Sales forecasting for small businesses

Start with clean deals

A forecast is only as good as the deals behind it. Before forecasting, make sure every open deal has a realistic value, an expected close date and the right stage. Close out anything that has gone cold.

The weighted method

Give each stage a probability based on experience, then multiply each deal’s value by its stage probability.

The probabilities here are only examples. Set yours from your own history: of the deals that reached each stage last year, how many did you win?

Use categories as a sense check

Some teams also sort deals into categories: committed (very likely), best case (possible) and pipeline (early). Comparing the weighted number with the committed total keeps everyone honest.

Check it against reality

At the end of each month, compare what you forecast with what you actually won. If you are consistently optimistic, lower your stage probabilities or tighten your rules for what counts as each stage.

Common forecasting mistakes

• Counting deals with past close dates. If the date has passed and the deal isn’t won, update the date or close it.
• Using the same probability for every deal. A repeat customer at quote stage is more likely to sign than a cold lead at the same stage. Adjust where it is justified.
• Forgetting seasonality. Many Australian businesses slow down from mid-December to late January. Plan for it.
• Relying on one big deal. If one deal is more than a third of the forecast, plan for the month without it too.

A simple monthly forecasting routine

1. On the last working day of the month, ask everyone to update their deals.
2. Note the weighted forecast for next month and the next quarter.
3. Compare last month’s forecast with what actually closed.
4. Adjust stage probabilities if the gap is consistently large in one direction.
5. Agree two or three actions to close any gap to target.

Twenty minutes a month is enough for most small businesses to get a forecast they can plan around.

A worked example

A small signage business has twelve open deals worth $96,000 in total. Weighted by stage, the forecast for next month is $31,000, against a target of $40,000. Looking closer, $14,000 of that sits in one deal waiting on council approval. The owner treats that deal as uncertain, which leaves a realistic forecast of about $17,000 plus whatever else closes. With three weeks warning, the team follows up six older quotes and contacts past customers about refreshing their signage before Christmas.

Quick checklist

• Make sure every open deal has a value, stage and close date.
• Close or update deals with past close dates.
• Set stage probabilities from your own win history.
• Check the forecast against last month’s actual results.
• Plan for seasonal slowdowns such as the Christmas break.
• Agree actions to close any gap to target.
• Treat any single deal over a third of the forecast with caution.

Turning a forecast into decisions

• A light month ahead? Chase older quotes, contact past customers or push marketing now.
• A heavy month? Line up staff, subcontractors and materials early.
• One big deal carrying the month? Don’t count on it until it’s signed.

On Professional plans and above, NovaSoft One’s sales forecasting calculates weighted revenue by month, quarter or year from your open deals, with categories and targets.

Common questions

This guide is general information for Australian businesses, not legal, tax or financial advice. Check anything specific to your situation with a qualified adviser or the relevant government agency.