Explain how a sales forecast is used to determine the sales volume for a typical small business.
What will be an ideal response?
A sales forecast is an estimate of the amount a firm expects to sell during a given period in the future. In preparing operating and sales budgets, these forecasts are used to estimate revenues for the next quarter, for the year, or perhaps even for three to five years. Learning how to forecast accurately can spell the difference between growth and stagnation for one's business. Different parts of a typical small business use these forecasts for planning and controlling their areas of operations. Then, scheduling production, securing financial resources, purchasing plant or equipment, hiring and paying personnel, scheduling vacations, and planning inventory levels must be done.
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