There is no straightforward logic to sales, and no simple shortcuts will solve this issue. It’s a great tool to use for anything that shows linear behavior, like Covid cases for example. Excel and Google spreadsheets use something called “linear regression” for forecasting. Yes, there is a forecasting function in Excel, and there’s one in Google spreadsheets as well. Using the “Forecast” function in Excel doesn’t work for sales They only show your ability (or inability) to sell products, which is definitely not the same as measuring future demand.
But past sales are not a representation of future demand. It gives you a way to measure past sales and go from there. Excel, unfortunately, is a very bad tool to identify stockouts. These are the moments when a customer comes to the store with the intention of purchasing goods but leaves empty-handed, because you didn’t have the goods in stock. Identifying sales that never happenedĪnother key aspect of sales forecasting is taking into account missed sales opportunities, what we call stockouts. See where the problem is? Do you see why the green line is not a good representation of sales behavior over time? 3. The blue line above represents a sales graph, with the red dots showing your numbers in Excel when you measure sales over time. They’re a continuum, and when you put them in numbers (as opposed to linear graphs), you freeze them in time without knowing what happens in between. Sales numbers look much more like the stock market. If we could just grasp that function and apply it to the future. We might wish that sales curves followed a certain logical function. And that knowledge will not take you far. The only three things we know about forecasting sales is that sales can go up, go down, or stay the same.
That’s how much we’re likely to sell.” Unfortunately, that’s not the way sales numbers work. “Hey look, our sales grew 12% last year in this month. The moment when you open your sheet to start drafting a table forecast, you are immediately prone to include assumptions based on the past.
#SALES SHEETS FOR EXCEL FULL#
Like it or not, your head is full of assumptions. Yes, intelligence is a powerful tool when it comes to problem solving, but it stands in the way of demand planning. The number one rule in sales forecasting is counter-intuitive to what you thought you knew about the world: “Do not use your head”. Here, however, we will attempt to explain why using a table processor isn’t the right way to do demand planning. And there are good reasons why it is not a good idea. We have written a lot on sales forecasting and how it should be done, and we encourage everyone to dig deep into our blog and read all about it. Put those two together and you should be fine, right? No. After all, sales forecasting is a mathematical discipline, and Excel is pretty good for calculations. But there seems to be a misconception that an Excel sheet is the right place to do sales forecasting, and we understand why. Sales forecasting in Excel is a hot topic if you judge by how often those three key words are found in Google searches. 6 minutes read 7 reasons you shouldn’t use Excel for sales forecasting
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