What is the function of a sales forecast?

The function of a sales forecast is to estimate future sales and inform decision-making. This is crucial for businesses as it helps them anticipate demand for their products or services, which in turn informs various strategic decisions such as inventory management, resource allocation, and budgeting. By having a reliable sales forecast, companies can plan better for peak sales periods, allocate marketing resources more effectively, and minimize the risk of stockouts or overstock situations.

While evaluating the performance of sales staff, creating advertising campaigns, and tracking current market trends are important aspects of a business's overall strategy, they do not directly relate to the core function of a sales forecast, which is primarily focused on predicting sales outcomes to aid in proactive decision-making. Therefore, estimating future sales is the fundamental role of a sales forecast, providing businesses with the insights needed to navigate the market effectively.