Identify the major assumptions when doing sales forecasts.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There are at least two ways to answer this question, depending on whether you are doing a sales forecast for an existing business or doing one for a proposed business.

An existing business generally bases its sales forecasts on its sales figures for a previous period such as the previous year.  The people making the sales forecast then make assumptions about the likely changes in sales figures.  In that case, the major assumptions are A) that future sales can in some way be predicted by past sales and B) that future sales will be higher, lower, or level (depending on what the people assume) than previous sales.

A prospective business generally bases its sales forecasts on the performance of other businesses in the same industry and market.  In such a case, the major assumption is that the new business's sales will be similar to (either the same as, or some given percentage of) the sales made by its competition.

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