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Understanding Sales Trends

Anticipating the unknown is always hard – even more so when it’s your company and you’re riding the ups and downs of trying to anticipate seasonal sales. But like waves crashing on the shore, with a little bit of investigation you can begin to understand the highs and lows of your natural sales cycles. You really can jettison those hoped-for sales expectations and start managing your seasonal sales in a way that creates more financial stability for your company.

Each Friday this month, I’ll cover one of the four critical topics that have a direct impact on seasonal sales fluctuations and discuss ways you can better manage your sales through choppy seas. We’ll discuss practical and easy ways for you to get a handle on these fluctuations, which can often seem more like a moving target than a predictable forecast.  Our goal is to offer some useful advice that can help you come out ahead with less stress and more cash in hand.

In this first article we’ll talk about Understanding Seasonal Sales Trends. In the next articles we’ll cover Planning for Seasonal Sales, Marketing Plans to Manage Seasonal Sales and finally How to Manage Cash Flow for Seasonal Sales.

First, let’s begin to unravel the mysteries of seasonal sales by learning about trend spotting…

Understanding Seasonal Sales Trends

Your first priority in getting a handle on your seasonal sales is to understand the historical sales trends for your company’s products and your industry. This involves looking back at your sales history and identifying obvious trends for each product during a given time period. If your business is new and you don’t have historical data, save yourself some serious heartburn and spend time doing research into historical seasonal sales for your product categories. Make sure you fully understand the natural ups and downs of your industry.

The easiest way to understand seasonal trends is to create a simple spreadsheet that you can use to track your historical sales by products or product categories. You’ll then be able to create a chart that paints a vivid picture of any type of trend. In this section we’ll demonstrate how to make a simple chart so you can see your trends over time. Your goal in creating a trend chart is to understand how much inventory you’ll need prior to the start of any sales cycle, including promotions and discounted products, so you can buy your inventory as needed. You’ll begin to spot patterns that drive your product categories in each season. You’ll also be able to better estimate your cash flow needs to cover your planned inventory purchases. The purpose is to better anticipate what you need without buying too much and getting stuck with items you’ll have to discount to move out of inventory. The earlier you plan, the more flexibility and options you’ll have in managing your cash. Avoiding surprises is a major advantage.

So let’s make a sales trend analysis chart! The easiest way to create a simple trend chart is to use a spreadsheet, but you could even just use a piece of paper. Start by listing months in columns, such as January through December for twelve columns. Then list each of your products in rows, such as Product #1, Product #2, etc. If you have a lot of products you might want to group them into product categories. Then input the monthly sales for each of your products into the corresponding month. You can track your monthly sales either by units or total dollar amount sold.

You can then use the chart tool in your spreadsheet software to create a simple chart that gives you a visual of your sales trends for each product. The chart gives you an enormous amount of information at a glance. In this case, pictures really are worth a thousand words. You can quickly spot trends that, over the course of time, paint a vivid picture of what your actual sales performance was and what’s it likely to be going forward. You’re looking for product sales patterns within time periods. Use your trends to plan your future inventory purchases, basing your decisions on what you’ve actually sold in the past rather than what you hope to sell.

You can dive as deep as you want into this topic. There are a lot of expensive sales trend analysis and forecasting software products on the market. Smaller businesses don’t need to buy these tools. Most just need a simple and free way to map their future sales trends.

Check back next Friday for the second part of this series, when I’ll discuss how to make a sales plan for seasonal sales.

Cynthia McCahonFounder and CEO,
After years of providing business planning and development services for private clients, Cynthia became acutely aware that many entrepreneurs struggled to develop accurate business plans and saw the need for a free tool like Enloop. | Facebook | @cmccahon | More from Cynthia

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