How to forecast future figures by month: a small business guide
Do you ever set forecasts for your business? I’m guessing probably not, and you’re absolutely not on your own.
You can probably guess what I’m going to say…
Whether you’re doing £2k a month or £200k a month, a forecast allows you to head towards a goal. And when you work TOWARDS something you’re much more likely to get there. Call it focus, laws of attraction or whatever you want but it’s true. And I’ve seen it enough times to know this for sure.
I’ve been looking at forecasts for a few businesses since the start of the new year so thought I’d explain to you how I do it so you can have a go yourself.
This type of thing doesn’t need to be complicated at all - you can put in as little or as much info as you want. What I’m going to outline here is simply around revenue which is the first thing you would ever put into a forecast anyway and it’s absolutely fine if it’s the only thing you put in too.
Forecasting should always go hand in hand with your trading calendar - when you have both of these set and planned out you’re much more likely to have a great year ahead of you.
Here’s a little reminder of what I mean by both of those…
Trading Calendar - This is your plan for the year of what’s happening and when. It includes all your events, key messaging, launches, key dates (inc. shoots, production etc). It’s your roadmap and will allow you to keep on course (if you follow it). It’s kind of like your business diary.
Forecasts - This is a set of figures you’re going to aim to hit each month in your business. This can be at top line (i.e overall revenue) or it can extend further and split down each launch as well as other key metrics.
Let’s be honest, forecasting your sales might not be the most exciting part of running a business, but nailing those future numbers can mean the difference between ordering the right stock or drowning in unsold inventory, hitting your revenue targets or scrambling to cover unexpected expenses.
So, how do you actually project what you’re going to sell each month based on what’s already happened?
Step 1: Look back before you look forward
Your historical sales data is your crystal ball. It’s packed with clues about how your business has performed in the past and it holds the key to your future forecasts. Start by breaking things down month by month based upon past performance.
Even if you simply write down what your sales were each month, this is a good start.
Next you need to apply and recognise the following:
Seasonality: Do your sales spike in December or dip in the summer? These patterns are gold.
Growth Trends: Are your numbers steadily climbing, flatlining, or even taking a dip? Knowing where you stand is crucial going into a new year.
Event Impacts: Did a promotion drive sales in a certain month? Make a note of those boosts.
Pull out the main patterns within your sales.
Step 2: Find your monthly baseline
Once you’ve got your data, it’s time to calculate your monthly baseline - your average sales for a given month. Think of it as your “default” number before you factor in growth, marketing, or events.
Baseline Sales = Total Sales in the Past Year ÷ 12
For round figures, let’s say your total sales last year were £100k. Divide that by 12 months, and you get a baseline of £8333 per month. This figure is valuable to note as a general guide each month for reference of last year.
However, going back to Step 1, if January is usually slower, you might adjust it down to £5k for that month, while July could bump up to £10k if that’s the pattern you usually see.
Understanding the sales pattern from Step 1 is important here - you can’t just apply a growth % each month, it has to follow your peaks and dips.
Step 3: Add some growth
Are you scaling up? Amazing! What growth did you see in your business in 2024 compared to 2023? Factor in your growth rate to make those numbers reflect where your business is headed.
So to be clear here your figures at this point will still follow the same pattern as the previous year but you’ll apply a % uplift based upon your growth trajectory.
Projected Sales uplift = Baseline Sales (Step 2) × (1 + Growth Rate)
If you expect a 20% growth rate and your July baseline is £10k your projection becomes £12k (10,000 × 1.20).
Step 4: Add your marketing activity
What do you plan on doing in 2026 that you didn’t do in 2025? What do you plan on pushing harder? How many new product launches will you have versus the previous year?
Make sure you include the expected lift from any upcoming campaigns in your forecast.
Look at Past Campaigns: If last year’s Black Friday sale gave you a 20% boost, use that as a guide. If you plan on going in much harder this year then perhaps you might want to double it.
Timing Is Everything: Pencil in when your campaigns will run and spread the uplift across those months.
This step is all about recognising what addition activity your business will see this year and factoring in the resulting sales.
Step 5: How many new customers did you recruit last year?
This step is really important! Have a look at how many new customers you brought into your business last year. This figure is going to give you a guide as to how many of them are going to stick about.
As a rough rule of thumb if you recruited 1000 new people in 2024 you can assume about 20% of them will buy again. That’s 200 people. If your AOV is £50 then this is a potential extra £10k.
Now you need to apply the £10k across each month following the patterns you’ve previously mapped out.
Step 6: Keep it real (and flexible)
Forecasting isn’t a one and done deal. Keep an eye on how your actual sales stack up against your projections. If you see a big gap, dig into why, it could be that your growth rate was too optimistic or that a campaign didn’t perform as expected.
Tips for Adjusting:
Track Monthly Performance: Compare your forecast to real results and tweak as needed.
Learn from Patterns: Over time, your forecasts will become sharper as you learn what works (and what doesn’t).
Stay Proactive: Regularly update your numbers based on new data, trends, and market changes.
So there you have it, a quick intro into forecasting…
It might sound a bit intimidating at first, but it’s more like painting a picture of your business’s future, and the more data you have, the clearer that picture becomes. A solid monthly forecast keeps you prepared and in control and that’s where you always want to be.
So, create a new spreadsheet, channel your inner business detective, and start projecting. Because knowing where you’re headed isn’t just smart, it’s essential for taking your small business to the next level.
Make this year the one where you don’t go in blind!