In this competitive eCommerce market, it's impossible to build an online business without doing regular sales forecasting. When done right, sales forecasting can help you make more informed purchasing decisions, build investor relationships, and set smart budgets. However, it’s essential that you use the right tools if you want to achieve these benefits. Continue reading to find out why Excel spreadsheets aren’t an adequate solution for proper sales forecasting, and why you should consider a tool like instead.
What is sales forecasting?
The primary goal of a sales forecast is to paint a picture of your expected sales revenue over a certain period of time. Having an accurate prediction of how much you’re likely to sell helps you make accurate business decisions about stocking, pricing, and more.
If you’re not performing sales forecasts for your business, you might find yourself with too much or too little stock in relation to demand at different times. As a result, you’ll lose out on sales or have surplus, unsold product, and you may risk disappointing your customers. That’s why sales forecasting is key to running a successful business.
Why is sales forecasting in important?
While sales forecasts are essential for making smart buying decisions, their importance extends beyond just projected revenue. Creating thorough, accurate sales forecasts can also help enable smooth internal operations for your business.
The objective of a sales forecast is to build an accurate prediction you can plan your operations around. This can help you allocate resources, compensate employees well, and stay on track for overall business goals. When forecasts are produced properly, you’ll have the foresight to perform operations well. If forecasts are produced poorly and inaccurately, you risk overspending and allocating resources to the wrong departments and products.
6 reasons you shouldn’t use Excel for sales forecasting
Since forecasting is such an essential part of your business’s operations, it’s important that you use the right tool to do it. In the past, many online business owners used Excel spreadsheets for this task. Now, however, there are much more sophisticated tools out there. Here are six reasons you should stop using spreadsheets for your sales forecasting and switch to software instead.
1. Spreadsheets are time-consuming to set up and manage
Using Excel spreadsheets for advanced tasks like sales forecasting isn’t easy or intuitive. To appropriately use the advanced functions you’d need, there’s a steep learning curve. Inputting formulas and ensuring each cell matches the correct data sets in your business is a tricky task. Locating the correct resources, exporting, and organizing all the data in a meaningful way in your spreadsheets can take weeks or even months. That’s why many people who choose to use spreadsheets outsource these tasks to a third party, which takes time and money.
With demand-planning software like Shypyard, however, the learning curve is much smaller. Inventory solutions like this come equipped with pre-built formulas and intuitive dashboards to simplify data visualization and prioritize efficiency and accuracy. In other words, software like this can give you better insights with less time and effort.
2. Spreadsheets can’t answer specific data needs
Another pitfall Excel users often encounter is that these spreadsheets can come with a large margin of error. A single mistake in one formula can cause errors throughout your entire data set. That’s why companies that still use spreadsheets often dedicate teams to set up sheets, proofread formulas, and ensure every tiny detail of each sheet is correct. It’s a large responsibility that requires investment in a well-trained team—and even if you do this, human error can still make its way into the documents.
Plus, most Excel data only shows a final value, or single points on a graph. However, real-world sales data is continuous. The fluctuations in sales can be much more telling than a clean final figure. So in this way, an Excel spreadsheet wouldn’t tell the whole story.
3. Spreadsheets are tough to integrate with other tools
Running an e-commerce business in this digital era requires many different tools. From customer service software to warehouse management solutions, the average online business uses dozens and dozens to achieve success. That’s why the ability to integrate all these tools is so crucial. You need to ensure that changes in one area of your business are taken into account in others. Sales-forecasting software can integrate with other software you already use, unlike an Excel sheet. That means better accessibility and more accurate data for you.
4. Spreadsheets aren’t ideal for collaboration
If you have other team members or work with contractors, it’s essential that you be able to easily send and share data with each other. Especially if several people have disparate data needs, it can be irritating to have to send different people different sheets, and try to manually control their access to certain documents.
This can result in privacy concerns, which may be a hazard to your business. Many types of trusted sales forecasting software, however, contain pages and certain tabs you can make collaborative. By providing easy ways to share specific sales data, sales forecasting tools make it easy to work together with your team to make informed decisions about your business.
5. Spreadsheets don’t offer sophisticated security
While you can encrypt Excel files and set passwords, there’s no easily accessible, centralized method to ensure your data is always secure. By using Excel as your primary source for data analysis across all areas of your business, you make yourself extremely vulnerable to data breaches and viruses. As your business grows, you may want to consider a safe, cloud-based software solution that all business members can easily work from without worry.
6. Spreadsheets can’t provide proper trend analysis
One of the largest places Excel falls short is in the area of consistent updates. Unless you or a team member are updating spreadsheets hourly with new sales data, you can easily lose track of your current business position. Excel sheets require constant maintenance—and even then, they may not provide enough information to help you determine smart business moves, or even identify your current business position. Without advanced analytical programs, it can be nearly impossible to reliably and consistently make the best choices for your store based on data.
Meet Shypyard, the ideal Excel alternative
So, what Excel alternatives exist? Inventory planners can easily replace Excel with modern, advanced software like Shypyard. At Shypyard, we understand how difficult it is to try and plan or make smart business decisions when everything is constantly changing. In a world with so many moving parts, let Shypyard be a constant for your business. Our top business-planning tools will help your brand rise above the competition.
If you have a growing Shopify store, we’re here to help. With customized inventory planning capabilities and integrations into any 3PL or WMS, we empower e-commerce retailers to find success. With Shypyard’s inventory planner, you can save hours of time and ensure complete data integrity. Shypyard is the most robust demand-planning and supply-chain planning software out there, allowing you to make inventory management simple and easy. With trackable KPIs, easy data analysis, and unlimited collaboration for your team, trying Shypyard today is a no-brainer.
Reduce dead stock, save money, and enjoy worry-free inventory planning so you can transform how you run your business.