EZForecasting

How to forecast sales for a small business

You don't need a statistics degree or expensive software. You need your past numbers, a simple method that you've tested, and some judgment about what's about to change.

Reviewed October 2026

1. Gather your history

Pull your sales by month (or week, or quarter) from your accounting software, point-of-sale system or bank statements. A few rules make the forecast much better:

  • Use the same measure throughout. Revenue before tax and refunds, or units sold, but not a mix.
  • Go back as far as the business has looked roughly the same. Two to three years of monthly data is ideal. If you changed what you sell or how you price it, older data may mislead more than it helps.
  • Fix obvious errors, like a month where a big sale was recorded twice.
  • Note one-off events such as a closure, a big one-time order or a viral moment. You may want to adjust those months before forecasting, because no method can predict them.

2. Look at it

Paste the numbers into the forecast tool or a spreadsheet chart and look for:

  • Trend: are sales generally growing, flat or shrinking?
  • Seasonality: do the same months rise and fall every year, like December for gifts or summer for landscaping?
  • Changes in pattern: a jump or drop that stayed, often from a price change, new location or new product.

3. Pick a simple method

Simple methods are often hard to beat, and they're easy to explain to a lender or partner.

  • Steady with no trend: repeat the recent level (naive method) or the average.
  • Growing or shrinking steadily: a trend line or a smoothed trend.
  • Seasonal: same month last year, or a method that handles trend and seasonality together (Holt-Winters).

The methods guide explains each one in plain English. The forecast tool tries each method and picks the one that would have predicted your recent months best.

4. Test it before you trust it

Hide your most recent few months, forecast them from the older data, and compare. If a method can't beat simply repeating last month's number, don't use it. The forecast tool does this test automatically and shows how far off each method was.

5. Adjust for what the numbers can't know

A forecast built only from past sales assumes the future works like the past. Adjust it, and write down why, for things you know are coming:

  • Price increases or discounts
  • New products, locations or sales channels
  • Losing or winning a large customer
  • Marketing campaigns
  • Changes in the local economy or competition

Keep the adjustment separate from the statistical forecast, so you can tell later whether the method or your judgment was off.

6. Plan with a range, not a single number

Sales next month won't land exactly on the forecast. The forecast tool shows a likely range, where about 8 in 10 outcomes should fall if the pattern holds. Plan your cash and staffing so the business is fine at the low end, and so you're ready to buy stock or hire if it lands near the high end.

7. Update it every month

Add each month's actual sales and re-run the forecast. Compare actuals with what you forecast. If you're consistently too high or too low, change the method or your adjustments.

Turn the forecast into decisions

  • Cash: compare forecast revenue with expected costs to see when cash gets tight. The cash runway calculator helps.
  • Break-even: check whether forecast sales cover your costs with the break-even calculator.
  • Inventory and staffing: order and schedule for the forecast, with a buffer toward the high end in busy seasons.

Sources