Do you fear forecasting your sales? Do you avoid forecasting, maybe because you fear it, maybe because you don’t think you’re qualified, maybe because your forecast is always off? You’re not alone. But what I’ve found, in about 30 years of running my own business, is that one thing harder than sales forecasting is running a business without it.

Let’s talk about why. Why bother? You’re not taking a class, you don’t have to show anybody a business plan, so why should you take the trouble?

It’s common knowledge that the big companies run on sales forecasts. They have planning departments, econometric models, customer polls, sales pipelines, quotas, and commitments. The publicly traded companies have to forecast for stock analysts, and when they miss their projections, their stock prices suffer.

But what about small business, the entrepreneurs? We don’t worry about stock prices, and maybe we don’t worry about sales quotas either. Does not having to show anybody a business plan mean you don’t bother to forecast your sales? No, it doesn’t mean that. I sure hope not, in the front lines of it

The sales forecast is to management what the steering wheel is to driving. Take a second to think about how many elements of your business hang on your sales like clothes hang on a clothes line:

• If you sell products, then there’s the whole chain of purchasing and resource management related to inventory, assembly, or manufacturing. Are there personnel costs related to product management? Do you need contractors to keep up? Or if sales are bad, do you need to lay some people off?

• Then there’s the marketing plan, results, and budget. Sales and marketing are locked together. Your level of sales controls your level of sales and marketing expenses. Don’t you need to hang the marketing budgets on sales levels? And if sales are different than planned, don’t you need to manage budgets accordingly? Here’s where the management comes in: maybe you need to cut marketing, maybe you need to increase marketing, and maybe you need to change the marketing mix.

• And of course there’s the rest of your spending. Think about running expenses such as personnel, rent, utilities, your Internet sites and connection costs, travel, and all the rest. If you sales are beating your forecast, you have more money to spend. Do you leave the excess as profits, or do you invest in more marketing to generate more growth? If your sales are below forecast, then you’d better know why, and what to do about it.

Does that remind you of steering? Are you managing without a steering wheel?

But is your sales forecast is good enough? With sales forecasting, you’re never going to know while you’re doing it whether it’s accurate or not. That obviously comes later. And you set out with the mindset that it’s not about accurately predicting the future, but rather about laying out assumptions and educated guesses so that when they’re wrong—and they always are—you can easily tell how wrong, and in what direction. And that leads to thinking about what to do about them.

To check a sales forecast as you do it, ask yourself whether or not you can track your forecast and compare it to actual results. Don’t forecast in categories you don’t track in your sales accounting and reporting. Make sure the factors you use to build a forecast—units and unit prices, for example, or page views, conversion rates, sales pipeline factors—are factors you track as part of your normal management.

The entire sales forecasting process is intended to generate better business results from better business decisions. So what really matters is whether or not your sales forecast is set up right and broken into factors you’ll be able to track and will lead you to better management decisions.