Explain one factor that may make sales forecasting difficult for ABC's new business.

• A. There is a long trading history in the market.
• B. Market is highly linear.
• C. No long trading history in this market.
• D. There is too much data.

Answer: (C)

When forecasting for a new business, the main challenge is the absence of historical sales data. Without any long trading history in this market, you don’t have observed patterns of demand to rely on—no track record of how sales rise or fall over time, whether there are seasonal spikes, or how customers respond to price changes and promotions. This makes it hard to estimate future demand accurately, because your forecasting models would be extrapolating from little to no real-world experience, leading to greater uncertainty and the risk of over- or under-forecasting.

Having a long trading history would actually help the forecast by providing patterns to learn from. If the market were highly linear, relationships would be easier to predict. And while too much data can require careful analysis, for a new business the lack of data is the core hurdle, not the amount of data.