7 Tips for Business Forecasting
As a business owner or key executives you may find yourself getting so caught up in the day-to-day running of your business or company that you forget to work on your business forecasting. This may be because you just do not fully understand:
- How business forecasting can help your business or company?
Regardless of your reasons, you should consider taking some time out from the running of your business or company to ask yourself the following questions:
- What is business forecasting?
- How can business forecasting help your business or company?
In addition to providing you with useful information in regards to the above questions. This Blog also provides you with some useful “Tips” on business forecasting.
What is Business Forecasting?
Business forecasting can be defined as being an act of estimating or predicting future economic conditions based on past and present information.
To put it another way, it is an estimation or prediction of future developments in business such as sales, expenditures, and profit.
How can Business Forecasting help your Business or Company?
Many business owners and key executives simply use business forecasting to estimate or predict the following:
- The success of their business or company, and
- The future direction of their business or company.
However, business forecasting is much more than just trying to “guess” the above outcomes.
When used properly, business forecasting can help your business or company in many ways. For example, it can:
- Help you in planning ahead of your business’s or company’s needs.
- Help you in identifying where you can tighten up your business’s or company’s expenses, and also where you can work to expand its sales.
- Help give your business or company a competitive edge over its competitors.
- Help guide you in your decision-making.
- Help make your business or company to be more profitable and also to have a better cash flow.
- Help your business or company to be much better placed when it may have to respond to any future business opportunities and challenges.
- Help grow your business or company.
“Tips” for Business Forecasting
Here is a list of 5 useful “tips” you can consider:
Tip #1 Tie in Business Forecasting to your Business Plan
Business forecasting is generally considered to be the foundation of business planning. With this in mind, you should:
- Consider tying in business forecasting to your business plan, and
- Ensure that your business plan provides enough accurate information upon which to base your business forecasts.
Tip #2 Base your Business Forecasts on Accurate and Relevant Data
Your business forecast will only be accurate if you base your forecasts on data that is accurate and relevant.
Tip #3 Study Predictions of Experts
Business forecasting enables you to take some time-out from your day-to-day routine to study predictions of experts in your market and try to understand:
- How your business’s or company’s position in your market can change in accordance with economic indicators.
Tip #4 Be Alert to any Business Opportunities
Business forecasting gives you the opportunity to keep your eyes and ears open for any opportunities you may see or hear that can help you grow your business or company.
Tip #5 Evaluate your Products or Services
Business forecasting provides you with an excellent opportunity to evaluate your core activities (i.e. your products or services). When evaluating your products or services consider asking yourself some questions. For example:
- What makes your products or services successful?
- Are your products or services effectively matching your customers’ or clients’ needs?
- How can your products or services be improved?
- Do you need to launch new or complementary products or services?
Answering these questions can at least give you some basis on which to:
- Improve the performance of your business or company, and
- Improve the financial performance (i.e. profitability) of your business or company.
Tip #6 Forecast at Regular Intervals
The key to successful business forecasting is to regularly monitor any developments that may impact on your business forecasting and equally important, it gives you the opportunity to adjust your business forecast accordingly.
Tip #7 Obtain an Impartial Opinion
Obtaining an impartial opinion of your business forecast from an expert can highlight aspects that you may have overlooked as well as providing you with the reassurance that you have covered all the bases.
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DISCLAIMER: This blog post is of a general nature only and does not constitute professional advice. I strongly recommend that you seek your own professional legal and accounting advice in relation to your particular circumstances.