Forecasting: Your competitive edge to tackling the future’s uncertainty

11 Sep Forecasting: Your competitive edge to tackling the future’s uncertainty

Forecasting is a decision-making tool that offers businesses a way to deal with the future’s uncertainty, by looking at historical data and trends from their business.

 

Forecasting helps business owners guide strategy and make informed decisions about critical business operations like sales, expenses, revenue, profit, margins, resource allocation etc. It also helps to predict potential issues and supports the business owner not only in making better decisions, but also measuring the impact of those decisions.

 

The more you forecast, the more accurate you become as your assumptions are more up to date. Thus, when done consistently, forecasting adds a competitive advantage and can be the difference between a business that succeeds and a business that fails.

 

The NumerEyes forecasting tool doesn’t just help you forecast to make better informed decisions, it also highlights areas that you need to work on, serves to facilitate improved communication to stakeholders and is a powerful method to create future scenarios.

 

Elements of business forecasting include:

 

Preparation: connect to the programme that pulls the data together

 

Choose your data points: an example could be “What is our sales projection for next quarter” or “Can we afford a new employee”?

 

Choose indicators and data sets: the relevant indicators and data sets you need are identified

 

Make initial assumptions: to start the forecasting process some assumptions will be made to measure against variables and indicators

 

Analyse your data: available data from the programme will be analysed

 

Estimate your forecasts: future conditions will be estimated to reach data-backed estimates

 

Verify your forecasts: your forecasts are compared to the eventual results. This help you identity problems, tweak variables, correct deviations and continue to improve the assumptions

 

Review your forecasting process: deviations between your forecast and actual performance data will be reviewed over time

 

If you’re not sure if forecasting is worth your while, consider the following important questions:

 

• What happens when I don’t budget correctly?
• What happens when I make a big decision that negatively affects the whole business and all the staff?
• What happens when I’m not keeping my eyes open for opportunities?
• What happens when I don’t pick up on problems?
• What happens when I don’t plan for the future?
• What happens when I don’t communicate clearly with all stakeholders in my business?

 

 

NumerEyes is there to help. Contact Scott Morris on [email protected] to find out more.