Why do you need forecasting?
Photo source: www.toppr.com February 2021
We live in times of uncertainty that have a direct impact on our day-to-day lives and the way our business' function. It's crucial to take action and have as much control of the situation as possible to help your business. One useful tool to gain control of the present and plan ahead (to minimise the risk of failure) is forecasting. Forecasting is a tool to help your business move forwards towards success.
What exactly is forecasting?
Forecasting is the process of making predictions of the future based on past and present data. The analysis of trends is the most common way of forecasting.
How can forecasting help you?
Forecasting can set your business towards success or failure. The purpose of forecasting is to project different scenarios that’ll help you understand the direction your business can take in the future. In order to make projections, you need reliable historical information. You might not have this information. Perhaps your business hasn’t been trading long enough. Don't worry, you’ll still be able to make projections based on the insight you do have about your business.
Let’s put this into practice with some examples:
What would the overall impact in your business be if sales start to decrease? How long would you be able stay afloat? Forecasting will help you make predictions from the best-case scenario to the worst. You’ll have the knowledge and be able to take control of the situation proactively. You can put measures in place to mitigate possible risks or failure.
What happens if you negotiate discounts or get better deals with your suppliers? Forecasting is a powerful tool that provides you with the future impact of any small changes you make in the way you operate.
Can your business be more profitable? How much do you need to push yourself to take your business to the next level? Making predictions will help you visualise where you would like your business to be in the desired time. Forecasting will help you set realistic goals. It will break down how much you need to increase your sales by and how much extra resource you would need to achieve your desired target.
What is your conversion rate? How can you increase it and be more efficient? Having reliable data available will provide you with the tools to start working on your business as well as working in your business. Forecasting the ideal scenario will help you make the right move to achieve your goals and keep you focused.
How can you implement forecasting in your business?
Forecasting will provide you with solid data which can then be used to get to the exciting bit! We’ll be able to help you. We can create forecast scenarios that meet your needs showing relevant information for you to run your business more efficiently. This information will provide you with the tools to anticipate different possible realities. More importantly, it’ll equip you with the knowledge to make informed decisions. That may be around investment, staffing, funding or just staying afloat. It’ll help you work better under pressure as you’ll take control of the situation.
If you’d like to take your business to the next level, plan and gain control, join our mailing list to find out more. We can help you with the forecasting process from scratch.