Unfortunately, forecasting is still a mystery to many business people, and I’ve heard many people say “I just don’t have time to forecast.” Forecasting does take a little time — time you may not think you have — but invariably those businessmen and women who take the time to carefully plan their sales and inventory are far more profitable than those that don’t.
Forecasting sales and cash flow is never a simple task, and the shaky economic recovery is making the process downright perplexing. In this and coming newsletters, I would like to speak to the 3 biggest questions that I hear about forecasting; (1) Why should I do it? (2) How do I do it? and (3) What do I do with it after I’ve done it?
So…why should you forecast? Forecasting is about predicting the future as accurately as possible, given all the information available, including historical data and knowledge of any future events that might impact your forecasts. Forecasting will answer many of your most asked questions: What is my business going to spend next year? What do I think we’ll bring in? When will that money actually reach my bank account?
Forecasting is used to make sure that the right product is delivered at the right cost and the right time. Forecasting will allow you to measure your costs and increase your profit margin. Forecasting will also allow you to communicate to your vendors and bankers as well as your team
I am of the firm belief that forecasting is just plain smart. It should be an integral part of the decision-making activities of management. I designed our Three Page System to contain an easy- to- use tool that will simplify the forecasting process for your clients.
-Ron Haugen