Business forecasting is an estimate or prediction of future developments in business such as sales, expenditures, and profits. Due to our country’s’ somewhat volatile economic environment, businesses are recommended to undergo an annual forecast as a minimum. Many experts agree that precise business forecasting is as much an art as a science and a good forecast result is more likely to come from experience, sound instincts, and good judgement than from formulas or equations.
3 Types Of Business Forecast
It helps to read the future and to predict probable changes that are likely to impact your business. Every business is affected by the conditions of the community in which it is located. Do not think for one minute though that just local business community conditions will influence the future of your business. Political conditions and fiscal policy controls, population migration and even our national debt can also have a direct bearing your business' future. A general forecast can include many, many external factors … and the more factors taken into account - the more accurate the forecast (generally).
Sales forecasting decides the fate of most organizations as sales drives growth and many other extremely important business factors. Therefore, sales forecasting should never simply be a blind guess - it should be accurate and achievable as a minimum. With this in mind, your sales forecast should be at the forefront of any important business planning. A wise man once stated that "It is the sales forecast that must set the stage for internal planning, business expenses and capital outlays.”.
A large part of any business enterprise' sustained success comes down to good financial planning. Its capital forecast must take into account many factors besides fixed costs and working capital - deprecation, replacement, development and reorganization all should be taken into account amongst other things. As such, the need for an accurate capital forecast is paramount and many businesses undergo this process on a regular basis to ensure they continue to live in a real world … they are aware of the importance of keeping up with changing costs and will be better placed to reach for additional funding, if required, before its too late.