Do you know what your company’s sales will look like 12 months from now? Can you determine how much warehouse space you’ll need for your busy season? Will you need to hire new employees in the next 90 days? Business success requires careful planning and reliable projections to achieve company objectives. Your ability to forecast future business growth is critical to effective planning.

What Is Business Forecasting?

The ability to project future business activity requires strategic thinking and planning. With a strategy that incorporates realistic expectations, you and your business team are better prepared for the ups and downs experienced by most businesses.

Business forecasting equips you with the “big picture” data that can enable you to turn your vision into reality – one strategic step at a time. Reliable forecasting requires input from your management team, the company accountant, the CTO, CIO, CFO – the managers who possess a clear grasp of the challenges a business faces, and who can propose solutions to address those challenges effectively.

Business forecasting also involves identifying downstream problems and proactively developing solutions before that logjam has a negative impact on business.

Can you predict the future of your company? Not with 100% accuracy. Things change. However, you can view business activity critically, with an eye toward improving company performance.

When gazing into the company crystal ball, consider a variety of factors – variables to one degree or another – that you can control with teamwork, a realistic strategy, and a clear vision of where you want the company to go.

Observe Current Business Systems in Action

Does one business system create more challenges than others? Is customer care up to speed? How about “just in time” ordering? As you heighten your powers of observation, you’ll understand more clearly what motivates employees, what problems they face, and how to most efficiently address those problems. Look at business systems impartially and get input from all stakeholders on what’s working smoothly and what needs improvement.

Listen carefully, and don’t take it personally when you discover that your great idea from two years back isn’t delivering.

Analyze the Company Organization

How do employees fit into the daily business hierarchy? What do you need to change in order to put your business strategy in place? How can you improve productivity without loss of quality client care?

Review past performance to identify those aspects of business that deliver a positive return on investment and those that drain company resources. By integrating assets – employees, equipment, and other resources – you can advance your strategy for business success.

If you don’t look to the future to develop dependable projections, at some point you’re bound to hit a snag you never saw coming.

Face Challenges from All Angles

Often, business challenges are complex, involving numerous in-house and outsourced individuals, departments, and even different companies.

Consider business challenges from different angles:

  • What’s happening in your marketplace?
  • What impact will your strategy have on company performance?
  • How will this large project get finished on time?
  • How will you measure business success?

Use the numbers from last year or last quarter to fill in as many blanks as possible. By collating hard data, you can develop the yardsticks required to measure the success of your business strategy.

Adapt Your Strategy

Just because you developed a business strategy last year doesn’t mean it’s going to work this year. Use your business forecasts to identify the need to adapt a strategy to new conditions. Maybe a new competitor moved into town, or maybe you lost a key staff member.

Your business forecasts are indicators of future performance, but you also have to remain flexible to adapt the strategy created on last year’s projections to this year’s reality.

Planning for the future is planning for success. In your forecasts, be realistic, identify potential challenges early, and stay nimble. Change when change is the obvious course.

Use your business crystal ball to realize your vision for the business, and improve the chances of achieving company success.

 


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC