Forecasting should be one of the key elements of your business strategy. Without it, you won’t be able to make accurate marketing plans and make informed decisions about the future of your company. However, it is far too easy to make an inaccurate forecast and this can be even worse than not having one. So, to help you make the right forecasts, here are 9 forecasting tips that will improve your business if you follow them.
1. If You Don’t Measure it, You can’t Improve it
What isn’t measured can’t be improved. Let this always be your mantra when thinking about forecasting. Make sure to choose your most important KPIs (key performance indicators) and keep measuring them if you want to improve them. Without measuring something, you won’t even know if it is broken and needs fixing.
2. Don’t Forget to Keep Accurate Records
Forecasting and demand planning relies on having accurate records in the first place. Without this you can safely throw the forecast into the bin. So before you go with it, make sure the records represent the real situation, no matter how dire it seems.
Speaking of records, you should also make use of historical data, because very often, they’ll provide a glimpse into the near future. Perhaps you’re having more business in September and less in April? Always keep an eye on market and industry trends.
3. Assign Owners
For each process, you should assign an owner and make it clear what your expectations from them are. Typically, this can be the manager of that particular sector, which makes the most sense as they’ll be the person with the most authority, but you can assign someone below them in rank as well.The important thing here is to keep watch if they’re doing the right job.
4. Always Keep an Eye on the Competition
Never take your eyes of your competitors. No matter what business, industry or market you are in or how small the niche is, there will always be someone competing with you whether directly or indirectly. You don’t have to (nor should you) simply copy them verbatim, but neither should you allow them to slip away from you. For example, has the competitor opened a new store near one of yours? That can be a problem and therefore you should address it in your next forecast.
5. Get Rid of the Spreadsheets
If you’re still using spreadsheets, here’s a great forecasting tip for you. Get rid of those. Find a good forecasting and demand planning platform instead. This will make your life a lot easier and your forecasts much more accurate. Make sure that the platform includes custom workflows and enables both multiplan and multi-team collaboration.
6. Break Down the Forecasts by Segments
You should first create a basic forecasts using the historical data that you have. From there, it’s a good idea to segment that forecast into different parts. This will obviously look different for various industries, so think about what works best for yours. In the end, segmenting will allow you to have a better picture of where your business as a whole is as well as where these different segments are at the moment and where you can improve them both.
If people in your organization don’t fully understand what a forecast is and why you are doing it, don’t expect it to go well. Everybody involved should be on the same page when it comes to forecasting, so make sure you educate those involved to know what forecasting is and what it is not.
8. Don’t Rely on Yearly Forecasts
Most companies that even do forecasts, do them once a year. That may work for some industries and markets, but most move much faster than that. The more regular your forecasts are, the better the results that you get will be. You don’t have to create a forecast every week, but make sure to do it at least for every quarter, even monthly if that’s what your business requires.
9. Be Ready for Mistakes
With forecasts, you want them to be as accurate as possible. You’ll rarely get a 100% accurate forecast, largely because it is hard to fully understand the insight of your different teams and then put them all into one package. Somewhere, somehow, something will get lost. Don’t dwell on it too much. It’s better to have a 75-80% accurate forecast than no forecast at all.
Of course, there is a lot more than that to creating forecasts that will help your business, but hopefully these 9 forecasting tips will get you on the right track.
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