Forecasting is a powerful tool for companies trying to navigate the murky waters of the post-COVID economy. It allows them to get a glimpse of the future and pivot their strategies to face the ever-changing economic reality we live in.
While moving to “lethargic mode” became common in the business world, forward-thinking businesses are actively seeking opportunities to predict possible losses and find new ways to boost their revenues.
The importance of forecasting
In today’s fast-changing business environment, forecasting has a central role in planning business operations. It presents a detailed analysis of future economic, financial, or other trends, based on accumulated historical data and can help businesses understand exactly how best to react during times of uncertainty.
Forecasting helps companies track progress, take preemptive measures, if necessary, keep an eye on the competition, and adapt the overall strategy to the ever-changing economic realities.
We usually describe it as an art and a science. Although there is no perfect way to create a forecast, companies should build a habit of looking ahead as this will prepare them for both unexpected challenges and future success.
Failing to view your business from a bird’s eye can lead to fatal mistakes. But if you manage to perform forecasting accurately, this can facilitate planning and goal-setting, guide the management, and create a plan to avoid risks while helping the company meet its goals and milestones.
Forecasts could be influenced by a product or service’s position in its life cycle whether this is the sales, growth, maturity, or decline stage. Products and service forecasts can also be affected by demand, technological progress, and the business cycle.
No matter whether your business is big or small, any amount of unstructured or structured data can be turned into relevant insights helping companies charter more accurate financial action plans.
The ability to predict future trends based on past data has implications way beyond the revenue. Keeping track of your spending and sales as they happen is important to effectively manage your business.
These are the reasons why forecasting analytics is essential in times of crisis:
Accurate financial planning
One of the benefits of forecasting is creating models of financial predictability for more accurate financial planning. This helps companies keep revenue streams flowing, accounting for any possible expenses and profits.
Managing people and addressing employees’ needs become even more challenging and essential during times of crisis. Accurate forecasting also benefits companies with seasonal businesses. It can help bring additional workers in advance to prepare for the upcoming months or restructure staff to meet quarterly financial projections. With a clear understanding of your demand and supply, you can chart a forecast that will track any changes in consumer behavior, thus allowing you to adjust your sales strategies to maximize profits.
Forecasting can greatly aid companies in reducing costs by providing crucial insights for supply and demand. In certain industries, forecasting can help minimize costs associated with job allocation and management, sourcing materials, and front-office or customer-facing duties.
One area where forecasting can shine significantly is customer satisfaction. It allows companies to streamline and enhance the production process, logistics, and retail operations.
If you want to make sure that you can deliver the right products at the right time to your customers, you need to align distribution, production, and procurement, as well as all other processes with that goal. Forecasting can help you be more efficient and take the uncertainty out of demand planning.
Forecasting with technology
As already discussed above, forecasting allows you to look into the future and see where your sales are going, how costs are divided, what are your biggest expenses, and generally to have a better understanding of where your business is heading.
Forecasting has benefited greatly from the rise of Artificial Intelligence, Big Data, and Machine Learning. They allow forecasting to evolve to a higher level of transparency that translates into more accurate transformative models through the use of sophisticated analytics.
SageData offers an innovative forecasting tool that allows to:
Forecast all business important KPIs and Metrics with just a few clicks
Run hundreds of forecasting models simultaneously using a scalable infrastructure
Monitor useful data and keep your business on the right track with SageData’s forecasting and anomaly detection
To illustrate the power of tech, we recorded a small video that will help you understand our forecasting tool:
In times of crisis, companies must act quickly and adjust to any abnormal market behavior to sustain their revenue streams and cut any potential losses.
Organizations need to constantly revise their forecasts as business conditions may change drastically. They should be ready to pivot with several crisis management scenarios to avoid any catastrophic results. Building financial models with changeable variables can charter future paths for growth and expansion.
Creating foreseeable predictive models with the help of analytical platforms like SageData could help companies predict effectively any financial instabilities that come during their journey of growth, and find a way to overcome them successfully.