In business we can be guilty of sticking our heads down, getting on with the work and the doing, without taking time to look forward. When that becomes the business norm, however, and the forward looking stops, that’s when things can become somewhat dangerous.
Forewarned is forearmed is a saying in life, and it’s just as true in business! You must be looking forward in your business in order for it to succeed.
With that in mind, here are 10 benefits of forecasting in business!
Better finances and better financial performance; forecasting helps you improve profit, because you’re focused and forward looking, rather than backwards facing. It helps you to best plan and maximise cash flow as well. And, in turn, helps you to best utilise and optimise working capital.
Forecasting helps you to best manage and utilise your people resources. It helps you to flex staff in the best way, cover the workload to ensure you’re getting the best out of your staff, and ensure that they’re productive and not overworked.
Forecasting helps you to manage your business operations in the best way. This is anything from optimum stock levels, to the best utilisation of machinery, to logistics – looking forward helps you plan all of your operations to maximise productivity and efficiency.
Looking forward and having sales forecast allows your marketing to be more targeted and productive, ensuring money isn’t wasted.
And speaking of not wasting money…Forecasting, paying closer attention to the details of what’s coming up, allows you to target your spend. This, in turn, means you reduce costs because you’re not spending money on things that are unproductive, not in the plan and aren’t fruitful.
Forecasting sales, having an idea around stock levels, knowing what marketing activity you’re going to be expending to attract more sales, this all means you can best service your customers. They’re not going to be waiting for weeks because you didn’t realise you were running out of Stock Item A, or that 4 people had holidays planned in that week so the customers queries were unanswered for a long period of time. Forecasting all of this increases customer satisfaction, which in turn increases customer loyalty, and their return/repeat custom.
Having a forecast to use as a guide and a focusing tool allows management to make the best business decisions they can, because they’re not making decisions blind. They have information to refer to and use to their advantage when it comes to decision making.
Having a forecast means your business has a focus on the goals and targets you want to achieve, meaning everything you do has a purpose and inefficiency and wasted effort is minimised.
Identifies Weak Spots
Forecasting helps you to identify weak spots and problem areas, before they actually become a problem. This allows you to get in front of those potentially problematic areas and combat them in advance, which minimises and mitigates the risks your business is exposed to.
Having a forecast supports team work, giving everyone direction and promoting the 3 C’s – cooperation, coordination and cohesion.