Trend Predicting for Success 101: Essential Tips to Master Business Forecasting
When you’re running a business, part of your job is to closely observe the trends that are shaping the world of commerce. As an entrepreneur, you can’t afford to lose sight of such details because these are the things that could make or break your hard work. Think of yourself as a sort of oracle where you need to be well-informed of what’s to come so that your company can stay on top of, or perhaps even ahead of, the game. Admittedly, this sounds rather challenging, but nothing was ever gained from taking things the easy way.
Trend forecasting is something that you should be skilled at considering that both the habits of consumers and businesses change frequently depending on the social, cultural, and political events that are happening around the world. The art of predicting possible outcomes is a tricky thing to get right, and there will be times when even your expected scenarios don’t turn up as you expected them to be. But the good thing is that even though such things may happen, you’ll still get a good grasp of what trend forecasting is all about.
Here are some key questions you need to ask yourself: How much money will you be spending for your business next year? Will there be a good return on investment after all of your business expenses? Will your business be sustainable for the long term? Such queries are not that difficult to answer if you’re making a genuine effort to be more attentive with what is likely to happen in the foreseeable future. That being said, here are some of the most essential pieces of advice you need to know to learn the skills of business forecasting.
Be prepared for absolutely anything
At the end of the day, all businesses need to break even if they intend to survive a highly competitive world where consumer loyalties can change at any moment. This is why you should always make concrete plans in the event that there will be tough times ahead. And you read that right: plans, as in, plural. You can’t just rely on just one backup plan in case things go down south really quickly. The smart move would be to formulate multiple fallback strategies so that if one fails, you’ll be able to rely on other escape routes too.
But on the positive side of things, you should also be confident enough to make projections that predict desirable outcomes for your business. Preparing for anything and everything means you must be ready to face a windfall of good luck should it come your way down the road. This way, you won’t be overwhelmed with the amount of revenue you’ll be receiving because you already knew beforehand that it will happen. Furthermore, preparing for positive forecasts means that you’ll know exactly what to do with the delievered results.
Always reinvent whenever necessary
When you’ve already made a forecast for the next time frame of your business, it’s strongly encouraged that you keep updating it as time passes by. There is a tendency for your initial predictions to go stale or inaccurate if you stick to it fervishly rather than amending it based on frequent seasonal changes. In fact, doing forecasts only once a year is not advised, especially if you are aware that the global economic climate is uncertain. Therefore, it’s in your best interest to revise your expected outcomes if it is necessary for you to do so.
While the creation of new or amended forecasts may be tedious and time-consuming, it’s a small price you have to pay if you want to reach the desired goals that will pay off handsomely in the end. Moreover, the process of frequent updating will allow you to avoid any potential mishaps that might be the result of the predictions that you started with. You must always be confident every time you make decisive changes so you’ll move forward knowing that you made the right choices, and that you’re also going in the right direction.
Update your investors and clients
When you have a group of investors who’ve spent a considerable amount of money into the creation, promotion, and maintenance of your business, then you need to give them reassurances that their investments aren’t wasted. As such, you must give your investors a heads-up when you’re giving them your current fiscal projections for the quarter or for the year. To be on the safe side, it’s best for you to be low or conservative with your forecast so that investor confidence will be high if your business manages to exceed expectations.
Outside of the boardroom, another group of people you need to inform with regards to your forecasts are your clients or consumers. Even though they may not be that interested in business talk, they still want to know whether you’re doing well with your performance as a brand. Above all, you must never let them lose faith or confidence in your business because if they see that your forecasts are looking quite grim, then chances are that they’re unlikely to stay with you for the long haul and may switch allegiances to another company.
Stay ahead of discount planning
Whenever you intend to do discounts for your products or services, there are two ways to go about it: promotional offers during the peak of a current sales season, and price markdowns as a sales season transitions to a new one. Part of your forecasting duties involve the planning of seasonal discounts since such things can affect your overall annual revenue. Bear in mind that just because people flock to your doors because of a promotional sale, discounts still decreases the original retail value of your overall inventory.
Even if you know that your sales are the strongest whenever discounts are being offered, you have to remember that you should always defend your cash flow and gross margins every time you plan on doing clearance markdowns. As such, you should always take stock of your monthly inventory so that you know the exact amount you want to have on hand, and with this information, you’ll be able to figure out a decent markdown percentage that will be attractive to the eyes of your customers and friendly to your business accounts.
Closely involve your sales team
Because business trend forecasting primarily involves fiscal calculations, it’s best to have your sales team collaborate with you in this situation since they are the ones who are on the frontlines of keeping your business afloat. This is highly advised since the people who work in the sales department have the knowledge and insight on how to drive the numbers in an upward direction. Having other voices in the discussion will also give you the opportunity to make sure that your company’s forecast is a collaborative effort rather than a solo one.
Make it a habit to have regular conferences or meetings with your sales team at the start of each fiscal year—as well as every quarter of the year—so that you can all huddle and exchange ideas and opinions. This is the time where you can talk to your colleagues about how you performed in the past in terms of what you did right, and which areas that your company needs to improve upon. Once you’ve all come to a mutual decision regarding your projections, then the information will be disseminated to the rest of the company.
Pay attention to consumer activity
The foundation of every solid trend forecast is not just knowing your business from the inside out, but also having a firm understanding of consumer behaviors. You really don’t need a crystal ball or read tea leaves in order to gauge what your customers like or don’t like with every passing sales season. All you need to do is to look at the sales reports and records and figure out which products or services they keep coming back for more. This way, you’ll know exactly how to structure your inventory and save money in the process.
If you want your predictions to be as close to accurate as possible, then you need to be very attentive with consumer trends. Aside from what services and products your customers frequently get, you should also know when they make their payments, how they pay for their purchases, and what specific age groups are more responsive to your marketing and branding. Gathering intel will prove to be beneficial in the creation of your projections, so make absolutely sure that you keep yourself abreast with consumer activity at all times.