The importance of business forecast is to anticipate future business activities. It is the confirmation of new borne idea which is on its way to serve the needs of the people. Therefore, it has to be something unique in the market so that people quickly respond to the product. Business forecast is the prediction one makes to envisage their product in the market along with its competitors and customers. In this way, one tend to minimize failure risk and develop business strategies.
For example, imagine you have an idea to start a new business, you also have arranged the capital and other requirement and your product is ready to launch.
In this process you have missed the few vital parts which are: Planning and managing the product; Resources; Location and time.
Before you start, answer these questions to yourself:
- How unique is your product?
- Who are your consumers?
- Do you know your customers behaviour regarding this product?
- Did you observe the market trend?
- Are you depending on single vendor? Is there anyone offering the material at lower cost?
- Is your product seasonal?
- What is your expectation from sales performance?
- Did you identify competitors mistakes?
- Have you made any strategy to overcome the obstacles faced by your competitors?
Last but the not the least, where do you see yourself in coming 5 years in the market?
Your answers will help you have an idea and also to understand the industry, your product’s longevity, customer behaviour, how to address your competition, where you stand in the market, and so on. The business forecast enables you to review historical data and analyse your strategies.
Finance plays a major role in planning; most businessmen keep rolling their profit to make more out it. You might need to consider certain aspects like the cash flow (capital, profit or loan), establishment cost (office rents, bill payment etc.), sales forecast (material cost, manufacture or production cost, delivery etc.). Finally, after all these expenses, you will be able to see the profit. Probably you need to chalk out before to shell your money to meet the cost incurred in the process.
Importance of business forecast:
- Time to launch: Starting from designing campaign, advertising, marketing there are many things to check and cover during any product launch. Business forecast will help you to launch the product in presence of maximum people. The maximum sight the product grabs, is the maximum leverage the product gets.
- Season of the product: If only your product is season based, forecast will help you to understand consumers need and try to launch before the season starts.
- Replenishment of inventory: Make sure you do not overload your inventory from the beginning. Hopefully, your business strategy will define the amount, which will be initially required.
- Resources: Forecast reports states your need of resources too, in regards to human sources and materials. Overloading resources will block your capital which you can spend in other requirements.
- Costs: When you have a business forecast ready, you know exactly where to spend and the figures are already there in your plan. In this way, you are able to control your money and refrain from over spending.
- Contracts: In the process of planning, you know how to make the contracts that will help you to understand the number of days and cost required by vendors and clients.
As you can see business forecast helps you to understand the idea of your product which you want to introduce in the market. Prepare the business forecast as soon as you perceive the idea of the product. So you know how to protrude in the market and also avoid mistakes made by your competitors. The forecast can help you to identify the potentials in your product as well as the opportunities to grab in order to make it big.