“It is far better to foresee even without certainty than not to foresee at all.”
– Henri Poincare
You can do a simple forecast for your business. It doesn’t take an advanced degree, or an econometric model; it takes common sense and knowing your business.
I’ve been at the front lines of this, as a well-paid vice president in a high-tech market research firm. Our clients paid us big sums to predict market growth, inflation, and trends. I ran some very sophisticated forecasting projects that ended up proving nothing much beyond the fact that the people working in those markets, doing business there every day, know more than the data manipulations. All data-based forecasting is based on using the past to predict the future.
And in the meantime, hard as may be to forecast sales and expenses, it’s harder still to run a business without forecasting them. You need to break things down into meaningful chunks, make some educated guesses, and then follow up with regular plan vs. actual review and revisions.
This chapter has three parts:
- Forecast Your Sales: includes cases and examples. The math is simple. But you have to be comfortable with making educated guesses.
- Budget Your Expenses
- Plan for cash