How To Improve Your Business's Decision-Making With Accurate Forecasting

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Forecasting Consulting

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Wouldn’t it be great to have an accurate glimpse into your business’s future? This seeming impossibility becomes a reality with business forecasting; by combining current and historical data, you can make accurate projections for future trends and expectations. And working with Pearl Lemon Consulting as your forecasting consulting partner will help you make the most of these incredible opportunities.

What is Business Forecasting?

Regardless of industry vertical, all businesses must prepare for an unpredictable future. Business owners and corporate executives are the ones in charge of resource planning and allocation in order to maximize growth and meet corporate objectives, but it’s a task that is becoming more challenging as the business environment becomes more complex.

Executives in this position can utilize a data analysis technique known as forecasting to assist in developing accurate forecasts of what will happen in the future and to enable the informed and effective allocation of resources. However, as this is a complicated – and often data-heavy – discipline most business owners and executives do not have the forecasting knowledge and experience to go it alone.

Bringing in forecasting consulting experts, like the team at Pearl Lemon Consulting, gives these people access to the knowledge and tools to accurately and efficiently use forecasting to improve almost every area of their business, both now and in the future.

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The Three Types of Forecasting Pearl Lemon Consulting Can Help With

As we mentioned, forecasting makes predictions about future occurrences based on current and historical data, as well as experience and intuition. In a corporate environment, there are three forms of forecasting that are often used to generate predictions about the future, and the experienced forecasting consulting team at Pearl Lemon Consulting can help with them all.

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Sales and Marketing Forecasting

A company’s revenue comes from two sources: sales and marketing. The sales staff generates income by connecting with potential customers through outbound efforts, whereas marketing’s role is to engage audiences with content, targeted advertising, and other initiatives that generate inbound leads.

In order for businesses to make the most of their internal budgeting and resource allocation planning, forecasting sales and marketing income is a critical competency.

Capital Forecasting

Capital forecasting is essentially corporate financial planning. Capital forecasting is used by a company to predict future revenue (based on expected revenue from sales, marketing, and other revenue sources), ensuring that it will be able to pay incoming financial obligations and maximize growth investment.

Capital forecasting enables businesses to better allocate resources and drive growth while maintaining proper cash flow management.

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Why is Forecasting Important?

Forecasting plays an increasingly important role in ensuring that resources-both financial and in terms of personnel – are appropriately allocated for the future when a business grows in size and plans to invest in promoting its products and services.

The capacity to accurately estimate marketing revenue and efficiency has a number of advantages for the company:

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Accurate Forecasting Leads to Better Resource Allocation

To guarantee that they are in a position to meet customer expectations for quality and service, businesses need to know how many sales they are expected to make in a given time period.

If your company makes widgets, being able to predict marketing outcomes can help you figure out how many of those widgets you should make. Forecasting can assist you in figuring out what resources you’ll need to deliver the services if you sell a service.

Accurate Forecasting Leads to Better Budgeting

The ability to predict marketing outcomes can assist your company in determining how revenue will grow or vary over time.

This feeds into cash flow estimates, which can assist you in successfully budgeting for growth. Businesses must try their best to estimate how much cash they will have available and when in order to optimize capital use and minimize cash flow concerns.

Having accurate forecasting reports can also be essential when it comes to seeking outside funding to grow a business. Banks, private investors, and others prefer to see that a business has taken the time to prepare such things and being able to present accurate forecasting reports can speed up funding, as well as increase the amount of financing and/or funding offered.  

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Forecasting Helps You Discover New Market Opportunities

Businesses don’t just need to promote their goods and/or services to new clients; they also need to continue to market to their current ones. Forecasting income from both new and current customers can assist firms in determining their customer life-long value (CLV), which is a helpful indicator for determining marketing ROI and justifying customer acquisition expenses.

Organizations can uncover new and lucrative market opportunities by understanding consumer purchase behavior across the customer life cycle and forecasting can be a significant factor in doing so accurately.

The Three Types of Forecasting

Forecasting can be conducted in three different ways. The method of forecasting chosen will be determined by a number of elements, the most important of which is the forecasting type that is suited to the particular needs of the unique business.

Qualitative forecasting

When data isn’t readily available, qualitative forecasting is utilized to generate predictions about the future as accurately as possible. When there is no data, such as when a product or service is brand new, a company may have to rely on qualitative forecasting alone.

In circumstances where there is insufficient data to develop a solid quantitative model, assessments of target market growth may also require qualitative forecasting.

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Quantitative forecasting

When there is historical or time-series data that can be utilized to influence predictions, quantitative forecasting is used.

Organizations that track metrics and KPIs through the sales funnel can construct complex forecasting and revenue models based on volumes at various phases of the sales cycle and conversion rates for sales and marketing forecasting.

This information is examined for trends and patterns that can aid analysts in forecasting future income and outcomes.

Causal Modeling

Causal modeling is an advanced forecasting strategy that tries to account for all of the causal elements that influence a certain outcome. Causal models are complex, and they can be updated over time as the company strives to develop an appropriate predictive model for a certain study.

Forecasting always makes assumptions that might bias findings, but causal modeling avoids this by tracking assumptions and testing them against fresh data.

Often, to get the best results, a combination of all three forecasting models is used. One of the things that sets the forecasting consulting team at Pearl Lemon apart is their ability – and willingness – to properly assess the needs of each individual client company to ensure that they make use of the right combination of forecasting models to achieve the best possible outcomes.

As your forecasting consulting partner Pearl Lemon Consulting will give you the tools and expertise needed to make the most of forecasting while ensuring that you understand the reports produced, their value, and how to make the best possible use of them.

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Forecasting aids in goal-setting and preparation. It is easier for firms to evaluate how much change, development, or progress will be deemed successful when they have precise data and statistics to work with. These objectives help businesses more accurately assess their development.

The role of a forecasting consultant is to work with an organisation to gather and analyse data, identify trends, and make predictions about future outcomes. This may involve conducting market research, developing forecasting models, and presenting recommendations for action.

Forecasting consulting can provide several benefits, including improved decision-making, better resource allocation, and increased organisational agility. It can also help organisations identify future risks and opportunities and develop proactive strategies to respond to changes in their business environment.

We'd Love To Hear From You!

Interested in learning more about forecasting consulting and the Pearl Lemon Consulting difference?

Contact us today and let’s get that conversation started.