How to Write a Business Forecast

Well-written business forecasts give management staff a clear idea of what will occur within the business.

Businesses do not like uncertainty, yet uncertainty is an inevitable part of all businesses. Having certainty allows businesses to plan for the future and make decisions that maximize profit. Not having certainty means businesses have to guess at the effects that their actions will have on the marketplace and also forces businesses to engage in forecasting in order to make the most appropriate business decisions. These forecasts must often be communicated in a written form so that they can be sent throughout an office in e-mails and reports.

Things You'll Need

• Word processor

Instructions

1. Study data collected through market research, such as sales numbers and surveys.

2. Establish a cause-and-effect relationship between actions that are carried out by the business and the effects that these actions have on the business and the market.

3. Assess all of the things that the business will be doing, such as product creation, advertising and customer-service efforts.

4. Explain the current market situation, such as the demand for some products and services over others. Include data that demonstrates a demand for a specific type of product that the company can bring to the market. Understanding the market situation is crucial because changes, such as an increase or decrease in the purchasing power of consumers, can change how business actions affect sales.

5. Include any expert opinions on changes in the marketplace or changes in the operating procedures of the company. Also, point out the results of any sales simulation forecasting software.

6. Identify what products the business will develop and what features these products will have.

7. Point out where products will be marketed and explain how the product features and prices will appeal to customers.

8. Include data regarding the effects of different types of advertising on sales. This can include data taken from advertising efforts carried out by the company itself and also by other companies. Also include specifically how these advertisements will appeal to customers.

9. Describe the current public image of the company and explain how this might affect sales.

10. Describe in clear language exactly what the business needs to do.

Tips & Warnings

• Forecasts must be data-driven to prove to both business members and investors that trends will continue to generate the same results.

• You can combine multiple forecasting methods to maximize the accuracy of the forecasts.

• Forecasts can never predict the future. Not only are there too many variables, but the business' actions in response to the forecast can affect the future.

• All forms of business writing should remain focused on the goal at hand in order to minimize reading time and comprehension.

References

• BusinessBalls.com: Business Plans and Marketing Strategy
• StatPac: An Overview of Forecasting Methodology