Early business forecasting was more of an intuitive initiative, but the 1950s brought formal approaches that advocates claimed improved an organization's effectiveness. Forecasting anticipates possible difficulties within a business plan and facilitates the development of contingency plans before an incident occurs. The basic premise of corporate forecasting involves predicting possible future events; strong strategic plans develop a business for ultimate growth.

Forecasting for strategic planning requires detailed information from departments that support the strategic plan, therefore, every area of your business plays a role. Each of your employees has an area of expertise, so use their knowledge as a valuable resource to add substance to forecasting through strategic planning. Regarding additional forecasting for strategic planning basics, consider the following foundations:

1. A difference exists between business planning and forecasting.

2. Business forecasting methods develop slowly.

3. Processes of strategic forecasting vary.

Action Steps
The best contacts and resources to help you get it done

Know the difference between business planning and forecasting

Strategic plans express an intended outcome, and business forecasts predict results from plan implementation. Planning and forecasts are interrelated and dependent on each other for accuracy, yet each has separate operations. The circle that develops begins when strategies, depending on forecasts, become a plan, and forecasts result from that strategic plan.

I recommend: Marketing @ Wharton offers a fundamentals paper that goes into great depth about the relationship between forecasting and strategic planning, while Herb Rubenstein Consulting offers information about the process overlap between strategic planning and forecasting.

Examine the brief history of forecasting for business

Corporate forecasting, or any other level of business, began with tracking occurrences within one's own organization to forecast possibilities. When unexpected developments occurred, researchers revisited their forecasting method to include the element of change. By the mid 1970s, researchers included external environments on a small scale by focusing on internal trends and issues, which slowly expanded into today's methodology that accommodates a shift in values and attitudes.

I recommend: In the ERIC Clearinghouse on Higher Education article, a review of evolution in business forecasting is available at the top of the page. For a historical perspective on the development of business forecasting, read the article by Walter Friedman.

Review process steps for business strategic forecasting

The process for business forecasting allows for freedom of style. One set process model has yet to fit all situations, but there are some basic stages that need mentioning. Some of the important stages include: identifying the problem, considering economic theories about the problem, deciding what data to collect, note possible assumptions, choose a forecasting model, prepare the forecast report and verify the viability of the report.

I recommend: For examples of forecasting processes, see iSixSigma and Baylor University. A case study showing the process of forecasting in action is available in a working paper by Rogelio Oliva and Noel Watson.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Pay attention to business forecasting solutions available from businesses in your industry to avoid repetition of others' mistakes.

Happy New Year! It’s the perfect time of year to review where your business has been, and where it’s headed in the future. It’s time to re-evaluate the measures you have in place in terms of equipment, products, services, technical needs, business plan, and employees. Do you really need that high-end copier with the costly rental fee, or would an affordable all-in-one machine suffice? Are you outgrowing your phone system and could benefit from a PBX system? Are you having computer problems because you haven’t installed software upgrades in a while? Are your employees overworked and stressed out, and could you improve their productivity by hiring additional workers? With a thorough review, you’re sure to detect ways to cut costs, streamline operations, or fine-tune your products and services. Remember, if a business does not change and update with the times, it can quickly be left in the past.

The top three things to know about evaluating your small business for the New Year:

1. Proactive measures in updating and keeping equipment current save you time, money, and effort, while “reactive” emergency updates or repairs can be expensive and inconvenient.
2. Updating the services you buy means making sure you’re paying a fair price, and getting the most for your money.
3. Evaluating everything from your business plan to your business’s products helps to ensure you’re still heading in the direction you want to go, and you’re doing it in the most efficient manner possible.

Action Steps
The best contacts and resources to help you get it done

Follow your business plan

All businesses should have both short- and long-term business plans. If you do not have a good business plan in place, how do you know you’re on the right road to achieving your goals? Now is the time to stop and check the map for directions.

I recommend: Without a business plan telling you where you’re going, you’ll be lost in no time. For more than 500 business plans, plus a wealth of information, go to Bplans.com.

Focus on financial systems

Finance is one area the small biz owner can’t afford to let things slide, and this often means financial systems need upgrading each year. Make sure that if you DO decide to upgrade, the system you choose helps you save time and money, and doesn’t require a CPA to operate it.

I recommend: QuickBooks 2007 takes QuickBooks 2006 to the next level, offering automatic classification of business expenses, improved Shipping Manager and data back-up, Google Desktop and Google marketing tools (some free, some not). Other subscription-based add-ons include the Payroll Center, and QuickBooks Time Tracker. Not sure which version is best for your business needs? Then check out this QuickBooks Comparison.

Power up your Web presence

There are still some small businesses whose online presence is minimal, and some who –gasp! –do not even have a Web site. Make 2007 the year that your Web site is given priority status – or you may find yourself lost behind your competitors.

I recommend: Not sure how to start up or build your site? No problem – go to the Website Pros, a national, full-service site developed especially for small business people. They’ve built more than 400,000 Web sites, and whether you’d like them to do the work, or you just need some pointers on building your own site, they’re the ones to guide you through the process.

Assess equipment and services for replacement or updates

Remember that old adage, “If it ain’t broke, don’t fix it”? That applies here. Evaluate your current office equipment, supplies, and services objectively to determine which current measures – whether they’re phone, equipment, or business supplies – are inefficient, outdated, or nickel-and-diming your business to death.

I recommend: At BuyerZone, you can request quotes from multiple dealers for a number of small business systems, including telephone systems, security services, technology, Internet, collection agencies, and much more. For the everyday goods and small business needs, check out the amazing NEBS, which serves more than a million small biz owners a mind-boggling assortment of business-building items – from checks to promo products and workwear, to Web-based services and management tools.

Upgrade your technology

The technology upgrades are endless, but some products – such as the updated Microsoft Office 2007, and the company’s Exchange Server – are must-haves for those who want to stay on the cutting edge to keep their company ahead of the competition, with efficient computer-based offerings.

I recommend: Just in time for the New Year, Microsoft has several new products available for your small business, including Office 2007, Exchange Server 2007, and Windows Vista. In Exchange Server 2007, Microsoft has increased this messaging server’s security, the mobile workforce, and regulatory and policy compliance in this upgrade.

Re-evaluate health insurance offerings

Health insurance is one of the most important benefits you can offer your workers. Unfortunately, the costs for such plans are often exorbitant, even though the benefits are often vital to the small business’s long-term success. Make it a point to evaluate your health insurance plan each year to ensure that it’s still the best one for you.

I recommend: For more info on health insurance and the small business, check out the many great resources about how to choose a plan, which benefits to offer, and how to negotiate health plan contracts, go to the U.S. Chamber of Commerce Small Business Center: Employer Toolkit.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Update your financial and tax files once a year, putting last year’s files in storage. Remember to keep your tax and supporting records for at least six years.
• •  Do a SWOT analysis on your business’s Strengths, Weaknesses, Opportunities, and Threats, and then address those things that need it.
• •  Evaluating your current business systems and services does not mean making sure you have the most recent technical doohickeys; it means getting what your business needs to help it run more effectively.
• •  Don’t forget to evaluate where the company’s money, time, and effort has gone over the past year to determine if there are areas that need more or less attention.
• •  Don’t assume that a system or piece of equipment is useless if it just needs a new part, or long-overdue servicing, and make a resolution to do proactive maintenance on your business vehicles, systems, etc., so you can tackle little problems before they become big problems.

Business planning and forecasting is important part of a business's long-term strategy. Corporate forecasting helps businesses examine the current state of its operations and financial plans. After an evaluation, businesses use company forecasting to set financial, operational and development goals for the next year or forecasting cycle.

Business forecasting covers a wide range of management topics, so it is important to educated yourself on all aspects of your business's financial and operational systems. Forecasting for strategic planning education and training can come from many sources including:

1. Training programs for financial and operational management.

2. Online courses that offer ways to improve management systems.

3. Strategic forecasting reference tools.

Action Steps
The best contacts and resources to help you get it done

Explore online courses that teach you how to create business forecasts

Online courses are the quick and easy way to learn about business forecasting, the tools needed to implement business forecasting in your company, or how to improve on the forecasting system you already have in place. Most online training is provided by financial institutions that offer expertise in the field of company projections.

I recommend: The Financial Management Training Center provides online courses with supplemental written learning materials. It offers final exams so you and your employees can review what you've learned. The University of Phoenix provides an online course that covers strategic planning specifically for the health care industry.

Attend seminars that teach skills in business forecasting methods

Seminars are a great way to learn specific skills in business forecasting. Most seminars do not take more than a day, and will provide you with the latest news and technology as they pertain to strategic planning and forecasting for your own business.

I recommend: PSMJ Resources offers many seminars, workshops and additional online publications on strategic planning. The Institute of Business Forecasting & Planning offers an on-site seminar that provides efficient models on strategic planning and forecasting.

Learn to create forecasting solutions with resource tools

Learning how to create forecasts is important. But to successfully compile this information in to a usable product, tools and resources are available. These resource tools include consultants, software programs and financial calculators. Along with forecasting courses, plan for training to use these resource tools.

I recommend: The University of Rhode Island offers a course in strategic business forecasting using computer applications, where no previous computer experience is necessary. Technology Futures provides in-house workshops to teach businesses how to utilize technology for planning and forecasting.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Business forecasting methods are constantly changing according to demand for a business's product, the quality of its employees, and the state of the financial markets. To keep up with changing models, plan to take refresher courses and seminars when available.