Jon Lester Cabanes Assessment 7

IA 2-3 BTLED 1900

Reflections: How Forecasting can contribute to the startup business?

It is critical to create periodic sales forecasts as soon as your startup begins regular sales
activities. A sales forecast is a prediction of your sales revenue for a specific time period in the
future, such as the next month, quarter, or year. A sales forecast is necessary not only to
understand and manage sales activities, but also to facilitate the overall company's growth and
development.

Forecasting is a technique used by businesses to predict possible outcomes based on

historical data. This process is critical for guiding an entity's strategic development. Forecasting
can be used to predict the quantity of customer demand for a company's product line.

Forecasting is done in two ways: quantitative and qualitative. Market research, sales force
estimates, executive opinion, expert judgment, and the Delphi method are the five quantitative
forecasting methods. Furthermore, there are two types of quantitative forecasting methods:
causal models or linear regression, and time-series models, which include the trend projection
method, and time-series models, such as the moving average, weighted moving average, and
weighted moving average and exponential smoothing

Several methods are used to calculate forecast error because accuracy is critical to
obtaining the desired forecast. The mean squared error (MSE) is calculated by taking the average
squared forecast errors of the prior data and selecting the lowest result that is closest to the actual
data. Furthermore, the mean absolute error (MA) is calculated by taking the mean absolute value
of all forecast errors. Finally, we have the mean absolute percentage (MAPE), which is
calculated by taking the percentage of the absolute percentage values of all the forecast errors.

Remember that forecasting is most effective when done by product category, sub-
category, and brand. Forecasting at a more detailed level will involve far too many specifics to
be manageable. If you forecast at a higher level (that is, for a department or the entire company),
you risk capturing too little information for the forecast to be useful. Startups should review the
data and fundamental assumptions on which their sales forecasts are based on a regular basis.

Attempt to systematically reduce errors by determining where previous forecasts went

wrong. Use a healthy dose of realism and logic. Not only will this improve your forecasting
accuracy, but the insights you generate will also assist management in determining which sales
and marketing initiatives produce better results than others. This is linked to the profitability of
your operation and thus benefits the entire organization.