Forecasting

Forecasting

Forecasting Business Consultants in Phoenix

Accurate forecasting is a vital planning tool for all types of companies, from SMBs to nationwide corporations. Forecasting may influence nearly every business decision you make over the next year or more, from hiring and production to expansion plans or service line rollouts. 

Not every business has a dedicated CFO or internal team dedicated to performing things like forecasting. Just because you don’t have a dedicated in-house financial expert doesn’t mean you can’t benefit from forecasting. Our business consultants in Phoenix excel at developing accurate forecasts to help our clients make wise and informed decisions throughout the year.  

Why Do Some Businesses Struggle to Calculate Accurate Forecasts?

A fundamental pitfall that can lead to forecasting results that don’t reflect reality is relying solely on financial analysis rather than operational outcome indicators. Financial inputs are an important part of any forecast, but attempting to predict revenue or your bottom line without taking into account real-world operational factors that may affect your business can compromise your forecasting results.



At H&H Accounting Services, our business consultants combine their extensive knowledge of the Phoenix business market with their intimate understanding of finance and accounting to develop forecasts based on a diverse array of relevant variables. We want to make sure the results we help you find track as closely to reality as possible, even in a highly unpredictable world.


Can You Always Rely on Forecasting to Drive Your Business Decisions?

No – and any business consultant who implies every business can develop a fool-proof roadmap based on forecasting is not being honest. There are businesses with incredibly steady demand and fixed expenses that can make reliable predictions years out, but they are the exception, not the norm. 

Most businesses deal with:
  • Demand volatility
  • Releases of new products or service lines
  • Marketing and lead generation
  • Changes in commodity pricing
  • Supply chain bottlenecks
  • And much more

Even for businesses with many unknowns in their future, forecasting can still be an incredibly important tool. It can allow businesses to discover potential challenges in advance, like supply chain inelasticity, to ensure they make adjustments to allow for volatility. 

Businesses can also take measures to smooth out demand or better time product rollouts and marketing efforts. There are always lessons to be learned from forecasting, even if you shouldn’t treat them like a time machine.  

Qualitative Versus Quantitative Forecasting 

Not every important operational variable that will impact a business’s success or valuation is objective or easily quantifiable. Industry health, the skill of employees and the potential success of R&D efforts are all subjective (qualitative) and can’t be perfectly predicted with spreadsheets and P&L statements. 

Forecasters who understand the value of soft data can use qualitative analysis through a variety of exercises, such as examining a business and its industry competitors from the perspective of a customer. What is the competitive advantage of choosing your business? Or a competitor? How can you improve the customer’s opinion and your potential outcome? 

Quantitative analysis does rely on objective measures to develop statistical models and measurements to make predictions about market and customer behaviors. Anything that can be tracked numerically can be analyzed quantitatively, and the more historical data that is available, the more can potentially be gleaned about future behaviors. 

Making Sure Your Forecasting Is Informed By Reality

Phoenix businesses don’t want to put all their eggs in a basket of unproven integrity. Therein lies the difficulty some businesses have with trusting forecasting. The key to using forecasting is working with the right team of business consultants, CPAs and accountants on your forecasts and understanding their limitations.


While forecasts may not provide an exact roadmap of the future, they can help inform your decision making and allow you to make better use of your resources at the right times.



Learn more by scheduling a free one-hour consultation with H&H Accounting Services.


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