Forecasting for Strategic Planning Basics

Learn about the history and the process of business forecasting and planning

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.

 

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.
Try: 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.
Try: 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.
Try: 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.

 

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

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