Nobody can tell you the future, but only the very skilled can accurately predict it. You may think that ‘accurate’ and ‘predict’ shouldn’t be in the same sentence. However, forecasting is an incredible skill in business, which does exactly that. It’s something that top CEOs will pay happily for, by hiring risk analysts, financial advisors and legal professionals. But so many small business owners don’t see the need to do the same. Granted, you don’t have as much funds to spare as top corporations do. Nonetheless, you should utilise the forecasting skills of those that know specific areas of business, relevant to your enterprise. Here are a few ways you can use the skill of forecasting to further your aims and build on your success.
The Delphi method
Some might say that business experts are just glorified opinion merchants. However, even if you don’t agree with one particular business expert, a compilation of many experts will give you a mean average of an opinion. This can then be treated with more respect, as you can gain the perspective of many and create a middle of the road plan which satisfies all possible angles. This is called the Delphi method. It’s a process whereby you send out your devised questionnaires and you then gather the responses. When it comes to the compiling of answers, you must add each expert’s viewpoint as anonymous. This is so, no name and or personality is attached to their answer, which could sway opinion.
This group response will give you a plethora of views to your challenges. However the trick is to spot patterns in their answers. Notice concerns that keep repeating and then aggregate the ones with the most recurring mentions. The final result will be a ‘true consensus’ as you have fairly weighed up all the answers and created a comprehensive list of predictions.
Giving your financial advisors and accountants the right kind of software is key to allowing them to make mathematical predictions. With the proper Excel training, your employees will be able to use this software for forecasting and data analysis. Are you trying to expand your business into a new territory and want to know what the most realistic number is for the cost? Then give your accountants and financial advisors time to add up all the possible items, challenges and needs of your business, and then extrapolate the cost figure according to the scale of your operation.
This will hopefully give you an accurate picture of your expansion regarding time schedule. Month one, two, three, etc, will all have their separate costs calculated as time goes on. The financial team will calculate local costs and try to predict patterns such as seasonal consumer habits, potential tax hikes and competitive pricing challenges when taking on a competitor.
Risk analysis of geopolitics
Risk managers aren’t just skilled at predicting the most financial danger posed by external forces. They can also predict when government policy will damage your ability to trade with clients. If you’re an exporter or importer, you will need to utilise the skills of risk analysts that are versed in geopolitical and economic risks. Perhaps a country that you trade with, is simmering with news of a potential civil war. A political risk analyst will study the various factors that could both cause and nullify this from happening. They will then advise you on what kind of changes you should be making, just in case the worst case scenario occurs.
Your economical risk analyst will inform you of the potential losses and try to predict what will occur to the economy of the nation you’re trading with as well as the impact on your business the longer a crisis situation goes on. It’s important to know what your options are and how you can carry on doing business even when there is political tension in the air. The risk analyst will show you alternative options such as different ports for your containers to be brought in and unloaded. If certain roads are cut off, then alternative routes have to be found for the logistics teams in delivery trucks. Micromanaging issues such as these, will be far better tackled when you have the predictions of a skilled risk analyst.
Forecasting is not a dark art of some kind. It’s a skill which every business owner and leader needs to achieve the most success. You will be one step ahead of every bump in the road, allowing you to minimise unavoidable losses and maximise situations which would otherwise entrap you.