How to Make a Business Forecast Along With Examples

Business Forecast or business exposure gives the company the cumulative details they use to project their future growth. Financial and business analysts evaluate income, expenditure, market trends, and current product demand and use data to make important operational decisions such as investing or seeking funding from outside.

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In addition, businesses can use various methods for estimates to predict what their operations are in the next few years.

In this article, we discuss what business forecast, the forecast method used by the company, and how to make business forecasts that can help plan business development in the future.

What is Business Forecast?

Business Forecast or business forecasts are a tool used by businesses and organizations to make decisions about financial planning, budgeting, and estimating future income growth.

Businesses use forecasts as a way to help predict the results of sales and profit growth in the future using previous data. Businesses use this forecast to make important financial and operational decisions.

What is the method in Business Forecast?

There are two basic types of forecasts, qualitative and quantitative methods as described below.


Qualitative forecasts are short-term forecasts that rely on observations and opinions from consumers and experts. In this type of this method you will see the following basic approaches:

  • Market research involves the analysis of consumer polls and surveys.
  • Delphi research involves analyzing expert polls and surveys.


Quantitative forecasts are long-term forecasts that utilize historical statistics and patterns. In this type of method you will find the following basic approach:

  • The indicator approach examines the relationship between certain indicators, such as the level of unemployment and economic health.
  • The econometric approach considers past relationships between certain indicators for a certain period and makes assumptions based on how these variables will likely change.
  • The time-series approach is a popular and inexpensive approach that researches historical data to measure future predictions.

Why is Business Forecast important?

Business forecasts are important because it gives insight into their future profitability. In addition, forecasts can allow businesses to:

Develop a structured plan

One of the most important aspects of the business forecast is the ability to provide business to develop a very structured plan for income growth.

With the application of consistent forecasts, companies can evaluate their market future needs and create sustainable operations that meet these needs in the future.

This means that businesses can project future revenue streams that enable them to form an action plan that makes the company closer to future income goals.

Make an accurate budget

Forecasts allow businesses to analyze current expenses and use this information to make the realistic budget used by the company to manage cash flows out.

With accurate estimates, companies can project operating costs in the future, such as resources, materials, and staff members, and make a budget to manage costs and obligations.

Expenditure and income analysis

Making business estimates allows companies to evaluate their current expenses and margins so they can develop a budget to better manage operations. With insight into forecasts, businesses can make plans that include future income needs and how future income will affect operational costs.

Evaluate market trends

Effective business forecasts to analyze what customers are most purchased and evaluate this sales data to make predictions about market trends in the future.

This is an important aspect of forecasts because it can provide business insights about market demand projected for their products and services. In addition, financial analysts can use this data to establish short-term and long-term income goals.

How do you make a Business Forecaster?

Whatever method is used by businesses, there are several key steps to make business estimates. These steps are described below:

1. Set the base for comparison

The company generally conducts an initial analysis of its current operations, financial status, and economic status. This includes evaluating the position of industry, popular products or services, and financial and business operations. The following example illustrates how business completes this process step:

Assume Quick Tech Providers (QTS) is an electronics company that sells various computers, cellphones, and other devices. They create business estimates to project growth in future income. A business analyst evaluates the following information:

Industrial state: 

  • Number two (behind the large chain office equipment store) in a profitable electronic provider company in the geographical area
  • Additional service providers for customers who buy from stores (including system security, network assistance, problem-solving, and support needs)
  • The most successful product is a smartphone, smart TV, and tablet, laptop sales appear right behind

Current economic status:

  • Current increase and projected in new models and updated due to technological advancements
  • The current price point reflects the market retail value

Financial position:

  • Current income growth is 3.5% when introducing new products in the store
  • Consistent profit margins for the past three years
  • Current recurring expenses: $ 410,000,000 per month
  • Operating costs: $ 320,000,000 (employee payroll), $ 52,000,000 (overhead), $ 38,000,000 (liability)
  • Current income acquisition: $ 4,025,000,000 every three months, consistent between 2018 and 2020

2. Set a long-term projection

Using data from analyzing current positions, the business sets long-term goals. Depending on the nature of the organization, this long-term goal can be income-based or expansion-based. Generally, business estimates will include both aspects. Using examples from the previous step, assume the company sets long-term goals:

Industrial projection:

  • Business operations may be far behind the competitor's shop due to a lack of online shopping options
  • Making online shopping platforms for companies can help improve industrial advantages, especially with taking on the same day or free shipping to the store

Economic projection:

  • The increased population of technology workers can produce an increase of 2.5% to 4% in a customer base
  • With the current smart technology request trend, Davis technology provider must experience a moderate growth of 2% in product availability

Financial projection:

  • Projected revenue growth continues at 3.5% (and up to 4%) when introducing new products in the store
  • Repeat cost projection and operational costs: $ 410,000,000 per month, there are no additional costs expected
  • Details: $ 320,000,000 (employee payroll), $ 52,000,000 (overhead), $ 38,000,000 (obligation) and no expected costs
  • Long-term income objectives: $ 4,400,000,000 every three months, between 2020 and 2025

3. Review, measure, and compare estimates

Throughout the forecast process, businesses compare any irregularities between their projections and actual performance results. Measuring growth and progress towards long-term goals allows the business to make improvements in the process and improve and adjust its estimates to reflect sustainable growth. To illustrate this step, use the previous company example:

Annual estimated analysis:

  • The same position with a leading office supply chain locally, similar income
  • Online shopping and inside stores increase influence in the technology product industry
  • The current customer base increased by 2% over the past year (only below the five-year projection)
  • Add monthly payroll fees by hiring three new employees, hoping to see ROI in 1.5 years
  • Revenue increased 1.7%, expected to increase by 2% at the end of 2022
  • The target for 2020 to 2021: Another increase in revenue was 0.5-1% and reducing operational costs by developing a remote support team


That is the complete understanding of the Business Forecast that you might adapt to your business. While many things in business are beyond your control, having an estimate of financial information will help you in making strategies in a better business, and that's the use of a business forecast for your business.