Myth Buster: My Business is Too Small for a Forecasting System
Every business with inventory will benefit from a good forecasting system – even businesses that are just starting out. To grow, a business must use some kind of forecasting to determine how much inventory they need. If they have too much inventory, they will not have the cash needed to fund the best-selling, profitable items. If they have too little inventory, they will miss sales and disappoint customers.
Beyond Fulfilling Customer Needs On-time in a Cost-effective Manner
A forecasting system’s primary objective is to fulfill customer needs on-time in a cost-effective manner. Inventory optimization is the holy grail. By having the right product, at the right time, in the right amount, companies can increase their cash flow and optimize their operational performance. Revenue and profits are increased, while markdowns and liabilities are reduced.
However, a good system goes beyond that. It provides a vision into the total business, so strategic decisions can be made for the entire company. Production and staffing needs can be projected. A forecasting system helps determine where marketing dollars should be spent. Insights for new product development can be gleaned.
Work Smarter, Not Harder
A forecasting system enables a small business to work smarter, not harder. By gathering the sales and inventory data for you, the system saves time and often a lot of frustration, allowing for more time to analyze current data. A system that provides alerts when action is needed creates even more efficiencies and helps prioritize workflow. In addition, a forecasting system is more accurate because human error is reduced.
Right From the Start
Businesses that are just starting often feel that it is too early to invest in a forecasting system. That is not the case. It is actually advantageous for a new business to invest in a forecasting system that will grow with them. By engaging with a good forecasting system, a small business can be assured that their sales data will be organized in a way that allows them to get the best analysis. It is also very important that a company’s data is clean and accurate. A good system will have validations in place that check for this. If the data is not clean, it’s garbage in, garbage out – you will never get good forecasting and analysis from your data.
Unfortunately, most small businesses fail within the first five years due to a lack of cash flow. A forecasting system provides a financial roadmap by defining sales goals, inventory levels and profitability. When trends deviate from the roadmap, actions can be taken to get back on track to achieving company goals. Strategic decisions can be made based on what is and is not working. Forecasts help businesses anticipate change, reduce uncertainty and identify the best ways to achieve their goals.
Get Help from Industry Experts
At SAFIO Solutions, we help companies – large and small – with their forecasting and sales analysis. Our team of industry experts have years of experience in demand planning. Our dedication to customer service and educating our clients through the forecasting process makes us unique. We would love to help you – contact us today, or visit our website