Tips for Business Forecasting

Forecasting sales and cash flow is never a simple task, and the shaky economic recovery is making the process downright perplexing, says Inc. They've compiled the 7 best tips for forecasting this year.

To be prepared to at least break even in tough times, but also be ready for growth, Orb Audio CEO Ethan Siegel makes three different spreadsheets for his high-end speaker manufacturing business, Donna Fenn reports.

“We try to walk the fine line of making sure we are profitable if the worst case comes true, but also have enough product and staff to support the best case predictions,” says Siegel, whose company is based in New York City.

This year, the company grew by 30 percent, with growth fueled largely by foreign sales driven by a weak dollar. “We never would have guessed that we'd grow that much,” says Siegel. “But because we also planned for best case and built up inventory, we weren't caught with our pants down.”

In the short term, Siegel looks carefully at the month-to-month growth rate in the previous year to predict revenue in the coming months. “It's been very accurate for us since speaker sales do tend to follow a seasonal pattern,” he says. “People are more likely to spend their money on indoor entertainment in cold months.”

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