What are forecasting techniques?

In Addition to Above,

Knowing the Business

Just keep in mind the different type and no. of products you have to sell and the associated costs, you have to incur to manufacture.

or in Service industry, the number of services you have to offer and the possible treatment, experiments, lab tests you have to do go through in advance for calculating the near figures.

Seasonal Fluctuations

Look at the whole, your business history is the same in whole year or it fluctuates because of religious or national festivals or long vacations.  Adjust the seasonal fluctuations.

Benchmarking

Do the benchmarking with the available competitors with their strength, tools they use to control the cost or the means they will utilize to offer the product. Coordinate with the marketing department for analyzing the market figures and share of product or service which you are going to offer.

Keep to analyze and control the variances with feeding knowledge to stakeholders.

Master Budget

The easiest way to forecast the performance of your business is to create a master budget based on the company's recent performance. This static financial document provides a one-time snapshot of how you think your business will do during the coming year. In addition to using income and expense data from the last year or several, project performance based on trends and knowledge. Discuss with key personnel the anticipated performance of current and new products or services, changes in the marketplace and other factors that might cause changes in your company's results compared with last year. Forecast your final budget using your recent performance numbers and agreed-upon projections.

Real-Time Projections

Create an additional column of information in your master budget that projects your annual performance using data as it occurs. For example, using your first three months' sales figures, you might be able to more accurately project your year-end totals than your static master budget does. As you enter data into your master budget, divide the "Total" column results by the number of months that have passed to get your average monthly income and expenses. Multiply the numbers in this column by12 to project where you will end the year if these numbers continue at their current levels.

Overhead Projections

You will be able to more accurately project your profits if you know how much it costs to produce each unit of a product, meal served or hour billed. In addition to the hard costs of making a product or providing a service, overhead must be considered as part of the cost of selling it. If you have $1 million worth of direct expenses to make a product, and it costs $2 million to run your company, your actual cost to sell each unit will be $3 each. Knowing your overhead will help you project your margins and profits if you adjust your production numbers. Use your master budget to identify all overhead costs, such as rent, insurance, utilities, phones, office staff and marketing to determine the company's overhead costs. Divide this total by the number of units you produce to determine your overhead costs per unit.

Multiple Scenarios

To project how different levels of sales and different prices will affect your bottom line, use the same master budget to create three scenarios. In addition to the initial annual projections you and your team make based on your recent history and anticipated market conditions, create two more budgets that show a lower amount of sales and a higher amount of sales. This will let you project the impact on your business to see where you can make adjustments. Create two more budgets that forecast your performance at price points higher and lower than your current prices. Adjust your sales numbers to reflect the impact your two prices changes will likely have. This will help you project sales, profits and margin changes. If your sales rise in response to lower prices, your profit per unit will increase as your overhead cost per unit goes down

 well forecasting techniques help organizations plan for the future. Some are based on subjective criteria and often amount to little more than wild guesses

We mostly follow :

• Delphi Technique
• Subjective Approach
• time series forecast

agreed with all