Forecasting Services:
The definition of forecasting is to look ahead and predict the future. Suppose you had taken a sea voyage a hundred and twenty years ago. The people in the crows nest were the forecasters trying to see ahead and then relay to the captain a course that would avoid the obstacles that the crows nest personnel observed. The reason that the crows nest is part of our Logo is because they were the original forecasters. Unfortunately, the crows nest technology failed with the voyage of the Titanic as the people inhabiting the crows nest did not see the iceberg that sank the Titanic until they were virtually on top of it. This changed the technology of sea going voyages to radar technology starting with the end of World War II.
From a business perspective, forecasting means looking ahead in order to predict revenues and costs — that is the forecasting of business financial performance. Forecasting, not projections. The current practice in business planning is to use financial projections to forecast financial performance. Financial projections are easy to use, but they are highly flawed for three reasons. First, simple projections employ assumptions that are wrong almost certainly (with 100 percent probability). At Boston Forecasting we call this forecasting by assumption. Second, one of the jobs of the forecaster is to quantify the uncertainty inherent in any forecast. Forecasting that uses financial projections fails to capture the uncertainty inherent in the projection, thus failing to perform one of the functions of the forecaster. Please note that because financial projections give an air of certainty since they fail to include uncertainty does not mean that uncertainty in the projections doesn’t exist. Our forecasts of financial performance contain confidence interval estimates of the forecast. The confidence intervals embed the uncertainty inherent in the forecast.
Budget planning for both producers and consumers is intimately related to the forecasting of both revenues and costs. In order to do budget planning, which is about the allocation of resources, one first must forecast both total revenues and total costs. With the forecast of total costs for producers, one allocates total costs across the list of more detailed resources for producers. With the forecast of total revenues, which is equal to total expenditures in one market for consumers, one allocates total expenditures across the list of products and services supplied by your business and those supplied by your competitors. In allocating resources, one should aim for efficiency, meaning minimum costs for producers and minimum expenditures for consumers. The third flaw of using financial projections is that resources are not guaranteed to be allocated efficiently (do not yield minimum costs or minimum expenditures). Inefficient budget allocations mean higher costs and lower profits for the business firm than do efficient budget allocations (see section on budget planning for producers). Inefficient expenditure allocations also mean higher expenditures for consumers that could exceed consumer incomes. (see section on market planning)
Please download our fact sheet to see what we do and what we deliver to clients as part of our forecasting services package.
We are a 501 (c)(3) public charity. All revenues that we receive that are in excess of the costs of producing and marketing our forecasting services are used to subsidize our research function.