In the world of business, being able to predict future sales and other numerical information is crucial for success.
Any business that wants to accurately assess its upcoming needs and make preparations accordingly needs to be forecasting future sales and trends.
While this might sound complicated, it doesn’t have to be. In fact, The Excel Experts know that the best tool is one you already use regularly: Excel!
If you use the program correctly, you can easily forecast future trends in numerical data, including potential sales, future spending and more.
Here are some of the many benefits of data forecasting using Microsoft Excel and how you can get started.
What Is Data Forecasting?
Data forecasting is the process of using past information to predict future trends. While you won’t know exactly how many sales your business might make in the next month, based on the past month and any other information you might have, you can speculate.
Using data forecasting, your business can prepare itself for any potential spikes or drops in sales or review upcoming expenses to ensure that it is aligned with your company’s goals.
The more past data you have, the more accurate your predictions can be, as you’ll have more information to work with.
Data forecasting is an ideal way for businesses to make the most of their data and prepare for any upcoming changes that could affect their finances and other business-critical departments.
Why Use Data Forecasting In Excel?
Microsoft Excel is an ideal solution for data forecasting, as most businesses already use the program and are familiar with it.
That means you won’t have to pay for additional software for your data forecasting or learn how to use a new tool.
Excel has been specifically designed to offer a wide range of data management tasks, including reporting, automation and workflows, as well as forecasting.
As a result, you can use Excel for all your business-critical data management, including data forecasting, meaning that everything is in one place, and you only have to learn to use one tool. Every business is unique, so Excel is versatile, and you can even get bespoke tools made by experts like ours to help you make the most of its data forecasting capabilities. Here are some of the additional benefits of using Excel for data forecasting.
1. Can Predict Future Sales
By using past data, you can predict future sales for your organisation. You can then use this data to ensure that you have the resources ready to fulfil orders when they come in.
If you use Excel to manage your sales data already, then you won’t need to migrate your data to a different software if you use Excel for your data forecasting.
2. Can Predict Inventory Requirements
When you know how many sales are due, you can review your inventory and ensure that you have everything on-hand and ready to fulfil your orders. If you keep inventory stock details on your Excel database, then you can use this data to forecast future order requirements and ensure that you always have everything ready.
3. Can Predict Consumer Trends
With sales forecasting information, you can predict future consumer trends over the months and years to come. For example, if you notice that over the past 2 years, sales of a particular product have risen around Christmas, then you can use this information in the run-up to the festive season to drive your marketing and distribution strategies.
What Are Future Values In Excel?
The future values function in Excel allows you to work out the future value of an investment. The value is calculated using a consistent interest rate, which you can input yourself. Future values are useful for understanding how much an investment asset will be worth over time.
Using Historical Data For Predictions
Past data can be used to predict future trends by calculating how certain trends will progress over time. Using a specially devised formula, programs such as Excel can work out how data will change in the future.
These formulas can be created to your unique business specifications to improve their chances of producing accurate predictions.
Forecasting Statistics
Forecasting statistics is the practice of predicting, based on past trends and known upcoming developments, how specific markets will behave. These might include your corporate industry or one that’s connected to it, such as the housing market in your region.
This information can help you to understand how your market is behaving and what external pressures could affect your organisation moving forward.
Highlighting Linear Trends in Excel
A linear trend is a statistical approach that helps you to see how data would react if a specific trend were continued over time. You can find this information in Excel by using a data graph for your forecast and selecting the + sign on the top right of the graph.
The Excel Forecast Function
The Excel forecast function is found in the Data tab at the top of any Excel worksheet. All you have to do is highlight the columns of data you want to use and then click Forecast Sheet.
This button will open a help window, which will allow you to create a data forecast sheet for your chosen columns.
When you create your forecast, you can choose a line or column chart to give you the perfect visual representation of your forecasted data.
Once you’ve chosen the right option for your business, you can click the create button to make your forecast.
After you’ve made your Excel data forecast, you can customise it using the Options tab to create the right solution that shows you everything you need to know.
Why Businesses Should Utilise Data Forecasting Using Excel
1. Sales
Sales forecasting can help your business prepare for potential busy periods and make the most of quieter months, meaning that you can maximise your time and resources. It can help you to plan your hiring strategies and improve inventory management, meaning that everything runs as smoothly as possible, even during busy periods.
2. Data Analysis
Using data forecasting, you can analyse your information and make the most of it. You can review the current trends in your data and how these could be extrapolated to predict future trends and business developments. You can make the most of the information you have and get it to work for your company.
3. Modelling
Using forecasted data, you can build data models that will help your business to understand future trends and prepare accordingly. With Excel, the forecast data charts can act as a data model that can help you to understand future trends for your organisation or market.
4. Fill In Missing Data
Using Excel’s data forecasting tool, you can fill in any missing data sections by going to Home- Editing- Fill- Series. You can then fill in any gaps using the formula to predict how these gaps can be filled. This will save you time and help you to predict future data trends.
5. Discover Seasonality Patterns
With the help of Excel data forecasting, you can understand seasonal patterns in your data. All you need to do is to sort your data by date, and then use the data model to review how the data changes through each season. You can then predict patterns during certain seasons and make the most of them.
Conclusion: Why Businesses Should Consider Data Forecasting in Excel
As this article highlights, businesses should consider using Excel for data forecasting because of the tool’s versatility and flexibility. Every business has unique data forecasting needs, and Excel is adaptable, and the formulas can be edited to meet any requirement.
Using data forecasting in Excel can be challenging, but The Excel Experts can help. Check out our blog to find more tips on how to make the most of Excel. If you want to find out more about our services and how we can help you make the most of Microsoft’s popular data management product, then get in touch today.
FAQs
Forecast data can be used for a variety of applications, including sales, marketing, staffing, and inventory management. You can predict what will happen in the future based on past information and make the most of the information at your disposal. It can also be used to predict potential trends, which could shape your future business practices.
Excel is a great solution for data forecasting as it can allow you to store and review your data in one place. Your team probably already uses Excel, so you won’t need to migrate your information to a new tool, and if you already have a Microsoft subscription, then you won’t need to pay for another tool.
Forecast accuracy is the degree of accuracy of your data predictions, and this is important as it will affect the way you use your information. If your data forecast is inaccurate, then you won’t make the right decisions using it.
The Excel forecast function is only as accurate as the data you provide it with, so you should try to use accurate information and check your data for repetitions or missing figures before you run your forecast. No data forecast is 100% accurate, and unexpected developments could occur, but Excel’s forecast is designed to offer you a clear picture of the future for your business.
