A financial forecast of any business is prepared by analyzing the past data of the company and with the help of this information predicting the financial position of the company for the future. Jonathon Karelse who is also a co-founder and a partner at NorthFind Partners says Financial Forecast is not only a prediction of your business financial condition, but it can also assist the businessperson in taking significant business decisions. For example, a company can use its own past sales information to understand how much will be the sales in coming months and according to that, they can start with the productions which will save them from producing extra units of their product. Forecasting helps a businessperson to identify what are the risks which he can face in future so that they can take necessary precautions prior. Also having a business forecast planning can help you by informing you in advance about the resources which you will require to meet the goals.
In one of the recent interview of Jonathon Karelse, the co-founder and a partner at NorthFind Partners Karelse said. Financial forecasts can be both qualitative or quantitative. A qualitative strategy of making an economic forecast includes collecting data that cannot be measured, the best example of Qualitative approach would be consumer’s views about the new pack for a product that is being revived to the market. Whereas the other method of making a financial forecast involves using the past data to predict the future results of a product, i.e., a Quantitative way added Jonathon Karelse.
Jonathon Karelse also said that the Qualitative methods of financial forecasting are helpful when a brand-new product is launched since there’s limited or no past data available. For example, a company is launching a brand new product in the market they have to plan their strategies using the Qualitative method of Financial Forecasting as the product is new in the market and there is no past data available from which you can understand the demand of that particular product. In this scenario, you can also make in-depth market research or can check with your competitors if any. The company can distribute some sample amongst the consumers to record their views on the product.
On the other hand, Quantitative methods of Financial Forecasting uses the information to predict what will result in a future period. The Quantitative techniques can be used to prepare the sales forecast of a product or predict the economic growth of the company. In some recent articles on Jonathon Karelse’s official website, he said that Financial projections are made by knowing the past trends and using this data to predict what might happen in the future.