A Forecasting Overview
IN THIS CHAPTER
Knowing the different methods of forecasting
Arranging your data in an order Excel can use
Getting acquainted with the Analysis ToolPak
Going it alone
A sales forecast is like a weather forecast: It’s an educated guess at what the future will bring. You can forecast all sorts of things — poppy-seed sales, stock market futures, the weather — in all sorts of ways: You can make your own best guess; you can compile and composite other people’s guesses; or you can forecast on the basis of wishful thinking.
Unfortunately, none of these options is truly acceptable. If you want to make better forecasts, you need to take advantage of some better options. And there are different ways to forecast, ways that have proven their accuracy over and over. They take a little more time to prepare than guessing does, but in the long run I’ve spent more time explaining bad guesses than doing the forecasts right in the first place.
Microsoft Excel was originally developed as a spreadsheet application, suited to figuring payment amounts, interest rates, account balances, and so on. But as Microsoft added more and more functions — for example, AVERAGE and TREND and inventory-management stuff — Excel became more of a multipurpose analyst than a single-purpose calculator.
Excel has the tools you need to make forecasts, whether you want to prepare something quick and dirty (and who doesn’t from time to time?) or something sophisticated enough for a boardroom ...