Do you need to produce a sales or market size forecast on a regular basis?
If so, then developing a robust forecasting model will improve the accuracy and reliability of your projections. It will also give you a more solid foundation for your forecast than 'gut feel' and can also be used to provide the starting point for further strategic discussion.
At Leading Edge we can work with you to develop your own sales forecasting model that can look at the effect on your sales of a range of market scenarios such as different levels of housing starts, GDP, construction output or new orders.
If you would like access to a working sales forecasting model in an excel s/sheet then please call us on 01189 797800.
Forecasting – how to approach it
There are three main types of forecast models which can be used separately or in combination:
- Causal forecasting models – based on the relationship between the variable to be forecast (eg sales) and an independent variable (eg public sector new orders, rate of interest or construction output). Actual or forecast economic and market data can then be used to predict future sales levels or market size changes. For example, the level of new orders for housing in this period will have an effect on the size of the future brick market and the future sales of brick manufacturers and housebuilders
- Time series models – use historical data as a means of forecasting future outcomes and assumes past patterns in data can be used to forecast future data points. Our specialist forecasting software also enables us to manually add growth, static or decline trends based on a knowledge of the market
- Qualitative forecasting – based on the educated opinions of selected persons. Information can be collected, for example, via panels or questionnaires from selected respondents with a knowledge of the market, sector or company
Our forecasting experience
We have 20 years experience in developing causal, time series and qualitative forecasting models for the construction industry. We have our own specialist forecasting software to help us do this but we can also develop models within Excel which can then be used by clients in-house.
We have developed be-spoke market and sales forecasts for a number of clients, both regional and multinational, in the construction and building materials sector. Our forecasting experience includes model development for a company’s total revenue and also down to individual product line.
We produce a 5 year construction market forecast every 6 months that examines actual and forecast output by sector. You can find more information on this on our construction activity webpage.
Case Study – Sales forecasting for a building products distributor
This client, a large company in the construction market, wished to provide a quarterly sales forecast for its business looking up to 2 years forward. We successfully analysed the relationships between specific economic variables, construction industry new orders, construction industry output and sales of the company's products for each of its main divisions. We also produced a time series model to forecast sales of product groups and key customers.
The company can now use the model to produce 'what if' sales forecasts based on various market scenarios. The company is able to produce a more reliable and credible sales forecast which will improve planning within the whole organisation.
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