What Is Business Forecasting?

Business forecasting is the process of predicting a business's future performance using data analysis, including market trends and other metrics. Business forecasting professionals provide their organizations with insights for decision-making, strategic planning, and overall operational effectiveness.

Successful businesses understand the importance of business forecasting, as it allows them to prepare for changing market conditions and estimate how to allocate resources best. For this reason, the number of jobs that fall under the business forecasting umbrella should grow through the next decade. For example, the US Bureau of Labor Statistics predicts a growth rate of eight percent for financial analysts and 10 percent for management analysts [1, 2].

Read on to explore the importance of business forecasting and how to get started in a business forecasting role. 

What is business forecasting?

Business forecasting is the task of predicting a business' future performance and the market in which it operates. As a business forecaster, your job is to examine current and past data to identify trends, compare them with current industry influences, and make predictions about what will happen soon. You also may collaborate with managers from different departments to discuss potential opportunities, new relationships, and patterns you notice in the data.

Types of business forecasting jobs

Business forecasters work in various organizational departments, including finance, marketing, and human resources. Job titles that fall under business forecasting sometimes include the term planner, analyst, or manager. In these roles, you may track performance, look for trends in historical data, and apply statistical analysis to gather data in one or more of the following areas: 

• Accounting: You use historical cost data to anticipate future costs and help prepare the budget.

• Business: General business forecasting can include predicting non-financial functions such as customer satisfaction, logistics, and goals to maximize efficiency and profitability.

• Capital: To perform capital forecasting, you analyze sales, costs, and other metrics to predict how much working capital (company assets minus liabilities) a company should have in the future.

• Demand: Demand forecasting involves predicting customer demand to ensure the company has the resources (including inventory and supply chain) to meet it.

• Financial: You examine financial metrics, including cash flow, expenses, revenue, and sales, to predict future profitability.

• Sales: A sales forecast is a prediction of how many units the company will sell to customers during a given period of time in the future.

Business forecasting tasks and responsibilities

A business forecaster must make educated guesses about how specific metrics will change in the future based on historical performance, economic trends, and statistical analysis. You typically rely on your understanding of the industry and your skill in using qualitative and quantitative models to inform your predictions. Within the scope of your work, you may be responsible for the following tasks:

• Analyze market trends and company data

• Estimate demand and make predictions about future needs

• Meet with executives and decision-makers to share data

• Make recommendations for policy change

• Prepare forecast reports

Business forecasting skills

You can prepare for a career in business forecasting by developing a mix of technical and workplace skills, including data visualization and communication. The following skills equip you to analyze data effectively and translate insights into actionable strategies to optimize processes and operations.

Technical skills

• Programming languages: You can use coding languages such as Python or R to analyze large sets of data

• Data visualization: Creating graphics that tell a compelling story about what the data says can help you share analytics in a way that everyone understands.

• Statistical analysis: Before creating insights from data, you must be able to collect, organize, and interpret data to find relationships and trends. Analysts use several statistical analysis models to do this.

Human skills

• Communication: Communicating how the present situation affects future prospects is a key part of your job as a business forecaster.

• Strategic thinking: Your research into present performance metrics provides clues to what might happen and how the company might advance.

• Critical thinking: You should be able to think critically about the data you collect and choose only what's necessary for decision-makers.

Business forecasting salary and job outlook

Business leaders rely on accurate forecasts to make predictions about the future and plan accordingly, which means demand for business forecasters should continue to grow. Forecasting jobs also tend to be lucrative and come with above-average salaries. 

• Budget analyst: $82,260 [3]

• Demand planner: $79,400 [4]

• Financial analyst: $95,080 [5]

• Financial manager: $139,790 [6]

• Management analyst: $$99,410 [2]

The job outlook for business forecasting jobs is strong. Demand for financial, budget, and management analysts should grow by up to 18 percent [2, 3, 4, 5, 6]. Specifically, the BLS expects 27,400 annual openings for financial analysts through 2032 [5]. The agency anticipates 92,900 job openings for management analysts, 69,600 positions for financial managers, and 3,600 openings for budget analysts during the same period [3, 6, 2].

Business forecasting career path

The type of business forecasting you plan to do determines your career path in this field since the work of a demand planner differs from a financial manager or management analyst. For example, you may be able to begin working as a logistician before you've earned a bachelor's degree, but employers typically expect you to have a degree in economics or a similar area before they hire you to work as a financial manager. 

Education and training

Entry-level business forecasting jobs typically require a bachelor’s degree, and business is a common undergraduate major. For more than a decade, business has been the top choice for undergraduates earning a bachelor's degree [7]. However, you may also find it helpful to study a field that is more closely connected to your field. For example, if you plan to pursue a forecasting role in finance, a degree in finance or economics is another option to consider. You may also consider earning a master's degree, like a Master of Business Administration with a concentration in business analytics or marketing analytics, if you want to advance your career to a senior-level position.

Earning an industry certification can demonstrate your knowledge and dedication to the field, especially if you want to qualify for more advanced positions. The following organizations offer Professional Certificates and licenses for business forecasting professionals:

• American Institute of Certified Public Accountants

• Association of Government Accountants

• Association for Supply Chain Management

• CFA Institute

• FINRA

• Institute of Management Consultants

Getting started with Coursera

Business forecasting is the process of predicting future performance through analysis of historical data, market trends, and other factors affecting an organization's outlook. In this role, you use skills such as statistical analysis and gathering opinions from key stakeholders or market experts.

To develop the analysis skills needed for a business forecasting role, consider taking courses like Macquarie University’s Excel Skills for Business Forecasting Specialization offered on Coursera. This three-course Specialization covers business forecasting methods, regression models, Excel, and more. You receive a certificate to share on your LinkedIn profile after successfully completing the program.