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Have you included a reasonable contingency in your forecast in case sales or costs are significantly different from forecast?
"If you blow your forecast, you're in a heap of hurt," said one storage expert, David L. Hawkins, a senior consultant at KEMA, a consulting firm.
(A technical note: this calculation assumes that the error in your forecast follows a bell curve, or normal distribution, which is an oversimplification in practice).
What would make you nervous about your forecast of a market rebound? A. Three things need to happen for the stock market to recover.
"If five or six models all say the same thing, then you can have quite a lot of confidence in your forecast.
People can go belly-up on you and if your forecast doesn't include any bad debts it wouldn't be realistic," he says.
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Sense check your forecasts with someone you trust, such as your accountant.
Why wouldn't you be a bit more "aggressive" in your forecasting?
Always be prepared to readjust your forecasts when things don't go as you had planned.
So does this mean you should all go out and use the ISM manufacturing index in your forecasting models?
So you had better have a plan, and a backup plan, too, for when your forecasts inevitably go awry.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com