6 Reasons Why Demand Forecasting Is Important In International and National Businesses

Demand forecasting is a well researched topic, and the most methods used in today’s businesses are relatively new. Setting out goals on sales promotion in international or national business without having relevant knowledge is like jumping from a mountain without having a parachute in your hands. I often find that the first thing people ask me at a conference is the importance of demand forecasting for their companies. In this article I will point out 10 reasons why you need to consider it for your business.

1) Many businesses nowadays provide services and products to their clients without having a clear figure of their demand. Sometimes what they know about their consignments is the deadline they should meet, but missing a proper demand forecasting plan can lead them to not appropriately react to the changes. When a customer is unable to get the product or they want more than once, it can make them to choose the competitor’s product.

2) Marketing gurus of your company may not perfectly promote your sales in case you do now know how much is necessary to produce. If you company overestimates demand, it has a risk of producing too much which can lead you to loss due to holding unsold items. But if it produces too little, there will be a loss of potential profits and your marketing team can not help you in this case too.

3) With the growing tends of globalization and wide range of items in the market coming with different shapes and sizes it is also important to track the demand for each product. The demand for small audio sets, touch-screen audio sets, Bluetooth-enabled audio sets should be considered separately keeping in mind all customers needs.

4) In business battles, especially in international businesses the future prices and costs are not always stable. Demand forecasting should be tied with all profit margins considering the prices and the costs of your production.

5) Changes in technology have contributed towards globalization. The improvements of technology make our lives much more convenient therefore the rules of the game are changing. There should be forecasting about technological change (TC) and its bear upon demand, costs and prices.

6) Besides these all, demand forecasting should be based upon changes in the external environment. As we know a business doesn’t operate in a vacuum. It has to act and react to what happens outside the factory and office walls, and sometimes outside from national borders. With this in mind I want to close up with the 6th reason why it is fundamental for your company.

4 Ways to Energize Yourself and Your Business

At the start of this decade no one was waiting around the office at midnight dreading to see if the electric grid crashed, if computer-based machinery stopped, or society fell into chaos due to Y2K as we did ten years ago. Yet, I still witnessed people dreading returning from their four day weekend to the daily grind that chewed up many businesses and their leaders last year.

To revitalize a company the leader must first be revitalized. How can you revitalize yourself when the economy is still down, people still seem to be in a negative mindset, and the future is quite unclear? With these four action items you can re-energize your vitality as a leader and once again set a positive tone for your staff to follow and vicariously become more energized themselves.

1. Get a reality check

I’ve heard it said many times; things are never as good as they seem and never as bad as they seem. 2009 seemed to be a pretty bad year for most organizations. Many executives just gave up in the fourth quarter and started focusing on 2010. In retrospect, 2009 was filled with lessons. Step back from the pain and frustration of 2009 and make a list of lessons learned that can help you in the future. We all learned last year, in some cases it could be what not to do. However, aren’t those some of the best lessons to have?

2. Make a plan

Free-wheeling is no longer an option for leadership; nor is sticking directly on a plan. Flexibility within a plan is different than free-wheeling in that you have a clear understanding of destination and the ability to make adjustments. Do you have a written plan for this year? Do you have a written plan for your personal life? I’m not being pollyanna here, I know you don’t suddenly wake up one day and life is all rosy. The business side of life is still going to be a climb up the mountain, but your personal life can be a great source of energy fueling that climb. Have a personal plan as well as a business plan.

3. Find inspiration in your personal life

People are still going to reject some of your sales efforts, companies are still tight with budgets, and the country still has a ways to go before we are into positive growth. In other words, business is still going to be a challenging environment. That is why I set 50 personal goals for the year (to go with my 50 professional goals for the year) because I know I get inspired in my personal life. Who inspires you? What inspirational friends do you need to spend more time with? What friends do you need to avoid/drop/move on from? If you aren’t being positively impacted by your friends, you are losing energy that is needed to fight the business battle. Find inspiration.

4. Try something completely different

How many times last year, did you ask people to give you more, hammer them for not doing their jobs correctly, and generally focused on the negative aspects of the business. Try something different this year. Become solution-focused instead of blame-focused. Be proactive instead of reactive. Look for innovative approaches instead of cutting budgets and doing less of the same that wasn’t working in the first place!!!

Pushing an elevator button repeatedly does not make the elevator arrive any quicker. I think we fall into this type of behavior frequently when times are tough. Get real about the positives, find solutions for the negatives and get energized to lead. Because it is the beginning of a new year, now is a great opportunity to refocus, reinvent, and reenergize yourself and your staff. Get pumped to make a difference this year.

Functions of Business Finance

Strength and soundness of business depends on the availability of finance and competency with which it is used. The abundance of finance can do wonders and its scarcity can ruin even a well established business. Finance increases the strength and viability of business. It increases the resistance capacity of a business to face losses and economic depression. It is just like a lubricant, the more it is applied to the business, the quickly the business will move. Following headings explain the importance of finance to business:

(1) Initiating Business: Finance is the first and fore most requirement of every business. It is the starting point of every business, industrial project etc. Whether you start a sole proprietary concern, a partnership firm, a company or a charity institution, you need ample amount of finance. It is equally important for profit seeking and non-profit activities. It is equally important for a multinational organization and for a free dispensary.

(2) Purchase of Assets: Finance is needed to purchase all sorts of assets. Even if credit is available some down payment is to be made. Mostly finance is needed at the start of business for the purchase of fixed assets. These fixed assets consume a large amount of initial investment of the entrepreneur, so he may face liquidity difficulty in running day to day affairs of the business.

(3) Initial Losses: No business attains high profit on the first day of commencement. Some losses are normal before the business reaches its full capacity and generate enough revenue to match cost. Finance is necessary so that these initial losses can be sustained and business can be allowed to progress gradually.

(4) Professional Services: Certain business need services of specialized personnel. Such personnel have rich experience in specialized fields and they can provide useful guidance to make business profitable. Nevertheless these services are costly. Finance is always needed so that services of such professional consultants can be hired.

(5) Development: Business is always exposed to change. New innovations and emergence of new technologies replaces old techniques out of market. So in order to remain in the market, it is needed to keep the business well equipped with all emerging tools and techniques. This required finance. New technology is always expensive as it is better than others. So finance is needed to purchase new equipment and keep the business running.

(6) Information Technology: Information technology has now changed the geography of the business battle field. The home markets have now extended virtually to other comers of the world. The whole world can be your customer or competitor. To face such a fierce competition, IT is needed. Skills and competency in IT can perform miracles. But finance is again the decisive factor. It is very much needed to incorporate expensive IT products in the business.

(7) Media War: The advertisement and promotion have now become a vital elements for the success of business. The way a businessman approaches a customer and convinces him to purchase his product has become more important than the quality of product. With advertisement on International media, a businessman can reach the minds of millions of people around the globe. However, advertisement is a luxury which every business can’t afford. Huge finance is required to meet advertisement expenses.

(8) Resource Management: Finance is very essential for efficient resource management. Resources here include capital and human resources. Maintenance of plant and equipment and training of employees all need finance. Establishment of new industrial units, expansion of plant capacity, hiring of well learned skilful laborers – all
these factors can lead to huge revenue but at the first place they need finance to start with.

(9) Stock Investments: These investments are those which are made to hold ample stock of raw materials in hand. Bulk purchase of raw materials is profitable in a sense that purchase discount can be attained and there is no danger of production halts. So companies most often hold huge amount of stocks and raw materials. But such an investment can be made only if a company has sufficient capital or finance to carry out its daily operation easily besides holding huge stock.

(10) Combating Risks: Everything is exposed to one or more risks. A business is also exposed to variety of risks. These risks include natural hazards, burden of any huge liability, loss of market or brand name etc. Finance is needed to make business powerful, so that it can sustain occasional losses and liabilities.