Risk is something you have to accept as an entrepreneur. The very act itself of starting a business is an enormous risk unto itself.
What you ideally want to do is to minimize risk whenever you can and the way to do that is to rely on sound analysis and data.
Decisions guided by data and analysis are not foolproof per se, but they are tilted toward success. All you can reasonably ask for as an entrepreneur is to be put in a position to succeed and demand forecasting helps with that.
See how demand forecasting minimizes risk for business owners by checking out the entries below.
Demand Forecasting Helps Businesses Determine When to Launch New Products
New products account for a significant percentage of overall sales. That’s their main value, but they can offer so much more to businesses.
If a company’s catalog has grown stale, a new product can provide a jolt of excitement. It can also liven up the employees as well as the consumers. Excitement is always a good thing for businesses.
Launching a new product can be a tricky endeavor, however. It’s not just the product you have to worry about because the timing of the launch matters greatly as well.
A study conducted by researchers V. Kumar, Amalesh Sharma, Alok Saboo looked at how new product launches affected companies in the pharmaceutical industry. The study, which was published in the Harvard Business Review, found that new products had their value diminish over time. On top of that, companies that launched products at irregular intervals also didn’t reap as many benefits from their new offerings.
What the study also reveals is that there’s a right pace to launch products. That specific pace varies from one company to another and that’s why demand forecasting has to factor into the decision-making process. The data provided by demand forecasting can give businesses a better idea of when to launch their new offerings.
Demand Forecasting Can Inform Branding and Expansion Decisions
Expansion is a rite of passage for many successful companies. Some companies may choose to expand their offerings while others may opt to acquire old competitors in an attempt to consolidate their consumer base.
If you decide to acquire a former competitor, your instinct may be to rebrand it and absorb it fully into your growing company. Demand forecasting may show that such an action could be harmful.
This article from Santa Clara University points out that many customers have brand loyalty. By choosing to rebrand every new acquisition, you could effectively be pushing out the loyal customers they were supposed to bring in.
Avoid adopting a blanket approach to branding and expanding and instead let the findings of demand forecasting guide your decisions.
Demand Forecasting Can Help You Identify Smart Investments
Investing in a new startup or even just a new product is risky. There are all kinds of unknown variables to sort through and you may not understand all of them.
Demand forecasting will not tell you everything you need to know about a certain investment opportunity, but it can do other helpful things.
For example, forecasting can shine a light on some of those unknown variables. Forecasting can give you better insight into what they really mean and how they should influence your decision.
Demand forecasting can also put an investment opportunity into context. You can find out how similar investments panned out in the past and decide if it’s worth making the leap now.
Making an investment can sometimes feel like taking a leap of faith. Relying on demand forecasting helps you put the safety net in the right place before you make that leap.
You won’t ever be able to eliminate all of the risky decisions that come with running a business. They simply come with the territory. Even so, demand forecasting can minimize the risk you take on and that’s why it’s so valuable.