Zansa › Answers › Forecasting and data science
What is demand forecasting and how does it work for a small business?
Demand forecasting estimates how much of a product or service customers will want over a future period, using past sales, seasonality, prices, promotions and other drivers. For a small business it usually starts with a clean history of weekly or monthly sales, a simple method such as a seasonal average, and a regular check of how wrong it was.
The output is a number per product, location and period, ideally with a range around it. That number feeds purchasing, production, staffing and cash planning.
A practical sequence is:
- Collect at least a couple of years of sales by product and date where possible.
- Clean out stock-outs, returns and one-off events.
- Build a simple baseline first.
- Measure error on data the method has not seen.
- Only add complexity if it beats the baseline.
Want this applied to your business? Zansa builds dashboards and forecasts for small and mid-sized companies worldwide. Start with a free intro call.
Book a call