The move to a digital-first world gave businesses the advantage of immediate communication as well as real-time and ‘at a glance’ data. Now, artificial intelligence can be used to leverage this information for smarter forecasting.
Here’s how AI for business forecasting works and how you can use it to make strategy-influencing predictions:
AI and machine learning
Artificial intelligence takes the information it collects or is given and uses it to make inferences and solve problems.
In real estate, AI can estimate which homeowners will be thinking of selling, based on historic data about how long people stay in their homes, their age and other circumstances.
In construction, AI can take 360-degree images and use them to let project managers know if the timeline is off track or whether a job has been marked complete but isn’t.
Machines can do similar activities with numbers; they can take the information provided and use it to highlight issues and make predictions.
How does AI work for business forecasting?
Business forecasting is the ‘art’ of making informed guesses about future business metrics based on current and past information.
When you leverage AI for business forecasting, you can ask a machine to run the numbers, look at algorithms, identify trends and make predictions based on the data to hand.
Why use AI for forecasting?
The thing that makes AI so powerful is that computers can do millions of calculations in extremely short time periods.
You have the benefit of being able to compare much more data when you use AI for forecasting. Many of the manual input processes are removed, meaning the work is faster and the results are more accurate.
What’s also incredible about AI is that it can learn as it works. As more data is added and feedback is provided, it can analyse its past results and build its own ‘encyclopedia’ of knowledge, making adjustments along the way.
How to get started
Humans still come into play with business forecasting, even though machines are here to help.
Firstly, you’ll need to figure out what information is most important for forecasting and ensure you are keeping track of the data you need. This may require some groundwork if you’re not a digital-first business.
When it comes to what needs forecasting, price, churn and demand are all areas where AI can be particularly useful.
- Price forecasting: Price forecasting will help you figure out the cost of future products and how much your competitors may charge
- Churn forecasting: Churn forecasting predicts how likely clients are to stay with your business over a future time span.
- Demand forecasting: Demand forecasting, probably the most important, predicts the demand you can expect for your products or services.
- Growth forecasting: This will help you figure out if your business is on track for growth
- Cash flow forecasting: A look into how much money your business is likely to make over a specific period of time
- Tax forecasting: Find out how much tax you are likely to be liable for so you can plan ahead.
You, your accountant and artificial intelligence are the ultimate combination when it comes to business forecasting. By working with a professional and leveraging machine learning, you can generate more detailed and accurate forecasts that empower you to make more strategic decisions.
Want help with forecasting? Contact Mobbs & Co today.