How to simplify your forecasting

I do forecast modeling and scenario planning in Excel and it is quite simple:

  • Be clear on your assumptions — typically top left in the worksheet
  • Document your formulas by including a comment on input (column M below)

Follow these two points and you can easily update your model, or do a handover to your successor without too much training.

A simple forecast model in Excel

Price and cost per unit are constant throughout the year while volume is varying. I use three cases, which is typical for scenario planning:

  • Base-case
  • Upside
  • Downside

In addition I have included a monthly ramp-up percentage.

If your assumptions change (and they will!), you update your assumption in B2-B6 and your whole model will update — both your table, your graph and your scenarios.

This example displays a very simple forecast model, but the same principles applies to more extensive models.

How do you set up your forecasting?

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