Forecasting without historical data

Power BI
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Hi all,
I need to setup a model for a Budgeting and Forecasting model for a new business. The problem facing here is the lack of historical sales data to support forecasting. Thus, I am residing to budget in order to create sales forecasts. Is there any related topic that I could use or maybe a sample model available for review?

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Hi @Thimios ,

Maybe this course may help you:

Good luck.

1 Like
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Thank you @mspanic but I already reviewed that twice before posting…
Will attempt one more though in case I’m missing something :frowning:

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@Thimios - is it complete new business or just a business line (one part of business) ?

One idea - If it is just one part - maybe you can use some other lines data (with adjustments to fulfil what is missing) or you have some other business projections that you can rely on in this phase ?

Good luck

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@mspanic I’m afraid this is a complete new business hence the difficulty.

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@Thimios - so to summarize - it’s new business and there are no historical data that you can use (or modified to use). Only you have budget.

Do you have maybe some other data that you use

  • some part that you use to calculate budget
  • some plan figures
    ?

Maybe you can divide this new business into small parts (i.E. business lines or smaller) - which is much easier to monitor, analyze and get feed-back / correct. Use what you have (see my previous question), maybe you can add plan / projected profit margin and in this phase calculate from that. Be careful of seasonality, some regulatory / one time fees that you might have.

Afterwards - after few cycles of rolling forecast you will have some data to compare.

Good luck.

2 Likes
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Hi @Thimios
Every company will have a hard time forecasting for any new business coming in.

Some things that I would consider are:

  • Did your company have any new lines of business that came in the past couple of years that is same region(country)? If so maybe use the actual and take a percentage of that for your forecast. Sometime, there might be a file stored some place(lan, sharepoint) that has that information on how they calculated the budget and forecasting .

  • Is there any information on the internet on the new business what kind price it selling at?

  • Take an Average of all your business and apply that average to the new business line.

  • Calculate all new business that came into the company from all lines for the previous year and use that percentage for your forecasting.

I’m afraid its going to hard to forecast without historical information but all companies try to do a best estimate and management needs to understand that its new business coming in.

Some companies change their forecasting thorough out the year especially new business. (We don’t like do it because one month could be low and next month is higher than expected but as usual it comes back in line by the end of fiscal year.)

I’ve read some of the comments that @mspanic has made and I like them too

Forecasting is hard with new business

Good Luck
Keith

2 Likes
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@Thimios ,

I think @Keith and @mspanic both have had laid out some excellent suggestions above.

One other suggestion I would make is in the best book on forecasting I’ve ever read, Rob Hyndman’s and George Athanasopoulos’ “Forecasting: Principles and Practice” they have an entire chapter dedicated to “Judgmental forecasts”, often used when there is a complete lack of historical data.

At the end of their chapter in section 6.8 they provide a detailed bibliography of other resources and key papers published over the last 20 years addressing the main judgmental forecasting approaches: Delphi, Adjustments, Analogy, Customer Intentions and Scenarios.

Amazingly, the authors have made this entire book available online for free. Here’s the link:

I think you’ll find this material extremely helpful in addressing your question.

All the best.

– Brian

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Great suggestion @BrianJ , thank you!

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@Thimios ,

My pleasure - glad to hear that was helpful to you.

I’m interested to hear how this process works out. Good luck!

  • Brian
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Hello @Thimios, good to know that you are having progress with your inquiry. Please don’t forget to tag the response to this post as “solution” if it solved your query.

Thanks

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Hi @Thimios, due to inactivity, a response on this post has been tagged as “Solution”. If you have a follow question or concern related to this topic, please remove the Solution tag first by clicking the three dots beside Reply and then untick the check box.