3 Step Direct Forecasting

This fancy term means that forecasts should be analyzed and compared to three kinds of data: national economic, industry, and company.

1) A company can compare its sales projections to economic projections. For example, a 5% increase may be sub-par in boom economy but great in a recession.

2) A company can compare its sales projections to other companies in its own industry.

3) A company can compare its sales projections to its own past sales.

Looking at sales performance from these three perspectives gives management additional information to refine their decisions.