You’re trying to forecast the future. What are the most important things to consider?

1 Define your purpose

Why are you forecasting the future? What is the question you want to answer or the problem you want to solve? Your purpose will guide your choice of data, methods, and assumptions. For example, if you want to forecast the sales of a new product, you need to consider the market size, the competition, the customer demand, and the pricing strategy.

3 Select your methods

Methods are the tools and techniques you use to analyze your data and generate your forecast. You need to choose the methods that suit your purpose, data, and level of accuracy. There are different types of methods, such as quantitative, qualitative, causal, and judgmental. For example, if you want to forecast the stock market, you might use a quantitative method, such as a regression model, or a judgmental method, such as an expert opinion.

4 Make your assumptions

Assumptions are the beliefs and expectations you have about the future that affect your forecast. You need to make your assumptions clear, realistic, and consistent. You also need to test your assumptions and monitor how they change over time. For example, if you want to forecast the population growth, you need to make assumptions about the birth rate, the death rate, the immigration rate, and the emigration rate.

5 Communicate your results

Results are the outcomes and implications of your forecast. You need to communicate your results clearly, concisely, and confidently. You also need to provide context, evidence, and explanation for your results. You should also include the level of uncertainty, the margin of error, and the confidence interval for your forecast. For example, if you want to forecast the GDP growth, you need to report your results in percentage terms, with a range and a probability.

6 Review your performance

Performance is the measure of how well your forecast matches the actual reality. You need to review your performance regularly, objectively, and constructively. You also need to learn from your mistakes, identify your strengths and weaknesses, and improve your skills and methods. For example, if you want to forecast the election results, you need to compare your forecast with the actual votes, and see where you were right or wrong.