The Israeli telecom company, Bezeq announced that it will sustain a loss of over NIS 1 billion (USD 284 million) This as compared to a projected profit of NIS 1 billion for 2019. What went wrong?
Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) based its projections for the year on anticipated outcomes that did not materialize. They announced to the Tel Aviv Stock Exchange that due to having to write off tax assets on the Bezeq-YES merger, loss of value in Pelephone, and capital gains tax as a result of the sale of the Sakiya site, they are revising their forecast for the 2019 fiscal year.
Forecasting Probable Outcomes
Accurate forecasting is critical for businesses as it informs budgeting, planning and long term strategies. The best forecasting is based on several factors such as experience, statistical analysis, and past performance. In the case of moving into a new market expert analysis and interpretation of market trends and culture is critical, market expansion is no place to fly by the seat of your pants. The more accurately you are able to assess the probable outcome, the more likely you will achieve success as your organization moves forward.
Effective Forecasting is a Marriage of Methods
There are several ways to approach business forecasting, all are relevant and all ultimately rely on an expert to interpret the results within context of the current economic situation and geo-political influences.
This is based on the opinion and judgment of market experts. It is most useful when coupled with historical data.
Quantitative forecasting connects different variables to establish cause and effect relationships which can be utilized to chart the course of the business. In-house and market data are used in the analysis to predict evidence-based probable outcomes.
The Average Approach
This approach bets on past conditions and performance being indicators of future conditions. Past performance data is required and an assumption that market conditions will remain stable.
Plan, Don’t Hope
As the disastrous results at Bezek so clearly indicate, accurate forecasting is critical. Bezek based much of it’s forecast on “hoped for” events. When forecasting for your business you can’t hope for things to go the way you want them to. You must plan based on facts and expert analysis or face the consequences.