Accurate financial forecasting is crucial for small businesses. It helps in budgeting, managing cash flow, and planning for growth. Many business owners rely on Excel for these forecasts, but Excel’s basic forecasting tools can struggle with data that includes uneven revenue trends, seasonal swings in sales, or P&L line items that only show up occasionally (like a quarterly expense or a once-a-year revenue bump). RunSmart, Projection Genie’s powerful financial planning and forecasting tool, is designed to handle such complexities, allowing small business owners to make more informed, data-driven decisions without needing deep financial expertise.
In this article, we’ll share the results of tests where RunSmart produced forecasts that more closely matched real-world small business patterns compared to Excel’s built-in forecasting function. These examples highlight RunSmart’s ability to generate more accurate forecasts that align with real business data patterns, helping small business owners avoid costly errors and eliminate the need for expensive financial experts.
The Importance of Accurate Forecasting for Small Businesses
Financial forecasting isn’t just about predicting numbers; it’s about understanding the underlying trends, fluctuations, and seasonal variations in a business’s financial data. For business owners without a background in finance, statistics, or mathematics, interpreting these numbers and identifying patterns can be challenging. Many turn to Excel for help and though it’s powerful for many tasks, its built-in forecasting functions often produce oversimplified results that don’t capture seasonal trends or irregular patterns. Manually adjusting oversimplified forecasts in Excel is not only complicated and time-consuming to correct, it also requires an advanced skills set which often translates to costly consultations with financial experts to solve.
RunSmart, on the other hand, is designed to automate forecasting with algorithms that capture data patterns intuitively, helping small business owners make informed decisions without constant adjustments that require a strong statistics background.
A Side-by-Side Comparison: RunSmart vs. Excel Forecasts
To demonstrate the advantages of RunSmart, we ran tests on two sample datasets, each with unique characteristics that small businesses will often experience. We generated forecasts using Excel’s FORECAST.ETS function and compared them to forecasts produced by RunSmart’s custom algorithm. Below are the datasets and the forecasting results generated by both solutions.
Dataset 1: Incremental Growth with Gaps
Our first dataset demonstrates a pattern of increasing monthly revenue values interrupted by zero values, simulating a scenario with periodic growth in sales interspersed with inactive periods from Jan 2019 to Dec 2021. The dataset is as follows:
Dataset 1 Values:
$0, $0, $30, $0, $0, $0, $40, $0, $0, $0, $50, $0, $0, $0, $60, $0, $0, $0, $70, $0, $0, $0, $80, $0, $0, $0, $90, $0, $0, $0, $100, $0, $0, $0, $110, $0
The results generated by each tool for the subsequent three-year period (Jan 2022-Dec 2024) are detailed below.
Excel’s Forecast:
$29, $29, $30, $31, $32, $33, $34, $34, $35, $36, $37, $38, $39, $39, $40, $41, $42, $43, $44, $45, $45, $46, $47, $48, $49, $50, $50, $51, $52, $53, $54, $55, $56, $56, $57, $58
RunSmart’s Forecast:
$10, $10, $100, $10, $10, $10, $110, $10, $10, $10, $120, $10, $19, $19, $109, $19, $19, $19, $120, $19, $19, $20, $130, $19, $29, $29, $119, $29, $29, $29, $129, $29, $29, $29, $139, $29
Why RunSmart Was More Accurate
Excel’s forecast (orange line in the first chart) produced relatively flat results, averaging values across the dataset without recognizing the upward trend and gaps between growth points. RunSmart’s advanced algorithm, however, identified and accurately projected the incremental growth pattern, capturing the increases in each cycle while accounting for the gaps.
In addition, RunSmart’s forecast demonstrates a higher level of confidence through its tightly grouped upper and lower bounds (the light blue and green lines respectively in the second chart), which stay close together. This close range of values reduces the “funnel effect” often seen with Excel forecasts, where a wider spread between higher and lower estimates can make predictions less reliable. RunSmart’s high-confidence bounds give business owners precise insights they can trust for better decision-making.
Dataset 2: Consistent Peaks and Zeroes
The second dataset follows a pattern of consistent peaks at $150 followed by sequences of zeros, representing a common recurring monthly business expense that reappears during the same three months every year from Jan 2019 to Dec 2021. Here’s the dataset:
Dataset 2 Values:
$0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0
The results generated by each tool for the subsequent three-year period (Jan 2022-Dec 2024) are detailed below.
Excel’s Forecast:
$43, $43, $44, $44, $45, $45, $45, $46, $46, $47, $47, $48, $48, $49, $49, $50, $50, $50, $51, $51, $52, $52, $53, $53, $54, $54, $55, $55, $55, $56, $56, $57, $57, $58, $58, $59
RunSmart’s Forecast:
$0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150, $0, $0, $0, $150
Why RunSmart’s Forecast Stands Out
Excel’s forecast tends to smooth over these patterns, creating a steady average that lacks the regular spikes seen in the original data. RunSmart’s forecasting algorithm accurately reproduced the peaks at $150, interspersed with zeros, closely following the original data and maintaining the consistent spikes that Excel missed. By accurately predicting the recurring peaks, RunSmart allows business owners to better plan around fluctuations for any revenue or expense line item, making it easier to manage cash flow and anticipate periods of higher or lower activity.
The RunSmart Advantage: Tailored Forecasts for Small Business Needs
RunSmart outshines Excel in several key areas, offering small businesses a forecasting tool that is both more accurate and easier to use. Here’s why:
- Pattern Recognition: Unlike Excel, which often averages trends, RunSmart identifies underlying patterns—like seasonal swings in sales or recurring expenses that don’t happen every month—automatically creating more accurate forecasts.
- User-Friendly Automation: RunSmart’s forecasts don’t often require manual adjustments or advanced statistical knowledge. Small business owners can rely on accurate predictions without implementing complex formulas or analysis on their own.
- Cost Savings: Without the need to hire costly financial experts to refine forecasts for you, RunSmart makes high-quality financial forecasting affordable and accessible.
Conclusion: Achieve Accurate Forecasting with RunSmart
For small businesses, accurate forecasting is key to better, more strategic decision-making. Our comparison highlights how RunSmart delivers more accurate, insightful forecasts by recognizing data patterns and adapting predictions accordingly. This level of accuracy isn’t easily achievable in Excel, making RunSmart a strong choice for small business owners who need reliable, actionable insights without the complexity of spreadsheets.