What is the difference between Planning and Forecasting?

There are many aspects of a business that is important to ensure the business runs properly. Two aspects include planning and forecasting. Planning incorporates making plans of what is needed to be done in the future of the business. It is a way of seeing how the future will be, including drafting goals of what the business wants or needs to accomplish.

Forecasting is a way to estimate and predict the future. To forecast is to use information from the past, including past trends and past statistics. Planning uses current information to create a plan. Forecasting focuses on trends while planning focuses more on assessments and expectations.

Planning and forecasting are terms that are closely related to one another. They are important managerial activities. Planning is the process of thinking about the future course of action in advance. Planning answers the question of how, when, and what to be done. Planners are forced to make an assumption that is related to the future. There are three major types of planning. These include operational planning, tactical planning, and strategic planning. For you to start planning, you have to identify the goal you want to achieve. Forecasting is the process of using the past and present data for the prediction of the future. The assumption in forecasting is based on the experience of management. When you want to forecast, the first thing you should do is to analyze and understand the problem.

Planning and forecasting are important managerial principles whose function helps enhance the business. Planning is a process of drafting plans of what will be done in the future while forecasting is estimating, predicting, or projecting the future—forecasting deals with uncertainty using facts, past trends, economic conditions, and information while planning involves having relevant information and using the information to draft a plan.

Planning is assessing how the future will be while forecasting is estimating events or trends. Forecasting dwells mainly on facts while planning dwell on facts and expectations. Planning has to do with how, when, and what to be done.

Planning includes operational planning, strategic planning, and tactical planning while we have the qualitative and quantitative forecasting, judgmental forecasting, time series forecasting, and naïve forecasting. Planning is done by the top managers, while forecasting is done by experts.

Some may think that planning and forecasting are the same, but actually, they are not. When you say planning, this means that you are thinking about the course of action that you are going to do in advance. This will help you know what the things that you are going to do in order to reach your goal easily are.

When you say forecasting, this means that you are making a prediction of the things that may occur in the future about the project that you are planning or the action that you would like to do.

Take note that forecasting will be done based on the available data. Past and present data will always be considered to be sure.