The word “forecast” can bring forth a series of emotions depending on the context to which it is used. For example, when you watch the “forecast” on the evening news, it inspires security that you know what the next seven days are going to be like weather wise. Not to mention it helps you determine what to wear, pack if you travelling, or serves as a reminder to grab your umbrella when you leave. When you watch the “forecast” for your favorite sports team, it inspires confidence that you made the right decision in which team you are rooting for.
However, when you apply the word “forecast” to the concept of business, it often inspires fear in most any business owner or entrepreneur. Why is that? How is it that a word that is used to inspire confidence in our favorite team or remind us to grab our umbrella; can be so frightening? The answer is simple, a fear of failure. A fear, that if you forecast incorrectly that you will not make your goals and bring down your whole team or even the company.
A few years ago, I had that same fear. Ron Haugen helped me overcome that fear and got me excited about forecasting. I remember him saying to me “The weather is not always correct, it sometimes sunny when they call for rain” (Which is very typical here in Arizona) “Does that make the weatherman a failure?” He went on to say “If forecasts were always accurate, they would call the actuals.” How true is that?
Business forecasting does not have to be scary. It can be really exciting and inspiring too. When you started your company, you had a vision in mind. You knew what the big picture was and where you wanted to be in two, five or ten years. Have you gotten there yet? If you do not forecast and set realistic goals then my bet is that you haven’t.
A solid forecast that everyone believes in, can make you profitable. For example, at the place that I work, it costs $345.00 per day to open the doors to the place. That is for us to break even, pay our bills and make payroll. I can go to team and tell them that we need to make $345.00 per day to keep the shop open. If that’s what I do, then keeping it open is all I will get. However, since I operate on a forecast, I know that to achieve the gross income that we want to obtain for the year, I need my team to make $650.00 per day. That gives me a profit of $305.00 per day, if the hit their numbers. If they fall short, (which they will do and have done at times), I can be profitable as long as they are shooting for that forecasted number. With encouragement, rewards and weekly update meetings, I have a team that is determined to make the forecasted numbers and is excited to do so.
Knowing that, the fear of forecasting should be gone. You check out the forecast all the time to see what is happening with the weather, if you apply the same concept to your business, and check out your forecast to see where you are with your company; you will be on your way to becoming profitable and getting the most out of your team and business.
-TR – Senior Business Advisor, Phoenix, AZ