Five Steps to More Valuable Forecasting


Welcome to this week’s installment on planning and forecasting! Head over to our Youtube channel and take a look at this article featured on Financial Management Magazine to learn more.

Today we’re looking at a good article by Noah Ash, who’s the managing director of the AICPA, and it’s a short piece about five steps for better forecasting. We just want to share these steps with you!

First, you want to set clear objectives for your planning and forecasting. People who’ve followed us for any amount of time know the first step in forecasting is to start forecasting. It is a difficult process. It takes time to be good at it, and you will never be good at it unless you start doing it, very much like playing the piano or riding a bicycle. It is an uncomfortable process to go through, especially as new leaders, but it’s a process that must be started.

Later, you want to establish the right level of detail. Most of us, once we do start, we can get lost in a sea of numbers and data, especially if you think one set of data is going to be reliable and then you’re trying to correlate it to other data. You need to establish the right level of detail toward which you’re going to work when you’re early on in forecasting. You want to start with shallower data. You want to make some assumptions, and then you want to build off of that to see what’s going to happen.

You want to leverage your enterprise systems and your data. Now, what’s an enterprise system? Depending on your organization, that is a system that is managing data for the entire organization, and there might be several systems that you need to pull that data together. But you want to rely on the data that you own and control. You want to leverage sources of rapid frequency data that comes in small bytes and comes regularly and quickly because that is going to be the data that tells you when change is coming the most quickly.

You also want to leverage automation and technology. There are some fabulous planning and forecasting tools out there now, and when you start the process, we highly encourage you to find one and start using it. Doesn’t mean you’ve got to stick with it, but it will help you through the process, because planning and forecasting can be a very manual and laborious process, so use some technology to help you along the way.

Again we re-emphasize the important point is to start forecasting. Start the process. The reason it’s uncomfortable is because you’re actually attempting to predict the future, because when you do take time to look at your situation and events around you, sometimes you can become pretty good at guessing what’s going to happen, because you’re now keying into leading indicators.

This is something that we help our clients with, and we would love to help you! So if you’d like to reach out and have a conversation, book a call with us.

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