Welcome to this week’s installment on planning and forecasting for your small business! Head over to our Youtube channel and take a look at these pieces from Marketing91 and AskAnyDifference to dive deeper.
After all these weeks of doing a weekly planning and forecasting segment, it occurred to us that there may be confusion as to what planning and forecasting are. We at least want to state that they are not the same thing! So today we’re gonna talk about: what is planning and what is forecasting. Linked some great articles above for you, so take a look at those, too.
First off, what is planning? Planning can be a very basic function that any manager may perform. Planning may be as simple as planning a staff schedule for a week or two weeks out in advance, and that is a function of planning. As a small business owner, you’re looking more than a week or two out, but you’re planning every facet of your operation for as much as a year out, if possible, six months perhaps. Sometimes you look out further than that. Certainly you want to look at staff planning, and you think through all the different possibilities. Planning is really the process of scenario identification, if you would. It’s the process of identifying possibilities as well as overlaying your own intent of what you want to do with your business onto the plan, and then you make a plan for a particular period.
Forecasting is really more of the process of predicting the future. For most people, forecasting is applying numbers to the plan and then calculating, making estimates, and identifying assumptions that would be necessary to execute the plan that has been laid out. These are two very, very, very different functions, but they go hand in hand. You can’t measure your plan without doing a forecast, and then you compare that to what actually happens. So you can plan all day long, and we’ve all known people who do this… who plan and plan and plan, but they never put the forecast in place and never actually put their plan into operation.
So in summary, planning is identifying possibilities and scenarios. Forecasting is putting numbers to the plan and predicting what the future will look like. Again, take a look at the two articles we linked above. This is the kind of thing HGC does for clients every day, so we’d love to talk with you and help you with it too. Just reach out and give us a holler anytime!