If you have ever downloaded any tools or other resources on our site, you know that we usually ask you about your Biggest Business Challenge in our forms. In response to your feedback, we are featuring a series of blogs on your biggest business challenges! This post is a response to the challenge “Forecasting and prediction."
How many times have we been disappointed by an inaccurate weather forecast? The local news meteorologist smiles and says in a cheesy voice, “Get out your golf clubs and dust off the barbecue pit; Saturday will be sunny and 70 degrees. A perfect day…” Then, we wake up to thundershowers that bring in a cold front.
Worse than a ruined weekend, inaccurate forecasting can ruin your business strategy, as well. From missed sales numbers to unexpected dips in revenue or a myriad other problems that you just didn’t see coming, inability to predict how well you are executing on your plans or to think about the future of your business and what might be coming next can have disastrous consequences. But, how can you develop the skill to forecast the future and avoid being blindsided?
Just like a meteorologist uses instruments and tools to predict the weather (with varying degrees of success), you can implement some tools to help predict the future success of your business. You can test and recalibrate these instruments until you have a fairly reliable engine to avoid being blindsided.
Here are your best instruments for prediction:
- Leading Indicators. If you know your targets and critical numbers for the quarter, be sure to take the next step to figure out what levers drive these results. Follow these steps to develop leading indicator KPIs that allow will help you know if you are on track to hit the results you want at the end of the quarter or if you need to make an adjustment.
- Dashboards. Use a dashboard to status based on your prediction of how you will end the quarter. This is key to knowing when you need to adjust. Your dashboard isn’t very valuable if you are only updating it based on where you are today. For example, let's say you have a leading indicator KPI on your dashboard for "number of new demos" that helps you predict the result you want for the quarter - new sales deals closed. If you determined that you needed 25 new demos this quarter to close the 5 new deals to hit your target, then you want to status your KPI each week based on your forecast of whether or not you’ll hit the 25 demos by the end of the quarter, not based on how many you did this week. Updating your status based on your forecast forces you to think critically about whether or not you’re on track to hit your goal. Even if you only have 3 demos this week, but you know that you’re doing a webinar next week that usually generates 10 demos, you might be able to reasonably predict that by the end of the 13-week race, you’ll still hit your numbers. Also, if you have that webinar and only get 5 demos instead of the 10 you predicted, you can raise your hand early with a red status to let the team know that you’re off track to hit your goal. This is your early alert system so you have time to brainstorm other ideas to generate more demos before it is too late and the quarter is over and you were blindsided by fewer sales than you needed to hit. Here are the key questions to consider when you are forecasting your status on your priorities and KPIs on your dashboard:
- Am I on track to hit the Green goal by the end of the quarter?
- Are there potential obstacles that could derail my ability to hit my goal?
- When I built my plan in the beginning of the quarter, where did I think I would be at this time in the quarter? How close am I to that point?
- Think Rhythm. Many of our clients want reliable revenue growth engines. The only way to have consistent revenue generating strategies, which we call Winning Moves, is to get into a rhythm to think about and work on these ideas each week, each quarter, and each year. Very few great strategies come from “A-ha” moments; most of them take a long time to develop. Establish your rhythm of coming up with, evaluating, and testing assumptions on your Winning Moves to have the confidence that you always have revenue growth ideas on the bench that you can implement as needed.
Having these three tools in your arsenal will help you execute your strategy with purpose and feel confident that even though you can’t see around that next corner, you are prepared to make the needed adjustments and have a process in place to help you navigate any unforeseen storms ahead. With time, you’ll learn to use the instruments better and your ability to predict and forecast will only improve the more often you use these skills.