Forecast

What is the subject? We are talking about the crystal ball. There is no history, no customers, no experience. The product is not existing, it is either in the mind or on paper. But everybody pushes for a forecast to get the business plan completed in place.

There are songs like “Christmas Winter Wonder Land”. We can relax a bit, this is not, what is expected. But a business plan needs to have a plan aside, how the whole idea will turn out in the real world. Finally it needs transparency, how the concept will earn enough money for the team and the investors.

Bridge to reality

The sales or order forecast must give an indication how the business-idea will turn into reality.

The forecast is the tool, which forces the team to become specific and create facts. The team needs to understand the environment around the company as well as the competitive landscape. There is plenty of literature available in bookstores or libraries as well as in the internet. A mentor is a good support, as he had to setup and deliver countless forecasts and budgets time-wise overnight.

Forecast-Rule

There is one important aspect about the forecast. This is (for my opinion) the golden rule. It must be explainable. The entire team need to be able to understand and explain the forecast from different perspectives. Enthusiastic or conservative – it must be feasible and explainable. Investors and bankers realize immediately, if the team stand behind the plan.

A feasible and explainable forecast will become a strong tool and provides direction for the team.