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Never Make Forecasts, Especially About The Future

If you could predict with absolute certainty the exact moment each opportunity in your company’s sales pipeline would convert into an order, wouldn’t life be marvellous.

The Hollywood movie mogul Samuel Goldwyn is reputed to have said “never make forecasts, especially about the future’.

Whilst these may appear (especially in current times) wise words, if you’re running a large order complex business, Sam’s quote is unlikely to be an escape route from having to say, “What you expect to happen in the future” when it applies to your sales (and cash flow) forecasts.

With that in mind, here are some tips that might help you get your sales forecast closer to right than wrong.

1. Measure your accuracy

If you work in an environment where your forecast accuracy is measured for you, be grateful that someone is helping you improve your forecasting ability. If you don’t, start to measure it yourself. Give yourself a (very quick) pat on the back for what you got right and then turn your attention to what you got wrong.

Take out any emotion or defence mechanisms around the things that were “out of your control” and rationally analyse what you would/could have done differently if you could turn back time to when you last updated your forecast.

2. Acknowledge that it’s important

A forecast is not an administration exercise, if you say you’re “doing your admin” when updating your forecast you may want to reassess your priorities. Business plans, cash flows, your and your colleagues’ future employment are all based on your company’s ability to obtain orders from your customers.

Being able to forecast when these orders will arrive, how much they will be worth and when they will be invoiced is one of (if not the) most important set of numbers in any business.

3. Be honest

An accurate forecast depends on an honest appraisal of your sales pipeline, the less honest view you take, the less accuracy you will be rewarded with. If you want to fool yourself that your sale pipeline is better than it actually is, it’s not very difficult to achieve, just be over optimistic about when your orders will arrive and what their value will be.

It might keep the management or the bank away from you or it might give you the blanket of false security you’re craving. However, it will be short lived and the only person you are really fooling is yourself. If your pipeline doesn’t look great, be honest and focus on what you need to do to improve it.

4. Learn and improve

Accurate forecasting is a skill; there is no fool proof methodology. If there was we would all know about it, I wouldn’t have written this and you wouldn’t be reading it. Like any skill, the more we learn from our past successes, our past mistakes and the harder we work at it, the better we get.

So apply the learning techniques and the “purposeful practice* to forecasting that you would to any other skill you want to improve.

5. Find your perfect model and process

If your forecasting systems are not up to scratch, then find a way round them, through or over them: whatever you do don’t let them stand between you and having an accurate forecast.

If the model and process you are using does not work and you don’t know what to do, hire someone who knows what good looks like to redesign it for you.

6. Take responsibility

It’s your forecast, you own it and you’re responsible for its accuracy, it can’t be delegated, allocated or transferred to someone else. This is particularly true for those in the sales and business leadership positions. It doesn’t matter if your forecast is an aggregation of ten, a hundred or even a thousand other peoples’ forecasts; it is still your responsibility.

Of all the factors involved in accurate forecasting, buying into the fact that you are 100% responsible for your own forecast is probably the most important. Forecasting accurately is hard work, it demands time and attention and a real desire to get it right.

Samuel Goldwyn might not have been interested in “forecasting the future”, but then again he didn't need to, he was in the movies, he could make the future whatever he wanted it to be.

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