Forecasting is all about reducing risk. During uncertain times, standard forecasting practices just won’t be enough. Here are a few tips to add to your forecasting process that will help you reduce risk, keep your key stakeholders informed on the health of the business, and impress a few people along the way with a quantifiable display of your understanding of your business.
Define What Uncertain Means to You
The term “uncertain” is being used to describe almost every aspect of life since the coronavirus has entered our lives. Every market, industry, and company has been affected differently, and this is a time when your understanding of the business is going to be tested. While there’s no way to fully prepare for what might (or might not happen) you can think about what uncertainty could mean in terms of operations. By brainstorming all the ways your business could or will be affected, you can then use those scenarios to build a narrative around the quantifiable impacts on your forecast weightings.
For example, you might consider that: “During these uncertain times, I think my buyers will take longer to make buying decisions.”
Quantifying Forecast Impact
While historical data can be useful, it’s important to not be blinded by what life was like before the uncertainty of COVID-19. Things have changed dramatically, and using your historical data as a benchmark is about all its good for.
That’s why it’s important to consider all possible scenarios during your brainstorming session. Once you do that, you should have a list of ways your business will be impacted. Now, the next step is to convert those narratives into a quantifiable weighting.
Here’s an example: Pre-coronavirus, my average days to close was 45 days. I think it will increase to 60 days because it will take another two weeks to get internal buy-in because of the additional approvals required.
Then, take the extra step to test your theory with your sales team, and even go to your most trusted prospects/clients to get their thoughts in order to build confidence around it.
Double-Down On the Process
There are two parts to this step. First, uncertain times will require change, and updating your processes to adapt to those changes will be key. Second, you’ll need to commit to those changes by making sure the team is prepared for them, and more importantly, able to follow the process around them.
The good thing is that you can take what you know about how your business will be affected and adapt the process to mitigate the risk. Each theory that arises from your brainstorming exercise will be an opportunity to think through the down and upstream impact of each.
Here’s what that could look like: When the days to close go from 45 to 60 days, my opportunity generation teams will need to adjust their targets to hit them, and my services team will see a slow-down on customers acquired during this time.
Standardize Your Forecasting Across the Team
When forecasting is done well, it provides your executive team with exactly what they need to know in order to make those really important decisions during uncertain times. If they are left guessing in regard to the accuracy of your forecast, the team will be unable to lead effectively.
Once you have your updated process, make sure you standardize those protocols across your revenue team. If you have variability across your reps, managers, or teams, it could lead to some confusion, leaving your executive team unsure about how much to take off the top of your forecast — ultimately defeating the purpose of forecasting in the first place. The fix? Standardize your forecasting, and you will build trust in your numbers.