Moving from budgeting to rolling forecasts

Video transcript:

The key benefit of shifting to a rolling forecast is you can have a very explicit conversation about what are the action plans, what are the gaps. And by seeing those stairsteps you’ve got to make to climb up to the target, you can ask a whole lot of really good questions, real deep planning questions: Do we have the right manpower to be able to execute this one? Do we have a plan? Do we have manpower? Do we have working capital? What needs to happen? What competitive reaction might come if we take those actions?

Forecasting is about understanding where you are headed, where you want to go is a target and if you think about on that far wall if we had a target, it would be up there, we’re trying to get our ship to head that direction, but we only get our ship to head that direction based on projects and initiatives and we’re buffeted by the economic changes that are happening, up, down, left, right. We’re constantly having to correct our direction of our ship.

We’re doing a lot of education and training, teaching people how to build simple forecasts to start with, and then try to make those forecasts more sophisticated over time by building predictive logic diagrams.  Now predictive logic diagrams is the fancy word of saying what causes what to happen.

You create this logic diagram. If you have that funnel, that sales funnel through sales and marketing, you can then look at that and begin to interpret and project what the financial health is going to be, project how long it takes for leads to fall all the way through there, and you begin to get early warning systems to tell you whether or not do I have enough good leads coming through to my revenue one month out, two months out, three months out.

So, it will be this ongoing process and what happens is as you close the gap as you move up and get better and more competitive and move higher up in the rankings, you will see new challenges. That strategic plan will keep out there.

The good news is, there is purpose-build planning tools today that do a great job of helping show you how to do rolling forecasts, automate that, automate your data feeds. And since so much of this is moved to cloud-based technology, where things are now, you don’t have to do it on premise, you don’t have to involve a ton of IT, there is no upfront cost, it’s all rented. And, basically, you do it in the cloud, and there is not many vendors out there doing that. Nearly all the planning vendors have shifted to peer cloud implementations, and we are going to see that trend continue simply because it’s a lower cost of ownership, it’s a quicker time to the money. You make an investment, you get your return faster.