Forecasting Business Goals
We’ve talked a fair amount, in recent years, about goals – personal goals, business goals. I’m for them. Big-time. But it’s important to make sure your goals are realistic, capable of achievement; it’s also crucial to have a plan, a roadmap, for meeting those goals.
That business roadmap is what a good forecast can provide. And the more the forecast is revisited and revised in light of actualities and the ensuing updating of assumptions, the better the map it will become.
You’re almost certainly familiar with financial forecasts, whether in principle or in practice – forecasting long-term business goals is a slightly different matter.
Forecasting goals (indeed, all forecasting, to some extent) is principally the art and craft of measuring uncertainties, assorting possibilities among most-likely to least-likely-but-still-possible. Some forecasters call this the “cone of uncertainty,” with the likeliest outcomes in the center and the least-likely at the edges.
Further, effective forecasting requires taking into account the least-likely possibilities – as time goes by, markets change and these possibilities may become much more likely than they originally appeared.
A sound forecast of your goals for your company identifies potential as well as emerging trends within your (and other related) market(s) which may help identify ways to position your business to capitalize on trends in order to meet your long-term goals, and then refines on the results as more information emerges over time.
It’s important to note that a forecast is not a prediction. Prediction is only possibly where there is certainty, and potential future trends are the opposite of certain. If you were certain about the future, there’d be no need for a map of its uncertainties.
But – a good forecaster can let you know whether your long-term goals are:
- Likely of success
- Possible of success
- Unlikely of success
And if the goals are realistic and achievable, a good forecast can help show you the best paths to pursue in order to reach them.
There’s a fourth possibility – your goals are realistic and achievable, but not in the time-frame you’ve allowed for.
This is one reason to make sure you have an excellent forecaster – one who can tell you hard truth with understanding, compassion, and with the expertise to develop long-term forecasts which will help you meet your realistic goals – and help identify what goals, under what circumstances and in what time-frames, are realistic for your business.
Now, if you’re head of a large company, you may have a CEO and a CFO and their teams, which almost certainly include skilled forecasters.
But if you’re a smaller concern, you may be serving as your own CEO/CFO, and likely haven’t done in-depth business forecasting, though you’ve made business projections, set budgets, and generally done an excellent job of running your business.
Forecasting, though, especially toward meeting longer-term goals, is a very specific learned skill and mindset, and one which some learn more readily than others.
If you haven’t a dedicated CFO, consider consulting with a virtual one. Virtual CFO services are gaining traction for a very good reason – they are a great resource for entrepreneurs running closely-held businesses and wearing many hats. It’s highly probable that the CFO hat is not the best fitting one for these high-powered, super-busy business owners.
A virtual CFO can give you a solid forecast to serve as a roadmap toward achieving your goals, and will constantly update that forecast to give you an ever-improving map in light of new information, emerging markets and industry trends. A virtual CFO should meet with you regularly and get your insights into current operations and your vision for the company’s future.
In addition, a virtual CFO is positioned to help you devise not only forecasts, but strategies for achieving your goals for your business. These, also, will be updated regularly.
If you are looking to develop realistic long-term business goals and effective strategies for meeting them, I recommend strongly that you consult with us – RFG’s expert virtual CFOs are here to serve your needs.
Please click here to let me know how we can help you.
Until next time,