Is your forecast ready for your 2018 Annual Operating Plan?

by: Rose Cain

As summer comes to an end, you are likely looking ahead to 2018 and preparing for your 2018 Annual Operating Plan (AOP).  A key component to your AOP process is your sales forecast.  Forecasts by nature are not perfect but you need a forecast that is right – you need reasonable, reliable revenue expectations.

A 3% increase in forecast accuracy increases profit margin by 2% (Source:  AMR Research)

Here are a few things to consider as you set to deliver your 2018 forecast projections and sales goals:

History lessons are important.  Historical data is the most important element to accurate forecasting.   The past trends (seasonality, buyer trends, market trends) can predict the future.  Review your 2017 forecast against your actual sales to highlight areas that were accurate, and areas to further inspect.

One set of numbers.  You can’t get a picture of your business “truth” if there is more than one forecast.  If Marketing, Sales, Product Management and Manufacturing all are working to different forecasts, you will never gain the accuracy you are looking for.  Create a collaborative forecasting process with buy in across the company.

Keep it Simple.  Don’t make your forecast process so complex you need a team of statisticians to decode it.  There are many forecasting tools available – your CRM can easily be configured to manage your forecasting.  Make updating the forecast fast and easy (and mandatory).

Document the Process.  Document and communicate the process frequently – accurate forecasts must follow consistent processes and definitions.  All it takes is one individual to misunderstand the process, to skew the numbers moving forward.  Make your forecast process part of the onboarding of all new personnel who are involved in forecasting.

Forecasting is a continuous process – no matter whether you are forecasting quarter on quarter, or 12 months rolling, tweaking and adjusting is normal.  Manage forecasts by regular scheduled forecast reviews with all stakeholders to gain insight on areas of accuracy and areas requiring in-depth reviews.

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