I learned the importance of forecasting when I managed large department store operations back in the 80’s and 90’s. I found running a department store was very similar to running my own business, except I had a lot of support small business owners never get, which gave me a unique opportunity to learn the most important aspects of managing by the numbers.
Thinking like a retailer will never fail you in any sort of business. All businesses have inventory and sell it for a profit. All businesses have overhead expenses and need to control them. I could go on, but I won’t…suffice it to say that as the general manager I had direct profit and loss accountability, and I was in control of bringing my bottom line in at or above the planned number. I learned pretty quickly to focus in on driving sales, controlling my overheads, and to concentrate on moving higher margin items. But, if I didn’t forecast properly the buying division would not plan my “buy” properly and l would not get the inventory to support my sales targets. After all, this had to be done months in advance of the season I was selling in.
You can think of your business forecasting in the same manner. First, review what you did last year in your profit model and then project what you want to do this year, all that is left is to fill in the business growth strategies to get you there, spread those over the course of the year and execute on them, as you watch the needle move.
Oh…and if you need a hand with that – drop me an email at email@example.com.
Clint Best is a business coach and the founder of Kaizen Business Development in Kelowna, BC. Clint has been guiding forward thinking business owners through change and growth since 2002.