The 10 Key Issues : Issue 10 & Conclusion
The last in a series of articles about the 10 key things that you will need to either know, have, acquire or do if you’re going to get the forecast you want.
Download the complete document: The 10 Key Forecasting Issues
Issue 10 : Software
In a nutshell : Don’t choose your software until you know who’s in charge of the project, what their skills are and you’ve established exactly what you want to achieve.
And last of all. Only now, when you know who’s in charge of the forecast, what skills they have and what other resources are available to them - and precisely what it is you’re trying to achieve - only now should you select the tool for the job.
If your aspirations are very meagre there’s always the back of a fag-packet, but I’m presuming if you’re still reading this you’re relatively serious about it. If you’re going to buy software you don’t know how to use, you have to build in an expensive and time-consuming learning curve. (As a general rule the more expensive it is the more difficult it will be to learn, and the cheaper it is the more you have to fudge and compromise. Either way it’s expensive.) The options range from professional proprietary software of many different types, free software given away by banks through to building your own spreadsheet system.
Or, worst of all, you can simply abdicate the whole thing to your accountant and take whatever they give you. Instead you need to ‘own’ this decision and take it proactively - rather than just accepting what you’re given - if you are to make sure you meet your objectives for your forecast.
Of course, at least now you are aware of all the issues and you can ask the right questions before making a decision!
Conclusion
These ten issues are not the answers. They’re the questions. Whether you like it or not they affect every financial forecast, big or small, simple or complex. But the purpose of these questions is not to maximise the significance of each issue or turn each into a millstone. It’s as much about ensuring that you don’t provide for things you don’t need as it is about making sure you get what you do need.
How significant any individual issue may be to you depends on your specific needs. What’s important to one business may be insignificant to another, or even wholly irrelevant. And that’s the point. ‘Wholly irrelevant’ doesn’t mean the issue doesn’t exist as a question for you. It means ‘wholly irrelevant’ is the answer in your case.
So go through each in turn and take a view. And then go through them again. You may find that your initial preconceptions have altered once you’ve looked at the whole picture.
And last, a word about keeping it simple. Be aware that being drawn into the world of forecasting has a strange effect. People who create forecasts start to believe them. When they believe them they start to think there’s some merit in going into more and more detail, on the grounds that it will inform them more and more. Remember: a forecast is just a guess in a party-dress. It’s not a crystal-ball. Its purpose is to guide and inform what are always in business speculative decisions. Unnecessary detail in what you can’t predict doesn’t help; it often hinders. I spend a great deal of my consultancy time on keeping clients to a realistic level of detail. And bear in mind what is the right amount of detail for your audience. It’s they who matter most. Always keep it as simple as you can afford to.
Whether it’s to assist you in planning, or to convince someone else of your case, a good forecast is worth its weight in gold. Give it a bit of thought before you start, and you’ll get the forecast you need.
If I can be of any help, get in touch. Good luck, and good forecasting!
Simon Thompson
Download the complete document: The 10 Key Forecasting Issues
