One of the more powerful drags on business planning in general is what I call fear of forecasting. Lots of people have it.
“How could I possibly know?” is one of the more popular complaints. After all, who can predict the future? How can you know what’s going to happen in the market, with the competition, or with new technologies. Isn’t it just wasting your time to try to guess?
No, it isn’t just wasting your time, because one thing harder to do than forecasting is running a company without a forecast. The real question isn’t, How can I possibly know what’s going to happen? but, rather, How can I possibly know whether what actually does happen is good or bad or better than expected if I don’t know what I thought would happen?
Confusing? Think of it this way: although you forecast for at least a year, you actually go out on a limb only for the next month. In a month, you’re going to review that forecast. You’re going to see what is different from the forecast, and revise the forecast. Your year doesn’t stay static after the first month if results of the first month cast doubt on the whole year.
So don’t worry so much; get started with your forecast, and you’ll be revising.
Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.
