When you are in the midst of creating your business’ planning forecasts, do you use Guess, Estimate, Accurate and Precise interchangably? I don’t. I believe there are very distinct differences in these words — they are not synonymous. Here’s how I see them.
Guess: Pulled out of thin air. “Oh yeah, sure, no problem, easy-peazy! I can get all my darts into the target! Um — uh — er — which target was that?”
Estimate: Prediction of the future, based upon past results, or research. “In my previous rounds I’ve hit the target. I’m improving. I think I have a 65% chance.”
Accurate: The real data, the actual results — in a broad sense. “I did hit the target.”
Precise: Specific detail, categorization, analysis. “I hit the bulls-eye once, the triple 20 once, and one dart hit the target, but outside the scoring rings. I need consistency.”
When you are initially writing and then regularly reviewing your business’ operating plan think seriously about these concepts.
Guess: Leave these blue-sky, gross generalizations out. Venture Capitalists and investors can tell when you pulled these out of ……. thin air. If you run your business on guesses, guess what, you’re out of business.
Estimate: Do your research. Forecasting is more than guessing. It is grounded in past experience, sound market research and analysis. Cite your sources.
Accurate: Keep your records and use all your results. You can use the big picture, but it may not serve you well if your view is too broad. “The fewer the data points, the smoother the curve.” But really, you want to see all the peaks and valleys so you can adjust your business activities and future planning to account for real-world variables.
Precise: Be honest here. Look closely. Continue to do your periodic scheduled reviews. Do your analysis thoroughly and completely, even if the conclusions may not be exactly what you wanted to find. If you throw out half of your data in order to reach correspondence with your estimates, you are neither accurate, precise, nor honest with yourself nor with everyone else participating in your business.