“Strategies and Tactics You Need to Know to Improve Forecasting Success” with PivotPoint Business Solutions Partner, Ken Lane

Ken Lane, PivotPoint Business Solutions partner and Founder/Owner at Hathaway and Lane Digital

I’m excited to be contributing to the PivotPoint Business Solutions team in my role as Business Advisor, helping our partners with improving business processes, forecasting accuracy, marketing return on investment and – of course – the bottom line.

It’s becoming clear in a post-pandemic, tightened supply-chain, and in the pending recessionary business times that we are competing in, that getting your forecast right is the second most important function for companies. Other than providing the products and/or services that you sell, having the right amount of cash available – when you need it – is paramount for success. My own consultancy – Hathaway & Lane Digital is a team of data-driven thinkers who help companies use their data and our exclusive “RI” (real intelligence) to help build a better business. These skills have become especially important with all things forecasting since the pandemic.

The team at PivotPoint asked to write a blog focused on forecasting and importance. Following is the first in a series I’ll call “Strategies & Tactics you need to know to Improve your Forecasting Success.”

Those of you that know me, or have sat in on one of my conference/webinar presentations, know that I like to start things off with quotes. Most suitable for this subject matter is from Steven Covey – author of the Seven Habits series of books – and one of the most profound thinkers of our time. Mr. Covey died in July 2012 but his legacy lives on through Seven Habits and through the Franklin Covey Institute. I had the extreme pleasure of hearing him speak to a small audience many years ago during my tenure as Director of Marketing for the Jackson & Perkins Rose company.

One. “Start with the end in mind.”

While this has many connotations, business and otherwise, it is quite apropos for forecasting in the horticulture industry. Simply stated, you need to know where you are going and then build a forecast…realistic, based on data, acceptable from your management team, attainable and achieving the company’s P/L objectives. Phew…that was a mouthful. Easy, right? Perhaps not, but maybe it can be.

Two. “Understand, measure and manage the KPI’s that matter for your forecasting needs.”

Simply stated, it is tantamount for your forecasting success that know the KPI’s – Key Performance Indicators – of your business. If you have been doing this for years, or worked for your company for years, this might be easy to compile. You may have some metrics from a previous job or position that are relevant and applicable for your business. Add these to the collection. Ask others in the organization what numbers they look at on a daily/weekly basis (etc.) and add these, as well.

Create the “per” KPI’s along the way…. per order, per customer, per association, per greenhouse, per acre, etc. Understand your historical “curve” …the percent complete curve…that allows you to assess progress versus your history. The key to success using this tool is understanding that the curve ends at 100%. If your YTD revenues forecast, based on historical curves, is running “significantly” ahead or behind budget, you need to adjust the endpoint to reflect where the 100% of the season might be and then react accordingly.

While it may sound silly, KPI’s are numbers, not words. A pet peeve of mine over my entire career is when a question is answered with “a lot.” A lot is not a number. Try to double “a lot” next year…you need to be as specific as you can be at each level.

Case Study: We have a client – let’s call them Acme Annuals - that, when she starts with the end, determines her organization’s revenue expectations for a rolling three years. A direct to consumer (DTC) marketer, she knows that each additional greenhouse is capable of generating $2 million in revenues. And while it might go without saying, if those greenhouses don’t get built (labor, cost, time), they are not going to hit revenue expectations.

In our next issue, we will discuss Phantom Demand…no, not an Andrew Lloyd Webber musical…It’s your secret weapon in building your most accurate forecast ever.

Connect with Ken Lane at ken@pivotpointbizsolutions.com or Homepage - Hathaway & Lane Digital (hathawayandlane.com)