Forecasting the Future – Alternatives

Forecasting the future relies on an accurate method of measuring past and current performance. As the year progresses, everything is compared back to the figures provided at the beginning of the year. Many businesses operate this way mainly because that’s the way they’ve always done it. This limits your view to the number of months that have passed since the start of the year and may cause trends to be missed. The YTD method does have value when you need to estimate tax but leave that to the accountants; RealTime CEOs need a more effective method of forecasting everything else.

What if you could always have a complete set of data for twelve months or twenty-four months, no matter what time of the year it is? In our blog 24 Month Rolling Forecasts, we discussed the Trailing Twelve Month method of measuring your business’s performance. This method gives a twelve-month view of your business at any given time. As one month drops off, another month adds on. But what if we could look even further ahead?

Imagine you’re driving along the freeway in a shiny, new sports car… Research tells us that we maintain a field of vision of about 120 metres in front of us. What happens in that field of vision helps you make decisions while driving your car. Now, we don’t just keep looking ahead to the same spot, otherwise we’d end up looking at the front of our car, which would be really dangerous. Instead we keep looking ahead in that field of vision. This is what we want to do when we measure business performance. When you look ahead to the end of the year, the distance is shrinking as you get closer to it. What we want to do is maintain your field of vision ahead of your business.

We can better accomplish this with RealTime 24-Month Rolling Forecasts. In our next blog, we’ll examine the mechanics of RealTime 24-Month Rolling forecast. You can also contact us for a plan that’s tailored to your business.