Is Your Operating Plan Outdated?

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Management completes the company’s annual plan and smiles. Click that Done checkbox! The plan is forgotten.

In today’s rapidly changing business environment, “set it and forget” is dangerous.

First, let’s replace the word “plan”.  We are working with forecasts: what we expect to happen.

Technology, how we work, consumer behavior, and the economy are all changing at a rapid rate.  To be as profitable as it can, your business must change to reflect these factors.  A rolling forecast will show you the benefits of reacting now instead of next year.  Well ahead of your competition!

Rolling Forecast

As a “living” forecast, rolling forecasts are reevaluated throughout the year, often quarterly.  Your forecast’s level of detail should be enough to make sense. Not every detail line item, simply the higher-level categories.

Let’s look at COVID as an example. Companies rolled out their annual forecast on January 1, excited about the upcoming year. They set it and promptly forgot it.

In a few short weeks, news of the virus hit.  Companies realized their static forecast wasn’t going to be achieved, through no fault of their own.

Clearly, this is a dramatic example.  External challenges do arise, though.  One-time predictions rarely pan out exactly. Rolling forecasts will adapt to these moving challenges and opportunities.

A rolling forecast can be used in what-if analysis, to show the success (or failure) of new marketing techniques, changes in production techniques, pricing strategies, and more.    What if we change our marketing to online only, what can happen to sales and profits?  What if we outsource this product component?

Unexpected opportunities and new challenges are always popping up. Be prepared!