I’m betting you’ve either got a lot of numbers already laid out on a spreadsheet for 2018 or you’re scrambling to get it done in the next few days.
I’m a big proponent of forecasting. It lays out a map as to where we are going. Although there are detours along the way it gives us a chance to get to our final destination.
I’m an even bigger proponent of department head meetings. I believe your job as a leader should be to teach, educate, coach and encourage your team to seek ways to improve your operations.
I tend to take a common sense approach to most things in life and I approach forecasting and monthly management meetings no differently.
Dealers, or any business for that matter, tend to forecast based on what they would like to do in the upcoming year. Often it’s based on statements such as “we need to increase our sales by 10%” and/or “we need to reduce expenses by 15%.”
Saying you want to increase your business by 10% sounds good, but if you don’t have a plan to get there what good is it? I’ve always been baffled by annual forecasting.
One of two things usually happens:
1. Someone is overly optimistic and/or they are blowing smoke up someone’s butt.
2. Someone serves up a low ball because they don’t want the pressure of hitting an unrealistic number.
Although dealers want to see an improvement in the next year’s numbers, what they really want is a number they can take to the bank.
In order to do a realistic forecast, you have to take into account staffing, inventory, and market conditions. How can anyone do a forecast and predict what those three pieces of the equation are going to look like 3, 6 or 12 months down the road?
I’m not saying you shouldn’t do an annual forecast, but doesn’t it make more sense to adjust that forecast monthly or quarterly based on those three fundamental elements?
Because most leaders don’t make those adjustments it frustrates the management team and defeats whatever good intentions there might have been. Everyone eventually loses respect and confidence in any type of forecasting and concludes “Why bother?”
While it makes good sense to do a monthly or quarterly review of the actual numbers, managers become disillusioned with these reviews in that they become a “beat up” session rather than trying to figure out what went wrong and how “we” can fix it.
People know when they didn’t perform. What they want from upper management is leadership that gives well defined ideas and direction on how to “fix it” or make it better.
Using more common sense with your forecasting and monthly management meetings will help you grow a solid organization that generates consistent profits and sustained growth.
That’s all I’m gonna say, Tommy Gibbs