Jared recently started his own business and has seen it grow exponentially in the last few years. Jared wants to ensure continued success by conducting effective forecasting for his company.
Jared understands that the goal of forecasting is not to predict the future but to tell him what he needs to know to take meaningful action in the present.
To do this, he discovers six rules he should follow to ensure that his forecasting efforts are effective including:
Rule 1) Define a cone of uncertainty.
Effective forecasting will provide Jared with essential context that will inform his intuition and judgment.
Rule 2) Look for the S curve.
Change rarely unfolds in a straight line and Jared must look for these types of incremental developments.
Rule 3) Embrace the things that don’t fit.
Indicators, when aggregated, become powerful hints that Jared can use to forecast what is to come.
Rule 4) Hold strong opinions weakly.
Jared must learn to not hold onto his pre-conceived notions too strongly especially after facts have changed.
Rule 5) Look back twice as far as you look forward.
Looking back on a company’s historical data is a good metric to predict the future.
Rule 6) Know when not to make a forecast.
Periods of dramatic and rapid transformation may be times when a forecast should not be called, leaving space for new changes to emerge on their own.
Now that Jared understands how he can make his forecasting efforts more effective, he is ready to ensure the success of his new business. These 6 rules can help any business owner lead from the front and steer a company toward progress.
If you want to learn more about the six rules for effective forecasting, click the link below for more information.