As businesses emerge from restrictions imposed due to the pandemic, they do not have a clear definition of “normal.” Whether the business was in an industry sector that thrived in the past year or one that struggled, it is almost certainly facing a radically changed landscape. Yet businesses must find a way to plan their two-to-five-year future.
Projections and scenarios are two techniques that provide better forecasting in this challenging, constantly changing environment. Being agile enough to make quick decisions is imperative.
Here are five steps you can take to make your forecasts as targeted as possible:
- Set strategic goals, objectives and timelines. Understanding what people inside and outside the company want is key because it provides a framework to build on.
- The company’s policy on whether to remain virtual or bring employees back to the office should consider employees’ preferences. If it does not, the response may be a higher turnover rate or the loss of key employees.
- Similarly, understanding your customers’ value system contributes to how you approach them. A customer base that values great customer service has different needs than one that is price sensitive.
- Use data to support the company’s goals, objectives and timelines. The company’s enterprise systems contain much of the necessary data. Using that data to set up a dashboard, or a series of dashboards, will let you monitor important indicators such as delayed delivery of critical raw materials.
- Use metrics from social media and other marketing tools to help identify issues and problems. For instance, a retailer that sees complaints about shipping charges may choose to pick up the costs or set a dollar amount over which shipping is free to the buyer.
- Do not ask for more data than you need for a particular purpose. For example, forecasting supply chain needs requires details, but forecasting receivables does not. Asking for unnecessary data can distract from what is really needed.
- Use scenarios to help plan. It is impossible to plan for everything, but it is possible to envision what can be done to mitigate a situation where a supplier does not deliver as promised or a key employee leaves the company unexpectedly.
No one knows what the new normal will be or how it will evolve over time. Yet company leaders are charged with developing strategic plans for the future.
Businesses rose to new challenges quickly at the start of the pandemic, and some of the lessons learned from those challenges will carry over. Even though it is impossible to follow historical trends to anticipate when the pandemic will end, it is possible for company leaders to make the best possible decisions through value-driven forecasting. Baking the ability to monitor the right metrics into the firm’s daily activities will allow it to remain agile during these uncertain times.
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