Part of the “secret sauce” in playing The Great Game of Business is developing a consistent Huddle rhythm that includes forward forecasting your income statement by "line owners," or people close to the numbers that have responsibility for reporting each line of the P & L. The level at which associates embrace this practice varies across Huddle team members—some take it very seriously, while others devote little or no time to this critical process.
As a business coach who has been a part of hundreds, if not thousands, of Huddles, I've learned what to listen for in a forecast. When I hear phrases like these below, it alerts me to dig a little deeper and ask questions of the line owner to promote a better thought-out and more accurate forecast:
This is natural for business people, but not helpful here. We want to use all the knowledge available to forecast financials accurately. “Conservative” is not the line owner's most precise and authentic forecast.
If it is the last day of the month this is fine. However, if half the month has yet to happen, using month-to-date data will probably not prove to be accurate.
The same problem with being conservative. We are not looking for optimistic, pessimistic, or conservative. We are looking for what is likely to happen.
This is fine if this month will be like last month. It's not fine if this is used as a shortcut to a Forecast. “Just use my number from last month” is probably only good if you are forecasting an item that is consistent month to month, like rent.
This sets off all sorts of alarms for a Coach. Did the line owner even bother to look at the forecast for this Huddle?
Just not acceptable. It undermines the whole process. If this reoccurs, this person should not be part of the process.
If the Plan is new, then using those numbers might be appropriate. If the Plan is several months old, defaulting to Plan numbers is probably not acceptable. At this point, associates should have enough data to make a more specific and accurate forecast.
“Tom” does not own the line and the associated forecast. The line owner does. The line owner should communicate about necessary items before Huddle and come prepared.
Accounting is a critical source of information but is not responsible for the forecast. The line owner needs to figure out another way to forecast with the data they have for a Huddle.
This list is not exhaustive, but a good representation of phrases you need to be on the lookout for in your Huddles. Others "weasel" words that indicate the person presenting the forecast is trying to sidestep the responsibility and accountability include words like “sort of” and “nearly.” If you hear phrases like these too often, your Huddle will sort of nearly be useless.
Financial forecasting in business can be very challenging but the benefits to the short- and long-term health of the organization can be tremendous. To ensure that your forecasts are as productive as possible, listen for and eliminate these weasels from your Huddle.
Talk to one of our experienced Great Game coaches to learn more about the importance of financial forecasting and steps to get started.
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