Forecasting and planning for 2021 after the year that everything changed

As we approach Christmas, teams across all sectors and industries will be taking the opportunity to review and reflect on the past year. How did we do against our target? How well did we adapt to what the year threw at us? What did we do well, not so well and what learnings or changes do we want to take forward into next year?

During this period of review and reflection, how many of us can say that the year has panned out as planned? For the lucky minority, business has boomed. But for many, the year has presented substantial challenges, some difficult decisions and some very ‘off-plan’ results.

As well as looking back over the last twelve months, celebrating successes from the year and identifying areas for improvement, December is also a time for looking ahead to the approaching year. In the coming weeks, teams up and down the country will be setting targets and developing business plans for how they are going to achieve these goals.

Forecasting and planning can be tricky at the best of times, but even more so this year many managers will likely be pulling their hair out at the thought of presenting robust numbers for the coming year. Indeed, after the rollercoaster of 2020 and the economic uncertainty that still lies ahead, some may be struggling to know where to start with this, whilst others may even be questioning whether there is any point.

Forecasting and planning is a key area where the Managementors team supports our clients as part of embedding an effective management operating system (MOS). The tumultuous times we are currently living through will undoubtedly add some additional challenge to this process, however there are some core principles we should keep front of mind.

Understanding your historic data is a key initial step. If your data looks quite different in 2020 to previous years, this raises some important questions to be considered when forecasting for next year. Which volumes have increased and which have decreased? What has driven this? Has the mix of work changed? Are we expecting these trends to continue, and to what extent? Do we anticipate any substantial business changes or shifts in performance in the coming months? What other variables do we need to consider?

The identification of risks at an early stage in the planning process is key. What risks can we see on the horizon? How likely are these to occur, and what will the impact be if they do? Importantly, what are the preventative actions we need to take to mitigate these risks and, if they do occur, what are the contingent actions we can put in place enabling us to still reach our goal? Forecast and risk management documents should not be a one-off exercise completed at the end of the year, then left to gather dust, but must be treated as live documents reviewed as part of a regular review structure.

If this year has taught us one thing, it’s that we cannot predict the future. However, whilst there will always be unknowns and variables, ensuring that you can answer the above questions will provide you with the building blocks needed for developing robust forecasts and plans going into next year. Finally, we should also keep reminding ourselves of what we’re trying to achieve; “the goal of forecasting is not to predict the future, but to tell you what you need to know to take meaningful action in the present”.