Forecasting
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What can you learn from your past?
Your past can be a gold mine of information. Your history contains a blend of things that are worth repeating because they resulted in healthy growth, and things that should not be repeated because they didn’t work well. Forecasting, when done right, should help you give serious thought to these factors.
Corelytics forecasting
Forecasting builds on your past financial performance to predict what’s going to happen over the next 12 months. The forecasting logic looks at your past 6 months of growth and at your past 24 months of growth and from that predicts 2 potential scenarios for the future. The logic results in a forecast that says “if you keep doing what you did in the last 6 months, your future will look like scenario 1 and if you continue doing what you have done over the past 24 months, your future will look like scenario 2.”
For most companies, the 2 scenarios will be different and only rarely will they be the same; one scenario will be higher than the other. On the charts you will see one forecast line that is an extension of the rate line and one that is a continuation of the past 24 months. The other line, whether it’s higher or lower, is the continuation of the past 6 months.
Recommended steps
- On the revenue, expense, and profit screens, click the Forecast button in the upper left of the screen
- Check out the potential high and low forecast for the next 12 months (the numbers at the far left the lines on right half of the graph)
- Click on the goals box and the benchmarks box below the graph to see how your forecasts compare
- Determine actions required to achieve the desired scenario
The critical management decision
So the big question to you is: “do you want to keep doing what you have been doing in the past 6 months or do you want to get back to what you were doing in the past 24 months?” Making this choice is pivotal to moving forward with your best footing.