👋Hey there,
Do you dread forecasting because you’re never 100% right?
We’ve done hundreds of revenue and profit forecasts.
And guess what?
Every single one of them was wrong—and that’s ok when handled properly.
Although it is a huge mental hurdle to get over.
We’ll talk about one of our biggest forecasting fails.
Double-counting a revenue figure in a public company’s internal profit forecast.
Tune in to find out how we made the mistake, how we communicated the mistake to leadership, and how we handled it which drove revenue results higher (seriously).
Listen on
Mistakes Happen, Be Proactive (and Organized)
ONE thing is certain in FP&A careers.
You will get numbers wrong.
The trick to accelerating your FP&A career will be how you respond to making mistakes (aka getting numbers wrong).
Having a best-in-class profit forecasting process in place helps a lot.
🔥TIP: Here’s how a veteran profit forecaster approaches profit forecasting.
And enabling your team to support this process with a balance of autonomy and controllable failure helps too.
Failure helps people learn.
Controllable failure is helping your team make mistakes without letting those mistakes reach key stakeholders.
Show Notes
00:18 - We aint perfect in FP&A—let’s talk about epic forecast fails
00:42 - Forecasting fails are a right of passage in FP&A
01:28 - Holy smokes, Drew messed up a public company’s forecast 🙈
02:59 - Great monthly forecasting processes help catch and mitigate mistakes
03:45 - Making mistakes is stressful—respond by taking action
04:50 - You learn who people are when their backs are against the wall
06:30 - The reality is, numbers will be a measure of your FP&A job’s success
07:53 - Forecasting is about the realm of possibility—not perfection
08:44 - Drive operational finance—help your business partners make decisions
10:15 - FP&A is about driving decisions to help your company achieve its goals
Know Why the Mistake Happened
Making mistakes is ok.
Try not to make the same mistake twice.
Our revenue forecast mistake happened because two people counted the same product in their own stand-alone forecast.
The fix?
Each month audit what products each forecaster owns, ensure ZERO double counts.
🔥TIP: Speaking of products, use that product data to do whitespace analysis.
Hustle to Communicate and Create a Plan
Knowing why a mistake happened and ensuring it doesn’t happen again is a good start.
But what can you do about it now to help the company still achieve its goals?
Go on defense by managing expenses to help profit and cash flow hit desired levels.
Or go on offense and see what untapped revenue opportunities exist (like we did).
Either way, try to have a contingency plan in place when you communicate your forecast mistake.
Manage Future Mistakes the Same Way
We aren’t perfect.
Things you can’t predict will come up.
And mistakes will inevitably be made.
Focus on having a:
✔️ Framework
✔️ Team
✔️ Process
To help keep financial and nonfinancial KPIs (and metrics) organized throughout your forecasting journey.
That will help you maintain focus not on accuracy, but the realm of what’s possible.
And give your leadership and key stakeholders confidence that you will help them navigate their financial performance with financial rigor in place.
🔥TIP: Here’s a case study on KPIs (and metrics) you can relate to.
Conclusion: Keep Learning
You will grow from your successes and failures.
The trick is to keep learning—every day.
Knowledge is power.
It’s also an asset that will help propel your FP&A career.
How do you manage mistakes to better yourself and your team?
Share your experiences by replying to this. We read and reply to every email.
Now go have fun making an impact on your business and your career!
See you next week 👊
Cheers,
Drew & Yarty
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Disclaimer: This content is not investment advice or financial advice. The views expressed and stories told are our own. We may be investors in the companies discussed. Do your due diligence when considering applying what you learn.
Turn Forecasting Mistakes Into Opportunities