Why is accurate forecasting important?

1. It allows the company the ability to effectively capacity plan their resources (i.e. people, inventory, & marketing resources, etc)

2. It provides senior leaders and shareholders visibility into product and service demand along with their associated revenues

3. It aids in multiple levels of strategic planning and capital investment planning

So if forecasting has such a heavy organizational impact, then why do we treat it like a 50/50 guessing game? Instead of forecasting based on the reasons that we think the deal “will” close. Why not flip it on its head and forecast based on the variables that could cause the deal “not” to close. This is called Risk-based Forecasting”.

The risk-based approach can improve forecast accuracy by more than 30% if done properly. Here are four key questions that need to be answered before you can even think about forecasting revenue.

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