“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.” (William Arthur Ward)
The topic today is revenue and the question is – how to predict it.
I must admit to you that my inclination has been to take the “business as usual” approach and punch in the figures based on current trends and what is likely to happen.
Joseph Voros produced a chart he called ‘Future Cones’. He called my style of revenue budgeting “Probable”. (see in ‘Foresight Infused Strategy’ by Maree Conway).
There are several other ways to approach this.
You can go down the “Preferable Future” path. That includes some value judgements about what you want to happen or perhaps what you think should happen. I like that approach.
There is “Plausible”. This will use current knowledge and tries to predict what could happen.
You could use “Possible”. Here you would take future knowledge and see if you can come up with what might happen. It is a subtle difference and considering the rapid pace of change and innovation, this is one for the “optimists”.
The ‘outside chance’ Joseph calls “Preposterous” and that is seen by most as “impossible” and “will not happen”. It is a good thing for us that Henry Ford decided on the motor car when all the advice at the time was to go for faster horses.
If you are a student of Excel, you may have already come across the Revenue Forecast template in the Microsoft Business suite. You can put in to the query box “revenue” and this is the first thing to come up on the list:
The other pages in the template include: Optimistic, Most Likely, Pessimistic and Mean Revenue. I guess you have options and can take your pick.
It depends on how realistically you want to set your sails!
If you need to talk to someone about revenue, we are available.