The Impact of Missing Your Forecast

—Sales forecast accuracy is the ultimate number that sets great sales leaders apart because the more reliable they are, the smoother the company can run.

Carl Eschenbach

Partner at Sequoia Capital and Former COO of VMware

Here’s the truth: For most companies, forecasting is

Inefficent Reps can’t enter all the relevant data

Not Data-Driven Leaders can’t see all the risk factors

Not Real-Time Managers can’t coach strategically

Off the Mark Teams can’t take the right course of action

When you’re under the forecast...

Hard Cost

Decreased value/drop in stock price Missed revenue means a decrease in stock and company value.

Layoffs

Cash impact

Instant cash relief through reduction in work force may be necessary, leading to poor morale and costly rehiring in the future.

Less cash flowing in means reduced hiring, programs and investments impacting future fundraising and autonomy.

Missed/delayed fundraise Your fundraising story weakens without an accurate forecast, shortening runway and leading to a smaller raise.

When you’re over the forecast...

Executive Team Credibility The board, investors and customers lose trust in company leaders for not having an accurate pulse on their business.

Hard Cost

Investors wonder if you actually have a pulse on your business, or if you’re being reactive impacting future fundraising and autonomy.

Employee morale and productivity All teams feel a drop in morale by not hitting the forecast, especially sales, resulting in turnover and decrease in productivity.

Missed opportunity to accelerate operating plan With greater visibility, you could have proactively taken steps to pull forward key hires or investments.

Negative brand implications Customer and prospect skepticism from customers, partners and suppliers.

Investor confidence

Soft Cost

Not enough inventory to meet

Downstream crush on post

needsInventory was likely purchased based on the forecast, resulting in unfilled orders, expeditation fees, customer concessions and a hit to customer satisfaction.

sales departments Teams are undderresourced to meet demand, leading to unmet customer needs, overtime costs and turnover.

Inefficient “late spend” profile

Based on accounting rules, unexpected revenue might need to be spent prior to new fiscal periods, resulting in poor spend decisions and dollars wasted.

Soft Cost

Exec team credibility with the board The board, investors and customers lose trust in company leaders for not having an accurate pulse on their business.

Investor confidence

Premature increase to future quotas Increasing quotas might be a natural reaction, but the results of one quarter could be a false positive if you can’t explain the overage.

Investors wonder if you actually have a pulse on your business, or if you’re being reactive impacting future fundraising and autonomy.

Deterioration of CRO/CFO trust

Was the CFO in the loop or will they now have to report on a number from left field to the board? The result is stress on internal executive relationships.

The ability to predict revenue outcomes is more critical than ever and is on the critical path to achieving revenue confidence. Accurate forecasting sets the pulse for the entire company, its operating plan and the way it invests and grows. <u>Learn more here</u>.