The Importance of a Guide
When business conditions get tough, the first reaction is to look at your future forecast. And revise the numbers. Numbers are crunched. Targets are calculated. The forecast for the next 12 months is no longer a guide. It has now become a target. Once the numbers have been finalised, the communication with the Executives / Department Managers begins.
“We need to reduce our spend by $50,000 over the next 3 months?”
When you start to use the forecast numbers as a target, the natural tendency is for someone to say they will hit the target. They don’t want to let management down. So they will agree. Despite their good intentions, it doesn’t mean they will meet the target. And then what happens? The target is carried over into the next month. Very quickly, the numbers lose their meaning. And there is no longer accountability.
But what if we were the re-frame the question.
“What does our next 12 months look like? What can we do to reduce our spend over the next 3 months?”
“Let’s put together a schedule that supports our reductions. Let’s see what non-critical spend we can forgo over the next 3 months.”
Now we are seeking guidance, and with the supporting data you can put together a story that supports the numbers. A story that your people can believe in.
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