The rear-view mirror is a fraction of the size of our windshields. We don’t look at our rear-view mirrors very much when we are driving. However, we are usually doing all of our financial analysis by looking at our historical numbers. This is like driving down the highway at 65 miles per hour without looking through our windshield into the future.
A recent article from the Big Fat Finance Blog is the source for this week’s Five Burning Questions. This article discusses the concept of “rolling” forecasts where you are consistently planning a set period of time into the future.
- Why are rolling forecasts important for a company’s business planning?
- How detailed should these forecasts be?
- Besides financial figures, what types of information should be a part of a good rolling forecast?
- How will you use rolling forecasts to make your business happen?
- How can you use a rolling forecast to keep from looking into the rear-view mirror all of the time?
We can only make our businesses happen by looking into the future. Having the right mindset to avoid strictly reviewing past data is a critical part of planning your business with an eye for what will happen next.