When to rely on a forecast or not….

As I write this the sun is shining brightly and the cold damp unseasonal (?) weather we have been experiencing is suddenly a distant memory. OK the stock market is down (again), retail sales are down (again) and Greece continues to teeter on the brink (again). However there is something about a change for the better in the weather that seems to make the world, however fleetingly, a much better place.

Of course businesses are extremely adept at using the weather to excuse any number of calamities. Too much summer, too little summer, badly timed summer (seriously), all are often used to explain away unexpected poor performance. Interestingly weather is very rarely given the credit for good things that happen in business. These naturally are down to the leadership and wisdom of the management team.
Anybody who has ever organised an outdoor event, however humble, knows how it feels to look skywards when the day in question dawns and offer a suitable prayer for reasonable weather. However meticulously you plan the thing, its success or failure is often down to the one thing that is never within your control. All you can do it take precautions to mitigate any downside.
Indeed the only predictable thing about the British weather is it unpredictability. I am sure that the Met Office will be able to provide ample statistics that show that it is right more often than wrong but weather forecasts are only ever just that – forecasts.
The same goes for business planning and forecasting. The chances are you will never get it totally right, but you can stack the odds in your favour by understanding your key profit and cash drivers and modelling a number of scenarios that impact on them. This will help you to assess and manage your risk so that even if it does “rain on your parade” at the very least you already know where you have put your business umbrella.
Gratuitous name dropping alert (part two). I had lunch last week with a Swiss Federal Councillor, Johann Schneider-Ammann. For those of you who are not up to date with the Swiss political system, the seven member Federal Council effectively acts as the Swiss head of state.
Each councillor is responsible for a number of key portfolios within their departments, unlike our Cabinet Members who by and large only have one. As Mr Schneider-Ammann, whose brief is economic affairs, noted following the recent elections in France, he had to send congratulatory letters to all seven of his new French counterparts! Clearly a good example of Swiss efficiency…..

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