Why You Should Keep Sales Forecasting and Budgeting (Even If It Feels Impossible)

Mid-September is when we are traditionally charged with preparing sales forecasts and marketing budgets for the next year. While we are not at the uncertainty levels of this same time last year, we are also not back to normal times, and the task is almost as ominous again.

It is difficult not to be bogged down with “what ifs” and numerous contingency scenarios and modeling—especially at what seems like very early in the game. “Fluid” is an understatement about (and an overused description for) the state of affairs. It has become more of a challenge to look out even just 15 months, which used to be “near-term” forecasting.

Sales forecasting has become more of a continual process. We have found ourselves looking out monthly and quarterly during much of the past 18 months. Indicators are certainly less reliable and harder to even prove valid. Sales trends are often nonexistent during economic upheaval, but we are grabbing hold of anything we can find to help formulate our best, most likely and worst-case scenarios. We’re calling upon industry publications, social media posts, peer networking and, yes, our gut feelings to get the job done.

The unknown effect of the lingering pandemic and new virus variants on our businesses is a primary, but not sole, interrupter of the process. Inventory levels and shipment delays, along with ongoing labor shortages, are all playing a part in putting even our best estimates at risk. There are so many unknown and moving parts in play.

Corresponding marketing and operation budgets are of course equally hard to develop. Traditionally a percentage of forecasted revenue, budgeting is dependent on accurate forecasting. We will be adjusting our marketing spend almost as continually as we adjust our sales forecasts.

Of course, the hope is that we are adjusting both to the positive as the recovery continues and we keep growing our businesses. We are keeping more of our spend in the flexible/non-committal column as we see how the market continues to recover and how effectively we can respond to demand. And we are reprioritizing our marketing dollars to address what is working, or perhaps going after what is missing as far as target customers and markets.

While it can definitely be a draining process, the positive side is we are now taking a new and closer look at our businesses than during “normal” years. We are spending more time strategizing and being reflective of our businesses and our own careers.

As we come out on the other side of this, our businesses through this exercise alone may very well be leaner and stronger. There will certainly be opportunity for the strongest to not only survive, but also eventually thrive with their newfound strengths. On the extreme side, one can find themselves on the very best side of industry consolidation, and even acquisition, as opportunities present themselves.

Professionally and personally, the increased level of introspection can also help steer us to where we really want to be in the next few years. Whether it be growing, slowing, rightsizing and, of course, strengthening our businesses, we can position ourselves to be more thoughtful in planning our work and choosing how we want our work/life balance to look in the longer-term future.