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As we see many earning reports showing the performance of Q1 2024, many companies overperform but many others have to accept their budget/forecast was wrong.

And in my experience, when a forecast is wrong, not only people point fingers at Finance but Finance also feels guilty about that.

So let's see how we can recover from this.

So take a coffee, sit down, and read FP&A Stories like 29K others

This week in FP&A Stories

🧑‍⚕️ Recover from a failed forecast

As we reflect on the recent Q1 results that did not meet our expectations, we must approach the situation from two angles: improving our forecasting process and recovering emotionally.

Why?

Because in 99,99% of the cases, you'll be finger pointed and feel guilty about that situation.

But instead of complaining about how unfair this is, let's see how we can avoid that in the future and give us some slack.

Part 1: Improving the Forecasting Process

Although I am of the ones who will always consider that accuracy is not the main goal of a forecast, it's part of the important things to consider.

So, when things go wrong and the results don't meet the forecast targets, it's our role to quickly work to change that.

How?

Know the root causes of the variances

Is it in your model? Or is it from what's happening in the market?

Whatever it is, find out what the issue is and see if it can be better planned in the future.

Revisit Forecasting Assumptions

Maybe the assumptions were too optimistic? Or simply based on wrong understanding of the evolution?

Assumptions should evolve as new information becomes available. Update your projections and assumptions based on current data.

Enhance Communication and Collaboration

Strengthen the lines of communication between finance and other departments. Regular interactions can provide insights that lead to more accurate and comprehensive forecasts.

Part 2: Recovering Emotionally

I've been there too! You start blaming yourself for the forecast variances and fear people will look at you like a failure?

Don't be so hard on yourself!

It's not that it's not your fault and that the assumptions come from someone else!

But you know the saying: there's no failure, only learning!

Embrace the Learning Curve

View every misstep as a learning opportunity. Each challenge is a chance to refine your skills and enhance your strategic acumen, contributing to your professional growth.

Don’t Blame Yourself

Remember that many elements affecting forecasts are outside your control. Focus on what you can influence and let go of self-blame.

Avoid Taking It Personally

Detach your self-worth from your professional outcomes. A missed target does not reflect on your capabilities or value.

Strengthen Team Morale

Foster a supportive environment where open discussions about setbacks are encouraged. This not only builds a resilient team but also promotes a culture of transparency and continuous improvement.

Keep Perspective

Maintain a broader perspective. One quarter's results, whether good or bad, are just part of a longer journey. Focus on long-term goals and continual improvement.

Prioritize Self-Care

Finally, take care of your mental and physical well-being. Balanced self-care practices enable you to perform optimally and think more creatively.

Conclusion

Recovering from a forecasting error involves both tactical improvements and emotional resilience. By applying these strategies, you can ensure that you not only bounce back from current challenges but are also better prepared for future uncertainties.

That's a wrap for this week

See you next week!

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