Forecasting through the volatility of the pandemic – and beyond
The uncertainty brought by COVID is, for the most part, still with us. Although most businesses have adapted to some degree to lockdown conditions and to their new operating environment, leaders still need to be poised to act quickly. And be ready to re-evaluate everything from cash positions and liquidity to their entire financial strategies.
Although vaccination programs are set to allow many aspects of operations to return to a more stable state in the not-too-distant future, uncertainty is likely to remain even beyond the pandemic. For instance, vaccine provision across different countries means organizations operating internationally will likely be faced with a complex and fast-moving regulatory environment.
But even in a time of extreme uncertainty, it’s possible to forecast sales and revenue effectively. Business leaders have to focus on maintaining continuity where possible – and on pursuing reliable revenue sources while uncovering potential new opportunities. It’s also vital to continue to position strategy with an eye to taking advantage when markets begin to truly rebound.
Although we’ve largely moved past the initial shock to revenue streams experienced at the beginning of the pandemic, demand in some areas is still significantly softened. (Many industries have seen their forecasts cut in half without much chance of improvement as their customers cool off on spending in the face of uncertainty.)
Securing revenue in times of uncertainty – and beyond
One of the most important actions financial leaders can take in these circumstances is to work together with sales leaders to ensure revenue streams are preserved, insofar as possible. This means taking a frank and honest look at which streams are strategically vital, which are not, and where “upsets” can leave the organization most and least vulnerable.
Start with pipeline
The process begins with a meticulous analysis of your sales pipeline – inspecting its makeup across the core dimensions of shape, size, and quality.
Shape: The “funnel” model is far from ideal in uncertain times, because it simply adds unknowns to the situation. Instead, aim for linearity. Make sure your sales teams are going to extreme lengths to disqualify unsuitable and unwinnable deals as early in the process as possible.
Size: This will vary from territory to territory and rep to rep, but the old rule of thumb “quota/annual close rate” usually works well.
Quality: Not every lead is worth pursuing – or even winnable. Your pipeline should consist only of those prospects and accounts that can actually support your corporate objectives. (And it bears repeating: disqualify those that don’t support them early and often!)
Key questions to ask about your current revenue pursuits
With your pipeline duly interrogated, try to answer the following questions. These will be key in terms of securing short to medium term revenue sources. And in turn, these will be vital in setting the business up to rebound along with the market and seize new opportunities.
Are our customers still in a position to buy from us?
The answer to this one will vary widely, with some projects being accelerated and others placed on hold. You’ll have to dispassionately assess which of your buyers are likely to be able to continue to do business with you now, and as the economy gears back up over the reopening period.
Is our value proposition still relevant in the new market landscape?
This is a question that can only be answered as a collaboration between product, marketing, sales, and finance teams. Start having the difficult conversations now to avoid running into problems later.
Are the deals we have on the table still desirable given recent shifts to our go-to-market strategy?
Changes in conditions might necessitate the sacrifice of some of your works in progress. Rather than setbacks, these should be viewed as opportunities in and of themselves – to free up resources for a more relevant strategic focus.
Are the deals we have on the table objectively winnable under the current circumstances?
Another difficult question – but one that you’ll have to answer to secure your revenue streams. If you avoid this question you risk wasting valuable and scarce hours that could otherwise be put to productive use chasing illusory or unprofitable deals.
Make sure your planning and forecasting tools are up to the job
Regardless of what the future holds, we can say for certain that it won’t be much like the past. Markets and demand patterns have changed. And they’ll continue to change even as societies begin to reopen. In these circumstances it’s more vital than ever to leverage external and internal insights – particularly when it comes to revenue forecasts.
According to Gartner, “Organizations that rely on predictive forecasting tools which do not incorporate third-party data signals for market intelligence into their models will be useless for revenue targeting. This is because they solely depend on historical data to feed predictive models, leading to distorted ‘business as usual’ projections.”
Ensure that your tools are up to the task and can provide you with the integrated models of the future that you need to survive and thrive.
How Unit4 can help you navigate your financial future during and beyond the pandemic
Our FP&A platform incorporates the external and internal financial insights – along with powerful scenario planning – that will allow your organization to create meaningful strategies for any eventuality. Check out our product page to learn more or click here to book a demo.
