Thoughts About Forecasting, Business, and Money
I love business books. I have amassed a library of well over 600 of them (and I add to it every month – Amazon loves me)! I read books with a pen so I can underline and star information that strikes a chord with me. I write notes in them so that I can go back later and scan the parts I need to think more about or reflect on.
Here are some quotes about forecasting, business, and money that I enjoyed from a small sampling of those books. I hope they spark an idea in your mind or just get you thinking more deeply about business. These are also great books to buy and read as well. Enjoy!
My favorite book on financial forecasting is Future Ready: How to Master Business Forecasting. It is written by two of the leading experts in performance management, Steve Morlidge and Steve Player. They create a compelling and deep dive into the why and how of forecasting on many different levels (and with many different types of forecasts). It is a fantastic book that you will enjoy reading.
I am the proud owner of an autographed copy of the book from Steve Player!
From Future Ready by Steve Morlidge and Steve Player
“This book helps business people improve their ability to forecast the future. By improving your organization’s ability to anticipate, you will be better prepared. As a result, you will deliver more reliable performance, and be in better shape to exploit opportunities and avoid potential catastrophes.”
“…The purpose of forecasting is to help ‘steer the ship’. By providing information about the likely future position, we can decide either to do nothing different, or we can change our plans, and so, ‘change the future’. You can only do this by doing something different, and doing something different usually involves some combination of:
- Stopping an existing activity.
- Starting a new (unplanned) activity.
- Speeding up a planned activity.
- Delaying a planned activity.
- Changing a planned activity.”
“Decision-making is driven by performance—without it, management is no more than guesswork—and it comes in two ways, there’s information about the past (actuals) and then there’s information about the future (forecasts).”
“The decision to cross the road involves a forecast—we ask our- selves ‘Will that car arrive before I have reached the other side?’ This forecast is constantly updated with new information, which we use to adjust our actions; we may speed up, slow down or turn back. In fact, almost every act requires a forecast of some sort; a source of ‘information about the future’.”
“When making decisions, we cannot rely solely on information about what has happened, we need information about what we believe might happen as well; information that we create through the process of forecasting.”
“We might think that we want to ‘know the future’, but in reality we only want to know the future in order to be able to do something about it. In other words, we want to change the future to make it more acceptable to us.”
“The purpose of forecasting is…to help create the future rather than to predict it.”
“There’s only one thing we know for sure about a forecast. It is likely to be wrong.”
“While it might not be possible to forecast uncertainty, the process of forecasting helps enormously because in the act of considering possibilities, we enhance our awareness.”
From Implementing Beyond Budgeting: Unlocking the Performance Potential (2nd Edition) By Bjarte Bogsnes
“A target is what we want to happen; a forecast is what we think will happen, whether we like what we see or not. Forcing a target and a forecast into being one number in one process is almost guaranteed to result in either a bad target or a bad forecast or both…”
“A forecast is not a promise, not something to deliver on. People using that expression have not understood the difference between a forecast and a target. Again, a forecast is what we think will happen, an expectation; a target is what we want to happen, an aspiration.”
“Some would call ‘on course to hit a rock’ a bad forecast. Assuming it is true, it is a good forecast, even though it contains bad news.”
“Forecasting should primarily be something you do for yourself to help you manage your own business.”
“A forecast should also be actionable. If the information cannot be used to trigger any action, why do we forecast?”
“I would much rather have good forecasts with bad news than a bad forecast with good news.”
“It is quite natural to have gaps between ambitious targets and realistic forecasts.”
From Superforecasting by Philip E. Tetlock and Dan Gardner
“We are all forecasters. When we think about changing jobs, getting married, buying a home, making an investment, launching a product, or retiring, we decide based on how we expect the future will unfold. These expectations are forecasts.”
“…We never truly know what will happen next. Hence forecasting is all about estimating the likelihood of something happening.”
“How predictable something is depends on what we are trying to predict, how far into the future, and under what circumstances.”
“Weather forecasts are typically quite reliable, under most conditions, looking a few days ahead, but they become increasingly less accurate three, four, and five days out.”
From Best Practices in Planning and Performance Management by David A. J. Axson
“When asked to construct a forecast, the fact that most are wrong is perhaps the hardest concept for most people to come to terms with.”
“The real value of a forecast is not the accuracy of the answer, but the insights into how current decisions and future events interact to shape performance.”
“Positioning the forecast process as a decision support tool that seeks to provide insight into future opportunities and threats reduces the pressure to develop absolutely precise estimates. As a general rule, the level of detail in a forecast should decrease the farther out you look. In the last few years, best practice organizations…are forecasting more frequently and reducing the amount of detail in each forecast.”
“Providing time for management to plan how it will react under different sets of circumstances is one of the biggest benefits of the whole forecast process.”
“The forecast is not simply an extrapolation of the financial plan. The financial forecast is derived directly from the forecast of key business drivers.”
From Billion Dollar Company by Robert H. Hacker
“. . . Now, if we were to ask what are the two or three most important questions that a business plan or financial model should answer, somewhere in the top three would probably be ‘how much money do you need and for what?’”
“I have come to realize that managing the business by focusing on the growth drivers is a sound and understandable management approach and would help entrepreneurs to focus on what is important.”
From The Six-Month Fix by Gary Sutton
“The function of a business is to create money, not consume it, and the longer you postpone this the harder it gets to fix.”
“Bankers cannot make more than a few percentage points on the money loaned, but they can lose it all. That’s why they’re jumpy. They make more money by avoiding losses than by getting new clients. Help them relax by getting them familiar with your business.”
“Receivables are viewed as nothing more than test market expenses until they are paid. There is no sale assumed, no customer satisfaction believed, and no commission paid until the money arrives.”
“Converting Controllers to CFOs is…tough. The skills are the same but the personality is different, and even the Mayo Clinic isn’t performing personality transplants just yet. Controllers set budgets, squeeze dollars, and control. CFOs sell forecasts. One sells the outside world. The other squeezes internally.”
From The Way to Wealth by Brian Tracy
“All business relationships are built on trust. Since all of business involves money—from bankers, suppliers, vendors, shareholders, and investors—and the opinions of customers and clients, the most important single ingredients for success in business are trust and credibility.”
“Your ultimate goal in business is to reach the point where you have enough money so that you never have to worry about money again.”
“This means you have to be measuring your success by the amount of money you are able to take out of the business and put somewhere smart and safe, ideally in appreciating or income-generating assets.”
From How to Sell at Margins Higher Than Your Competitors by Lawrence L. Steinmetz, PhD., and William T. Brooks
“Products and services are sold—and prices stick—because a business gives its customers quality, service, and on-time delivery. And these companies that know how to create a brand and promote and sell those three things—quality, service, and on-time delivery—will have prospects wanting to do business with them. But all those things cost money. If you are going to give your customers what they need and want, you’ve got to charge a premium price.”
“Have you ever worked for an unprofitable business? If you have, you probably learned that it’s not much fun. Perhaps people who work at unprofitable businesses should consider putting signs in their offices that say, ‘It ain’t fun if it ain’t profitable.’ If you have worked for both profitable and unprofitable businesses, we think you would agree it’s more fun when the enterprise is actually making money. We have never heard anybody complain about excessive frugality in successful businesses; but we sure have heard about ‘the need to tighten up’ in an unprofitable one.”
“Just remember, if you want to stay viable and make some money, you’d better be prepared to be a little bit aggressive on price. This means you really do have to raise your price on a regular basis.”
From Your Money & Your Brain by Jason Zweig
“Making money feels good, all right; it just doesn’t feel as good as expecting to make money. In a cruel irony that has enormous implications for financial behavior, your investing brain comes equipped with a biological mechanism that is more aroused when you anticipate a profit than when you actually get one.”
From The 80/20 Principle by Richard Koch
“Accounting systems are the enemy of fair rewards, because they are absolutely brilliant at obscuring where the money is really being made. This is why, human frailty apart, the imbalance between performance and reward is greater in large and complex firms than in small businesses.”
“My view is that money is not difficult to obtain, and, once you have even a little of it to spare, it is not difficult to multiply.”
From E-Myth Mastery by Michael E. Gerber
“After almost 30 years, passionately pursuing the quixotic subject of business, I have come to the steadfast conclusion that there is nothing in the creation and operation of a company that so seemingly conspires to confuse, intimidate, overwhelm, complicate, rationalize, and metastasize the plain ignorance of the average business guy, or woman, than money.”
“What I’ve discovered is that most owners and managers ignore the money until it’s too late to ignore it, and then become frantic to fix what needed to be fixed all along, but wasn’t. And as soon as they fix it, if they’re lucky enough to get a second chance, they go right back to sleep again.”
From Loving What Is by Byron Katie
“When I argue with reality, I lose—but only 100% of the time.”
“Arguing with reality is like trying to teach a cat to bark—hopeless.”
“If I think you’re my problem, I’m insane.”
“I’m a lover of what is, not because I’m a spiritual person, but because it hurts when I argue with reality.”
“Thoughts aren’t personal. They just appear, like raindrops. Would you argue with a raindrop?”
“When we stop opposing reality, action becomes simple, fluid, kind, and fearless.”
“We’re often quite sure about what other people need to do, how they should live, whom they should be with. We have 20/20 vision about other people, but not about ourselves.”
“Once you see the truth, the thought lets go of you, not the other way around.”
“Reality rules, whether we’re aware of it or not.”
From Simple Numbers, Straight Talk, Big Profits! by Greg Crabtree
“One of the skill sets that we’ve built into our firm is the ability to forecast and quantify every situation. We believe that you have to play out multiple scenarios—actually plan out those cash flows—and create reasonable expectations for the investor. Will it take eighteen months for the investors to get their money back? Or will it take five years?”
“This is probably contrary to what many others think, but I believe that once you get to a million dollars of revenue, you’d better be profitable and paying yourself a market-based wage.”
“It is not sufficient to just forecast net income; you also need to forecast cash flows and capital requirements.”
“You can’t build wealth until you get out of debt. And make no mistake getting out of debt really does help you build wealth.”
“Do not confuse debt with capital. Capital is the cash you leave in the business to fund your receivables and inventory for normal business conditions, and debt is financing for special cases.”
“Cash is the most powerful opportunity magnet ever created.”
“If the business makes a profit beyond your salary, the business should make a tax distribution to cover the taxes it caused you to pay.”
The next few quotes are not from a book. They are from a talented business owner who has navigated a changing industry and created a thriving, growing business. Lauré Poffenberger owns a niche travel agency that specializes in Destination Weddings and luxury travel.
Destination Weddings are a growing trend because couples can marry in a beautiful setting while also providing a fun, relaxing, and memorable experience for their family and friends. Lauré is the Destination Wedding Guru (and my wife)!
Here are just a few of her words of wisdom about business and money (and travel).
“You can’t smell urine on the internet.”
“People travel one or two notches above how they live.”
“You don’t want to be on vacation…and wish you were home.”
“I know you believe you understand what you think I said but I’m not sure you realize that what I said is not what I meant.”
“Life is still life—even in paradise.”
“Self-employed can equal unemployed if you are not focused on making money.”
You can learn more about Lauré and her Destination Wedding and Romantic, Luxury Included Travel services at: www.travelluxuryvacations.com/destination-weddings/.
A Quick Start Guide to Financial Forecasting:
Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher
This book provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter financial decisions.
Too many entrepreneurs and CEOs today are feeling more like passengers than drivers in their business. They’re staring at their rearview mirror as they bounce along in the passenger seat. Their company is careening along on the highway of business as they wonder and worry about where their business might end up financially.
A reliable financial forecast solves this problem by providing a clear view through the financial windshield of your business. It creates the visibility and clarity you need to drive your company toward a bigger and brighter financial future.
What if you had answers to questions like:
What’s about to happen to my profitability and cash flow?
How much cash can we distribute to the owners of the business?
How long will it take to pay off our debt?
What will our taxable income be this year?
A reliable financial forecast puts the answers to these questions at your fingertips. It helps you take control of your profitability and cash flow because it gives you answers to the most important financial questions you have to deal with every day.
Put yourself in the driver’s seat of your business by tapping into the unique and exciting benefits that financial forecasting can unlock for you.
Buy the book at Bookmasters (including a PDF version you can download immediately).
The 10 Cash Flow Rules You Can’t Afford to Ignore
The single biggest reason the small business failure rate is so high today is this one simple fact: Most business owners don’t really know what’s going on with their most precious asset – their cash.
Despite the fact that cash is the lifeblood of the business, the fuel that keeps the engine running, most business owners don’t truly understand thier cash flow. As a result, more businesses are failing today than ever before.
Never Run Out of Cash shows you a powerful and simple set of principles that will transform the way you manage your business from this point forward.
It’s an easy-to-understand, here’s exactly how you do it approach to understanding and managing your cash flow.
Understanding Your Cash Flow – In Less Than 10 Minutes
This online course teaches you a simple, step-by-step approach to understanding and managing your cash flow. Here are the two unique promises I make to you in this course:
- I’ll show you how to understand your cash flow in less than 10 minutes
- I’ll show you how to explain what happened to your cash last month to your business partner or banker (or maybe even your spouse) in a 2-minute conversation.
I take off my CPA hat and I speak in the language every business owner can relate to. No jargon. No stuffy financial rambling. Just a simple, common sense approach that only takes 10 minutes a month.
The course includes:
- The video presentation of the course. This is a screencast that you can watch and listen to on your favorite device. I walk you through the step-by-step process and show you how to understand your cash flow in less than 10 minutes a month.
- The course workbook. This is a downloadable workbook to help you get a fast start with the course material. It has all the examples and everything you need to complete your first Cash Flow Focus Report.
- The Cash Flow Focus Report. You get the links to download the PDF or spreadsheet version of the Cash Flow Focus Report. 10 minutes a month with this unique and simple tool and you will wonder how you ever got by without it.
- The slides from the presentation. You can download a document with a copy of each slide from the presentation so you can go back to any specific example or portion of the recorded presentation.
I provide a no questions asked, 100% refund guarantee with the course. If you don’t love the course I’ll refund 100% of the purchase price.
Learn more about the course.
If you have already purchased the course (and/or the related coaching), get the full course here.