Do the Math, Part 6: Forecast Management

The success of your business hinges on more than meeting your sales goals and retaining your customers—it requires that you manage your future risk and your people as well. That’s why doing the math is so important.

To understand and assess your risk and manage your team, you want to build a culture that does more than react—you want to create one that looks forward in preparation. You can do this using a combination of landscape business management software and a proactive forecasting process that:

• Holds people to a high standard of preparation
• Gives them feedback on performance and results (recognition and tough love)
• Involves them taking ownership of their work (preparing for customer service and delivery)

Success relies to a large extent on planning—the ability to anticipate resource requirements like time, labor, materials, and equipment. In my last few posts, we have reviewed the elements of a business management reporting system, which include financial budgets and reporting practices for sales and customer management. In this post, we’ll establish best practices for planning.

We start with a Forecast KPI, drill down to functional reports, and design a dashboard to drive preparation activities and accountability.

Forecast management reporting

Forecast management KPI

This KPI allows you to assess whether:

• The work and services currently sold and proposed will achieve your budget goals
• You have the labor and equipment required to deliver those services when they were promised

It also manages your primary risks—too little revenue and/or too little or too much labor to meet your budget. By adding this Forecast KPI to your management practices, I hope you can see the strong connection to the Sales and Customer Management KPIs. Together, these three provide the essential information for making plans today that produce financial benefits in the future—not to mention the benefits of improved employee morale that naturally come with proper preparation.

Forecast KPI

The Forecast KPI is based in dollars. The green segment of revenue bar shows revenue sold but not yet delivered. The gray segment shows potential revenue—bids in the sales pipeline. The revenue budget bar shows the budget for that same time period—month, quarter, or year. The labor and labor budget bars show the dollars and hours required to deliver the services associated with the revenues.

Now, at a glance, you can make a pretty solid forecast of your future P&L compared to your budget P&L.

The next step is to forecast and plan at a more granular level by drilling down into:

• Sold service work
• Proposed service work

These two reports do more than answer the basic question, “Do we have enough work and enough people to do it?” They outline specific types of work promised and when they need to be done. Total hours and dollars don’t explain the “devil's in the detail” requirements that various services require—like different crew talents and unique equipment and material needs.

Forecast reports

Sold service work (pivot and list versions)

A sold service work report outlines sold work by service type. This is essential information because individual service types may have unique requirements for labor, materials, subcontractors, and equipment. It also accounts for specific seasonal timing requirements (e.g., the customer wants flowers installed in April not in May).

Proposed service work

Proposed services outlines those services that might be sold. These should be included in your planning as a “what if.” As in, “what if” we sell all that stuff in the pipeline? Could we get it done when the customer wants it done, considering all that we have already committed to?

Now that we have this information, we have to make it available to the people who do the work and make decisions about preparation—and keep it current to maximize everyday awareness and personal accountability. That’s where dashboards are most useful as reports, in order to:

• Minimize the risk of customer dissatisfaction (services behind schedule) and
• Maximize efficiency (materials, people, or equipment available/ready)

Here are a few essential dashboards:

Work Last Week: The services (revenue and hours) scheduled over the past week – were all scheduled services delivered?

Work This Week: The services (revenue and hours) to be delivered this week – are all forecasted services (mulch, clean-ups, flowers, etc.) now scheduled?

Work Behind: A list of services forecasted and scheduled (revenue and hours) that are past due dates.

Work not Billed: A list of completed services that are “unbilled” (this typically includes enhancement, T&M, and per-service work).

These are the best practices for forecast management. Using a cascading reporting structure for landscape and snow business management, you can minimize surprises, build efficiency, and increase your customer satisfaction—all while creating a culture of accountability where winning becomes the norm. This is landscape business management in real time, and it provides the framework for real accountability, productivity, and profit.

All the decisions made in a landscaping business can be seen in one place: the profit and loss statement. To learn how you can get your people to focus on the importance of P&L in the next part of the Do the Math series, "Do the Math, Part 7: Profit & Loss Statements."

To check out the Do the Math series from the beginning, read "Do the Math, Part 1: Reporting for Accountability."