Forecast Management – Doing the Math Part 6

Managing future risk and people are essential to business success. That’s why Doing the Math is so important. To accomplish this, you want to build a culture that does more than react – 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 (kudos 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 including: (1) financial budgets, and (2) 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 function reports, and finally design a dashboard to drive preparation activities and accountability (see the graphic below – Forecast Management Reporting).

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 KPI’s. 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. (It’s not much fun to be a figurative firefighter every day – it gets old).

Forecast KPI

The Forecast KPI is based in dollars. The blue segment of REVENUE bar shows revenue sold, but not yet delivered. The orange 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. Sweet! 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 in the detail” requirements that various services require – like different crew talents and unique equipment and material needs.

Forecast Reports

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

Sold Service Work (Pivot and List versions)

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?

Proposed Service Work

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 “un-billed” (these are typically enhancement, T&M, and per-service work).

CLICK HERE to see those four dashboards.

These are the best Forecast Management practices. 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, as it should be.

Next up: the Profit Management KPI.