Forecast Early and Often
"Forecasting is a pain, so we adopted the model of as 12-month rolling forecast with quarterly reforecasts (and correspondingly quarterly incentive comp structures) out of necessity. For early stage companies in emerging industries, there are simply too many moving parts in the business to provide enough visibility to produce an accurate 12-month budget. There are really four factors at work here:
- Investment...
- Competition...
- M&A...
- Recurring revenue: for any business that has a recurring revenue model, missing your numbers in a given month or quarter makes it nearly impossible to get back on track for the rest of the year since next quarter's number depend on making this quarter's numbers...."
So forecasting early and often is a great solution to this problem, and it's a particularly effective tool to keep the team motivated. Read more in this Matt Blumberg post.
