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Forecasting in a "double dip" recession- what do you do?
Over the past few weeks, financial experts have been predicting more economic turbulence and many polls across the net show that most people believe we're headed for another dip. How do you account for these predictions when forecasting for the rest of the year? Do you have any particular strategies or suggestions to other businesses?
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1 Answer
A couple of quick tips... First, it's important to identify leading indicators in your business that will allow you to get ahead of the curve. Too often, a business will focus on lagging indicators (for example, it's not until the last day of the quarter that you realize that there's demand-side weakness due to the economy). An example of getting in front of this demand-side weakness is looking at sales funnel at metrics such as total pipeline opportunity created or number of leads generated in the last 30 days. But you can go a lot further up the funnel and look at things like search volume on Google for keywords that are relevant to your business (generally speaking, you want KW volume to grow). It's just one example of a great leading indicator.
Second, every business should have a contingency plan for a downturn that is triggered when you cross a certain threshold. Again, this is about getting in front of the curve. This plan should include how the business will adapt its organization, supported products, pricing, financing options, contract terms, T&E policies... you get the idea. The plan is triggered when you cross the leading indicators you identified in part 1.
Looking forward to hearing what others have to say.
Scott
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