Marathons are a lot like running a furniture store. It’s important to finish strong. In the HFA’s Fall Insights magazine, David McMahon offers furniture retailers advice on the final push. But that’s just the start, says McMahon. Here he offers some tips on forecasting for the next year.
Retailers can forecast any time, he says. “The end of the year or the start of the new year is just a convenient time that people like to do this,” he says. “They’re reflecting on what happened in the past and are hopeful for the future as to what could happen.”
McMahon says the important thing is that retailers put time and investment into doing business projections, asking self-assessment questions, and setting actions to achieve desired results. He says it’s easy to be lulled into complacency and only ask these questions of your business once a year.
“Reviewing projections and desired results throughout the year is important,” he says. “When setting goals and targets follow the SMART principal: Specific, Measurable, Attainable, Relevant, Timely.
A few strategies
With SMART in mind, here are a few steps McMahon recommends planning for 2020 and beyond:
Decide on methodologies. Common types include Incremental, Zero-based, Value Proposition, Activity-based, Continuous budgeting.
Decide on level of employee involvement in process. How are you going to engage your staff in the planning. Some Common examples are authoritative/imposed, negotiated, participative.
Create the master and summarized by department. Sales and Marketing, Purchasing, Administrative, Occupancy, Advertising, Service, Warehouse, Delivery, Finance and other.
Create operational plan/forecast. Set actions and KPI’s by department to achieve.
Determine needs. Create cash flow and balance sheet projections.
Define moves. State key actions and assumptions to achieve and assign responsibilities.
Circle back. Review progress at least quarterly. Refine your actions and forecast.
One last piece of advice from McMahon. All those projections you’ve made? Don’t expect them to unfold exactly as you anticipated. That’s OK. “Forecasting and budgeting is one of the best tools you have to drive your business and your people toward achieving common objectives,” he says.