Especially at the start up phase.

The only thing we can truly predict is that we do not know what the future holds so why do we write business plans and forecast financial returns when they are usually no more than fiction. It’s always fascinated me….and I’m prepared for the backlash from my financial and bank friends on this one. It really is a question meant to stimulate debate.

History, we know, does not give us a good indication of the future. Forecasting is usually no more than a finger in the air to see which way the winds blowing or a guesstimate (seriously it’s nothing more.) Pulling financial forecasting together for a bank, venture capital funding or whatever is, at worst fantasy, and at best, a load of b*!!*&cks. Previous performance tells you that, what happened in the past, not what you are going to experience in the future. And if you’re a start up what’s the past? Just because you performed in the comfort of a proper job as an employee, doesn’t guarantee success in your own business. It’s amazingly different, considerably challenging and you start all over again on the curve of learning.

Often the more information we give people at our start up stage, the more they read into it. You give people ‘noise’ and, unfortunately, they and you mistake it for informed data. Now I’m not saying we shouldn’t be setting targets, I’m a great advocate of purpose. But goals have to be tangible with clear added value attached to them. There needs to be a significant dose of realism so those starting up businesses beware.

Those forecasts about numbers of customers, profits, turnover, cash flow can make you resistant. They can make you vulnerable because, at this critical stage, you are too focused, too narrow and we often don’t build in improbable factors. Recognise the limitations of forecasting, don’t concern yourself if you don’t hit them. At start up, the most important factor is being able to have the courage to change, reflect new conditions and react to competition and innovation. It’s about having the guts to just go out and do it!