Smart in 60 seconds! Today: the forecast

A new episode of our series in “The Agency Blogger”. Here we regularly explain the most important terms of agency controlling in a short and sweet, but practical manner. Today: the forecast.

The creation of a forecast is one of the most important control instruments for company and agency controlling. Company goals are normally determined once annually. However, since the economic conditions frequently change throughout the year - especially for agencies - there may quickly be deviations from the original goals. Forecasts predict the development of the company throughout the fiscal year. They provide answers to the following questions: Can the revenue and profit goals be maintained? If not: Where do adjustments have to be made?

The forecast provides a look into the future: How will the order situation change - in particular through budget gains and losses - and how does this affect the agency. What budgets, goals and plans are affected by this? Additionally, possible measures will already be included to offset and adjust. A forecast can either be done regularly (for example, the so-called year-end forecast) or irregularly (ad-hoc) - for the entire company or just for individual business areas and projects. The further development is predicted and extrapolated based on actual values (for example, revenue in the first quarter of the business year or the comparison to the same quarter in the previous year). If, for example, there is a major deviation between the predicted revenue and the planned revenue, measures for improvement will be suggested.

A forecast therefore does not only serve as a prognosis of company development, but rather also as an analysis of deviations and the control of countermeasures.

Agency software offers an overview of all indicators required for the forecast (e.g. revenue, staff costs, etc.) as well as an aid during the calculation