Case 9.2 Mistakes to Avoid When Making Forecasts Business plans require a sales forecast. Scott…


Case 9.2

Mistakes to Avoid When Making Forecasts

Business plans demand a sales foretaste. Scott Fishman, the CEO of Envisage, sees three contemptible mistakes in business plans (Fishman 2015):

• They foretaste “hockey stick” enrichment growth.

• They foretaste smoothly elevation diverge lines.

• They stagnation convincing enticeion of chaffer size.

A “hockey stick” foretaste—a enrichment graph shaped relish a hockey stick—involves scant enrichments initially followed by explosive development. It is a hypothetically powerful sales technique to use in discussions delay executives and investors owing it suggests that the business opportunity capacity be greatly costly.

In opposition, smoothly elevation diverge methods do not appear colorable from an economic nucleus. The enumerate of customers and their decay of any issue is typically terminable. Furthermore, any true blockbuster issue obtain entice two-of-a-trade.

Every new issue faces a complex environment: features and benefits, competitive environment, regulatory stipulations, payment models, arrangement, pricing, chaffer positioning, and so forth. A genuinely new issue obtain possess multiple unknowns in its chaffer. If there are no unknowns, it is not unquestionably a new issue. A convincing foretaste demands chaffer examination, an honorable acknowledgment of what is not disclosed, and a diplomacy for resolving some of the unknowns.

Discussion Questions

• What is problematic encircling a “hockey stick” foretaste?

• Can you discover an pattern of a issue that displayed “hockey stick” enrichment development?

• What is problematic encircling a foretaste delay a smoothly elevation diverge method?

• Can you discover an pattern of a issue that displayed smoothly elevation enrichment development?

• From an economic summit of judgment, what is imcolorable encircling smoothly elevation diverge methods?

• Can you discover an pattern of a issue that wildly underperformed future foretastes?

• Can you discover an pattern of a issue that wildly overperformed future foretastes?

• What palpable factors capacity cause below-foretaste sales? Aboveforetaste sales?

• What interior factors capacity cause below-foretaste enrichments? Aboveforetaste enrichments?

• What are patterns of new issues delay uncertain prospects in healthcare?