eKourier April 2017

FEATURES Forecasting... Worth The Effort?

A s we move towards our effort?” There has been healthy internal debate on Yammer of the pros and cons of the forecasting process. Annual Forecasting process it is always worthwhile asking, “Is the Forecast worth the 1. Control – having a Forecast allows the business to compare our actual results vs what was expected. Variances would often explain either something is not working as expected and may need an improve- ment or what we expected to happen has changed. This could result in a new process being adopted or an update on our understanding of what is taking place vs what was expected. 2. Achieving Goals – having a Forecast allows the business to work towards achieving a goal. It provides a common process of working towards the goal. In the case of Kennards it is a goal for each centre which builds into a total goal for the company. 3. Effective Planning – it is very benefi- cial for managers/centres to plan for the future and think about how their centre will operate over the next 12 months. It forces one to look forward and plan and think about what the centre will achieve. Often thinking about the future is pushed to one side as we go through our daily responsibilities. To have to think about the future and put into numbers what we expect at our centres is very powerful. It takes into account our occupancy, pricing, what our competitors are doing, what our Team can achieve, other revenue such as merchandise or insurance and also what new opportunities we can create. Do we expand, add spaces, adjust our unit mix. Here are some of the benefits of the Annual Forecast process:

4. Funding requirements – the Forecast allows us to see what cash flows will be generated and how the business will be funded going forward.

3. Setting unrealistic low targets – this means the person doing the Forecast deliberately sets low goals or easy to achieve forecasts. This can cause slack and the business to be ‘happy” with what is being achieved when in fact it could be better. This can always be avoided where there is an aligned forecast and a review of the forecasts to achieve the best possible outcome for the business. 4. Blame Game – sometimes missing the Forecast can be seen as a way of blaming poor results on Team Members or others that are causing a centre to have poor results. This can be avoided by working together as a Team to grow the business and supporting each other through whatever issues may arise to achieve the best outcomes given the circumstances. 5. Forecast restricts what I spend or spending is increased – sometimes necessary spend may not happen because it is not included in the Forecast. Likewise, if someone has forecast an amount to be spent it may be done for the sake of spending the money, a sort of use it or lose it way of thinking. These can both be avoided by always doing what’s best for the business and asking oneself “If this were my money or my business, would I spend the amount?” Whatever ones opinion on forecasting, it certainly aligns a business and creates a common vision for what is planned to be achieved for that centre, state, country and total business. A collaborative, engaged, simplified process of forecasting keeps all those involved well informed and allows ownership and proactive actions to be taken to continuously grow the business. Anthony Rous Chief Financial Officer

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Having a Forecast allows the business to work towards achieving a goal.

5. Users of Kennards Data – the Forecast allows users of our data to see where the business is going, what growth, and basically what the future holds for Kennards. 6. Financial Learnings – the Annual

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Forecast allows Team Members to develop their skills in finance and forecasting and develop increased financial understanding across the business.

As with all process, there can also be cons relating to the Forecast: 1. Effort – Forecasts take time and resources. It is key for businesses to look to minimise the effort through systems, simplification and ongoing training. 2. Ownership – Team Headquarters will tell me what to do so why do I bother to do a forecast? This is a terrible outcome and means preparers of the forecast do not own or take accountability for their own forecast. This can easily be avoided by working collaboratively and taking on input from centres as to what their forecast is and how it is being impacted by local factors.

6 Kennards Kourier April 2017