Never trust the forecast

NEVER TRUST THE FORECAST!

Let me share a little story about my 14-year-old son dipping his toes into the e-commerce world with a venture he started guided by his mom 😎 .  

He’s selling fantastic products based on our family recipes. It's pretty early days for him, and while the online sales are trickling in, it's all about learning the ropes of marketing and keeping a brand afloat for now. Profit? Not yet on the horizon, but something interesting happened recently.

A mail-order company got in touch, showing considerable interest in a couple of his signature products. You can imagine the excitement—big plans started to form, all based on the cash he thought would come in from this deal. They went back and forth, talking about shipping details, box sizes, you name it. It all seemed set. Then, out of the blue, radio silence for weeks. When they finally got back in touch, the bombshell dropped: the order was slashed in half because they decided to make one of the products in-house.Sounds all too familiar, right? Many startups begin by targeting smaller companies, dreaming of the day they'll land those big enterprise deals. And when a couple of those big fish seem to bite, it's easy to get carried away. Your forecasts suddenly look like you've hit the jackpot with deals that could double or triple your size overnight.

But here's the kicker—those deals are slippery. Forecast meetings will be positive, showing the prospect intends to sign when purchasing and legal approval is required. Your sales team seems optimistic. BUT - One minute they're on the verge of signing, and the next, they're gone, maybe because they chose to develop in-house or for some other reason. If your strategy hinges on one or two of these big "whales" or "elephants," you're skating on thin ice. Those deals should be managed in a separate pipeline, and the founder CEO should be suspicious when the sales team presents them with such a pipeline. In my long career, I’ve seen many of these situations. 90% of them ended badly. Sales execs and CROs may leave the company if they have a few bad quarters, but the founder/CEO will be left to clean up the mess.

My son's learning this lesson the hard way, but honestly, I'm glad he's learning it now. It's a crucial nugget of advice for anyone in the startup game: never get too carried away with those shiny forecasts. The *only* indication of success is closed deals. Always have plans B, C, and D. Never trust the forecast.

I don’t.

P.S: Also, listen to your CMO. They are usually the first to see this, but in most cases ignored.