The Impact of The Credit Crunch on your forecast
At first glance you may be thinking the impact is going to be felt company wide and we just need to change the Company growth rate factor from a positive number to a ‘finger in the air’ negative one for say next 18 months. Job done, well that was easy now where are the golf clubs!!
But the good news for your business is that we should be able to improve the forecast by reviewing and taking action in the following key areas:
1. Review the market conditions by geographic areas, some countries you export to may be less effected than your home market, especially with the much lower exchange rates making your goods more affordable.
2. Review all your Sales Channels with the account managers to determine the specific impact. Clearly the Retail sector may be taking the biggest hit, but within this sector the Retail Internet sales could still be growing strongly as current feedback is showing in many markets.
The Wholesale market can often have a very lumpy demand pattern which is difficult to predict, but with less sales in Retail you may have more ‘excess’ stock to push down the Wholesale channel than previously.
3. Review by significant Customer which in the case of a ‘Woolworths’ situation to reduce or stop forecasting and run out their stock, but others with a better market position may be able to grow faster to take up some slack.
4. The above has focused on your Markets and Customers, but equally important is to review the impact on your Products (probably at Group level). In times of recession the luxury Products Groups are likely to suffer more than your ‘on a budget’ low priced product groups. The later might actually grow especially with some promotion budget behind them.
The conclusion of all the above is there is so much your can do to lessen the effect of a recession, the key is a highly flexible Forecasting Tool to enable you to achieve these results which in turn has a major impact on your companies profitability.