For efficient planning startups need to bridge the forecasting gap

 

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Business world is experiencing an evident schizophrenia which is causing considerable damage. In Italy (as well as to a greater or lesser extent, in many other countries) about 98 percent of the total amount of active firms have less than 20 employees. A cluster  made up of over 5 million small and micro  business that produce 40% of the annual national value added.

For those who are willing to manage a firm in the right way, first of all is necessary to plan, because nowadays the entrepreneurial intuition without planning and organization skills does not lead anywhere.

Planning of course means a lot of different things:

  • Strategic planning, played around the entrepreneurial vision, with a time horizon ranging between three and five years;
  • Marketing and commercial planning, for conquering new markets for their services and products, with times horizons sometimes short, seasonal or anyway generally between one and three years;
  • Financial and fiscal planning, necessary to ensure the company a sufficient and above all constant cash flow injection;
  • Risk and IT planning more and more necessary to keep up with a fast moving market and with the huge technological progress;
  • Planning of training, increasingly decisive for long-term success on the markets, but which often requires some time to appreciate its impact in terms of value production;
  • The planning par excellence, that is the one concerning research and development, which according to the various product fields, can absorb resources for many years to come;

Challenged with this growing demand for planning skills (and related investments), the reality that entrepreneurs are facing is constantly changing, almost ungraspable.

It is not just the markets that oscillate dangerously between unbridled globalization and a neo-protectionistism that is often illogical and counterproductive, it is the whole society at the global level. As a victim of something very similar to a sort of sociological and political “greenhouse effect”, the social and cultural climate seems to “overheat” everywhere, with phenomena of political instability and local virulence that are equally unpredictable and difficult to read as weather events.

So companies are faced with a clear schizophrenia, if on the one hand the market demands more planning skills (and therefore ultimately an increased forecasting capacity able to lead the investments that these plans always accompany) and on the other hand it always provides less certainty on how and in what direction the needs and aspirations of consumers will move ahead, as well as the socio-economic government policies, the possibilities of supplying resources and raw materials, etc, etc

In this context data are definitely not missing, rather we are submerged of numbers, often lacking the ability to classify, order, analyze this avalanche of data, in an aseptic way, free from prejudices or from ideological strabism deriving from the use and the abuse of theories and economic and entrepreneurial ideas.

There is therefore a need to moderate this evident asymmetry, to bridge this “forecasting gap”, endowing companies with reports that aim to reduce this huge uncertainty back into clear trends and scenarios with which the company can become step by step familiar (if at the same time we can also provide them with the appropriate interpretative keys), reducing at the same time the risk and instead increasing their possibility of success on the markets.

Therefore entrepreneurs and most of all startuppers should select structures, advisors and incubators able to provide these forecasting services too because not only  large companies should benefit from it.

Scenario planning helps reducing risks in many ways:

  • It compensates common and frequent errors in decision making
  • It’ very different from any other plan (f.i. contingency, risk, etc) because it connects all different uncertainties a form daily has to face

The scenarios and trends on the evolution of the international landscape and market that SME’s and startups need to have at their full disposal, in facts help to create that substrate on which the above described planning needs can consistently grow, finding confirmation and inspiration and, above all, the most necessary thing: a concrete reduction of the entrepreneurial risks.

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