Mark Osborne breaks down what makes a projection trustworthy: solid assumptions and whether it matches your actual history. Most forecasts should stay within one or two standard deviations of past performance unless you're changing strategy. Watch for variance from customer churn, pricing shifts, tariffs, and unexpected events.
So let's talk about it. Let's flesh that out and let's understand what you truly mean so as to provide a little more accuracy. The A is for the quality of the assumptions. So I focused a lot of time on the assumptions. I think that's key to any successful set of projections to be used as a tool for business owners. But it's based on the quality of the assumptions. And the M is, do they mimic historical results? Huh? Right? So, there are times when there are companies that are changing direction, changing strategy, changing course. And that's fine, right? But most companies live within a certain bandwidth just off the center, right? And they live within a standard deviation or 2 of what it is depending on some outliers. Or maybe we lost a customer. Maybe we got a new customer. Maybe there are price effects, tariffs, right, that came in.
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