P&L vs Forecast
The P&L tells you what happened. It shows you what’s left after the dust settles and all the debits and credits are entered. It displays seasonality, market shifts, lucky breaks, bad moves, and good strategy. It highlights the truth about good and bad decisions. Sometimes it’s depressing and sometimes it’s exciting.
The P&L requires no vision to create. It’s simply the truth about what happened. It doesn’t require much of anything other than accuracy.
The forecast on the other hand can be scary. It’s scary because it’s a guess based on the reality of the past and the hope of the future. They are almost never correct which causes a couple of responses.
They are never right so what’s the point?
They are never right but are still useful!
The former displays a fixed mindset and the latter, a growth mindset. Your thoughts about the future matter even though you can’t know what it is. The forecast teaches you about your view of the future. Over time your guesses will improve and the forecast will be more useful.
The goal of the forecast is to inspire strategy and creativity to achieve. It encourages growth and innovation to get there.
Comparing what you thought was going to happen with what actually happened is where the golden lessons are. Lessons that are likely unlearnable without the bravery to forecast.
Parting thought: It’s okay to look back…just don’t stare.
