It helps to start with good, accurate data. Here are 6 pieces of information to gather.
How can you possibly know what's going to happen in the marketplace? It's a question posed repeatedly by managers as they contemplate doing their first annual plans and forecasts. The answer? Relax. You'll learn plenty by just gathering data. Here's how one company, Charlton and Hill, goes about it:
Geographic information. "We went to the Web site of the economic-development office of our province, Alberta, and here in our city, Lethbridge," says CFO Bruce Thurston, adding that the company's objective was to learn about trends in its home market.
Industry trends. Next stop: industry data. One of Charlton and Hill's business units is in roofing, so they gathered data from the roofing contractors' trade association. "We focused on questions like, 'What will impact us in terms of roofing trends? What's the economic indicator that impacts the industry?" The company also contacted a scientist at a local university to discuss the effects of El Niñ o on the weather, and found a Web site that charted temperature variations for the local area. "Seeing that data allowed us to plan with more confidence."
Competitive intelligence. Charlton and Hill sent five employees to a seminar on competitive intelligence. It gathered industry data from the Canadian government statistical agency, and measured its own performance against industry averages. "We use the Internet to compare ourselves to businesses in the States. We downloaded several Web sites and in one of our business planning sessions we rigged it so that they were visible. Then we picked them apart. We wanted to see how they present themselves to the market, how they define the different segments of their organizations."
Trade journals. "Time was, we'd receive these trade journals and only a few people would glance at them. Now somebody goes through them every day -- photocopying, tearing out, collecting." From trade journals, for example, the company learned about the U.S. trend toward consolidation in the heating, ventilating, and air-conditioning business.
Information from customers. "To verify our interpretation of trends, we go straight to our customers and ask, What are you doing? What pressures are you facing? How can we help? That's real affirmation. Going to key customers and asking them what they're up against really brings it home to people. It also helps them see beyond the day-to-day."
Ongoing discussion. "We've added a new dimension to our regular forecasting meetings. Toward the end, we take a few minutes to discuss new developments in the industry and in our target market. Are there any trends we're missing? What's the word on the street? It's informal information we regularly distribute along with our updated financials."