3 Simple Ways to Chart the Future

magnifying glass on top of graphs

by Warren Hayford

Organizations look at the numbers they collect for two purposes. The first is to assess how well they’ve done in the past. The second is to get an idea of where they might be in the future.

Charts are the only way to look at your company’s performance into the future. There are three simple techniques you can use with charts to show the future.

The first technique is to add extra periods after the last actual value that you have. Let’s look at an example. Create a chart of 3 ½ years of monthly sales data. Most charts don’t continue on past the last period in which there is actual data.

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To apply this technique, extend the chart to the end of the fiscal year. The blank space to the right of the chart gets the reader to think of the actual in the context of the fiscal year.

Using this technique you make the chart covey the future without adding any projections or targets. People try to fill in blanks. They estimate where the numbers will be at the end of the fiscal year based on the “trend” of the line leading up to the blanks.

The second technique is to use a forecast or target. Forecasts and targets are specific numbers the organization has determined to try to reach by the end of the fiscal year.

A forecast may be charted as a single point in the last period of the fiscal year or as a straight line drawn from the last actual number to the forecast number. Both ways you provide a sense of where you are now against where you want to be.

When you use this technique, be sure to use a different color and line style to differentiate the forecast from the actual.

The third technique is to use a trend line. Most software products you will use have this capability built-in. The only problem with using the built-in trend line is that it uses all of the numbers that are charted. This is usually a lot more than you want included in your trend calculation. Usually, you are much more interested in the trend of the last 12 or 18 months than the last three years.

When you use this technique, be sure to use a different color and line style to differentiate the trend line from the actual.

To help your organization stay focused on the future create charts. Apply either blank periods into the future, or a forecast, or a trend line, to show your team the direction your performance is headed.

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