What should you do if your prediction interval is too wide, say between $6 billion and $14 billion for an annual revenue forecast of $10 billion? Or equally concerning, what if the interval is too narrow, indicating overconfidence? Both cases signal a need for immediate action:
- Adopt agile practices to increase flexibility in responding to unexpected changes.
- Strengthen risk management protocols to identify and control potential risks.
- Maintain a keen eye on performance metrics, adjusting plans as needed to avert negative impacts on sales.
- Develop contingency plans that lay out actions to take if actual results deviate from the prediction intervals.
By adopting prediction intervals, companies can navigate the landscape of financial uncertainty, making more data-driven and resilient decisions. The principles applied to sales forecasting are equally relevant to other predictive scenarios, empowering organizations to adapt and thrive in a dynamic business environment.