3-9 Forecast
Rolling Forecasts

3-9 Forecast: A Balanced Approach to Financial Planning

5 mins

Every good forecasting model takes 2 aspects into concern – current results, and the results you’re going for, like in the 3-9 forecast. Take any of the two from the equation, you might end up in a very different place from what you were hoping for. And that isn’t always a positive thing.

 

Precisely because of that, rolling forecasts enable you to stay in the loop the entire time by taking the best of both worlds – current trends and performance and the goals you’re aiming for. One of these is the 3-9 forecast

 

Read Rolling Forecast – 101 Guide For Smarter Planning

 

Read on to find out how it functions, what are its benefits and challenges and what to take into concern if you’d like to try it out in your company.

What is the 3-9 Forecast?

The 3-9 forecast is a rolling forecast model that combines recent performance with expectations. It functions in a rather simple way:

 

– It uses recent 3 months of actual data as a starting point. This data can include sales figures, operational costs, and market trends.

 

– It plans 9 months into the future based on historical performance, strategic goals, and current market conditions.

When you take real data from the past three months as a starting point for your forecast, you get a more accurate and realistic view of your current financial situation. This makes the forecasts for the other nine months more responsive to recent trends. Not to mention that it reduces the risk of relying too heavily on long-term predictions that may no longer be relevant.

person holding a pencil over a laptop
3+9 forecast starts from actual data

Why the 3-9 forecast works

If we dig a bit into the past, most businesses used to rely on traditional forecasts. You know, the ones updated annually or quarterly at the most. However, these forecasts can quickly become outdated. Especially if you’re working in a fast-paced industry where market conditions can change overnight.

 

The 3+9 forecast is different because it updates your projections with the latest data all the time, which keeps your financial plan relevant and adaptive. Basically, it makes you rethink your numbers over and over again. 

 

Here’s why it works:

  • 3 months of actuals keep you grounded. Since the first three months are based on real, verified data from your business’s recent performance, this helps eliminate guesswork and ensures that your short-term analysis is accurate.
  • 9 months of projections keep you agile. The forecasted 9 months allow businesses to prepare for strategic initiatives, market changes, and growth opportunities. Since this part is updated regularly, it can evolve with new information, making it more reliable than static, long-term forecasts.

 

Also read What is a 2-10 Rolling Forecast and How It Can Transform Your Financial Planning

the 3-9 forecast with actuals and projections

3 Key Benefits of the 3-9 Forecast

1. Real data make your forecast more accurate

If actual data are your starting point, then your predictions for the next nine months are definitely more reliable than if you had started building your forecasts on assumptions (like some financial models do).

 

Let’s say you’re a manufacturing company producing automotive parts. You can easily use a 3-9 forecast to manage your production lines. With the first three months of actual sales and order data from clients, you can easily adjust your nine-month forecast. This real-time adjustment makes it easier for you to avoid overproduction, manage supply chain issues, and keep inventory levels aligned with actual demand.

2. Your business is more flexible towards market changes

Since you update your forecast regularly with actual data, it becomes a living document that adapts to shifts in the market. This is especially important in industries where fast shifts can have huge impacts on performance.


Apple uses rolling forecasts to predict demand for its products, particularly around the launch of new devices. The company applies a forecast that balances actual sales data from the recent past (e.g., the last quarter) with projections for upcoming quarters based on market trends and consumer behavior. This helps them to adjust production levels to avoid both stockouts and excessive inventory. But at the same time, it ensures they can meet customer demand while optimizing production and distribution costs.

 

apple logo in front of a building
Apple uses rolling forecasts to predict demand for its products

3. You can stay more aligned with your business strategy

By updating the forecast every month or quarter, businesses ensure they are always aligned with their strategic goals. The 9-month projection allows for longer-term planning while the 3 months of actual data keep the focus on immediate execution.

 

Tesla has adopted a rolling forecast method similar to the 3-9 approach to align its production goals with evolving market demands. Tesla regularly revises its forecasts based on the most recent sales and production data for its electric vehicles. For example, after analyzing actual sales figures for the Model 3 and Model Y, Tesla adjusted their nine-month production forecasts to align with their broader strategic goal of expanding market share while scaling up their battery production and infrastructure. This approach helps the company stay agile and aligned with both short-term sales goals and long-term growth targets.

a row of doors with windows
Tesla regularly revises its forecasts based on the most recent sales and production data for its electric vehicles

Challenges of the 3-9 Forecast

Though there are numerous benefits to the 3-9 forecast, there are still some challenges to consider. Here are some of them:

 

  • Data quality. If you’re off to a wrong start, it’s difficult to imagine you’ll end up at the right place. Meaning – your forecasts are only as good as the data you use. If your actual data is inaccurate or incomplete, your 9-month projections could be off.
  • Market volatility. There isn’t a forecasting model that can prepare you for external factors like economic downturns or sudden industry changes. The 3-9 approach helps mitigate this risk because it makes you question and update your projections regularly, but unpredictability will always be a factor.
  • Regular updates. To truly reap the benefits of the 3-9 forecast to the fullest, you need to update it regularly. This requires commitment from your finance team and alignment across departments to ensure accurate data is fed into the model consistently.

Best Practices for a Successful 3-9 Forecast

If you’d like to implement the 3-9 forecast in your business, here are a few tips to approach it the best way possible:

 

  • Automate wherever you can. Use financial forecasting software to automate data collection and analysis. This helps you reduce human error, not to mention that this is the easiest way to keep your data up-to-date.
  • Collaborate across teams. Involve as many departments in the forecasting process as you can. Sales, marketing, and operations teams can provide valuable insights that will ensure your projections are accurate.
  • Conduct scenario analysis. Use the 9-month forecast to plan out different scenarios. For example, what happens if demand increases by 20% or if a major supplier experiences disruptions? This is where you need to think about it.
 
3-9 forecast best practices

Why Should the 3-9 Forecast Be Your Next Move

If you’re a business looking to balance real-time data with long-term projections, then the 3-9 forecast is definitely something to look at. Starting with the most recent three months of actual data, this method offers a realistic, adaptable approach to financial planning that keeps businesses agile in today’s market. And with so many changes happening in all industries, agile is, as it seems, the way towards success.

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