Forecasting: You're probably better at it than you think

We are saying anyone has the ability to forecast with a decent degree of accuracy and you don’t need to hire experienced professionals to do it for your business. Let me take a couple of minutes to demonstrate.

First up I need you to take some time to give me a ball park answer to this question;

How many piano tuners are there in the city of London?

Take a minute and think before coming up with your answer. I’m not looking for a black box guess and I’m confident you could get close if you try.

I came up with 60. The actual question asked is a famous one and a Google search will justify answers of over 100. This is fine and whether I am right, you are right or Google is right isn’t that relevant. What’s important is the method we have used to get there. For your business you may be thinking that an accurate answer is actually pretty important and you would be right. I doubt anyone reading this knows much about the piano tuning business so the method uses many assumptions. Applying the same method to your business where you have a deep knowledge and access to relevant data will ensure your forecasts are far more accurate. So don’t panic or stop reading.

Let’s have a look at the method I used to come up with my prediction of 60 and see how close I was to following your methodology;

I know there are almost 8 million people in London so I just rounded up to 8 million.

I then estimated that the average household was made up of 4 people.

8 million / 4 people per household = 2 million households

Thinking back to my childhood I don’t remember many of my friends having a piano in the house but I definitely remember seeing at least one somewhere. On that basis I’m going to say 1 in every 50 households have a piano.

Number of pianos in people’s homes = 40,000

Thinking back again I do remember seeing a piano in a church I used to go to and a few in schools.

Say churches have the capacity to service a quarter of the city’s population. That’s 8 million people / 4 = 2 million. A church can probably hold 2 – 3 hundred people so let’s go with 250. That’s 2 million people / 250 = 8000 churches or, 8000 pianos.

Our estimated number of pianos is now 48,000.

But then there are the schools. Let’s run a quick estimate. There are 8 million people with an average life expectancy of 80. School age is 5 to 15. Working on the number of people per age group is even that gives around 1.6 million students. Primary schools tend to be smaller than high schools so let’s say the average capacity is 1000 students. That’s 1600 schools, with say an average of 5 pianos per school, so 8,000 pianos.

That gives us a total of 56,000 pianos so far. Let’s add 10% to cover the odd one in hospitals, care homes, pubs etc. That takes us to 61,600 pianos.

Now we need to think, of the 61,600 pianos, how often are they tuned.

Of the 40,000 in peoples home a fair few will be sat collecting dust and seldom used let alone tuned so let’s forget about 10% of them.

That leaves 36,000. Again I don’t know much about pianos but I’m going to guess that domestic ones are tuned every 2 years on average. That’s 18,000 pianos that need tuning each year.

For the remaining 21,600 pianos in churches, schools and other public places I’m going to guess these are used and tuned more regularly so I’ll average one tune per year.

That means there are 39,600 pianos that need tuning every year. So how long will that take?

For the ones in people’s homes I’m going to guess 3 per day. This takes into account travel between jobs, setting up, having a customary brew etc. with a typical working day being 8 hours. That means it would take 6,000 days to tune them all.

I have gone with 2 per day for churches as the tuner would need to complete their RAMS and other stuff so that’s 4,000 days to tune all 8,000 of them.

A good tuner should be able to close a school off in a single day so it would take 1,600 days to tune all 8,000 pianos.

That gives us a total of 11,600 days of piano tuning work each year.

Let’s say there are 48, 5 day working weeks in the year after holidays. That’s 240 days per piano tuner. To complete all the work it would take 49 piano tuners. My prediction of 60 is based on the work not being distributed as evenly as this calculation shows with some of the piano tuners being part time doing it in addition to piano sales or lessons.

What we have done here is used a basic forecasting framework that can be applied to almost anything. The more accurate the data you can get the fewer assumptions that will need to be made and the greater the accuracy of your prediction.

Are we going to have supply issues with our raw materials? Is consumer demand for online retail going to continue to grow? Should we switch to an electric fleet of delivery vehicles? Will demand for air travel outstrip supply and push airline ticket prices to record highs?

These are all the types of questions you should now be able to answer using the piano tuner method.

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