Why sales forecasting is essential to business survival
At least 50 percent of businesses worldwide fail in their first five years of existence. If you closely examine government figures you will see the evidence
The official common reason for failure is the failures simply ran out of funds. This deliberation is not helpful and so I decided to look for people directly and indirectly involved in failed businesses to see if I could determine the details, establish any consistent reasons for failure and publish them on the net in the hope that my results would help others avoid a similar fate. I discovered eight common reasons for business death. Here are three of them:
No Vision, mission or strategy
“If you haven’t a clue where you are going then how are you going to get there?” You have to have a clear picture of what you want to achieve and how circumstances will be for your business if you achieve it. To achieve anything you need a strategy. Strategy can be likened to a road map it shows you how to get to your destination. It’s a systematic list of actions. To make a strategy work you have to create a business plan that not only contains the key actions and milestones but can used to measure business performance against. A key instrument for monitoring business perfomance is the sales forecast.
Lack of a system for marketing or sales
Marketing is about identifying markets and testing strategies to position your proposition in the minds of prospects and moving them into your sales channel. Sales is about engaging the prospect and getting them to buy your product or service. Marketing is a process of measuring and refinement of the methods you employ to reach prospects. selling is the process of acquiring leads, forecasting sales and closing sales. In successful organisations a decent marketing and sales system is usually supported by a effective sales forecasting software system. Systems like these enable you to track and measure the activity in the sales and marketing processes. These insights arederived from reports generated by the system which can then be used to compare what was planned with what actually happened. The point I am making is what gets measured gets improved or discontinued. This is the essential formula for success.
Lack a system to get sales from their captive customer list
There is a well used phrase that eighty percent of your sales should come from 20% of your customers. Your job is to achieve or exceed this figure. Customers who have previously purchased from you are easier and cheaper to persuade to buy from you than prospects that haven’t. A combination of effective web based crm software and sales forecasting software should give you the insight of historical activity and allow you to search for opportunities in your current customer base.
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