Small Business Sales Forecasting: 4 Things to Consider Before You Plan Posted on January 8, 2016October 13, 2020 by Jonathan Herrick As a small business owner, the success of your business relies not only on executing in the moment but knowing where you are headed in the future. If you’re like most owners, it is easy to get sucked into the “one day at a time” mantra as you roll up your sleeves and run multiple aspects of your business. But in order for you to grow revenue, reduce expenses and thrive in the long term, it helps to step back and have a healthy focus on honing your skills at sales forecasting. What Is Sales Forecasting? Sales forecasting is a term that is often over complicated with enterprise jargon and tossed around without much explanation in the small business marketplace. Yet as an owner, you need to understand its importance and how it affects all aspects of your business. Let’s take a look at what a sales forecast is, the benefits and why to adopt a predictable model for your small business. The Definition of a Sales Forecast A sales forecast allows you to determine what your estimated sales (Revenue, New Customers, etc.) will be for a given time period. The forecast is generated from an analysis of previous data about your sales, the sale of similar products by your competitors, and market response to your offerings. Essentially, the sales forecast is a critical component of your management framework and it enables you to assess and improve key business initiatives such as: More accurate forecasting of expenses and cash flow projections Understanding the best venues for deploying marketing dollars Turning more prospective customers into repeat customers Adapting your product to better meet the demands of your customers Inventory management control Timely staffing and hiring How To Adopt Sales Forecasting A sales forecast produces an accurate representation of your projected revenue and growth for your business. As with any small business, cash flow is key to keeping the lights on and the doors open. By implementing a sales forecast and using it consistently you will be more capital efficient and get the best ROI for your sales & marketing budget. You will also be better prepared to know when you need to bring on new hires and expand your team. So before you build your sales forecast for the upcoming quarter and beyond, here are 4 tips to consider: Solidify Your Marketing and Sales Process Before you can accurately predict future sales and revenue, there first must be a predictable process in place for finding, converting and growing sales from customers. Otherwise your estimate will be like throwing darts at a dart board. On the money one month and way off the next. It’s all about putting together a systematic process that drives more opportunities that ultimately convert into sales month over month. So if you are using outbound methods to drive sales like cold calling, you may want to rethink your process and incorporate an inbound marketing strategy to create a more predictable and scalable process. Leveraging the Right Tools One of the easiest ways to create and follow an accurate sales forecast is to leverage the power of a small business CRM. A CRM will help you get to the sales and marketing data you need quickly and easily. For example, we use Hatchbuck to continuously reshape our sales process, propel new sales to small business owners and give us insights in our sales pipeline. In fact, we have successfully increased the company’s revenue by 2,300 percent since 2012, and this rapid growth was achieved without resorting to cold calls and “shot in the dark” marketing and sales strategies. With the right tools in place, we have the ability to track new sales historically, categorize lost sales by reason, and better analyze the number of leads per month by source. In essence, we get a complete picture of the entire marketing and sales funnel – helping us to better predict where we are having success and where to best allocate our resources next month and thereafter. We also have the ability to run real time reports such as a 3 Month Forecast Report to give us a 90 day snapshot of our sales pipeline by close probability. Also, financial software tools like Quickbooks can be a great source of product and expense data. These tools help you get the full picture on the total cost per customer and other important data points key to forecasting. Don’t Create Your Plan in a Vacuum To help you create a sales forecast for your small business that is achievable but stretches beyond the current performance – don’t go at it alone. I would highly recommend bringing in your sales team into the process since they will be responsible for achieving this upcoming year’s numbers. There is nothing worse than a team not believing in the reality of the goals and projections set out in front of them. By allowing them to take ownership in creating the plan, they are more likely to hold themselves accountable month in and month out. If you’re both the owner and the sales team, ask for outside feedback on your model. By bringing in an outside set of eyes you may be surprised what you find. Maybe you are overly optimistic and your plan is out of reach leaving you with a cash shortfall at the end of the year. Or possibly your sales forecast is not aggressive enough and not maximizing your capital as efficiently as possible. Measure and Adjust Once you have your forecast in place, don’t just let it collect dust. Access your monthly sales reports and compare actual performance to your forecasts. Determine what went right or what went wrong. Understand where you need to make adjustments to help you better manage your business moving forward. You may find you have an opportunity to invest more into marketing campaigns – further accelerating sales growth or driving higher profitability. If you miss your targets, dig into the causes to better understand where you have a bottleneck in your sales and marketing process: Are your salespeople under performing? Do you have enough sales people to respond to lead generation demands? Did you miss the mark on the number of opportunities generated? Did your sales conversions slip? Did a competitor win a larger percentage of the business because of a new product or service they launched? By looking for these trends connected to lower sales performance, you enable yourself to better forecast revenue and expenses for the future. Budgeting and forecasting may seem like a daunting task for your business, but you put yourself in the best chance to achieve your growth goals when you do. Start by solidifying your sales and marketing process, implementing the right tools, and taking a proactive approach to modeling your sales projections.
Are You Measuring What Matters? 3 Sales Performance Metrics You Aren’t Thinking About. Posted on December 17, 2015June 27, 2016 by Jonathan Herrick Many shops and small businesses use core sales performance metrics such as the number of monthly sales made and revenue as common benchmarks to measure success. While these are associated with the bottom line, they can be lagging indicators and don’t necessarily tell the whole story. In order to get a bigger picture owners tend to lean on traditional metrics such as activities and proposal generated. When it comes to your business, it’s not just about where you’ve been, but where you’re going. While the number of sales or proposals generated last month doesn’t always provide a good indication of where you’re headed this month. But, with the right sales performance metrics, you can easily gauge the pulse of your business and make adjustments to keep your business healthy and humming. Don’t Call Me, I’ll Call You In this new digital era, sales happen differently. No longer do sales occur only by picking up the phone and making cold calls. Think about it…when was the last time you responded to a cold sales call? Today, buyers are doing their research online first before talking to a sales person. With intelligent automation, it is now possible to reach people who are in research mode, driving leads inbound to your small business and talking to them only when they are sales ready. The buying process has changed, but have you? If you haven’t changed the way you are measuring sales performance metrics and you don’t have insights into the process that drives sales, consistent revenue growth can be extremely difficult to sustain. Modern Sales Performance Metrics Whether you’re the captain of your sales team or have a sales leader in place, here are 3 sales performance indicators to gauge the health of your business: 1. Lead Conversion Performance – Lead Response Time Today, marketing’s job is more than just designing fancy brochures; marketing is responsible for generating qualified leads and opportunities for your small business. The faster you can respond to marketing leads the better chance you have of setting the appointment and converting the sale. In fact research shows that the odds of contacting a lead if called within 5 minutes versus 30 minutes drop 100 times. The odds of qualifying a lead if called within 5 minutes versus 30 minutes drop 21 times. Smart tools such as marketing automation platforms enable you to nurture leads until they are ready to buy and automatically notify your sales team to engage with prospects when they are most interested – maximizing sales response time and increasing sales conversions. Not only can you nurture leads into conversions with marketing automation, but you can also track lead source to learn about what’s working – and what’s not working – for your small business. For instance, when you reach out to your leads to qualify them and don’t make contact, you can track them as “Closed Lost – [Reason Why]” such as “Closed Lost – No Response” in your CRM. This gives you valuable data to track back to marketing and better understand if you have a channel that may be driving unqualified leads or you have a sales response time issue that needs to be addressed. 2. Pipeline Opportunity Performance In order for sales to happen each month they have to come through the pipeline. When you analyze your pipeline the key is look for ways to boost conversions. By tracking deals as they move through the pipeline you can measure sales performance metrics such as: Lead to opportunity: This ratio measures the effectiveness of leads converted into opportunities (deals). It can help you measure the quality of leads that you’re attracting to your business. Opportunity (Deals) to customer: This ratio measures the effectiveness of opportunities converted into customers. It can help determine the quality of your sales reps and the efficiency of your sales process. Average Opportunity (Deal) Value: Revenue amount assigned to an opportunity when it is created. This can help you forecast your revenue. So if you know that you consistently win 60% of the opportunities (deals) in your pipeline, you can predict your revenue for the upcoming month. Days to Close: How long it takes to move a deal from creation date to close. This metric gives you more accuracy in measuring the health of your lead channels. For instance, if your average days-to-close is 60 days, you know to evaluate a new marketing campaign 60 days post-launch (not 30 days) to get the most reliable picture of success. Probability to Close: Percentage chance you will close the opportunity. This gives you a better ability to predict sales and revenue for your business and to set sales and marketing goals each month. So, if you know that you close 60% of opportunities (deals) that you bring in, and you have a sales goal of 10 new customers for the month, you can set a marketing goal of bringing in 17 deals for the month. Days in Stage: Historical tracking of lead or opportunity by stage. This can give you data to see how long each stage of the sales cycle is, helping your team manage expectations and time. So if it usually takes 10 days to write a proposal and get a signed agreement back, your team can be prepared for when to expect a new customer to come onboard. Filters by Sales Rep and Lead Source: There are a number of filters within the pipeline that you should filter on to get the micro level metrics you need to make better decisions about your business. Maybe you’re spending money on a lead channel that never produces a customer. Or maybe you have a channel that converts at a high rate that you could invest more in. Or, maybe a sales rep needs additional training or better tools to help them convert more opportunities into customers. These important data points are early indicators of future revenue for your business. For example what does your 3 month forecast look like? What would happens if you shortened your sales cycle by 50%? Or increased your opportunity to customer ratio by 10%? By understanding your sale pipeline metrics in depth, you have the ability to optimize your sales process and know which levers to move to drive more sales for your small business. 3. Customer Retention Metrics Customer loyalty is often a metric used to measure the effectiveness of your support team. However in order for you to have the net customer growth year over year that you are looking for, you need to make sure you are attracting the right customer, signing the right customer, and getting them to stay and purchase from you. One way to break it down is to look at the Customer Lifetime Value of your customers to better understand who you’re best and most profitable customers are. This gives you the insights you need to ensure you are spending your valuable sales hours each day with your ideal buyers and with opportunities that have a higher propensity to convert into lifelong customers – not just one time sales. By knowing how your lead performance, pipeline metrics and customer retention data points you’ll be able to measure what matters – the metrics that lead to more sales and revenue.
How To Easily Scout Sales Leads For Your Small Business Posted on August 24, 2015June 3, 2016 by Jessica Lunk A constant infusion of qualified leads is the lifeblood of your business. Without the steady stream of leads, you cannot work with prospects, determine their needs and convert them into sales. However, sourcing leads can often be a problem, especially in a small business where every moment is filled with tasks including putting out fires. It is important to have a proper system in place that will continue to scout out leads for your business whether you get distracted by other matters or not. Just the knowledge that your company continues to source sales leads can lower tension. So, how do you solve this problem by putting into place a system that will build your prospect list? One answer to this issue is adopting a program that manages your lead sourcing and follow-up without hands-on attention on a constant basis. Does that mean you can ignore the process? Of course not. You will still need to pay attention to the way the system is used. But it does mean that you can free up some of your attention to details and get back to managing your company, coordinating efforts and looking forward to the future. Hatchbuck has multiple methods of improving your lead sourcing and managing the leads once you collect them. Using Hatchbuck, you will find that your ROI increases, meaning your team can work smarter, instead of harder. Better results increase confidence and establish pride in skills and abilities for your whole team. The best way to understand Hatchbuck is by getting a live demonstration. However, here is a list of the ways Hatchbuck will help you succeed. CRM and Marketing Automation With this tool, you can track and manage your sales and marketing activities in one central location. Hatchbuck will let you know when you need to perform important tasks, and alerts you to hot prospects. Build relationships with prospects and customers in a personalized manner until they are ready to buy your products or services with Hatchbuck’s email nurturing engine. All the Tools in One Place You can build customized online forms with Hatchbuck for converting visitors to your site as well as import your existing contact list to the program, eliminating a lot of your administrative time. After all, time is your most valuable resource. Easily Segment Leads You can add more personalization to your contact list through tagging and segmenting to ensure that your customers only get the valuable information that they are interested in and avoid boring them with too many emails. Track Leads Precisely Getting the right message out at the right time is a big part of the battle. Hatchbuck tracks your visitors’ behavior on your website which will trigger relevant emails to be sent as a result of their behavior. Timely Follow Up Hatchbuck will take the work out of following up with your leads, nurturing them properly with relevant messages through the entire buying process. Convert Prospects into Customers You will have help converting prospects into customers as Hatchbuck scores them for prioritizing. Hatchbuck is the ideal solution to improving your marketing success, increasing your ROI and building your customer base. If you want to grow your business more efficiently, Hatchbuck will help you get the job done.