Discover how to avoid business failure – the importance of sales forecasting
Fewer than 50% of businesses survive beyond five years. If you closely examine government figures you will see the evidence
The gurus “broad brush” reason for death is the unfortunate ones simply ran out of funds. This deliberation is not very useful and so I decided to look for individuals directly and indirectly connected with failed businesses to see if I could uncover the details, establish any recurring reasons for failure and post them on the blogosphere in the hope that my discoveries would help others avoid a similar fate. I discovered eight consistent reasons for business death. Here are three of them:
No Vision, mission or strategy
“If you have not decided where you are heading for then how are you going to get there?” You must have a clear picture of what you want to achieve and how the environment will be for your business if you achieve it. To achieve anything you need a strategy. Strategy is like a route map it shows you how to get to where you want to go. It’s a structured series of activities. 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 tracking and measuring business perfomance is the sales forecast.
Lack of a system for marketing or sales
Marketing is about seeking out markets and testing strategies to position your offering in the minds of prospects and pulling them into your sales funnel. 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 engage prospects. Sales is the process of getting 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. The tools in these systems help you to track and measure the actions and results in the sales and marketing processes. Results arederived from reports produced by the software which can then be used to compare planned vs actual results. In summary what gets measured gets improved or discontinued. This is the key formula for success.
Lack a system to get sales from their current customer base
There is a well known phrase that 80 percent of your sales should come from twenty percent of your customers. Your task is to achieve or exceed this figure. Customers that have already purchased from you are simpler and cheaper to sell to than prospects that haven’t. A combination of effective web based crm software and sales forecasting software will give you the knowledge of past activity and enable you to find opportunities in your existing customer lists.
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