Sales Forecasting – The Sales Manager’s Nightmare
Sales Forecasting: By Allan Himmelstein is President of Sales Coach AZ, via SoldLab Magazine
Throughout my career, one of the most dreaded activities was sales forecasting. It is a dreaded but a necessary evil. Your sales people must be involved. Only they have firsthand knowledge of the account. If done properly, there are many aspects that cannot only help your business, but help the sales training process. It helps everyone determine strategies and directions for your top accounts. Don’t you want your salespeople thinking like business owners?
The strangest experience in forecasting was when I was with a German company and I projected only $100,000 in sales and actually had $600,000. They nearly killed me for selling too much. I thought they were crazy.
After some discussion, I started seeing their point. The effect on the company was enormous. If they would have known, they could have gotten new people. If they would have known, they could have gotten new equipment to produce product, and even more important projected their cash flow.
Sales forecasting is part science and part guesswork. There has to be a system in place to help the salesperson and sales management to forecast at least 80% of the sales in a simple succinct manner. Part of the problem is that some sales people are eternally optimistic, and others do not want to stick their necks out, so they forecast low. Without a system, you have no way of knowing and it becomes pure guesswork. At the same time, you do not want it taking too much time away from sales efforts. Or is that an excuse, hmmmm?
A CFO can really give you great forecasting tools. However, you will need to include subjective points like the following:
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