Last week we explored the area of reviewing financial reports to see the results and needed areas of focus to build and sustain a scalable company. Hopefully you took that to heart and as today is the 10th of the month you have reviewed your financial reports at least with yourself and or your leadership team.
We also mentioned last week that sales, marketing, and pipeline development are also critical to be focused on to contribute to the growth and success of your business. Depending on the nature of your business, forecasting sales to support manufacturing and acquisition of raw materials can be the difference between growth and closure. All industries have been dealing with various supply chain issues and weak pipeline forecasting to managing inventories only adds more challenges to the mix.
Each organization has various needs to shape their best pipeline forecasting process. It should be stated that forecasting from our opinion is both science and art. Some of the pieces are purely data points. Once captured and organized will allow you to view into the future to observe demands and trends of cash movement. Part of the pipeline system is the pure art of forecasting. You review and interrupt the data in the pipeline and using your intuition you shape the information into a model for success.
As there is no one size fits all pipeline process, it is good to start out with what you are trying to forecast and for what reasons. This will keep your initial forecast effort to a narrower focus and hopefully keep you from drifting off into the variety of areas which the forecasting process might take you.
To start with, you simply need a list to identify the various components of the forecast. Things like – projected sales activities, type of the client, nature of the product or service being proposed, the value of the proposal, a projected timeline to close the business and probability (gut level check) on confidence of all those factors. With these in hand, you will have a view of future dollars into the organization. As probability can be all over the place based on a person’s subjective view of the opportunity, it is suggested that you give the stages of probability some definition. This will allow for greater consistency amongst the various people providing input.
Setting up a pipeline forecast is not a once and done thing. It typically takes multiple months to hone it in so you can build confidence in what it is indicating to you. As you refine the numbers and get more tangible data, you will begin to see the real picture of cash plan coming in and the burn rate of expenses going out. It is for these reasons many business leaders start the process and then drift away from it as they can’t stomach the picture and they then try to correct the sale issues by driving their people even harder. This only alienates the salespeople, and the cash continues to burn.
If you are serious about having 2022 be the year of significant progress and you don’t have a solid pipeline forecast process then you might want to change your targets. You are looking at the opponents’ targets hoping they might shoot your targets and give you an easy win. Not going to happen in 2022 that way.
Need help getting your business setup on a reliable pipeline forecast system? Give us a call to arrange a no obligation discussion on how JKL Associates might be the right choice for business growth in 2022 for your business. MI- (313) 527-7945 or FL (40-7) 984-7246