Businesses that don’t forecast sales inevitably fail

More than 50% of businesses don’t survive more than 5 years. If you closely examine government figures you will see the evidence

The industry experts most obvious reason for this tragedy is the unfortunate ones basically ran out of funds. This lack of detail is not helpful and so I decided to track down people directly and indirectly connected with failed businesses to see if I could determine the details, establish any recurring reasons for failure and post them on the net in the hope that my results would help others avoid a similar fate. I found eight common reasons for business failure. Here are three of them:

No Vision, mission or strategy

“If you haven’t a clue where you are heading for then how are you going to get there?” You must have a clear view of what you want to achieve and how the environment will be for your business if you achieve it. To achieve anything you must have a strategy. Strategy is very similar to a road map it shows you how to get to your destination. It’s a systematic plan of actions. Strategy is only effective if it is translated into a business plan which can be used as a benchmark for business performance. A key tool for monitoring business perfomance is the sales forecast.

Lack of a system for marketing or sales

Marketing is about discovering markets and trying out strategies to position your offering in the minds of prospects and pulling them into your sales pipeline. Sales is about engaging the prospect and getting them to buy your product or service. Marketing is a process of measuring and improvement of the methods you employ to attract prospects. Sales is the process of acquiring leads, forecasting sales and closing sales. In effectively managed organisations a decent marketing and sales system is often underpinned by a effective sales forecasting software system. Systems like these enable you to track and measure what is happening in the sales and marketing processes. Outcomes arederived from reports generated by the software which can then be used to compare what was planned with what actually happened. In summary what gets measured gets improved or discontinued. This is the critical formula for success.

Lack a system to monetise their current customer list

There is a well used rule that 80 percent of your sales should come from twenty percent of your customers. Your task is to achieve or surpass this figure. Customers who have already bought from you are easier and more cost effective 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 enable you to search for opportunities in your current customer base.