We all need help predicting future sales. Historical metrics such as total sales, close rate, and average job size are all useful, but they fall short of giving us a read on where sales are heading in the coming months. Here’s a helpful method I use regularly.
Take inventory. Make a list of current prospects and clients, what type of project they want to do, and their “status” in the pipeline. Knowing where the project is in our process helps us evaluate how “real” it is.
Also list which team members are involved with the project. Finally, enter the date the project is expected to proceed and the estimated sale amount.
“Real” sales. The next step is to evaluate the probability of each sale. Our rule of thumb is that nothing is more than 90% until after it is sold; and nothing is more than 70% unless there is a clear date the project is expected to sell. The sample worksheet below multiplies this percentage and the estimated sale amount to get the “sales prediction” for each job. The sum of all sales predictions for all jobs gives you the total sales volume in your pipeline. This is a good read on the sales volume you can count on in the next month or two.
Take action. Don’t put this information into a drawer — use it to make decisions. Share the worksheet with your entire team; it will satisfy their curiosity about the sales outlook, plus it will help them focus on those projects that have a high probability of proceeding, i.e., the “real” projects that should get the full attention and focus of you and your team.
You should also compare total predicted sales this month and next both to your budget and to expenses. If they’re not aligned, evaluate your options and adjust your resources, team, and focus accordingly.
You will find mixed results the first few times you put this dashboard to use. Some people will be overly optimistic in their predictions, and some will be overly pessimistic. After a couple of months, however, you will find this dashboard invaluable to making smart business decisions and invaluable to reducing stress for you and for your entire team.
—Bruce Case is president of Case Design/Remodeling; firstname.lastname@example.org.