Discover how to avoid business failure – the importance of sales forecasting
Wednesday, August 5th, 2009
Less than 50% of businesses survive more than five years. If you closely examine government figures you will see the evidence
The gurus common reason for expiration is the failures eventually ran out of money. This deliberation is not very useful and so I decided to seek out those directly and indirectly associated with failed businesses to see if I could uncover the details, establish any consistent reasons for failure and publish them on the internet in the hope that my discoveries would help others avoid a similar fate. I discovered eight consistent reasons for business failure. Here are three of them:
No Vision, mission or strategy
“If you haven’t a clue where you are going then how are you going to get there?” You have to have a clear picture of what you want to achieve and how life will be for your business if you achieve it. To achieve anything you it is essential to have a strategy. Strategy is like a route map it shows you how to get to where you want to go. 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 instrument for tracking and measuring business perfomance is the sales forecast.
Lack of a system for marketing or sales
Marketing is about finding markets and testing strategies to position your proposition in the minds of prospects and drawing 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 improvement of the tactics you employ to acquire prospects. selling is the process of getting leads, forecasting sales and closing sales. In successful companies a good marketing and sales system is usually supported by a well designed sales forecasting software system. The tools in these systems help you to track and measure the activity in the sales and marketing processes. Results arederived from reports created by the software which can then be used to compare what you predicted would happen versus the real outcomes. In summary what gets measured gets improved or discontinued. This is the essential formula for success.
Lack a system to monetise their captive customer base
There is a well used rule that eighty percent of your sales should come from 20% of your customers. Your task is to achieve or surpass this number. Customers that have already purchased from you are simpler and cheaper to reach than prospects that haven’t. A combination of good web based crm software and sales forecasting software should give you the information of historical activity and enable you to discover opportunities in your existing customer lists.