By Tom Woodcock
As the holidays pass and we barrel into the new year, companies scramble to forecast next year’s performance. Numbers will be thrown around, projections made, and hopes elevated. Ownership will almost always demand better results in either revenue or profitability, or worse, both. Then the great master plan is formatted and presented at a company meeting. At that point, virtually everyone walks away leaving the sales team to make it happen.
Kinda comical if you really think about it. Marketing budgets get cut, entertainment expenses reduced and owner engagement wanes, yet you’re tasked to increase business. “Do more with less!” is the new company motto. You sit there wondering how you’re going to pull it off, if at all. It might be easier to just start making your excuses now as opposed to when the projections are blown. It seems to be an annual ritual. The real question is how do you project what an upcoming year will hold?
Projections can be very strategic or de-motivating in nature. Most are unrealistic in scope and cause unnecessary sales stress. Many have no formulation on how to achieve the numbers. Whether revenue, profitability or expansion of customer base, projecting results without having a plan is a shot in the dark at best. There are a few key areas related to sales that will require a strategic approach. Otherwise, reaching a projected goal will be a seat of the pants proposition. Hitting these main points will at least allow you to hit the basics:
- Market Conditions: Understanding and calculating what is taking place in your specific markets is paramount to setting your company’s sales rudder. Is demand trending up or down? Are there economic factors that dictate market direction? Has the customer base shifted in need or demand? These are important questions to answer. These influences can send you in the wrong direction if not addressed.
- Historical Sales Data: I find many organizations evaluate their sales teams via gut reaction. You “feel” like someone is doing a good or bad job and approach that person accordingly. The sales data may reflect the opposite of your impression. It’s impossible to project where you’re going without knowing where you are. What’s the starting point? What increases have you been averaging year to year? If historically you’ve realized a 5 percent increase year over year, you’d better have some strong data supporting an expectation of a 20 percent increase for the projected year. Unrealistic growth is never realized.
- Ability of Sales Personnel: Being realistic with the talent and work ethic of your sales team can assist in determining what you can truly expect that team to produce. Are they seasoned veterans? Developing rookies? Maybe a combination of both? Break the team down by individuals and measure the past contributions of each to your sales total. Use that as a baseline then incorporate the information you attain in the first 2 points and project growth. Combining the individual results will give you a company-wide figure. It’s useless to predict a high level of growth when you don’t have the players to get there. It’s like expecting your nine-player baseball team to hit 90 home runs when no one has ever hit more than five. It is just not possible.
If you’re diligent in at least these three areas, you can expect to make reasonably educated forecasts. Hitting projections will fuel the motivation tank. Over analyzing causes paralysis, insecurity and mistrust. Set your direction and stick with it. Be sure everyone clearly understands the requirements and the result of hitting or missing goals.
Recognizing that your company can fall into the trap of letting external factors dictate your success will keep you working on your strategy. You really do control your growth, not Wall Street or the next President. Rising above circumstances requires more than effort. Having a strong sales strategy tied to that effort has virtually a zero percent chance of failure. Of course each company has its own idiosyncrasies that can affect success, but having your sales ducks in a row can mitigate the negative and extenuate the positive. You are in control.
I’ll be sitting with the companies I work with over the next few weeks setting projections. Owners will argue with me and want to push the numbers. My response will be; “Okay, how are you going to pull that off?”. That will at least light the fuse. From there, reality will kick in and we’ll end up with a good, aggressive, yet achievable projection. Which, truth be told, is exactly what both they and you need. Don’t give in to the wishful thinking of pie in the sky expectations. The eventual result is a bad taste in your sales mouth.
Tom Woodcock, president, seal the deal, is a speaker and trainer to the construction industry nationwide. He can be reached at his website: www.tomwoodcocksealthedeal.com or at 314-775-9217.