A businesswoman presenting a sale forecast while smiling to Focused Energy outsourced accountants

How to Create a Scalable Sales Forecast?

The state of the sales pipeline affects every single decision a company makes, from hiring to expansion to the resources allocated for inventory or products.

With an accurate financial and sales forecast, entrepreneurs can gain a clearer picture of financial performance, which will enable smarter financial decisions. But when the data isn’t reliable or the pipeline isn't predictable, it's nearly impossible to achieve high-growth.

Sale forecasting is not a one-time task. It cannot be a rigid plan with set figures and targets. Think of it more as a process.

Let us briefly walk you through the process of sales forecasting, and how best to scale your forecasting in order to achieve growth goals.

Sales forecasting

A sales forecast is an analysis that predicts the number of goods or services a sales team or a business can sell during a sales period.

A sales period varies by the size and nature of the business. It can be set at weekly, monthly, quarterly, or annually for different sales forecasting plans.

A sales forecast plan varies at hierarchical levels of a business. For instance, the director will estimate sales for the company for a specific period. Conversely, the sales manager will set targets for the sales team or a salesperson.

What is scalability in sales forecasting?

Scalability in sales forecasting means the ability of a business to adjust for the changing sales objectives without compromising the performance metrics.

We can define a few characteristics of a scalable sales function.

  • A sales process that can handle increased prospects without a compromise on quality.
  • A sales team that can gear up for the challenging targets without having a negative impact on the win rate.
  • A team that can grow and adjusts with changing sales forecasts.
  • A sales function that can hire and train new talent quickly.

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Tips to create a scalable sales forecasting plan

A forecast plan needs to be flexible. In times of uncertainty, a flexible and scalable sales forecasting plan can help your business thrive.

Here are a few key tips for you to create a compelling and scalable sales forecasting plan.

Establish the process

Systematically establishing the sales forecasting process. Define the processes and steps involved in the forecasting process for your sales team.

You should clearly define the opportunity, lead, conversion and close terms for your team. Capture best practices.

That’s because smaller departures from processes that slip under the radar when a team is small, become magnified on a larger scale. This introduces inefficiencies, higher costs and other unwanted issues.

It is important to develop a process that is flexible, modified when required and repeatable. On a larger scale, these customizations

Therefore, one of the key indicators that a sale process is scalable is when it can be repeated. What this means is the process works the same, whether you have one prospect, 50 or even 1,000.

Align your sales and marketing functions

Your marketing function will create compelling campaigns. The primary task of your sales team will be to convert these leads into closed deals.

A pivotal part of a successful sales forecasting plan will be to keep both functions on the same page. If their goals and objectives are aligned, they’ll create harmonized plans.

Related: the power of organizational alignment

Choose the right sales forecasting method

The historical forecasting method is a widely used sales forecasting method. It is suitable for a business with an established history and compiled data.

On the other hand, you can choose to pursue opportunity stage or pipeline forecasting for detailed sales forecasting planning. These options require substantial resources and time.

Choosing the right forecasting method will depend on your business size, industry, team culture, and data availability.

Create a sense of inclusivity

An all-inclusive sales forecasting plan will have inputs from various functions of a business. For instance, your product development team, marketing team, and sales team should align their objectives.

Similarly, taking inputs from HR and finance teams will create a sense of inclusivity. If all the teams do not believe in the forecast plans, they’re unlikely to pursue them.

Consider seasonality

Every business has a seasonality impact. Consider your business’s seasonality for highs and lows.

For instance, the month of December can be a high-selling month for business and a holiday season for another. Thus, factoring in the highs and lows of seasonal sales is important in keeping the forecast plans scalable.

Embed the “what-if” culture in your sales team

Many businesses follow historic and trend analysis too rigidly. For a sales forecast to remain flexible and scalable, you must embed the “what-if” culture.

It is primarily focusing on qualitative questions as well as quantitative numbers. For instance, a business must ask what if we face another economic shut-down for a month? What if we receive double the orders, we anticipated for our third quarter?

Adapt flexibility, review consistently

Finally, adopt flexibility as a culture with your sale forecasting. Constantly changing consumer behaviors and economic conditions demand flexibility and scalability at every level.

At the same time, you must review your forecast plans consistently. Keep your review spans shorter. It will help you adapt to the changes quickly and bridge the gap for variances in results.

Related reading: tips to scale

Building a scalable business: a final thought

The optimal and smart allocation of resources is critical for high growth. Attracting new customers, optimizing operations, accurately forecasting sales, and venturing into new markets are all options that can help you increase your company's profits, but they are not the only ones.

A profitable business is a synergy of operational and financial processes. Focused Energy's financial and accounting experts can help you see the forest for the trees, and determining the best path to achieve your goal, as well as what actions could potentially increase business profitability.

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