4. Accurate job costs
Ensure your sales people are not just guessing at the actual job costs. Have accurate and up-to-date prices for labor, overhead, crew rates, equipment rates, etc . Accurate estimating must include a review of what your general conditions really cost and then an accurate budget based on input from the field.
5. Factor in closing times
One of the most challenging parts of any sales forecast is determining the closing time on projects. In general, prospects buy much later than they say they will, so you have to figure out when projects will close and when they will be billed. It is best to use historical data to determine how long the typical prospect takes to move through each step in the sales cycle from proposal to closing the sale to billing. For example:
- How long does a prospect, on different types of projects, take to accept the proposal from the time your sales person submits it?
- What are the different stages of the project?
- How long will it take to realistically complete the project?
- What issues may delay the project at its different stages?
6. Extrapolate from the known to the unknown
The information you have so far will give you a month-by-month forecast of business you have sold and sales in the pipeline to be sold. For your long-term forecast, you need to consider two important factors: are you seeing a pattern of rising, declining or flat sales? And, what changes must you make to your team's sales activity to refill the prospect pipeline for future periods? Take a close look at every step in your selling cycle to determine the dollars and time that go into each sale: Prospecting, Qualifying, Appointment Setting, Estimating and Bidding, Overcoming Objections, Customer Service, other Post-Sale Support and any other steps applicable to your business. Then make sure you have the resources in place to handle the growing requirements of your sales team.
If you want to make more money or at least make your projections, make your forecasting more than a guestimate. Use the six factors above to create an efficient forecasting system. The outcome is your ability to have a better handle on how much business you will close this year.
Linda Hanson, CMC, is a certified management consultant and author of 10 Steps to Marketing Success. She writes, speaks and consults on marketing, management and customer service issues and can be contacted at www.llhenterprises.com. Sign up for her free newsletter The Superior Performance Report.