The 4 Best Practices for Forecasting Sales for a New Venture
Forecasting sales for an existing venture is much easier than for a new venture, as for an existing venture you can use sales data from your sales organization and estimate future sales whereas for a new venture it will be like driving with closed eyes. With other responsibilities of starting a new venture, it could be hard to make forecasting a priority but you have to think about the big picture.
Sales forecasting implicates factors like the amount of capital needed by you to get your venture off the ground, how you can set your marketing budget, how you can divert potential investors, and inventory management. But this process can be just as exacting as it is necessary and to account for your venture's lack of historical data it often requires a lot of "filling the blanks".
According to many surveys, 75% of sales organizations miss their forecasts by more than 10%, and 52% of the deals forecast by reps never close. This isn't sustainable for any business, here are some sensible strides you can take when forecasting sales for a new venture
Establish a sales team process
It's a bit critical first step to determine the sales process which your team is going to employ as it gives connections for your sales forecast. Determination of sales process allows you to keep your sales team on the same page and estimate the likelihood of deals closing also informs other aspects of your sales operations like quotas - these factors can help you understand the revenue you can expect to generate in the future and construct your sales forecast as your new venture expands.
Research & identify services/products similar to yours
Understanding how your offerings have fared in recent years can be a valuable benchmark to forecast how your offering is going to sell initially. If your services or product is something new, don't assume that your offering is going to storm the market, look for a similar offering to yours that has dealt with and how they are sold, who they've appealed to, and find the necessary data. This can be a solid starting point for figuring out how your product/service might hold up in its early days for your new venture.
Talk to vendors and others in your industry
Your vendors and others in your industry often have valuable information and relevant experience regarding your industry and can give you a perspective on industry trends as well as how similar companies to you have fared. But finding people willing to talk to you might not be so straightforward as they might be inclined to just tell you what you want to hear in the interest of landing your business and keeping you happy. Instead, try to reach out to fellow professionals and experts beyond your immediate surroundings if possible
Make ideal and not-so-ideal forecasts
To approach a forecast that might work for you, you need to take a two-pronged approach - an ideal and conservative forecast. In your ideal forecast assume that you are making a projection that assumes you'll be selling behind fully-realized and effective marketing efforts, which you're going to sell at a high with an enthusiastic and capable team of salespeople.
Where are in the conservative forecast, you will assume that you'll be selling without much marketing at relatively low price points and virtually no sales staff. But understand neither of these projections will be accurate, your real figures will wind up somewhere in between these two but it's important to have some idea of these ups and downs when forecasting for a new venture.
It's a complicated process for a new venture to forecast sales as often it comes off as potentially unreliable in some cases. No forecast is ever perfect but actively forecasting no matter the maturity of your company helps you in understanding several other crucial aspects of your business operations. So it always helps you to keep up with forecasting sales for a new venture.