Welcome to Business Mythbusters. Today, we’ll be unpacking one big misconception that has done plenty of harm to businesses, perhaps more than any other.
Myth: Sales planning is only for big corporations.
Deadlines, quotas, sales projections…these terms might conjure the image of a big corporation. But the reality is that businesses of every size need to get their sales pipeline in order.
Whether you like it or not, sales planning exists for a reason. That reason is to hit the numbers needed to keep the business open.
There’s no getting around it. Good sales figures are the lifeblood of every venture. Every other component of a business builds from those numbers. No sales = no business.
Without a quantifiable timeline for these sales, there’s no way to know if you’re reaching your goals. And without goals? Forget making effective plans.
There are questions that every business needs to ask, regardless of whether it’s a multinational corporation or a one-person show. These questions include:
- What is our forecasted sales revenue?
- What are our forecasted expenses? Cost of Acquisition? Strike Rates?
- Do we need to expand sales and marketing efforts to match the demand of the upcoming quarter, or is it time to cut costs and ride out a slow one?
No matter the size of your company, you need to be able to answer these questions. And to be able to confidently answer these questions, you need to have a sales plan.
From the mighty Coca-Cola to the family-owned soda bar on the corner, every business needs to know if their revenue is matching their projected sales on the timelines they anticipated.
Why most businesses fail
Most businesses fail for a simple reason: They don’t have a plan. They either don’t know their sales projections, haven’t calculated a sales goal or failed to create a step-by-step action plan to meet their goals.
The stats are clear. In their first two years of existence, 30% of businesses fail.
That doesn’t sound so bad until you get to years 4 and 5, at which point 50% of businesses fail. It can take a long time for a failing business to close its doors, even if the numbers are already forecasting their end.
The kicker? Most of these companies are unprofitable and run on personal savings until they dry up.
Many of them would survive if they had better information about what kind of sales figures they needed. Small business owners are dangerously hesitant to make preemptive sales plans, and that needs to change.
Another statistic for you: 82% of small businesses fail due to cash flow problems. Most of these startups didn’t have sales projections. Successful businesses have extensive forecasts and allocate a lot of resources to meet those projections. ALL good businesses need this process. It’s not just for the giant corporations.
Plan for a change in attitude
If your company is unfamiliar with sales projections, it’s likely time for a shift in mindset. Just because you’re small doesn’t mean you shouldn’t plan ahead. Quite the opposite! Proper forecasting is a huge factor that sets profitable businesses apart from the rest.
Planning has more to do with mindset than resources. No matter the size or industry, a business must make sales outreach and projections a top priority. Don’t neglect your sales forecast.
Tragically, many small business owners do not make realistic sales plans, which is why most businesses don’t make it in the long run.
How to succeed
It’s easy to start a business, but it’s very difficult to get one to be profitable. A whopping 60% of small businesses are losing money or just barely breaking even.
Running a profitable company -of any size- demands not just excellent quality, but also carefully constructed sales pipeline and processes. Sales planning isn’t an innate trait. It can be incorporated into any business by being intentional with analysis and forecasting.
The solution? Assess and plan ahead. If you don’t have target numbers, you don’t know if your business can succeed. If you don’t have a sales forecast, you don’t know the direction your company is heading. Beat the odds by being exceptional, have a sales plan.