Making Sales Projections For Your Business in Uncertain Times

Nov 15, 2011

As the current year winds down, it’s time for small businesses to make their plans, budgets and forecasts for the coming year. How can you plot what next year’s sales are going to be when the old patterns just don’t hold true anymore?

Tom Searcy, an author and speaker, offered some advice for realistically making 2012 sales projections in a recent CBS Money Watch article.

“I have architected, led, and suffered through these processes for 25 years of my career,” he wrote. “During that period, I don’t know if I ever had to create a picture of the future during circumstances of greater uncertainty than we are in now. I imagine that to those either going through it or preparing to go through it, you may feel like buying lottery tickets has just as much potential of accuracy as this process.”

Searcy shared five guidelines, including:

  • Shorten your reference frames. “If you’re going to do a historical examination of sales cycles, client order volumes, and projections, look back no more than six months or one seasonal cycle,” he wrote. “Three cycles have little value in the current models. Likewise, as you look forward for the next year and begin the forecasting process, put precision on your months and quarters no more than six months out.”
  • Name your risk scenarios.“When you build a business plan and seek funding, you include ‘potential business risks’ as a part of the document so that investors have a clearer understanding of their downside,” Searcy wrote. “Do the same for your sales projections.”
  • Tighten your review and re-calibration cycles. “You need to be performing a scaled-down version of the forecasting and planning process using these guidelines as a very regular and aggressive part of your management and leadership culture,” he wrote.

To read the complete CBS Money Watch article, click here.