How to Improve Your Sales Forecast Accuracy

How to Improve Your Sales Forecast Accuracy

What is Forecasting and Why is it Important?

Forecasting is an essential part of every business as it helps you avoid unforeseen issues and manage your business more efficiently. The sales forecast is especially important, as it serves as the base for your company’s goals, profit and growth potential. But, to be able to depend on a sales forecast, you need it to be accurate.

Related Reading: Should Small Businesses Forecast?

Forecast Pitfalls

The problem for many businesses is that their sales forecast is based on data that isn’t accurate or realistic. Adaptive Insights’ CFO Indicator Q2 2016 report showed that only one in four CFOs met their sales forecasts. Relying on a sales forecast that is based on the wrong data can cause a lot of headache. If you are sick of coming up short on your goals, take a look at the steps below to improve your sales forecast accuracy.

Steps to Improve Sales Forecast Accuracy

1. Understand your buyer’s journey

A sales forecast is based on your sales goals and ultimately who ends up buying your products or services. While historic sales data is important, you also need to make sure you understand your buyer’s journey and each step of the sales process. Ultimately, the sales process only moves forward when your potential buyer makes a decision. Therefore, you should aim to outline each step of the buyer’s journey, what decisions are made along the way and what you can do differently at each stage. This will also allow you to make better predictions on your sales goals.

2. Incorporate external factors

It is common that companies only concern themselves with internal data and don’t realize the impact that external factors may have on your sales. As a result, their data is wrong. Because of this, you should research economic factors that have had a historical impact on your company’s sale and include in your forecasts.

3. Shorten your forecasting cycle

Finally, you should forecast more frequently, as it allows you to be alert earlier if expectations don’t match results. Consequently, you can take action quicker and prevent any arising problems.

“Consider pushing your annual forecast back to later in the year. We used to do our forecast in August but now have pushed that all the way back to November. And in the past six months, we’ve created a new forecast almost monthly. Creating that many new forecasts can take a lot of time, but sometimes it’s necessary. In the end, you don’t want to run a business off of a forecast you no longer have confidence in.”

 

– Jeffrey Hollender, Seventh Generation, in an interview with Inc.com

One approach to increasing the frequency of your forecasts is by using a cloud-based performance management systems (CPM). Using a CPM system allows you to constantly adjust and fine-tune your forecasts. This means you can view real-time data and make better informed decisions with your business.

In conclusion, you need to establish a framework that offers clear communication and no surprises. This will allow for an improved sales forecast accuracy that, at the end of the day, gives your business a better chance of succeeding.

What steps is your company taking toward improving forecasting accuracy?

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Women’s History Month Inspiration

In honor of Women’s History Month, we wanted to feature a woman who has achieved great things in the finance business.

As Lavoie PLLC is a minority-and woman-owned company, I wanted to feature a history maker that is an inspiration to all of us as we work hard to grow our business and serve our community. I found just the woman – and guess what, she is a 2016 Black History Nominee!

Suzanne Shank is the President and CEO of Siebert Branford Shank and Co, the largest minority-and woman-owned municipal finance firm in the U.S. The firm which was established in 1996 and went public in 2005, has acted as managing underwriter for municipal bond transactions exceeding a whopping $2 trillion dollars and ranks among the top 10 firms in the world for municipal bond underwriting. Suzanne was the founder and co-owner of the firm and now sits on the firm’s board of directors.

Suzanne grew up in Savannah, GA, the daughter of a school teacher and a bus driver. She received an engineering degree from Georgia Tech and worked as a civil engineer for a few years before attending Wharton Business School. While at Wharton, she tried to get an internship on Wall Street, but found it hard going. But she didn’t give up. Armed with a subway map and her resume, she hit this street, knocking on doors until she landed a position with a small boutique firm. After she graduated from Wharton, she returned to that firm and began her career. Early on, she met Muriel Siebert, known as “The First Lady of Wall Street”, because she was the first woman to purchase a seat on the New York Exchange. Muriel took Suzanne under her wing, and a new partnership was born in 1996. From the very beginning, Siebert Branford Shank and Co was a minority- and woman-owned company that eschewed the more typical transaction- driven approach to the market and instead focused on establishing ongoing relationships with clients.

What were the biggest lessons Suzanne learned from early in her career?

She said, “While education and talent are important to attain success, nothing can replace persistence and determination. Through the ups and downs of business cycles and financial crisis, preparation and persistence has been most critical to our ongoing success.” And she credits the mentoring that she received as critical as well. “Muriel taught me the ropes, picked me up when I failed, and demonstrated to me that I could accomplish what seemed impossible.”

Today, Suzanne is a Titan of Wall Street and the only Wall Street CEO who was named to the “Best Dressed” List! Outside of work, she is deeply committed and passionate about public service. She spearheaded the formation of the Detroit Summer Finance Institute, an internship program that introduces underprivileged high school students to the financial world. She is a founder of W.A.V.E, an initiative to help poor residents pay their water utility bills and she sits on a variety of charitable boards.

Suzanne is quite a role model for the staff of a company like Lavoie. We too are dedicated to our clients and we insist on providing the highest level of service and attention to each. We care deeply about our community and we support a variety of charitable efforts. Like Suzanne, we work every day to improve and grow. Thanks to Suzanne, for showing us how it is done!