#65 How To Almost See The Future: Sales Forecasting 101

Business owners have shared these two frustrations many times.

1) I don't understand why my sales reps can't close deals like I do.
2) I need better visibility into the future of my business.

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Fortunately, there's a single action you can take to lessen the pain of both of these challenges. And that action is consistent sales forecasting.


Owners that complain about sales reps usually stutter when I ask them this question.

“Exactly how do you sell?”

They have grand stories of big wins and happy customers. But they struggle to write down, step-by-step, what their sales process looks like. They’ll say "it’s common sense" or "you just get out there and do it". Fact is, many business owners sell by feel. They rely on their complete understanding of their company and the fact that they control all resources and priorities.

Two advantages no sales rep is ever going to have. 

But it would be nice if you could get your reps part way there. If you could give them a fully documented outline of your sales process. Something they could follow to be more efficient and effective.

And if you're going that far, you might as well take one more step and create a full blown sales forecast. This second step might just give you that visibility you've been looking for.

Let's give it a whirl.



Your first job is to agree on the process you use to bring in business. Write down the steps all the way from first contact to happy customer / reference. (Note: we could start earlier by looking at lead generation but for simplicity's sake I want to keep the two separate.)

And please note that getting this nailed down and agreed to will be harder than you think. It’s imperfect work. Not every prospect follows the same path to becoming a customer. Things don’t always happen in the same order. Different product lines or services each have their own flow.

All true. But do it anyway. As an example, here's a tiny piece of a made-up sales cycle.

Step 1:    Prospect visits website and provides email address.
Step 1a:  Prospect visits trade show and provides email address.
Step 2:    Introductory email sent to customer.
Step 3:    Initial phone contact made with customer.
Step 4:    Understand customers basic need and timeframe.
Step 5:    Onsite meeting scheduled with customer.

Yours won’t look like this. Different markets work in different ways. That’s OK. All that matters is you get a detailed approximation that your team agrees on.

As a warning, if you go online looking for help, be prepared to find tons of garbage. I went searching for some nice sales process examples to share with you, but all I found was boilerplate junk. Every site was trying to sell me some whiz bang system. 

My best advice would be to ignore this noise and take a first whack at it with just you and your team. Get in a room with an empty wall and a fistful of sticky notes and lock the door - no system or outsider can know your process better than you.

Be forewarned that this can be tedious, but it's critical that everyone on your team see the same picture. So have the debates and get it done.

Then congratulate yourself, because you've just made life easier for your sales reps. They now have a clear recipe for how your typical piece of business is done. They may never sell like an owner, but at least they won't be flying by the seat of their pants. Which will save them frustration and you wasted dollars on turnover.

Good stuff, but we still haven't solved the owners other frustration. The wish for better visibility into the future. So let's keep going.


Assign a percentage to each of the steps from TASK #1. Experts argue whether this percentage should represent..

A) % of steps completed. If your process has 20 steps and you've completed the first 5, then you're at 25%.


B) % of work completed. If your process has 20 steps but the bulk of the work happens between steps 15 and 20 then completing steps 1 - 14 might only put you at 25%. 

I'd suggest you not spend much time on this A or B debate - just pick one and go with it. You'll see why in a few paragraphs.

One thing you can't do is let different reps use different percentages for the same step. If rep A records doing a demo as 60% and rep B records it as 20% - your forecast will be garbage. The key to forecasting success is consistency across your organization. Eventually you'll probably use software to make sure this doesn't happen, but for now realize that it's a huge no-no.

That’s it. With these two challenging tasks done, you’re now ready to forecast. 


Here’s a description of six columns you might have in a simple forecasting spreadsheet.

Column 1: Customer/Project Name
Column 2: Total Deal Size (in dollars)
Column 3: Estimated Close Date
Column 4: Number or Name Of the Current Step you’re on in your sales process
Column 5: Percentage Associated with the step you selected in Column 4
Column 6: Expected Value (Deal size times the % in column 5. Column 2 X Column 5)

There are lots of other columns you could add. Number of units. Detail by product type. Deal notes. And on and on. For now we’ll keep it simple.

Add up all the Expected Values (Column 6 in my example) and you have the MYTHICAL value of your forecast pipeline. I say mythical because this number means nothing in concrete terms. In the real world you get no cash or credit for closing a deal 25% of the way. But this pipeline number matters a lot in terms of signaling. 

Is it growing or shrinking? How fast? Which products are heading in which direction? Is there a certain time frame where a slug of business looks like it might hit all at once? Is one huge low potential deal skewing the numbers?

Realize that this is why I don't care whether you use criteria A or B (discussed above) to assign your percentages. The exact forecast number is irrelevant. The real value is noticing how it varies over time directionally and sizewise. That's where the signaling information lies.

For instance, if you notice that when your forecast pipeline grows by 20% your sales typically grow by 10%, that is a freaking gold mine. Planning, purchasing, recruiting - all can be forewarned. More proaction, less reaction. Less stress.

So this forecast / pipeline isn’t a concrete dependable roadmap of future business. But it is a powerful signaling device and conversation starter to use with your management team and your sales force.


Most companies start out with a simple excel spreadsheet - like this sample I found online.


I’ve managed forecasts with several 100’s of entries and millions of dollars this way.

If you want to get more automated there are software packages out there to help you. They're called Customer Relationship Management Systems (CRM). This is specialized software that handles forecast / pipeline management, contact management, and tons more. Most CRM’s also offer integrations into other parts of your business, such as marketing. If you choose to go down this path, prepare to be confused. The number of vendors and features are unlimited.

My only advice is to get the CRM that your folks will use. Sales reps historically suck at putting information into systems. Doesn't matter how sweet the system is if folks aren't feeding it, so keep it simple.


Document your sales process from beginning to end. Then scrub it with your sales / management team and assign percentages to each step. 

Next place every opportunity on a forecast spreadsheet and update weekly. Use this tool to drive proactive discussions on how to more efficiently move deals through your pipeline. 

If you do this consistently, you'll build a forecasting track record that will give you visibility into your future. At the same time you'll be documenting the owners valuable sales experience - creating a blueprint that your reps can build on and improve. 

If all goes as planned, someday you're reps might be wishing the owner could sell as well as they do…


I wasn’t planning to do a series of posts on sales, but it happened. So let’s sum up what I’ve shared in the last few weeks.

1 - Develop a sales forecast to pass knowledge from owner to sales reps. And to also get better visibility into your future business.
2 - Don’t jack your customers around with manipulative sales techniques. (That was back in post #64 - Customer Caring)
3 - Only hire reps that fit your culture. (That was back in posts #62 - Sales Connections and #63 - Sales Connections & My Map)

If you do these three things you’ll be miles ahead of your competition.

That’s all for today… Join me next time when I fill a major hole I found in my Maps.

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