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Less than 50% of businesses survive more than five years. Visit government census or Depart of Industry web sites and if you look at the detail you will see irrefutable evidence

The analysts common reason for this tragedy is the unfortunate ones just ran out of funds. This deliberation is useless and so I decided to seek out those directly and indirectly involved in failed businesses to see if I could determine the details, establish any consistent reasons for failure and publish them on the web in the hope that my discoveries would help others avoid a similar fate. I uncovered eight common reasons for business death. Here are three of them:

No Vision, mission or strategy

“If you don’t know where you are headed then how are you going to get there?” You have to have a clear picture of what you want to achieve and how the future will be for your business if you achieve it. To achieve anything you it is essential to have a strategy. Strategy is like a route map it shows you how to get there. It’s a structured series of activities. To make a strategy work you have to create a business plan that not only contains the key actions and milestones but can used to measure business performance against. A key instrument for monitoring business perfomance is the sales forecast.

Lack of a system for marketing or sales

Marketing is about finding markets and testing strategies to position your offering in the minds of prospects and moving them into your sales channel. Sales is about engaging the prospect and getting them to buy your product or service. Marketing is a process of measuring and improvement of the tactics you employ to engage prospects. Sales is the process of acquiring leads, forecasting sales and closing sales. In well run companies a decent marketing and sales system is consistently underpinned by a well designed sales forecasting software system. The tools in these systems help you to track and measure what is happening in the sales and marketing processes. Outcomes arederived from reports created by the software which can then be used to compare planned vs actual results. The bottom line is what gets measured gets improved or discontinued. This is the critical formula for success.

Lack a system to monetise their current customer base

There is a well known saying that 80 percent of your sales should come from 20% of your customers. Your job is to achieve or surpass this number. Customers who have already bought from you are easier and cheaper to persuade to buy from you than prospects that have not. A combination of good web based crm software and sales forecasting software will give you the information of recent activity and allow you to search for opportunities in your current customer lists.

Pulling together the basic sales forecasting information you need

Every business should have a sales forecasting process. Sales forecasting should receive just as much attention as cash flow management. Sales are the life blood of any business as cash is the oxygen supply. The cash flow and sales forecast reports are inextricably linked. The adoption of good sales forecasting software and a well enforced sales forecasting policy can make an big difference to the health and performance of any business.

Key inputs

There are three key inputs or factors to consider when creating a sales forecast. The sales person, the customer and the product. Good sales forecasting software should allow you to sort,correlate and present these inputs and give you a clear assessment of the state of your sales pipeline and what is and isn’t going to come in when.

1. Getting sales people to gather accurate sales forecasting information.

Sales people vary in their levels of skills, experience and knowledge of your target market or industry. But with a small amount of training, encouragement and discipline they can be made to submit accurate sales forecasts. Make sure your salespeople are acutely aware of what information you need them to extract from the sales process and make sure they pose the correct set of questions to the correct people at the correct time in the correct way. Therefore the first discipline sales people should have drilled into them is planning. Don’t even think about calling or meeting a customer unless you have planned it. The plan should contain what information is needed and what questions will be asked in what order. Their call plan should be recorded in the sales forecasting software for later review. Poor sales people don’t take notes and worse still don’t turn up with a well prepared set of questions.

2. Gathering Customer information

Keeping detailed information about the customer’s organisation, the market they operate in and the progress they are making is really useful when it comes to assessing the basis for the salespersons sales forecast assumptions

A good example of this is the customers credit rating. Customer records should be stored and available in the sales forecasting software. Therefore every sales person should develop a habit of finding out as much as they can that is in the public domain about the customer. Naturally this information is good content for conversation when the sales person interacts with the customer. It will always lead to questions and most customers are impressed by sales people who appear to have a genuine interest or good working knowledge of their customers. Remember the art of the sale is about solving the customer’s problem. The more problems you can spot in your customer’s business, the more creative you will become and the more you might sell if what you have can address these problems.

3. Educating the Customer

This is where the third factor, the product comes into play. The easiest way to sell a product or a service is to make sure your customer is educated as much as is possible about what you do. I am not talking here about thrusting brochures into their hands. Here I would recommend using the timeless art of the story. The great story tellers are always guaranteed the attention of the audience. Stories about how other customers have uses your products and services to solve their problems are invaluable. The best testimonials and case studies are well told or documented stories. These terms are tired and worn. You will get so much more information back from a customer if you tell detailed and carefully woven stories as they paint good pictures of the possible outcomes of using your product or service.

All of this information rigourously entered by all into a good sales forecasting software system should give you the vital data to make better decisions and avoid errors of judgement in cash management.