Over the course of my career helping business owners and salespeople out of the jungle, I’ve had countless conversations about business strategy, business goals, and their achievement. Often the conversations sound like this:
Wanda: I’m at 21% of my quota and we are three quarters of the way through the year.
Pat: How much is in your funnel/sales pipeline?”
Wanda: About $750,000.”
Pat: Of the $750K, how much of that should close in the next 90 days?
Wanda: I hope, about $350K to $500K.
Pat: How much, realistically, in the next 90 days?
Wanda: . . .Well, maybe, $150,000 to $200,000.
Wanda is the name of my role playing gal, but this is a conversation I had with a real prospect (the name is changed to protect the mostly innocent).
In this conversation, Wanda was pretty tentative about the strength and validity of her pipeline. That’s not unusual. Most professionals and small business owners have very little clue when it comes to what constitutes a prospect with strong interest and a high likelihood of closing.
This is not the place I’m going to talk about qualifying and closing. The focus of this post is hope in general (and as a business strategy that doesn’t serve).
The Good News: Hope is good in general. It indicates a positive outlook on life and business. While not essential for your business success, it often makes success easier – as well as making it look more attainable.
The Bad News: Hope is a poor strategy when you’re planning cash flow, how many clients you can handle, or whether to bring on subcontractors or release current resources.
And why are most cash flow projections and sales forecasts filled with fluff?
Easy: If your pipeline looks like it’s filled with ten times what you need for the month, you can trick yourself into believing you’re okay, that there’s no sense of urgency. You’ve got lots of time to figure out why you’re not closing, why you keep getting sticker shock or stalls.
A Better Business Strategy
Pipeline Analysis and forecasting are pretty straightforward skills to learn. They do require you to know what questions to ask your prospects, and they do require you to be at least candid with yourself. Brutally honest is even better.
If you have a reasonably accurate projection and it shows that for any of the next three months you’ve only got about half of what you need, you no longer have the luxury of denial. You can’t pretend everything’s just fine. Reality forces you to take action, to get better at what you do, or start looking for a new job while the looking is good.
I can’t recommend hope as a business strategy when it comes to cash projections and closing. Skills and self candor are your best bet if you want to be in business months from now.
Take Action – Make This Your Own
- Take a hard look at your sales and cash flow projections.
- Be ruthless and don’t count them if you’re not 80% – 90% certain they will close in the next 60-90 days. If you can’t explain to a buddy why the business would close – objectively – based on client needs and urgency, you can’t count that client.
- If you have a strong suspicion you’ve been kidding yourself and using hope as your main business strategy for success, please seek out a mentor or trusted advisor to help you get clear about how much business you can really count on.
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