It is that time of year again, into Q4 and as well as meet your targets for the quarter and the year you must complete your sales planning for your upcoming year. In many conversations over the years with Tech CEOs and Execs of companies of all sizes and technology types, sales planning for next year can be complex but the basics are simple.
1. How much total revenue do you want to achieve next year?
Whether you are setting your targets from a revenue growth target or from forecasting outputs from your current market activities, how do you set what revenue numbers you want to achieve?
Then how do you make this target ‘realistic’ with connection to what you know works in your business and seeking further growth and what high-risk unknown new activities are you seeking results from?
2. How much are you budgeting from already secured business?
Secured business such as maintenance contracts, recurring revenues, existing long term contracts and secured orders provide low-risk highly stable forecasting revenue base. Although they do carry risk, the risks can be predicted and managed relatively easy compared to depending on the external market.
3. How much are you budgeted from existing or recent customers?
They say it is 5 (or is it 10) times easier to sell to existing customers that to find new customers. So how much of your revenues are you planning to achieve from existing customers?
- What further opportunities do you have to help your existing customers?
- Do you have a process or methodology of assessing how much business you could achieve from a selected customer account?
- What is your plan to expand your revenue with each customer?
4. How many new customers do you want next year?
This is my favourite question. This is a key question to help determine best the most effective business development activities and methods you should use to grow your business?
If your number is small and easy to access, ie: customers in your region, then a direct sales approach might be fastest. But, if this number is a large number or companies that are not easy to access then sales channel partners may provide the most effective route.
5. How does this break down over the year from Q1 to Q4, from January to December?
When you know what you want for the year, then break it down across each month of the year?
Beware stacking too much towards the end of the year, producing the infamous hockey stick upward revenue curve. This is high-risk and cause significant problems if a month or two slips on your plans.
6. How much business of your Next Year’s budget is already in your sales pipeline?
If your sales cycle length is 12 months or more, then you are already talking to the bulk of next year’s revenue sources. If your sales cycle is 3 to 6 months, then your marketing activities still have plenty of scope to grow your sales pipeline to grow your sales numbers.
7. How do your targets breakdown between Direct and Indirect / through sales channel partners?
Have you asked your sales channel partners for their targets and plans in the coming year, or sought agreement and commitment for your joint-plans?
How much help do you give your sale channel partners in planning Next Year’s Sales? You supposedly know more about selling your product that they do and they supposedly know more about selling in their region, so your combination of experiences should help produce realistic achievable targets.
8. What are the activities against each of the targets set above and who is responsible for each?
Paper will always accept Ink, Excel loves numbers and big growing numbers are very uplifting.
Ground every number with the sequence of activities that will produce these results. Assign every planned activity to a named person and target dates for completion.
9. What are the assumptions and risks against each of the budget numbers and activities?
Planning is a group activity. When left to a single person then many assumptions can be missed and misunderstandings cause problems and delays.
- You must work diligently to identify all the assumptions behind each target and number.
- You then must work equally diligently to highlight the risks associated with each of the assumptions and targets?
- Your plan must include how you will prioritise reducing the risks and how you provide extra monitoring on high-risk areas.
10. What are the Strategic Developments to build the company into the future?
How do you maintain the priority focus on sales targets while progress the strategic goals?
It is difficult to balance long-term and short-term goals. How much time and money will spend on maybe development of your sales partner channels to build revenue sources and expand your markets for the following Year’s or possibly late Next Year’s revenues.
11. How will your plan be reported on and managed?
What are the key activity and performance metrics against each of the activities?
It is of no use having a plan when you don’t plan to monitor and manage the activities to produce your desired results.
Outline your metrics against each of your key activities or milestones. Decide how each activity will be reported on, the frequency (weekly, monthly) and who is needed to review and attend these meetings. Book these meetings now or add the items to the agendas of existing meetings.
Set further quarterly reviewing meetings on the entire plans to make corrective actions if required.
Behind every Excel sheet of numbers is a fantastic assumed plan. Do assume, make it clear, realistic and achievable and then Execute, Execute and EXECUTE.