# Sales Forecasting: How Much Business Will You Close In The Year Ahead?

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2 \$10,000. Once the demo is successfully completed, the expected value rises to \$50,000 x 33% = \$16,500. The key to making these forecasts accurate, of course, is having detailed records of prior sales campaigns from which to build your probability numbers. You will need to establish separate sets of steps and associated probabilities for: Different product lines or market segments Different price points Direct sales vs. reseller sales Initial sales vs. add-on sales Building A Realistic Sales Forecast The next step is to combine the values of all of your prospects to create a total sales forecast. This involves three steps: 1. Total the expected values of all prospects The chart below shows a forecast based upon four prospects: Prospect Name Potential Value Probability of Close Value Account A 50,000 33% 16,500 Account B 12,000 60% 7,200 Account C 61,000 10% 6,100 Account D 32,000 20% 6,400 Total Forecast \$36,200 Note that the total forecast is considerably less than the \$155,000 in sales that would be achieved if all of these prospects closed, but it gives a much more realistic view of what is likely to happen. Create this same chart on a weekly basis, and you'll quickly see whether: Your total sales forecast is sufficient to meet your plan. Your projection of sales is growing or declining; that is, your sales pipeline is becoming more or less full. 2. Add a closing time frame to each prospect This is the most challenging part of any sales forecast. In general, prospects buy much later than they say they will, so you have to take their projections, and those of your salespeople, with a grain of salt. As with the closing percentages you assign to each sales step, it is best to use historical data to determine how long the typical prospect takes to move from each step to the

5 By looking at every element that affects your company's sales and using past performance to gauge this year's sales, your sales forecasting method can be more realistic and point your team in the direction of growth.

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