Why is sales planning necessary at all? For the success of your startup, it is essential to set up a sales forecast
It sounds so unsexy and boring. Another planning file. But now we finally want to sell the product. And so, in my first sales jobs, I drove hundreds of kilometers across the country by car, without planning, but with a trunk full of product samples, a price list in DIN A 4 format in my pocket and a calculator for safe price negotiations. Hundreds of sales appointments with cranky buyers to negotiate every last cent in the third decimal place. Later, large Excel spreadsheets were added as planning files; every year, planning was done down to the liter or gram. Mostly these were consumer goods at that time. In the sales area, a sales forecast, as a very detailed planning file, is still very relevant today in corporate groups and medium-sized businesses.
Should you also make a sales plan for your digital startup product? Or won't the downloads or applications come naturally when you talk to a few customers? Then why is sales planning necessary at all?
When I am invited to pitches or conferences and the sales activities are mentioned in the presentations, often - very often - a filter is animated graphically and the so-called sales process is explained to me with many buzzwords, such as sales funnel, lead generation, and so on. I then always get very restless and I am annoyed by the same sales theories copied from books. I get bored with the startup buzzwords and the stories that say Elon Musk would have done the same thing in the beginning. Broad grins and nodding in the audience then make me hurry to the so-called "coffee break with the opportunity to network".
But it is much more structured and much easier. You plan your sales strategy based on this structure for your startup:
1. Define the USP of your product. And do it in one sentence.
2. Work out a competitive analysis.
3. Create a target group definition.
4. Define your distribution channels.
> Where and how do your customers buy your products and services?
5. Define your sales tools.
> which marketing tools can be used within the sales channels to increase your sales?
6. Think about your pricing strategy.
> define a clear pricing structure for your products
> which pricing is accepted by your customers, so that you can achieve positive contribution margins?
7. Define your sales targets.
> define your numbers, data and facts for your sales and your turnover, your monthly costs, etc.
8. Define your concrete measures for customer acquisition
> how do you acquire your customers?
> which team member is responsible for your customer acquisition?
> how do you prepare your customer appointments?
9. Work out a summary of your sales forecast
> This forecast shows which products you want to sell, when, in the next 12 months, in which quantity, to which customers, at which price.
> how will your sales per customer develop per month?
> record all data in a yearly plan, which can be dynamically adjusted, depending on when you win which customer and when which marketing measures are carried out.
This structure can be used for consumer goods as well as for digital applications. As a basis for your sales forecast, a simple table is sufficient, in which, on the X-axis, the following 12 months, starting today, are shown for one year. On the vertical level, the Y-axis, are your products or services. In the matrix, you then enter the sales per month, i.e. the expected quantity or the contract conclusions and the corresponding turnover, and you can use the comment function for each field behind it to note with which customer you want to achieve these sales. So if you are planning a certain amount of contracts or a certain amount of sales of a product with the corresponding revenue for March 2022, for example, you need to think today about which marketing campaigns and which acquisition strategy you want to use to achieve this. We always think from the end and then go back to today.
So you make your sales planning for each of the 12 months of the year and can use the planning on the one hand to create your annual sales plan and on the other hand to make your budget planning for your marketing measures. Sales and marketing activities cause costs, so right at the beginning, for each year, in addition to this sales forecast, you should plan your financial budget and make an income/expense overview on a monthly basis. A simple income/expense overview shows you which costs will be incurred per month as fixed, recurring costs for your startup and which costs will only be incurred once in a given month. And this overview also shows which income you generate due to which measure in which month.
I am often asked if this is not all very hypothetical, especially if your product is only in the BETA phase. A sales forecast is always a foresight and supports you, no matter in which phase of product development you are, to plan all your sales and marketing measures in a file and to keep the overview. The entire sales process is dynamic, so if I am spontaneously invited to a very important customer appointment tomorrow and win a customer with the corresponding sales, then I include this in my planning. If you notice in your cold calls that you will not achieve the amount of contracts in October, for example, you have to adjust October accordingly in the sales planning and see when you will realize the unrealized sales in the other months, with which customers and with the support of which sales measures.
And also for your talks with your potential investors, this sales forecast helps you to give a very good overview of the development of your startup in the course of the next months.