Article of the Week: 5 Key Tips on Sales Forecasting for Business Owners
Don’t underestimate the value of a sales forecast for running a business effectively. Even if you do nothing else in the way of planning, having just a sales forecast plus regular review and revision can go a long way towards better business management.
Here are five tips that have helped me integrate the sales forecast into my management process for decades.
1. Set the bar right from the beginning
One of the biggest problems with sales forecasting is the idea that it’s supposed to be accurate months in advance. That’s not the point. It’s about connecting the dots between sales and related expenses, finding the drivers (see #4 below) and tracking results so you can see changes as they happen.
It’s unlikely you will set a sales forecast and then live with it, unchanged. As in tip #5 below, you set the forecast and then watch, carefully, for interruptions, fluctuations, etc.
What you forecast for sales next summer, while you work on it for the present month, is a matter of getting the interrelationships written down so you can track progress and manage change.
In the real world, when you do your forecasting right, you’ll have lots of revisions as time and other factors affect your predictions. Just get it down early, so you can review results later. If you don’t forecast, you’re running blind.
2. Find the right level of aggregation and summary
Don’t forecast your sales as one number, in dollars. Don’t forecast sales as 100 detailed lines of sales. Find a level of sales groups you can manage. This has to do with the way we, as humans, think. We can’t work with too much detail; but it’s still useful to break things down enough to offer meaningful insights.
The most obvious example is breaking sales into units and price per unit. With that simple breakdown we can later analyze, whether the difference between planned and actual results were caused by price differences, volume differences, or both. And natural divisions, such as channels of distribution, or major product categories, can be very useful.
Find the level of summary and aggregation that works for your business. You’re unique and so is your business. There are no hard and fast rules on this. Make it so it works.
For example, with my software business, we don’t forecast sales broken into dozens of different sub-versions and options; we forecast our three main lines, aggregated and summarized.
The restaurant ought not to do a sales forecast broken down into each of the 75 items on the menu; but rather major sales categories, such as meals, drinks, appetizers, and other; perhaps it could be breakfast, lunch, and dinner.
The bookstore ought not do a sales forecast for each book. Imagine how difficult and inefficient. It might be more useful to forecast for paperback versus hardback, fiction versus nonfiction, books versus magazines.
3. Match your accounting
Most of the benefit of the sales forecasting comes from the ongoing management of the difference between planned and actual results (as in #5 below). Therefore, to ensure your sales projections is worthwhile, make sure the organization of the forecast in rows or items or groups matches the way your accounting or bookkeeping tracks them.
Match your chart of accounts, which is what accountants call your list of items that show up in your financial statements.
If the accounting divides sales into meals, drinks, and other, then the business plan should reflect those divisions. if your chart of accounts divides sales by product or service groups, keep those categories intact in your sales forecast. If bookkeeping tracks sales by product, don’t forecast your sales by channel instead.
If you’re planning for a startup business, coordinate the bookkeeping categories with the forecasting categories.
Get your last Income Statement (also called Profit & Loss) and keep it in view while you develop your future projections.
If you don’t have more than twenty rows of sales, costs, and expenses, then make the rows in the projected statement match the rows in the accounting.
If your accounting software summarizes categories for you – most systems do – consider using the summary categories in your business plan. Accounting needs detail, while planning needs a summary.
If your categories in the projections don’t match the accounting output, you’re not going to be able to track plan versus actual as well. It will take retyping and recalculating. You may lose the most valuable benefit of business planning: management.
4. Look for your specific sales drivers
Most every business has the so-called drivers that lead to sales. For some businesses, it’s foot traffic; for others, it’s web traffic. Maybe for you it’s downloads. Some traditional businesses look at lead generation, leads, presentations, and closes. Others consider the pipeline related to direct sales deals in the cycle from lead to close.
Use the concept of sales drivers to help develop a sales forecast and then manage the business process that generates the drivers. It will help you track and manage your business better.
For example, in our software business we look at organic web traffic, pay-per-click web traffic, and traffic generated by affiliates, all of which we measure in visits. And we look at conversion rates, which we measure as the percent of web visitors who end up purchasing software.
And, as another example, back in the 1990s when retail sales were important, we measured unit sales per month per store.
Think about what factors drive sales for your business; and how you can use the measurements of those factors to improve your sales forecast.
5. Review and revise often
Don’t let your sales forecast sit unused. Schedule a regular time for sales forecast review and revision at least once per month. Get your forecast and compare it to actual results. Look for surprises both good and bad. Reward people whose work influenced the good surprises, and talk to the people responsible for bad surprises or poor performance. Revise your sales and marketing programs to take advantage of what’s working well, and correct what isn’t.
Sales forecasting, done right, is a fundamental part of planning. And planning, done right, is management.
As former president and military strategist Dwight Eisenhower once said: “The plan is useless; but planning is essential.”
Article of the Week: How To Give Yourself A Push When Your Progress Stalls
By: John Searles, FastCompany.com
Making a strategic career change. Saving more of your paycheck. Paying off debt. Setting money or work goals like these is the easy part. Keeping up your momentum so they stick for the long term? That’s where the battle begins.
Maybe your pattern is to create a plan of action so sweeping that it ultimately overwhelms you. Or you get sidetracked and bogged down by the daily grind, and you veer off course. Perhaps you know you want to change but aren’t sure what the first step should be, so you end up spinning your wheels. However you get there, when you sense that you’re stuck in rutsville, it’s frustrating and discouraging.
So how can you get unstuck and move forward? We talked to Jodi Womack, CEO of the Get Momentum Leadership Academy and founder of No More Nylons, a coaching program for business leaders. Womack is the author of the new release Get Momentum: How to Start When You’re Stuck with Jason W. Womack, her business partner of nine years and husband of 17 years.
The Womacks have made it their life’s work to help people make positive changes that last. Here, Jodi shares her insight on why successful people fall into a job or money rut, and gives tips for busting out and reaching your goals.
How do you know when you’re stuck?
If things aren’t moving forward in your life, and you feel isolated, frustrated, as well as physically, mentally, and spiritually exhausted, chances are you’re stuck. But if you can’t feel it, listen to yourself. If you often repeat phrases like, "I don’t know what to do next . . . I tried that once and it didn’t work for me . . . I’m confused . . . I’m overwhelmed . . . I don’t know where to start," then you’re in a rut. You need to get back on the path to the future you want.
Many people reach a point where they feel stalled at work. Why does this happen?
Being stalled at work is rough. If you’re not feeling momentum at work, everything feels stagnant. [The reason this happens is] the same as in any other area of life: You don’t create clear goals as to what you want to get out of your job and where you hope it will take you. Or you do have goals, but you don’t monitor them closely, and before you know it, you veer off track.
We suggest our clients take a strategic approach to goal setting—specifically, to let themselves dream and build a vision of how they’d love things to be. Then, constantly scan the landscape of opportunity and look for new chances to move toward their goals.
What’s the most effective way to kick-start momentum?
The very best way to create momentum in life is to establish firm, clear goals and then set up milestones—intermediate mini goals that make it easier to achieve the [larger goals] you set out to accomplish. We suggest something called the "30/30 Rule," whereby you devote 30 minutes a day to focusing on something that is 30 days away or more. For example, you spend a little time each day keeping track of a big work project coming down the road in a month rather than avoiding it and letting it sneak up on you.
Also, the 30/30 Rule can help you with larger career questions like, "Do I want to be in the same job a year from now or do I want to start doing everything I can to get that promotion?" If so, you would take that one-year goal and break it into 12 monthly goals. When it’s time to check your progress on the next monthly goal, see if you can schedule two to four of those 30/30 Rule blocks each month to work on that."
When it comes to finances, especially paying off debt, people seem to get very stuck. Why?
With money, it all boils down to having an exact sense of what’s coming in and what’s going out. Too often, people get stuck because they don’t have a basic understanding of this equation. If that’s your situation, sit down and do the math. Ask hard questions like, "What one change can I make to keep me moving forward?" Or, "Where can I cut back?" Or, "Where do I have the opportunity to create income?"
Also, look for people you might learn from in this area of life. Maybe it’s a trusted family member who is smart about money or a financial advisor. Educate yourself on the realities of your finances and ways you can boost your income or cut spending. That will give you momentum to take action.
Speaking of guidance, in the book you place a strong emphasis on relying on a mentor to help reach a goal. What makes a good mentor?
Jason and I have two different approaches to mentors. For me, a mentor is someone I know personally who cares about me deeply, a person who cares about my goals but also cares about me. For Jason, he views anyone he has learned from as a mentor. That includes authors he’s never met but whose books he’s read or an expert who has given a Ted Talk he watched online.
So when it comes to mentors, we encourage you to find someone who’s willing to help you achieve a vision that’s a little bigger and a little more outrageous than your current self.
Is there a right time to try to escape a rut so you’re better able to break free successfully?
Some people prefer starting on a set date, like New Year’s Day. If that works for you, by all means, do it. But I’m a bit of a rebel in this area because I feel it sets you up for failure: You vow to get in shape only to hit the gym for three weeks in January with the rest of the crowd and quit.
Instead, I strongly believe that the absolute best time to work on a goal is right now. Don’t wait! If you want to eat better or save more money or get your resume together, do it today. And if you find yourself making excuses, then dig deep and ask what’s the real reason you have such discomfort about starting now. That answer will help identify the problem and hopefully put you in a place of forward movement.
You advocate setting milestones on the way toward reaching a goal. How does this work?
Momentum happens when you set goals and reach milestones. Setting up little goals that you can complete lets people know you succeeded. Accomplishment leads to confidence. If you can create small wins [in your life], they build on themselves and affirm that what you are doing is working.
What if you get derailed and feel discouraged? How would you suggest rebooting?
The fastest way we know to reboot is to ask yourself, "What do I want to be known for?" This will help you create your criteria for what you do and don’t do [to get back on track].
Article of the Week: Generational Differences: When They Matter, And When They Don't
By: David Sturt and Todd Nordstrom, Forbes.com
Carol just can’t catch a break. She hustles to get her work done, turns in assignments on time, and does her best to connect with colleagues on the team. But for some reason, her teammates and manager don’t believe she’s giving her full effort—and don’t seem to enjoy working with her. They view her late arrival in the office as disrespectful. They don’t appreciate her chatter over the cubicle walls. And they just don’t understand why she’s always using email instead of delivering messages in person.
This is a classic case of a misunderstood millennial in the workplace. But, what really makes this situation interesting is Carol’s perspective toward her coworkers. She’s confused by the hyper-focus on “working hours” and “start times.” Isn’t the work she produces at the corner coffee shop just as valuable as the work she performs in the office? She doesn’t understand why chit-chat is frowned upon either. Isn’t the point of working together, building camaraderie, and sharing ideas the point of going to an office?
All individuals approach their work life through slightly different norms and habits, which can create plenty of miscommunication. In the last few years, HR and leadership experts have made a big deal over generational differences and the chaos they can wreak in the workplace. But the truth is, regardless of the differences, there are also many important similarities that hold true regardless of generation.
We were curious, after talking to people from all generations in the workplace, to find out which differences actually matter, and which ones don’t. And, furthermore, whether you’re in Carol’s shoes or you sympathize with one of her disgruntled colleagues, as much each generation loved to spotlight differences of their coworkers, it was amazing to discover the one thing this conversation seems to overshadow—the similarities of different generations.
Three Generational Differences That Matter:
This is a classic. Employees of different generations have diverse management preferences not only because they view the world differently, but also because they are at very different career stages. For example, almost eight in 10 millennials report they’d like their manager to act like a coach or mentor. That makes sense, because they’re trying to gain skills, make connections, and advance their careers. Baby boomers, by contrast, cite the top qualities for the perfect boss as ethical, fair, dependable and consistent. The generational differences don’t represent mutually exclusive desires, but the preferences reveal how important it is for a manager with a diverse team to understand the mindset of each employee—and manage, encourage, and motivate them accordingly.
Who do you think is more collaborative—younger or older employees? It’s a trick question, because the results are all over the board. More millennials (55%) than baby boomers (39%) believe that team consensus is important in making decisions—but gen X employees are actually the most likely to think consensus is key (61%). And, baby boomers are the least likely of all the generations to believe the boss knows best when it comes to making business decisions—but they’re followed closely by millennials in that opinion. So, more collaboration and group input, or less? What’s the best for your crew? It depends on the makeup of your team, but you can never go wrong with assigning a combination of individual and group projects to keep everyone busy.
How do employees of different generations decide to join a new organization? What motivates them to get on board with a new team or company? The answers to these questions vary widely. While older employees report that more money and working in an innovative environment are both reasons to choose a new employer, for millennials, company values are key. Aligning with these values helps millennial employees feel motivated and loyal to their company, both key objectives for leaders. And millennials also say that an employer’s state-of-the-art technology is a key factor for their choosing a company to join. Put your company’s best foot forward to appeal to employees of all generations—and remember to show your commitment to empowering great work, too.
Three Times Generational Perspectives Align:
Everyone knows that younger workers crave a flexible schedule. And the younger they are, the more they want to work from home in their pajamas, set their own hours, and even take whole days off (as long as the work gets done)…Right? Well, no. It’s true that 74% of millennials report they want flexible work schedules. But—and here’s the surprising bit—a whopping 94% of baby boomers also say they would like a special work arrangement such as flexible hours or telecommuting. Turns out everyone is interested in creating a work arrangement that aligns well with other life priorities. It comes as no surprise as work-life balance fades away and is replaced by work-life integration (and the expectation of constant contact with coworkers and bosses). The demand for flexible schedules is here to stay.
Making An Impact
Headlines claim that millennials aren’t interested in staying with one company for long—that they’re more interested in advancing their own career trajectory than delivering a difference for an organization. They want to make an impact, sure, but their motivations are selfish. But O.C. Tanner research overturns those assumptions. Millennial employees have a longer tenure than you’d think, and they’re particularly willing to stay and do great work at organizations that express appreciation for their impact. And, the IBM Institute for Business Value reports that a top career goal of millennials, gen X, and baby boomers alike is “making an impact.” Millennials, too, want to do something great and groundbreaking, and make a difference for their organization. So stop assuming that younger employees don’t care about making their mark—and start actively empowering them to succeed.
Your eyes aren’t playing a trick on you. Motivation was also listed above as a category in which generational differences can matter, because when it comes to what motivates employees to choose to work for your company, the factors vary with age. But what makes employees want to stay at a company long-term? And, even more importantly, what motivates and inspires them to create innovative, groundbreaking work? The factor there is universal. It’s appreciation for a job well done. Studies show that companies with strong recognition programs boast longer employee tenure. And it’s also well known that employees of every age report that the best way to motivate them to deliver great work is to recognize them sincerely. It’s more important than a bonus, a suite of perks, or a corner office—just a simple, genuine thank you is the best motivator of all.
So how can Carol and her colleagues bridge their generational differences? It may not be as easy as bonding over shared values, but it’s a great start. In your own team, you can discuss what preferences and priorities everyone shares—and which traits vary widely with individuals. It’s an important discussion to have in order to help the team build understanding and unity, and discover how to collaborate and cooperate on the path to great work.
Article of the Week: 4 Data-Backed Strategies For Writing Email Subject Lines That Get Opened
By: Stephanie Vozza, FastCompany.com
Even though many of us complain that our inboxes are too full, email is still one of the most popular ways to communicate. The average person sends and receives 123 emails each day, and that number is expected to grow over the next three years, according to the technology market-research firm Radicati.
With all of that volume, your best chance of being read rests in your subject line, says Anna Holschuh, a data engineer at the email platform provider Yesware. "We often make split-second decisions about dealing with email, and it’s easy to disregard a message based on a subject line," she says.
Yesware’s data scientists analyzed 115 million emails for a full year to identify email subject-line strategies that work and those that don’t. "We looked specifically at most and least used words and formats in comparison to most and least effective," says Holschuh.
With an average open rate of 51.9% and an average reply rate of 29.8%, Holschuh and her colleagues identified some important trends:
Got a quick question? Think twice before shooting off an email because it could reduce your chances of getting a reply. "Quick question" is a frequently used but poorly performing subject line, says Holschuh. When a question or question mark was used in the subject line, the open rate dropped from 51.9% to 41.6%. In addition, the reply rate dropped from 29.8% to 18.4%.
"Questions put people on the spot, and you’re asking a lot of an already busy, stressed-out professional," says Holschuh. "You’re asking them to do work without providing value up front."
"If the recipient is familiar with you or if you add context to your request on why it benefits the other person, it could be a different story," she says. "But cold emails that put people on the spot don’t do well." Instead of asking, "Are you the appropriate person?" for example, do your research up front and save the person’s time, says Holschuh.
Skip The Personal Greetings
Greetings in subject lines, such as "hi," "hello," and "howdy" seem conversational and familiar, but they tend to reduce the open rate, especially when you don’t know the sender, says Holschuh. When a greeting was used in the subject line, it dropped down to 48.1%. In addition, the reply rate dropped to 21.2%.
"The technique was used to dupe people into thinking that the sender was an old friend, and it was overused," says Holschuh. "It could be that our brain now recognizes these subject lines as an early warning sign of a sales email, and we delete the emails to avoid that first time we expected a personal email and were wrong."
Save personal content for the body of the email instead of putting it in the subject line, Holschuh advises.
Questions and greetings don’t do well, but there are other things you can do to catch the recipient’s attention. Subject lines with hard numbers have a higher open and reply rate, according to Yesware. The open rate increased to 53.2% and the reply rate went to 32%.
"We believe it’s the case because in this age of data, people like numbers and hard facts," says Holschuh. "Metrics also offer credibility, and we saw that including numbers boosts open and reply rates."
Use Title Case
An unexpected finding was the use of capitalization. When senders use title case—for example: Subject-Line Story versus subject-line story—emails had a higher open and reply rate. Title case had an open rate of 54.3%, while lower-case subject lines dropped to 47.6%. The reply rate with title case bumped up to 32.3%, while lower case fell to 25.7%.
"It provides a sense of authority of what you’re talking about versus an informal tone that’s implied with all lower-case letters," says Holschuh.
Article of the Week: How To Turn August Into Your Most Productive Career Month Ever
By: Avery Blank, Forbes.com
August is known to be the least productive month of the year. It is when most people take off for vacation. In countries that guarantee over 30 days paid leave, citizens take off for the entire month and businesses shut down. For those still at the office, it can be relatively slow and difficult to move forward with projects that require the help or expertise of others.
Being productive is not about accomplishing more. It is about investing your time in strategic activities that help you to add value and advance your career. Here is how to work smart and turn August into your most productive month yet:
1. Develop and maintain an accomplishments sheet.
Life and work can feel like it is moving at a rapid pace. Take advantage of the slow time in August to appreciate the full scope of your professional success and start developing an accomplishments sheet. Compile a comprehensive document that records your professional accomplishments. List major projects you have led or contributed to along with metrics that help quantify your accomplishments and written praise from managers, colleagues, and clients or customers.
An accomplishments sheet will prepare you for and show your value in performance reviews, client proposals, and job applications. When you know your successes, you can feel more confident in your endeavors.
2. Get to know your business and the numbers.
To add value, you must know where it is needed. Use this slow time of year to reach out to decision-makers and share with them your interest in learning the ins and outs of the business. Ask them about the priorities and challenges of the business. Know how the organization makes money and where it losses money. Know where the business is now and where it wants to go.
Billionaire investor and entrepreneur Mark Cuban tells people that you have to “know the numbers.” Know the organization’s revenue, profit, and stock price, as well as the cost of doing business and of acquiring new customers. If you work in research and development (R&D), know the percentage of sales revenue reinvested in R&D and how that compares to similar companies in your industry. This will demonstrate that you understand the bigger picture.
It is your business to understand the business. The more you understand your business or the business you work for, the better you will understand its pain points- the areas of the business that need to be strengthened.
3. Be yourself, and bring your whole self to work.
Deloitte research reveals that many professionals are not their authentic selves at work because pressure to conform still exists at many organizations. This concept is called “covering” and involves downplaying aspects of yourself (that may relate to gender, race, age, sexual orientation, disability, socioeconomic background, political affiliation, or citizenship) or your natural tendencies to fit into what you perceive as the corporate culture.
Being yourself at work allows you to be more productive and successful because you are not using energy to suppress what you might not want others to know about you. As organizations are now developing more inclusive cultures that help their employees be themselves, you can help yourself and others by modeling behavior that makes colleagues feel more comfortable being themselves at work. Take advantage of the more relaxed and less populated August work environment to open up and test the waters.
Be careful here. Do not act like you are at a college fraternity or sorority party. It is more about revealing to others the way you are at home and with your friends. Think about what they like in you, and show that side of you at work.
If you want to work with another company or start your own business, be yourself from the start. This will help you to identify the organizations that value your background and preferences or convey how your business is different to help you stand out from the competition.
4. Communicate your market value proposition.
If you are your authentic self, know your accomplishments, and understand the business, you have the opportunity to identify and propose the value you can bring. Align your strengths, background, and unique capabilities with the business’s weaknesses to market your value in a business proposal, growth plan, or job application.
For example, if the business is having difficulty appealing to millennial consumers and you are a millennial, propose an idea that leverages your knowledge and will increase profits. If the startup you are applying to wants to expand into Brazil and you speak Portuguese, clearly identify this skill on your resume. Be the problem solver.
Improving your resume and LinkedIn profile will only get you so far. If you want to be productive, invest your time in activities that uncover the information about yourself and your business. Use this information to strategize on how you can move the needle and add real value that will advance your career.