I thought that January would be the perfect time to talk about the importance of having a solid pipeline and sales forecasting for SMMEs. According to Configero: these two are very important and they are the bread and butter of every company’s salesforce – there is no customer relationship management strategy that can survive without these. 

Let’s start by defining them: Pipeline Management can be described as: “the management and assessment of all sales opportunities as they progress through a multi-step sales cycle to a successful close.” Actively managing a sales pipeline means understanding what is in queue and strategising on how to move deals to the next step in the process. 

Forecasting is related to pipeline management, but it’s a distinct practice defined as “The act of predicting business activity for a future period of time. Typically, it is a projection based upon specific assumptions, such as targeted prospects or a defined sales strategy.” Forecasting requires representatives (and/or various levels of management) to predict what will close, either by assigning weighted percentages, categorising deals, or committing to a total sales number for the period. 

I decided to tackle this topic because of this time of the year. Some companies started planning for this year in October 2023, while others might have used the beginning of this January to finalise their plans or do financial projections for the year. Either way, by now everyone should start being on implementation mode. It is important for small businesses to start planning in the last quarter of the year with a list of potential clients to approach for either new sales/acquisitions or in the case of existing clients – a retention strategy. Having a list of potential clients for new acquisitions and existing clients for retention is essentially what your pipeline is.

In some cases, from the list of potential clients – engagement or communication with them had started last year already. Others from the pipeline list might still need to be contacted so that conversations about possible sales or business opportunities can commence or continue. This is then where forecasting comes in, you look at each client in your pipeline list and gauge them by percentage (from 0 – 100%) how far you’ve gone with negotiations and likelihood to close the sale or business opportunity. If the talks are still at an early stage, then the percentage weighting will be low but if the talks are at an advanced stage where a few things need to be finalised before signing on the dotted line – then the percentage will be much higher.

Talking to your clients the year before and having a solid pipeline means that when you forecast, then your percentages for most clients will probably be higher than 50%. This essentially means that most of your potential clients on the pipeline list are somewhat close to signing and that business will be coming in soon, presumably in the first half of the year. This preparatory work in the last quarter of each year is essential for SMMEs, it tells you how healthy or unhealthy your business potential is, financially I mean. When your forecasting is in a good place, then you can already gauge just how much potential business or money will be coming into your organisation in the first half of the year.

I would like to encourage SMMEs to go through this exercise and make it an annual ritual in their businesses. And, I would like to close off this month’s column with Benjamin Franklin’s quote: “By failing to prepare, you are preparing to fail”.

Miranda Lusiba is the Founding Director of Strangé Consulting – Boutique PR Agency & Lifestyle Services specialising in Communication, Freelance Writing, Media & Stakeholder Relations, Reputation Management, Thought Leadership, Media Training & PR Coaching.

Leave a Reply

Your email address will not be published.