Sales Plans vs. Sales Forecasts

Hi Readers,
I’m back- hope you didn’t miss me too much last week.

I’d like to get back to the subject of sales plans, as not only do I have my presentation to the Schaumburg Entrepreneurs Group coming up, but my next video (which should be released by this weekend) will be the first in a sales plan mini-series.

In previous posts I’ve touched on some very general points about sales plans- I’d like to start with the basics here – what’s the difference between a sales plan and forecast (or is there one)?

The answer is a resounding yes. A sales plan and a forecast are absolutely separate documents and both are critical to success. A sales forecast is typically an Excel spreadsheet with the next year broken down into monthly numbers, and hopefully offering/market. Think of it as the tactical plan for the coming year (or the short-term execution plan for the strategic-focused sales plan).

A sales plan by contrast is what connects the business plan to the forecast, outlining the chosen strategy for executing the business plan. It will outline things such as: sales organization structure, channel to market, incentive plans, strategies for specific business initiatives, etc… While a forecast is a fixed document (while maybe reviewed during the year, it should never really be changed), the sales plan by contrast is a living document linked to the business plan.

As I mentioned in my post about the Importance of linking Business & Sales Strategies, any business initiative that requires the support of sales must be reviewed and compared to the existing sales plan before it can possibly make its way to the execution stage (forecast). I cannot stress enough how important this is, especially for small, young businesses. Vetting a business initiative against the sales plan is a massive time and resource saving exercise!

The company I mentioned in the previous post ‘wasted’ six months of time (and, unknown to me at least, money). Given that they are a larger company than I typically work with, the impact was not terribly significant. However, the smaller and younger your business is, the less you have to waste. So what exactly are you looking for?

Given that sales people are money motivated, they are going to focus their actions on whatever activity is most likely to take them to the bank – you as a business leader have to ensure you are incentivizing the right actions. The first question you have to ask is: are our salespeople going to be financially motivated to promote this initiative? While a ‘yes’ here does not ensure success, it at least ensures that you are being your own enemy. If the answer is ‘no’, you must go back to the initiative and modify it to be compelling to sales.

You may find after exhausting all reasonable options that the initiative is still not a compelling proposition to the sales team. But think about all the resources you just saved by not going forward with a project that had little to no chance of success!

Until next week!
Rick

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