Reasons for business failure – no sales forecasting
Thursday, August 27th, 2009Less than 50% of businesses survive more than five years. If you closely examine government figures you will see the evidence
The authorities common reason for expiration is the failures eventually ran out of funds. This lack of detail is not very useful and so I decided to track down individuals directly and indirectly connected with failed businesses to see if I could uncover the details, establish any consistent reasons for failure and present them on the web in the hope that my discoveries would help others avoid a similar fate. I discovered eight consistent reasons for business failure. Here are three of them:
No Vision, mission or strategy
“If you don’t know where you are going then how are you going to get there?” You must have a clear view of what you want to achieve and how things will be for your business if you achieve it. To achieve anything you need a strategy. Strategy is very similar to a route map it tells you how to get there. It’s a structured plan of actions. To make a strategy work you have to create a business plan that not only contains the key actions and milestones but can used to measure business performance against. A key tool for monitoring business perfomance is the sales forecast.
Lack of a system for marketing or sales
Marketing is about seeking out markets and testing strategies to position your proposition in the minds of prospects and moving them into your sales channel. Sales is about engaging the prospect and getting them to buy your product or service. Marketing is a process of measuring and improvement of the ways you employ to attract prospects. selling is the process of acquiring leads, forecasting sales and closing business. In successful companies a decent marketing and sales system is consistently underpinned by a well designed sales forecasting software system. Such a system gives you the ability to track and measure the events and outcomes in the sales and marketing processes. These insights arederived from reports generated by the software which can then be used to compare planned vs actual results. To sum up what gets measured gets improved or discontinued. This is the critical formula for success.
Lack a system to get sales from their existing customer base
There is a common phrase that 80 percent of your sales should come from 20% of your customers. Your focus is to achieve or surpass this number. Customers that have previously bought from you are simpler and more cost effective to sell to than prospects that haven’t. A combination of effective web based crm software and sales forecasting software should give you the knowledge of recent activity and allow you to search for opportunities in your current customer lists.