There's no sale until the cash is in the bank

Most start-ups that go under do so because they pay scant attention to the very business plan they worked so painstakingly to develop; most established businesses that go under do so because they have no predefined sales plan. Without a strategy for selling, there is no effective way to gauge the financial growth and progress of a business.

You need a realistic map that identifies:

Ø Where the sales will come from
Ø How they will arrive
Ø Who will provide the sales

But never lose sight of the fact that even when you have established these requirements to your satisfaction, the 'no sale' sign will still be showing until the cash is in the bank.

DETERMINING YOUR PRICING STRATEGY

It is your privilege to create the policies that set your selling prices but bear in mind that your pricing strategy is dependent upon a variety of factors. Think it all out before you set your SPs in concrete.

FORECASTING AND TARGETING SALES

You must forecast and target your sales - by season, by calendar event, even by time of day. You need to know how your venture will generate sales over a given period of time. The sales forecast (budgeted sales) will be important data for your cash flow projection. It appears at the top and is the catalyst to what appears in your bottom line. These targets will help to determine priorities and channel your energies accordingly.

Perhaps you haven't had a stab so far at forecasting and targeting sales in an orderly fashion, so how can you estimate? Here is how you do it.

Ø Observe your competitors - Try to gather intelligence on the typical spend per customer.

Ø What are your estimates for customers per month? - Work out your market share. First, estimate the number of customers who buy from businesses like yours within the immediate catchment area. Now work out how many times each of these customers buys in a year (9 small ads, 3 hours of plumbing, etc). Now multiply the two numbers to establish the total size of the market. Finally, divide your sales into the total market size to get your market share.

Ø What is your capacity? - Maximum production output of your knobblewockers, number of rooms in the hotel, number of tuition slots in the appointments book? What percentage utilization do you expect to achieve in each month of each sales period? Work this out by market segment. Estimate the average spend per customer.

Ø List all firm orders you have generated.

Sales build up from small beginnings but they may be affected by fluctuations in the national economy: levels of unemployment, rising interest rates etc. For example, if you are selling to
account customers, your profit and loss forecast must reveal all the sales you have invoiced out but for which no payment has yet been received. Some customers may turn out to be bad debts.

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