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Sales Strategy & Management

You Can’t Build Profits Without Forecasting Your Sales

How building your foresight will give you the tools for building a profitable business.

Pavlo Phitidis




It was the beginning of another year. The December holidays felt like they were months ago. Already work was becoming overwhelming.

Charlotte held the hard-earned post of regional operations manager in one of South Africa’s biggest tile retailers, she had been with the company for eleven years. For some time she had felt she needed a change.

She also had a creative side that never found expression in the day-to-day humdrum of operations. For three years before she started her own business, Charlotte had been keeping herself busy over the weekends.

Every week she would collect the broken tiles that were discarded as a result of careless material handling – dropped boxes, forklift damage incurred during the long journeys from manufacturers all over the globe. She only collected the decorative tiles with colours and patterns to suit the tastes of eclectic South African consumers.

The tile pieces were taken home to the garage where Charlotte’s other life took over. On the walls and floor were tile mosaic patterns expressing emotions and images that would appeal to the homeowner.

Her journey into the world of mosaics began on a trip to Chartres, France in 2004. There she visited La Maison Picassiette, a home covered completely in mosaic made of broken ceramic tile. The care, dedication and beauty evident in the work inspired her so deeply that she decided to make mosaics.

Inspiration and passion are key attributes needed when starting a business which she certainly had in large doses.

In 2006 she left her previous employer on good terms and started her own business. She produced mosaic kits including the mosaic pattern, tile pieces, tools and materials needed for home mosaic enthusiasts to create their own pieces of art.

In 2010, her business was generating an annual turnover of R13 million with exciting growth prospects.

Managing costs

Few retail suppliers are pure cash businesses; terms of payment often sit on both sides of your business model. Retailers demand payment terms and you want their business.

On the supply side, Charlotte sourced the broken tile pieces from her previous employer. Her orders were made up of broken tiles collected in nylon bags or end of range whole tiles which she broke up into the fragments.

The relationship was invaluable. Charlotte could order as and when she liked and the pricing was reasonable. The biggest distribution centre of the retailer which supplied stores across the country was a convenient 12km from where she lived.

The early years saw her learning the lessons that cannot be avoided. At first she marketed her product too broadly. Not everyone likes the idea of buying a mosaic kit.

During the first two years, Charlotte worked hard to understand the consumer market.

Turning your business to face your customers and not your ideas is a very humbling and difficult task to achieve.

She found a market and matched the products she developed to retailers that she could market to.

In 2008, the impacts of the global credit crunch began to bear down on the global economy. The South African economy responded soon afterwards. In order to sustain her growth, Charlotte had to innovate. This meant two actions.

First, she had to get the price of her materials down. At the same time, she had to broaden the range of products she had under specific price points and increase the range of designs to appeal to established customers. Her first trip to China was being planned.

After two weeks in Guangdong, China, Charlotte arrived back in South Africa with her first order placed. She found a range and variety of tiles that fitted exactly what she needed and at prices that were almost 30% cheaper than her current line of supply. It was a dream trip.

When I met her in 2011, her annual turnover was a solid R18,7 million.Charlotte complained that while her turnover had grown and things were looking good (she was about to list her products with a national garden product retailer), turnover was not translating into the profit margins she once enjoyed. She was in a terrible cash crunch.

[box style=”gray,info” ]The Importance of Not Letting First Sales Go Bad[/box]

Sales forecasting

I ran the diagnostics on her business. We included the numbers, a site visit and business systems evaluation. What I discovered sent a chill down her spine.

Charlotte’s materials inventory, work-in-progress and especially finished stock ratios were a mess. After additional analysis, we discovered that the problem lay with the Chinese inventory. The levels were too high and cash was tied up in what increasingly looked like unsaleable stock.

Before importing from China, Charlotte procured locally. At most she would have a three or four day delivery cycle. Her ability to order ‘just-in-time’ was on offer all-the-time. While this was great for the first few years of her business, the demands and pressures that led to her having to import required a different approach.

China required an increase in the size of the average order and she also had to endure long lead delivery times, as the tiles were transported by ship.

Despite her experience, the stock she ordered often arrived when the season for its demand had passed. Mosaics have a fashion and novelty factor and so we quickly went to work on developing a system to create an inventory order foresight capability. It’s called a sales forecast.

Charlotte had to prepare a forecast on sales over the next year. The forecast needed to specify sales into product units. For the first time, she could get a sense of what the future plan of the business would look like. Supporting the forecasted sales was a promotional plan, something she had never aligned against a forecast.

With our ability to read the market signs and present them in product units, we developed an inventory ordering capability that took into account the manufacturing and delivery processes from the Chinese suppliers.

Included in the February orders were samples for the development of products for the following summer season. This allowed Charlotte to move to a point with her retailers where she could pre-sell the season’s products before placing orders from the Chinese manufacturers.

Forewarned is forearmed

The power of doing a well thought out sales forecast in your business provides you with advantages that you would never have thought of. In Charlotte’s case ‘forewarned is forearmed’.

Today Charlotte’s business generates a consistent R27 million with an average stock turn of around 1,4, dramatically down from the terrifying 3,2 that we first discovered. Goods are almost completely sold before they are even ordered. A nice place to be. And profitable too.

[box style=”gray,info” ]Become a Sales Process Master[/box]

Sensing the future

Forecasting isn’t about mind-reading. It’s looking to the future, and then using the numbers to make intelligent decisions today.

Stock sense

What does your inventory look like, and is it hurting your business?


Build your forecasting tool

Create 12 columns marked with the months of the year.

Row 1

Identify all the activities this year that will impact sales e.g. school holidays, strike season, elections, the seasons etc.

Row 2           

Forecast the business from your current clients.

  • Organise your profitable clients. It’s likely that the top 20% of your clients make up 80% of your sales. If you are dealing with consumers, segment them and identify which segments make up your 80% of sales.
  • Forecast their performance this year: Take a view on growth given the poor economy — say 10% and take your 20% customer segment and grow their revenues over the period by 10%.

Row 3

Forecast sales from new clients against your product/service range.

  • Take all your products or services and do the same — segment them into the top 20% that brings in 80% of your sales. List them over the 12 month period.
  • dentify what promotional activity you want to implement this year and locate these activities over the 12 month period.
  • Take a view on what new sales you will generate against your top 20% products/services in response to your promotions.

Row 4

Aggregate your sales forecast for this year by adding the expected sales from current customers to the hope for sales of the new customers responding to your promotions over the year together.

You now have a forecast

It will never be right. Every month register what sales you brought in and compare to what you thought you would bring in. Did you over- or underachieve?

Ask and interrogate why and in so doing you develop the intuition of foresight through a most useful tool called the forecast. Do it now and it will serve you beyond your dreams.

Pavlo Phitidis is the CEO of Aurik Business Incubator, an organisation that works with entrepreneurs to build their businesses into valuable assets. Pavlo is a regular commentator on entrepreneurship on 702 Talk Radio and 567 Cape Talk Radio. He can be contacted at


Sales Strategy & Management

What Really Drives Sales Growth And Repeat Business?

Hint: It’s neither your prospects’ ability to buy nor how great your product or service is.




Have you ever analysed what really drives sales in your business? Most people tie their answer to marketing or new leads. Those can be drivers but not the main driver for small businesses.

What causes one person to shop with you for years, driving out of their way to get to you, while the guy across the street won’t set foot in your door? Typically, when I ask this question, I get feedback about how great the product and service is. When I ask why the guy across the street won’t use you, I typically get some explanation of a lack of need or ability to buy.

Those answers can all be true, but that doesn’t make any of them correct.

I have spent the last seven years studying these questions and searching for both the truth and the correct answer. Surprisingly, the right answer is far easier to understand than I thought it would be. Instead of you having to become an expert on the subject, I’ll save you years and tell you what I found.

The truth and the correct answer

If you want to drive sales growth and repeat business, it boils down to understanding and then implementing one strategy: Content builds relationships, relationships build trust, and trust equals sales. Think about that statement for a minute. It is true in your personal and business life right now.

Related: Sales Leadership: The New Frontier

Content builds relationships

Since the dawn of man, how did we build relationships? We create content. If I found myself to be single tomorrow and on a date, I would work to build a relationship with the person I was dating by talking to them – that is, by creating content.

In B2B sales for many years, people created content by having all the knowledge and telling sales prospects about the great features and benefits of new, amazing machines. Today, we create content for our websites and e-books, as well as for downloads or videos to post on YouTube.

Why do we do all of this? Simply put, content builds relationships. And if your customer is looking to purchase anything of significant value from you, you will first need a relationship to make that happen. Once we have a relationship, what happens?

Relationships build trust

shaking-handsMost people don’t fully trust someone they just met, regardless whether it is a business relationship or a personal one. Human nature is to give a little bit of trust and to see if someone is worth giving more trust to. In other words, make them earn it. This is why delivering, at a minimum, what you said you would is so vitally important.

This is where good customer service, the person who answers the phone or sits at the front desk, can make or break a new relationship. As the relationship continues, more and more trust is given; and if the experience remains positive, the amount of trust you get grows still more. As the trust in you grows, then what happens?

Trust equals sales

The more a person trusts you, the more they will buy from you.

One bit of good news with all the competition that is popping up is that it is super easy to stand out, because there are so many poorly run companies and untrustworthy people in the world. All you have to do is do what you say you’re going to do when you say you’re going to do it. Also, treat people the way you’d want to be treated. Since so few will do that, it is not that hard to stand out from the pack.

Related: 3 Strategies For Closing Sales Without Picking Up The Phone

Once a person has a relationship with someone, and they always get what they expect, changing from that person or business is not easy or even desirable. Because you gave good content, you created a relationship. Through that relationship you worked hard and developed trust and now, that trust you earned turns out money through, year after year. When you have 500; 1,000; 2,000; or 5,000 of those trusting relationships, they become assets of your amazing business.

If you’ve read me before, you may have heard me say that you should use a newsletter to build a fence around your customers. They will stay longer and spend more. Well, this is what I’m talking about. Had I been more sophisticated in my understanding of how all of this works seven years ago, I would have switched out the word “newsletters” for “content.”

I tell people all the time that a newsletter isn’t a magic tool. If anyone is selling you a magic solve-all-your-problems tool, you should run very far away and very fast. A newsletter is simply a vehicle to distribute content that builds relationships. It nurtures those relationships over time. You have to respect the relationship and earn trust by delivering on your product or services. If you don’t, can’t, or won’t do that, you could deliver all the content and send all the newsletters, and it simply wouldn’t matter one bit.

How to implement this in your business

The challenge with any idea is implementation. With most ideas in business, you typically have four choices, and this one is no different.

You can do the following:

  • Do nothing. This is what most people do, which is good news for you, because it is also what most of your competitors are doing. That makes it very easy to stand out.
  • Do it yourself. Content has to be created, and maybe you’re the best person to do that right now in your company.
  • Hire an employee to do this for you. Of course, you could hire and train a content creation person and outsource editing, graphic design, etc.
  • Find a company to help you implement this strategy.

Related: The 5 Best Actions You Can Take To Improve Sales Calls

Regardless of your decision, if you want to truly grow, or if you want to beat the competitor down the street, or if you want to increase the value of your company, it starts with this strategy: Content builds relationships, relationships build trust, and trust equals sales.

This leaves you with one thing to as you finish this article: Look back at the four options and make a choice.

This article was originally posted here on

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Sales Strategy & Management

Get Those Quotas Moving (Upward!) In 2018! 5 Things Your Salespeople Can Do

Fewer than half of salespeople make quota, on average. Here are some best practices for to help them hit their targets in the new year.

John Holland




Whether they had a tremendous 2017 or a difficult one, sellers likely hit the re-set button with the start of this new year. And that button push probably was accompanied by more aggressive quotas for those sellers to achieve in 2018.

So, what should sellers do to gear up for the coming year? As 2018 gets under way, here are five things I can share to help sellers get off to a good start.

1. Avoid stale quotes and proposals

Unlike fine red wine, proposals that have been in the sales pipeline more than 45 days old aren’t getting better. Many of them, in fact, are likely to have “no decision” outcomes.

So, if you’re the seller, what’s going on? There may be instances where your prospects have chosen a competitor and not given you the bad news. My suggestion is to send a snail mail letter, “return receipt requested,” to the highest level you’ve called on within the account. State in the letter how long the proposal has been outstanding, noting that you haven’t been updated on its status and that you intend to withdraw if you don’t hear anything back.

Related: 3 Questions To Guide You To Success In 2018

The hope is that your letter will cause the buyer to contact you and say there is still interest. If that’s the case, you can ask to revisit the opportunity (help facilitate a cost vs. benefit analysis) and see if a revised recommendation can be made.

If your letter doesn’t elicit a response, you can safely remove it from your forecast. While that’s not the desired outcome, you’ll have the benefit of a more realistic view of the size and health of your pipeline.

2. Create add-on opportunities

Sellers often believe that if customers have additional needs, they’ll proactively reach out. Certainly, close rates will be higher when there is an existing relationship vs. when sellers are closing new accounts. That’s why sellers should take a look at each client and try to determine potential business needs that might be addressed through the use of their company’s offerings; they should then proactively contact the key players who might be interested.

The key to initiating add-on opportunities is taking executives from latent to active need for a company’s desired business outcomes.

3. Be realistic with nurtured leads

If the cost of your offerings exceeds $50,000, you may want to take a hard look at the entry level that nurtured leads provide. My view is that many of those leads get sellers in touch with people that are doing product evaluations. So, those people may not be working with budgets and have not identified potential areas of value/payback that can be realised through the use of your offerings.

Ask yourself if the contact you’ve been given is a potential champion who can provide you access to the key players you must call on to sell, fund and implement the offering being considered. If not, I suggest you treat the contact as a coach that may be willing to get you an introduction to a higher level that may then serve as your champion. My thought is to gain access to people who will see value in your offerings.

Related: How South Africa’s Small Businesses Plan To Invest Their Money In 2018

4. Ask for referrals

Satisfied customers can be under-used assets, especially if sellers can help them quantify results.

My preference is that sellers break down benefits and values specific to titles and outcomes that have been achieved using those sellers’ offerings.

Once quantified, sellers can ask if their customers know of any other individuals or companies they could be referred to.

5. Plan a sales cycle ahead

When I was in engineering school, I was a “just-in-time” learner in that I studiously avoided professors who assigned homework and also approached midterm and final exams with some last-minute cramming.

Some sellers follow my academic model – and that’s not smart: In terms of their year quota, many sellers who are not YTD against their numbers believe they can close enough business in the last quarter to make up for their previous gaps. But this is a very stressful strategy, and there will be times when sellers run out of runway.

An alternative I’d suggest is for sellers to break their quota into monthly increments and multiply that number by the months in an average sales cycle. They can then estimate their close rates and set pipeline thresholds they should try to exceed.

Once they’re at the stage of interviewing committee members, sellers can then negotiate their activities and time frames via a written document with buyers (I call this pipeline “E”). Here’s an example of how to project ahead:

  • A seller has a $2.4 million quota ($200,000/month).
  • Her average sales cycle is four months and her close rate is 50 percent.
  • Therefore, her “E” target is to close $800,000 or more every four-month period.
  • At any time, if she is YTD or better, her E target will be $1.6 million in her pipeline.
  • In a given month, any shortfall from YTD must be doubled and added to that $1.6 million; business development efforts must be ramped up.

Being aware of YTD performance to date and projecting the sales cycle that’s ahead on a monthly basis can reduce stress levels during Q4.

And reducing stress is good, right? I hope these tips can help make your 2018 a great, and de-stressed, year.

This article was originally posted here on

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Sales Strategy & Management

(Podcast) Are All Prices Negotiable?

Person, socialisation, product, place – what are the key differentiating factors between those who negotiate price and those who don’t? And who determines the value of a product?

Nicholas Haralambous




What is up for negotiation? When should you be negotiating prices, and when should you be open to negotiating prices with your customers?

Person, socialisation, product, place – what are the key differentiating factors between those who negotiate price and those who don’t? And who determines the value of a product?

Listening time: 8 minutes

Related: (Podcast) Phone Calls Often Solve Email Problems

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