In today’s demonstration of why a cashflow forecast can change your business or your life, I want to use a real life example of how a cashflow forecast improved sales performance.

Transcript

In today’s demonstration of why a cashflow forecast can change your business or your life, I want to use a real life example of how a cashflow forecast allowed these business owners to improve how they set targets for their sales team.

Now when I first met these business owners, they were struggling to set sales targets.  They were struggling to understand how their sales turned into revenue and what it meant financially.  This was complicated by the fact that they might sell a contract today, which might not be started for 3 months with 4 months to complete.

So, to help them, what I did was inverted my normal cashflow forecast process.  Instead of focusing on revenue first, I focused on costs.

Once we understood what the cost profile of the business was, we added the required profit margin and we came up for each month over the forecast, what the required gross margin was.

From that, we could work out what their projected sales or revenue was on what they had closed today and we could see the gaps.  That way then the sales team could be targeted to close those gaps. 

For example, if they were $20,000 short of the gross margin for next month, the sales team could be focused closing some short term sales that could generate $20,000 of margin next month. 

And if in 3 months’ time, the business knew it needed $200,000 in gross margin but they only had $100,000 of margin in the pipeline, the sales team could be targeted on closing sales that would generate another $100,000 in margin for that month.

And on top of that we made it really simple for the sales team to understand.    We just put together some thermometers like you see at charity events.  Each thermometer had an amount that needed to be closed for each month.  And as sales in the pipeline were closed, that pipeline and that number was coloured in.

So quite quickly and visually the sales team could see what was needed to be closed for each of the months going forward.  Suddenly, the directors now had a tool to better manage their sales team and to get them to focus on the right sales, in the right timeframe for the business to achieve the profit they wanted to get

Just another example of why and how a cashflow forecast can change your business or your life.

Now if you want some implement a cashflow forecast that may potentially change your business or your life, contact me below.

Contact Wayne Wanders for your FREE Business Survival Session

At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times.

Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au