The Sales Boss

CHAPTER 18 Forecasting the Future

One of the necessary evils of being the Sales Boss is forecasting revenue. To say that forecasting is the bane of existence for most sales managers is an understatement. I would go so far as to say that if a sales manager had a choice to complete the forecast or go to the dentist for a root canal, then the sales manager might just have a monthly visit to the dentist! The term “forecast” is used differently in different sales organizations, but broadly speaking, it is the crystal ball that a company asks the sales manager to look into to predict what revenue will be produced, from which channels the revenue will come, and when the company can expect it to show up on the books. Sometimes this is the sales budget prepared at the beginning of the year, followed by changes and updates through the rest of the year.

Most sales managers struggle to get the forecast right. The one thing that can be said with certainty is that the forecast is only accurate as a reflection of the hopes the sales manager has on the day it is submitted. I tend to think of it as a list of gifts a child writes for Santa Claus. Some of those gifts are received, some are a surprise under the tree, and some, like world peace, clearly didn’t ever stand a chance of happening, but were on the list anyway just in case this year was different!

Why are forecasts notoriously difficult? To begin with, forecasting is a battle between two opposing forces: reality and the desire to look ...