Managing Business Projections

Today, the process of projecting business volumes and profitability is widely recognized as a partially scientific and partly artistic process that includes all of the elements of marketing, plus the effectiveness of distribution and selling. In the first stage, businesses and potential customers discover each other in terms of their respective products and services which may satisfy customer's wants and needs, this is raw opportunity. Then the business managers must determine what part of the opportunity their own business might capture while making a profit. This is the definition of opportunity used in opentaps. Finally, the opportunity must be factored according to the realistic limitations on resources, and processes found in distribution and selling so that an actual prediction of future business can be made. This is the definition of forecasts in opentaps.

Opportunities represent potential future sales that are not yet certain. Thus, opportunities are defined in the following terms:

•  The Sales Pipeline stage of this particular Opportunity (prospect, proposal, quoted, closed)
•  The likelihood, as a percentage, that a profitable sale will really happen eventually, 
•  The projected Closing Date for such a sale to develop, and 
•  The probably dollar value of any future sale.

Opportunities can be created for an account, or for a lead that has already been qualified. The opportunity for a lead that is being converted to an account becomes associated with the new account and it's contacts. An opportunity can be created for one account or lead only but can have multiple contacts associated with it.

When the opportunity is initially created, and when the Sales Pipeline Stage changes, then the new stage is used to look up the probability from a table configured and stored in the system. The probability can then be edited as appropriate.

Sales forecasts use the Opportunities, their associated probabilities based upon the sales stage, and the estimated amount of each potential sale to calculate the total amount of sales a company can expect to close in a specific period of time. Thus, Forecasts are calculated by totaling up the Opportunity information for the company, along with the application of management's consideration of factors that determine realistic sales limitations due to resources, profitability, and geographic or other limitations.

To get a correct total forecast for the company, we recommend adding a unique (real or fictitious) sales executive to use for a company wide, realistic total. We associate this particular executive once and only once to each account and qualified lead. Their calculated and edited forecast which includes consideration of realistic limitations of the business will be the one that accurately reflects a company wide total outlook for capturing future business.