Selling in the USA In 2016 — Step Two: Building a Revenue Forecast and Staffing Plan

I cannot think of any more important task then the creation of a business and revenue plan for the USA prior to the end of 2015. It is a vital team building process that includes the participation and cooperation of all the senior managers in the company. During the session everyone works together to establish reasonable goals and a pragmatic approach to achieve them.

Plan on at least two days with your team, devoid of email, SMS, WhatsApp, and ringing phones. You can always schedule breaks in the day to catch up on urgent items. Also be prepared to yield to the opinion of the manager in that given area. If the head of presales says he needs two days to prepare for a PoC that needs to be the number you use. You may not like the numbers that come out of this exercise but it is far more important that you can trust them, and meet them. The alternative could be unrealized goals and investors that are extremely disappointed.

In the end this process is all about the numbers.

We start by looking at the ratio between leads, and demonstrations, and proof of concepts, and sales. It is these real life metrics that insure that accurate forecasts of revenue and the resources required are developed. The most relevant data for calculating what is feasible is the experience that your company has had in the past, no matter what geography that was in. Use the actual metrics from the year before. If you do not have enough history, the next best source is your competitor’s results.

The numbers are actually very simple to calculate. The greater challenge is getting everyone to agree on them. It can be an uncomfortable process but a necessary one.

What is your revenue goal for 2016? (Example $1,000,000)

• Average Sale Price
• How many new customer transactions did you conclude in 2015? (Example 5)
• What was the total revenue of those transactions? (Example $250,000)
• Do the math. (Example: Average Sale Price $50,000 – So you will need 20 deals in 2016)

Proof Of Concepts

• What was the total number of PoCs that you completed in 2015? (Example 15)
• Do the math. (Example: 15 PoC/5 deals = 3 PoC per deal = So you will need to conduct 60 PoCs in 2016 to complete 20 deals.)
• What is the average presales effort required to prepare for and conduct a PoC? (Example: 5 days – So you will need 300 man days of presales capacity for PoCs in 2016)
• What is the average sales effort required to prepare for and conduct a PoC? (Example 2 days – So you will need 120 man days of sales capacity for PoCs in 2016)
• Another important factor to include is the amount of time your R&D personnel will spend supporting those PoCs. My experience is that this can be significant during that first year in the USA.

Demonstrations

• What was the total number of demonstrations you completed in 2015? (Example 75)
• Do the math. (Example: 75 Demonstrations/15 PoCs = 5 Demos per PoC = So you will need to conduct 300 Demos in order to have 60 PoCs in 2016)
• What is the average presales effort required to prepare for and conduct a demonstration? (Example: 25 days – So you will need 75 man days of presales capacity for demonstrations in 2016)
• What is the average sales effort required to prepare for and conduct a demonstration, including the prospecting calls and scheduling? (Example: .25 days – So you will need 75 man days of sales capacity for demonstrations in 2016)

First Calls Via Phone Or In Person (30 Minutes Or More)

• What was the total number of First Calls you completed in 2015? (Example 300)
• Do the math. (Example: 300 First Calls/75 Demonstrations = 4 First Calls per Demo = So you will need to conduct 1200 First Calls to do 300 Demos in 2016)
• What is the average sales effort required to acquire and book a First Call? (Example: .3 days – So you will need 400 man days of sales capacity for first calls in 2016)

Marketing Effort

• How many leads did marketing deliver to sales in 2015?
• How did they acquire leads/opportunities? Was it from the web? Did they come in from partners? Did you have people on the phone calling companies for you?
• What were the resources required to acquire them? Include the cash outlay and all the time that your personnel had to spend, time is money and money is time.
• Are these methods repeatable and predictable?
• What was the total marketing budget for 2015? (Example: As a placeholder I would multiply that number by the revenue increase predicted, in this case 400%)

So now, using our example , we now can assess our staffing requirements for 2016:

• Presales Effort
• 300 man days effort for PoCs
• 75 man days effort for demonstrations
• Total: 375 man days
• Nothing included for travel which will limit availability
• Nothing included for other tasks like training, trade shows, and answering RFPs
• Sales Effort
• 120 man days effort for PoCs
• 75 man days effort for demonstrations
• 400 man days effort for first calls
• Total: 595 man days
• Nothing included for travel which will limit availability
• Nothing included for other tasks like training, trade shows, and answering RFPs

In 2015, there were 251 working days in the USA after the holidays. To be safe I would take another, at least 15 days for vacation and illness, leaving 236 working days in a year.

Based on our example you will need at least two presales people and probably three salespeople in 2016. This is because the time eaten up by the factors not included can be significant depending on where your resources are located and how large a geographic territory you are searching for deals in. (Please see my blog on Focus)

You do not want to go through this process without all the stakeholders involved including your CEO, CTO, R&D, marketing, and especially sales. Even though you are on different continents, speaking different languages, and putting out your own fires its important you all buy in to the plan.

Finally, I have led many of these meetings and would suggest that you have someone objective in attendance that has been through this process before. These meetings can get emotional as various folks challenge each other’s assumptions as the numbers play out differently than desired. A good option in many cases can be one of your investors. They know your company and have a vested interest in your forecasting achievable numbers.

Feel free to contact me with any questions or comments. We all become more proficient by sharing our expertise with others.

VERY Funny Meeting Video – Enjoy & Happy Hunting!