The Sales Forecasting Spreadsheet

Sales Forecasting is a topic that every RevOps Leader will eventually have to tackle. Nothing is 100% predictable, but using methods like the ones below can at least make things more predictable. That extra level of predictability could be the difference between success and failure over the short-term, and help bring stability to your entire revenue organization. 

That’s why we’re so excited to feature this Sales Forecasting Spreadsheet offered by Jon Martin, Senior RevOps Consultant at Process Pro Consulting. We’ll let him take it from here!

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The best sales leaders are looking into the future by setting goals, forecasting, finding new salespeople, and coaching their current team.

Goal setting for your sales team focuses on four metrics:

1. Revenue Growth

2. Sales Acceleration

3. Close Ratios

4. Quote/Revenue per rep.

In this article, we will be covering a deep dive into forecasting for revenue growth.

Revenue Growth

When building a sales forecast based on Revenue Growth, there are a few different structures to consider:

• (MRR) Monthly Recurring Revenue - The predictable total revenue generated by your business from all the active subscriptions in a particular month
• (ARR) Annual Recurring Revenue - The predictable total revenue generated by your business from all the active subscriptions in a particular year
• Un-Scoped Time & Material Engagements - Future deals that have yet to be scoped out by your team. Early stage Opportunities.
• Scoped Projects - Future deals that have already been scoped by your team. Later stage Opportunities.

Many businesses have more than one of these structures that they leverage. The variety and unpredictability of these different options can make it very difficult to look 5, 3, or even 1 year into the future.

Building your quarterly revenue goals and the required pipeline growth to reach those goals can be frustrating. To do so, you need to define and be able to measure the ever-changing variables of:

• Close Rate (dictates how much deal value we need to create)
• Deal Velocity (dictates how early those deals need to be created)
• Total Deal Quantity (dictates how many deals we need to get there)

In my consulting practice, I’ve dealt with several sales leaders struggling to wrap their heads around this challenge. As I was building out a spreadsheet for them, I mentioned this on LinkedIn and asked if there was interest from other people. I quickly had 30 people raise their hands saying that they'd like a spreadsheet like this.

That level of interest prompted me to turn it into a tool that other companies could use and leverage on their own.

The spreadsheet & instructions below will do the following things for you:

1. Give you black and white clarity on your numbers and the growth behind those numbers.
2. Display the impact of changing pipeline velocity and/or close rate on your required pipeline.

Completing the Sales Forecasting Spreadsheet 

Building your Pipeline Goals & Forecasting Spreadsheet

Tab 1

• Fill out your annual goals for the first year by pipeline or service. The spreadsheet will show you revenue % per pipeline, as well as total revenue.

• Name your goal years.

• Enter the names of your pipelines or services.

Tab 2

• Add the percentage of growth you want to experience after the first year and then for the next 4 years.

Tab 3

• Tab 3 pulls in the data from tabs 1 & 2 and sets up a nice table of growth by pipeline for the next 5 years.

• Use the columns with percentages to adjust the revenue coming from each pipeline over the next 5 years.

Tab 4-7

These Tabs are specific to each pipeline. For each tab you are using:

• Add your days-to-close (pipeline velocity) 
• Add your close rate (conversion percentage)
• Adjust the revenue percentage per quarter

This will show you the total pipeline to create and give you a date (based on days-to-close) that starts the 90-day period. This is the period that correlates with your quarterly revenue, where you need to create the required pipeline amount to enable you to hit your revenue goals.

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Next Steps

After you complete those 7 tabs, you will have a clear understanding of the required pipeline growth for the next 5 years. You will also see the impact of the days-to-close and conversion rate metrics.

Play with changing the close rate and days-to-close to see how it impacts the workload of your sales team.

Currently, this tool is focused on scoped projects & T&M sales projects. A version is coming that will also facilitate MRR & ARR as well. 

Have Other Questions?

Feel free to reach out! I am happy to answer your questions or continue the conversation in the RevOps Co-op community or on LinkedIn.

For more content, check out our blog and join the RevOps Co-op community.