Business Insights – Maximising Business Value & Effectiveness – New Business Development
It is good practice for any business to monitor the Sales Pipeline. This takes on added significance when selling your business as it will almost certainly be asked for during the due diligence process. Not an unreasonable request you would think, but in many cases the resultant document is anything but convincing! In fact in these circumstances it is unlikely to be a source of confidence in the business – often the complete reverse.
Having a convincing document evidences good practice, good planning and clearly represents the fact that you are in control of your business, something potential buyers will certainly appreciate and value.
The key to a good sales pipeline document is to establish a process that reviews the pipeline on a regular (typically weekly or monthly) basis. There are many tools now available to help you do this (eg. MS Dynamics, Salesforce etc) but for most businesses an Excel spreadsheet will do just fine.
The only thing certain about a sales pipeline, and estimated sales that derive from it, is that it will be WRONG. However, measured against actual sales over a period of six months or a year, you will be able to ascertain the likelihood of a sales forecast being achieved based on the current pipeline. This WILL give confidence to a buyer.
Another risk well understood by a buyer is the potential loss of key salespeople after completion of the sale. The more widely the sales process is understood, and the less dependent it is on a “stellar” salesperson, the better. When a business is sold there is always a risk that key people will leave, and the most mobile of all are those in sales. By breaking the sales process into discrete parts, and dividing the responsibilities amongst the team, the associated risks will be reduced, and value enhanced.