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hi guys Ian Johnson from driv success.com uh today I thought I'd kind of discuss uh small business sales forecasting now um I'm just going to provide you with a couple of tips that you can use in order to make your sales forecast a little more accurate now uh a lot of the companies that I work with when I work with manufacturers a lot of them have Erp systems and MRP systems but some of my customers don't have that luxury of having an Erp system or an MRP system and they do a lot of things uh by Excel and in fact uh what I'm going to show you today is actually available on my blog at driver success.com there are plenty of uh sample Excel spreadsheets that you can download where this rule that I'm going to show you or this basic principle is is is available for you to download and it's pretty straightforward the only problem that some of my customers have had is when they ask their salespeople for an estimate of what they think they're going to sell they basically are asking their sales people to give them one number you know so they basically basically will say to them how much do you think you can sell and the sales people does a quick calculation in his head not scientific by any means maybe they might rely upon some historical data but for the most part they make the number up so this is a a bit of a different take on it okay um what we're going to do today is we're going to rely upon a on a on a method called per it's called the project evaluation and review technique it's not the shampoo it's it's something that is used uh as the as the fundamentals for Gant chart so project evaluation review technique you know the United States Navy came up with it back uh years ago when they did the design of the Polaris submarine uh product evaluation review technique is used by uh product managers project managers uh all kinds of guys that do installations and want to measure uh transit times and delivery times from multiple points and different vendors um it's all about uh identifying critical and non-critical paths to project completion so it is a project management tool and it's the fundamentals of of Gant charts but we're going to use it today um for our analysis on how to improve small business sales forecasting so there's basically three portions to the to the calculation there's What's called the uh best case scenario okay the best case scenario equals a and I'll show you the calculation after the most likely case scenario equals B and the worst case scenario equals c okay now when a Sal person is about to do their their sales forecasting with this tool with per what they're going to do is they're going to ask themselves you know what's the best case scenario in terms of my sales for next week or next month what's my most most likely scenario what what am I most likely going to sell and what's my worst case scenario what am I you know not going to sell at all so let's just say for this situation that this individual thinks his best case scenario for you know next month sale is he going to sell he thinks the most he can sell is 10 okay he thinks it's most likely that he's going to sell let's say six and he says the worst case scenario you know if I don't do either one of those two I'm going to do four okay so instead of him doing this calculation in his head we're going to come up with something a little bit more scientific not 100% foolproof but it works now the per uh calculation is fairly straightforward okay per says you take one time a which is 10 + 4 * B which is 6 + 1 * C which is 4 and you divide this by six okay so this is so I'll just uh change up the numbers here so uh 1 * a 4 * B and 1 * C now do the inside of the calculation first 1 * 10 is 10 4 * 6 is 24 1 * 4 is 4 so 24 + 4 is 28 + 10 is 38 so right away this calculation looks like this is equal to 38 and you divide that by 6 on the outside and you get something that looks like 6.5 or something like 6.3 units in in any case it's probably going to be six now is this foolproof do this guarantee that your your sales forecast are going to be a lot more accurate no it won't but it's going to help and and what it what it allows companies to do is it it basically forces their sales people to put numbers down you know they can basically track their variances historical uh and account for seasonality in terms of uh you know busier and slower times of the year but instead of the salesperson just randomly coming up with any number and not knowing whether it's based on history or not what perk likes to do is basically kind of you know apply some kind of a um a more statistical approach to to coming up with this number here in terms of the units that they can produce now per becomes more accurate um The More Sample portions you have so when you first get started you're going to you're probably going to be all over the place but as you use per and as you use this simple little process to ask your salese how much do you think you're going to sell you know what's the best case scenario in terms of sales what's the most likely scenario what's the worst scenario these numbers are going to become more accurate and as these numbers become more accurate this calculation will become more accurate now again this uh this entire simple little calculation is available on Excel spreadsheet that I've uh got on my website at driv success.com go on you can do this for oems original equipment manufacturers vs uh value added resellers Distributors um so go on take a look and uh you know let me know what you think Ian Johnson take care