Can You Predict Future Revenue?

By MARK RIFFEY for the Flathead Beacon Newspaper


Lightning arrives before thunder.

In the book, “The Go-Giver”, Bob Burg uses thunder and lightning to illustrate the before/after of delivering value and receiving revenue.

It’s a good analogy to explain that relationship – particularly for first-time clientele. There’s another revenue relationship that you need to have under control: You should generally be able to predict a reasonable percentage of your future revenue.

Yes, you should be able to predict future revenue.

How do I predict future revenue?

In most cases, we’re talking about data that you probably already have some gut feel for.

Funeral homes managers know the death rate per thousand or per million people and can extrapolate how busy they’ll be based on that data combined with the population of their service area, plus historical information.

Fortune teller

I believe I can predict your future sales with a 95% confidence level.

Most restaurant owners can likely predict how many tables they’ll turn on Mother’s Day. Liquor store owners can typically predict their sales volume on college game day, Super Bowl weekend and major holidays. Depending on their business, some can probably do so most days of the week – thanks to “regulars”.

These measures depend solely on historical data, and while that data is useful for predicting some types of business, it can be inaccurate depending on other things going on in the market. It also doesn’t tend to take into consideration the effects of new business and planned recurring business.

That last one is the one that you really have to work on.

Planned recurring and follow-on sales and service allow you to predict future revenue and do so with a fair amount of accuracy. The question is, are you tracking it?

If you sell cars, you should know how long it will be before certain types of buyers will return for another. Will you wait until they return, or will you remind them of critical crossroads of the age and/or mileage of their rigs so that they can maximize trade in and/or resale value?

Likewise, if you provide preventative service for those cars, you should know how often that service should occur and remind the owners to get that work taken care of, much like a dentist would send a reminder card that it has been six months since your last visit.

Reminding isn’t enough.

While reminding is a nice courtesy, some portion of your clients have a firm enough schedule that they may allow you to schedule those appointments well in advance.

Confused in glasses Photo-by-Seth-Werkheiser1

What would I do if I wasn’t so busy chasing work to make payroll? Whoa…that’s deep!

You may be thinking that they might no show or they may wish to avoid scheduling something so “trivial” three to six months in advance. The thing is, they do it for a number of other things because those things are important, serious, of value, and for other reasons.

Some portion of your customer base might be willing to purchase those services and make appointments in advance, or have them automatically paid when the appointment is set, particularly if there is some value added in the process.

I’d prefer a value add to a discount simply because the value received in a value added as a reward is preferable to slicing a piece of profit right off the top. It’s like exchanging a little extra touch for the high value (to you) of knowing that revenue is already going to occur.

You’ve seen other businesses do this. Restaurants have birthday clubs, for example. We’ve talked about those before. Learn from the little things others are doing successfully and think about how you can leverage those to your advantage and to your clients’ benefit. They’ll almost certainly need a tweak to make them your own, but that’s OK.

Build a baseline

The key is not so much what others are doing, but that you are doing *something* that allows you to look at the calendar for next month, the month after and so on, and have a good, dependable idea of the revenue you will receive for that month.

If this predictable “future banked” revenue meets or exceeds your minimum required revenue for a specific period, then the stress of worrying about making payroll next week or next month evaporates.

What’s that worth to you? What would you be able to focus on if you weren’t running about the place trying to chase down enough sales to make next week’s payroll?

What can you do for your clientele that will allow you to future bank revenue generating events?


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