Wherever they are, whoever they’re talking to, CEOs always get asked the same question: Where is your business headed in the coming months? At the office, in the boardroom, even among friends and family, this question comes up again and again. Is your company growing? Will next quarter be better than last? Of course, every CEO wishes she knew the answer to this question, but it is not always that simple.
Without a crystal ball, CEOs often rely on a haphazard approach for predicting growth — what their Sales VPs tell them about upcoming deals, what similar companies have experienced in the past and so on. Ultimately, though, these finger-in-the-wind approaches often do more harm than good — and they certainly don’t give the kind of analytics-based information that can help CEOs make strategic growth decisions.
So what should CEOs use to help them predict upcoming revenue growth? A combination of historic performance and conversion rates (in terms of both specific sales reps and the company as a whole) and details about the specific opportunities currently in the pipeline, such as age, stage and size. Only by weighting open opportunities by these factors, and ascribing expected values to them, can CEOs be sure that they are receiving an accurate glimpse of their company’s near-term future.
And all without a crystal ball.
A metrics-driven forecast is only one of the many tools a CEO needs to better run his or her business.
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