Budgets are a pervasive reality in any B2B sales professional’s life. We are required to budget for total sales. We are asked to budget for repeat business and, we are commonly asked to budget for margin, or the profitability of our sales. We are also usually required to budget for “new business” which can be defined by variable parameters in different organizations. Is it new business with an existing client? Are we being asked to budget new business with a new client? Etc, etc.

Budgeting or predicting revenues and growth for existing accounts is a relatively easy process. We know how much business we currently have. Maybe we have contracts in place that will produce revenue into the period being budgeted for. And, we have our “pipe”, which should have some revenue located at the end of the pipe that can predictably be expected to close.

What about budgeting for pure new business though; business that is from a net new client resulting in net new revenue?

This can be a daunting task. How do you predict which meeting will result in an opportunity? How do you know which new opportunity will result in a sale? The answer, you can’t.

Dwelling on chancing across a piece of new business is an exercise in futility and, not the way to plan your new business pursuit or build a budget. In other words, you can’t budget for it. So, what to do?

Like all things in life, there are patterns and disciplines we can impose on our selves that will bring about a predictable outcome. The weakness in most budgets is that they are based on results, expected or hoped for outcomes. What they don’t ordinarily include is the action plan necessary to achieve the budgeted expectation.

What if you were a bird watcher? You would know that the more time you spent in the field, and the more time you placed yourself in a habitat where birds were common, that you would observe more birds. So too it goes for prospecting and from that, finding new business. You know the “habitat” where your prospects live and therefore can build an operating budget or action plan to achieve your desired goal.

Building a budget for new business that is based on prospecting isn’t as complicated as you may think.

First, establish the amount of new business you will need to satisfy your requirement. For the sake of this exercise, let’s say the number is $100,000 in new business for the upcoming year.

Next, based on past business, figure out what your average deal is. It doesn’t need to be exact, ballpark will do. Again, for this exercise, we’ll say that your average deal is $20,000

You now know that you need to close five new deals worth on average $20,000 by years end to achieve your budget of $100,000

From experience, you know not every opportunity you discover results in a deal closing. Perhaps one in three of the opportunities you work on come to fruition based on your track record. You now know you need to discover fifteen opportunities to close five.

Let’s keep going. How many meetings does it take to discover one of these opportunities? Everyone’s different and of course, there is a wide range of circumstances that will shape this model, but as we move through this exercise, let’s assume about one out of every eight meetings you attend leads to one of these fifteen required opportunities.

See where this is going? If you need fifteen opportunities, and only one of eight meetings results in this goal, then you need to attend one hundred and twenty meetings with new prospects for the budgeted period. Whew!

At this juncture, most sales people say “no problem”, that’s just 2.3 new prospect meetings over fifty two weeks. Think again.

First of all, attending these meetings in November or December won’t do much good, because you know from experience that your new business tends to take ninety days to close from the first introductory meeting.

“OK” says the sales person, “that still leaves me 44 weeks or 2.7 meetings a week. No problem”.

What about the holiday seasons? Can you reasonably expect to secure a meeting with a new prospect in the last two weeks of December? What about the first week of January?

So, you now know how many meetings you need to achieve your budgeted goal of $100,000 in new business for the next year, one hundred and twenty.

You also know you’ll need to attend these meetings before the end of September. So, nine months, less public holidays, your vacations, your prospects’ vacations, etc. etc.

How many phone conversations do you need to make to get 120 meetings? If one in five conversations results in a meeting, you need to have six hundred initial conversations. That’s a lot of conversations, especially if you leave them to the last minute.

Six hundred conversations with new potential prospects over nine months. Let’s see, that’s about sixty conversations per month, or seventeen conversations per week.

How many times do you need to dial the phone to discover seventeen prospects willing to talk? Remember, not every call attempt will result in a conversation.

The lesson in all this? You need to plan for prospecting like anything else and set an action plan in place that will yield the desired or budgeted expectation.

This needs to be done well in advance. How much preparation does it take to identify a prospect list sufficiently robust enough to get seventeen people interested in talking with you each week, and how many calls do you need to make to discover those?

Of course, this is an extreme example and doesn’t allow for other business development initiatives that will undoubtedly contribute to your goal. However, most sales people will still need to enact a proactive plan to meet new prospects.

If you want greater control over your new business destiny, take another look at the equation just presented. Do the math. Establish your goal and work it backwards so you don’t get caught short of your goal.