Projecting the Pipeline
Our latest edition to our template library is straightforward. When our team evaluates companies and opportunities, we want to understand the current revenue multiple on the business (= valuation / monthly revenue annualized) as well the forward multiple (= valuation / monthly revenue 12 months from now, annualized).
If we can confidently underwrite the denominator to this second metric, the path becomes much easier. Our ability to underwrite the denominator is closely related to predictable revenue and the company’s funnel management. If a company can state the percentage of leads that convert from stage to stage, and the revenue dollars in the pipeline by stage, then we can bridge today’s revenue to the forward revenue and take it from there…
If you’re running lean and mean, you can hack together something on a spreadsheet to figure out these numbers, if you’re not ready to pull the trigger on some expensive software.
And by you, we mean us. We’ve hacked something together. It’s extremely simple and hopefully as accessible to as many people as possible. Minimum viable, if you will.
>>CLICK HERE TO DOWNLOAD THE PIPELINE PROJECTION TEMPLATE<<
We follow spreadsheet conventions where the teal fields are filled in by the user. Moving from left to right…
TAB: LEAD DATA
Column B: enter the prospect’s name
Column C: the date when the prospect was qualified as a lead
Column D: the date when the prospect was qualified as being in development, if applicable
Column E: the date when the prospect went to contract, if applicable
Column F: the date when the prospect closed, if applicable
Column G: the date when the prospect was dead, if applicable
Column I: the source of the prospect, according to whatever categories you may have
Column L: this month’s revenue, annualized
Column M: the value of a potential contract/subscription with this customer at the qualification stage
Column N: the value of a potential contract/subscription with this customer at the development stage
Column O: the value of a potential contract/subscription with this customer at the contract stage
Column P: the value that was actually closed
Notes:
You may have different stage names. You can replace those, of course. If you need to add more rows to this spreadsheet, best practice is to insert a row in the middle of the field so as not to break formulas.
TAB: MONTHLY METRICS & TARGETS
Cell C5: enter the first date for which you have data/for which you’d like to use to start tracking
Rows 24, 25, 26, 27: enter numeric targets for number of opportunities per stage you’d like to have on a weekly basis. It’s fine if you don’t have this right now, the next tab will explain all…
TAB: SIMPLIFIED REPORTING
You made it. Reporting!
The first chart is what we’re really looking for. Current revenue run rate plus the incremental revenue by stage, organized by highest likelihood of conversion towards least.
The table:
Assume Average Contract Value: this number is the average contract amount of revenues from the Closed column on Lead Data
Target Incremental Revenue: How much incremental revenue do you want? :)
Implied New Customer Target: this equals Target Incremental Revenue/Assume Average Contract Value
Conversion from Qualification to Closed: Overall funnel conversion.
Implied Qualified Lead target: the number of qualified leads you need to get to his goal
Current Qual Leads per week: the productivity of your sales development team in identifying qualified leads, weekly
Number of Weeks to Target Incremental Revenue: implied number of weeks to hit this goal
Then we’ve got a few bonuses: what are your most productive sources of leads?
And what is the visualization of your pace of lead identification, by stage?
...and that’s it! There’s obviously a lot more you can do here, but our goal is to be able to confidently underwrite your business forecast.