Knowing this revenue number can help you greatly at time of company sale
When you go to sell your business one day, an acquirer is going to ask you what the growth outlook is for your business. You are certainly going to have an answer for them and you will want to be able to convey it in a way that gives them great confidence in your outlook. To give them this confidence, you’ll want to show them that you have a good revenue forecasting model/discipline in your business and it includes regularly identifying what your revenue “go get” is. When they see this type of discipline, they will be more confident in your revenue outlook for factoring into the valuation they will place on your business.
As part of your revenue forecasting, the Go Get revenue is that revenue which you still need to get in order to deliver on your full year revenue target. A way to think about it is:
- Take your Year-to-Date revenue (that which you’ve already invoiced for in the year)
- Add to this number your order backlog (Purchase Orders you have in hand but have not yet fulfilled on or invoiced for but you will be in this year)
- Add to these two numbers the value of new orders that you confidently believe you will secure as a result of current proposals in the hands of potential customers and proposals you are highly confident customers will be coming to you for yet this year. For the purpose of forecasting this year only, just include in this number the value of orders you believe will be fulfilled and invoiced in this year.
- Total these 3 numbers above
- Take this total and subtract it from your full year revenue budget or target that you set for the full year
The difference is your Go Get revenue. Meaning, you don’t yet have clear line of sight or very high probability awareness as to where this revenue amount is going to come from and yet you still need to find it to make your revenue target for the year. The smaller this go get number, the much more likely you are to deliver on your full year revenue. The higher this go get number is, the more aggressive selling steps your team may still need to take in order to deliver on your budget for the year. Discussing this number will help facilitate good strategic selling deployment with your team.
This basic concept can help you build a strong revenue forecasting discipline in your company. Building such a discipline will help you one day build the confidence of your future acquirer because they will see that you have a good internal revenue forecasting tool and discipline that bridges to how you then deploy your sales team to deliver on your revenue targets. This will encourage them that under their ownership of the company, this discipline is in place and will increase the likelihood that your team knows how to deliver on its revenue targets and this confidence will factor into the valuation they place on your company.
