Stop Guessing, Start Planning: The Simple Sales Math Your Business is Missing

We’ve all seen it: the salesperson with a barren pipeline, wondering why they’re falling short of their goals. A recent popular blog post rightfully pointed out that an empty pipeline is a clear indicator of struggle. The author’s “brutal math of sales success” – more touches lead to more conversations, which lead to more opportunities and, ultimately, more deals – is a fundamental truth in sales. Activity is undeniably crucial.

At i5 BioPartners, we love to keep things simple, but we also believe that for strategic planning, the math needs a bit more refinement. It's not just about being busy; it's about being effective and understanding precisely what your activity needs to generate. Making critical commercial decisions, like how many resources are truly needed to hit your plan for the next six to twelve months, requires a deeper, data-driven approach.

It’s about having the right data to support your decisions. Here’s a simple, yet slightly more complex, mathematical equation to give you that clarity.

Step 1: Know Your Baseline - Run Rate vs. New Business

Before you can build a plan for growth, you need to understand your starting point. The first step is to clearly distinguish between your existing business and the new business required to hit your targets.

• Run Rate Business: This is the recurring revenue you can reliably expect from your existing customers over the next 6-12 months. It's your foundation.

• New Business Target: This is the gap between your overall revenue goal and your run rate. This is the growth you need to actively generate.By separating these two, you can focus your resources far more effectively. Your new business target is what your sales team needs to build their pipeline around.

Step 2: The Equation for Predictable Growth

Once you know your new business target, you can use a more nuanced formula to understand the specific activities required to achieve it. This moves beyond generic activity metrics and ties your team’s efforts directly to revenue goals.

Here is the equation:

$$\text{New Business Target} = (\text{# of weekly calls with a new account}) \times 48 \times (\text{average new account revenue in the first 12 months}) / (\text{sales cycle ratio})$$

Let's break that down:

• # of weekly calls with a new account: This is the primary activity metric for your sales representatives focused on new business. It’s a measure of their proactive outreach.

• 48: This represents the number of working weeks in a year. We use 48 instead of 52 to account for vacations, holidays, and sick days, making the forecast more realistic.

• Average new account revenue in the first 12 months: Not all new deals are created equal. Understanding the typical revenue a new client generates in their first year is crucial for accurate planning.

• Sales Cycle Ratio: This is a key variable for businesses with sales cycles shorter than a full year. It helps to properly weight the revenue contribution of deals that close more quickly. To calculate it, simply divide your sales cycle in months by 12.

  • Example: A 1-month sales cycle has a ratio of 1/12=0.0833.

  • Example: A 6-month sales cycle has a ratio of 6/12=0.5.

From Activity to Insight: The Power of Data

The original blog post rightly states, "The math never lies." We agree. But by adding these layers of specificity, the math tells a much richer story. It transforms a simple directive to "make more calls" into a strategic plan.

When you have this data staring right at you, your perspective on the business changes. You can now answer critical questions with confidence:

• Do we have enough salespeople to hit our new business target?

• Is our average new account revenue high enough, or do we need to target larger deals?

• Can we accelerate our sales cycle, and what impact would that have on our revenue?

This is the core of the i5 BioPartners philosophy. Successful commercial decisions are not about gut feelings or simply demanding more activity. They are about having the data to support your strategy, to allocate your resources wisely, and to build a predictable engine for growth.

So, try it out. Run the numbers for your own business. We challenge you to view your business in a different light once you have the data staring right at you!