What is a sales pipeline? A plain-English guide for business owners

6 min read · Garner Desk

"Pipeline" sounds like sales-team jargon. It isn't. If you run a business and people ask you about work, you already have a pipeline. It's just stored in your head and your inbox, which is why some of it leaks.

The simple definition

A sales pipeline is a list of every piece of work you might win, sorted by how close each one is to a yes.

That's it. It answers three questions at a glance:

• Who am I talking to right now?
• Where is each conversation up to?
• Who do I need to chase this week?

The stages a small business actually needs

Big companies have pipelines with a dozen stages. You don't need that. For most service businesses, five is plenty:

The test of a good stage: everyone in it needs the same next action from you. If a stage doesn't tell you what to do next, merge it with another one.

Contacts vs deals

This trips people up. A contact is a person. A deal is a piece of work you might win from them. One past client might have three deals over the years. Your pipeline tracks deals, so you can see what's actually in play, not just everyone you know.

Why it's worth the effort

• Nothing falls through the cracks. Every open conversation is in one place, with a next step.
• You see where deals stall. If everything gets stuck at Proposal sent, the problem is your follow-up or your pricing, not your marketing.
• You can plan. Ten deals at Proposal sent tells you roughly what next month looks like.

The 20-minute weekly routine

A pipeline is only as honest as the last time you updated it. Every Monday:

1. Move deals forward. Update the stage on anything that changed last week.
2. Find the stale ones. Look for anything untouched for 14 days or more. Either follow up or move it to Lost.
3. Set this week's actions. Every open deal should have one next step and a date.

Signs your pipeline is lying to you

• Deals sitting at Proposal sent for months. Those are almost certainly lost.
• No deals marked Lost. Everyone loses deals; if none are marked, the list isn't being kept up to date.
• Everything is at the same stage. Usually means the stages don't match how you really sell.

Spreadsheet or software?

A pipeline can live in a spreadsheet with a Stage column, or in a CRM that shows it as a board you drag deals across. Our guide to spreadsheets vs CRMs helps you choose, and our free HubSpot setup guide shows how to build one.