The Secret to Sales Success
SALES BUDGETS – The secret Keys to Success in Sales!
I am in the process of producing a sales and marketing budget for a client at the moment. I know from past experience that just having a budget of achievable monthly sales targets that the staff can aim for and an action plan will give the organisation direction and motivate the staff. Just producing the budget seems to create a self fulfilling prediction.
I know that they will achieve the objectives we set because Sales Budgets work!
Big organisations invest a lot of time and thought into producing “Budgets”!
Most of them will have started the process in January department by department and would have been well down the track by the end of March – Well before the actual end of year on the 30th of June.
That meant that they would have been making educated guesses about the sales results and projected spending, for the last three or four months of the financial year.
Many small and even medium size businesses, in my experience, either don’t have any budgets at all or have a vague idea in mind that they want to get X% more sales.
Have you done yours yet? If not you are missing a great opportunity.
Big organisations do have the luxury of sufficient professional staff to invest time in the budget process rather than being caught up in day to day crisis management. But you can do it yourself. It’s the process of coordinated planning that gets results.
So if you want your business to move forward during the 2016 / 2017 financial year you have to start right now. All you need is most of last year’s monthly sales and expenditure figures on an Excel spreadsheet and commitment and you are ready to start.
HOW DO YOU PRODUCE A BUDGET FOR YOUR BUSINESS?
1. DECIDE WHAT DO YOU WANT TO ACHIEVE
Budgeting starts with your profit, sales and business objectives and ideally a business strategy / plan. What do you want to achieve during 2016 / 2017? Be sensible. Your objectives have to be realistic and not pie in the sky.
Let’s assume that you want to increase your profit by 40% and on current margins that may mean you estimate you will need to make 20% more sales and that this is achievable without more staff or capital equipment. That is your objective!
2. WORK OUT WHAT YOU HAVE TO DO OR SPEND TO GET THE RESULTS
Now you have to ask yourself how you will be able to make 20% more sales in the market you are in. Do you have to get 20% more customers? Could you sell 20% more to your existing customers? Could you introduce more products to sell to your customers? Could you increase your distribution area or sell on-line? Do you have to advertise more, set up a promotional program, train your staff to cross sell etc? With a bit of thought and effort it is achievable isn’t it!
3. SET UP AN EXCEL SPREADSHEET FOR YOUR SALES BUDGET
Set up a sales budget on an Excel spreadsheet with monthly columns and total sales, then set up rows across for sales by product / market type or division, leaving a space below each row for the Sales Budget and put in the monthly sales totals for last year.
Show a row with the total actual sales for each month and below that the total budget for each month.
4. SETTING THE MONTHLY SALES BUDGET FIGURES
To do this you have to work backwards. So you start by typing in your total sales budget which we know is 20% higher than your total sales last year. Now add 20% to each of the total sales figures for each of your products or divisions. Then adjust the figures so that those which have most potential for growth have bigger budgets and those with less potential smaller budgets while still adding up to your total sales budget.
The next step is to allocate monthly targets for each product or division. This means that you have to share the budget increase for that product or division between each month of the year.
Two factors make this complicated. The first is that growth in sales is likely to be gradual and so it is unlikely that you will get a big increase in sales in the first months of the financial year and so have to start with smaller increases and work up to larger ones to end up with your total sales budget for that product. The second is that some months have historically low sales. If you are closed over Christmas then allow for that.
When you have completed this for all products / divisions you will now have a Sales Budget!
5. MAKING IT WORK
Producing a sales budget will not make extra sales happen!
You and your staff have to be committed to achieving the sales result for the year. As the business owner / manager you have to demonstrate your commitment as the leader by measuring progress on a daily, weekly basis and providing support where necessary. Most important you need to reward all the staff as monthly sales budgets are achieved.
The sales budget is the starting point for real results in sales and profit for the next financial year. It is not hard to do and will both make you think more deeply about your business and give you the opportunity to motivate your staff.
Feedback and rewards build champion teams! I have a chapter in my book called “Creating a Sales Supportive Culture in your Business”
Contact me and will send a copy to you if you are interested.
Don’t delay – start your Sales Budget TODAY!