You probably have come across with more than one business success story. We all find delightful to read those cases of people who came up with the million-dollars idea; or that one of the renegade who in the pursuit of his dreams reached glory with more tenacity than experience.
Inspiring stories, all worthy of admiration that nevertheless; are significantly less than those of failure. So, the moral here is simple: Enthusiasm is perfect, but it isn’t the only key to success. In other words, business success doesn’t happen at random, and you have to carve out your own path towards it.
Even in those admirable cases where tenacity, faith and self-confidence highlight; there is always a common point: Organization. Yes, the protagonists always account how business themselves forced them to make a stop along their way to success to rethink and organize their strategies.
Sales Budget Process, why for?
As we said before, the common point in stories of success is organization. In other words, long-term business success is always planned; and the best way to achieve it is through budgeting.
Same, part of the visualization process to focus on business success lies in numbers. It becomes pretty clear: Having a goal expressed in numbers helps you to focus.
Now, the next question here is, where do you start budgeting? The truth is that all areas of the company are subjected to the budget process. Let’s see how to organize the budget process to improve your sales and making your way towards business success.
The Budget Process as a tool for Sales Management
Considering that sales budget is essential to land the business objectives in constant numbers; from its correct conception it will emanate sales and management strategies to guarantee the commercial success of your company.
Then, the budget process is a guide that compiles estimates and sales projections that dissipate the doubts about the profitability of your company. In addition, it serves as a schedule and chronogram to measure the true potential of your economic scopes.
In summary, the budget process for your sales department determines the actual liquidity of your business; its financial viability; establishes guidelines to adjust your levels of production and distribution of goods and services and meeting demands; calculates the sales potential of the business; and it helps you detect areas that require improvement.
So, to make a realistic and successful sales budget, the first thing you should do is setting your sales goals in realistic numbers of what you expect to achieve in a given period of time.
Following, assign them in these items to establish wise and accurate objectives:
- Sales on credit
- Cash sales
- Sold Items
- Distributed/Returned Items
- Staff Expenses (Sales and Distribution)
- Purchasing stock
- General expenses
- Maintenance expenses
Then, follow this:
- Make an inventory of all the products or services you sell, from the most to the least demanded. This exercise will make you establishing priorities and understanding your potential and financial limitations.
- Classify and measure them in both, value (monetary sign) and real quantities (inventory), and using the items described above.
- Estimate their value taking into account depreciation; adjustments for inflation and relevant factors.
Other considerations to make a budget process that improves your sales
Meet with your managers and listen what they have to say
Although their areas of interest may be different from sales, they are experts regarding the activities and tasks in their domains. Your part will be assigning value and economic projection to each of one of those activities and tasks.
With these data, you start to organize the budget process while detecting your real situation in financial terms. And with both, you will be able to establish business strategies to enhance the areas of improvement and investment.
Dream, but down to earth
For this reason, it’s always a good idea to review the historical records of at least two (2) financial periods prior to your fiscal year in order to make realistic forecasts. Take your time to analyze variations and fluctuations of your market to clarify the general picture.
Also, your budget process must take into account advertising and marketing expenses to determine if your business objectives are growing, or quite the opposite. All these elements help you to clarify any doubts for creating realistic business goals.
Take into account the market variations
As it occurs in population movements, sales suffer highs and lows depending even on the seasons and their characteristics. For example, if you sell umbrellas, your sales will increase considerably in autumn.
In other words, sales trends change depending on social, environmental and economic factors that you must also take into account and understand to take advantage of them. Organize a promotion schedule; discounts; settlements and product renewals that help you project your budget process.
Know your customers thoroughly
Among the items already explained in The Budget Process as a tool for Sales Management above, they count the costs for customer service and distribution of merchandise. In this sense, it sounds very logical to classify your customers and assign them a special item to keep them always happy.
Also, segmentation should consider new customer niches that may emerge from a new service or proposal. Same, take into account some concessions such as discounts and promotions for your most loyal customers. All in function of keeping under control all the aspects related to sales. And speaking about it…
- Implement a flexible pricing policy
By the moment of starting the budget process, focus a lot on that final number that you want to achieve in sales. With that number in mind, we do the math and set stipulated prices based on individual costs for the sales volume; then check the closest competitors to evaluate the value of similar products and services; and we observe the variations of the particular market to which the company belongs.
While this process is logical and perfectly plausible, it is even better to add a percentage as a margin of profit for contingencies. With them, you can maneuver and consider other marketing worthy strategies.
Assign an item for innovation
Finally and given that we live in a time of constant technological innovation; you must always take into account consequences of methodology; infrastructure and personnel involved in this change. Likewise, each one of these aspects represent an operating expense that we must take into consideration.
In this category we find:
- Acquisition of automated tools for sales, inventory, etc.
- Improvement of the physical infrastructure of the company to accommodate assets and devices for production.
- Hiring specialized professional services; updates and new hirings.
- Change of raw materials and supplies. Transfer prices are also included here.
- Reserve capital for contingencies.
- Redesign of products and services, alternative means of distribution and delivery and expansions.
As you can appreciate, business success doesn’t happen at random. Covering all these aspects helps you reinforce and crystallize the dream you had when you first started operations.
The budget process substantially improves the sales of your company because it works as a management tool to measure the impact of all your operations in real numbers. If you want to automate all these tips and procedures in one place; we have both, tools and the staff to carry it out. Learn more here.