Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Active PrActice UPDATEs                                                                 NOveMBer 2011                     ...
Effective sales planningCreating a sales                                Specifying the types of product each              ...
Upcoming SlideShare
Loading in …5

Plummer Parsons Chartered Accountants Effective Sales Planning November 2011


Published on

Plummer Parsons Chartered Accountants Effective Sales Planning November 2011

  • Be the first to comment

  • Be the first to like this

Plummer Parsons Chartered Accountants Effective Sales Planning November 2011

  1. 1. Active PrActice UPDATEs NOveMBer 2011 plummerparsons ap-sf-nov2011Effective sales planningThe ability to predict realistic sales levels is essential for a business.Not only does it enable you to identify and deal with any possiblecashflow issues, it also makes it easier to plan for growth, to exploit Business UPDATEopenings in the market, and to manage operations and production.A sales forecast provides a business with just But don’t limit your analysis to the income • Calculating the effect of any plannedsuch a capability. It sets out the level of sales generated by those sales. Take a look at changes to the business (if you arethat a business can reasonably – a key word, the volume too. This will give you vital going to be putting up prices, forhere – expect to achieve. information about possible production example, you will need to examine levels in the future, and about the costs that the impact this will have on both sales“The more detailed a forecast, the such operational matters as delivery, stock values and sales volumes)more accurate and practical it will be.” holding, and employment resources will • Looking at the effect of staffing changes involve.Preparing the ground (will you be investing in more sales staff • Assessing the impact of any changesTo create an accurate and working sales Accounting for changes to the products or services yourforecast, a business needs first to assemble in circumstance business offers (some new productssome basic information covering past sales. may take time to achieve their potentialThis information should include: It is unlikely that the months of the year ahead sales levels; some products may be will exactly replicate the year that has gone. approaching the full limit of their sales• The numbers of customers gained and A business, therefore, must make certain, reach; while sales of other, older lost in the last year well-informed estimates, and assess any products may already be on the point• The (seasonal) periods (if any) when possible changes to circumstances that will of falling). sales rise or dip affect the volume and value of sales. Such• The value of sales made to each estimates, based on both past sales and What about seasonal trends? Factor in customer on any realistic ambitions for growth your surges and falls in demand. This will be• Specific product or service sales that are business has, will create the framework for critical when it comes to the delicate growing, flat-lining or declining the sales forecast. balance between income, paying supplier bills and stock holding (if a sales forecast• The impact of national economic There are a number of areas where you isn’t accurate you could find yourself with circumstances must take a balanced view of probable too much stock on your hands but without• Cyclical purchasing trends developments. These include: the customers to buy it).• One-off events (bad weather, for • Judging market trends (is the overall example) It is important to assign a definite value market likely to grow or contract; is your to each of these assumptions if the sales• The impact of particular measures that share of the market set to expand or forecast is to be meaningful. have been taken to push sales, such as decline?) a marketing campaign.18 Hyde Gardens East Sussex BN21 4PT01323 431 200
  2. 2. Effective sales planningCreating a sales Specifying the types of product each customer may purchase will give a indication of how well (or not) the business is performing. It will also allow you toforecast business the opportunity to predict make adjustments to operations and to possible supply issues and anticipate formulate plans – a boost to marketingStep one in drawing up a sales forecast both potential shortages and gluts, and to spend, a switch to alternative sources ofis to estimate market demand. Market achieve a better balance between stock custom, a change in pricing policy – fordemand for a product or a service is build-up and sales. correcting any downturn or for exploitingthe total volume that would be bought any customers, in a defined market or It is important to bear in mind that a salesgeographic area, and in a defined time forecast is not a sales target – a figure It is vital also to consult with your salesperiod. aimed at defining, or encouraging, the staff as you draw up the forecast. sales effort over a given period – or a Allocating them targets they know to beStep two is to work out the share of sales budget – a figure used to cover impractical will be demand that a business actually current purchasing, production and cash- And for an objective viewpoint, why notcommands, be it on a national, regional flow decisions. get the advice of your accountants onceor local scale. For example, if a local the forecast is complete – this can offer abicycle firm believes that the overall The secret is to focus on the sales you very useful counter to any rosy-tinted (orbicycling market in the town in which it actually believe you will make rather self-effacingly modest) assumptions on youroperates is £400,000 and its income is than on an ambition for sales. Otherwise part.£80,000 per year, then it has £400,000 the forecast becomes a marketing plan,divided by £80,000 or 20 per cent of establishing goals instead of concentratingthe market. on the specifics of sales based on particular circumstances. Remember thatStep three is to establish an expected level the purpose of the forecast is to help youof business sales based on a marketing gauge sales on a month-by-month basisplan. Will, for instance, that bicyclingbusiness be developing its website; will it and to help you control cashflow. summarybe focusing on one product line (off-roadbikes) at the expense of another (thin- Realism Sales forecasting is crucial to a business. It is both an aid to growth and an earlywheeled track cycles); will it be targeting It is absolutely essential to make sure warning sign that problems need toincreasing consumer awareness of ‘green’ that every figure is based on realistic be addressed. The watchwords aretravel; will it be attempting to spread its assessments and not on projected or realism and a willingness to adapt to thesales across a broader area of the year; hoped-for increases in sales. While information the forecast may be givingwill it be dropping its prices in order optimism has its place, over-estimation of you about the performance of yourto lessen the impact of dead stock; will sales will end up burdening your business be changing its stock management with expectations that could harm, notso that the shop is either extending or enhance, its performance.contracting its range; will it be questioningits dependence on the sales of children’s For this reason, all the figures should takebikes? into account what the business is capable of achieving in terms of productivityThe sales forecast and capacity. If you are not planning on taking on more staff, don’t assumeThe more detailed a forecast, the more that productivity will rise by a significantaccurate and practical it will be. amount. If you are not going to invest in a new plant, don’t assume - whatever theIt can help, for example, to separate level of demand in the market - that outputproducts out by market, area or customer. is going to outstrip your firm’s ability toIt is also very useful to calculate the manufacture.percentage chance of any given saleactually occurring, as this will have an Once the sales forecast is determined,impact on its predicted value. Bear in try to avoid the temptation to tinker with If you would like our help in constructingmind that the likelihood of making a sale the figures too much (although some the sort of sales forecast that will give yourto an existing customer is higher than adjustments may need to be made if business the best opportunities for success,converting a new customer, so the chance predictions appear to be off the mark). please don’t hesitate to contact us.of the sale happening in the former case is Comparing actual sales figures withcorrespondingly higher too. the forecast will give you an accurate