Business Blog No. 11- Strat Planning – Sales Budget Part 2

This week is the second part of a 2-part topic focussed on developing a Sales Budget for the next financial year.

Last week we put together a full year sales forecast for the current financial year and then a first cut sales budget using the forecast as a starting point and factoring in base growth and price assumptions.

Now the objective is to extend that first cut sales budget into something you might call a final draft Sales Budget. As always, if you need some help or guidance on the material herein, don’t hesitate to call me on (03) 9554-3128.

You might recall we developed a Sales and Marketing Strategy a few weeks back. Now it is time to feed the financial targets developed from the initiatives contained in your Sales and Marketing strategy into your Sales Budget.

At the very least, you should be targeting growth greater than the market (so you gain market share) and budget for price increases higher than inflation. Remember you are more a ‘price-setter’ than a ‘price-taker’ because you are now differentiating your business and marketing yourselves as providing value beyond price.

Extending the spreadsheet we created last week (see Figure 1 below), let’s add three more columns represented by Column F. In these columns enter the increase in volume and price beyond the industry base due to the influence of your Sales and Marketing Strategy. Multiply the new volumes by the new price to create a ‘second-look’ Sales Budget.

Beyond the broad market share and price effect assumptions of your Strategic Plan, you should also have identified additional new innovative products/services or new markets or targeted new customers. These need to be added into your sales budget, volumes and prices, above and beyond our ‘second look’ Sales Budget. Let’s add some new rows to the spreadsheet under column A for each of these initiatives and attach budget volumes, budget prices and budget sales dollars for each. Include these items in column G of the spreadsheet (refer Figure 1 below).

As an aside, are you budgeting any export sales? If so, you will need to make some assumptions about exchange rates. Speak to your business banker and ask if they can provide you with the banks forecast exchange rates. Use these to calculate your export sales budget back into Australian dollars.

Assuming you have captured and added in all the initiatives from your Sales and Marketing strategy, adding column F to column G of the spreadsheet gives you your ‘final draft’ Sales Budget, represented by column H. It is not a ‘final’ Sales Budget until the full budget is complete but you now have your starting point. A Sales Budget is the key part of a business’ overall budget and is the first stage in the budgeting process.

spreadsheet blog 11

Use this week to further develop your Sales Budget from ‘first-look’ to ‘final draft’ for the next financial year using your Sales and Marketing Strategy as a pillar of the budget and to provide a sound foundation for business success.

Come and visit us at our stall at the Smart Manufacturing 16 Expo on Tuesday May 17.

Smart Manufacturing logo may 2016

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