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Sales Budget

Sales Budget

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Sales Budget

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A sales budget is a valuable tool that gives a direction to a company with regard to its targeted
sales. It helps to improve the proIitability oI a company. The company makes a Iinancial plan
with regard to the amount oI goods and services that it plans to sell in a year and the price at
which the goods and services are to be sold. This plan is its sales budget.

Sale Department expense Budget:
1he sales deparLmenL wlll alm Lo ellmlnaLe mlscellaneous expenses LhaL relaLe Lo lLems such as flllng
Lechnlquesţ accounL managlngţ Lravel arrangemenLs wlll be changed such as cheaper hoLel roomsţ Lravel
accommodaLlonsţ and hlghly reduced Lravel lf posslbleţ llmlLed overnlghL Lravelţ more drlvlng and less
flylngŦ Also expenses relaLlng Lo Lralnlngţ supervlslonţ supporLţ and Lechnology wlll be alLered or posslbly
ellmlnaLedŦ

AdmlnlsLraLlve expense budgeLť
O anticipates administration expenses Irom the Sales and Inventory/Cost oI Goods
ManuIactured budgets
O may include the budgets oI various individuals or groups involved in administration
O may be combined with the Selling Expenses Budget
O administrative expenses portion contains mostly Iixed items (executive salaries and
depreciation on company oIIices)
O The administrative expense budget, also called the sales, general and administrative
expense budget (SG&A) is vital Ior measuring the success oI any company. The more
support a company provides Ior marketing, compensating the sales Iorce, Iinance,
accounting, legal and similar Iunctions, the more prepared it is to make the best decisions
about company operations. In order to sell the SG&A budget to top management, you
need to illustrate the connection between administrative Iunctions and sales.


Production department budget:

A deparLmenL LhaL ls dlrecLly lnvolved ln manufacLurlng producLsŦ Lxamples are Lhe machlnlngţ flnlshlngţ
and assembllng deparLmenLsŦ
8evenue expenseť
A secLor of Lhe company LhaL ls responslble for manufacLurlng producLs or servlcesŦ

8evenue expenses are 8evenue lncomes are Lhose lLems whlch are relaLed wlLh Lhe maln commerclal
acLlvlLy(les) of a buslnessŦ

Lxpenses and lncomes can broadly be aLLrlbuLed Lo Lwo groups namely revenue and caplLalŦ When a
buslness pursues lLs maln ob[ecLsţ lL lncurs expenses Lo generaLe lncomeŦ 8oLh Lhe expenses and
lncomes ln such a case are of revenue naLureŦ Poweverţ when a buslness parks / lnvesLs Lhe funds ln lLs
nonŴmaln ob[ecLs or commerclal acLlvlLlesţ and earns lncome ouL of such lnvesLmenLs by lncurrlng some
expenses Lhereon Ŵ Lhey are noL revenue lncomes and expenses as such lLems of expenses and lncome
are ouLslde lLs maln buslness ob[ecLs Lo pursueŦ

Iorecast|ng ls Lhe process of maklng sLaLemenLs abouL evenLs whose acLual ouLcomes (Lyplcally) have
noL yeL been observedŦ A commonplace example mlghL be esLlmaLlon for some varlable of lnLeresL aL
some speclfled fuLure daLeŦ
Sales lorcasLť
Prediction oI the Iuture sales oI a particular product over a speciIic period oI time based on past
perIormance oI the product, inIlation rates, unemployment, consumer spending patterns, market
trends, and interest rates. In the preparation oI a comprehensive marketing plan, sales Iorecasts
help the marketer develop a marketing budget, allocate marketing resources, and monitor the
competition and the product environment.
Sales Forecasting is the process oI estimating what your business`s sales are going to be in the
Iuture.
Sales Iorecasting is an integral part oI business management. Without a solid idea oI what your
Iuture sales are going to be, you can`t manage your inventory or your cash Ilow or plan Ior
growth. The purpose oI sales Iorecasting is to provide inIormation that you can use to make
intelligent business decisions.


(Sales lorecasLlng) Lhe process of esLlmaLlng fuLure sales for your buslnessŦ lnvenLory managemenL and
cash flow are dlrecLly dependenL on accuraLe forecasLsŦ lorecasLlng for new buslnesses requlres
research of Lhe LargeL markeLţ compeLlLorsţ and Lradlng areaŦ
a|es Iorecast Ŵ A predlcLlon of whaL sales wlll be achleved over a glven perlod (usually from a week Lo a
year)Ŧ Sales managers requlre sales people Lo forecasLţ ln order Lo provlde daLa Lo producLlonţ
purchaslngţ and oLher funcLlons whose acLlvlLles need Lo be planned Lo meeL Lhe sales demandŦ Sales
forecasLs are an essenLlal performance quanLlfler whlch feeds lnLo Lhe overall buslness plan for any
organlzaLlonŦ

Sales Þlannlngť a|es Þ|ann|ngť 1he process of deLermlnlng Lhe overall sales plan Lo besL supporL
cusLomer needs and operaLlons capablllLlesţ whlle meeLlng general buslness ob[ecLlves of proflLablllLyţ
producLlvlLyţ compeLlLlve cusLomer lead Llmesţ and so onţ as expressed ln Lhe overall buslness planŦ

1he assessmenL of Lhe currenL slLuaLlon ln a sales reglonţ Lhe seLLlng of ob[ecLlvesţ Lhe formulaLlon of
sLraLegles and LacLlcsţ and Lhe esLabllshmenL of conLrol and evaluaLlon proceduresŦ

Sales Plan
A sales plan contains the objectives of the sales process, the responsibilities and incentives of those
involved in the sales process, and the resources that will be available or used for the sales process. The
sales plan usually includes objectives (sales targets), assigned sales representatives, what products they
are authorized to sell, list of sales roles, responsibilities, and territories.
This diagram shows how a sales process can be managed. !n this example, the sales process is divided
key steps that can be defined and managed. The prospecting step is used to identify new customers or
expanded needs for existing customers. The qualification step is used to determine how many of the
prospects are qualified (real candidates) for the product or service. The interest assessment step is used
to determine how motivated the prospect is to take action to satisfy their need for the product or
service. The fact·finding stage is used to determine who are the decision makers and what steps are
necessary to complete the sale. The close involves the consolidation of the previous steps (coordination
of motivated decision makers) so purchases can result. The progress between each step can be tracked
and optimized. !ncluded in the chart is an example activity time sheet showing that step may require
different levels of time commitment and that the allocation of resources (time for each salesperson) is
usually distributed along each step.



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