How important the topic of a sales plan is can already be seen from the fact that sales planning is the start of your financial plan and should not be missing in any business plan. But even later in your other life as an entrepreneur, sales planning is an important tool for you.
This planning is especially important for the development of your company. Therefore, the sales plan must be realistic and reliable because you can only do further planning in your company. You can find out everything you need to consider when planning your sales and how you can create a sales plan in the following article.
In a sales plan, you must always specify the magnitude in which you are likely to sell products or services in a certain period. Sales planning plays an important role, especially in your business plan, because it is part of the financial plan. So here in your sales plan, you have to state a quantity of how many sales you expect from your product or service after establishing your company.
3 steps to the realistic sales planning
As I said, it is very important that your sales planning is realistic. Some very many founders have a far too optimistic look, and whose ideas of future sales are far too high. But such a lofty sales plan can very quickly become a major stumbling block for you and possibly even a danger to your existence. With realistic sales planning, however, you can prevent this, and you can do it in three simple steps.
Step 1: Calculate your minimum sales
Your minimum sales you have to calculate in the first step of your sales planning. Always keep in mind that this must be at least high enough that you can cover all costs with it. However, do not forget in the planning that your existence must also be secured.
Specifically, this means that you have to know how many units you have to bring to the man or the customer each month to make a living as a self-employed person. If you are aware of this scale, you have already taken a big step forward. This is the only way to know your own goal, which you should at least set yourself. Don’t make the mistake of many other founders, and don’t just carelessly push this minimal goal aside.
Nobody will give you crooked looks if your sales planning will not be like a rocket launch initially and you plan very conservatively. It should be clear to everyone that you have a certain one at the beginning customer base, which must be created first. However, your sales plan should be designed to make a living in a real-time window without major problems.
Here again the most important things for you at a glance:
- Sales planning must always realistically be
- In the first step, you always have to calculate your minimum sales.
- You have to sell so much to cover your costs and to secure your existence.
- It is advantageous to plan your sales a little more conservatively at the beginning of your business career.
Calculation of your current sales
It should be relatively easy for you to calculate your current sales. No complicated formula is necessary for this. All you have to do is add the sum of all of your earnings. In other words, everything that you bill your customers for and what ends up in your cash register or account.
Not all sales are the same
You need to know that sales have the same meaning as revenue. But that also means that you must never equate your sales with profit. The revenue only tells you how much money you’ve made. As previously written, how much landed in your cash register or on your account. But you don’t yet know how much you spent to achieve this turnover. To do this, you first have to deduct all your costs from your sales. Only then do you have your winnings.
Step 2: Carry out an industry comparison: where are you?
You now know your minimum sales. But that does not mean that you can now incorporate this into your sales plan as a fixed variable or use it as a basis for evaluating other business measures. Rather, you first have to check your determined minimum turnover to see whether you can succeed in the market in the long term. It doesn’t help you that you have to sell a product 100 times a day for 100 euros to reach your minimum sales. And that when maybe 20 people at most get lost in your shop every day. So it would help if you compare how it looks in your industry. You can do this with a so-called industry comparison. You do this as follows:
- Get an industry report. You can either find it on the Internet or contact an advice center for founders. You can also ask the Chamber of Commerce and Industry or your house bank. There are also some of them there.
- Check out how much sales were made in this industry in this trade report. But you shouldn’t just look at a short window of time. Take a look at sales over the last few years.
- You should also look at the future forecasts in the industry report and see how prices are usually designed within your industry.
- If you summarize all these figures, it shouldn’t be difficult for you to deduce whether the figures from your sales planning are realistic.
If you discover that you have not planned realistically and that your sales are much higher than usual in the industry, you have to make corrections. Approaches can be found in your price calculation, sales strategy, or calculating your costs.
Step 3: Do market research & collect data
With the numbers and values from your industry comparison, you have now taken another step on the way to your sales planning. But even here, you have to be careful. The values determined cannot be completely reflected on your company and your start-up project. You have to take a closer look at these values using what is known as market research. This is not rocket science, and you do not need any special means or instruments for it. You can do that relatively easily. Just ask a little about your industry. Real market insiders know exactly what sales you can realistically achieve.
But the locations must also be compared with each other. It doesn’t help if you ask insiders from a city with more than a million inhabitants, but you plan your own business in a small town. It must also be clear to you that you have to spend some time on this market research.
You can also conduct surveys with potential customers. In this way, you can quickly find out what they think about your product and the possible price. This is very time-consuming, but you get a lot of very important information delivered practically for free in return. This gives the chance to make possible corrections.
- When preparing a sales forecast, do your research with insiders in your market.
- Always keep in mind that every insider is a potential competitor.
- Interview potential customers on the street and collect important input
- If you ask insiders from other cities, there must always be a comparison with your planned marketplace.
Sales forecasts for your sales planning: what is it & why do you need it?
A specific forecast of your future sales, mainly based on past economic performance, is also known as a sales forecast. Taking these factors into account, the sales forecast can be a very good indicator of your future sales in a stable market environment. However, you always have to make sure that the market does not change too quickly.
In this case, a sales forecast is not all that certain. With a sales forecast, you come into the situation that you can react very quickly in certain situations. This means that you can recognize problems earlier and better and take appropriate countermeasures. The sooner you spot a problem, the more you can take decisive action that can immediately give you a competitive advantage. It would help if you also had sales forecasts to make better decisions in the company.
- With a sales forecast, you can identify problems faster and take countermeasures sooner.
- To be able to make strategic decisions in the company, you need a sales forecast. This makes it easier to plan both goals and budgets.
- A sales forecast can be an important tool in motivating employees. This is especially true for employees in sales.
- Sales forecasts are an important foundation for your sales planning.
Factors that affect a sales forecast
A sales forecast always focuses on various factors and takes them into account. A sales forecast takes the following factors into account:
- Production capacity of a company
- currently prevailing economic climate
- current trends in sales
- Company policy in a company
- Market research
Basically, these roughly listed factors are broken down and divided into two main areas. These are the internal and external factors.
The main external factors are as follows:
- Competition: It is always possible that your competitors’ successes and failures can have a direct impact on your company. For example, if a competitor withdraws from you, your demand can increase significantly. But it can also be that many customers migrate to a competitor because he lures with great discounts. In this case, you will have to follow suit to avoid falling by the wayside.
- Changes in laws: As a rule, every change in law also shows a change in the demand for products. You have to keep this in mind when making your sales forecast.
- Changes to products: A change to a product almost always positively affects your sales, regardless of whether the product has more functions or a new tiered price is introduced. In most cases, a company increases its turnover.
- Economic situation: As a rule, you can always look forward to good or even increasing sales when the economic situation is good. The money then sits much more loosely with your customers. If the economic situation is bad, however, then a sales cycle will be extended significantly backward.
- Seasonal influence: Certain products always have their main sales at certain times of the year. Seasonal fluctuations in your sales are therefore quite possible.
- Developments within the industry: Complementary products are a good example of this, which have a common demand because they complement each other perfectly. If a product goes down in price, the demand for it also increases for the other product. For example, just take the example with computers and software.
- Developments on the market: You always have to keep an eye on such developments. The customer can have a strong influence on the market through his purchasing behavior and his demand for certain products. It is therefore important that you always have certain trends in mind.
In addition to external factors, internal factors also play an important role in the sales forecast and thus in your realistic sales planning. These factors are as follows:
- Changes in company policy: Changes in company policy, such as introducing new commission models or commission claims, can significantly impact employee motivation. This can go in both positive and negative directions.
- Personnel decisions: You usually have to record a loss in sales if you do not adequately replace employees who have left sales promptly. On the other hand, you can achieve an increase with a higher workforce in your sales department.
- Change responsibilities: The sales forecast will show a bit down if you change responsibilities in your company. Well-established employees in new positions need some time to get used to the job.
Your sales planning in the business plan
In your business plan, sales planning forms the start of your financial plan as part of it. At this point, you indicate how many services or how many products you want to sell in a clearly defined time window after your establishment. Here, too, you mustn’t plan too euphorically.
It is better to set the sales planning in the business plan a little more conservatively and to be able to deliver the figures afterward. This is all the more important because sales planning is a part of your financial plan, which is an integral part of your business plan.
In other words, your business plan represents a unit. Only everything together in the financial plan makes sense, and the context can be understood. This is why your sales planning is so important because everyone can only understand the company’s sales planning figures if the following conditions are met:
- It can be seen what the customer benefit is
- You can, of course to your plan customer acquisition show
- You show what your customer loyalty measures look like
- Everyone can understand your pricing and pricing
- You describe in concrete terms how you want to position yourself in the market
- A clear sales structure and a clear sales structure can be seen
With your business plan, please always make sure that the figures you have given in your financial plan also match what you have written in your business plan. Under no circumstances should these passages of text contradict the figures.
In summary: You should be able to distinguish between these terms
If you are creating a sales plan, you should also know what meaning certain terms have in this plan. Here is a brief overview for you:
- Revenue: This arises when you record the units sold in a defined time frame and take the stated price into account. Sales planning is, therefore, nothing more than a forecast of future sales and the resulting income. The term revenue is also very often referred to as sales.
- Sales: You call the number of units sold as sales. This is defined in a specific time window.
- Gross profit: The term gross profit is always used in connection with products. If you subtract the cost of purchasing from your sales, you get your gross profit.
- Profit: Many always think that sales equal profit. But this is a fatal mistake. To be able to determine the profit, you need your gross profit as a basis. Further costs such as personnel costs, rent, etc., are deducted from this. The sum of this calculation results in your profit.
It would help if you always stayed realistic when planning your sales and rather plan something conservative. For many founders, sales planning is an important part of the financial plan and thus also for the business plan. With realistic sales planning, you can also better assess your own company and thus lay a foundation for successful negotiations with the bank, should you need a loan.
To create good and realistic sales planning, you also need the instruments market research and industry comparison. When making your sales forecasts, you must always look to external and internal factors that pay attention. A good example is the seasonal fluctuations, which often need to be taken into account. An Excel template is ideal for creating your sales planning.