![]() This is done by taking into account both internal and external factors that will determine and affect sales numbers throughout the budget period. You now understand exactly what a sales budget is, but you’re probably still wondering how do you prepare a sales budget? One of the most important things to keep in mind in preparing your budget is that it is realistic. How to Prepare a Sales Budget A step-by-step breakdown for budgeting sales Put simply, the sales budget shows the desired direction and goal of your company over the course of a year while the sales forecast shows how likely your sales team is to stay on track and reach that destination on time. Also, because it is broken down into shorter periods, a sales forecast accounts for seasonal sales trends much more than you would be able to see in an annual or even quarterly sales budget. While a sales budget will look at long-term, annual numbers. Alternatively, the sales forecast is determined after the sales budget has been set and breaks down what exactly is forecasted to be sold during specific periods.Ī more specific difference between the two is that sales forecasts are more often structured for smaller periods of time like per week or month. ![]() The sales budget will be put together first. One that summarizes the total expected revenue from all services or products sold. Your company’s sales budget is a quantified expectation of the sales numbers that will be achieved during a given period. But, it is important to understand that they are in fact different and exactly what the differences are between the two. So much so that they are frequently confused as being the same thing. Sales Budget vs Forecast: What Is the Difference?Ī sales budget and a sales forecast are two tools that are very similar to each other. Much less energy will be wasted on non-sales driving activities. ![]() When it comes to efficiency, with sales managers able to assign clear and specific goals, driven by the sales budget, sales reps will be more motivated to continue to meet and exceed their metrics. This will then help the company as a whole continue to grow economically and expand. Sales reps that are able to visualize progress towards sales goals through data visualization are more likely to improve their sales numbers. Tracking and visualizing specific goals has a significant positive impact on sales productivity. Thus giving your sales reps an easily digestible and motivating number to strive to meet or exceed. Allowing your sales team to create specific monthly or weekly goals. For example, in looking at a completed sales budget for the year, the number of sales per fiscal quarter can then be broken down further into actionable sales goals. The focus of a sales budget is solely on depicting how much money will be coming in during the budget period.Ī sales budget is invaluable when it comes to both setting sales goals and increasing the efficiency and productivity of your sales team. ![]() Keep in mind, although they are an important part of your company’s master budget, a sales budget usually does not include the expected costs of conducting sales efforts. Such as the marketing, production, direct materials, or master budgets. The revenue numbers from your sales budget will help in preparing most of your company’s other budgets. ![]() In many cases, the sales budget is the first step in budgeting and financial forecasting. These will help you determine an accurate estimation for what the expected number of units sold will be during the budget period. Several other factors, like your past sales data and current market trends, for example, are an important part of the sales budget process. This is achieved by multiplying the number of units expected to be sold by the selling price. More specifically, what does your sales budget determine? Put simply, a sales budget determines your total expected sales revenue during a specified period. Here is a breakdown of what a sales budget is, the difference between a sales budget and a forecast, and the step-by-step process of budgeting sales. The more accurate your sales budget, the more effectively the company can be managed. Your sales budget is an essential component in helping your company remain profitable, especially in tighter times where every penny counts.Īs a whole, the sales budget (and the process of creating it) acts as a guide, helping direct your company and its sales team over the rest of the month, quarter, and year. From tweaking sales processes to deciding how many new sales reps to onboard and everything in between. An effective sales budget is critical in helping drive many other important business decisions affecting your sales team and your company as a whole. ![]()
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