How to Prepare a Sales Budget

by Linda Ray; Updated September 26, 2017

A sales budget is used as a guide in the overall business planning process to discern how much in sales is expected and what kinds of profits will be garnered from those sales. The sales budget is typically the first stage in preparing a master budget for a company. A sales budget should focus on the goals of the company while presenting a realistic picture of the financial impact of the sales.

Items you will need

  • Market information
  • Previous sales figures
Step 1

Gather information from previous time periods that reflect the full spectrum of sales. Look for patterns of when sales were up and when they were lower. Many circumstances, such as holidays and weather events, can predictably affect the sales volume. Consider the size and experience of the sales force and the amount of time the company has been in business to uncover patterns that will help with forecasts.

Step 2

Research the current market, including the competition. Find out what new competitors have emerged and where consumer spending is heading. Take into consideration new influences such as the state of the economy, employment figures, local and national politics and emerging technology that can influence your sales.

Step 3

Survey current customers to find out how much they plan to spend with your company in the coming year. Many businesses and consumers have fixed costs that you can depend on, while others may be expanding or downsizing. Call a random set of prospective customers to poll them on their opinions about your products and services.

Step 4

Interview your sales staff members and find out how they feel about the current state of the market, their territories and their personal sales goals. Although the sales manager usually prepares the final sales budget, input from those who are in direct contact with customers can provide insight into the market that managers often miss.

Step 5

Project the amount of sales you expect to make in the coming year. Forecasting can sometimes feel as if you are looking into a crystal ball in that it's just as reliable. But with careful research and by following the previous steps, you should be able to come up with an accurate approximation of projected sales.

Tips

  • Use new budgeting software that can help to crunch the numbers to get an accurate picture for the final budget.

Warnings

  • Consider the number of salespeople that you employ and how much attrition you expect during the forecasted year. Include a specific plan to reward high performers so they will stay with the company.

About the Author

Linda Ray is an award-winning journalist with more than 20 years reporting experience. She's covered business for newspapers and magazines, including the "Greenville News," "Success Magazine" and "American City Business Journals." Ray holds a journalism degree and teaches writing, career development and an FDIC course called "Money Smart."

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