Setting sales targets
Your sales targets will grow with your business. Good sales planners set targets in areas that will drive business growth. For example, if the market is chasing compression gym clothing, they increase their targets for that range.
In setting sales targets you need to:
- consider the profit margins each of your sales will achieve (there's little point reaching your sales target figure but shrinking your margin to achieve it)
- be realistic – your targets must be supported by marketing plan information
- keep all your business costs in mind and plan for growth.
Consider your finances
Before you set your sales targets, take the time to review and understand your business's financial position.
Calculate your gross profit margin to help you identify products making the most profit, so that you can focus your sales targets on them. While any profit is good profit, smart businesses concentrate on achieving higher sales targets for their more profitable items, rather than making 'broad' product sales with a thin margin.
Determine your break-even point by itemising all of your known, fixed annual costs (e.g. rent, electricity, insurance and wages), and then working out the volume of sales (in units) required to cover those costs.
Work out what your minimum sales requirements are by calculating how much of your products or services you need to sell to cover fixed costs, your salary and your desired profit.
Keep in mind your aim is to achieve a fair return on the funds you have invested in the business, in addition to your salary. Once you've calculated your break-even point, decide what you consider to be a reasonable return on investment (ROI) and a fair salary for the owner and/or manager of the business (i.e. you).
Costs that could affect your profit
Consider all the related costs involved in achieving your minimum sales requirements. Marketing, production and supply costs can affect the amount of sales you need to make a profit.
Your marketing must be sufficient to generate your desired sales volume, and your production processes must be capable of delivering those sales.
You must have sales strategies in place to meet your targets. There are a range of strategies you can use, including how you will:
- keep existing customers (e.g. a customer rewards program)
- attract new customers (e.g. marketing and advertising)
- sell more to existing customers (e.g. up-sell).
A realistic sales target is often based on a solid marketing strategy. You can help your sales staff achieve their targets by generating qualified leads and brand awareness from your marketing activities.
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