Sales Budget

SALES MANAGEMENT

CHAPTER – 3LECTURE - 7 & 819TH NOV 2011

1Compiled by T S Dawar – Sales Management Lecture 7 & 8

Sales Budget

Who is going to sell, how much in what time, at what cost?

2Compiled by T S Dawar Sales Management Lecture 7 & 8

• Planning – sales, expenses, territory

• Coordination – Sales Staff

• Control – organization, staff and expenses

BUDGET PURPOSES


Consideration before making Sales Budget

• Unit sales by sales territory • Unit sales by month• Unit sales by account• Unit or rupee sales• Forecasting Methods


Sales Budget Program designed for a stipulated time frame that highlights

theselling expenses and anticipated sales, quantitatively and in

value terms.This helps in making an objective estimate of net profit on the

selling operations. In a real sense, it is a statement aimed at comparing the

revenue, net profits, sales volume and the selling expenses relating to a particular

product or the entire business.


Sales Budget

A budget is a plan expressed usually in monetary terms. It is a process of allocating a portion of an organization’s resources for its various activities for a specified period of time.

It helps in planning and coordination of the organization’s activities. Sales budgets are developed for the smooth functioning of the sales function.


Cont.

Developing sales budgets serve two purposes –

As a mechanism of control andAn instrument of planning. There are several benefits an organization

derives from budgeting.


Cont.

They are –• Improved planning• Better communication and coordination• Performance evaluation• Psychological benefits • Avoiding uncontrolled expenditure.


Cont.

Interlink Role

Marketing Plan

Sales Force BudgetSales Forecast


There are THREE

Types of Sales Expenses:

Fixed Expenses:These expenses pertain to the compensation of salespersons, sales office rent, sales operational expenses, depreciation, interest on cost of assets like vehicles, office space, office equipment, etc.

Performance-related Expenses: These include commissions, incentives, bonus and awards, etc.

Activity-related Expenses: These include travel and communication expenses, etc.


Types Of Budget

In practice, sales managers prepare three types of budgets –

Sales Budgets Selling Expense BudgetAdministrative Budget


Cont.

Sales Budget

A sales budget gives a plan showing the expected sales for a specified period in the future.


Cont.

Selling Expense Budget

Selling expense budgets details the schedule of expenses that may be incurred by the sales department to achieve planned sales.


Cont.

Administrative Budget

Administrative budget specifies the budgetary allocations for general administrative expenses that would be incurred by the sales department.


Cont…. NEXT SLIDE

IMPORTANCE OF SALES BUDGETIts importance can be gauged from the factors given below:

It serves as a scale, or a yardstick, to measure the performance/progress of the company in terms of the performance of the sales personnel, regions, products, marketing channels and customers.

It helps identify the areas in which the company needs to strengthen or improve its performance.

It serves as an indicator to control the expenses associated with the sales activity and to keep a constant watch on the net profits of the company.

It helps in comparing the actual performance with the budgeted performance and takes corrective measures if drawbacks appear or to follow the strategy

if the performance is good.15

Compiled by T S Dawar Sales Management Lecture 7 & 8

Cont… from previous slide

IMPORTANCE OF SALES BUDGETIts importance can be gauged from the factors given below:

It helps the planners to frame policies for actual market situations and provides

the platform to establish ways and means to get the business where they want it

to be.

It provides vital statistics to relate and dedicate the resources in an effective

manner so as to realise the forecasted sales and convert these figures into

reality.

It helps keep expenses under control so that by using scarce resources, the

objective of net profits may be achieved.


Cont….

Factors Affecting Sales BudgetThe sales manager should take into consideration the following factors while preparing the sales budget: Past sales figures and trend Salesmen’s estimates Plant capacity General trade prospects Orders on hand Proposed expansion or discontinuance of products Seasonal fluctuations


Other factors

The nature and degree of competition within the industry

Cost of distributing goods

Government controls, rules and regulations related to the industry

Political situation — national and international — as it may have an

influence upon the market. Potential market Availability of material and supply Financial aspect


Methods For Budgeting

The different methods for budgeting include the-

Affordability methodPercentage-of-sales methodCompetitive equality methodObjective-and-task methodReturn-oriented method.


BUDGETS SHOULD BE FLEXIBLE

Sales, costs, prices, or the competition’s marketing efforts are some factors that may be higher or lower than expected.


THANKS

END OF TODAY LECTURE


Documents

Sales Budget