A sales budget is the cornerstone of any company, since the functionality of each department of a company depends on it. This shows the expenses that must be made to achieve sales in a defined period of time.  

It is also associated with determining the estimated average earnings after a predetermined period. A company, at the beginning of the year, carefully analyzes economic conditions, competition, production capacity and expenses when determining the sales budget . All of these factors play a crucial role in the future performance of the company. The sales budget is what the company hopes to sell and generate in business.   

When determining the budget, keep in mind the term "sales forecast", which means predicting the amount of sales that can occur in a defined period. This is much more than a "hunch" and is determined based on past sales achieved, market conditions, industry growth rate, and customer analysis.

Tajarat.com.pk strives to be Pakistan's biggest real estate developer ever, guaranteeing the highest international standards, prompt execution, and lifetime customer loyalty. With projects blue town sapphire payment plan

Importance of making a sales budget:

1) Help with business budgets:

The sales budget depends on different departments of a company. This is applicable to companies focused on production, where their expenses are proportional to the amount of sales they are expected to achieve. Without a budget, companies don't know how much to spend on marketing, production, or any other department. While these are variable expenses, fixed expenses like rent and utilities also have to be covered by the sales estimate.  

2) It is part of the growth objectives of any company:

Another aspect of the budget is that it helps to establish objectives for the commercial team and the achievement of them contributes to the economic growth of the entire company. What's more, any business can have general and individual growth, once the sales numbers are achieved.

Factors that influence the sales budget:

1) Internal factors:

The number of employees, the scope of the sales team, the nature of the product, the availability and stock of the product, the price of the product, the sales volume, the skill of the salesperson, the promotion strategies , etc. 

2) External factors:

The political and legal environment, competing products, the customer base, the economy, seasonal factors, the purchasing power of customers, etc., are external factors that can affect the sales budget. 

Advantages of sales budgets:

• It helps in the adequate preparation of the cost of the organization.
• Supports resource allocation for all other departments based on sales forecast and other factors.
• It is useful to keep a check on the expenses of the company.
• It serves as a measure to evaluate the forecast before any achievement, objectives and the general economy of the company.
• It also helps to identify weak spots and areas in the organization that are an obstacle to meeting the sales budget . Actions can be taken to correct those weak links and strengthen teams. 
• It acts as a constant guide and reminder throughout the year to the organization about the agreed budgets and helps everyone to be on the right track.

Disadvantages of sales budgets:

• It cannot always be 100% accurate as no one can predict future events or sudden market trends for the company.
• Preparing, editing, modifying, reworking, getting the sales budget  approved can take up too much management time, in which real sales can be made. 
• Unforeseen expenses are not considered in the  sales budget , which can arise from any calamity or unpredictable market conditions.

Procedure to prepare a Sales Budget:

To prepare an effective and successful sales budget , you need to carry out the following steps:  

1. - First, consider the financial perspective of your company, before preparing the estimate.
2. - Next, select a time frame, to calculate your sales budget . The time frame can be monthly or quarterly. Choosing an annual time frame will make it difficult for you to analyze large amounts of data. 
3. - Try to obtain the annual and quarterly sales data of some companies in your industry, to get an idea and from there to prepare your sales budget. 
4. - Make a study based on trends and market status. Analyze the population, their preferences, prices, etc. This will give you a very clear picture that you can include in your budget figures.
5. - Calculate by comparing the number of sellers you have in mind, since these figures could vary annually and therefore these numbers should be compared consecutively.
6. - Get information from your salespeople on what the figures could look like for the next sales period, as their knowledge and experience can add value to your budget.
7. - Study your competitors and understand what should and should not be done. Even analyze the trends of your competition to understand how they can affect your sales and what actions can be carried out.
8. - Your customers are the best people who can indicate your future sales status. Talk to them and try to understand the trend that you could later include in your sales budget. 
9. - Once you have gathered all the information, confirm it with the current state of the market, analyzing the high traffic seasons, customer behavior, appearance of your sales team, etc. and based on this estimate your sales forecast budget.
10. - Prepare the sales budget in such a way that you do not end up losing more than your capital investment. The sales budget should at least ensure that there is a return on capital for the time period in which it is created.  
11. - Once your time period is up, compare the results to your existing budget to understand how well your estimate has been, so that you can better understand what to do and what not to do according to the estimate of your business.
12. - As you prepare the next monthly or quarterly estimate, compare it to the previous sales budget history to understand the seasonal trends affecting your deals and create a new estimate accordingly.  

Start making your sales budget based on your value:

Never talk about price without first defining your value. By setting a price without first analyzing it, it is to place your product as something basic. It may be that your prospect looks at your offer as a cost center and therefore, it will be very difficult for you to establish the value of your product or service from now on.

That's why it's important that you first gather all the relevant knowledge about your prospects. Then when it comes to price, you can make it about the value your solution provides.

The question should not be: How much does this cost?

The question should be: How much will be the return on investment?

Keep in mind that price can be an empowering factor.

Never, never give away the price without understanding your prospect. Never, ever give your price before establishing value in a sales conversation.

If you talk about price before you know what value you create, you are talking about cost, basic product and you are losing control of the negotiation.

When you talk about price once you really understand the prospect and the customer, price is now an investment, it is brand, it is positioning. Watch how it goes from being something negative and out of your control, to being something positive and empowering, something that reinforces your negotiations in each sales process.