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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