When you are a small business, it is easy to brush off the subject of sales targets by laughingly declaring when asked “I just want to sell as much as possible!” However true this statement may be, it is also rather naive. The number of sales you make is probably one of the best indicators as to how your business is going. Many business owners simply say they don’t have the time as the whole process of setting sales targets can seem so complicated. The good news is that it’s very easy to set realistic sales targets that allow you to monitor progress and help you see if your business is on-track.
To determine how many sales you should be making in a week, or month, you first need to know how much money you need to make to meet your annual turnover and any profit goals you may have set. If you split your annual figure down into monthly or weekly targets, it’s far easier to keep on top of the figures and makes them considerably less daunting.
Below is a simple, easy to follow way to help you work out what your sales targets should be, in weekly or monthly segments.
- Firstly list your turnover / revenue targets for the next 12 months. You need to know what this figure is, in order to know how many sales you should be making each year. If you have done a business plan, you can take the figure you used there, or you can work it out by listing all the outgoings of the business including how much you would like to “make” on top of what you need to clear the bills, also note down the pricing of your products or services.
- Next you need to work out what your &qaverage” sale value is. The fastest way to do this is to make a list of the value of your last day’s sales, and then divide that number by the total number of sales. This is only an approximate figure, but is often fairly accurate.
- Then, list how many “average” sales you would need to make over the next 12 months, in order to achieve the figures that you got from step one, make a note of this number.
- Next, divide the number you wrote down in step 3, by 12 to get your monthly sales target.
- If you want to work to break it down into weekly targets, simply divide the annual number of sales by 52, or more realistically 48 to allow for bank holidays and other times you may be closed or simply have fewer customers. If you want to have quarterly sales targets, then you need to divide the number of annual sales by 4.
The author even goes as far as to have broken it down roughly into daily figures so that they know roughly how much money they need to take a day to cover the outgoings involved with their business. However breaking it down too far can be as daunting as leaving it in large quarterly chunks, it is fine if you can accept that there will be “slow” days, and “good” days and that things can balance out – if you are focusing too hard on what you need to make, then it can impact your selling technique making you seem “desperate” which will put off potential buyers.
If you still struggle to set your sales targets using the above method, it is something that your accountant or book-keeper would be able to do with you easily. By tracking the actual sales you make against the targets you (or your accountant or bookkeeper) have set means that there is less chance of you getting a nasty surprise when you suddenly realise that you have not made enough sales in a month / quarter or year, leaving you scrabbling around to make ends meet or approaching the bank for some kind of additional financing and will mean that you can make changes to your marketing or an extra effort before things get too bad.
With most things in life, particularly in business, things rarely “just get better” by themselves, you need to be aware of your businesses strengths, and weaknesses, and monitor it carefully to ensure that you don’t fall foul. For better results in your till, you may need to be making better marketing decisions and purchasing decisions , this could be something simple as changing one or several of your suppliers, or where you are advertising – it may also require a more complex solution, for example, improving the Search Engine Optimisation of your website or could even mean that you need to talk to a sales & marketing consultancy who specialise in assisting companies achieve their marketing goals, and therefore hopefully, their sales targets.