Sales budgets keep your business focused
Sales people need to plan for and own sales results
Sales do not just happen. You need to plan for them and figure out how to make sure they materialize in your business. One key element of planning for sales is a budget. The people in your business need to know what they are trying to achieve. You cannot wait for orders. You need to have a budget for each month and hold people accountable to deliver the results. This might sound harsh, but it does not have to be. When everyone is engaged to deliver the results, it can be contagious, not negative.
People need to know what is expected, then they can go out and do their job to deliver the sales you need. Reality is your business requires a certain volume of sales to be profitable. Your sales people should work with your finance team to develop a sales budget for the total business and by customer.
Building sales budgets
Your sales budget needs to start with the total sales required in your business. You should consider YTD performance, overall category growth/decline and how your customers are doing. An example would be discount growing faster than conventional. Once you understand the total volume, you can consider seasonality, previous promotions or potential promotions and your competition. When you build sales budgets, they should be dollars and volume.
It is a delicate balance to challenge sales people, but you also need to keep them engaged. They should be realistic but challenging. If they are too aggressive, your sales people will feel they do not have a chance. If they are too conservative, you might miss opportunities. We are not accountants, so make sure you get some good advice from the people you work with.
A good sales budget and accurate reporting will keep your sales people accountable and drive the business to deliver the results you need.
Detailed but not onerous reporting
The complexity of your business and the resources you have will determine a lot about how detailed your sales budgets need to be. You need to find the balance of good solid information to keep people accountable and deliver results vs so much reporting that you are paying people to do work others will never review. We like to see the following:
- Sales $
- Sales units or cases
- Trade spend
If possible, these should be budgeted with total business, by item and by customer. The reporting should be done weekly (in larger businesses), monthly, quarterly and YTD. The reporting should include budget and actual.
Review the results
Sales budgets and reporting are great…when you review the results. This is where the delicate balance of too much vs. not enough information comes into play. When your sales people are engaged, they should be eager to get the results. The business leader and the sales team need to review them for accountability. Discuss what influenced good or bad numbers and most importantly what you will do going forward. It is not just the sales people who impact these results. If you had great service level that is the entire team. If you had poor service level because someone did not order enough packaging you need to get to the root cause of the problem.
The real value comes in when you can react to the results. If you are on a good trajectory for dollar sales, volume and spend, you know the plan you have is working. If volume is starting to fall behind you need to figure out why. If it was poor service level, you need to get the inventory produced for the orders. If your competition has been investing more in loyalty and in store specials, you might have to react with an increase in spending.
Sales results do not match the budget all the time. There are a lot of factors that impact your numbers. The real key is to stay on top of them and make good decisions about the future.
When you can review your numbers by customer, it is very valuable. You might be on track with one customer but falling behind with another. Our preference is to have your sales people responsible for specific customers. This ensures they develop the relationships over time, understand the customer’s business and deliver the results. You can review your performance with each account and figure out what needs to happen.
You have a choice as to whether you should incentivize people in sales and the entire business. When you have good budgets and accurate reporting, you can reward people for good results. We believe it is better for the entire business to be rewarded. If you can add some variations if one customer results are better than another. You want to reward good, hard work but not penalize or reduce morale with people who have more challenging situations. There are examples where your competitor over spends and buys market share. Is it fair for your people to earn a lower incentive? If you only have access to a limited number of ingredients one customer might not get as much as they want. Consider the variables before you build your incentive plan.
It was great to see so many familiar faces last weekend CHFA in Toronto and at the FCC Food & Beverage Summit in Saskatoon! Two great events that showcase so many great products.
Peter
SKUFood Recipes for Success Podcast
In this episode of Recipes for Success, we’re joined by Gary Hughes, Local Program Specialist at Sobeys, who has spent over 27 years growing with the company and building a deep understanding of what it takes to succeed in grocery retail.
Gary began his career as a clerk at a Garden Market IGA and worked his way up to Store Manager, before moving into buying and category management roles overseeing multiple categories across Sobeys, Safeway, and IGA in Western Canada. In 2017, he joined the newly created Field Merchandising team with a mission close to his heart, helping local products come to life on Sobeys shelves across the Prairies.
With a lifelong passion for small business, Gary now works with hundreds of entrepreneurs and startups, guiding them through the process of getting their locally made products into grocery stores. In this conversation, he shares insights on what retailers are looking for, how local suppliers can stand out, and the steps that can help small producers expand from community-based sales into larger retail opportunities.
If you’re a food entrepreneur looking to grow your retail presence, this episode is packed with practical advice from someone who knows both sides of the shelf.
Listen and subscribe wherever you get your podcasts.
If you would like to be a guest send us a note. We are always working on the upcoming episodes.
Cherry blossom will be history soon
Interesting to see the emotional response some consumers have to food products. I am sure the companies who make them wonder where these people were when they were trying to generate sales. Consumers do change and products come and go. Unfortunately, products that are unique to the Canadian market have a tough time delivering enough volume in large multi-national companies. We do worry about becoming a sea of sameness, determined by results in other markets.
Where is Peter speaking?
With the focus on Canadian food and beverage we wanted to share a program we have developed with Alain Bosse, the Kilted Chef. We partner to share insights about Canadian food and beverage at conferences and events. We talk about where products come from, share insights about some hidden gems and of course Chef Alain has great tips for using the products at home. This is designed to be entertaining and engaging. Not just for food industry audiences, it works for everyone.
I do have travel coming up to Toronto, Saskatoon, and Fredericton so if you want to connect or have an event in any of these locations give me a call or send me an email.