Sales Planning for Profitability in 5 Steps
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True sales planning is one of the most important things that a business can do each year. It forces business leaders to think through – in significant detail – what is necessary to accomplish their business goals. It’s about planning to sell profitably. Selling profitably is something that is not as straightforward as it seems. We see examples all the time, in companies big and small, that believe they are selling profitably and selling well–but simply are not. We will explore the Who, What, Where, When and How of selling to the right customers in a profitable manner. https://goo.gl/JwT1jL
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Sales Planning for Profitability in 5 Steps
- 1. 5 Sales Planning Steps to Profitability Leading the way in accounting services for small business
- 2. Meet Your Scalable Finance and Accounting Department. As an outsourced accounting and business advisory services firm, we work as a natural extension of your business. Our experts work side by side with you to build and implement accounting systems and procedures, offering proactive guidance along the way to help you increase profitability and plan for growth. Follow us @TGGAcctg Schedule a Free Consultation
- 3. True sales planning is one of the most important things a business can do each year. Follow us @TGGAcctg Schedule a Free Consultation
- 4. “Your quota is $1MM. Now go sell!” This is NOT sales planning: Follow us @TGGAcctg Schedule a Free Consultation
- 5. Instead, it’s about planning to sell profitably. Follow us @TGGAcctg Schedule a Free Consultation
- 6. • Getting traction in a new market. • Gaining a marquee client in a new industry. • Initial sale with high likelihood of follow-on services. When it’s okay to sell at lower margins or a loss: Follow us @TGGAcctg Schedule a Free Consultation
- 7. The rest of the time? Just say no, kids. Follow us @TGGAcctg Schedule a Free Consultation
- 8. 5 Questions to Ask To Ensure You’re Selling Profitably Follow us @TGGAcctg Schedule a Free Consultation
- 9. Who do you want to have as customers? Follow us @TGGAcctg Schedule a Free Consultation
- 10. Some customers are much more profitable than others. Follow us @TGGAcctg Schedule a Free Consultation
- 11. If you are B2B How big are they? Will they be repeat customers? Do you want one-time customers? What is their need? If you are B2C What demographics? What psychographics? Where do they live? Follow us @TGGAcctg Schedule a Free Consultation
- 12. What are you selling? Follow us @TGGAcctg Schedule a Free Consultation
- 13. Gross margin is the driver of your profitability. Even more than revenue. Follow us @TGGAcctg Schedule a Free Consultation
- 14. Where do you find and sell to your customers? Follow us @TGGAcctg Schedule a Free Consultation
- 15. Can you effectively service clients that are not local? Are you including appropriate charges for shipping, freight, travel, etc? Follow us @TGGAcctg Schedule a Free Consultation
- 16. When do you sell to your customers? Follow us @TGGAcctg Schedule a Free Consultation
- 17. Before you take that rush order, ask yourself: Will you need to have people work overtime? Will you need to move people from other projects? Will this impact the client service of other customers? Will you need to pay vendors extra for rush delivery? Will you need to pay expedited freight? Follow us @TGGAcctg Schedule a Free Consultation
- 18. How are you sourcing your sales? Follow us @TGGAcctg Schedule a Free Consultation
- 19. Make sure you consider all the hidden costs of making a sale. Follow us @TGGAcctg Schedule a Free Consultation
- 20. Especially meals and entertainment. Follow us @TGGAcctg Schedule a Free Consultation
- 21. Sell smarter, not harder. If you know your numbers, you can sell more profitably. More profitable sales mean you don’t need to sell as much to make the same amount of profits. Follow us @TGGAcctg Schedule a Free Consultation
- 22. We’d love to help you improve your profitability. To learn how we can help you increase profitability and plan for growth, schedule a free consultation. Follow us @TGGAcctg Schedule a Free Consultation Schedule Your Free Consultation Today!
Notas do Editor
- True sales planning is one of the most important things that a business can do each year. It forces business leaders to think through – in significant detail – what is necessary to accomplish their business goals.
- True sales planning is one of the most important things that a business can do each year. It forces business leaders to think through – in significant detail – what is necessary to accomplish their business goals.
- Sales planning is more than a tactical plan set from on high: “Your quota is $1MM, now go sell!”
- True sales planning is one of the most important things that a business can do each year. It forces business leaders to think through – in significant detail – what is necessary to accomplish their business goals.
- There are examples of strategic decisions to sell certain products or services at lower margins or even at a loss. These may include gaining traction in a new market, gaining a marquee client in a new industry, or an initial sale with high likelihood of highly profitable add-on services.
- But these examples should be few and far between and only done based on a specific plan, not because you didn’t realize it was an unprofitable sale. The vast majority of the time you should be turning down unprofitable sales (just say no!) and focusing on those customers that value what you offer and are willing to pay a fair price. To do this you must truly understand both your financial numbers and your sales plan.
- To give some examples of how to think through your sales planning and to ensure you are selling profitably, consider Who, What, Where, When & How:
- Don’t just take any deal that comes in the door. Have a plan about which customers you want to sell to.
- Often, certain groups are much more profitable and willing to pay a fair price for your products or services than others. If you are providing more than just the base product/service, be sure to charge for that.
- True sales planning is one of the most important things that a business can do each year. It forces business leaders to think through – in significant detail – what is necessary to accomplish their business goals.
- Most business are confident they can answer the question “what are you selling?” They know that they sell product “x” or service “y” and at what price they sell it for. But many would be stumped if they were asked to provide the true Gross Margin generated by each product or service line.
- Using some general business assumptions, a 2.5% increase in Gross Margin can generate a 17% increase in Net Income. That is profitable selling. The best businesses pay commissions not on revenue but on Gross Margin. This forces sales representatives to sell profitable deals and not to be so quick to discount, since it has a much greater impact on their personal compensation.
- There are two questions we typically ask clients about where they sell to customers.
- For many companies, serving clients locally or remotely is no problem. But for others, serving companies farther afield means unexpected costs and inefficiencies. If you incur a greater percentage of these costs on a given customer/project and do not appropriately charge for this service, you will see your margins and profitability quickly decline.
- Time has a price. Consider this the next time a customer calls and says they have an emergency and need your services asap. Sure you want the business – maybe you have been working on closing this client for 18 months and here they are ready to do business.
- All of these may be reasonable trade-offs that you decide to make in order to take on this job and client. But it is not the time to discount prices. In fact, urgent jobs should usually be priced at a premium. They should be opportunities to upsell your ability to meet tight deadlines that your competitors could not. By understanding the trade-offs and the numbers, you can make the right profitable, pricing decisions.
- Most business owners know their salespeople’s salaries, the commission rate, and how much they are spending on marketing. And they probably think through these sales and marketing costs vs the total sales goals.
- But are you considering all of the other costs? Good sales planning means taking into account hidden costs.
- The biggest hidden costs are travel, meals and entertainment. These tend to get buried because they are lumped into General & Administrative costs and combined with all Travel and M&E costs from employees across the company. It is also where there tends to be thousands–often tens of thousands–of dollars of savings.
- Sales are the lifeblood of most businesses. Most of the firms that we consult who are struggling are doing so because of a sales planning issue.Their general internal diagnosis is that they are not selling enough. Instead they are not selling as profitability as they should. There is no doubt that sales is hard work and that some amount of sales is simply getting out there and doing it, as they say “activity begets results.” Still, there can be another option – sell smarter!