How to set sales targets

The majority of small business owners, if you ask them, do not set and then track their sales targets.  It’s easy to see why this is when you consider that the whole process can seem so complicated.  The tendancy is for many small business owners to just say “we want as many sales as possible” without actually setting out any plans or targets, by doing this it makes it hard to focus on the end result.

The good news is that it’s very easy to set realistic sales targets that allow you to monitor progress each week / month or quarter.

The main thing that you must know is how many sales you should be making each month or each week, in order to meet your annual turnover and profit goals.  By splitting this annual figure down into monthly or weekly targets, it’s far easier to keep on top of the figures.

Here’s a simple, easy to follow way to discover what your sales targets should be, in weekly or monthly segments.

1. 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.  I am assuming that you know this figure, if not sit down right now and think about the turnover and profits needed over the coming year (it should be in your business plan) and the pricing of your products or services.
2. Work out what your “average” sale value is.  An easy way to do this is to list (for example) the value of your last 20 or 30 sales, and then divide that number by the number of sales.  This is only an approximate figure, but it will give you something to work with and is often fairly accurate.
3. Now, list how many “average” sales you would need to make over the next 12 months, in order to achieve the above figures in step 1  Write this number down.
4. Now, divide the number you wrote down in step 3, by 12.  This will give you a monthly sales target.
5. If you want to work on weekly targets, (this suits some business types better than others), simply divide the annual number of sales by 52, or more realistically 48 to allow for bank holidays and other “slack” times.
6. And it follows that if you want to work on quarterly figures then you need to devide the number of annual sales by 4.

By using sales targets if gives you a very good idea as to how your sales team (or you if you are a sole trader or are responsible for sales yourself) are doing – tracking the actual sales against the targets means that there is less chance of nasty surprises when you suddenly realise that you have not made enough sales in the month / quarter or year and will mean that you can make changes to your marketing or an extra effort before things get too bad.

Remember that as with most things in life, things will not “just get better” by themselves.  For better results, you need to be making better marketing decisions, this could be something simple as changing where you are advertising or much more complex such as improving the SEO on your website or could even mean that you need to talk to a sales & marketing consultancy such as Armida who are based in East Sussex.