Knowing exactly how many sales you need to achieve instils confidence, which benefits all aspects of your business. A clear sales target focuses the mind and helps prevent any procrastination that may kick in. When you are employed in a company, working alongside others, there is usually some healthy competition and social chit-chat, which can increase in building sales. But when you work on your own, you may have to create an environment which motivates you to sell.
How do you work out your sales target?
You can make up a number that sounds good. When you achieve it, you feel fantastic; when you don’t, you doubt the target! But this is not the best way.
Look back at past performance and use that as a base. Most companies have months that are better for selling and months that give a worse result (i.e. “seasonality”). Peaks and troughs don’t just apply when you have seasonal products, but also around buying patterns. Many businesses can achieve half their turnover in the run-up to Christmas; holiday homes can charge a premium during school holidays; accountants are wise to spread their payments over the year, not just at tax time. If you are a B2B business, you will be affected by budget allocation, long sales cycles, and important events in the industry calendar.
You can score the possibility of a sale based on the strength of the market conditions, the quality of relationship with the customer, and, of course, your reputation.
All of these factors change regularly; therefore, it is worth recording and analysing your performance. Actively monitoring your sales and the selling conditions is essential. We all know the famous saying attributed to Peter Drucker: “What gets measured gets managed.” Small business needs to do enough measuring to understand what is happening, but not so much that it delays moving things forward.
You may need to cut expenses if you are not achieving your targets. Alternatively, spend more to become more proactive in selling.
Start-ups, in particular, have difficulty defining sales targets, but in times of change, all businesses need to look again at their goals. Time spent analysing the business will create more meaningful and sustainable sales targets that help you grow your business for the long-term.
For an impartial view of your business’s unexploited areas, contact Flourish to get your FREE Business Performance Assessment.