It’s turbulent times for business owners and no-one is really sure what to expect in 2023. But one thing we can rely on, businesses who plan and monitor results are more likely to succeed than businesses who simply go with the flow.
As accountants, we believe in the power of numbers – that includes:
- Thinking about likely sales over the next few months
- Looking at your overheads and expenses to see where your money is going
- Finding ways to save money and/or reduce expenses
Understanding your numbers may sound complicated but it doesn’t need to be.
In this blog, we cover our top 3 tips on how to set sales targets for the rest of the financial year or contact us, and we’ll help you through the process.
Tip 1: Be realistic when setting your sales targets
Sales mean money into your business but in an unpredictable economy like the one we have now, it can feel difficult to anticipate what will happen.
We suggest you look at your sales figures for the financial year so far, as well as your sales for the same time in previous years. Use this information to formulate your best guess of what is realistic. Ideally your new sales target will be a moderate stretch but not too ambitious.
Your accounting software should make it easy to perform these comparisons. But if you need help, get in touch with us.
Tip 2: Set a stretch sales target and a minimum sales target
Why set 2 sales targets? The lower sales target should reflect your breakeven point. Achieving the minimum sales target will mean you are covering all of your costs but not making a profit. While it’s not encouraging, if the economy has a significant downturn, you’ll be able to monitor your sales in terms of covering your expenses.
The stretch sales target should be the one that will challenge you and your team to do better and will generate the most profit for your business. Once you have set your target, look at your recurring and likely sales. The difference between the 2 figures will indicate how many additional sales your business will need to make.
Now look at your average sales value to calculate how many additional sales you will need to make each week, month and quarter to achieve your stretch sales target. Use that information to formulate your business and marketing plans.
Tip 3: Monitor everything!
At the end of each week and month, monitor your actual sales against both your stretch and minimum sales targets. How are you going?
If you have made additional sales, analyse who they were to and why they chose your business. These could be the groups of people you need to focus on.
If you are missing your minimum sales targets, try to analyse the reasons for the shortfalls. Was it a short week? Have enquiries dropped etc.? Use this information to consider whether you need to make changes in your business.
We help businesses improve their bottom line
We believe in thinking strategically about what’s happening in the economy to help you run a sustainable business. Along the way, we help you create a business that is flexible so it can sidestep foreseeable difficulties and better respond to the unexpected.
If this sounds like the type of accounting services you want for your business, contact us to arrange a time to meet.