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A Look at Sales Budgets & the 7 Steps to Creating One [+ Templates]

Sales is rarely directionless. Every aspect of the practice requires established expectations and some degree of guidance — and in many cases, “expectations and guidance” amount to firm predictions of a sales org’s performance.

Those predictions often come in the form of something known as a sales budget — a document that sets realistic standards for how much a sales org is expected to sell within a given timeframe.

These plans are central to processes like goal-setting and forecasting — so to help you give you a better grasp on sales budgets as a concept, we’ve gathered some key information that will help you better understand the what, why, and how behind these documents.

Sales budgets are often conflated with sales forecasts — and that kind of mix-up makes sense. The two are fundamentally similar in that they both offer some kind of prediction of sales figures over a given period, but they differ in terms of intent and timeframe.

A sales budget provides a realistic but ideal direction for your company to pursue. It provides a baseline understanding of what you should expect out of your sales org, and a sales forecast is often a natural extension of that. Forecasts take that information and set predictions for how likely you are to live up to those expectations.

Sales forecasts also tend to cover smaller periods of time. They generally set predictions on a weekly, monthly, or quarterly basis. Sales budgets, on the other hand, typically account for an entire year.

The Purpose of a Sales Budget

Sales budgets and the insight they offer have a variety of applications. Here are some of the most prevalent ones.

Dictating Expenses

A sales budget guides a sales org’s financial planning and objectives. It gives managers a more definitive reference point for the expectations and standards they’re working with. With that kind of comprehensive picture in mind, leaders can set better-informed, more effective overhead and administrative budgets.

Helping Set Objectives

A sales budget sets firm expectations for profitability — giving your sales org a sort of North Star for its expected performance and the goals it needs to set to realize it. This kind of plan can also help with setting quotas and keeping more accurate tabs on team performance as your efforts are being carried out.

Measuring Ultimate Performance

At its core, a sales budget is a benchmark against which a sales department’s success can be measured. It sets definitive expectations for what your company expects your org to deliver and, in turn, a way to see how effective its process and efforts are. Without one, you’ll have a harder time determining whether your sales strategies helped or hurt your ultimate performance.

1. Set a time frame.

As I mentioned, sales budgets cover fixed periods of time — typically on an annual basis. That said, sales budgets can also be set to cover weeks, months, or quarters. No matter the time frame you go with, If you want to prepare a sales budget, you have to start with the when.

2. Find your prices.

The next key component of a sales budget is pricing. You can’t predict revenue if you don’t know how much each unit you sell is going to cost, so you have to pin that side of your plan down, right off the bat. And if there’s any chance those prices are going to vary at any point in your selected time frame, you need to account for that as well. 

3. Look at previous data from a similar period.

Here’s where you start trying to understand what to expect from your sales efforts. One way to do that is to pull historical data that offers some perspective on how your sales org typically performs around the time of year you’re budgeting for. 

4. Compare your data to your industry and competition.

Another angle you can take when preparing a sales budget is to look at your competitive landscape. How are your industry peers performing? If you and another company share a similar market position, try to look into its sales figures to better understand what you can expect from your prospects and customers.

5. Talk to customers.

Sometimes it helps to hear directly from your buyers to get a pulse on your offering’s appeal, longevity, and potential profitability. Are people still enthusiastic about your product or service? Is there a competitor that might siphon consumers’ interest in your business? Taking action like sending surveys or directly communicating with your base can offer some invaluable information to shape your sales budget.

6. Identify market trends.

How has the product for your market been trending recently? You can only understand your future performance so well from looking into the past. If the market for your product service has been consistently trending downwards in recent years, your historical data might not do all that much for you. Remember, you’re predicting sales figures — not copying them.

7. Create your budget.

With the listed factors — among others — behind you, you can get a solid feel for how many units you can expect to sell and, in turn, put together an accurate sales budget.

Sales Budget Template

The structure of your sales budget will vary based on the number of products or services you sell and whether you offer any sort of discounts. Here are a few templates that cover those bases.

One Product or Service With No Discounts

  Q1 Q2 Q3 Q4 Annual
Expected Unit Sales          
x Price per Unit          
= Total Overall Revenue          

Multiple Products or Services

  Q1 Q2 Q3 Q4 Annual
Expected Unit Sales #1          
x Price per Unit          
= Total Revenue #1          
Expected Unit Sales #2          
x Price per Unit #2          
= Total Revenue #2          
= Total Overall Revenue          

One Product or Service With Discounts

  Q1 Q2 Q3 Q4 Annual
Expected Unit Sales          
x Price per Unit          
= Gross Sales Revenue          
– Sales Discounts          
= Total Net Sales          

Sales Budget Example

Here’s an example of a sales budget from a firm that expects to see varying sales at different price points throughout the year.

  Q1 Q2 Q3 Q4 Annual
Expected Unit Sales 11,000 11,500 12,000 11,500 46,000
x Price per Unit $45 $45 $47.50 $47.50  
= Total Overall Revenue $495,000 $517,500 $570,000 $546,250 $2,128,750

Knowing how to craft an accurate sales budget can help keep your sales org on track and operating as efficiently as possible. It lets you set reasonable goals, thoughtfully allocate resources, and have a firm reference point for measuring your ultimate performance. If you plan on having a hand in any sort of longer-term sales effort, it helps to know how to create one.

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