Planning – From Sales To Finance
The attitude towards planning of all the companies’ management is different. Some believe that the plan should be executed, no matter in what way. Perhaps, for employees, sales motivation should be based on this principle. But the governing body must understand that the plan is not an end in itself. The plan is the derivative of dozens of factors, but not constant.
As for me, I believe that the most productive is such an approach, when the plan is seen as a landmark. In this case, planning can help predict how a firm will be evolved in the next month, quarter or year. And also, how and what the money will be spent for. In this case the specific numbers aren’t important, but the conclusions you can draw from them.
Why planning is vital for the company? Plan is necessary for the following factors:
-to understand where, when and for whom the company is going to produce and sell products,
-to know what resources and when will be needed for the company to achieve the goals,
-to make effective use of resources attracted,
-at last to anticipate the adverse situation, analyze the risks and include specific measures to reduce them.
This is planning in a whole, and to begin with I would like you to get acquainted with the principles of sales planning.
Long-term planning – at least for a year
It’s absolutely pointless to argue with the fact that the annual sales plan is needed. Because if it’s not, then how to plan working capital and advertising budgets? However, attitudes to planning for the year ahead should be reviewed
There exists a very useful rule, which is still rarely used in practice: “The annual sales plan should be solely a guide for employees, the emphasis in planning should be shifted to the operational plans – the quarterly and monthly”.
Operational Planning – weekly, monthly, quarterly
Weekly – checkpoints to control the monthly plan, breaking the plan for the days provides it with the higher specification; the average market minimum term planning is a week.
Monthly- except for performance monitoring, it is necessary term planning of the motivational funds for sales staff dependent on the implementation of the plan.
Quarterly- useful for financial planning, tied to quarterly periods, and has greater correlation to the annual plan than monthly plans
How is a sales plan formed? Let’s answer this question by considering how to develop sales plans:
-Forecast. method,
-Method of extrapolation,
-Normative method.
Market forecast method is that first determined the total sales on the potential, segmentation of product, client or mixed basis. Then the proportion of this amount is determined. It should be noted that this prediction can be made by the presence at the company analysts or marketing department.
Method of the extrapolation is based on the average annual growth rate of sales agencies in previous years. It is possible to compare the rate of sales growth with growth of the market.
Normative planning method is applied to sales of those companies that measure the KPI (key performance indicators) in sales. Such standards may include the following indicators:
corporative sale;
quantity of the sales per employee;
quantity of the sales office / branch office (if the network structure)
average transaction price;
volume of the sales per employee;
volume of the sales office / branch office (if the network structure)
the whole sales and etc.
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January 18, 2011 | In: Finance