Sales Plan – Your Money Making Plan
A sales plan is as important to a business person as a battle plan is to a soldier. No soldier will go out to battle without a plan as to how he/she will win. Among other things, the plan will also outline the objectives of the battle, the number of soldiers needed to win the battle, the military hardware required, the terrain of the battle field, the time to move into position, time to attack, the tactics to be used to outflank the enemy, the number of enemy troops that have to be defeated and the territory to be conquered.
The same is true of a Sales Plan in a business. The Sales Plan is the businessperson’s plan to win in the market. It is a roadmap that spells out the Business sales targets, including the actual numbers either in Rand value or units to be sold, the number of sales people required, the tools the sales people need, the competitive environment and the sales strategies and tactics to be used in the market.
Just as a soldier cannot leave the barracks to fight without a plan, it is inconceivable for a business person to venture out into the market without a sales plan. Every business has to make money in order to survive, but there has to be a plan in place to do this. A Sales Plan is the business person’s money making plan. It is absolutely critical and a must have, for any serious business.
A Good Sales Plan
Like a good battle plan, the sales plan should be short and simple but written with daylight clarity, so that any member of the team can understand what the plan seeks to achieve. Long and wordy sales plans can end up confusing you, the business owner and your staff, making it difficult to focus on the key aspects of the plan.
Broadly speaking, the sales plan should have two main parts, namely, how the business will grow with its existing customer base and attract new clients (speaks to the sales strategy of the business) and what the business will do to grow its sales on a month by month or quarter by quarter in each section of the market, region or territory it operates (speaks to the tactics of the sales plan).
There is a distinction between a strategy and a sales tactic. In simple terms, strategy in this context is the plan that will help you to achieve your goal, e.g. sell more of your high margin product. The tactic on the other hand is the specific action that you will take to fulfil the plan, e.g. run a quarterly sales promotion with existing customers on the high margin product.
To further illustrate the example between a strategy and a tactic in putting together a sales plan, refer to the example below:
Sales Strategy: Grow sales volumes in the Eastern Region by 15%.
Tactic: Meet with at least 20 new customers every week in the region.
To maintain clarity in your plan, it is advisable to lay out your Sales Plan, under the following headings:
- Strategies to grow with existing customers
- Tactics to grow existing business
- Strategies to acquire or secure new business
- Tactics to acquire or secure new business
Assumptions in a Sales Plan
In putting together a Sales Plan you will have to put make assumptions. Assumptions, simply means events or circumstances that will affect your sales plan. The most common assumptions you will need to take into account in your sales plan are the following:
- Past Sales History – if your business is already in operation, you will need to take into account your past sales performance in putting together a new plan. This also gives you the opportunity to reflect on what has worked in the past and what hasn’t worked, and to come up with new initiatives for the plan. If you disregard past sales performance, you might end up with a sales plan that is overly ambitious, unachievable, and this can demotivate you and your staff.
- The Market – it is importance to understand whether the market in which you operate is growing or declining? If it is growing, you may assume for example, that it will grow by 5%. This is not a number you make up. There are credible sources like banks and Stats SA, which can give you this kind of information. It is not a good assumption to say that you want to grow your sales by 20% when your market is declining by 10% yearly. Unless off course you plan to put every competitor out of business.
- Resources – these include your people, your equipment, technology and your budgets. E.g. if you want to grow sales volumes by 20%, it might mean that you hire one more sales person. So, the assumption in your plan will be that you will employ a new Sales Rep in quarter 1.
- Products – are you planning to launch new products? If you are, then you could say in your assumptions that the new product will contribute a given percentage to the 20% sales volume growth you are planning
- Pricing – will you be raising prices, by how much and when? This should also be in your assumptions because it will affect your sales performance in the market and your results.
- Economic Indicators – Your assumptions should also include what you know about the general economy, is it going to grow or shrink, inflation, and any other outside variables that will impact your sales plan.
Sales Forecast Document
This is the part of the Sales Plan that captures in figures, what your strategies and tactics will achieve. This is where you nail your colours to the mast. The Sales Forecast section is normally captured in the form of an excel spreadsheet. It will have as its heading, the product and the period of the sales plan e.g. Sales Forecast for Silver Awnings; January to December 2016.
It is advisable to first capture the number of units of the product the business plans to sell each month which will then to give you a total unit number for the period. Next you should enter the unit price of each product, and this multiplied by the units to be sold will then give you the Rand value per month. This process can be repeated for each region and territory, for ease of monitoring during the tenure of the plan, and for evaluation at the end of the sales plan period. It can be further broken down to a weekly forecast using the monthly figure.
The sales forecast is a business person’s best friend, in managing actual performance and anticipating when sales will be high and when they will be low. Since it will also have the price of the product, it helps a business owner or manager to monitor whether you or the Sales Reps are selling the products at the right price as per the plan.
Finally, it is important to note that like any plan, it is based on a given set of assumptions and sometimes these do change. If the change is material and will affect the planned results, then the sales plan might need to be updated but only in those areas where the change is expected. Equally important is not to treat the Sales Plan as a once off event which a business has to have, in order to please the banks and other lenders. As the heading of this article says, a Sales Plan is the business’s money making plan, and therefore it should be a living document that guides the operations and activities of the business.