Edge Retail Academy Blog

Future Growth Projections

by David Brown

This article will help you to create a roadmap so that you can measure your progress towards your sales and profit goals. It is important to achieve your future wealth and retirement goals.

Monthly Sales Analysis

Following our example of ‘GAP’ Sales of $1,062,265, we now need to break the annual budget down into realistic monthly targets.

Because not all months are created equally we need to divide the annual budget into relevant ‘seasonal’ proportions. For example, December sales for most stores represents between 20-22% of total annual sales whereas other months can be as low as 5%.

We suggest you look over at least three (3) years sales history trends to help even out any exceptional highs or lows – see Table 1 below.

help even out any exceptional highs or lows – see Table 1 below.

Month 2014 2015 2016 Average
$ % $ % $ % $ %
January          48,750 7.50      52,500 7.00      51,000 6.00        50,750 6.77
February          45,500 7.00      52,500 7.00      59,500 7.00        52,500 7.00
March          42,250 6.50      48,750 6.50      55,250 6.50        48,750 6.50
April          45,500 7.00      52,500 7.00      59,500 7.00        52,500 7.00
May          42,250 6.50      48,750 6.50      55,250 6.50        48,750 6.50
June          42,250 6.50      52,500 7.00      68,000 8.00        54,250 7.23
July          42,250 6.50      48,750 6.50      55,250 6.50        48,750 6.50
August          45,500 7.00      52,500 7.00      59,500 7.00        52,500 7.00
September          48,750 7.50      56,250 7.50      63,750 7.50        56,250 7.50
October          48,750 7.50      56,250 7.50      63,750 7.50        56,250 7.50
November          55,250 8.50      63,750 8.50      72,250 8.50        63,750 8.50
December      143,000 22.00    165,000 22.00    187,000 22.00     165,000 22.00
Total Sales:      650,000 100.00    750,000 100.00    850,000 100.00     750,000 100.00

 

In this table, you will notice that for the month of June (highlighted), sales have ranged from 6.5% in 2014 to 8% in 2016 with the average being 7.23%.

Therefore, if the average June contributes 7.23% of total sales then your budget for next June would be $76,802 i.e. 7.23% of $1,062,265 equals $76,802.

If you do not have history going back this far then either go back as far as you can and draw your own conclusions or use the Industry averages.

Please take into account any months with unusual trading patterns such as sale months, closed for remodeling, etc. as these can distort the normal seasonal breakdown.

 

Daily Sales Analysis

We would also suggest breaking the monthly goal into a Daily Goal. The easiest way to do this is simply to divide the total sales goal by the number of trading/selling days. For example, if the budget for June is $76,802 and your store is open for 25 days, then your daily budget is $3,072 i.e. $76,802 divided by 25 days equals $3,072 per day.

Table 2 below shows what a monthly breakdown might look like:

Month 2016 Goal Running Totals Trading Days & Ave $
$ % $ % # $
January 71,915 6.77 71,915 6.77 25 2,877
February 74,359 7.00 146,274 13.77 23 3,233
March 69,047 6.50 215,321 20.27 25 2,762
April 74,359 7.00 289,680 27.27 25 2,974
May 69,047 6.50 358,727 33.77 24 2,877
June 76,802 7.23 435,529 41.00 25 3,072
July 69,047 6.50 504,576 47.50 22 3,139
August 74,359 7.00 578,935 54.50 23 3,233
September 79,670 7.50 658,605 62.00 24 3,320
October 79,670 7.50 738,275 69.50 24 3,320
November 90,293 8.50 828,568 78.00 22 4,104
December 233,698 22.00 1,062,265 100.00 23 10,161
Total Sales:    1,062,265 100.00    1,062,265 100.00 285 3,727

 

If you want to strive for ‘Best Practice’ then your daily goal can be broken down between the sales team. For example, if Mary typically does 25% of the sales then her personal goal for June would be $19,201or $768 per day.

Again, the easy part is setting the sales goal, the challenge is ‘how’ to achieve it consistently.

Action Steps:

  1. Calculate the average percentage contribution made by each Month using three years of historical sales data or Industry Benchmarks.
  2. Divide your annual sales goal by the percentages in Action Step 1 (as per Table 1) to arrive at a monthly goal.
  3. Get a Calendar out and work out the number of days you will be trading/selling in each month.
  4. Now divide your Monthly goal by the number of trading days (as per Table 2) to arrive at a daily sales goal.
  5. We recommend you split your sales goal between the sales people so you can manage their activities and measure their results.
  6. Implement a Daily Team meeting, to keep everyone in the loop and on track.
  7. ‘TMT’ it. Test Measure and Tune your strategies and results.

If you would like help with setting goals for maximum performance from your team as well as strategies in helping you achieve your sales goals, please contact Becka Johnson Kibby, 714-925-2456 or Becka@EdgeRetailAcademy.com

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