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