With less than a week to go before Christmas Day I know you’ll all be swamped with last minute orders, post office runs and prepping your Boxing Day sales – so this blog is for you to ponder on over the holidays (hopefully with your feet up and a mince pie in hand) . I want to talk about a question that I get asked a lot – what is the point of having a sales plan?
Often when I talk to clients about planning out their sales they tell me that their goal is to sell as much as they possibly can and they don’t set themselves a sales goal. They’re just always trying to maximise the amount that they’re selling. This is an understandable mindset because it’s easy to think that the most important thing is to be pushing sales as much as you can – well I believe that a sales plan is the most important thing that you could do for your business and I’m going to tell you 5 reasons why.
Reason 1 - Targets
It’s very hard for you to hit a target when you don’t know what the target is. Imagine that you’re trying to fire an arrow at a target but you’ve been blindfolded so you don’t know where the target is – it’s much harder to hit it and if you did it would be luck. It’s the same with your sales target – if you put a concrete number against what 'selling as much as you can' means then already you have a real possibility of hitting it - because you know what you want that number to look like and you can plan how to get there.
People often get nervous because they feel like they don’t want to say a number in case they don’t hit it and then they'll feel demotivated. I think it’s far more important to put a stick in the sand to say this is how much I want to sell this year, or this month or this week and to really commit to it. To commit to a concrete number, one you can focus on is much more powerful that just saying I’m trying to sell as much as I possibly can.
Reason 2 - The process
The process of planning your sales is in itself a really creative and thought provoking exercise. I have produced sales plans for £400 million businesses - I’ve done it time and time again, 4 times a year. Usually we would plan out a season, we would put together what we would call the 'building blocks' outlining what we’re committing to as a business for our sales and how we’re going to do it.
We would look at which products we thought were going to drive the sales, what new initiatives we thought were going to drive the sales and where we thought those sales were going to come from. All of those pieces put together meant we had a clear picture for what we wanted to achieve. Now did we get it right? No absolutely not. I don’t think I ever created a sales plan and then looked back at that period and thought that’s exactly what happened – the products that drove it, that’s where the money came from but we were often very close. What it did do was get us to focus as a company on what we were going to do to drive those sales.
It helps you to understand if you were realistic or not and importantly it helps to flag if there are going to be problems. Are there going to be products areas you don’t think will be as on trend this year so you adapt plans for them. The whole process of creating your sales plans is very creative – it gets you to zoom out – take the big picture view of your business and really engage your creative thinking around what you’re trying to achieve and how you’re going to achieve it. It’s a really valuable exercise.
Reason 3 - Cash flow
Planning out your sales helps with your cash flow because ultimately it's very hard for you to work out what expenses you can have in your business - including paying yourself - If you don’t know how much money you’re going to have coming in. Having a forecast mapped out gives you an idea of what you think is going to be possible which will help you plan lots of other things accordingly.
Very simply – if you know in January your sales are going to be low then you don’t sign up to a huge outlay of money in January because you know there won’t be that much income to cover it. If you know your peak periods then you might have a better idea of when you'll have cash in your business to purchase your stock or pay out other expenses so it’s really crucial to start understanding your sales forecast.
Reason 4 - Stock
Again, on a very simple level if you know that September, October, November, December are going to be your peak months you’ll have an understanding that stock needs to be incoming, in order to hit the sales for those months. The more you look at your sales by month and the more you have an idea of how you think they’re going to pan out - based on history, your experience, based on the kind of business that you’re running. Then you can start to understand when your stock needs to come in. Your stock should always follow your sales so it’s very hard to plan your stock correctly if you don’t have a plan for your sales.
Reason 5 - Motivation
Working towards a planned out goal, based on your knowledge of your business and customers is really motivating – especially when you smash that goal! If you say my goal is to 'sell as much as I possibly can' how do you know if you’ve ever achieved that, how do you know what success is – it’s hard to sustain your motivation in that senario. If you said your goal was to make X and you actually made 10% more than that. you can really celebrate that and review what went well so you know to do it again! If your goal is just to grow, to make more sales you can never have that moment where you can actually pop the champagne cork – say “fantastic, I did it” and we all deserve that as product business owners! Having a goal is very motivational. That is my final reason why I believe that planning out your sales is one of the most important activities you can do in your business.
The 5 day challenge
I’m really excited to announce that I’m going to be running a free 5-day sales planning challenge at the end of January. It’s going to run Monday to Friday in a private Facebook group. I’m going to bring as many people together as possible, to talk them through the process that I have used myself to produce sales plans for big businesses of £100 million, £400 million. I’m going to take you through the same process so that at the end of the you feel really clear about what your goal is for 2020, You’l have lots and lots of opportunities to ask me questions. I’m going to be in the group every single day. I’m going to be going live every single night and I can’t wait to share it with you - register here.
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