Your Business Resource for Greenville Metro and Upstate South Carolina

Every fall brings the opportunity to stop putting out daily fires and take some time to do a little long-range thinking. It’s a time to look at the numbers, see what was good and what could be better, and set goals for the next year. Putting together a sales forecast and cost budget gives everyone in the organization the same game plan by which to do their job every day, and that’s why many businesses take the time to do them. Sound like daunting tasks? They can be, if you don’t have good information and a plan to follow.

Here’s a checklist of information to gather that will help the process go more smoothly this fall.

1. Run a sales report, in dollars and units by month for this year so far. 
2. Run the same report for the last two years, so you have historical comparisons. 
3. Ask the sales team to review the sales history and provide their input about seasonality, market conditions and what they think their clients or customers are planning to do for next year. Have them contact their customers to get their forecasts – they will appreciate being asked, and any information they can provide will add to the picture you have from your historical data. 
4. List all new product or service introductions you are planning, including selling price and cost to make the product or deliver the service. Note the month they will be introduced. 
5. List all products & services that will be discontinued, with their respective prices and costs. Note the month each will be dropped, along with any non-recurring expenses that may result. 
6. List all major non-recurring purchases and investments planned, or to be discontinued, including the cost, and month for each. This would include any asset purchases or leases such as vehicles, furniture, equipment, buildings, etc. Keep in mind a capital budget separate from the operating budget may be useful. 
7. Run a report of administrative expenses (support staff, office supplies, company cars, travel & entertainment) for the current year to date and for the last two years. Make sure all categories of expenses (i.e. travel, office supplies, etc) are listed separately so they can be examined individually. 
8. Run your manufacturing or service cost reports for this year and the last two. Ask your manufacturing team for their review and input on changes they plan that may affect costs. 

Once you have all your reports, you can begin to firm up your sales forecast and cost budgets. Tackle the sales forecast first, as it will drive your variable costs and affect your overhead as well. Then you’ll know how much fixed cost there will be, and you can back into how much discretionary cost you are willing to incur to support the sales (i.e. travel, entertainment, office supplies, etc.)

Thinking you might put those reports in a drawer? If you’d like to have some help putting together your 2011 sales forecast and budget, call A.T. LOCKE for a free consultation.