SALES BUDGET

The sales budget is a blueprint for making profitable sales.

A sales budget consists of estimates of expected volume of
sales and selling expenses. The sales volume part of the sales
budget is based on the sales forecast. Thus, the budget
depends on the sales forecast and the amount of revenue
expected to be generated for the organization during that
period.
BUDGET PURPOSES
The budget is an extremely important factor in the successful
operation of the sales force. Top sales managers spend a great
deal of time attempting to convince corporate management to
increase the size of their budgets. Budgets are formulated for
many reasons, including the major ones of planning,
coordination and control.
INSTRUMENT OF PLANNING
The budgeting process requires complex sequences of planning decisions.

Total Budget

Marketing or Sales
budgets/plan

Sales goals Cost of executing

Sales Strategy and the strategy & the
or quotas
action plan action plan

By products By territories customers Salespersons

Sales quotas include sales volumes, selling expenses, and key activities to be
performed by salespersons.
The typical budget period is one year, the sales budgets and quotas are prepared
on quarterly and monthly basis.
COORDINATION
1. The budget is a major management tool for coordinating the
activities of all functional areas and subgroups within the
entire organization.
2. Example: sales must be coordinated with production to
ensure that enough products are available to meet demand.
The production manager can use sales forecasts and the
sales department’s marketing plans to determine the
necessary production level.
MECHANISM OF CONTROL
1. The sales budget is a composite of sales, expense and profit
goals.
2. it serves as a yardstick, against which progress or actual
performance is measured.
3. Yearly sales budget at the company and marketing units
(like territory, salesperson) levels are broken down to
quarterly and monthly goals and the same is measured
against the actual performance.
4. If actual performance of sales manager or branch manager
is favorable are appreciated and rewarded or else the
reasons for unfavourableness are identified and corrective
actions are undertaken.
 SALES BUDGET PROCESS
1. REVIEW SITUATION:
Sales manager should review the past performance, current
and future (i.e. budget period) marketing environment.
Past budget performance:- it helps to understand the
deviations of actual performance against the budget.
Current & Future B.P: helps to understand the changes
taking place in the external environment.
Review of sales budget must be activated 4 to 6months prior
to the commencement of the financial year.
2. COMMUNICATION
(Communicate in writing about the budget
Head, sales preparation)

Area Branch District Regional

Sales. Mgr Sales. Mgr Sales. Mgr Sales. Mgr

Each first-line field sales manager estimates the sales volume

in units and value for each product and service to be sold,
along with estimated selling expenses and administrative
budget.
3. SUBORDINATE BUDGETS

National sales manager

Regional / divisional sales manager

First-line filed sales manager

(They prepare the sales budgets for
their respective sales territories and
submit the same to the immediate
reporting managers.)
4. APPROVAL OF THE SALES BUDGET
The national sales manager in consultation with the
marketing head, prepares two or three alternative proposals of
the sales budget and makes a presentation to the top
management of the company. Finally, the sales budget gets
approved.

5. OTHER DEPARTMENT
The ultimate sales budget of company is given to other
departments for preparing their own budgets (i.e. production
department, finance department, materials department and
human resource dept.)