1. Entrepreneurship Estimating Sales - Chapter 9.2

2. Estimating Sales You need to plan for your sales force Sales Force Planning What selling methods do you plan to use? Who do you need in your sales force? How much and what type of training do you need for your sales force? How large a sales budget do you need so you can pay your sales force? What estimated amount of sales can you expect the sales force to achieve?

3. External Selling Methods External sales - are obtained by hiring another company to do the selling for you By using this approach, you can have a large sales force without hiring employees Potentially sell more over a larger geographical area

4. External Selling Methods Sales Agents - external salespeople that are contracted by your business Sales Agents Typically are not paid for their work until after you receive payment from your customers Normally pay for their own expenses ex: travel, office, telephone etc.

5. External Selling Methods Disadvantages Little control over sales force Difficult with following up with your customers Hard to develop long-lasting relationships Conflict of Interest

6. Internal Selling Methods Internal Sales - are obtained by you or your employees who sell your products or services exclusively This method gives you the most control over all aspects of the sales process Internal salespeople are referred to as direct sales force

7. Internal Selling Methods Disadvantages Company has to pay the costs related to selling Paying your sales team for work and expenses before receiving sales income

8. Types of Roles Order Getting - a sales role in which the primary responsibilities are finding prospects, presenting the product or service, and helping to close sales Order Taking - a sales role in which the primary responsibility is recording and processing orders from customers who seek out your product or service Sales Support - involve assisting others with selling activities

9. Expenses Related to Sales Wages: Salary Only - a fixed amount of money that an employee is paid Commission Only - is an amount paid based on the volume of products or services that a salesperson sells Disadvantages: hard to keep experienced salespeople, budgeting personal finances, difficulty getting loans or credit Base Salary Plus Commision - paid with a combination of salary and commision

10. Expenses Related to Sales Sales quota - is a target amount of sales per month or quarter that a salesperson is expected to achieve Sq’s are one way of evaluating a salesperson’s work performance Sales territory - is the specified geographical area for which a salesperson is responsible, such as a city, county, state, or region.

11. Sales Forecast Sales Forecast - will be a key part of your company’s financial planning process A forecast accounts for such factors: Current economy Sales trends Company goals Competition

12. Sales Forecast 1.) Analyzing current conditions Market Research and SWOT analysis 2.) Reviewing past sales You can use past sales to project future sales Sales show seasonal variations ex: snow boots and bathing suits 3.) Making educated predictions about the future Is there something in the future that could cause a change in your future sales?

13. Sales Forecasting Techniques There are many methods for estimating sales More than one technique is used to help Common Forecasting Techniques Full Capacity Observational Data Industry Standard Industry/Seasonal Cycles Market Share Proportional Scaling

14. Sales Forecasting Techniques Full Capacity - simple, you forecast selling as many products as you can Ex: candles Observational Data - observation of competitors’ customers Ex: restaurant Industry Standards - proper sales forecast you will need to know how sales are estimated in your industry Ex: Retail store

15. Sales Forecasting Techniques Industry/Seasonal Cycles - sales cycles, particular buying phases that apply to your industry. Ex: Florist Market Share - when your goods are sold via Internet or catalog # of customers x # of purchases per year x average amount of each purchase Proportional Scaling - estimate the quantity you think you are going to sell within 6 months Sales per day by the # of days in the month Gradually scale up or down your sales for months 7 through 12