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Setting sales targets

Setting realistic sales targets is a key factor in improving performance and maximising profits.

Realistic sales targets can help improve cash flow, increase motivation of sales staff and meet your overall business goals. Sales targets can be used for products and services, regions or even for particular types of customers.

For a business to continually grow, business owners must set sales targets in areas that will boost growth and development. When setting sales targets, here are three things to keep in mind:

  • Tailor for your business

Every business is different and sales goals will vary depending on the stage of the business cycle it is in, i.e start-up or an established business. Sales targets will vary according to seasonal factors, marketing, production and supply costs.

A good way to work out a sales target for your business is to calculate the minimum sales requirement. This is the point at which both your fixed costs and your profit goal are covered by your gross profit (the difference between sales and the costs of producing products and services).

To calculate your minimum sales requirement, work out how much you need to sell to cover fixed costs, your salary and desired profit.

  • Consider external factors

Sales targets need to be realistic and take into consideration external factors, i.e. the economy, competition and volatile markets. These variables will significantly impact your sales goals and therefore, it is critical to constantly monitor your business’ environment to adjust your sales targets accordingly. Setting goals based on the previous year’s sales can be damaging to your business and lead to over-ambitious sales targets.

  • Involve your sales team

Sales staff are valuable members to include in the sales setting process; not only do they have insight into your market and customers but they also have a comprehensive understanding of your products and services. Sales staff can help forecast and monitor sales trends such as seasonal patterns, the number of new vs existing customers and the types of customers who purchase your products or services.

Be specific when setting sales targets, for example, if you are targeting customers break down the types of customers you sell to, i.e, new, existing or past. If your sales target is to sell more to existing customers, implement a solid approach to how sales staff can up-sell products and services.


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