The Sales Budget Process Guide for Field Sales Managers

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Are we on track to reach our sales targets for this quarter? What sales objectives should I set my field sales team? How do I analyze the health of our sales funnel? Everyone of these common sales questions facing field managers starts and ends with a sales budget process.

That’s because the sales budget process acts as a guide directing you and your sales team over the rest of the month, quarter or year.

It shows not only how much money you think should be made over a set period of time, but where that money is expected to come from. This is why it’s often the first and most important written document put together by your business and sales management process model.

But as a field sales manager, how do you go about creating a sales budget? Why is it so important to you? And what is the actual sales budget process?

This is what we aim to teach you throughout this blog post.

Sales Budget Process vs. Sales Forecast

Now if you’re scratching your head thinking this sounds an awful lot like sales forecasting to me – your 100% right to do so – the two are extremely similar.

Both the sales budget process and sales forecast are tools used to by companies to get a glimpse into the future. An idea of which direction they want the company to go in and whether or not they are on course to get there.

Although the sales forecasting process and budgeting are often used together, there are distinct differences between the two:

Budgeting is a quantified expectation of what a company hopes to achieve for any given period of time – a summary of total revenue from all products or services sold. Forecasting on the other hand is an estimate of how much will be sold over the set period of time.

In other words, the sales budget process shows the direction your company would like to go in and the forecast indicates how likely you are to arrive there on time.

What is the Sales Budget Process?

Before we get started with the step by step process you’re going to need to gather the following data:

  • Quantity of units/services (you plan to sell)
  • Selling price of each unit/service
  • Period of time (month, quarter or year)

To make this as realistic as possible let’s look at an example of where the sale budget process can be applied.

In this case we are going to play the role of a field sales manager from the insurance industry. To keep things simple, we are going to focus on life insurance policies for people aged between 30-65 years old.

The sales budget will be created for the upcoming year and will be broken down on a quarterly basis.

The table we will create therefore will look something a little like this:

sales budget process

Do you remember the data we gathered at the start of the sales budget process? Well now’s the time to put it to use.

After conferring with our marketing director we’ve decided to increase the cost of our general life insurance policies by 5% next year.

This would bring our median policy cost for all customers aged between 30-65 years old to $55.

Now seeing as we are working by quarter (and there are 3 months in a quarter) we are going to multiply our policy cost by x3 to match our period of time.

$55 x 3 = $165

Selling price per unit/service = $165

Let’s go ahead and pop that into our table:

sales budget process

Now we need to determine how many policies are going to be sold throughout the course of the year.

To do this it’s best that we extrapolate historical sales data from the previous year(s). There are many recommended quantitative methods of sales forecasting we could use, depending on our particular sales process, but one which performs consistently head and shoulders above the rest is exponential smoothing.

It’s considered the most accurate method for extrapolating data as it takes into account seasonality and rogue results by applying a damping factor – an optionally weighted bias towards recent sales data.

If we don’t have any historical sales data to work with we can choose a qualitative method. These include:

  • Market research studies
  • Expert opinion panels
  • Delphi method
  • Sales force polls

Once we have our estimated number of policies to be sold over the following quarters we can go ahead and add those to our table:

sales budget process

The next step in the sales budget process is to multiply the number of policies sold by the price per policy.

So for Q1 that would be:

1300 x $165 = $215,500

We then continue that process until we’ve filled out the table as follows:

sales budget process

As you can see the total annual sales budget, after the adding up the sum total for each quarter gives us:


Importance of having a Sales Budget Process

So why did we go through the trouble of calculating a sales budget for the upcoming year?

First and foremost it provides a yardstick for which actual results can be measured against. As a field sales manager you are given a quota to hit based on the sales budget. In turn, this figure is broken down into different territories and targets assigned to the corresponding field sales reps.

But if they had no target to aim for, how are you to know if the sales process and strategy you’ve implemented has been a success?

It’s like asking them to fire down a shooting range without a target to aim at…something that might prove a little difficult to do!

Setting goals

As we discussed earlier, the sales budget process shows the direction we need to be heading in as a field sales team – it gives us a target to aim at.

But from a distance this target may seem overly ambitious and impossible to achieve, demotivating the sales team and reducing their incentive to achieve it.

So in order to reach our target it will need to be broken down into smaller bitesize goals.

Let’s take our insurance example from earlier to highlight this point.

Our Q1 target for total policies sold is 1300. Now our field sales rep may look at that and laugh it off immediately, calling your sales budget “ridiculous” or “unachievable”.

However, if we look at it a little closer, say, by breaking down that 1300 into smaller pieces by month or maybe even week we start to get a different picture.

So let’s say we decide to break our quarterly totals into months:

1300/4 = 325

Now we can go even further than that by breaking this total down into weeks:

325/4 = 81

Suddenly 81 policies a week doesn’t seem so bad. As a field sales manager you can then work with your individual team members to set strategies to incentivize them to hit these smaller, bitesize goals.

What’s more, research suggests that field sales reps that are able to track and visualize their sales goals are 20% more likely to improve their sales figures.  

The implementation of target-setting sales software that can be plugged into your mobile CRM, such as GoalManager, gives field sales managers the flexibility to assign each rep individual goals. These goals can then be linked to overarching targets set by your sales budget, while providing reps with a visual dashboard from which they can monitor their progress.

Increased efficiency

An effective sales budget process increases efficiency not just across the sales team, but also by reducing waste in manufacturing and operations.

In sales it allows field managers to assign specific goals to their team, that once achieved, will have a direct and positive impact on the overall sales targets. There’s no energy wasted on non sales-driving activities.

If you work for a company that sells product, then an accurate sales budget is doubly important. In order to know how much stock to manufacture, order and distribute across the different depots nationwide the different departments will need to know how much is expected to sell.

So if you overcook your sales budgets you’re going to be left with excess product which will be written off as waste. Equally, undercooking your estimations could leave you short of product with some very unhappy customers to boot.

As we can see the sales budget process, along with the sales forecast form an integral part of any business strategy. Without the ability to make reasonably accurate predictions about the future not only are you handicapping your field sales team’s ability to do their job, but also leaving the direction your company is headed to chance.