Setting Sales Goals with KPIs
A break-even analysis is a necessary part of any solid business plan. This empowers us to know where our sales revenue needs to be to cover the costs of running your business and help us quickly establish sales targets for desired levels of profitability. With any business, setting sales goals are essential. Understanding how to use the key performance indicators on your income statement to quickly identify a sales target can be a handy tool for running your business more successfully and profitably. With COVID19 and top-line sales being so dramatically altered, many businesses have had to determine new sales targets.
Looking at your profit and loss statement, quickly identifying these key performance indicators, and running them through the break-even formula can give us clarity on what we specifically need to do to be successful financially. A quick recipe to understand what needs to happen to create financial success. This empowers you to understand what your sales target needs to be to break even, achieve a desired level of profitability, achieve the minimum level of profitability, or cover your overhead. It will give you the results you need from your sales activity.
Then you can go to the next step and create a sales forecast and plan on how you will market the business and generate those sales to hit your numbers. How are you going to reach your customer’s radio, direct mail, phone calls, online? Then, what will you say to them, what will your message be, how are you going to generate interest and convert that interest into business, how many customers will it take, how much will you charge, how much do I have to sell to break-even? How much is it going to cost you to bring in that business?
**COGS: Cost of Goods Sold
Want to learn more about applying this to your business? Contact us for a complimentary strategy session or enroll in our online course Setting Goals for Sales and Profitability.
For more on hitting your sales roadmap and actionable marketing plans, check out these articles.
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