Page 47 - Budgeting for Managers

Budgeting for Managers
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•How much do they spend each month?
•How much money will we receive from committed con-
tracts, even if we receive no new orders?
•How many new customers do we get each month?
•What is the spending pattern typical of new customers for
the first year?
Using these questions, we can look at how much money has
been coming in and estimate how much money is likely to be
coming in later, in future months or years.
In estimating sales of
Sales, Customer current products or servic-
Satisfaction, and es to current customers,
Budget Preparation there’s one other thing we
It is always good to keep in touch should think about: How
with our customers, and often we’re
long does it take to make
looking for a reason (or even an a sale? This is called the
excuse) to call them.When you’re
sales cycle time. It’s the
preparing your budget, you have that
time from the initial con-
opportunity. For example, if a cus-
tomer ordered a lot early in the year tact with the customer to
and not much recently, you can call the purchase, including
and ask if there were any problems. the delivery of the item. (If
You might win the customer back. the purchase is on
account, then the time to
payment is not included.) For expensive items, salespeople
might have to call on customers several times over months to
close a deal. In that case, you should talk with the salespeople
about how things are going now, and then predict future sales
from their reports.
Cycle time The length Before we finish esti-
of time it takes to com- mating sales to current
plete any cycle. Sales cycle clients, we need to ask
time is from first contact to the client one more question: Can
receiving the order. Production cycle we sell them other prod-
time is how long it takes to get some-
ucts or services? Based on
thing from the beginning of the
what they’ve bought in the
assembly line to the end.
past, what else do we