Page 48 - Budgeting for Managers

The Parts of a Budget
have that they might want?
Marketing people call new
ducts or services that we
things to sell to old cus-
sell as additional items to
tomers vertical services.
existing customers.They may be add-
ons or they may be separate items
When we want to increase Vertical services Pro- 31
sales, this is one of the likely to be of interest to customers
who have bought a particular item.
best ways to do it, since
it’s less expensive to sell
more to a current customer than to find new customers.
After that, we turn our attention to the new customers. How
do we predict sales to new customers? We need to look at the
marketing and sales plans and get estimates of the market. If
you’re not in marketing or sales, talk to people who are and get
their estimates. If you are, then turn to Chapter 11, where we
talk about estimating business income.
Estimating per Item Sold (Products or Services)
The second approach to estimating income is to estimate the
income we expect to receive from each product or service we
sell. We may find that products and services sell to different
markets or at different times of year. We estimate monthly sales
for each item and then add them all up to see the total income
per month and for the year.
It’s often a good idea to build a marketing plan for each
product, service, or line that we offer. We then estimate sales

Bicycle Sales and Repairs
A small bike shop makes money from sales of new bikes,
bike repairs, and sales of accessories. Looking at past year
figures by product and by month, we see that kids’ bikes and acces-
sories have the highest sales during the Christmas shopping season,
adult bikes and accessories have a small peak at Christmas and a big
one in spring, and repairs peak in the spring and then continue for the
summer. Because we thought about the differences between adults’
and kids’ bikes and accessories, we were able to make a more accu-
rate income prediction.We were also able to improve our plan for
ordering items for sale.