Budget for sales success

By Doug Freer

A goal that is not written down is nothing more than a dream. Goals must be specific, measurable, attainable, realistic and time-oriented to be effective. Without this kind of specificity, it is more likely you will not accomplish as much as you had hoped.

The budgeting process includes setting an often-allusive revenue goal for snow services. This is challenging when you don't know how much it's going to snow during the season. A specific plan that can be measured is more reliable and realistic.

Before you can begin selling, you need to know who you are and what you do best. What do you do well? Who are your best customers? What type of properties do you service best? Who else would make a great customer for you? Why should someone buy from you? What is your unique selling proposition?

Without a strategy, your attempt to sell additional work will be like throwing seeds in the wind; without a sales plan, you won't know how much seed to sow and when to begin and end.

Developing a sales plan is a multi-step process. Begin with building the sales budget so you know how much of your business will come from returning customers vs. new sales. Once you know your sales goals, you must allocate your resources—making sure you have the time to do the necessary selling.

1. Historical numbers. Note total seasonal snowfall and revenue for the previous winter. Determine the number of recorded events that you worked. Calculate average revenue per event by dividing total revenue by total number of events. For your historical numbers, go back as far as you can for better estimating accuracy.
2. Service saturation rate. Determine the amount of revenue that you would earn if you serviced all of your properties, including plowing, de-icing, sidewalks and scheduled loader work, etc. You may not service each property during each event depending on geography, trigger depth, level of service, etc. But the potential revenue divided by the average revenue per event provides a service saturation rate. The higher level of service you sell across the board, the higher the saturation rate. If your clients are all treated equally no matter the storm, then the rate will only reflect geographical differences. If you provide varying levels of service, the higher the service level you sell, the more work you will perform and the higher the saturation rate will be.
3. Revenue by area. Determine the area you cover in a given event; in this case we'll use acres as the common denominator. Divide the total potential revenue by the number of acres to be serviced to determine average revenue per acre. (Note: You can use parking lot-only square footage, or add in sidewalk square footage. Area to be serviced is part of a ratio, so it needs to be representational of your business—but not necessarily exact).
4. Currently sold contracts. Determine how many customers and properties from last year you expect to return. Consider renewals, multi-year agreements and new sales for which you have commitments. Decide whether you will also include those that you believe have a probability of returning. Of those returning contracts, determine the potential value for an event (Step 2).
5. Average revenue goal per event. Determine your goal for average revenue per event, which accounts for replacing lost customers and increasing sales. You will work and adjust this number according to several factors—going back and forth between Steps 5 and 6. Consider your gross sales for the season by multiplying your goal for average revenue per event with an assumption of low, average or high snowfall to see what the impact on your company budget would be. Be conservative and estimate lower snowfall for the season.
6. Full revenue goal per event. Divide your average revenue goal by the service saturation rate. This provides the full event revenue goal for how much work you must have under contract, knowing that you will not service each customer for every event. However, you must be able to service the work you sell in the event of a full storm and still have capacity to spare. From your historical numbers, you know what a realistic service saturation rate is for your geography and blend of customers. Consider your available or planned capacity and make sure this is a realistic number. From Step 3, apply the historical average revenue per acre to see whether your new sales target can be serviced with your current capacity. Do not oversell. Make sure you can deliver the service you are selling. If you can't service more customers (acres) to make your budget work, consider upselling current or potential clients to increase your service saturation rate (revenue), which you may be able to more easily accommodate.
7. New sales goal. You can now determine how much new work must be sold. Subtract the sold contracts or returning business (Step 4) from your total sales goal. The difference represents new sales you must close from returning customers who have not signed or from new customers. Divide the goal by revenue per acre to determine how much pavement area must be sold.
8. Average size of customers. Determine how many customers you worked for last year, and divide the total service area by the number of customers (or properties) to determine the average property size. Remove any overly small or large properties from the calculation if you feel they will skew the numbers.
9. New customers. Divide your sales goals by the average size of your current customers to estimate the number of new customers or properties you must add.

There is a limited window of opportunity to generate new sales, so you must determine whether you have the capacity to reach your goals, how many people you will commit to the sales process and for how long.

In your decision-making progress, factor in your closing ratio. How many contracts do you submit for each one that you close? Measure how long it takes to navigate the steps in your process so you can more accurately estimate how long it will take to make your numbers. Make sure you have enough time and company resources devoted to selling to accomplish your goals.

Once you have your sales process in place, set daily, weekly and monthly goals to remain focused. Create a wall chart to report and track your progress. Post it where everyone working on the project can see the results. Improve your plan and implement it efficiently, and you can reduce your effort— and hopefully increase your success.

Douglas Freer, CSP, owns Blue Moose Co., Inc. in Cleveland, OH.