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Nine easy steps to create your perfect sales expense budget

by , 03 September 2014
If you don't control your sales expenses, your company's profit may just go down the drain. That means all your hard work will wind up being for nothing.

You can prevent this though simply by using a sales expense budget. This simple budget is the best way to carefully control and monitor what expenses your company actually incurs in the process of making sales.

And before you start thinking drawing up this budget is going to take forever, don't. You can create the whole thing in nine simple steps...

 

Follow these nine simple steps to create a sales expense budget

 
Step #1: Determine how much you're going to sell
This is your starting point. Determine the total amount of product you project you'll sell in the next month. If you have consistent sales every month, this is easy. It's normally the amount of the product your buyers order. 
 
Step #2: Determine your expenses for your first month
You need to write down the type and total amount of expenses for your first month based on your previous month's actual sales expense figures.
 
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Step #3: Insert sales expenses amounts into Excel
Insert your sales expense amounts from step #2 for September into your Excel sheet. You may need to adjust your variable sales expense on the Excel sheet to match your sales volumes.
 
Step #4: Calculate the ratio of increase in products
With increases in sales, you'll have increases in variable expenses. And you'll have to insert these increases into your budget in your Excel spreadsheet. The best way to work out the increase in your variable sales expenses is to use a ratio.
 
Step #5: Enter the new figures in your spreadsheet
Enter the expenses you calculated for October into the Excel sheet.
 
Step #6: Calculate your ratio for each month of your budget
Now do your ratio calculation for November and the rest of the year. You must repeat this ratio calculation each month because demand for the product is different each month. So you must adjust your variable expenses for each month with your new ratio.
 
Step #7: Adjust the variable expenses for each new month
Adjust the variable expenses for each new month using your new ratio.
 
Step #8: Enter the expenses for each month into the Excel sheet
Enter the expenses for November  into the Excel sheet.
 
Step #9: Determine if you've sold enough product to cover your fixed sales expenses
Determine the profitability of your sales vs. your sales expenses, to see if your business makes financial sense.
 
It's that simple to create a sales expense budget and improve the way you control your sales expenses.
 


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