Financial Planning for the Wedding Industry, Part 2

This week are setting financial goals for 2010.  Yesterday, we worked on an expense budget.  Today, we are going to make a sales plan.  We’ll outline the basic components that you need to include in a sales plan in order to set yourself up for success.  We also have an easy-to-use download available for you to build your own plan.

I’m going to walk you step-by-step through how to build a sales plan:

1.     The Basics

First, let’s talk about some of the terminology that is used in a sales plan, and give you some definitions so you have background knowledge before you build your plan:

• Break-Even Sales
  This is the minimum amount of sales you have to do for you to recover your business expenses.  For example, if you have $50,000 in annual business expenses, you would have to do $50,000 in sales to break-even.
• Targeted Sales
  This is the amount of sales you’d like to do in order to make a reasonable living.  I like to build a plan where you define the income you WANT to make and determine how you are going to get there.
• Average Sale Per Wedding
  This is essentially the average price that you charge for one wedding.  We’re certain that you have a range, so come up with the average for this exercise.  We are sticklers for understanding how to price appropriately and what can happen when you price incorrectly, so make sure you take this into account and incorporate our strategies into your numbers.
• Average Cost of Sales Per Wedding
  These are all of the costs that go into producing one wedding.  These are costs that directly affect the ability to produce the wedding; they do not include any overhead or administrative costs.  If you are an invitation designer, they would be your materials, the cost of assembly, and the cost of printing.  If you are a photographer, they would include the film, books, prints, labor cost associated with shooting and editing the wedding.  If you are a planner, this would include the labor costs associated with producing the wedding.
• Annual Expenses
  This is what we worked on yesterday, in our expense budget post.  These are all of your administrative and overhead expenses.  See here for the template on building this.

2.     Determining Your Sales for 2010

Now that you understand the above terms, you can input these numbers into a sales plan worksheet.  If you’d like a template where you can simply plug in the data from Step #1 above and have the opportunity to play with your numbers, we created an easy-peasy download you can use.  Sales formulas are already set-up in Excel and will auto-calculate for you. Or, you can of course create your own spreadsheet and play with the numbers that way.  Here is our Sales Plan template download available for $10… click on the image to purchase:

3.     How the template works

The template essentially has you work backwards to determine how many weddings you have to do reach your break-even sales amount and your targeted sales amount.  We call it “easy-peasy” because you don’t have to do any math.  You simply plug in the numbers we discussed in Step #1 and the template will auto-calculate the numbers for you!  It’s a great tool because you can play around with the numbers until you are comfortable with a) your pricing, b) your costs, c) how many weddings you want to work.

At the bottom of the template you are asked to define your “promotional activities”.  Once you have a sales number that you are comfortable with, you’ll have to figure out, “how am I going to make this happen?”  You’ll build a list of everything you do to promote your business and determine how many weddings you will aim to achieve with that promotional activity. Examples of promotional activities include advertising in an online publication, attending networking events, etc.

You’ll probably find that you’ll play with the numbers quite a bit – there is not an exact science or formula we can give you to follow as you build your plan since each business is so unique with their pricing and expenses…however, we can tell you that the more time you spend setting sales goals and understanding expenses, the more likely you are to be profitable and sustain your business.

With that,  voila!  A sales plan is born!

If you’d like more detailed information about the Sales Planning process, we go into these exercises in much greater detail at The Simple Plan workshop… we’re hoping to see you there!

We’d love your feedback on this!  Please post a comment as to how the template is working for you!