A sales budget is a financial plan that projects anticipated sales revenue for a specific period. It serves as a benchmark against which actual sales performance can be measured. For example, a company might project $1 million in sales for the next fiscal quarter, detailing anticipated revenue streams from different product lines and sales territories. This projected revenue is the core of the sales budget.
Establishing an accurate sales budget is crucial for effective business planning and resource allocation. It informs decisions regarding inventory levels, staffing needs, and marketing expenditures. Historically, businesses have relied on sales budgets to secure funding, manage cash flow, and evaluate the effectiveness of sales strategies. A well-constructed budget minimizes financial risks and maximizes profitability.