Measuring Sales: Projecting Annual Revenue & Cost Management

When it comes to projections, some caterers use a monthly revenue budget along with a predicted percentage of the goal each sales team member sets at the end of the previous year. Sales pace is often tracked monthly and compared to the pace goal for each of the future months of the year. This is, for example, how the Colorado-based company, Catering by Design, measures its sales. 

Track sales & set goals

“In Q3 we will begin to track sales for quarter one of 2020,” General Manager Syd Sexton explains. “If a sales team member misses their goal, either total or for a month, the director of sales meets with them to determine what is needed to get them back on track. The operating department heads work together with the CFO and the general manager to prepare the annual budget for all expense line items. Once we are 30 days from the month, if it appears that we will miss the budget, our executive team makes the labor adjustments. It is their responsibility to maintain labor and all other costs assigned to them monthly.”

Meet & review

Catering by Design’s executive team meets 15 days following the close of each month to review the income and expense report in detail. If a single line item is off, it’s the department head’s responsibility to react immediately to bring the item back in line. 

“In addition to monthly reporting, our executive team reviews revenue and labor to forecast in a weekly meeting so that the team can adjust mid-month if necessary,” Sexton says.

Syd Sexton

Create a forecasting system

Catering by Design’s department leaders employ a monthly forecast via an online form. This tool was challenging for their team at first, Sexton explains, but once everyone adjusted to it, they encountered exponential success in managing their company’s labor expense.

“Catering companies book so much business in the month—for the same month—that they have become used to the unpredictability of ‘last minute business’ and ‘shooting from the hip,’” Sexton says. “The forecast tool, which features a comment section, forces the department heads to plan their upcoming month and acts as a live record providing accurate data for the future.”

Get the team involved

Metrics aren’t just important for your management team. It’s key that everyone on the sales team is included in the financial review and involved in all the metrics of their department.

Marketing metrics

Fulton Market Consulting measures weekly, which makes sense for a business that revolves around helping businesses increase profitability. But it’s important to measure more than profitability. Fulton Market Consulting measures revenue, expenses, profitability, and the number of new clients on a weekly basis, and measures social media hits quarterly. Jen Perna, president of Fulton Market Consulting, does her own bookkeeping and “loves it.”

Perna’s graphic designer helps her with blog postings, and she makes her aware of her blog’s performance. They communicate via email and have a great working relationship.

“She knows what I like and challenges me to think differently,” Perna says. “I truly understand the importance and value of investing in marketing, especially at the early stages of developing a business.”

Jennifer Perna

Making adjustments

Caterers have their own ways of adjusting based on the first year or even the first six months of results. Here are some suggestions on how to readjust:

Look at & reduce expenses

When revenue falls below budget, all department leaders must adjust labor and all operating expenses so that profit percentages fall in line. It’s important for the executive team to also determine what large expenses can be reduced. 

“The purpose of a leadership team is to steer the ship and to constantly keep all eyes on the path ahead,” Sexton says. “Rough seas will come your way—the sooner you become aware of them and adjust, the smoother the trip will be.”  

Scout for sales

Perna makes sales calls to new potential clients and reconnects with previous clients during slow periods.

“Follow up is imperative in sales,” Perna explains. “I think salespeople don’t do it enough out of fear of rejection or because they feel like they are ‘bothering’ their clients. It is important to recognize you provide value. And who knows when the time is right to work again?”

Catering by Design and Fulton Market Consulting are proud members of the ICA. For more information, visit internationalcaterers.org.