It's that time again......time to budget for a great 2008
sales effort.
If your agency does not use a specific sales budget,
it's not too late to get one in place for next year. A
budget should be considered a working tool for your
sales team (and your agency) and can really focus you
on your goals and help you control your expenses.
Here are some items of interest to the sales
department in a typical homecare agency's budget:
- Admissions by payor source
- Average revenue per admission (by payor source)
- Average length of stay (by payor source)
- Re-episode rate (for Medicare agencies)
- Staffing levels (drawn from admits and re-episode
rate)
- Marketing expenditures
- Sales salaries and bonus
You'll want to make sure that you derive your sales
goals for 2008 from the agency's budgeted admission
goals. It's a "best practice" to make sure that you don't
simply invent some admission numbers for your
sales team to achieve, but rather use a breakdown of
the admits that you are projecting for next year. There
is also no need to have the same sales quota for
each territory....you can assign admission quotas
based on opportunity or based on a cost justified
compensation plan for each of your sales reps.
Within the marketing budget you will likely find a
breakdown of accounts that might include the
following:
- Yellow Page Advertising
- TV, Radio Advertising
- Print/Display Advertising
- Conferences & Health Fairs
- Promotional Items
- Subscriptions & Sponsorships
- Dietary/Meals
Your budget might include some additional items (or
perhaps not this many). The reason for breaking
these accounts down is to make sure that your sales
and marketing effort is on task AND on budget all year
long. I'm not a big fan of the "miscellaneous" account
but it is nice for a sales manager to have some
discretionary spending money during the year in case
a great opportunity comes up. Remember, although
these accounts will be broken out by month, its up to
you to use this money strategically throughout the
year...so if you need to use more in the Spring and
you're over budget, simply cut back in the Summer to
get back on track.
Another key item to remember is that if your agency's
budget springs from admissions (as it probably does)
then you ONLY have the budgeted amounts to spend
for marketing WHEN you reach your admission
targets. If you have $12,000 in your print advertising
budget for the year and you are scheduled to admit
200 patients....you won't have that 12K available if you
only reach 160 admissions by year's end.
I encourage all of my sales managers to get involved
in their agency's budgeting/forecasting process.....it's
the best way to make sure that everyone begins the
year on the same page and working toward the same
goal. I also then encourage those same sales
managers to share the pertinent points of the budget
with their sales teams. It makes no sense to have
such a powerful, useful tool if everyone in the agency
cannot use it. Your salespeople might not need to
know things like LUPA rate, case mix, clinical
productivity and the like....but they sure can wrap their
minds around admissions, payor sources and
marketing dollars.
As a final thought, a budget can best be used as a tool
if you allow for significant market changes. If you are
halfway into 2008 and nowhere near meeting goal
due to some unforeseen circumstances, you can (and
should) amend the budget so that it can continue to
be a useful tool for all involved. I'm NOT a proponent of
changing the budget every month based on the last
month's results...but don't be so inflexible as to never
allow yourself to regroup.
A well thought out budget can help you guide your
sales team to a new level of success in 2008. Take
the time now to plan, measure and draft the forecast
for next year so you AND your budget are the
guideposts to a great sales effort in the New Year.
