Sales Planning and Operations to Increase Overall Sales

What does sales planning and operations mean? And why are they so important? Sales planning and operations are key to not just launching a company but its continued success.

Often, planning is regarded as strategy, and operations as execution. When, in fact, planning requires execution. And operations require strategy. Planning is a precursor to operations. From getting the numbers right, to setting up a sales funnel, to bidding “wisely”. In other words, it requires execution. And your company’s operations cannot execute without a strategy.

In this article, we will demonstrate how to integrate strategy and execution from beginning to end.


Nail Down the Numbers Before Setting Up Your Sales Funnel

To arrive at a good profit margin for construction, it is important that you are clear on the numbers, not just for sales planning but operations. Here are some numbers you need to know to make your construction business more profitable. Profit margin numbers are key:

1. What is your company’s equity or net worth?
Equity Numbers

  1. Equity is the sum of your total assets minus your total liabilities (look for it on the bottom of your balance sheet or financial statement.)
  2. Aim for a minimum net profit of at least 15 percent return on total equity or investment.
    Company Equity………….$400,000
    Min Profit Goal @ 15%………….$ 60,000

2. What is your projected overhead for the upcoming year?
Overhead numbers

  1. Calculate anticipated annual overhead expenses to keep open and running.
  2. Track it every month to make sure your actual expenses do not exceed your overhead budget.
  3. Subcontractors should aim for a pre-tax net profit return on their annual overhead expenses of 20% to 40% and general contractors for 25% to 50%.
    Annual Projected Overhead………….$500,000
    Net Profit Goal @ 40 percent………….$200,000

3. What is the risk you take to operate your business?

4. How much net profit do you want to make?
Sales numbers

  1. Amount to recover his overhead expenses, plus net profit = gross profit
  2. Total gross profit goal divided by the gross profit = sales.
    • Overhead………….$500,000
    • Net Profit Goal @ 40%………….$200,000
    • Gross Profit (OH & P) Goal………….$700,000
    • Average OH & P Markup………….25%
    • Average Gross Profit………….20%
    • Total Sales Volume Needed………….$3,500,00
  3. More on Markup vs Margin
Construction Markup vs Margin

Set Up a Sales Funnel for Efficient Sales Planning and Operations

First of all, it is important to understand the difference between your sales funnel and your sales pipeline. We explain this in depth in our Sales Pipeline Stages Explained article. Before you start setting up your sales funnel, formulate exactly why prospects should do business with your construction company. It is a best practice even for existing companies to review service offerings at the time they analyze the status of their funnel every quarter or at least once a year. You also need to determine who your best customers would be, or already are.

Read this short article on how to get construction leads from different channels. Bidding platforms, associations, review sites, your company website, and even Google Maps can feed your sales funnel. The latter is SO easy, we have to show you some examples here that Daniel Quindemil, founder and senior estimator at I AM Builders, provided. It is a matter of going to Google and typing the following into the search bar:

  • “Type of client” + in city
  • “Client type” + zip code
  • “Type of client” + near me

For example:

  • Developers in Miami
  • Commercial Realtors 33196
  • Property Managers near me

When you have the company names, you can use to get email addresses.

“Spend 80% of your time involved with your sales and marketing, and only 20% on actually running your business.”

Michael Masterson, Businessman, Author, ex Peace Corps volunteer

Bid Wisely (Sales Planning and Operations)

“The lifeblood of a contractor is accurate bidding. Without very detailed estimates, a contractor cannot compete, cannot complete a project, and cannot stay in business.”

AGC (Associated General Contractors of America)

For these reasons, the goal of every contractor must be to improve their hit rate by winning more bids. While the average win rate is different in each sector, our research discovered a good rule of thumb is to strive for a win rate of 4:1 (bid 4 win 1) for private projects and 10:1 for public ones.

It is also important to understand the difference between the skills required for construction bidding and estimating when it comes to construction sales planning and operations. Typically, one person, the construction salesman, performs both tasks. Estimating is after all part of the bidding process. However, when construction companies aggressively pursue business growth, estimating is usually assigned to a skilled professional called a construction project estimator. And estimators need to be skilled at math and construction technology, materials, and processes. They also need to be very detail oriented.

Here is a very thorough article on the challenges of bidding and seven tips to win construction bids we recommend you read. You can also visit our blog and read the articles we have published on the subject: Construction Bids & How to Win More Work in Construction and 6 Tips to Improve Closing Ratio.


Set Up a Sales Pipeline (Sales Planning and Operations)

One of the best ways to keep track of your sales, your clients, opportunities, and bids, is a sales pipeline. Look at the sales pipeline as an important tool in your company’s daily operations that helps you manage and grow sales. According to VantagePoint, for example, companies who define and master their sales pipeline enjoy a 15% higher revenue growth.

But keep in mind, it must be a sales pipeline that makes sense for your company’s sales process. And the construction industry has a unique process that requires a unique sales management approach. This is a topic that warrants an article itself. Check out our article on the benefits of a sales pipeline, the distinct sales pipeline stages, and how to set up a pipeline for managing planning and sales operations. You can do that with an Excel spreadsheet, or a sales management tool specifically built for the construction industry, like the iDeal CRM.

Provide Training (Sales Planning and Operations)

Training for your sales team does not have to be formal. McKinsey & Company reported that successful training programs tap respected people in the organization to participate as mentors. These programs encourage them to connect with and nurture talented young employees.

Internal Processes

First of all, clearly communicate the company’s mission, culture, and vision. Nobody sells your company as well as someone who understands what the end goal is and believes in what and how you do business. It is also very important your sales/business development team learn the company’s internal sales process right from the get-go. That will ensure that sales planning and operations are playing in concert.


Provide your sales with the support that they need to succeed. Make sure they know what tools are available to them, what purposes they serve, and how to leverage at each stage of the sales pipeline.

If your company leverages Excel, enroll them in an online course so they can become effective and efficient end users. LinkedIn Learning, for example, offers a flexible, cost-effective group membership for your team, including business and marketing courses.

Customer relationship management (CRM) software will now doubt offer training. Or you can assign a super user at your organization to train a new sales associate. Training is never wasted. It serves to run your sales operations smoothly. And it earns you loyalty.

Sales Seminars and Workshops

There are many resources you can draw on to equip your sales manager and team with the skills they need to drive business for your company.

The list goes on. It is so important for your team to stay competitive in die construction industry. That means they must remain informed. And inspired. Training accomplishes that. It does not have to be formal or a big drain on company finances. These days a newsletter, webinar, or Google search can deliver it to your Inbox or laptop.

Streamline Sales Operations

Internal Challenges

McKinsey & Company also researched profit margins and productivity in the construction industry. They identified the internal challenges that can impact construction sales management as such:

  • Accountability – A lack of accountability is often due to ill-defined or undefined organization structure.
  • Talent management –It is difficult to find business developers who have strategic-account management and cross-selling skills.
  • Performance management – Construction companies do not analyze and reuse best practices from one project to another.
  • Technology – The construction sector has been slow to adopt technology.

How To Address Challenges with Sales Planning and Operations

How does one address these issues in construction sales planning and operations? Clearly, talent management goes hand-in-hand with training, which we covered in the previous section.

Use metrics to address performance management with metrics:

  • Set baselines.
  • Communicate productivity goals clearly.
  • Put reporting in place to measure performance against goals.
  • Analyze important metrics such as:
    • Win Rates and Conversion Rates
    • Opportunity Metrics
    • Revenue Metrics
    • Sales-Activity-Related Metrics

It does not matter whether you accomplish that with an Excel spreadsheet or sales management software. Companies who do not embrace technology will find themselves at a disadvantage down the road. That applies to sales planning and operations too.

McKinsey cautions you to track sales against the big picture when working with the business development and sales operations teams. For example, a 10% discount on your usual profit margins for one project means other projects have to make up the difference:

“Because what gets measured gets managed, companies must establish a performance and health baseline to set and track ambitious goals. A major engineering and construction business, for example, was concerned about the erosion of its profit margins, so it examined the reasons for this trend and then took action. Among other things, it exited markets where it was performing poorly and improved its risk-management processes.”

AGC (Associated General Contractors of America)

So, set up full visibility into your company’s unique sales pipeline. Not only does it provide executives with metrics for sales planning, but it supports the business development/sales team with actionable insights into sales operations. For example, if you track an opportunity through a visual sales pipeline, it cannot fall through the cracks. Download the Sales Pipeline Template Excel spreadsheet template for that purpose or try the iDeal sales management system, no credit card required, no strings attached!

Further Reading