How to Set Realistic Sales Targets

Setting a sales target is often a tug-of-war between what the business needs to achieve (top-down) and what the sales team thinks is possible (bottom-up). If the target is too low, the business stagnates; if it is too high and unachievable, the team becomes demotivated and deal quality drops as they chase anything to make the number.

A realistic target is grounded in history and limited by capacity. It accounts for the actual number of hours available to sell and the proven conversion rates of the past, rather than just the aspirations of the board.

Top-Down vs. Bottom-Up Forecasting

Top-down targeting starts with the business's financial requirements. If you need to grow by 20% to satisfy investors or cover new overheads, that becomes the target. The risk is that this number may have no relationship with market reality or team capacity.

Bottom-up targeting starts with the data. How many leads did we get last year? What was the conversion rate? How many salespeople do we have? When you multiply these factors, you get a 'natural' growth rate. The gap between the bottom-up reality and the top-down ambition is where strategy happens—either you change the inputs (more leads, better conversion) or you adjust the ambition.

The Capacity Limit

Sales has a physical limit. A salesperson has roughly 160 hours a month. If a typical sale requires 10 hours of discovery, 5 hours of proposal work, and 5 hours of closing, a single person can only manage a certain number of deals simultaneously.

When setting targets, you must factor in 'selling time' vs. 'admin time'. In many small businesses, salespeople spend a large share of their week on non-selling tasks — measure it in yours. If you increase their target without fixing the admin burden, you are setting them up to fail.

Forecasting Basics: Categories and Weighting

A forecast is not a list of everything you hope will happen. It should be categorised by certainty:

• Commit: Deals where the verbal 'yes' is given and contracts are being signed.
• Best Case: Deals that are high-probability but still in final negotiation.
• Pipeline: Early-stage opportunities that are qualified but not yet advanced.

A weighted pipeline applies a percentage to each deal based on its stage (e.g., 10% for discovery, 50% for proposal, 90% for contract). While useful for high-volume sales, for B2B businesses with a few large deals, weighting can be misleading—you either win 100% of the deal or 0%. In these cases, it is better to look at the 'unweighted' path to the target.

The Honest Limits of AI Forecasting

Many CRM platforms now offer AI-driven forecasting. While these tools are excellent at spotting patterns in high-volume data—such as 'deals that haven't been touched in 10 days rarely close'—they have limits in complex B2B sales.

AI cannot account for the nuance of a relationship, a sudden change in a prospect's budget, or a competitor's last-minute move. In a small business environment, an honest conversation between a Sales Director and a salesperson is usually more accurate than an algorithm.