What is typically the first step when using the breakdown method to establish sales territories?

The breakdown method for establishing sales territories generally begins with determining the company's sales potential. This step involves analyzing overall sales forecasts and understanding potential market opportunities to define how sales resources should be allocated. By assessing the total sales potential, the organization can create balanced and appropriately sized territories that correspond to the expected demand.

Identifying target customers comes after establishing a clear understanding of sales potential. It is important but follows the initial step of evaluating how much sales can realistically be achieved. Similarly, assessing competitive factors and evaluating salesperson performance are also vital aspects of sales management; however, they play a role that is more focused on optimizing territories and evaluating effectiveness rather than laying the foundational groundwork for territory formation in the breakdown method. Thus, starting with the company's sales potential allows for a structured approach in shaping effective and equitable sales territories.