Note: Any unit desiring to conduct external sales activity must obtain initial approval for the general sales activity. Complete the External Sales Activity Form and submit it to the Internal/External Sales department at firstname.lastname@example.org for approval. After receiving initial approval for the general sales activity, on-going accountability and oversight will be provided as defined in this policy and procedures.
Applying risk base factors to conduct external sales activity
Units conducting low risk external sales activity on an infrequent base do not need to obtain approval to conduct external sales activity. Units are responsible, however, for verifying that the proposed low risk activity is an external sale and is not a sponsored project or a gift. Units must also verify that:
- the activities are not illegal or violate University policy
- the activities are consistent with the University’s mission
- the activities provide competitive rates and service
To determine if the sales activity is low, medium, or high risk, complete the on-line External Sales Risk Assessment
Any University organization planning to sell goods or services to external customers must complete the following steps prior to conducting sales transactions: 1) verify that the activity meets the definition of an external sale 2) evaluate the risk level of the transaction 3) work with Internal/External Sales department on business plan depending on risk level as defined in this policy and 4) obtain legal contract according to risk level as defined in this policy (See Administrative Procedure Establishing External Sales Agreements (Contracts)..
- Verify that the activity is an external sale.
An external sale is an exchange of tangible or intangible property or services by the University with external customers for monetary consideration which meets all the criteria set forth in (A), (B), and (C):
- The funds are in exchange for (i) services performed by the University and any tangible goods produced as a result of such services, (ii) use of laboratory equipment, or (iii) a license to use information on University maintained databases;
- The transaction is not a Sponsored Project, Gift, or an excluded transaction; and
- The transaction is consistent with the scope, guiding principles, and criteria set forth in Board of Regents Policy: Direct Sales of Goods and Services.
TRANSACTIONS NOT CONSIDERED EXTERNAL SALES UNDER THIS POLICY:
- Room and board;
- Instruction offered in the University's regular, extension, evening or continuing education programs, including non-credit instruction;
- Services provided in the practicum aspects of the University's instructional programs, including academic affiliations;
- Retail food and beverage services, including catering;
- Admission to University sporting or entertainment events;
- License for rights under a University patent, trademark, or copyright; (For further information contact the Office of Technology Commercialization at: email@example.com or 612-624-0550.)
- Use, sale or transfer of University real property;
- Naming rights or athletic promotions and signage;
- Sale of University equipment, fixtures, or supplies;
- Delivery of health care services to individuals;
- Delivery of veterinary care services to individual animals; or
- Delivery of services by University to either Fairview or University of Minnesota Physicians.
For definitions regarding Gifts, Sponsored Projects, & External Sales, see Appendix A - of this policy. If additional clarification is needed regarding the classification of the activity, contact firstname.lastname@example.org.
A transaction classification group with representatives from SPA, External Sales, and University of Minnesota Foundation has been established to provide rapid input to faculty and administrators who are uncertain how to classify a given transaction. This group also has ready access to University counsel when needed. To obtain input from this group, send a copy of the proposed statement of work, budget and performance dates, contact information for the person most knowledgeable about the proposed transaction, and any other background information the requestor feels is pertinent to: email@example.com. A classification decision or a request to obtain clarifying information will be provided to the requestor within 3 working days.
Note: The following sales activities are examples of non-acceptable external sales.
- Activities that are illegal or that violate University policy.
- Activities that are not consistent with the University's mission.
- Activities that do not provide competitive rates and service.
- Activities that do not identify an acceptable method for distributing costs to users based on actual usage.
- Evaluate which risk category the activity is classified
Complete the on-line risk assessment form.
- Prepare a business plan.
For activity identified as low risk, management oversight will shift to colleges and administrative units. Units have the discretion as to how they will conduct their low risk external sales activity. Units will monitor and provide oversight regarding pricing decisions and financial implications.
For activity identified as medium and high risk, complete the remaining steps in this document and all other procedures related to the policy: Selling Goods and Services to External Customers.
Complete a business plan if business plan does not already exist for the sales activity. Refer to UM 1741 - Internal and External Sales Business Proposal Outline.
Address the following items. If certain items do not apply, please indicate and explain why.
- A description of the proposed sales activity.
- How the proposed sales activity relates to the University's mission and purpose.
- Who within the unit will be responsible for the day-to-day operations of the proposed activity.
- Who within the unit will be responsible for monitoring the finances of the proposed activity.
- Any other sales activity currently being conducted by the unit which would demonstrate the unit's ability to successfully manage the proposed activity.
- Anticipated start up date, and any related or dependent deadlines.
Marketing and Pricing Information
- Describe the competitive options or who else (in or outside the University) performs these services or sells these goods.
- Describe type and size of expected customer base.
- Describe the customer expectations for pricing service and quality
- Define the expected per-unit price(s)
- Provide an analysis of the product's cost structure
Budgeting and Forecasting
Include a proposed budget for the current and subsequent fiscal year. See Administrative Procedures: Establishing External Sales Rates. Clearly identify:
- Resource needs which will not be met by sales activity (subsidy requirements);
- Onetime budget requests;
- Recurring budget requests.
- Resources from grants
- If grant funding is expected, identify tentative plan for replacement of any substantial grant funding at the end of the initial grant period.
- Identify all organizational partners and the level of financial participation of each, if any, business partner
- Include a financial forecast for the current and next 3 fiscal years, detailing estimated annual revenues, expenses, capital needs, and sales volumes.
- Include a projection of capital funding needs for expenditures such as equipment, facilities, or inventory acquisition. Identify proposed source of funding for capital expenditures. All financing plans for capital expenditures related to major equipment purchases of $100,000 or more, or new facility construction or renovations must receive prior approval by the Office of Budget and Finance.
Send the completed business plan to the Internal/External Sales department at firstname.lastname@example.org for review before engaging in medium or high risk external sales.
Once an activity is approved, units can proceed with obtaining legal contract if required. Refer to procedure; Establishing External Sales Agreements (Contracts).