When I meet with a client one of the first questions I ask them is if they have a marketing plan. The response I usually get is that look of a deer caught in the headlights. Okay, not everyone has one. So my next question is to see their business plan. Now we are getting the sound of crickets. As my brother once stated to me, “I’m not going to the bank to get a loan. Why do I need those?”
Let me put it this way. You’re going on a trip to the other side of the country and you’ve never been there. Are you going to make that trip without a GPS (or if you’re old school…a map)? Nope. That will probably be the first thing you put into the car. Why is that? Oh, you need to know how to get there. Well, business and marketing plans do the same thing for your new (or existing) business. Do you need both? What is the difference between them? Do they have to be as long as a doctoral dissertation?
Let’s start with what is a business plan. According to the SBA a business plan is an essential roadmap for business success. This living document generally projects 3-5 years ahead and outlines the route a company intends to take to grow revenues. Good start. What it doesn’t say is that you should review this plan at least every quarter (there ae some businesses that review more often than that to make sure they are on target).
Now that we know what a business plan is, what do I have to include in it? The SBA suggests the following areas:
- Executive Summary – This section gives you glimpse of your business plan, who is your company, and what are the goals.
- Company Description – This is a detailed area of your business. This is a good spot to develop your USP (unique selling proposition…the thing that makes you unique amongst your competitors), your mission statement, and your vision statement.
- Market Analysis – The research you’ve done on the market you are in and your competitors.
- Organization & Management – You need to determine how you will structure your business. The best person to work with on this is your accountant. They know your personal finances and get help set up the right structure. If you’re going in partnership with someone, choose a good attorney to help you. You will also list your owners/management team (and their experience) and their compensation structure.
- Service or Product Line – List the products and services you plan to offer. Determine those that you will start out with right now and others you will grow into.
- Marketing & Sales – This section will be the outline for your completed marketing plan. You’ll plan out your growth, channels of distribution, and communication strategies.
- Funding Request – You will list your funding requirements (now and future) and payback period of the loan. You will need to specify how you will use the money. This is a good spot to put your business budget (especially if you’re not going for a loan). Determine how much you need for furniture, equipment, insurance, marketing, etc. Don’t forget to include the cost of your website. Too many times I meet company owners that did not budget a website. They then try to do it themselves. See my article “The value of a professional designed website” on doing it yourself is not helpful to your company.
- Financial Projections –Your accountant can help you with this information if you’re an established company. This is where you get your crystal ball out if you’re a new business. Of course, any business owner wishes that was so easy. You need to project what your revenue will be. Look and your product and service line and try to project how much revenue you will derive from each item during each month. You need to make sure you hit your monthly expenses. This is the one part where you need to review often. To make sure you’re on target.
- Appendix – What to put here? Anything else that will help you guide your business. Some suggested items are: credit history, product pictures, market studies, licenses or permits, legal documents, copies of leases, contact information of business consultants. This can be your online go to file. In case of a catastrophe you have a digital backup.
That is your business plan. If want a great source of business plan samples you can go to www.bplans.com. They have hundreds to review. If you don’t find your particular industry just look for something close (I modeled mine after a computer company ; it was the closest they had at the time).
Next week I’ll continue with the makeup of a marketing plan.