I do find that questions that I see posed on social network sites or asked by clients are usually where I tend to get my inspiration to share lessons learned and today is no different. Someone posed a question on LinkedIn on whether it would be more beneficial to spend time on a Marketing Plan or a Business Plan and I cringed when I started reading where some readers said they would definitely spend time first on a Marketing Plan.
I am not sure why so many small business owners choose not to write a business plan when they start their business. If I were a betting person, I would think the answers range from I have my business plan in my head to I do not need a business plan because I do not need financing. There is also the thought that writing a business plan has to be an onerous task which is does not have to be at all. If you need a business plan for a financial institution, you do need a very complete business plan, but if you are just documenting your business to make sure you have all the pieces in place – a 40 page plan is not needed. It can be as simple as an outline.
If you are someone that believes a marketing plan is more important than a business plan, think hard before you follow that thought. If you do not have a clear outline of your business strategy, how are you going to create a marketing plan? A marketing plan is a piece of your business plan puzzle, but cannot be thought of in isolation. I cannot even count how many times I have gone to see a client who has been sold marketing that is not helping with their business. They were convinced by a graphic designer, web developer, or a writer that knows absolutely nothing about their business that a website, brochure, or a direct mail campaign is going to solve all of their problems and that is why they are not making money. They then spend the money to find out that there business has not increased at all. Many times, they then become disenchanted with marketing completely and become stagnate. The reason why they usually fail is because the marketing was done in complete isolation from the business plan You should not go out and spend money on marketing until you have your business strategy in place otherwise that money will most likely not be a good investment in your business.
If you truly understand what is required for a business plan and what having one will do for you, the answer to this question will become clear. A marketing plan is not a general plan that is a cookie cutter across all businesses. You have to understand your target market. You have to understand how they buy and how to market to them. A website for a manufacturing company is quite different than a retail chain. Direct mail or telemarketing may work well for some industries and others it does not. By not understanding your business and your customers properly, you could end up wasting a lot of money on the wrong marketing. A marketing plan is in support of sales and your go to market strategy. You need to understand what your target financials are for the year to know what you need to spend to get there and what types of marketing for your business will offer you the best return.
So before you hire someone to help you with marketing or spend a lot of money on a marketing plan for your business, make sure you can articulate a basic business plan. This can be done in simple outline form and does not need to be a novel. It also needs to be developed and written in such a way that it can be easily updated, as your business should not remain the same for years. Your business has to change with the times and you need to be able to capture those changes as your business grows, so that your business plan is current.
Here is a list of the questions you need to be able to answer about your business for a basic plan. If can answer all of these then you are 80% there. When you then decide you need a loan or investor financing, you are not spending your time scrambling to put the large plan together – you already have the main items. Once you have this complete and you understand your direction – now you can develop a Marketing Plan that supports your Basic Business Plan.
A Basic Business Plan
What is the mission of your business?
- What are your business goals?
- What is your vision for the future?
- What is your value proposition and what makes you stand out from your competition?
Who is your target market ?
- What is the size of that market?
- How much of that market can you truly address?
What are the products and services you plan to sell?
- What are the features and benefits?
- What need do they solve for a customer?
- How do your products/services differ from your competition and how will you sell against them?
How do you plan to market your products and services?
- Will you have a web site?
- What marketing materials will you have?
- What market mediums will you utilize for your business to build awareness and drive sales? (Events, Direct Marketing, Social Media, PR, etc)
- How much will you spend each year on Marketing?
What is your go to market strategy?
- How will you sell: direct, indirect, online, mixed channel?
- How will you price through each channel?
- How will you support your sales channels?
What is your operational strategy?
- How will customers order products and services?
- How will you deliver products and services?
- How will you support your products and services?
- How will you manage inventory, returns, restocking?
- What systems will you use in your business to manage it?
What is your human resources strategy?
- What does your management team look like (strengths)?
- What is your organizational structure?
- What are your HR policies and procedures?
- What is your compensation structure, job descriptions, benefits for employees?
What are your financials?
- Income statement and balance sheets – how are you trending?
- What are planned volumes/ revenues?
- What are your margins?
- How is your cash flow?