Before starting your business, it's important to outline all the details in a business plan. Creating the plan not only forces you take a good look at all aspects of your business, from financial, to target market, and more, but also, it becomes the roadmap for your success.
One of the most important sections of a business plan is Marketing and Sales Strategies, which outlines your plan for reaching and selling to your target market. While you want to have a wonderful product or provide stellar service, it's all for nothing if you don't have customers and clients. Your marketing plan is the key to effectively and affordably finding your buyers, making it a crucial section that lenders and investors review before giving you startup money.
Why You Need a Business and Marketing Plan
There is some debate regarding the need for home business owners to have a formal business plan, especially if you're not asking for startup funding. However, a business plan isn't only about appealing to banks and investors. The truth is, every business, regardless of size needs a business plan. A business plan helps you:
- Determine where you are now in relation to where you want to go in your business
- Identify needed resources to start and run your business
- Develop clarity and focus on what needs to be done
- Gain insight to and understanding of your industry, market, and more
- Calculate start up costs and what you need to charge to build a profitable business
- Hone in on your offer, how its different from your competitors, and how it benefits your potential client/customer
- Obtain financing
- Decide if you need to hire or contract outside help
What to Include in the Marketing & Sales Strategies Section
The basics of the marketing and sales section have to do with knowing your market and competition, and designing your product messaging, pricing, and other marketing strategies to maximize sales. It involves the 5 P's of marketing, as well as figuring out how you'll measure your marketing mix's success.
Here are the 5 P's of marketing:
- Product – Describe the product or service offered to the customer by your home business, including the physical attributes of your products or services, what they do, how they differ from your competitors and what benefits they provide to your potential customers.
- Price – Outline your pricing strategies that will help you reach your target profit margin. How you will price your product or service so that the price remains competitive while still allowing you to make a good profit? When calculating price, make sure you take into consideration both fixed expenses (those that don't change) and variable expenses (costs that aren't set), as well as your time and expertise, to insure you're charging enough to make a profit. Also discuss if your price will be lower or higher than your competition, and how you can justify the difference (i.e. what do buyers get by paying more for your product?).
- Place (Distribution) – Indicate where your business will sell its products or services, and how it will get those products or services to consumers. For example, will you sell online? Will you consign your products into local stores? When you know what outlets our product and services will be available, indicate how much you expect to sell in each location. For example, will 65 percent of your sales be done online and 35 percent through face-to-face appointments? Also include any delivery terms and costs, and how those expenses will be covered (i.e. added to the sale of the item). Indicate if there any shipping or labeling requirements that need to be considered and how you will meet those requirements. Finally, outline the transaction process and your return policies.
- Promotion – What methods of promotion you will use to communicate the features and benefits of your products or services to your target customers? Will you advertise? If so, where? What percentage of advertising will be handled by each advertising option? How much business do you anticipate each form of advertising will result in? How much is this all going to cost? Also indicate if you plan to offer coupons or other incentives to get customers in the door.
- People – Decide your sales strategy and the people who will provide sales and service that will be used in marketing your products or services to the customer. Who are the people or sales team that will be providing this service, and what kind of sales training will they receive? Do you plan to offer any incentives to your customer service representatives and how do you plan to measure customer satisfaction?
Essentially, the 5 P's of marketing forms the basis of your marketing plan. If you want to make your marketing plan a standalone document, you'll also want to include the information you prepared in the Market Analysis section for your business plan.
Evaluating Marketing Effectiveness
As you make your marketing decisions, consider how you'll know what strategies are working and those that aren't. There's no sense in wasting time or money on promotional tactics that don't work. If you use social media to promote your business, you'll want to measure your social media analytics. Consider using A/B testing techniques to make sure you're using your best offers. Whatever form of marketing you use, find a way to quantify results so you can know whether it's worth your time and money to continue to use it.
Next up in writing a business plan: Business Plan Outline - Organization & Management