One of the most important sections of a business plan is the Marketing and Sales Strategies section, 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 or clients. Your marketing plan is the key to effectively and affordably finding your buyers, and is crucial for potential investors and lenders.
Why You Need a Business Plan for a Home Business
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: Make smart decisions: A business plan helps you focus your ideas and forces you to spell out strategies for everything from human resources, to technology, to marketing. Identify potential weaknesses: As you go through the work of creating a business plan, you may spot pitfalls in your ideas. It’s also a good idea to share the plan with experts who can give you advice and tell you what they think won’t work. Convince people to give you money: If you do need startup funding, investors and lenders will definitely want to see a detailed business plan so that they can assess how likely you are to be successful with your business. Communicate your ideas with other stakeholders: You can share your plan with people you want to recruit to work with you, suppliers you need to ask for credit, and potential clients.
What To Include in the Marketing & Sales 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.
The 5 P’s of Marketing
The 5 P’s started out as 4 P’s, a construct developed by E. Jerome McCarthy more than 50 years ago. The 4 P’s include basic elements of marketing, which are product, price, place, and promotion. In later years, people or personnel was added by some marketers to become the fifth P.
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 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? Also include any delivery terms and costs, and how those expenses will be covered (e.g., added to the sale of the item). Indicate if there are 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 will you 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 on the people who will the 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 selling or providing customer service, and what kind of 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 changes in your social media analytics. Consider using A/B testing techniques to make sure you’re using marketing messages or materials that customers respond to best. 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.
