Why You Need a Business Plan Before a Marketing Plan
Why You Need a Business Plan
A business plan is the living, breathing life of any business. When we are consulting with potential clients, we start right away with asking a lot of business-related questions first before diving into the marketing. We find that a lot of businesses do not have a living, moving plan but rather an old plan from when the business was first formed. Many businesses don’t have one at all.
There are many ways to form a business plan and with great resources out there such as The Lean Startup and many others. We are not so worried about how you do your business plan, whether it’s a one-pager, a 10-page packet, a novel, or a working Google doc – just that you complete one at all.
Our experience over the last 15 years or so when working with clients is that business are not failing because of their marketing efforts (or lack thereof), but they are failing because the messaging is wrong. If you really break this down and bring it back to basics, you have to ask yourself some simple questions before you can begin marketing:
What am I selling?
Who am I selling it to?
This is bare bones, the minimum of questions we would ask a prospective client. If you don’t have a good grasp of your overall business starting from these three points, then how can you tell the right story, to get your stuff sold, to grow your business?
This is why we begin our process of finding marketing clients with consultation. Our consultative approach (read our blog about this) allows us to really dig into your business to see if you are ready for a strategic marketing plan, or if there are some business basics and groundwork that need to be laid first.
This is why we offer business services on top of marketing. If we see that you need some additional work, we may suggest that we start with a business plan, a full audit of your business practices, a coaching session, and so much more.
If we contract to create a business plan for you, we will work with whatever you are using (if at all) or if starting from scratch we like to use programs such as LivePlan. Using software like this will streamline the actual writing process so we can focus more of our time on strategy, as well as lets us continue to update the plan regularly. We believe business plans should be looked at and updated quarterly or biannually, whatever works for your business.
The following outline is the standard that we start with, customizing as needed.
- Executive Summary
- Problem & Solution
- Target Market
- Marketing & Sales
- Milestones & Metrics
- Financial Plan
Your executive summary should be just that – an overall summary of your entire business plan. We’re going to talk about what problem you’re solving, how you’re solving it, and the expectations for how your business will achieve those goals. This section might include an overview of things like financials, growth projections, etc.
Problem & Solution
Here we dig into the opportunity, first looking at the problem and the solution. What problem in the market have you encountered, and what solution does your company offer for it? For example, for us, the problem we found is that most people are uneducated and uninformed when it comes to a full digital marketing strategy. Our solution is a consultative approach that leads to an informed marketing strategy with a firm groundwork laid in business basics. As entrepreneurs ourselves, we understand the entirety of a business from creating the business, all the way to marketing it.
The next thing you have to look at is your target market. You can try to be all things to all people, but you’ll spend a lot of money and a lot of time and probably end up exhausted and unsuccessful. We have found that being something specific for a few people is better than trying to be something for all people. Nailing down your target market will also help you achieve your KPIs.
The last thing to look at in your opportunity area is your competition. Are you new to the market? Are you offering something unique? Is your market saturated with other people doing exactly what you are doing? It’s important to know what the competition is doing so that you can be successful in your industry.
Marketing & Sales
Having a clear plan for your marketing and sales is imperative for the execution of your business. Marketing should generally be about 10 to 15% of your operating budget and sales should have goals to support those numbers that will pay that marketing budget back as you scale. You should tie your marketing and sales into your target market and your competition to make sure you’re sending the right message and telling the right story to attract the right audience.
Operations are imperative because once you start to grow, can you handle the growth? We have found a really good system for weekly, monthly, and quarterly meetings through Scaling Up by Verne Harnish. Whatever system you have in place, just make sure it works for your team and that you have some type of operating system. We have seen way too many companies just be unorganized and that can waste time and money.
Covered under operations would also be a lot of your costs: where are you operating? How many locations do you have? What type of equipment do you need to purchase? What are the costs for all of these things? There are a lot of factors that can go in the operations, it just depends on what kind of business you have.
Milestones & Metrics
Milestones and metrics are where you look at the big picture. Where do you want to be in one year? 5 years? Or you could even do quarterly as you’re growing, so every 3 months – 3 6 9 and 1 year. And who is in charge of these goals? Accountability and follow up are huge factors in the growth of a business.
The company section should hold an overview of your organization’s structure, so whether you are an LLC, a nonprofit, etc as well as whether you are public or private. You should also include an overview of the team. You may include Executive Suite members, advisors, and other pertinent players. This is especially important for investors and partners looking into your business plan. People want to know who they’re going into business with!
Financial planning is where we’ve seen most companies struggle. Knowing where you stand with your financials can make or break a business and Live Plan has a great way of breaking this down and making it really easy. We have a lot of experience in raising capital for our own startups, as well as helping others businesses, so we feel confident that we can help you navigate this space.
The forecasting section will cover basic revenues, expenses, and profit-and-loss statements. Live Plan starts here simply just to get the basics nailed down and help you understand your big picture goals. This will help you determine whether or not you’re being realistic. If you’re forecasting to grow 20% this year but 80% in the second year, is that really going to happen?
Financing is a section for discussing what funding you’re seeking and how you’ll be using it. This is a really important section if you’re seeking outside investment to explain exactly where your money is going to be going where their money is going to be going.
Here you will find your profit and loss, balance sheet, cash flow statements, and additional statements you want to add. This is the basic accounting of the actual money you have in the business. Statements are going to be really important for forecasting and for investors, not to mention just for you to know exactly where you stand in the financials of your business.
Ready to Create a Business Plan?
This may seem overwhelming, especially if you haven’t completed a business plan before! But don’t worry, that’s why we’re here. We’ve completed a lot of business plans over the years for our own companies and start-ups, as well as for various clients.
At the end of the day, you know your business better than anyone. You need to be able to explain it to an investor, or future partner, and definitely your team so that everyone is on the same page and that you can grow and scale effectively.
So let’s get down to business! If you’re ready to start marketing but you think you might have a little bit of extra work to do, or you’re not sure where to start, go ahead and contact us for a free 15-minute consultation. We will ask you some questions and help you determine if you’re ready for a marketing strategy or if a business plan with a strategic team might be a great place for you to start.