Why the Marketing Section of the Business Plan Often Times Doesn’t Make Sense
Working with a lot of startups I have the opportunity to review numerious business plans. Over the years, I have seen all types of business plans. Many business plans that I’ve read are well researched, thoughtful, and effective. However, most business plans are inconsistent, almost incoherent statements about one’s vision for their business. Furthermore, many startup small business owners fail to understand and take advantage of the importance of the marketing section of the business plan. In making that statement, I’m hoping to explain to entrepreneurs why the marketing section of most business plans doesn’t actually make sense and how to improve it.
Give Me Directions I Can Follow
First off, let me address an overall issue that I see in most business plans. It’s an issue that isn’t limited to the marketing section of the business plan, but this issue can ruin your marketing strategy if not addressed. A business plan is supposed to be a plan. This means that I should be able to follow this plan to know how to build this business.
Imagine if an architect gave you a house plan that sounded something like this: “We will use the finest wood, cement, and drywall to build your house. It will have beautiful vistas and add value to the neighborhood. People in the neighborhood have told us they want beautiful houses in the neighborhood, and we know we will be successful because we have a passionate team who is committed to seeing this project through to the end!” If you or I, or anyone for that matter, received house plans like this we would fire the architect and find someone who knows how to draw up real plans. This may sound silly, but bankers and investors constantly receive equivalent business plans. These plans are full of a lot of catch phrases but don’t actually contain a plan for creating a business. If you’re going to write a plan, give me directions I can follow.
Connect Your Marketing to Your Financials
Marketing and financials were made to go together. If finance is the language of business, I would say that marketing is the ice breaker that gets the conversation started because all sales are a function of marketing, and sales are the starting point for financials. Business owners market their business to create and grow sales. Therefore, the effects of marketing on sales is the first connection that needs to be made between marketing and finance. The marketing section of any business plan should support the sales projections. It’s the life-long concept of reaping what you sow. The marketing section describes what you plan to sow and the financial section states what you hope to reap. If you never sow the right seeds, you shouldn’t expect to reap anything. But time and again I see business plans containing amazing sales forecasts with no explanation in the marketing section as to where these sales are coming from.
As a business owner managing your business, you also need to connect the financials back to the marketing. Marketing should drive sales, but the plan needs to show how the business is going to pay for all that wonderful marketing. In reality marketing is very expensive, but on paper too many people make it look cheap. I love looking at financial projections for a business plan that shows double digit growth year after year with little to no increase in marketing or advertising costs.
Develop a Marketing Strategy Not a List of Advertising Options
It’s easy to tell when an entrepreneur doesn’t have a marketing strategy. I just look for “the list”. The list I’m referring to is when every option available to advertise is listed in the business plan. It will look something like this:
We will market our business using the following:
- Social media
- Online marketing
- Radio advertisements
- Newspaper ads
A list like this tells me nothing about the business and how the business is going to generate sales. This type of list just reminds me of different advertising ideas I already know about. Whenever I see “the list”, the simple question I like to ask is, “how much will all that cost?” Too often the person being asked doesn’t know their costs because he or she hasn’t taken the time to develop a marketing strategy.
There is another problem with “the list”. Even if the costs are well researched and understood, it’s still incomplete. Most marketing isn’t done by means of traditional advertising. So if all you’ve listed is advertising options, you’ve likely ignored the bigger picture of your marketing strategy.
What? Does Market Research Matter?
When should a business engage in market research? Early and often. Unfortunately too many businesses never engage in market research, or maybe do it once and usually don’t get to it early enough in the planning process. This creates the problem of a confirmation bias. For example, if I’ve already signed a lease or purchased inventory or hired employees, I’m not that interested in seeing market research that suggests I’ve made a mistake or view research that doesn’t support my investment. Instead I’m looking for information that supports what I’m already doing and tend to ignore everything else.
Market research isn’t intended to make us feel good. It’s intended to help us make better decisions. But if the decision is already made and the business owner isn’t willing to change that decision, then there is really no point in doing market research. Yet well thought out plans are well researched plans. It takes a strong, courageous entrepreneur to back down from a bad idea that at one time seemed like a great idea.
Getting it Right – Creating a Marketing Section of Your Business Plan that Makes Sense
Honestly, it’s not difficult to create a marketing section of a business plan that makes sense. Creating a good plan just takes more time and effort and requires some patience and persistence. There’s no “right way” to create a marketing section, but remember the steps outlined in this article. First, make a plan that makes sense and gives direction to how to launch your business. Next, connect the marketing and the financials by creating a marketing sales strategy and showing how you will pay for it. Be sure that your strategy is a plan of action and not just a list of items. And finally, do your research before finalizing your strategy to validate that you have a good plan in place. If you don’t have a good plan in place, pivot and work on something better. It’s amazing what difference you’ll see in your marketing and overall business success with just these simple steps.
Do you still need help with creating your marketing strategy? Contact Us for ideas, a professional review of your existing plan, or an expert marketing consultation.