With the opportunity section of our business plan completely outlined, we now need to talk about how we are going to carry out and execute this business. Finding the opportunity and outlining a solution is easy compared to execution. Guy Kawasaki once said, “Ideas are easy. Implementation is Hard.” That is a true statement. Keep in mind as you put this plan into action that you must remain focused, dedicated, and persevere to be successful.
Marketing and sales is vital to any business and these two crucial items are vital to outline in detail as you write your business plan. Without marketing, how will customers find you? Without sales, how will you pay your bills? The two go hand in hand. You can have the best product in the world, but if your marketing and sales efforts are poor, the business will not be successful.
As we outline this section, we need to describe the major components of the marketing plan we drafted earlier. This is an area where you can reuse some of what you put together in the marketing plan. If you did not dive into the marketing activities that you will incorporate to attract customers in the marketing plan; we need to do that now.
Outline the different activities that will be used to make customers aware of your brand, product, or service. This could be things like digital advertising, website development, search engine optimization, social media, TV advertising, radio commercials, billboards, direct mail, and many others. Be sure to outline what methods you plan to use and make sure those expenses are outlined in your expense forecast.
For all of these forms of promotion you need to have a clear and unified message. Your message should be unique in comparison to your competitors and positioned in a way that shows why your product is the best solution. It is important in this section to outline the pitch and the message that will attract potential customers.
After you have detailed your methods of promotion you need to outline your pricing and distribution strategy. Distribution is the method for customers to buy your product. The best distribution strategy varies across industries. One method of distribution is direct sales, where the customer pays your company directly. An example of this would be the customer buying your product from your website.
Another method is selling through a distributor. Distributors distribute your product for you and sell it to other businesses, who then resell to the final consumer. Some choose to use distribution to minimize overhead from logistics, but keep in mind that through distributors you will make a lower profit margin since both the distributor and purchaser will need to make a margin of the sale.
A strategy that is fairly effective is the use of resellers. Resellers sign an agreement with you and sell your product for a commission or residual in return. Some businesses prefer this since it requires less overhead. The best resellers are classified as value added resellers or VARs. Value added resellers already have a customer base that purchases from them. For example, if we sold weight loss supplements, a potential value added reseller could be a fitness center or gym.
Keep in mind you do not have to pick just one and there are many other methods of distribution. Some companies offer direct sales, sell through distributors, and have reseller programs.
Pricing can be hard to determine at first. Often times you may have to adjust your pricing overtime to find the best position. Keep in mind the lowest price is not always the best price. I have met with business owners who have found that by charging more for their product and positioning it as a premium solution has led to a higher sales volume. Product positioning is everything. Your pricing will vary across the distribution methods above, since those that require other parties to make a percentage will result in a lower profit margin.
Be sure to outline the pricing of your products and services in this section. If you are able to, include the profit margin for each. One key element, which is important to consider, is if your product is a one-time purchase or if it is an ongoing sale. Some products like a bottle of soda, are one time sales. Other products such as software and other services have the potential to be a one-time sale or a recurring sale.
If an opportunity exists to create recurring income for your business with your product or service, find a way for it to be facilitated. Investors love to see recurring revenues and as you will find through your journey as an entrepreneur, recurring sales can ease stress. Bills come monthly and if you know that you have revenue coming in, even if the month’s sales are low will lower the overall stress.
With the marketing plan thoroughly detailed, we now need to explain how we are going to capitalize on prospective customers. If your business is a restaurant for example, this section is very simple. You may want to talk about payment methods and how you will track orders, but outside of those things the sales are pretty straight forward.
On the other hand, if you are selling software, insurance, professional services, or other high end sales person dependent deals, then much more will need to be detailed here. What this section is intended to provide is a description on how a lead goes from being a prospect to a closed deal. Describe the flow of the sale and the overall process from nurturing the lead to closing.
A few questions to ask yourself and explain in detail are the following:
- What is my sales process?
- What employees will I need for the process to be carried out successfully?
- What expense or overhead will this add to the overall budget?
- Will I use a commission based sales structure or pay salaries?
- Will I institute a quota?
- How will performance be measured?
- Will I offer resellers or my personal sales people specific territories?
- What software or tools will I need to maintain leads, send follow up messages and phone calls?
- Will I participate in tradeshows or professional networking groups?