Sales and Marketing Plan

How are your customers going to find out about you and make a purchasing decision?

Sales and Marketing Plan

The sales and marketing plan section of your business plan needs to show readers that you have thought through the methods and costs of getting your message to your potential customers. This section also needs to address how you will sell and how much you will sell. Finally, you’ll want to include information to support that your forecasts are reasonable and not simply wishful thinking.


Business Plan Outline for Sales and Marketing Plan Should Include:

  • Unique Selling Proposition (repeated)
  • Marketing Budget
  • How Customers Will Find Out About Your Business
  • Who Will Sell
  • Pricing
  • Sales Forecast / How Fast Will the Sales Come
  • Evidence to Support these Projections


Important Considerations

Unique Selling Proposition (repeated). Keeping in mind that business plans are often read in pieces, rather than from front to back, it is okay and even worthwhile to include your unique selling proposition both in Section 2: Products and Services, and again here in your Sales and Marketing Plan. We recommend providing a summary of your unique selling proposition here and referencing the more complete version in Section 2. For example:

Our sales and marketing plan is built around our unique selling proposition, which essentially states that we satisfy our customers’ appetite for quality baked goods and help solve their problem of too little time by bringing breakfast, lunch and dinner options to a single location, five minutes from where they work (for a complete description of our USP, please see Section 2: Products and Services). Since these are the factors that matter most to our customers, and the ones that make us unique, our sales and marketing plan will focus heavily on these aspects of our business.

How Customers will Find Out About You. Don’t let your new business be the best kept secret in town—if you don’t have a marketing plan or a marketing budget, chances are, that’s what will happen. Before starting your business, put yourself in the mindset of your future customers and ask yourself, “How would I find out about this new business, and what would make me care about it?” Experienced entrepreneurs will often talk about “rising above the noise,” which means having your message heard above all the other advertisements, sales pitches, fliers, signs and brochures that bombard consumers every day. It’s a difficult task. Now that you’ve identified your unique selling proposition, what is the best way to get that message to your prospects? There are numerous advertising vehicles to consider, including online ads, outbound email, newspaper advertising, direct mail, Yellow Pages advertising, fliers, door-hangers, radio advertising and more. If you have established competitors, or better still, companies in the same business but in a different geographical market, look at what they do. It’s a reasonably safe bet that if they have been running a small ad in the community newspaper for several months, it’s because that advertisement is working.

Your startup marketing plan should include more than one marketing vehicle. This will allow you to quickly identify whether your business can be improved by changing your message or changing where you market your company. For example, if online advertisements are not bringing in any business, but the fliers you distribute are performing quite well—the next step is clear: Reduce online advertising and increase fliers. On the other hand, if neither is bringing in business at the level you forecast, maybe it’s the message or the offer that needs tweaking.

Marketing Budget. Now that you have identified the types of marketing that you’ll be pursuing, it should be straightforward to put together a marketing budget. Start by accounting for up-front costs such as copywriting or production of promotional materials. Then look at the recurring costs for each marketing method you’ve included in your plan. Your business plan should include a budget for an ongoing, sustained marketing plan. Avoid the “Super Bowl Ad” trap (even on a smaller scale) where you spend a lot of money up front and expect that to carry you through the year. Over time, you’ll want to fine-tune your message, adjust your offering to customers, and adapt to better meet customers’ needs. This will require ongoing marketing.

Separately, think about the startup marketing costs that you will need to incur. Depending on the type of business you’re in, these could include signage, letterhead, printing, creating case studies or “white papers,” creating demonstration products, and of course, Web development.

When you’ve arrived at your number, it’s acceptable to include in this section a monthly, quarterly or annual number for your marketing budget. If you have seasonal fluctuations, it’s better to break it out monthly. Describe how the budget will be allocated among the different marketing vehicles. You don’t necessarily have to include all the details behind your numbers in your plan, but you should have them available so that if you’re asked to explain it, you can show exactly how you arrived at your budget.

Finally, when you get to Section 9: Financial Projections, be sure that your marketing budget matches what you have presented here.

Who Will Sell? Selling is the most important thing a business must do. No sales, no business. Your business plan should state who will be responsible for selling. Walk the reader through your business’ sales process and describe by title or position who will perform each aspect of selling.

Clearly for some businesses, this is very simple. For example, if you’re opening a yogurt store that sells exclusively through walk-in traffic, your business is more marketing-driven. The salespeople are the counter help who serve the customers and ring up their purchases.

In other businesses, there are several steps involved. For example, suppose your business is providing solar energy solutions. An advertisement generates a phone call. Who answers that call? What questions is that person equipped to answer? Next, an onsite consultation is scheduled where someone goes out to the prospect’s house to gather the required information to prepare a quote. Then the costs have to be calculated and a proposal created. The proposal has to be presented to the customer. Who will perform each of these important functions?

The idea is to think it through, present it in this section of your plan, and then be sure that your personnel plan and financial forecasts take into account the sales cycle for your products or services and what it will take to make your selling efforts a success.

Pricing. Your investors or lenders are not so much interested in seeing your price list as they are in seeing that you have thought through your costs, and set prices that allow you to be profitable yet competitive. If your prices will be roughly in line with competitors, or if price is not a key factor in a customer’s buying decision, then this subsection will be more of an account of the facts and will not be required to be persuasive. However, let’s consider two extreme cases: that of the low-cost provider and that of the premium-priced company.

If you plan to compete on price by being the low-cost provider, this section will be crucial. You will need to spell out your cost advantage and how you will remain profitable while selling at a lower price. Include information that supports your ability to run every aspect of your business and still remain profitable. Also include information that addresses why competitors won’t simply match your prices, or what the impact will be if they do.

The classic mistake to avoid is to plan to compete on price without taking into account all of the costs associated with producing, selling and delivering your products or services. Unless you can demonstrate some fundamental breakthrough or cost advantage, competing on price is a dangerous strategy—investors and lenders know this.

The opposite of the low-cost provider is the premium-priced product or service. If your plan is to charge prices at the high end of the competitive spectrum, you will need to convince your readers that customers will be willing to pay the higher prices. In this case it would be helpful to include some examples of similar companies (even if in different territories) that have been able to succeed with higher prices, while competing directly with lower-cost providers. This will be important. After reading this section of your plan, an investor or lender would have be able to say, “Yes, I can see why people will pay more to do business with your company—I think you are right.”

Sales Forecast. A banker will tell you that sales usually climb more slowly than business owners expect, and the expenses pile up faster. Your business plan should take this into account and convey that you’re funded sufficiently to survive that prediction, should it prove to be true. Put together a plan that shows your business ramping up sales slowly over time and ultimately reaching profitability. No banker or investor ever got upset with an entrepreneur who blew away his or her own sales forecast. They will, however, dismiss a plan if they think the founder is naïve about how long it will take to develop the business.

This ramp-up period is the area most likely to get discussion. The initial months are those when you’re most vulnerable to completely missing your sales forecast. Carefully think through your early startup phase and include information in your sales forecast section to support your numbers even before you’re asked.

If you will have multiple product lines, break out your sales forecast by product line. Each could have its own ramp-up period and each could also be rolled out at a different time. Investors and lenders will want to see where your sales are coming from, not just your total sales. Without going overboard, more detail is generally better.

If your business will include some period of development where there will be no sales, address these time periods as well in your sales forecast section. For example, if sales are not expected to begin until month 6, certainly there will be things that must happen in months 1 through 5 to be sure you are on track. Answer the question, “How will I know in months 1 through 5 if we’re still on track to begin selling in month 6?”

On the sales forecast itself, the most common mistake is to provide a rosy “top down” forecast. For example, the plan states (and might even substantiate) the size of the market and then says, if we just get 1% of the $300 million market, we’ll be a $3 million company. Sounds conservative, right? Not if you’re an investor or a lender. Why? They want to see a “bottom up” plan that demonstrates you understand the mechanics of what it will take to generate the sales.

A bottom-up sales plan sounds something like this: “We’ll have 3 stores, each open 18 hours a day. Each store will have 3 full-time sales people on the floor at all times. Each salesperson can average $100 in sales per hour across the day, which equates to $5,400 per store per day, or approximately $2 million per year for all three stores.” What if you have four stores? How much sales does each person do from 11 PM to midnight? What if you closed your stores at 11? What if they average only $ 80 each for the first six months a store is open? Now you have something your readers can get their heads around and discuss in business terms.

This section should include the narrative about your sales forecast, as described. Rather than include all of the details in this section itself, it is acceptable to summarize and point the reader to Section 9: Financial Projections for the details. For example: “Taking into account the information outlined in this section, we expect to reach sales of $125,000 in Quarter 1; $250,000 in Quarter 2; $475,000 in Quarter 3 and $600,000 in Quarter 4. Please see Section 9: Financial Projections for a monthly breakout by product group.”

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