Whether done well or poorly, business activity always costs money. Your marketing plan needs to have a section in which you allocate budgets for each activity planned. This information shouldn't appear on the activity matrix since there's enough detail there already. But it should be in writing with the individual carrying overall program responsibility. People responsible for portions of the marketing activity should know exactly what funds are available to them. In fact, you would be wise to involve them in planning those budgets.
Be as objective as you can about those costs you can anticipate. For things with which you have no budget experience, add 25 percent to your best estimate. Your budget should allocate separate accounting for internal hours (staff time) and external costs (out-of-pocket expenses). Make sure to enter the budget on a Lotus or Excel spreadsheet so you can manipulate it during construction to see which variant works best.
Your budget section might look like this:
|Budget for annual marketing efforts||$7,045|
|Sales letter mailing to prospects||$625|
|Clerical help on mailing list||$125|
|Advertising in local business magazine||$500|
|Advertising in newspaper business section||$1,200|
|Brochure design and copywriting||$380|
|Registration for business exhibitions||$145|
|Attend training session in Chicago||$930|
|Purchase new mailing label software||$225|
Controls: Tracking Effectiveness
To track progress on your marketing plan throughout the year, establish a regular schedule of meetings, and spell this out in writing. How will you make adjustments to your plan midstream? How will you monitor progress in sales/costs to make changes during the year? You can't leave yourself without this capability.
The reason you pick measurable marketing objectives is to have the ability to track your progress toward reaching them. Too many marketing efforts aren't quantifiable, with the result that the achievements of your marketing campaigns aren't satisfactory, or they're just plain illusory.
All your marketing efforts will benefit from the classic feedback loop: Act, observe, adjust, act again. Scheduling quarterly meetings is best. At these meetings, responsible individuals should report on what they've accomplished in the last quarter, including how much of the budget has been spent. Reports should be verbal, with a printed summary for the record.
As your activities move forward over time, you'll doubtless find the need to adjust the timing, the budget or the tasks themselves. At these points you must decide whether to intensify your efforts, add more tactical steps to pick up the pace, or scale back your objectives. Make your changes in an organized manner, adjusting all the dependent tasks so that the plan shifts as a whole. Whatever your decision, make sure to update your marketing plan document. Put in writing your understanding of why you didn't reach your goals. Keep the original, and date and number all changes. Your plan must be dynamic, but it shouldn't lose its sense of history. All this information will be extremely useful when you create next year's marketing plan.
Marketing isn't a science, but it is a skill in which you can make steady incremental improvement.
Your effectiveness section might look like this:
|A) Annual gross sales from the previous year||$865,000|
|B) Marketing expenditures planned during the current year||$40,000|
|C) Anticipated impact of marketing expenditures on gross sales||$110,000|
|D) Actual marketing expenses during the current year||$32,500|
|E) Annual gross sales at the end of the current year||$971,000|
|F) Percentage of the actual difference between this year's sales and last year's sales that can be fairly attributed to the marketing effort||60%|
Put a brief summary at the front of your marketing plan binder. On a single page, sum up (with key financial numbers) in no more than a single page the contents of your marketing plan. Use bullet points, short sentences and bold type for major points, and stay focused on the big issues. What does someone have to know about your plan to have any sense of it?
This summary gives plan readers a concise description of what your company plans to do in the coming year. It also forces you to boil your thoughts down to their rich and flavorful essence, which is always a good thing.
Here's a sample marketing plan summary:
The year 2006 marketing plan for Sumners and Associates has four main elements:
1. We review our existing competitive marketing situation. Overall, prospects look good for our company. Boulder is growing at a steady 4.2 percent rate, with new businesses starting at roughly 750 a year. No competitive bookkeeping and accounting firm has made significant marketing efforts, although Acme Bookkeeping did run a series of advertisements in the business section of the Boulder Bugle. Our gross sales were $145,000. We'll have to upgrade our software sometime this year, and this will cost us about $20,000, with associated hardware costs. Our supplier will let us spread these costs over three years.
2. We plan on marketing ourselves aggressively in the coming year. In addition to speaking and training engagements, we will prepare a series of three half-page ads to run on a six-time schedule in late summer and early fall in the Boulder Business Bulletin. We'll also produce our first company brochure, which we'll use as a handout at the training venues. Costs for production of the ads, the brochure and placement of the ads will be $8,500.
3. We foresee the following results for the coming year:
Gross sales $ 154,000
Net profit $ 12,400
4. In the long term, we'll explore the possibilities of opening a second office in the city. Over the next two to four years, we anticipate maintaining our historical growth of 5 percent to 7 percent per year. Toward the end of that period, we'll hire at least one other employee and consider expanding our leased space.
Your plan must address two different time frames: the short-term (one to 12 months) and the long-term (over 12 months). Most of your document should focus on the coming year, which is the most important for the majority of small and medium-size businesses. Marketing typically demands the performance of a number of short-term actions planned in unison, which together bring about change. Once you've outlined the major year-end goals, the analysis will largely focus on the mechanics of media, mailing and promotion. But you shouldn't stop your serious thinking at year-end. Stretch beyond your business's immediate needs and envision the next two or three years. What are you ultimately reaching for?
Write this down, briefly and in general terms. Questions you might answer could include: How many employees do you envision adding over the next few years? Will your need for office space stay the same? Will there be major equipment purchases? Will you be able to hire a manager? Do there exist specific training courses or certifications you'd like to put your staff through? Will your profit margin stay constant, or do you think you'll be able to better it? Will you become active in local, regional or national trade groups? How will market demographics affect your business in the coming years? Keep track of how your larger vision changes over time as well.
Source: The Small Business Encyclopedia and Knock-Out Marketing.
Miss any sections of our Marketing Plan How-To? Read our entire how-to: