Q: What exactly is a marketing plan, and how does it differ from a business plan?
A: A business plan projects business volume, the costs of doing business, cash flow needs and possible expansion needs for additional staff and square footage. The purpose of a business plan is to provide you with realistic projections and their accompanying budgets to serve as milestones and touch points, letting you know how your business is doing day to day, week to week, month to month and year to year.
It's common for business owners to have a five-year business plan that projects profits and losses, cash infusion needs, growth and expansion, and tax implications over a period of 60 months. An extremely valuable benefit of having a business plan is the ability to ask your bookkeeper, "How are we trending year-to-date compared to last year?" The bookkeeper might answer, "We're currently ahead of last year's numbers by 22 percent, but that's only 3 percent ahead of plan."
If you have an intelligent business plan and are constantly aware of how your business is performing compared to your plan, your banker will love you. Consequently, you'll find it much easier to borrow the money you need. Sadly, many entrepreneurs manage their businesses by the seat of the pants. Can you really blame a banker who won't buy into a business owner's enthusiasm and good intentions when that business owner can't explain mathematically what he or she hopes to make happen? It was the Cheshire Cat of Alice in Wonderland who said, "When you don't know where you're going, any road will get you there." A business plan is merely a financial roadmap that lets you plan the journey of your business over time.
Your marketing plan, on the other hand, tells you how you plan to attract customers. But businesses with a five-year business plan will often have only a 30-day marketing plan. This is probably because banks don't ever ask to see your marketing plan. But a marketing plan is required if you want your business to become a household name.
The creation of a marketing plan begins with two pieces of information and one question. The first piece of information required is the annual ad budget. "How much can we afford to invest in advertising, even if it doesn't immediately seem to be working?" The second piece if information required is your brand essence. "Why would anyone choose to do business with us? What unmet need do we fill? What is our message to the customer?" The remaining question to be answered, then, is this: "What is the highest and best use of our ad dollars?"
Tragically, most advertisers think, "I'll just experiment until something starts working, and then I'll just keep doing that until it quits working." This is why most business owners wander the desert of frustration thinking, "Advertising is a rip-off."
The simple truth is that the type of ad that pays off immediately will work less and less well the longer you keep running it. And the ad that will make customers think of you immediately when they need what you sell (true branding) usually doesn't begin showing any encouraging results for at least 13 weeks. These are the ads that will work better and better the longer you keep running them. But most advertisers will cancel these ads after only eight or nine weeks.
The thing to remember when developing your marketing plan is that you're not looking for what works. Every type of advertising "works" to one degree or another. What you're looking for is the best long-term use of your ad budget. Then you have to develop an advertising message within your marketing plan. The questions you're trying to answer are these: "What do we need to say to the customer and how often do we need to say it? And which media will give us the most efficient long-term access to the same customers over and over?" Your goal is to reach the largest number of people with the greatest amount of repetition that your budget will allow.
So plan your marketing and stick to your plan. It's the secret to making your business plan work.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.