Eights tips from the experts on what you should focus on when writing a business plan for your marketing firm
Eights tips from the experts on what you should focus on when writing a business plan for your marketing firm
Every entrepreneur faces the common challenge of writing a business plan at some point as they develop their fledgling venture. But while there are vast resources available to help tackle the task, most books, websites, and templates take a generic approach in helping entrepreneurs transcribe their visions onto paper. The truth is, however, that writing a generic business plan won't do you much good. What you need to create is a business plan that is tailored to the challenges and opportunities that exist specifically for your business. In this case, we reached out to entrepreneurs and experts alike for some tips on how and what you—the would-be founder of a marketing firm—should be focusing on as you go about crafting your business plan.
1. Define your audience. The first question you should ask yourself as you set out to craft your business plan is: Who is your audience for the plan? "Are you planning on trying to get funding from a bank, attract investors, or do you just want to create a guide for yourself as you build your business?" says Lorraine Ball, who owns Roundpeg, a marketing firm in Indianapolis. "If you're applying for a loan, bulk up your financial information. Prove to the bank that your business can make money. Prove to investors that you're taking advantage of an untapped market with revenue possibilities. If it's just a document to guide you, include the information that's most important for you to remember."
Dig Deeper: Impressing Your Audience
2. Build a team. A marketing firm's No. 1 asset is its staff, according to Bill Carter and Brett Smith, the founders of Fuse, a full-service marketing company with offices in New York City and Burlington, Vermont. That means that your business plan needs to focus on employee recruitment and retention more so than perhaps other types of firms do. That might mean mapping our benefits and compensation for your staff, as well as the unique perks that keep employees excited, motivated, and hardworking—all of which will help foster a positive culture, say Carter and Smith.
You'll also want to indicate how much you plan to mix full-time employees with freelancers in terms of meeting opportunities, says Ciara Pressler, founder of Pressler Collaborative in New York City. "Marketing companies almost always need to outsource work like design and printing," she says. "Ask yourself how much will happen in-house and how much will you need to budget for things outside your realm of expertise?"
Even if you do think about the team, don't neglect who you think can best lead them over the long term. Marketers often leave a critical component out of business plans: How they'll build a management team, says Tina Young, president and founder of MarketWave, a marketing firm in Dallas. "It's true that on day one you may not be able to afford senior-level staff, but marketing is a time-intensive business, and you'll need additional fire power down the road," she says. "Plan ahead by defining how and when you'll build your management team, and who they'll need to be in order to grow your client relationships."
Dig Deeper: Tips and Tools for Building a Marketing Team
3. Define the nuts and bolts. Unlike a business plan for a product company, your business plan won't cover a manufacturing or distribution process, says Young. Rather, it should define the sales process, discipline, business approach, and training that will keep your new business pipeline filled. "That, after all, is one of the biggest challenges for a professional services firm," she says.
When you're writing your business plan, therefore, you should focus on specifically how the firm will generate revenue, says Virginia Ginsburg, founder of Swell Strategies, a consulting firm in Santa Monica, California, that works with small businesses. Ginsburg says you should answer the following questions:
• How many leads will it take to land a deal?
• What will the average client project look like financially?
• What will the average client pay?
• Will they pay on a project, retainer, or hourly basis?
"Spend time creating cash flow estimates based on the answers to these questions, and don't forget to allow for late and no-payments," says Ginsburg, adding that when you think about the sales plan for your firm, you should also consider questions like:
• How will it generate sales leads to fill the pipeline?
• How will it pursue prospects?
• Who will prepare for and conduct sales meetings with prospective clients (i.e. senior or junior staff; account staff or a separate sales staff)?
Ginsburg says you'll also need to define a sales budget that should include costs such as travel and any mock-ups/models necessary to sell the service, as well as, more importantly, time costs. "Since a marketing firm is basically a billable-hour model, each hour applied to sales is basically an hour for which the firm is not paid," she says.
Dig Deeper: Sample Sales Commission Policy
4. Map out the opportunities. Defining your target market might seem like a big "duh" when it comes to your business plan, says Erin Cheyne, of Cheyne Creative in Brighton, Michigan. "But you can't just say 'Oh, I'm in
Marketing and everyone needs marketing services.' It's naive to think you'll have a successful venture if you're going with that concept when there are thousands of other newbies doing the same thing." That means you should take the time to define opportunities along the lines of:
• What kind of companies would you really like to work with?
• What industries you'll really compliment with your knowledge and interests?
• Who can afford you?
Once you've nailed down some of the answers to these questions, Cheyne says, you can then figure out where the emotional heartstrings of the business owners and decision makers lie related to the opportunities you have mapped out. "Those guys are your target market, you're selling to them, and you need to be able to sell to them on an emotional level," she says.
You'll also have to consider that unlike a traditional company—one that is more likely to be dealing with people in the same state, or at least the same country you're working in—social media and the Web have taken physical distance almost completely out of the picture, says Cheyne. "If a company likes the way a specific marketing firm approaches social media and general marketing, they will work with them, even if they are on the other side of the planet," she says. But, with those opportunities also come challenges, specifically related to different time zones. For her business, Cheyne, who admits to having to pull all-nighters to keep up, has decided to hire an extra person to cover customer service issues to keep her international clients happy. "If you don't plan ahead for this, you won't get any rest, and you won't have the budget set aside for a competent night owl to field the calls and emails," she says.
Dig Deeper: How to Define Your Target Market
5. Focus on innovation. It goes without saying that innovation needs to be at the core of any great agency, according to Ben Swartz and Kelly Cutler, the founders of Marcel Media. They say that given the competitive landscape for marketing firms these days, it's crucial that you differentiate yourself. Including technology in any business plan, for example, especially in one for an online marketing firm, is a must. Organizations get into trouble when they try to be everything to everyone. That's why in their business plan, Swartz and Cutler have outlined their intent to focus on innovative technology and in maintaining an expert level of industry knowledge in the firm by attaining certifications, such as Certified Google Analytics Consultant, Certified Google AdWords Partner, and Yahoo Ambassador. Swartz and Cutler say that if you're going to continue to grow your business in online marketing, it will be vital to stay up to date on search technology as well. It is also important to understand how the advancements in search marketing, such as social media, factor into things, which can lead to new opportunities to offer services, such as web development, analytics, and social media, as well as search engine marketing.
Dig Deeper: How Business Plan Competitions Reward Innovation
6. Know your competition. No matter how cutting edge you think your marketing ideas are, you will face stiff competition, says Ball of Roundpeg. "Maybe it's other marketing companies, or maybe you're competing for dollars that business owners would rather spend on improving their building or on buying a billboard. These days, I often find myself competing with companies in India for Web design projects." That's why Ball says it's key to define in your business plan not only who your competition is but also what your competitive advantage is over them, such as service or expertise. One differentiator that won't work, however, is price. "Someone will always do it cheaper," says Ball.
Dig Deeper: How to Keep Tabs on the Competition
7. Know your numbers. While marketers might not call math their favorite subject back in school, they still need to know their numbers, especially when it comes to managing cash flow, says Sarah Eck-Thompson, co-founder of All Terrain, a marketing agency in Chicago, something that becomes even more important if you plan to work with major corporations. "Pay cycles are becoming increasingly long," she says. "One of our clients cycle is now 120 days. Those billing cycles can be a pretty big barrier to entry for a start-up agency that simply cannot afford to front expenses without support from investment or a great line of credit." To make matters more complicated, Eck-Thompson points out that while some banks extend lines of credit based on a business's assets, such as equipment or inventory, marketing agencies don't have such assets to borrow against. What service firms do have that they can leverage and map out in their business plan, she says, are contracts and accounts receivables. "A start-up should plan to find a bank that considers those contracts and receivables as assets to collateralize a line of credit to draw into while you are waiting for your clients to pay for your services rendered."
Dig Deeper: Troubleshooting Your Numbers With Norm Brodsky
8. Don't forget to market yourself. Paradoxically, too many marketing firms forget to spend time thinking about how they will promote their own marketing efforts in their business plan, says Becky Sheetz-Runkle, who wrote the business plan for her company, Q2 Marketing. "If you're going to be a stand-out marketing firm, you have to begin by looking like one," she says. "So if you're emphasizing creative, your brand had better scream CREATIVE! If you're emphasizing B2B appeal, your brand had better appeal to that audience. Remember the basics and dedicate ample resources, time, and budget to creating a first-class website and other relevant marketing materials."
DARREN DAHL is a contributing editor at Inc. Magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, NC.