A marketing plan outlines and organizes all the ways in which you intend to market your business. It often covers a two-year window, but there is some flexibility. A marketing plan functions as a point of reference or guide; it reminds you of your goals and your action plan. It’s a dynamic document that you modify as you go. As you gain experience in your business, you will find out what works and what doesn’t. If an item on your plan doesn’t work, you can change it or abandon it.
Over time, you will refine this document into something more like a reference of proven successful marketing strategies. Some marketing strategies will have a better fit with your personality, ability, budget, market and goals than others.
Another good reason to have a marketing plan is so you can present it to a third party, such as a bank, when needed. If you are trying to get a business startup loan, for instance, having a marketing plan gives you legitimacy to the banker—it shows the banker that you are serious about your business.
A marketing plan helps to prevent you from trying every marketing opportunity that comes along, without regard to budget. If you follow your plan, you will realize that adding a new activity means dropping a planned activity or changing the budget.
A marketing plan is a subsection of a business plan. As a service-intensive business, your marketing plan is likely the most important section of your business plan. The good news is you already have the content for your marketing plan at your fingertips. All you need to do now is organize this information into a plan of action.
Remember, a marketing plan is just that—a plan. It is not a guarantee of profit. But with a plan, you stand a better chance of realizing your financial projections. The plan gives you a foundation on which to build your business.
Remember, too, that a marketing plan will not make you money until it is well executed. There are those among us who are wonderful planners, but hopeless implementers. If you know or suspect that you won’t follow through on the items in your plan, you should save yourself a lot of time and don’t bother with the plan.
Not only do you already have the content for a plan, but you also have a basic template for your plan. There are also many templates for marketing plans on the market, online and in books. At the end of this article, we’ve listed a few books that might be helpful. An Internet search will bring up plans that you can purchase and plans that are free. Most marketing plans are based on the assumption that you have a product to sell, but remember that you are looking to build a plan for a service business.
General Principles of a Marketing Plan
Marketing plans vary widely depending on where you find a template and what you are offering. But they all share some general principles.
General overview and mission statement: This is the basic information you need to know about your company. Start by asking yourself the following simple questions:
- Who is the company, including principals and employees?
- What is the product or service? What is the company’s goal?
- Where is the location of your business and what is the service area?
- How does the company plan to accomplish its objectives and sales volumes?
- Why is your product or service superior to existing services?
- When are your services purchased and who does the purchasing? For instance, the client purchases your service on site but, in a sense, it is the agent who sets up the purchase beforehand.
Once you’ve written your general overview, you are ready to dig into the meat of the plan.
Features and benefits of service: List the features of your service and the related benefits for customers. Describe what agents look for in an inspector and what homebuyers look for in an inspector. Then describe how your services meet those needs.
Unique selling proposition: What is the one benefit of your service that others cannot offer?
Budget: Develop a budget before you get into the rest of your plan so that you have an idea of what you have to work with. Be prepared to adjust your budget after you have developed your plan, and to add or omit any strategies that you’ve changed your mind about. If you’ve already made a tentative budget, insert it into this section of your plan.
Target market segments: Describe your target market. Home inspectors have to break these into segments, which can include homebuyers, home sellers, homeowners, real estate agents, lenders’ title companies, real estate lawyers and others. You may break some segments down into subcategories. Homebuyers may include buyer of new homes, first-time homebuyers, buyers of condominiums and so on.
Market size and penetration: For every market segment, define the total potential sales within this proposed market. This includes all the possible home inspections in the segment, for example. Then project your penetration into the market over 6 months, 12 months, 18 months and 24 months. This will be based on your estimate of how much demand you can create for your service in the market segment. Compare your service output capacity to your estimate of market demand. This is a check to make sure that if you create the demand, you will be able to provide the service.
Competitive analysis: This section outlines what your prospects want and the competition you face as you try to respond to that demand. You are competing with inspectors who already have established relationships with agents. To know more about your competition, ask yourself the following questions: What are your competitor’s service areas? How many years have they been in business? From whom do they get referrals? What are the features and benefits of their business? The more you know about your competition, the better your chances of knowing how to overcome the hurdles.
Find out what market share your competitors enjoy. One way is to conduct an informational interview with an inspector who works in a completely different service area. That way, they won’t feel like you’re encroaching on their territory, but you should make sure that the service area shares similar qualities of the service area that you intend to break into.
What are your strengths and weaknesses compared to your competition? Consider location, size of resources, reputation, services, report type, speed of delivery, flexibility of hours and so on.
Here are other questions to consider about your competitors:
- How many firms offer your service?
- Is your desired service area saturated with building inspectors?
- How many of these firms look prosperous?
- How many services such as yours went out of business in this area last year? Can you find out why they failed?
- How many new services opened up in the last year?
- Which firm or firms in the area will be your biggest competition? Why?
Service pricing and financial projections: When you get to this part of your plan, you need to consider four main elements:
- Operating expenses
- Planned profit
- Competition’s prices
These elements will help you develop a pricing structure that is fair to the customer and to you. Not only must you cover all expenses, but you must also allow enough to pay yourself a salary. Don’t sell yourself short!
Inspection fees can vary dramatically by geographic region. For example, in areas that have no basements and no fossil fuel furnaces, the inspection tends to be a little faster and the inspection fee tends to be a little lower. However, fees also vary with the cost of living; more expensive places to live have higher inspection fees.
Analyze the particulars of your pricing by doing the following:
- Describe the generic price range and rationale for home inspection services. You can look at this in a few different ways. If you’ve decided to go for a price that is higher than your competitors, show how you might lose a percentage of sales volume, but how you will make up any financial shortfalls through the price you charge. Charging more than the competitor can send the message that your service is high-quality. If you are planning a promotion, show how you have modified your price structure to accommodate your promotional prices, discounts or coupons.
- Show how this price covers your expenses and has appropriate margin for profit. You need to know what your costs will be to ensure that you can cover them. Hidden expenses will crop up when you least expect them, so build in room for incidentals. Include a breakdown of all service costs in your plan.
The more detailed information you provide about the following, for example, the better idea you’ll have of how to price your business and ensure profit:
- Operating expenses
- Computer, printer and software
- Inspection tools
- Insurance (property, auto, general liability, errors and omissions, health and dental)
- Association dues, training and continuing education
- Communications expenses such as telephone, Internet
- and website
- Marketing materials including business cards, brochures,
- stationery and an inspection report writing system
- Car expenses such as gas, repairs and reserve for replacement
- Inspection time
- Administration time
Provide a sales forecast of the market share that you think your company can realistically expect to generate. It’s a good idea to set up a financial projection page.
- Some items to consider are the following:
- Sales forecast
- Profit margins, including variations due to promotional pricing or coupons
- Provide a projection of the next few years of your business.
Distribution channels: How do you plan to get your service to the end user? This is an especially important question in the home inspection business. Your end user is your client, the homebuyer. But getting to the homebuyer directly may be an inefficient use of your resources. Many inspectors reach their clients through real estate agents.
How do these distribution channels help you meet your time frames? In your case, developing a relationship with agents may save you time because you don’t have to solicit homebuyers directly. Once you’ve invested time pitching agencies and agents, you will be able to decrease that time investment in the future and increase your inspection time availability.
Remember that all good marketing plans should be “living” documents. It’s a good idea to make changes from time to time. And remember that no matter how good the plan is, the marketing plan in itself won’t make you any money. The only way a marketing plan will lead to success is through your diligent and effective implementation of the plan.