The Dual Imperative: The Significance of Having a Business Plan and a Sales Plan
Business Plan vs. Sales Plan. Do I need both?
Introduction
Launching a Startup is an exhilarating journey that requires careful planning and execution. Entrepreneurs must develop two crucial blueprints to establish a solid foundation for success: a comprehensive Business Plan and a focused Sales Plan. While the Business Plan outlines the overall strategy and direction of the venture, the Sales Plan acts as a roadmap for achieving revenue targets.
Business Plan vs. Sales Plan – An Important Distinction. The Business Plan and the Sales Plan are critically different yet complementary elements of a successful business launch.
Business Plans are typically developed for a particular audience like C-Suite Executives, CEOs, CFOs, etc., and focus on raising funds with a Banker or conceptually pitching other funding sources like Private Equity or Venture Capital investors. Business Plans are developed from the "top-down" based on broad, industry-level market assumptions and often rely on the addressable market size, projected market share, average selling price, renewal rates, annual revenue projections, inflation adjustments, etc.
Sales Plans are typically developed by the Sales Leader to validate the Business Plan and verify the resources required to achieve the Business Plan's revenue projections. The Sales Plan is a detailed, "bottom-up" sales forecast that uses a reiterative process to confirm the sales resources (people, processes, systems, infrastructure, etc.) needed to ensure the timely delivery of projected Sales Revenue.
In this article, we will explore the importance of having both a Business Plan and a Sales Plan in the Startup ecosystem and how they work together to drive sustainable growth. Beyond Startups, this article offers a very effective approach that can be deployed in other business situations, such as Mergers, Acquisitions, Divestitures, Integrations, Reorganizations, and Turnarounds.
The Business Plan: Charting the Course
Strategic Vision and Mission
The Business Plan serves as a strategic compass, providing a clear vision and mission for the Startup. It outlines the long-term goals, target market, and value proposition of the business. By defining the purpose and direction, the Business Plan helps align the efforts of all stakeholders toward a common objective.
Market Analysis and Competitive Landscape
A thorough market analysis is a crucial component of the Business Plan. It involves studying the target market, identifying customer needs, and evaluating potential competitors. Market research helps the Startup understand its customers, anticipate trends, and position itself effectively in the market.
Operational and Financial Planning
A robust Business Plan includes detailed operational and financial strategies. It outlines the organizational structure, key responsibilities, and operational processes necessary to achieve the business goals. Additionally, it projects top-down financial forecasts, including revenue projections, expenses, and funding requirements, which help the Startup plan for contingencies, manage resources efficiently, and attract investors or lenders.
The Sales Plan: Planning to Grow
GTM Strategy & Sales Tactics
The Sales Plan details the Go-To-Market (GTM) strategy and sales tactics needed to drive sales growth. This may include sales channel selection, lead generation techniques, pricing strategies, and promotional activities. By mapping the sales process, Startups can streamline operations, optimize resource allocation, and enhance the customer experience.
Target Customer Identification
Understanding the target customer is crucial for Startups to tailor their sales strategies. The Sales Plan outlines the Ideal Customer Profiles (ICP), including demographics, pain points, and buying behaviors. By identifying the target customer, Startups can refine their messaging and design effective sales processes to maximize conversion rates.
Clear Sales Targets
A Sales Plan is essential for Startups as it clarifies sales objectives and targets. It defines measurable goals, such as revenue targets, customer acquisition numbers, the number and types of salespeople, experience levels, hiring plans, ramp-up time, sales quotas, the number of marketing qualified leads, projected calls/meetings per week, RFPs/month, win-loss projections, estimated conversion rates, manufacturing constraints, product availability, margin expectations, KPIs, etc. By setting clear sales objectives, the Sales Plan enables the Startup to focus its efforts and allocate resources effectively.
The Symbiotic Relationship: Business Plans and Sales Plans
Adaptability
The symbiotic relationship between the Business and Sales Plans allow for agility in adapting to changing market dynamics. As Startups navigate uncertainties and unexpected challenges, the Business Plan can be revised to accommodate strategic pivots, while the Sales Plan can be adjusted to capitalize on emerging opportunities. This flexibility ensures that the Startup remains responsive to market trends and customer demands.
Ensuring Alignment
The Business Plan and the Sales Plan must work in harmony to ensure alignment between the strategic vision and sales execution. The alignment enables the organization to maintain cohesiveness in its messaging, branding, and customer interactions. An aligned Sales Plan ensures that the Startup's sales efforts support the overall revenue goals. Ideally, the Business and Sales plans need to meet in the middle. Once aligned, the Sales Leader can develop a sales budget for the Sales Organization. How much does it cost to build and maintain a sales team capable of delivering the desired results?
Performance Tracking
Both plans provide a framework for performance tracking and evaluation. The Business Plan allows Startups to assess their progress toward the overarching business goals, while the Sales Plan enables tracking of sales targets, conversion rates, and customer satisfaction metrics. Regular evaluation of Key Performance Indicators (KPIs) empowers Startups to identify areas of improvement, refine their strategies, and make data-driven decisions.
Conclusion
The best way to validate a Business Plan is by creating a "bottom-up" Sales Plan that incorporates known variables to generate monthly/quarterly/annual Sales forecasts that align with the "top-down" revenue projections in the Business Plan. Any disconnects found during this process will allow the Company to address potential flaws pre-launch, which can save the company millions of dollars without having to rework the Business Plan, delay the launch, miss sales projections, or negatively impact the Company's valuation. It can also provide Operations with an accurate monthly sales forecast to order raw materials, plan inventory, and develop manufacturing schedules.
Bottom Line. Market Reports and Market Data are excellent sources of general industry information and trends when building a Business Plan; however, engaging a strong Sales Leader to develop and execute an actionable Sales Plan will ensure you have the necessary sales infrastructure and resources in place to launch and grow a profitable business.
If this article describes some of the challenges your business is experiencing, why not engage a Sales Advisor who can help elevate and accelerate your business? Book a confidential, no-obligation meeting with Strategic Elevation to learn more.