Creating a thorough marketing plan helps a business owner identify the actions he needs to take -- referred to as marketing strategies -- to increase revenues and meet the challenges presented by the competition. Although strategies are the heart of the marketing plan, the plan also contains financial projections of revenues, expenses and the resulting profit -- a projected profit & loss statement.

Part of the Annual Plan

A business owner should prepare an annual business plan that includes a month-by-month forecast of revenues and all the company’s expenses, including facilities costs, corporate overhead and depreciation. The financial projections created for the marketing plan are incorporated into the company’s overall plan. The marketing plan projections deal with only those expenditures directly associated with selling the company’s products or services.

Creating Revenue Models

The first step is to design revenue models -- formulas that depict the variables associated with selling the products or services. The business owner should make certain the models reflect the reality of the sales process. For example, a company that markets software to businesses would project how many sales calls will be made each month and how many of these will result in sales -- a projected conversion rate. Having assumptions in place for each of these variables allows the business owner to track how close her assumptions were to actual results and modify future forecasts based on this information.

Expense Forecast

Crafting a sales message to deliver to customer prospects and determining the media to use to deliver the message are two major marketing expenses that must be forecast. The business owner also must project how many sales and sales support people will be needed in the upcoming year. The expense forecast is critical, because most small businesses have more creative strategic ideas than they have financial and human resources to implement them. Projecting marketing expenses requires understanding how best to allocate the company’s limited resources -- so the expenditures result in the greatest positive impact on sales. Business owners sometimes underestimate how much it will cost to enter new markets. The key to effective expense planning is to think through all the tasks required to implement each strategy and then research what each of these will cost. Leaving expense items out of the forecast will result in actual profits falling short of expectations.

Approval Process

Although the sales and marketing staff will be responsible for developing the assumptions for the forecast models, the business owner and his finance staff should be involved during the process of developing the business strategies and the projected profit & loss statement in the marketing plan. Marketing people are naturally optimistic, and allowing the finance staff to question the numbers and assumptions behind them will likely result in projections that present a more realistic view of what the company can actually achieve.


Having a projected profit & loss statement in a marketing plan keeps the marketing team focused on the company’s bottom-line profit -- just as the business owner is. The marketing manager and her staff will become more adept at expense management -- spending marketing dollars carefully and wisely. By reviewing actual sales results compared to forecast, they will be able to see which expenditures were most effective in increasing sales, building market share and raising the company’s brand awareness.