A small-business owner creates a marketing plan in order to set the strategic direction for his business -- the target markets he intends to concentrate on and the strategies he will use to convert prospects into customers. The plan is more than an outline of strategies. Forecasts are the heart of the marketing plan -- the end results in terms of unit and dollar sales that he anticipates his business will achieve.

Projecting Industry Growth

The marketing plan includes a forecast for the growth rate of the industry in which the company operates. This projection is critical, because the strategies a business owner would implement in times of rapid industry growth are different than those he would use in a sluggish market. If the industry is expected to grow rapidly, the marketing plan would be focused on acquiring as many new customers as possible. If growth is going to be limited, the focus would have to be more on retaining customers the business already has -- because his competitors will be striving to lure his customers away.

Estimating Market Size

The small-business owner must have a reasonable estimate of the size of his company's market. The important estimate is not the total number of customers who purchase goods or services like those his company offers, but the size of his addressable market -- those customer groups he can reach with his marketing campaign and who are most likely to purchase from the company. A small-business owner sometimes overestimates his true market size, which can lead to disappointing sales results, because the customers were not there in the significant numbers he thought they were.

Determining Resource Needs

Revenues are generated because of actions taken by the small-business's management team and staff, such things as sales calls, advertising and promotional campaigns, and social networking. These actions require both money and personnel to implement. The small-business owner must accurately forecast what these needs will be and the cost of them to ensure both the funds and the staff are available to implement the strategies in the marketing plan. Small businesses must use every marketing dollar wisely and allocate time and money to those strategies with the greatest chance of generating sales.

Developing Measurable Metrics

A small-business owner needs to forecast more than revenues and costs. He also should track the productivity of his marketing staff and the success of his marketing strategies by creating metrics -- statistics he can monitor during the year. One important metric is customer conversion rate, which tracks how many sales calls were made and how many resulted in actual sales. A lower-than-forecast conversion rate may tell the business owner he needs to provide additional training to his sales staff or provide them with better marketing materials to present to prospective customers.

Forecasting Cash Flow

The revenue forecast and the marketing expense forecast flow in the company's overall cash flow forecast, which includes other operating expenses such as administrative personnel cost, office expenses and any interest payments the company is obligated to make. Having an unrealistically high revenue forecast -- or seriously underestimating the marketing costs required to achieve forecast sales -- can result in a cash shortfall for the company. For a small business, a serious cash shortfall may mean that future expenditures will have to be trimmed, which requires difficult choices such as having to cut staff.