For business owners, nonprofit directors, and community group leaders, the process of writing a business plan or creating a marketing plan can seem intimidating. They may know the ins and outs of what they do every day and have fantastic ideas on how to grow and market their organizations, but the act of putting it on paper often feels like stepping into a world with opaque rules and confusing jargon.
Fortunately, the reality of both business and marketing plans is that they aren’t nearly as complicated as many people think. In fact, most business owners have written both without realizing it, even if only in an informal manner.
Creating a formal business or marketing plan uses a lot of the same steps business owners already take when sketching out new marketing ideas on a napkin or doing some quick back-of-the-envelope math to figure out how to expand into a new city.
But before moving forward with the process, it’s important to know which one you need. In other words, what’s the difference between a marketing plan and a business plan?
The biggest difference between a business plan and a marketing plan is the scope of what they cover. While both documents can be quite lengthy and thorough, they don’t address the exact same information.
A business plan is typically a much broader document that covers every aspect of your business: operations, supply chains, human resources, materials costs, and — yes — marketing. In fact, a marketing plan will usually be a section of a business plan.
Marketing plans tend to focus much more narrowly on the specifics of making customers aware of and likely to buy a product or service. A marketing plan may touch on some of the same things a business plan does, like the cost of goods sold, but only as they relate to being able to sell those goods to consumers.
Another key difference between the two is how far into the future they look. Business plans, for example, tend to cover a much longer period than marketing plans. A typical window for a business plan, for example, is about five years. A typical window for a marketing plan, on the other hand, will be a year to three years.
The two are updated differently as well. Business plans rarely need to be replaced or updated unless there’s a significant change in the business — a completely new product category, a new business model, or some global event that changes the way a company performs its core function.
Marketing plans are often updated every year. They tend to be part of the yearly budgeting activities that help business owners plan how they will allocate resources to various departments.
This makes sense when you think about it. Companies change their marketing much more often than they change their business model.
The reasons for creating a marketing plan and a business plan are often similar but not identical. Most often, business owners create both to secure financing. Banks and investors frequently ask for business and marketing plans before agreeing to loan money or invest in the company.
But external demands aren’t the only or even the most important reasons to write both kinds of plans. A business plan is a great way to formalize the ideas behind how and why a company works the way it does. It’s a fantastic way for business owners to put down on paper many of the things they’ve been intuitively doing, and cement processes and procedures for running a company.
Business plans are also great at helping you to prepare for future needs. By going through the exercise of writing a full business plan, business owners get an idea of where they are and what kinds of initiatives and resources they need to meet their goals.
Marketing plans are also incredibly useful internally. As we mentioned above, they are an important part of the annual budgeting process. Sitting down and thinking through all of the marketing needs can help both validate a company’s marketing initiatives as well as determine the ideal amount of money to allocate toward marketing.
The bottom line
A marketing plan is a part of a business plan. That’s the easiest way to remember the difference between the two. The business plan shapes everything about the way a company works, and lays out big-picture goals and ideas.
The marketing plan paints a more detailed picture of how the company will use marketing to achieve the goals laid out in the business plan. The marketing plan is department level and has to coexist with plans for other departments — HR, operations, legal and regulatory, and others.
Both plans are important in successfully running a company, but the business plan is more important because it will at least outline some marketing initiatives. For business owners who only have time to create one, the business plan is the logical choice.