Image by Marco Verch.
Implementation
In the fifth and final step of a business plan an entrepreneur looks into the actual implementation of the different tactical decisions by forecasting the costs and benefits as well as coming up with a detailed planning. Both exercises go hand in hand as the planning forces you to consider the costs and benefits over time.
Cost-benefit analysis
To get a complete overview of the costs and benefits you start with considering the different elements of the value proposition: price, promotion, place and product features.
The price component is the only part of the marketing mix that yields benefits. The other elements of the marketing mix result in costs. To estimate the benefits you multiply the expected sales numbers with the price of each individual product. Since markets are unpredictable and historical sales data is often unavailable in case of a new venture, it helps to work with different scenarios: a ‘business as usual’ scenario (neutral), a best case scenario (positive) and a worst case scenario (negative).
For promotion, distribution and products we need to calculate the costs of each action as well as take into account an overarching general cost component: overhead costs. Overhead costs include costs which cannot be attributed directly to a specific operational activity. Here you can think of facilities, technical infrastructure and human resources (e.g. office manager).
For the promotion costs you estimate the costs of each promotion channel (google ads, billboards, events, etc) including hourly salary costs of the (marketing & sales) employees involved.
For distribution you also calculate the costs of setting up and using different distribution channels. An useful aid here is the visualization you made in step 4. The lines in the graph pertain transportation costs and each link in the chain is also likely to involve some costs such as warehousing or a contractual agreement. Again, here you must also include in your calculation the estimated (marketing and logistics) salary hours that support the distribution activities.
Finally, for the costs of the product component of the marketing mix you need an overview of the production costs of each unit, which usually can be provided to you by the manufacturer. You also include the hourly salary costs of your own employees for monitoring and testing in the production process.
Make a detailed planning
In order to detail the costs on a daily, weekly, monthly, quarterly and annual basis, you will likely automatically fine-tune and professionalize your business planning. An useful tool for planning is the Gantt chart. The Gantt chart provides a weekly overview (horizontal axis) of activities related to promotion, distribution, product and overhead (vertical axis).