From the course: Creating a Business Plan

Selling your product

From the course: Creating a Business Plan

Selling your product

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- In the sales section of your business plan, you have to spell out how are you going to sell your product or service? Will you use a sales force or will you just go direct to consumer maybe from your website? If you're using a sales force, what's the sales cycle going to look like? How long will it be? What's the conversion rate from prospect to customer? And make sure in the business plan, if possible have supporting evidence for that. How are you going to compensate your sales force? Will it be a base salary? Will you pay them a commission? Is it going to be a combination of the two? Because that's going to drive your sales forces' behavior. And in the sales section, how are you going to conduct contracting? Will you have long-term contracts? Will you have certain payment terms that you're going to expect? Some examples of different sales models. Let's say you're looking at a large software company. Now that's a complex sale and it's highly technical. For the sales section of the business plan, that would probably spell out that it requires a highly skilled sales force and those people are going to get paid a base salary plus a commission. It should also spell out that there will be long sales cycles. This is a complex high dollar sale with very low conversion rates. Look at another business where, say, it's a lawn service business. Where it's a moderate or even low complexity sale, low conversion rates and it requires salespeople to hustle and have high numbers of contacts because the conversion rate is so low. In terms of sales force compensation, I would expect to see a low base salary with a very high commission structure. Because that's going to drive efficiency because they have to get through a lot of prospects. And you don't want to be paying for unproductive salespeople with a base salary. So depending upon your business, you need to understand how are you going to take it to market what type of salespeople do you need and how are you going to compensate them? And having that clarity in your business plan, is going to make it clearer how those people will perform as well as how it will show up in the financial performance of your business.

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