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Labor and material costs are also directly proportionate to sales. These are things that go directly into the making of the product or into doing the service. a. Labor cost is the actual direct labor used in the making of product or doing the service. The cost would also include all the fringe benefits like social security, payroll taxes, vacation pay, holidays, sick pay days, etc. b. Material costs are all the materials used in the making of product or in doing the service. In the lawn mower service as an example it would be the gasoline used in the mower and any other materials used directly in that service. For producing a product it would be all the materials used in the product that is sent to the customer including all the packaging materials.

I mentioned the financial aspect of a plan earlier, so let me add this. Another fact about financials to consider: not all business activities are about making money. Point being, in most enterprises financial considerations are centric to the document. But there are some other considerations. For example, a few years ago I wrote a plan for a new subsidiary that was focused on developing an inventory of patents. The potential financial returns were years into the future. Those patents may or may not ever have commercial value. Another example is a non_profit enterprise that has need for a complete roadmap for growing their profile in a market, of which a marketing plan would be the centerpiece.

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