Crafts Report Part 4: Creating a Business Plan
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Every successful business owner needs to have a plan in order to evaluate the odds of success!
With a well thought out business plan you will be able to better understand your own business, your consumers and your competition. You will be able to pin down exactly who you are, what your business is trying to achieve, who your potential customers are and how to reach them. If you have ever used a napkin or scrap of paper to write down a directive on where you think your craft business might head a few years down the road, then you created the beginning of a plan.
You want to start out by writing your business plan with the resources you have available today and think about where you want to be. Look towards the future (3 to 5 years) and imagine the resources you might have then. Your well crafted plan will show how you will get from here to there. But first, you need to know what your goals and objectives are. Without knowing where you are going, it is not possible to plan ahead. Do you want to own a successful online store? Become a super seller on Etsy?
Here are a few questions to ask yourself to get started:
- How will your goals result in success?
- What is your mission?
- What is your plan for long term prosperity?
- How will you take advantage of major opportunities?
- What will your annual revenues be in a year? Three Years? Five Years?
- How will you deal with threats to your crafts?
- Do you have a contingency plan?
- How will you keep track of your competition?
- What are your plans for geographic expansion? Local? National? International?
- Could you work with partners or investors who demand input into your company’s management?
It takes some money to make money, but this doesn’t need to hold you back.
Even if you start out very small, you still need to purchase supplies, shipping boxes, business cards, etc. before you ever make any money from your customers, and the more sales you make the more supplies you have to purchase. This cash flow conundrum is the reason so many fast-growing companies have to seek bank financing or equity sales to finance their growth. They are literally growing faster than they can afford.
Be prepared for seasonal rushes, many crafters start building up for the Holiday season as soon as August and September. You will have to spend more money on supplies in those months, long before sales are expected to pick up in November and December.
There are 7 Sections to a Successful Business Plan
- Summary – Legal name of your business and the overall outline of your plan and what you want from it
- Description – Names of the owner(s), describe your industry, present outlook and future possibilities
- Your Market – Become familiar with your market and list the results of your analysis and how to deal with threats
- Competition – Strength and weaknesses of your market competitors and results of your analysis
- Development – Provide description of products design and chart development and marketing
- Management – Describe how your business functions on a daily basis and what qualifies you to run it
- Financial – List all the financial data related to your business
Before you can sit down to write your plan you will need to gather some information. You need financial reports like profit and loss, operating budgets, etc. (here are some easy to use forms to help you with that) and a list of each product along with its target markets, ie. craft fairs, online, etc. Spend some time analyzing your business, target market, how best to make and where to sell your crafts, and building an objective budget (make sure to enter your budget in a spreadsheet so you can easily make changes). The more accurate the information is the better your business plan will be.
There are many resources available for writing a business plan. You could hire a professional service for around $1,000 to do all the work for you, or use an online tool like LivePlan to help you write your plan. LivePlan is the winner of the Business Plan Software Review 2014, see side by side comparisons here. Pamela Slim is a business coach and author, she states: “I worked with many entrepreneurs who felt like planning would slow them down and restrict choices. After I shared LivePlan, they realized the opposite was true: data, charts and living plans allow you to make better informed choices that deliver growth.”
Some business plan software sites even have a free version to use like enloop, Inc. Their free & easy version includes one business plan with 3-year financial reports, a performance score which rates your business plan and customer support. You can upgrade at any time to create more complex sales forecasts, reports and financial ratio analysis. When you’re using professional software your final plan will look polished, customized to your needs, and ready to impress investors, business partners, banks and lenders.
Keep a notebook or journal (digital or paper) by your bed, your work area, and with you where ever you go. It will help you to write down creative inspirations, reminders to include in your business plan and to stay on tasks with the many day to day activities in your life.
Creating a business plan is not a set it and forget type of exercise! You should be updating your business plan whenever things change, it may be every month, every week or even every day. After all, in the crafting, business and marketing world things change all the time. Take a look at my new craft marketing book where I give more insights on how to craft a business plan and tips for setting up a home business. Turn your hobby into a money making business!
In the next part of the Crafts Report Series we will look at the importance of product photography and how best to use pictures in your content marketing.
Crafts Report Part 5: Product Photography Tips – Available Dec. 11th, 2014
Do you have a business plan in place? What strategy has worked best for you and how often do you update your plan? Leave your comments and tips below.
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