Do you have a business plan for your handmade business? You should. It helps you wrap your head around each step of your business. You can’t plan for the future success of your business if you don’t know where you want it to go.
While I was visiting my mom in St. Louis over Thanksgiving, we began to reminisce over childhood adventures: school plays, soccer tournaments, cookie company order fulfillment, etc. Wait, you weren’t a co-owner of a chocolate chip cookie company as a 10-year-old? I suppose that is a little odd. Let me explain.
I’ve always been entrepreneurial at heart. Lemonade stands didn’t quench my thirst for business. I wanted to create something more. When I was 10, my best friend and I started the Sweeties Cookie Company. We took orders by the dozen from neighbors and family friends and spent our Saturdays whipping up quadruple (no joke) batches of my mom’s recipe of chocolate chip cookies, which may or may not have been the Toll House recipe, but don’t tell! We packaged the cookies in plastic wrap, then snuggled the stacks of cookies into brown paper lunch sacks tied with raffia. If my memory serves me correctly, we sold them for $9/dozen or. Not bad for a 4th grader.
However, before the first dozen was even put in the oven, I wrote out a business plan. Yes, as a 10 year old. Unlike most my age, on my first vacation to Disney World, I spent the entire flight figuring out the marketing plan, cost of the cookies per dozen, and sales price. I didn’t know it at the time, but I was drafting a rudimentary business plan. It helped me figure out how the company would be operated.
Writing your own business plan helps you to think and analyze how all of the elements of your business come together. Every business, even a one-woman run handmade business, should have a business plan. It doesn’t have to be extensive or have fancy charts and graphs. You probably won’t be presenting this to a bank to obtain funding, but if you are at that stage of the game, you will need something more elaborate. The Small Business Administration is a great resource for more detail, but the general outline should have the following elements:
- Business goals and strategy for achieving them: What is the mission of your business? Will it be eco-friendly or will it donate a portion of proceeds to charity? Whatever your goals are, spell them out here. Be as clear as possible.
- Market Analysis: Who are you selling your products to? Why should a customer choose your product over a competitors? Are there regulatory restrictions in your industry? If you’re selling bath products, what laws do you need to adhere to for your state/country?
- Marketing Strategy: How are your target customers going to find out about your wonderful products? Will you buy advertisements on blogs or other websites? Will you use social media such as Twitter or Facebook? What is the minimum number of followers/fans that you want to have? How will you track prospective sales? Once you collect prospective customers, how will you continue to interact with them? Will you have an advertising budget or use completely free techniques?
- Products: Will you have one line of products or multiple lines? What is your value proposition (why should your customers buy your product)? Do any of your products require patents or trademarks? Who are your suppliers? If your supplier goes out of business, is there a comparable supplier? What is the cost of your product and what is the appropriate price?
- Financials (my favorite part!): Include both historical and future data (Profit & Loss Statements, Balance sheets, and Cash Flow Statements). If this freaks out out completely, try to plan out how much profit (the money you earn from selling your products minus the cost of your products) you want to make each year. What do you need to do to achieve this? If this still freaks you out, contact me
Part of having a good business plan is setting goals and writing them down. The Handmadeology team has put together a FREE 2013 Etsy Sales Goal Tracker Spreadsheet for our readers. Click HERE to find out how to get your hands on one!
My friends Tracy & Robin of Flourish & Thrive Academy just announced a new 3-Part FREE business training series for jewelry designers. You’ll learn how to beat the feelings of stress and overwhelm and create true FREEDOM in your life! Register now so you don’t miss a thing!