Thursday , 24 July 2014
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.

Handmade Business Plan – Why You Need One

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.

{photo credit}

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:

  1. 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.
  2. 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?
  3. 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?
  4. 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?
  5. 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!

 


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39 comments

  1. I need to do this! Thanks

  2. This is #1 on my to-do list for the new year. Thanks for the post!

  3. Thi has been on my to-do list for weeks. I am taking a long flight in two weeks and plan to get started then. It is amazing how much you can get done ona long flight. Thanks for the tips!

  4. Thank you, thank you -I’ve put this off for sooo long. I’m going to write a plan today so I’m ready to turn my business around in 2011!

  5. I guess I can’t put this off any longer. Thanks for the prod!

  6. Love this post! Great advice and a great reminder to all of us to RE-VISIT our business plan each year.

  7. I have been avoiding this. i think this will be my resolution for the new year

  8. Yes, I need to do this. A great new year resolution, thanks for the reminder.

  9. Great info!

  10. If you have a business plan then it stands to reason you ought to have a business license. A license must be posted where customers can see it. Who has done research on that?

  11. How true! Someone just asked if I had or used a plan and have one for next year. I said my plans even have plans!

    In art to wear fashion design one must plan what they’ll offer the next season so it’s automatic now for me. Especially having boutiques and art studios who’ll carry my work they need to see and know what I’ll be offering so they can choose the best for their customer demographic.

    Sometimes you don’t know where to start but along the way things start to form so write them down and before you know it you have a pretty good plan!

  12. Also ~ if you notice on my site:
    http://www.savoyfaire.com you’ll see the variety I offer in accessories and items to go along with my clothing. Be sure to think about that as once you start planning you won’t want to stop!

  13. Thanks for the great advice. I really need to work out on this immediately..

  14. Thanks for posting this. I really need to get the numbers on track and my business plan updated for this year.

  15. Ironically enough, I am in the process of writing all this out and shall be meeting up with a mentor from SCORE (http://www.score.org) — great resource for small business owners with lots of questions — to help me figure out my plan. ‘Tis quite serendipitous that this blog post link showed up moments ago via Facebook. :D

  16. I actually went to score to start my plan at the end of last year. This led to me entering a business plan contest!!! I didn’t win, but made it to the finals :) It really helped organize goals and network with other business owners and learn so much. Big plans for this year!!!

  17. I think a plan should be written for all things we do, but a business plan is very important. I started off with just a one page plan. I knew it would only be seen by me and not investors.

    So if writing a business plan becomes too much, I suggest start off with a one page summary of your goals based on each section suggested above.

    Planning is good, Alease

  18. I just got in touch with Score to get help in writing a business plan.

  19. Great advise! Thanks for the pointers.

  20. Good advice, I really need to put this all down ‘on paper.’ Thanks for the advice!

  21. This is what I need to re-vamp, I had a business License from 2005-to 2009, but my business plan needs work.

    In embroidery how do I determine my target group?

    Thanks for the helpful article.

  22. What I’ve come to the conclusion of is that even if your hobby is not a business you still should have a plan and keep records so that if the tax man comes knocking you can prove that you’ve a self funding hobby rather than a business.

    Ref: http://fleacircusdir.livejournal.com/4565.html

  23. I need to do this also. I didn’t think I did at first because my business was so simple. But now that it is getting some recognition, I really need to sit down and consider this now. Thanks for posting.

  24. I did one a business plan earlier and need to revise it. Might also do a marketing plan for social media.

    Thanks!

  25. I’ve tried to do this kind of thing several times and know it will help me from grasping at straws to grow my business, but wonder if there is a different way of going about it when dealing with fine art…so subjective and hard to pin many of these questions down….I’m not in production of a truly quantifiable product! Still, this is very helpful advice! Thanks so much!

  26. It makes a TON of sense to do this, especially when you’re moving your ‘hobby’ craft into the ‘business’ world.

    I seriously need to keep better tabs on the money (and time) I spend.

    Great post. Thanks for the nudge!

  27. Thanks for this ! I sell ethnic jewelry. It’s a niche market. I will have to revise plans so people know about my creations.

  28. I agree and think I’ll give it a try. Are there any resources for a sample one?

  29. Yes! I started a plan but it always needs refreshing!

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