Do you have a plan for your business?

A Business Plan – you’ve heard over and over that it’s something everyone who is serious about their business should write. I’ve written two for previous endeavors, and they were fairly easy, so I figured this time I’d just sit right down and knock this one out of the ballpark in a couple of hours.
(It’s ok, you can laugh)

Well, that was about 4 years ago, and I’m just now finishing up that sucker. As it turns out, it was a little more difficult for me this time around. Just like Jennifer mentioned in the conversation about pricing that got posted a couple weeks ago, it’s all too easy to fall in the trap of creating and simply hoping the details will fall into place – somehow. However, as was also noted in that post, if you ever want to quit your day job, support your family, or even fill a small goal like saving enough money to take yourself to Paris, it’s important to stop thinking like a hobbyist and start thinking like a businessperson.
So, let’s get back to that plan, shall we?
Now, there are a million templates all over the web, and most of them look something like this:

1. Executive Summary/ Overview
2. Business Description
3. Your Market
4. What you sell
5. How your business is organized
6. Your Marketing Plan
7. The Financials

It’s pretty straightforward, right? So why did I get so stuck?

Well, as Becky from Glue and Glitter pointed out, these templates aren’t really designed for crafters. She also looked online for starting points, but wound up ignoring most of what she found. The templates just didn’t seem to fit her needs, so she actually made her own.

In much the same way, I found it really difficult to translate traditional business terms into something that I could wrap my craft around. For instance, I got pretty stuck right off the bat because what products I make often depends on what materials I find to rework, so I had trouble finding a common thread to describe what I did.
Further, in a plan which focuses on traditional marketing, financial statements, and corporate definitions of profit, where do you put your business’ ecological footprint? What’s the monetary value of not making waste with packaging? How do you explain the choice to use unwound sweater yarn at a labor cost of 30 bucks, when you could go buy a skein of something similar for under 10$?

In short, I kept putting off finishing the plan because it made my head hurt trying to figure out where things should go, and how to account for those discrepancies. Last fall, however, I decided that it was time to get serious and stop procrastinating. I made a few changes in how I did shows so that I could more accurately figure out what was working and what wasn’t. I paid attention to what products people gravitated to, and what they saying about the designs. I really listened to what people said to each other about my work, and paid attention to what got repeated.

I highly recommend doing this if you have a chance. If you only sell online, figure out those google analytics, send your customers a mini-survey (maybe give a coupon for future purchases as a reward?), talk to people in the forums, or get a stranger to look at your shop. Google your product and see what else comes up. Who’s talking about products similar to yours?
Hearing what other people are saying about your work can really help you articulate your vision, and that makes putting it onto paper a lot easier.

So with that in mind, let’s re-look at that template.

1. Executive Summary/ Overview
Ok. This where you explain your business in fairly general terms. The biggest goal here is to make whoever is reading the overview want to know more. Some places suggest you write this last, although I found writing a rough draft of it first helped me get going with everything else.

2. Business Description
I know this sounds like a repeat of #1, but it isn’t exactly. Your summary is usually a few paragraphs and covers all the topics in brief, more like what you’d say to someone you were trying to hire, or to the press. Your business description is actually pretty short. It starts with your Mission Statement (what you intend to DO) and follows with your Company Vision ( where you intend to go, what you intend to BE) Finally, your description should include a history of the business and who exactly is involved.

3. Your Market
Who’s going to buy your products? This is where all that people-watching pays off. Develop a customer profile, but remember that where a traditional customer profile might center around an age group or a socio-economic class, crafters – especially eco-friendly ones – often find their customers are connected by some other thread.
You also need to figure out the market trends where products like yours are concerned. This can be a little more difficult, because you might not know where to get this information. Ask around at galleries and indie boutiques. Ask them what they’ve sold more of lately, and what no longer seems to move. Ask in the Etsy forums, or walk around trade and craft shows and see what other people are buying. Talk to the people who sell supplies.
Finally, you need to know why would someone buy your product over another similar item. Again, ASK. As it turns out, your no-waste packaging policy might just be the tipping point that encourages buyers to purchase from you and not your next competitor…

4. What you sell- this is pretty self explanatory, but don’t forget to include the pricing structure and how your products are competitive. This is where photos and patterns are great! This is also where you can use your eco-friendly ethics to your advantage. If you use all recycled materials or only organic cotton, play it up! This sets you apart, and helps explain your pricing.

5. How your business is organized
There are several options for business organization. Sole proprietorship, Partnership, LLC, etc. Talk about which you are, then include bios of the people who hold key positions in the company. It also helps to explain how your business actually gets run, and you should include whether or not you are required to have a license to do what you do.
This section might sound kind of silly when it’s just you and your sewing machine in a corner of your spare bedroom, but it’s a necessary step to being able to see yourself as someone who actually runs a real business that will grow.

6. Your Marketing Plan
This is a whole can of worms that really deserves it’s own post, but the short version is: figure out how you are going to get your products out there. Figure out how you are going to make sales. You really need concrete steps here, like “Get my wares into 6 stores by the end of the year” or “advertise on these 6 blogs who reach my target market” or “do one in-person show every month”.
More on this bulletpoint in the future, I promise.

7. The Financials
The tricky stuff for most crafters, and also really deserves it’s own post. This is where you really have to take a hard look at your pricing, your overhead, and how much you can sell.
There was a great post on the ecoetsy blog just the other day on pricing your goods, and the comments continued to be quite enlightening. I recommend starting there, and then spending some time really examining what it takes for you to create what you do. Then you’ll need to spend some more time figuring out exactly what you need to make in order to make a living.

Becky also added another category: “Design and Development” where she talks about new products and revenue streams she has in the works.

lunch tote from the Glue & Glitter shop

So, in summary, the hardest part for me about doing this, was just getting going, and forcing myself to answer the really hard questions, no matter how long it took. I was totally guilty of the “but I just want to create things” whine, and this was a really great exercise to get me out of that mindset. While I still have no desire to become a corporate overlord, examining my business from this angle really helped me see how to make it not only more profitable, but more enjoyable as well.

Comments

  1. Lori, my bad for just getting around to comment, but this is a WONDERFUL post. Your suggestions are insightful and thought-provoking and gave me the poke in the rear I needed to get going on this.

    Thank you!!
    Jennifer

    • thank you Jennifer! I was kind of embarrassed by how long it took me to do this, but it’s really comforting to see other folks had the same stumbles.

  2. Thank you guys! I really appreciate the feedback.

  3. Wow! This is one of those you-know-it’s-important-but-afraid (or lazy)-to-tackle kinda thing for your business. I needed this smack on the head. Thank You!

  4. Yes! Wonderful to be reminded and loads of information inside this post, I needed that.

  5. what a great post! thank you, thank you. i appreciate that you shared your process in working through the creation of your business plan, validating the difficulties as well as the benefits of biting the bullet and just doing it.