the business plan

I know what you're thinking, and it's a common myth. Most small business owners whether in the crafts industry or not, have the same opinion regarding business plans: that they are an ivory tower exercise forced on you by outsiders to justify the interest they are taking in you, such as giving you a bank loan. In your mind writing one is a waste of time --  valuable time that otherwise would be contributing to the success of your business. NOT!

If you are a business owner, the busier you are the more you should be planning. A plan forces you to think about your craft rationally, requires you to describe it coherently and then makes you redescribe it in financial terms (the so-called bottom line). It makes you focus, as in separating the forest from the trees. If you were in this business for your health, then perhaps you wouldn't need to plan. However, as a craft studio owner, you are in business to make a decent living with your art, and money drives business; ergo you have to plan. A business plan is no more than another business tool for you to use.

A typical business plan helps you to define your goals, outline a strategy for meeting those goals, specify the tactics that you will use to execute those strategies and develop meaningful tools to measure actual performance along the way. A business plan can and should be prepared for any number of uses:

 
  • For starting up a business
  • For changing direction/setting new goals
  • For managing compound growth
  • To benchmark the way the business is operated currently, so that you can identify ways to run it better
  • To develop "what if" scenarios to prepare you for possible major changes in your business' operating environment

All business plans combine actions, marketing, personnel and financial elements to produce a comprehensible picture to describe the steps to be taken in what order to reach your goal(s). Some business plans are merely shortened versions of this "big picture," as in a case where you might decide to shift more of your business into mainstream markets by exhibiting at some of the general gift shows, or where you have to develop staffing plans to include office help and studio supervision for your rapidly growing business. Other plans, such as those prepared for third parties to enable financing, include further elements such as information about the history or management of the company.

There is no standard business plan format, but all successful ones incorporate these common elements:

· An executive summary for bored bankers or investors with short attention spans. "We need $50,000 to get into the wholesale end of the craft industry, and we intend to exhibit at the Rosen and ACE shows until the money is gone."

· A description of your business: its history and its products. "We started out making hash pipes in the Seventies, but found a more mainstream market in letter openers using the same woodworking jigs."

· The "mission" statement (no, you aren't in the Army ­ yet!), which describes why your business exists in the first place; what are the fundamental, underlying purposes behind Crafts 'R' Us. "We create practical objects of art at affordable prices for the pleasure and enjoyment of conspicuous consumers with shockingly good taste, and we employ a half dozen apprentices who no one else will hire."

· Your key/specific/measurable objectives or goals to be achieved by implementing this plan. "We intend to triple our profits, sell the business and retire to the Bahamas after we pay off this loan."

· Discussion of the critical factors that influence your planned outcomes. These are key elements to successful implementation of your plan. "Our unique beadwork utilizing off-the-shelf findings and commercially-available lobster claws will be an oasis of creativity for gallery owners trying to shop the sea of jewelers at the Rosen shows."

· A simple marketing plan. How are you going to advertise; where are you going to exhibit your craft widgets? "A 1/12 th page black & white ad for one insertion in Niche Magazine should be sufficient to get our idea across to prospective buyers."

· A financial plan -- describe it in numbers. "Help! Have you seen the Quicken manual?"

· Your resume, as in: "what qualifies you to run a business in the first place."

Less is more in business plans, and a chart is worth a thousand words. For a more rigorous discussion, samples of ones for million dollar firms, and demos for your own go to www.bplans.com.

   
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e-mail us:   john@jiverson.com