Today we have a fantastic post from our planning & strategy expert partner: Megan Gallagher from Method & Madness.
Ah, the business plan. Do you get nervous just thinking about it?
Well, no more. Here’s what we’re going to do. First, we’re going to talk about what a business plan is, and what it’s not. Then, we’re going to break down 4 simple elements of a working business plan. Finally, we’re going to talk about refining and evolving your plan as you move forward. Remember, nothing in your business plan is set in stone. It should be consistently re-evaluated as you grow. Let’s also take a second to chat about what your plan should not be:
- It doesn’t have to be a 100 page novel. In fact, less is more.
- It does not require a MBA nor does it require you to hire outside consultants. ( you should use the appropriate professionals for legal/financial concerns)
- Just because you’re putting it down on paper doesn’t mean you can’t change it.
Your plan should be your road map to a creating a thriving, profitable business. You can’t get anywhere when you don’t know where you’re going or how to get there, right?
In my last post for build a little biz, we started talking about tracking your results & identifying your business drivers as solid groundwork for building a business plan. You’ve acquired a knowledge base that you can use to help you set goals, know where your opportunities are, and know where/how your money is being made. If you haven’t done any tracking, don’t sweat it. You can do it while you’re building your plan & tweak the numbers as you see fit.
So let’s break down the four steps to building a business plan.
1. Map—I find mapping to be an essential tool for every creative entrepreneur.
We don’t always think in the linear, in-the-box terms most planning tools offer; we tend to think in terms of connection and let our ideas flow. This is great step to go through before you start working on your actual business plan to get all of your ideas down on paper and start working with a clear mind—plus it’s a great resource to use as you build your official plan. Read more about mind-mapping here; I have a starter map available on my website in Twenty/20, and there are great software tools available.
2. Mission— What are you doing? and Why are you doing it?
The answers to these questions should result in a mission statement for your business, as well as 2-3 major goals for the year. These elements should be the starting point for every action you take; if it doesn’t fall in line with your mission or goals, it may be time to re-evaluate.
Example:Suzy’s Studio is a photography studio that specializes in destination weddings. From tropical beaches to snowy mountaintops, Suzy will travel anywhere to capture the most special day of your life.
Suzy’s goals for 2011:
- have 2 destination weddings/month booked.
- increase hourly rate +10%.
- increase prospective couple through referrals and business-to-business relationships
3. Metrics – How are you going to do it?
Set quantifiable sub-goals in each category that push you towards the ones you set in section 2.
People—since most of you are solo businesses, I’m going to speak in terms of self. What training/events/improvements/etc. do you need to push your business forward? What challenges may affect your making the goals you set?
Sales—the easiest way to break this down is on a blank calendar. Start with a yearly goal, and then break it in to quarterly, monthly, and weekly goals. Don’t just put the same dollar amount in each week; take note of holidays, seasonal shifts, and the seasonality of your industry. If you notice that a lot of income is built into 1 quarter of the year, how can you generate more throughout the other three? Remember that these goals are not set in stone—they should give you a gauge to work from. Additionally, make sure you take note of new product launches, marketing campaigns, etc. that will impact your sales. Plan accordingly. Also, make sure your expenses are factored into your yearly goal.
Product/Service—will your product create the income you listed above? Are you launching new products or improving current ones? Do you have any side projects or collaborations on the horizon?
Marketing—you all know that a good marketing plan is essential to your business growth. The important thing is to continually grow your market & do what works for you. Some businesses thrive on Facebook, others on a blog, and still more with Twitter. There’s no exact formula that works for every business model—do what’s manageable for you, but try to work in multiple channels. Try different approaches with different product launches—maybe you try a flash sale on Twitter for one launch, and a special discount for your email subscribers on another. Track your results and keep refining it.
Going back to our example:
People—Suzy wants to enhance her skill set so she can increase her hourly rate. She decides to take a few Photoshop and lighting classes during slower months. She also needs to get more involved with wedding vendors to gain their referral business—this is challenging because most of them are abroad. Suzy also knows that she needs to outsource some of her administrative work so that she can focus on bringing in new business. To quantify the goals:
- Take 2-4 classes during down months (January and April).
- Identify 50 potential new vendor/partners. Create fun, innovative direct mail piece and follow-up email & social media campaign. Have initial piece ready to mail by March 1.
- Hire 1 virtual assistant by February 28 to manage email, inquiries, and bookkeeping.
Sales—Suzy wants to make $50,000 this year. Her expenses range at about $25,000, so her total gross goal is $75000. She has 3 packages for her wedding bookings: $5000, $7500, and $10000. Last year she took home $35,000. Suzy is usually booked solid from May-October, with a lull between November and January. In January, she starts to pick up again, with a couple weddings booked in the first quarter of the year. To quantify Suzy’s goals:
- Book 8 ($5000) weddings, 2 ($7500) weddings, and 2 ($10000) weddings. Long-term goal is to book less of the first package and more in #2/#3.
- Between November & January, teach a beginner’s photography course to offset income.
- Explore ways to cut expenses.
Products—Suzy wants to sell more of packages #2 and #3 so that she can create the income with less workload. She also wants to create some additional income to offset her wedding bookings. To quantify her goal, Suzy will:
- Redesign #2/#3 wedding packages to be more appealing and give more value to potential clients. Complete redesign by Feb. 28, and re-launch with marketing campaign for mid-March.
- Design an e-course and live class in beginner’s photography to teach online and live in studio, as well as a downloadable format. Teach one class in February to outline course and format content. Create all content and have all 3 formats ready to go live by June 1st.
Marketing—Suzy needs to increase her social media presence as a “destination wedding photographer” and build relationships with potential partners around the world. She also needs to reach potential bookings through her past clients; the wedding industry relies heavily on word-of-mouth referrals so Suzy wants to maximize this opportunity. To quantify:
- Increase Facebook page followers to 2000; Twitter to 5000 by mid-year through active engagement and promotions.
- Create an innovative, never-before-seen marketing piece to direct mail to potential vendor contacts world-wide. Follow up with email campaign and social media connects. Phase 1 of campaign should be ready for March 1 mailing.
- Create a referral promotion to increase word-of-mouth: offer a special anniversary session for any referral, or partner with vendor to sponsor a trip giveaway/promotion for referral bookings. Have promotion in place for mid-year launch.
This is a simplified example, but hopefully it gets you thinking about how you can break down your business goals and make it happen!
4. Put it into action.
The most important element of your business plan comes after it’s already done. It doesn’t mean anything if you don’t put anything into action. The business plan is an active document; it doesn’t get finished and left on a hard drive until the following year. Starting now, start planning out on a calendar (I use Google Calendar) the next 3 months of business activity—set target dates to hold yourself accountable to your set goals and completion dates. Also, make sure you track things like guest posts, blog mentions, and what marketing elements you used for individual launches. It’s all great info you can use to continually refine and hone what you’re doing to drive your business.
I want you to know that unless you’re going to seek out venture capital or a bank loan, the format of your business plan is up to you. It should be something that you feel comfortable with—honestly, I wrote half of mine in a Moleskine notebook and the other half on my Google calendar. As long as it gives you the map you need to get your business moving forward, it’s an excellent business plan.
Here are a few additional resources to check out:
Megan Gallagher is small-business strategist working with creative indiepreneurs over at Method & Madness. She’s currently working on The Down & Dirty Project, a contest where one lucky indiepreneur’s business becomes a real-life community coaching lab. She works with a diverse creative clientele through one-on-one strategy sessions, small group workshops, and the DIY guides now available on her website. You can also see Megan’s work at Meylah and Create Hype. Megan lives in Philadelphia, PA where she is an avid runner & foodie, and works with a number of non-profit and volunteer projects.