A Business Plan for Your
Home Jewelry Business
Your business plan is a formal list of ideas and thoughts of what you want to do. A guide to follow to turn your idea into a business.
Think of the vast amount of lists you have composed, day dreaming about your craft business:
- How much money you would like to make—how many products you would have to sell to attain your goal.
- The different craft shows you would like to attend —how much you would like to net at each of them and therefore how many items you would have to produce.
- The variety of products you would like to create—how much it costs to produce them and how much you could profit from each.
- Finding wholesale outlets—which stores to approach and how; how much money could you make from each of them.
- How you could make even more revenue selling your creative skills—holiday boutiques, party-plan, teaching courses, selling kits, writing how-to booklets, more shows, more wholesale outlets.
Like most aspiring entrepreneurs, you scrawl these lists, ideas and thoughts on scraps of paper then either stuff them into an "ideas" file to sit and wait for the next list to join them, or they end up in the trash— accidently mistaken for a "scrap" piece of paper.
The Business Plan
By putting your artistic and business goals, your plans and your thoughts down on paper, you are writing a summary of what you hope to accomplish by being in business. Your goals and aspirations are clear foundations of direction, establishing what your business objectives are, planning for the future. This is exactly what a business plan is— a blueprint for mapping out what you want to do and how to get there.
Your business plan is a guide to follow to turn your idea into a business. It is a statement of your goals and objectives along with a detailed account of the steps necessary to achieve those goals. Properly completed, this road map for operating your business will provide the guidance needed to handle routine business details, as well as the business' direction for the future—measuring progress along the way.
Most businesses fail in the first two years—the reason the others survive is not just luck. More often than not it's because the owners were able to plan effectively, a necessary ingredient for success in any business. They had a good idea where they wanted to be in two or five years time, and when they got knocked off course, they made sure they got back on—even if they slipped a little or had to modify their immediate goals.
No matter how you start, you expect your business to succeed and grow. However, if you are not prepared to invest the effort and time to put your business plan together, then you should not even consider starting a business.
Refusal to commit your plans to paper may reflect an unwillingness to face the potential problems involved with any new business venture or may be a way of fooling yourself into believing that problems do not exist and that the goals you want to achieve will come in due time. A business that has no plan, that merely reacts to events as they occur, sometimes does well, but this is more by good luck than by good management.
Purpose of A Business Plan
A craft business needs more than creative talents and dreams to keep it alive and profitable. One of the most vital parts of any successful operation is careful planning. You may have unique products, made of quality materials and high craftsmanship, but if you do not devise a plan on how to market them, how many you need to produce to make a substantial profit and how to budget your finances, your business will most likely fail.
Your plan should tell you what your next step is, and how to expand your business. It may indicate how many craft shows you need to attend, or how many wholesale orders are needed to achieve your objectives. You'll find that a business plan is a useful tool, as it provides a framework against which you can monitor your business and assess its progress. By using it to observe what's happening on a month-to-month basis, you'll be able to take corrective action quickly if your budget starts to go astray.
Developing Your Business Plan
Not all plans should be alike, rather, they should be tailored to the specific circumstances of each business. Since planning is so crucial to your operation, it's important as you go through the process to examine every aspect of your business carefully and honestly. Be realistic in assessing what you're capable of and the possibilities that exist for your business.
Gather as much information on paper as possible. You will have to make a wide range of considerations such as day-to-day operations, competitors, the jewelry industry, new geographic markets, the cost of new assets, etc.
Make sure you know what your personal goals are as well as your business ones. Ask yourself if you have the necessary skills and abilities to not only produce your crafts but to also market them, what are your approximate cash needs at start-up and beyond, do you have the resources, and are you willing to take time to plan your success?
Your business plan of course will take a little imagination, research, and forecasting. Hopefully you had already started your market research when you came up with the idea of starting a business. You can now use all this research to help build your business plan. (For more information on market research see "Make Products That Will Sell"
The idea of forecasting is often rejected by people starting a new business, and it is not uncommon to hear them utter: "How can I possibly predict what will happen in a year from now? I'm no psychic." Forecasting isn't just a matter of predicting what may happen, it's a matter of estimating what you think may happen.
Forecasting will help you estimate your business's activities both financially and strategically:
- Financially, forecasting means estimating the revenues, expenses and profits that your business will incur in a certain period of time in the future.
- Strategically, a forecast can indicate the areas for growth and expansion whether in marketing or in production. A forecast can also point out activities that may need strengthening.
Components of A Business Plan
A business plan is like a formal report. But to be prepared to write it you must gather a wide rage of pertinent information as previously mentioned (day-to-day operations, etc.). This working file of information will help you when you're ready to develop your formal business plan. This file is called the Informal Business Plan.
The information contained in the informal plan should be arranged under the same headings as those used in the formal plan, for easy reference. It could be kept in a large loose-leaf binder with dividers to separate the major parts of the plan.
In this file, include newspaper clippings about the craft industry, marketing tidbits you may have learned from other craftspeople, retail shop owners/salespeople, customers or other business people, informal projections and new products or services you may be contemplating. At the front, have your business goals and objectives—both shorter and longer term—to keep you on track.
Your informal business plan should include information you may not want to include in a formal plan that will be read by potential investors or lenders. This might include your marketing and production strategies or competitor information.
This working file should always be kept in mind and updated regularly. Be aware of information gaps so that you can fill them in when the knowledge becomes available. Initial and date any notes you add.
Your Informal Business Plan should consist of four sub-plans:
- Business Profile
- Background of the Business
- Goals and Objectives
- Pricing and Costs
- Marketing Strategy
- Operating requirements
(work area, tools, equipment, raw materials, personnel required)
- Regulations and Insurance
- Production Strategy
- Projected Income Statement
- Financial Sources
- Projected Balance Sheet
- Cash Flow Analysis
- Start Up Costs
- Personal Cost of Living Budget
These glossary of business terms will help you to understand business and banking terms. Here is a PDF of a blank Informal Business Plan format with it's four sub-plans for you to print and fill out.
Preparing your plan is a lot of work, but it is well worth the effort. By planning your business on paper, you are building a frame for the structure. Once the framework is in place, you will find it easy to fill in the pieces.
There are no fixed rules regarding the length and depth of an ideal business plan. The amount of detail incorporated into the business plan depends on what you hope to accomplish by preparing it. If you hope to succeed and have great plans for expansion, or you hope to raise substantial capital from sophisticated investors, you'd be well advised to leave no stone unturned in your research, preparation and documentation.
Using Your Plan
Once prepared, your business plan can be used as a management control tool to remain competitive and viable. Good planning habits will help you to stay informed about changes in business conditions, altering taster and attitudes of customers, improved technology, new marketing channels and the overall effects resulting from different decisions.
Your plan must be periodically reviewed and revised. Flexibility is important in an ever-changing marketplace and your plan of action must be responsive to these changes. Month-to-month monitoring allows you to take corrective action quickly, before your budget goes astray and gives you a chance to see if your business is developing as planned.
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