So you want to start a jewelry line, design handbags or dresses? Cool, I can’t wait to buy them from you! But before you run out and order business cards, purchase fabric and hire a publicist, you need to have a plan of action. I wanted to touch base on a business plan before discussing product and market analysis.
A business plan is a written document that describes how you will run your business. It covers the seven basic areas of business:
Product Development - continually refining what you’re offering for sales to meet the ever-changing needs of your potential customers. This is why fashion businesses produce new lines each season. You need to consistently offer new products to generate repeat customers otherwise you don’t have a business.
Marketing - continually taking action to become even more aware of your customer’s needs and informing your potential customers that your product (or service) is meant for them and why.
Sales - talking face-to-face with your potential customers and getting them to say, “Yes, I’ll buy from you.”
Operations - doing the work of the business. For example, if you’re in the business of designing handbags, operations would require meeting with a manufacturer to create samples, sourcing materials, exhibiting at trade shows, etc.
Personnel - managing the people who work for you. This is probably the hardest part of owning a business.
Finance - measure the financial results of your business and comparing them with your desired results, using this comparison to identify critical business issues.
Management - making sure the above six areas are working in concert to meet your goals for the business.
In each of the seven basic business areas, your business plan describes:
- The results that you want to achieve
- The activities that you need to be done to achieve them
- The resources (money, people, time, equipment, etc.) required to perform these activities
- The criteria you will use to evaluate the results
- The reasons you believe the plan will succeed
Your business plan will also help you determine how much money you really need for your business. The only way to know how much money you really need is to decide what you’re going to do in each of the areas and figure out how much money it will take to do it.
You may find that no amount of money will help you have a profitable business. Perhaps you design on the side of a full-time career as a hobby. It is far cheaper to not to begin an ill-fated business than to learn by experience what a business plan would have taught you at the cost of several days of concentrated work.