If you want to build a successful maker business, selling your homemade / handmade products, it really helps to have a business plan. With a plan you can set yourself goals, keep your business on track and ultimately give your business the best chance of success.
Business plans and makers don’t appear to be a nature pairing! From my conversations with local makers in the Bordon area not many have actually written a business plan; most are allowing their business to develop in an organic and (sometimes) ad hoc way. That’s fine if your maker business is a sideline, but if you want to create a business that allows you to achieve certain goals, a business plan is an important part of your maker business toolkit.
A basic business plan for makers
The questions below are a way to clarify what you want your maker business to be. There are no right or wrong answers; your business plan will be unique to you. For some people that might mean generating enough sales to supplement your existing income – perhaps to pay for extra expenses such as holidays, school fees, or to cover specific household expenses. For other makers the plan may be to quit the day job and earn enough from doing what you love to support yourself and your family.
Other people may have want to go bigger; perhaps open a shop or several shops, represent other makers and sell their products too, or become a global brand. Whatever your dreams, a business plan can help you achieve your goals. And goals is where it all starts…
What are your goals for your maker business?
If you’re not clear on what you want, there’s no way to work out how to get there! You don’t need to map out the next 20 years of your life, instead you can start with short and medium term goals and where you want to be at the end of this year or in five years time. As you begin to define these goals, you’ll begin to get an idea of what you might want long term.
How much money do you need to get out of your maker business?
With some defined goals you can now calculate exactly how much you need in gross and net profits to achieve these goals. For example the average cost of a 2 week family holiday for four is £4792, if that’s what you want from your business you now have a ballpark figure of what you need in profit.
How are you going to do this?
Now think about the products you plan to sell, how much they cost to produce and how much they’ll sell for. Factor in other costs such as fees for attending craft fairs or food festivals, commission taken on marketplace websites like Etsy, studio or workshop costs, and other business costs (accountancy, marketing, staff etc.) and you’ll be able to answer the next question…
How many of do you need to sell?
Using the 2 week family holiday as an example (although you may need to generate a lot more revenue to achieve your goals), it’s a simple calculation of dividing the total amount of net profit you want by the actual profit you make on each unit. Of course, it’s never that straightforward as you may sell a variety of different products at different prices with different profit margins. You may want to come up with an average figure for your product range or focus purely on your most marketable product to get an idea of how many units you’ll need to sell per year to generate the profit you need.
Is there a market for your product?
Now for a bit of realism. First define who your target customer is; why they would buy your product, how many are they likely to purchase, where do they live and how they will find and buy your product. At this point you don’t need to create a detailed buyer persona / customer avatar (although this is an important thing to do), instead you want to get a good idea of the market for your product. How many individual customers will you need to achieve your goals? Are your customers going to buy regularly from you or in quantity? Or will they be more likely to be making one-off purchases?
What will you do to find the customers you need?
Now that you have an idea of how many customers you need, where will you find them and what methods will you use to sell to them. You’ll need to identify the best methods to achieve the volume of sales you require and this may impact on your business costs. For example, if attending events like craft fairs is the best way to reach customers, how many will you need to attend and what overheads will this entail?
Having completed this fact-finding mission it’s now time to review your figures and strategies and decide whether they’re achievable and realistic. If you’ve identified events as your main selling opportunity and you’ve calculated that you need to attend 100 events per year to sell the volume of products you want, ask yourself is this feasible? Are there enough events throughout the year for you to attend (factoring in travel, events occurring on the same day, other time commitments etc.)? Is your product seasonal or do you expect to make more sales at certain times of the year? If your product is typically a one off purchase, will you be able to reach enough new customers at each event you attend? With all this in mind you may need to revise your goals slightly, review your product range and pricing, or consider different ways to sell the volume you require.
What about next year, and the following?
When you set your goals for your maker business you’ll have probably set different targets for each year as your business grows. You may not be able to take out what you ideally want from your business in the first year, it could take a couple of years or even longer to achieve that. So you now need to think about how you will keep the momentum up and continue to grow your business, year on year. That might involve a new product range every year so that customers who bought from you this year will return to buy something new. It might mean finding new selling opportunities or investing some of your profits to enable you to reach new customers – such as by setting up an ecommerce website. Whether you need to maintain sales at a particular level or continue to grow them to achieve your goals, you need to explore how this can be done and outline it in your business plan.
Review, amend and repeat!
Finally, your business plan is not set in stone. You can tweak it and adapt it as many times as you want to reflect the direction your business is taking, the opportunities you’re presented with and the marketplace. Use your business plan as a road map for achieving your goals, but don’t be afraid to tear it up and start again if it’s not working or other factors come into play. It’s a working document that’s unique to your maker business; use it to help keep your business on track and as a way to work out the best way to make it a success.
Get started today by downloading our free Maker Business Plan template! We created this specifically for makers and creative businesses, aligning it with your business needs – not anyone elses! Download your copy by clicking on the link below: