Write a Thorough Business Plan
From Stitches' State of the Industry 2010
By Shane Dale
Here are some things to remember when writing or revamping your company’s business plan. Remember, you should update your business plan every year.
- Factor in startup costs. “If you’re just starting your decorating business, work with an experienced businessperson or your accountant on this area to be sure that you haven’t overlooked hidden costs,” says Deborah Jones, president of MyEmbroideryMentor.com.
- Get to know your market. “Type in the name of your community into a search engine,” Jones says. “You’ll be able to gather all kinds of information. For example, if one of your target markets is restaurants, you can find out how many and what types of restaurants are in your community.”
- Define your business. “Make a serious attempt to define your core products, services and top suppliers,” Jones says. “Name them in your plan.”
- Evaluate your resources. “You can offer all kinds of services. What services are you going to begin with?” says Danon Middleton, partner at Tango Partners. “Don’t try to be everything to everybody immediately. It’s not just selling products and services; it’s determining how you’re going to sell what you offer. You need to know your tools and how you’re going to support those tools.”
- Target niches you know. “Let’s say you used to work in the administration part of a hospital,” Middleton says. “Would you start selling to car companies? Chances are if you understand a specific industry, you can at least talk the talk when you’re calling upon those kinds of companies.”
- Determine your marketing expenses. “Will you have a salesperson? Will you use direct mail? Will you have a Web site? Be sure to include these costs,” Jones says.
- Determine your necessary sales volume. “Including this will let you calculate how many sales you need to break even and make a profit,” Jones says. “Compare it to the capacity of your equipment and planned working hours. This is a critical piece of information and lets you know if you need to make an adjustment to your plan.”
- Prepare a sales forecast. “Your business plan has to support how you’re getting those sales and how they’re going to be achieved,” Middleton says. “When you build your sales forecast, break it down by month. Advertising, salaries, office space, equipment, supplies and telephone – all of those things should be broken down. Your first year, you’re probably not going to be spot-on when it comes to your sales numbers, but for your expenses, you probably should be darn close.”
7 elements of a good business plan
Here’s a quick rundown of the elements that are necessary for any good business plan.
- Executive summary: Even though this part of the business plan goes first, you actually write it last. It’s just a page or two of highlights from everything that you’ll put into your business plan.
- Company description: This covers your legal establishment, history and start-up plans.
- Products or services: Describe what products and services you’re selling – and make sure to focus on customer benefits.
- Market analysis: You need to know your market, customer needs, where they’re located and how to reach them. This may be the most important aspect of your business plan, as it will show you – and salespeople who work for you – exactly where your revenue will come from.
- Strategy and implementation: Be specific. Include management responsibilities with dates and budgets.
- Management team: Include backgrounds of key members of your team, personnel strategy and other details. If you’re starting small and you’re the only person at your company, then you can leave this out. But definitely plan to add this in as soon as you take on additional personnel.
- Financial plan: Include profit and loss, cash flow, balance sheet, break-even analysis, assumptions and business ratios. Try to be as specific as possible with this. Yes, it’s all projections and they can change along the way, but it’s important at this time to have revenue and profit goals. Consult with an accountant if this is your first time putting together a comprehensive financial plan.
Many decorators misuse their showrooms, says Deborah Jones, president of MyEmbroideryMentor.com. “Remember, this space is a showroom, not an inventory area. You want to showcase your core products, in selected styles and sizes – the ones you really want to sell,” she says.
Here are other things to keep in mind when opening your showroom to the public:
- Put your best foot forward. “Display your best-selling products cleanly,” says Steve Freeman, owner of Qdigitizing.com (asi/700501). “If your customers want to see other products, you can have those nicely packed away so you can retrieve them quickly.”
- Keep it clean. “I’ve seen showrooms where people have dust on their products,” Freeman says. “It seems basic, but I go to stores all over the country and I see that time and time again. Keep your shop clean and well-organized.”
- Add variety. “If you add more product variety, the more likely your customers will see something that will work for them, whether it’s style, color, detail or price,” says Ashley Scoville, marketing and communications manager for Sawgrass Technologies. “From simple designs to multicolored options on a shirt, pants, sweatshirts or baby onesies – the more options you provide to your customers, the more likely they’ll find something that fits their needs.”
- However, avoid clutter. “Some people try to put in everything you can possibly imagine, and nobody can see anything,” Freeman says. “Less is more. Show some self-control. Don’t put two pounds of fish in a one-pound can, basically.”
- Take advantage of all available space. Scoville says, “Use your vertical space wisely to display your products.” Invest in waterfall racks and other professional display devices.
- Change things up frequently. “Don’t leave your showroom static,” Freeman says. “Constantly bring in new products.”
- Announce your showroom’s presence. “Regardless of the name of your store, add ‘embroidery’ in large letters to the front of your showroom to attract walk-in traffic,” Jones says.
- Don’t forget the amenities. “If you have a showroom, you’re inviting the public in to your place of business,” Jones says. “Be sure to have a pleasant restroom facility, and make sure the pathway to the restroom has a clean and pleasant appearance. Also, because the showroom indicates that you’re inviting the public, check your local code regarding access for handicapped customers.”
Danon Middleton, partner at Tango Partners, outlines some costs that the business owners she coaches often overlook when determining their monthly and annual expenses:
- Company brochures and other printed materials. “Don’t print a whole lot of collateral when you first open up,” she says. “You’re going to change and morph and grow, and you might not be the same business in a few years. Invest in getting a Web site up and then go the print-on-demand route. Of course, you need business cards and letterhead, but this is an area that can add up to surprising big costs.”
- Credit-card fees. “If you’re going to make the offer that people can pay by credit card, be aware that you’ll be paying a vendor to do these transactions,” she says.
Light Up Your Showroom
The number one rule to properly lighting a decorative apparel showroom, according to Steve Freeman, owner of Qdigitizing.com (asi/700501), is simple: Say no to fluorescent lighting. “Fluorescents don’t showcase products well,” he says. “They offer no warmth or depth, so they make products look flat and lifeless.” Natural lighting should also be subdued, as it tends to fade apparel, Freeman says.
While you’ll probably use fluorescent bulbs for lighting parts of your showroom, spotlight your products with good-quality incandescent or halogen lighting. Track lights can also help to properly light a showroom, according to Deborah Jones, president of MyEmbroideryMentor.com. “You can use track lights for focal lighting, about 6 feet out from the wall, spaced 8 to 10 feet apart,” she says. “If your showroom includes a dressing room, place makeup cosmetic lights over the dressing room mirror to make your customer look her best.”