Working out a simple business plan
The longer, detailed variety of business plans generally document your industry and overview the market, analyze competitors in the field, draw-up plans for marketing and management structures, describe operational plans of facilities and equipment, and thoroughly analyze financial requirements for running the business and generating profits. They cover a lot! But, we’re not going to work on these types of detailed business plans (though some of you might, at some point, need to do one if you decide to pursue a bank loan or line of credit for company expansion). For now, we’re going to cherry-pick some of the most useful, and relevant, parts for putting together a simpler, and easy-to-do version.
To generate a plan for your business, you’ll want to spend a little time researching and exploring the soapmaking industry. You can do this through magazines or even by doing a bit of online research. Good places to start are soapmaking forums such as http://soapdishforum.com/ or http://www.teachsoap.com/forum/ or some of the YahooGroups for soapmaking. You could also extend your reading to the health and beauty industries in general. Reading up on these industries will give you good insights on the latest trends. And having this kind of knowledge will certainly help you make better business decisions overall. If you’ve been in the soap world for a little while, you probably took care of this step without even realizing that getting a good background knowledge was important for your plan.
The next part of the plan involves figuring out your customers. Who are your customers? And, who are the customers you would like to sell to? If, right now, you’re selling to people at farmers’ markets and craft fairs, ask yourself: “Who is attending these markets and fairs?” And, then take notice of who is coming into your booth and making purchases. Are they women? Are they mothers? Are they groups of friends? Once you figure out these questions, you can start to make product offerings that appeal to these specific types of customers.
For example, if you find that many of your customers are mothers, you can create soaps that are fun for children. Since mothers are always looking out for fun products that kids like and have entertainment value (i.e. cute animal or hidden-object type soaps), you can make soaps that meet this need. It’s important to drill down to as much detail as you possibly can. Is that same mother wearing Birkinstocks or the latest Manolo Blahnik? Does she dye her hair? Is she carrying her baby in a sling or pushing the baby in an $1000 Stokke Xplory stroller. You probably shouldn’t be designing hemp soap with patchouli essential oil for the Manolo Blahnik–wearin‘, $1000 stroller-rollin‘ mom. When you find unique ways to meet your customers’ needs, you increase the likelihood of making sales to them. Being clear on who your customers are will help you to do this.
When creating your plan, you’ll also need to know who your competitors are. You’ll need to think about what exactly they offer. Understanding your competitors will lead you to your own unique value proposition. This is the unique offering that you bring to your customers that your competitors cannot. It’s what gives them value. And it’s how that offering positions you in relation to your competitors.
At a farmer’s market, there are only so many people actually in the market to purchase soap. If they can choose between your soap, and the soaps of a competitor a few booths down, what is it that will make them choose your soaps instead of your competitor’s products? Is it quality? Is it variety? Is it price? Think about the advantages your product offers as well as the advantages your competitors offer.
A word of caution: it’s tempting to consider everyone your “competitor” and want to go all draconian and drive them out of the marketplace.This is one way of doing business but I don’t think it’s a healthy way of doing business. I prefer to think of other people selling soapmaking supplies on the internet as “fellow suppliers” rather than “competitors”. The two terms mean the same thing but the feeling bethind them is vastly different. It doesn’t mean I don’t pay attention to them or try and figure out a niche they don’t have. I still do that. But, I do so in a spirit of trying to improve our company and hopefully, the entire industry.
At Bramble Berry, our unique value proposition used to be that we got almost all our orders out within 1 business day of the order being placed. Then, a few other fellow vendors started doing that. So, that unique value proposition started becoming more of a tablestake. So, now our unique value proposition is in trying to improve the customer experience. It’s something we want to be better at than our competitors. And so, we’re working really hard to give our customers lots of different ways to talk to us such as through blogs (this one and me visiting as many of yours as I can), soap forums, Twitter, Facebook, soap making weekends, and by giving talks at regional and national gatherings. We believe that by doing this, we give ourselves an edge over our fellow suppliers.
Tonight’s homework is to identify your current customer and identify your ideal customer, in writing. Write down as much detail as you can come up with about them (age, sex, income range, likes, dislikes, where they shop, what they drive, kids, professions – it all helps). It doesn’t have to look fancy. Just brain dump onto paper. At the end of this process, we’ll put it all together in a coherent format.
Tomorrow we’ll look at another feature of the business plan: how to evaluate your strengths, weaknesses, opportunities and threats.
Looking for another part in the “Kickstart Your Business” series?