Last week I introduced what I intend to be a weekly post on different aspects of running a small business. Because I am currently in the process of writing a business plan, I thought that might be a natural place to start.
I am using the weekly topics presented in Alyson Stanfield’s Art Salon program as my reference point for writing my business plan. Essentially, if you follow through with Alyson’s program, you will have the makings of a business plan at the end of 8 weeks.
So where to begin?
We all have goals; sometimes we write them down, sometimes we keep them stored in our brains and sometimes we share them with our friends and family. In the last two years, I’ve learned that keeping my goals in my head is fine and dandy…but that doesn’t mean I’ll act on them. Sharing them with friends is great because sometimes they keep me on track by asking me how its going with that task I wanted to tackle.
Writing down goals, however, puts them front and center. When you write down a goal, you see it right in front of you in black (or blue) and white. When you write down your big, hairy, audacious goal, it stares you in the face and you may start thinking about how you’re going to accomplish it.
So what is a goal? It is a task you hope to accomplish that is measurable. And how do you make it measurable? By writing down all the little steps that you have to take in order to accomplish it.
And a big part of the business plan is all about writing goals.
Let’s start with sales goals. We all hope to make money at what we do. And we may even have a grand number amount that we’d like to achieve financially someday. But how are you going to get there?
If you’re currently selling your art, start with the income or revenue you generated last year. If you sell in multiple venues (consignment, wholesale, retail shows, studio sales, etc) you may want to take your total revenue from last year and break it down by venue. This will give you a good idea of which venue generates the most revenue for you.
If you aren’t selling your work yet but hope to do so soon, think about how much revenue you’d like to attain and what venues you need to pursue. Be realistic. A million dollars in revenue is wonderful…it just may not happen in your first year.
Next, think about the amount of revenue growth you’d like to generate for your business. This is typically done for a five year period. (And making these projections is hard for someone like me who doesn’t tend to think that far in the future.) When you make your projections, you build cumulatively off each year.
Let’s say you made $10,000 in 2007. You’d like your business to grow by 10% each year for the next five years. Your projections would look like this:
If you sell your work in different venues, you may want to make projections about the percentage of sales each venue will generate. Example: 25% consignment, 25% retail shows, and 50% wholesale. Again, make your projections over a five year period. You’ll begin to see which venues are more heavily weighted; which ones you might want to focus your energy.
Now here is the caveat when making these revenue projections. Can you make enough work to generate those sales? In other words, how many earrings, necklaces, bottle stoppers, card cases, paintings, bookmarks, or whatever your product is, can you make per day, week, or month?
Yes, this may mean production work. Yes, this may mean you work 7 days a week or perhaps you hire an assistant. Yes, this is a business.
As daunting as it appears, if you think about how much work you can realistically produce, you’ll have a better idea of how much revenue you can potentially generate. That yearly sales number is your big, hairy goal. You make it measurable by determining how many pieces you can sell in order to get there.
Now are these numbers written in stone? Not necessarily. Things happen; the economy swings, you get sick, a supplier goes out of business, or one of your gallery customers closes their doors. But these numbers give you something to work toward and you make adjustments along the way.
Next week: defining yourself and your art.
Book recommendations: Leah recommended the following books to help you with your business: