The Secret to Writing an Effective Business Plan
Do you have a business plan for your shop?
Sadly, many don’t. That’s ok.
This article will guide you through the reasons why you should create one, and how to write a one-page “Lean Start-up” business plan.
Business Plan Mumbo Jumbo
Why would anyone need a business plan anyway?
A business plan helps define the “why” for your shop. As in, why would any customer want to buy from you?
But to me, the main benefit is helping you with what I call the “Ready, Aim, Fire” approach to business. A business plan creates that focused direction you need to hit your target.
I talk to shop owners all the time when they need help and struggle.
One of the first things I ask is “Do you have a business plan?” About 75% of them don’t. Their idea of sales growth is to try to grab “anyone that will walk in the door”. That’s not planning, that’s luck.
Creating that business plan helps you define your shop, align with your customer’s needs, and focus your effort to reach better customers easily.
A good business plan helps you sort out the noise of “busy work” vs “profitable work”.
Two Types of Business Plans
For starters, there are two types of business plans. Let’s quickly review and then get into the meat of the discussion.
Traditional Business Plan
This is a very detailed and comprehensive type business plan. It usually takes a good bit of time to construct.
Typically if you are trying to get financial funding or a business partner this is the type of business plan that you should write.
Lean Start-Up Business Plan
This type of business plan is easier to write, has high-level focus and includes the key elements of your business only. If you are trying to get funding or a new partner for your business, you may need more information included.
For the purposes of this article, we are going to outline writing a Lean Start-Up Business Plan as this will work for most decorated apparel shop situations.
There are eight different areas that we’ll review to write our Lean Start-Up Business Plan.
But first, comes a lot of research and questions.
If you consider that the one-page plan to be the tip of the iceberg that juts out of the water, the work involved in researching, discussing, and problem-solving is the heavy portion that resides below the surface.
You can’t see it, but it gives everything above the surface the stability needed to float. The work involved in researching and defining your shop, breaths life into the one-page plan that you will create.
Below are the eight areas you should consider with a brief outline of each. At the end will be a link to download and use a one-page template to write your own plan.
The first area of our business planning is discussing the Key Partnerships for the shop. These are the businesses or services you need to operate your company on a daily basis.
If you are already in business, you know who these companies are and what they can do for you.
However, if you are new to the industry here’s the first place to start researching.
These are the companies that sell you the consumables you’ll use for production. They market the apparel blanks you’ll decorate. These are the equipment manufacturers. They are also your local services like a plumber, electrician, lawyer, and banker.
Who do you rely on to operate your business? List them.
There are a few questions that you’ll need answers for to define how they operate:
- Geographically where are they? Are they down the street or a three-day ship to your shop ground?
- Can you set up an account with them? Will they offer you terms or do you need to pay upfront?
- Do they assign you a customer service representative or salesperson? What is their contact information?
- What about training? Do they offer any at their facility, a trade show, or in your shop?
Next up are the Key Activities that you’ll do in your shop. But not just how you decorate a shirt.
I want you to think about what makes you different than any other yahoo that prints or embroiders apparel. What makes you unique?
This is crucial.
You want to define your market differentiation. This means that you are going to have to spend some time investigating your competitors. What are they doing? Can you name their strengths and weaknesses?
Also, consider where the industry as a whole is moving toward. For example, as turn-times decrease and order sizes shift in some markets, how are other shops accommodating that trend? What are the big boys doing?
Outline all of that, but then start defining how you are solving your customer’s problems.
What is their pain point?
You need to be able to name the number one activity that your shop will do every day to solve your customer’s challenges. In order to do that, you’ll need to define that problem.
Research this by asking. In person, with a survey…literally any chance you get.
You need to know.
This point is all about leverage. What type of resources do you have or can obtain that will absolutely matter to your customers?
- Maybe you have a wealth of industry experience and can be seen as an authority figure?
- Did you serve in the military?
- Do you have a special social status such as being a minority business owner?
- Maybe you have some intellectual property that pushes you above everyone else?
- Can you make the ordering process more convenient for your customers?
- Do you have any ratings or certifications you can market?
Don’t be bashful.
Any of these are great points to capitalize on if they matter to your customers. What you are going after here is the instant trust that will build if you align with what matters to your target market.
You have to play this stuff up.
Maybe your shop markets to police or firefighters and you served in the Marines. Since a lot of those first-responder folks served too, this could give you an advantage.
Can you instantly name your leverage points that matter to your customer base?
If you don’t have anything, is there something you can obtain that will work? Find out!
This probably is the most important element in the entire business plan.
A Value Proposition is a clear and compelling statement that defines what makes you unique to your customers.
If you can’t articulate this, how can you market your company?
In your Value Proposition, you need to define the number one thing that resonates the most with your customers. Hint: It can not be about price.
Only companies that don’t have anything interesting to say market with price as their Value Proposition. That is a race to the bottom you don’t want to win.
Instead, define how you are unique. Show your customers that your strengths align with their needs.
For this topic, you are going to want to create and define what your customers should feel when doing business with your shop? This is all about branding.
Branding is more than a logo.
How will customers do business with you? In person? Online? With a sales rep?
Define that customer journey in detail. Most importantly, how will you know that your branding experience is successful? Will you be asking your customers? Maybe your potential customers?
What do they want or need?
Also, you want to define your shop experience so that it is repeatable. When I talk to shop owners one complaint they have is that they can’t delegate the customer management to subordinates because the “customer is tied to them”.
This is because they haven’t defined that interaction in detail.
If “nobody does it better than me”, then spend some time defining what that is so everyone on your team can do it the same way.
Get this into your Business Plan.
This is also known in business circles as your “Target Market”. If a Business Plan is a device to aim your effort, the Customer Segment is the bullseye.
How well do you know your customers? If you are one of those shops that “will take any order that walks through the door”, you haven’t defined your customer base yet.
It’s too generic.
You want to be hyper-specific. Details matter. More than anything, this work will help you understand and make better decisions later.
Here are some starter questions to ask:
- Who is your customer? Is it an organization? A business? Teams? Don’t forget your customer base could be composed of many different entities. They may all buy differently. Do yourself a favor and describe each in detail.
- What is their number one pain point? This is what you are poised to solve. Own this.
- When do they typically buy? Will there be repeat orders?
- How do they typically buy? Purchase orders? Online? 100% paid upfront? Deposit + balance due?
- Who is the decision-maker? Do you have access?
- What is the lifetime value of the customer? Shoot for customers that will stick with you for years.
- Can you describe their “average” order? Is this the type of work that you need to be more profitable?
- Why would a potential customer leave their decorator and start using you? List these reasons.
Here’s the marketing part of your Business Plan. It’s probably the hardest part to work on, as most shops fumble the ball with marketing.
They have great intentions, but it is the follow-through that never seems to work.
There are two things you should get a firm grip on with your marketing.
First, Define the Customer Channels
This is where your customers can be found. On social media. At trade shows. In associations. With networking opportunities.
If you have fully defined the “who” is your customer, this step is the “where” they can be found. That is your new playground.
You need to show up and play.
There are four steps to the sales process with marketing. Know, Like, Trust, and then Buy. Your marketing efforts nail the first three.
Your potential customers have to Know who you are. This is 100% name recognition.
Then, they have to Like you. Are you giving them a reason? Think this through.
Thirdly, you have to prove you know what you are doing. This builds Trust. How can you show that?
Lastly, if you have made a great impression with the first three things in this cycle, the Buy habit comes naturally and easily.
For your shop, can you describe these four processes with your marketing efforts?
Write them down.
Second, Use a Calendar
The number one way to have accountability in marketing your shop is to use a calendar.
If you have created your Know, Like, Trust, Buy plan the next step is to put tasks and deadlines on a calendar. For marketing, consistency is the key to success.
Over the years I’ve seen plenty of forum posts from shops that state that certain marketing tactics never work. But when you look them up on social media their last post on any channel was fifteen months ago. And even then it was a throwaway image of snow in the parking lot at the shop.
How is this aligning with solving your customer’s pain points? Unless your customer is the snowplow company, that type of marketing isn’t helping.
Instead, spend some time building up your brand with your authentic voice. Show happy customers with the work you produce. Film your production crews and post a short video. Start a Pinterest board and give examples of all the things your shop can handle. Tell stories with a short blog article.
But to make that happen, you need to assign that work to someone. Put it on the calendar who is doing it and create a deadline. Make a date on the calendar when that post is going to drop.
Part of your Business Plan is creating your marketing program that is directed to your Customer’s Channels.
Here is the eighth and final part of the Business Plan.
How is your shop going to make money? If you want to be profitable, you better have a clear understanding of this in your shop.
There are a few concepts that will be extremely helpful to you if you nail these down. Let’s take a look.
For starters, how much do you have to sell every week to breakeven? Not make a profit. Just to keep your head above water?
Do you know this figure?
This was outlined in the recent InkSoft blog article, “Why Keeping Score Will Help You Win the Decorated Apparel Game.” Rather than go into detail here, click over and read that article for more information.
Most shops lose money in Q1 every year. As you know, Q2 is when orders pick up. If you understand your breakeven amount and instead of losing money in Q1, your shop reached the break-even goal with costs, then you’ll be on the path to profitability earlier in the year.
Having this number in your head can help you focus on what you need to do.
Cost Per Imprint
Every time you decorate a shirt that unit of work is called an impression. Printing a left chest and a full-back on 100 shirts will total 200 impressions.
For your shop, a fantastic way to understand your costs is to keep track of your Cost Per Impression.
Right now, do you know what the average cost is for each impression you produce?
This was outlined in detail in the InkSoft blog article, “How to Calculate All Of Your Shop Costs: The 5 Buckets Method”. Again, rather than go into detail please read that article. There is also a companion video.
Using an accurate average cost per imprint can help you build a pricing structure that is based on reality.
This is crucial information to have.
A profit margin is simply what’s leftover from the sales price after the costs have been subtracted. This is expressed as a percentage.
This is outlined in the 5 Buckets article above as well.
For your shop, do you know your profit margin on your work? When was the last time you calculated this?
Have you put into place a plan to increase this margin? What do you need to do?
When you focus your efforts on a proper Business Plan, setting profit margin goals should be part of that work. How are you going to achieve your goals?
Sales Total Per Employee
Another key metric to consider is simply the sales total per employee. Good, profitable shops tend to operate at about $100,000 per employee a year. If you are really efficient, it is nearer $200,000.
In your shop, have you calculated this recently?
If your sales are lacking or your employee headcount is too high, what measures are you taking to resolve that challenge? Are you including that thinking about your Business Plan?
Define Your Sales Process
Taking all of those metrics into account, and coupled with your understanding of your customer can you define your Sales Process?
This is the last step for the Business Plan, as it is going to set your action items in place so you can achieve the success you seek.
Here are some thought starter questions to consider:
- Describe the sales cycle for your customers. How do they learn about you? What are you doing to attract them? How are you using marketing or tools to push them towards the Buy end of the sales cycle?
- How are you positioning your company to sell on your value, and not on price? Describe what that looks like.
- Describe how you are going to overcome sales challenges. What is your ammunition to compete in the marketplace?
- How can you upsell your customers to add more revenue per order? Describe your action plan.
- What is a realistic sales goal per month or quarter? How are you going to achieve it? Write your goals in the SMART goal format. (Specific, Measurable, Achievable, Realistic, & Timely)
Writing the Business Plan
Hopefully, now you can see that a solid Business Plan gives you the strength needed to focus your actions in the right direction for scaling your shop’s growth.
Frankly, this is a lot of work.
But it is worth it when you realize that you will be taking on orders that are more profitable for you, and aligned with who you want to do business with in the future.
Here’s a link to an example Business Plan that was created for the fictional Shop XYZ that I used in the example for the Business Plan Webinar.
Click Here to grab that one-page plan. Download it and use it as a template for your own Business Plan.
“You were born to win, but to be a winner you must plan to win, prepare to win, and expect to win.” – Zig Ziglar
“Failing to plan is planning to fail.” – Alan Lakein
“It takes as much energy to wish as it does to plan.” – Eleanor Roosevelt
Production Manager Tool
From day one, we’ve been devoted to making InkSoft the most useful tool for printing and customization professionals across the industry. While thousands of users are growing their businesses with InkSoft Stores and the Design Studio, we know we still have a lot of work to do to help print shops run more efficiently.
The next big step is a production management tool. We want to bring InkSoft full circle by providing a powerful way for you to streamline production and communication, ultimately boosting profitability and reducing costly mistakes. Not to mention, solving the challenges outlined in this article.