Thursday, May 26, 2011

Business Planning

One of the things I find extremely helpful as a business owner is to keep my business plan up to date. It's easy to look around at all of the finished merchandise in the studio and feel like resting on my laurels. Surely this much cloth indicates some measure of success, right? If I could just sell it all right now, I'd be doing great, right?

Well, a good business plan review session takes the emotional component out of the equation and lets me see where I really stand. A few months ago I posted a graphic to represent my current development strategy: build up my inventory before focusing too hard on selling it.

Here's a new version with the "Now" label moved to the current position in time.

And here's the graph of actual inventory and sales with the data pulled from Quickbooks. The next two weeks are projected based on the fact that I'm waiting for yarn to wind the next beam.

If you look at the second half of this graph, starting at the end of February, you can see that it matches the startup phase of my business plan pretty well..

Looking back to the plan, you can also see that it's going to be another few months before this business is stable. And that's the answer to my question. Can I take a break from production and focus on selling this batch of cloth? No.

I need more color variety in order to get into the markets that I want. If one of my future venues "hits", I need the ability to keep them supplied. ie: backstock to feed into the pipeline while I produce more cloth.

It takes six weeks to produce each color. I will need those new colors as fast as I can make them. Every time I look at this a different way I get the same answer: stability will arrive in late summer if I can keep the production levels up. Even though I'm flat broke, every penny still needs to go toward yarn so I can keep on weaving. It's good to know.


Anonymous said...

I will try to be brief as I know "time is money" for you.
I am relieved to find, for the first time, a weaver who is actually taking a business-like approach. How/where did you learn to do your business plan --- for weaving? I am a long way off from production weaving, but I know that I must be able to take the same approach as you.

Blossom Merz said...

Hi, Ellie!

Yes, time is money, but I need to enjoy life, too. Knowing that I'm possibly helping others to start their own crafts businesses is one of the reasons that I write this blog.

I took lots of courses through the SBA in San Francisco as well as some classes through local community-building workshops. One of those classes lasted two months and focused on business plan writing.

Market research is the biggest part of writing a plan, and it was a big factor in leading me to weaving: there's almost no competition. If I could achieve mastery of my craft, there would be almost nobody else in the arena.

But, when push comes to shove, all of the classes would be meaningless without goals. My day-to-day actions are bolstered by a goal to grow this business to be profitable enough to form the foundation of a new crafts-based monastery. And that goal pushes me to invent things for myself like the chart shown in this blog post.

Thanks for reading my blog, and good luck with your own venture!

Eric Rotkow said...

I agree. One of the keys to have a successful business is to formulate an effective and updated business plan. Having one will help a business owner see what areas in their strategy or management they need to change or improve upon. It is also a good way of measuring a business' progress, in terms of how far along you are in implementing that plan. Anyway, it’s great to see that it worked well on your business. Are you still using this approach up to now?

Eric Rotkow @ Coffee + Dunn