You can see, a person can not just open up certain businesses because they want to, they need to know what goes into the business. And that all starts with a business plan.
I once had a girl who brought her whole family with her to view a space I had for rent in my strip mall. It was her dream to open her own beauty salon and we both knew this strip mall was the perfect place for one. She had saved up thousands of dollars to purchase the equipment necessary to start the business. The first question I asked her was, “Where did you get your training?” She said she taught herself how to cut hair and has been saving all the money she made cutting hair in her basement to open up her own salon location.
Unfortunately, I had to break the bad news to her that in order to open up a salon she needed a managerial license. You see, she obviously never did a business plan on what it took to run a beauty salon. This was a total red flag for me because I, on the other hand, had completed a business plan on a beauty salon so I knew there was no way I could rent her the space without the proper credentials until she had years of experience and passed the test as a licensed manager.
A business plan is needed for a few reasons:
– I mentioned that it outlines everything
you need to know about the business in question. You’ll know if there are special licenses or permits needed, how much inventory you need and when to replenish it, who your competition will be, who will be running the business, where or what type of location you will need, and your marketing plan. It provides you with everything needed to understand both the internal and external aspects of the type of business you’d like to pursue.
– The most important point is that it tells you if your business will be profitable
. As I’m hoping that is your main motivator for going into business — to make a profit. If after you run a business plan and find out there is no way to make money, why would you continue to pursue going into this type of business? Or perhaps through the business plan you can alter the plan to find a way to make it work and be profitable.
– Another reason for a business plan is to outline your goals
as it will serve as a guide in the process. This way, there will be less surprises. Through a business plan, you can address concerns you may have and figure out which direction you want to go. You don’t necessarily have to follow the business plan exactly into your future, but it will provide you with a roadmap to success
and you may find that you need to take a few detours on the way to reach your goal or destination.
Some people refer to business plans as a living plan as it should be constantly monitored, flexible, changed, and redefined to suit your goals as needed.
Here is how business plans can change . . . After I retired I was changing my bed sheets one day and I could not get my sheets to stay on my bed. So I thought, “This is a square piece of fabric, I’m a designer. I should be able to design bed sheets that stay on my bed.” And I did.
My first thought was to make them out of a really great fabric. And any one who knows me, knows that I love fabric. So I started researching fabrics, and I found what we are actually sleeping in is enough to give a person nightmares! I kid you not! You probably do not realize what you are sleeping in. Over 75% of manufacturers put toxins in their bed sheets. That’s right, toxins! And these toxins off gas right into your pores. Then we wonder why allergies, eczema, and asthma rates are all on the rise. We are all sleeping in toxic chemicals and we don’t even realize it. I didn’t even realize it. This woke me up and I started to do a ton of research and now I had a new mission. I had to make bed sheets that didn’t have any toxins in them AND would stay on a bed. Finding the perfect fabric was really hard to do. I decided on cotton, because that’s a natural fiber and I found a small town called Xinjiang, (next to Tibet) that handpicked their cotton.
Let me explain the advantages of hand picking cotton versus machine picked cotton. First, in machine harvesting the cotton picker picks the entire cotton plant at once. The mature cotton boll gets harvested with the immature cotton boll, creating a lot of wasted substandard cotton fibers. When you hand pick cotton, it preserves the cotton in the longest threads possible and avoids contamination. Machine harvesting also stresses and breaks long strands of cotton into shorter frayed strands which requires tying them together which causes pilling. So handpicked cotton is less likely to pill. Machine harvesting also lets oils and greases from machinery soak into the cotton. Have you ever seen a little black line running through your t-shirt? That’s contamination. That’s grease from the machinery. Contamination isn’t possible when you handpick the cotton. There are so many reasons why handpicking cotton is beneficial that I cannot list them all. Machines also pick up garbage that strayed into the cotton field from a nearby road. Who wants garbage inter bed sheets or duvet covers?
When you have extra long fibers, it allows the cotton to breathe so you won’t sweat at night and it allows the sheets and duvet covers to be moisture wicking. What it basically comes down to is extra longer strands produce finer, more luxurious stronger, more durable fabric. To make a long story short, I started to tell my friends about these sheets I had made. And they started asking me, “Can you make me a set?”
One of my friends had cancer and she talked about how much she sweats at night from the chemotherapy, and how these sheets would be great for her. Some of my other friends are going through that time in their life when they get hot flashes. So that was another reason they wanted my sheets. Another friend who travels a lot was talking about how she goes to motel rooms and the sheets come off of her bed and she often finds herself walking up with her face directly on the mattress that thousands of people have slept on.
I’m sure everyone can relate as to when your sheets come off of your bed. It wakes you up at night. Sometimes, it’s like they shrink in the washer when actually they probably don’t. So that was another thing that changed in our business plan, we started to pre-shrink all of our fabric. Then I gave my sheets extra thick elastic so the sheets would actually grip the bed with the patented straps. This actually guarantees they will stay on your bed.
All of the stories I was hearing made me empathetic towards my friends and their situations. I really didn’t realize that bed sheets could have such a big impact on people’s lives. But think about it, you spend 8 hours a night in your bed sheets, that’s over half your life in bed. So you want to make sure you’re not sleeping with something that is bad for you. Then to top it off another friend told me about her son who is a veteran and has PTSD. He constantly tosses and turns at night and his sheets end up wrapped around him like a taco causing him more anxiety. That was the final straw, I knew I needed to get these bed sheets out there; so other people that suffer from things like this have the opportunity to benefit from these sheets in more ways than one.
I once heard a quote from Robert Badin Powell and he said, “Try to leave this world a little better than you found it. And when your turn comes to die, you can die happy with feeling at any rate, you’ve not wasted your time but you’ve done your best.” And so I thought, perhaps these sheets would be my contribution to this world. After all, the fabric I was using was already earth and animal-friendly, peta approved, hyper-allergenic, Okeo-tex tested (which means they contain no chemicals that can harm you), AZO-dye free, moisture wicking, they keep you cool when you need it and warm when you don’t… Did I forget anything? Oh yeah, they are BSCI compliant. BSCI stands for Business Social Compliance Initiative. It was formed to monitor business supply chains to ensure all suppliers are treating their workers ethically and legally. For me, it was all about my morals.
When I was in the prom dress industry, Vera Wang was taken to court over having her dresses made in sweatshops. So I wanted to make sure from that my dress factories didn’t have anything that was immorally improper happening at them. And that was never the case at my company. So if your company does abide by the BSCI standards, this is also something you should put in your business plan. Either in your executive summary or under your operating plans.
So I made a business plan. In the plan I researched who my customer should be but, I really learned a lot more going direct to my customers. For instance, I took my sheets to Macys and they told me that they absolutely love the idea of my sheets staying on the bed, but in order for them to have my bed sheets in their stores, they needed more than just one product. If they were going to take another product line out of their stores, they needed more than just bed sheets to replace it. They did offer to put them on their website but what I really wanted was for them to have my bed sheets in their stores. So that’s when I started to think, “What other products can I make that go with these sheets?”
That’s when I came up with the Zip-Zip-Flip duvet cover to match the sheets. I should mention that because the sheets and the duvet cover were unique, I had them both patented. Retailers love this because they know no one else on the market will have the same thing. First, I just came up with the typical duvet cover, you know the one that has the buttons on the bottom and I hated it. I couldn’t imagine myself demonstrating these as I had to crawl inside the duvet cover to get the duvet inside. My hair would be a mess coming out of the duvet cover.
So I thought, I’m a designer, I can do better than this. So, I designed a really easy to use duvet cover. You simply unzip both sides of the duvet cover. Put in the duvet, attach the four corners of the duvet inside the duvet cover so it stays in place, zip the sides up, then flip over the pocket on the top. I named it Zip-Zip-Flip. It’s so much easier than a normal duvet cover.
Now I had three products: sheets, a duvet cover, a duvet and I thought of one more product, a sleeping beauty mask. And again, having all these unique products, I wondered how I could make the mask unique. It was another New York customer of mine that had suggested having sleeping beauty masks on our line. He warned me all throughout the holiday season they could not keep beauty masks in stock. I knew I had to make this beauty mask different. I found some water gel beads and put them in a plastic form that is the same shape as your eyes. And you insert this plastic form into the same beautiful Oeko-tex tested cotton that was in my sheets. Then you can heat these water beads up in hot water or freeze them to be cool. When you put them over your eyes they help you with a few different things. A few being, they reduce puffy eyes, dark circles, pink eye, relief from hot weather, and are headache reducers, they help you relax, and of course they are blackouts when you are sleeping at night.
Now my business plan had changed from just having one product to having an entire product line. Before I was able to present my entire product line to Macys, Covid happened and my business plan had to change again. I went from having a B2B model to a B2C model. B2B means business-to-business and in my case that was my company being a wholesaler selling to a retailer such as Macy’s. And I was changing to a B2C model. Which means business-to-consumer or business-to-customer. For me that was going direct from me as a wholesaler, bypassing the retailer, and selling direct to the consumer. I was going to sell online.
Changing from a B2B to a B2C changed the entire business plan; all the way from my executive summary, to my marketing plan, to my pricing. My customer no longer needed to make money from the sale because now my product was going direct to the customer.
As you can see, the business plan directed me, but I had to make changes as I went along the way. A business plan isn’t cut in stone, some things just happen along the way. Unexpected things happen such as Covid and how the government changed how the majority of us had to conduct business. You can see the business plan directed me, but I had to make changes to it as I went along. And that is not where it ended. When I started running low on my inventory, a major retailer called to place a wholesale order, and I didn’t have enough inventory to cover the order, so I had to manufacture more. That’s when I found out my supplier was now lacking resources because their companies were shut down for Covid. In other words, I couldn’t get cotton. Or at least I couldn’t get the type of cotton that made my bed sheets so luxurious.
However, one of the buyers I had presented my sheets to had a plan. And this company was interested in licensing my product. They didn’t have a supply issue because they were a huge company. So again, the business plan changed to accommodate my unforeseen circumstances. If you’d like some of my sheets I am offering my listeners a coupon code while supplies last. Just put in BFT15 into www.deborarachelle.com to receive 15% off.
4– Finally if you need capital, banks, investors and financiers will require a business plan. They want to see if it will be profitable for them and how fast you’ll pay back your loan and if they’ll make any interest on your loan. However, having a business plan doesn’t necessarily mean a bank will loan you the money. When I first went into business, I showed my bank my plan and they said it was the best plan they had ever seen. Then they went on to tell me they could not provide me with a term loan because I didn’t have enough collateral. After all, I only had a nine year old car and I was only 24 years old. Since loans are one of the main motivators in writing a business plan and people always have questions about loans. I will dedicate my next podcast to loans and what’s available for you.
Business plans let bankers and financiers know exactly what you/they are getting into. It also shows a financier that you are serious about having a business and not some fly by night person. A well thought out business plan will tell you where you are today and help you plan for where you’ll be tomorrow.
For instance, you wouldn’t just hop on an airplane and go wherever it takes you. Typically, you would pack your bags first according to where you’re going: pack a swimsuit if you’re going to Hawaii or a parka if you’re going to Alaska. Then, you’d buy your plane tickets well in advance, so you can notify your employer or your relatives that you’re taking a vacation. And you’ll bring enough cash to last you until you come back.
A business plan operates the same way. It takes a business from conception to reality, mapping out the way to get there.
– Another good thing about a business plan is it doesn’t allow for emotions to get in the way
. Emotions run high when building a business and they can cloud your train of thought. A lot of people just get it in their mind that they want to live their dream, but they don’t take the time to put a plan in place. A plan will take all the emotion of the business and lay it all out there, showing your strengths and your weaknesses. Showing whether you will succeed or fail. It’s that easy.
Business plans can be any length. They can be short or long. It all depends on what type of business you’re going into. But, they all basically contain some of the same aspects/points. First, you want to form an executive summary. It needs to grab the attention of the reader by providing an overview of what your company is going to be all about, and what type of problems it will solve, who will be involved, and the plan of attack. It’s like the synopsis you would provide a literary agent or publisher of a book.
Next, specify typical company information or a company overview. That means providing what form or tax status your business will be taking, who is going to be running the business and the management team, why they will succeed and what their compensation will be. And what are their roles and duties? Where will the business be located? After listing your company information, the next section should go into detail on the product or service you’ll be offering. You’ll need a merchandise plan that lists your price points and unique selling points or patents you may hold on your products or services. Then, you need to specify who your target market is. This is describing your customers: where they live, what their hobbies are, their ages, their schooling, their income levels, anything you can think of that describes your customer in detail.
A section should be included on your competition. Who else has services or products like yours? Where are they located? What are their annual sales? You’ll need an advertising and marketing plan describing an in depth study on how you will get your product in front of the eyes of your target market.
Also included in your business plan should be an operations plan which describes your polices and procedures, how your orders are processed, and how you handle your inventory control and returns. Everything having to do with the day-to-day operations of your business.
Finally, the last section is a financial forecast. It displays in detail the funds needed, what they will be used for, a balance sheet, a profit loss analysis, business ratios, and details about your expenses and projected income for bankers and financiers. A financial forecast is the most important section of your business plan. If you’re looking for capital do not present a business plan without a financial forecast. I provided you with the basic outline of what a business plan is. If you’d like to see an outline in more detail click below: