How to Approach your Business Plan
So, it’s a Friday afternoon and rather than knocking off early and going to the pub you’re looking at your to-do list and contemplating that tenacious item that’s been on there a while but not seen any progress… your business plan!
Feeling uninspired? Fear not, for this is a common reaction. You think you should have one, indeed your mentor/backer/bank et cetera demand one and yet, you can’t really see how it actually will be useful to your decision-making – let alone the substantial amounts of time and brainpower it will take up. Basically, it’s beginning to feel like an albatross around your neck.
The good news is that it doesn’t need to be this way. One of the reasons that business plans are hard to prioritise is that whilst you could write the vision parts of it swiftly, and could somewhat easily write prose describing your customer segments, the financial projections and marketing activities look like an impenetrable mystery. Surrounded by various bits of general theory, these financial and marketing components are crucial to your business and it’s growth.
What follows here are a set of suggestions for how to get over this hurdle. The ideal output is a set of practical, pragmatic financial targets that marry up your goals with the process of researching your current or desired customer segments. Sadly, we can’t cover all that ground in one short article but if you follow the actions outlined below you’ll start to see how the process works and that will hopefully spur you on to do further research, use digital toolkits and proactively grow your business rather than twiddle your thumbs waiting for orders!
1.1 Who are your customers?
Before you can set any sort of sales goals for your business, you need to be clear about who your customers are. This means knowing what country they are in, what and how they buy and their attitude towards fashion - including the role it plays in their life.
As you’re reading this on NJAL, lets focus on consumers who buy online. Typically they want cutting edge pieces from young designers, have an international outlook and are interested in the newest most exciting piece. These are the innovators, the early adopters and between them they only account for 16% of the total customer base in any market. The good news about this demographic is that they spend more per head than folks who wait until something has become mainstream.
Make a list of the key attributes of your existing and potential customers. Does your product tick off the any needs or wants of your potential customer? If yes how many? If not, can you change something so it will? Or are these truly the customers for you?
Now make a second list of the places where you think these customers shop (both online and offline). By researching these retail outlets you gain insight into the customer and their habits. Doing this helps you to develop a relationship with the customer, while giving you an idea as to where a buyer looks for new designers to stock.
1.2 What do they buy?
Here’s where NJAL has an edge over any independent retailer stocking emerging designers; because the sales are via the online site, we can tell you exactly what is being bought, by whom, whether they come back for more and where in the world the customers are. So whilst we’re not going to go into the detail of the top selling designers, (that would break the confidentiality we all care about) we can examine sales by category and location.
In Europe & Asia the best selling categories across the site are rings, other accessories (i.e. not the rest of jewellery and not bags or scarves but everything else) and dresses. In the Middle East dresses still feature in the top three but the other two are scarves and jackets. It is worth bearing in mind however that the top two destinations to ship sales to are Europe and North America with the UK as the top destination in Europe.
Whilst only 30% of customers buy more than once, this group of repeat-buying customers are worth a third of all sales on NJAL. Marketeers always say that it costs you five times as much to win a new client as to look after an existing one. NJAL’s sales would underline that message so remember, when you are packing up a sale to post off … the more you can do to make it an enjoyable, surprising and delightful experience for the customer, the better your chances that they’ll come back and buy again! This message is underscored again when we see that the top selling designers on NJAL are responsible for approximately 20% of the revenue generated in 2011.
Review who has bought your work to date (both individuals and retailers), do you stay in contact with them to see what they might be interested in next? Do you ask for feedback or areas in which you could improve? These are simple but great ways to get a feel for how quickly your business might grow in the year ahead. Once you begin to see a pattern that connects first sales to secondary orders and beyond you can start to apply this to your expectations of new customers.
Answering and understanding the two questions above, provide the backbone to any successful business. In order for even the simplest of brands to resonate with their consumer, these seemingly simple questions should be at the forefront of any designer, marketeer or business manager's mind. After all, we are here to build businesses that grow and prosper for a very long time.
Sarah Thelwall is founder of MyCake, an online finance and benchmarking toolkit for creative businesses and the arts & culture sector.