A business plan, the way I have been explained (and, I could be
wrong), is that it is a plan determining how much you have to make
to meet expenses and determine when you are making a profit. I am
just an artist, so my jargon may be wrong here, but I will do my
best to give an example of my plan.
Let's say that I need $600 a month to make the note on my cabin,
electricity, gas, and to pay the squirrels that power my Internet. I
need $400 a month to keep my kids clothed in burlap, fed, and gas
for the truck. That's $1000 a month to stay alive. Sort of :o)
The price I need for each piece is something entirely different, but
I triple my supplies bought with credit and double cash expenditures
to determine what I have invested into each piece. This isn't the
actual business plan, but part of it.
I estimate the cost of broken burs, blades, and spent lap disks. And,
let's say that i have learned that I spend $100 a month on these.
Then, I plan for new equipment to either replace old, or new that i
really want. Lets say that I want new bellows for the forge and a
new apron for this upcoming year; $200. Yes, I know; I dream big.
Then I divide my years expenses by the hours that I work to
determine an hourly rate. $12000 a year to stay alive plus $1200 in
stuff that breaks, plus $200 for my wishlist. That is $13400 divided
by the 3100 hours I will work this upcoming year. That is at least
$4.50 an hour that I have to add into the price to bring in $1215 a
Then I list the ways that I bring in income; wholesales, repairs,
trading squirrels. I then list my venues for sales; galleries,
walk-ins, Squirrel-mart. And, I look to see where I can boost sales
to meet or exceed my projected needs. And, where I could cut
corners. (maybe I don't need the apron?)
I cannot exactly predict sales, but I can predict how much I can
produce. I can control my prices. And, I can control the squirrels
I can then use this to help me set my prices. If a piece cost me $50
in credit bought materials, and $20 in cash. I start with $190. And,
it took me 5 hours to make, so add in $22.50. The work has a
starting value of $212.50. But, I may not sell all of my work
immediately, and it is very pretty (bling value). So, I set the
price at $300. This gives me room for wholesaling cuts.
The plan can also help me decide when I need to beat a drum to get
folks into the shop. If I drop below $1215 a month. I either pray
very hard, or I have to dance naked in the street. Well, maybe not
that. But, I will worry none-the-less.
Of course there are other things to add into the plan, such as
unexpected holes in the roof or a storm blows my outhouse away.
There's also packaging, taxes, cardboard, whiskey, and bribes to the
local officials. But, maybe this will help you get my drift :o)
Michael of Cosmic Folklore Studios