In 2012 I will be posting excerpts from my e-book The Business of Face Painting once a month. Of course, if you would like to get all the information included in my book right now you can find out how here.
The Business of Face Painting was published in September of 2009 and I am working on the final stages of the companion book The Art of Face Painting which we hope to have out sometime this year.
Since this is a start of a new year I thought it would be appropriate to discuss The Business Plan. I just updated mine again and it is a great tool for focussing on the coming year’s goals. I update my plan every three to five years and review it annually – if there have been big changes over the current year I will update, if things are ticking along as anticipated I just review.
The following is an excerpt from Chapter Three of The Business of Face Painting.
THE BUSINESS PLAN
If you are starting a business, no matter how small-scale, you need to have a plan. Obviously, planning to start a business is a plan but formalizing it into a document is a very important step and the process will cause you to think about all the aspects and risks of starting your own business.
Writing a business plan sounds daunting to many people but it is not. The process of writing it and pulling all the information together can really help you to gain an understanding of your business and what is needed to make it the success that it is meant to be. Being a professional face painter is really no different, from a business point of view, than being a plumber.
There are many tools available to assist you with drafting your first business plan: on the internet, from your bank or financial service advisor, from your local small business association or Chamber of Commerce. I have provided a template at the end of this chapter which is the one that I used for my business plan and this was loosely based on one in a booklet from the bank I was dealing with at the time. Once you take the time and effort to do it the first time all you have to do is periodically review and update it to reflect your current business operations and goals.
The business plan is just that – a plan. It is not written in stone, in fact, it is meant to be updated and changed regularly to keep up with your business and your changing goals. In many cases businesses write-up a business plan in order to use it to support loan applications and other requests for funding. But, I think that it is a tool that anyone starting a business should take the time to use.
A full business plan covers all areas of a business’ operation – industry analysis, opportunities for work, competition, description of your business, services, target markets, staff, equipment, contingency planning, risk assessment, business goals, marketing plan, sales forecasts, operations, inventory control and management set-up.
Many people start face painting without a real intention of it becoming a fully fledged business, then gradually they start to get paid for doing it, and then realize that they are in business without actually planning to be. Once you are in business there are lots of things that you need to be aware of and by following the template for a business plan you will cover all the areas that someone starting or assessing their current business needs to consider.
There are different styles of business plans so if you don’t like the template I have included look around to find one that suits you… some are shorter, some are longer… it is all a matter of how much depth you want to get into.
I will go through the template point by point and provide some suggestions as to what sort of information fits with the headings.
– Description of Industry: Describe the services available like face painting, body painting, glitter tattoos, etc. the demand locally for the services, where you can sell the services, potential for growth, etc. Then describe the competition in your area – do some research to find out exactly what there is in your area. This information is for your eyes only so please be honest and accurate. Economic factors are things like recessions or booms – how much money do the locals have to spend? If you are in a factory town and the plant shuts down then your economy will be slow as people won’t have extra money for face painting. Social factors are things like religious prohibitions against face painting or lots of demand for henna tattoos for cultural reasons. Technology and environmental factors are things like new equipment like airbrushes and environmental might be allergens or disposal of solvents.
– Description of Business Venture: Well, what IS your business? Describe your business in a short paragraph or in point form. Define your target market (this is covered in detail in Chapter Four.) Explain your competitive advantage – why will people hire you over the competition. Describe you location and set-up, staff, equipment and supplies, and a history of the business or your experience in it.
– Business Goals: Where do you want to be after one year? Two years? Five years? This can be a simple statement or a detailed breakdown year by year. You can be as detailed as you want – I like detail as it is easier to breakdown into parts and projects that can be completed or scrapped depending on the market.
– Marketing Plan: How do you plan to sell your service? List every method you can think of and how you will do it. That is everything from giving out business cards to buying advertising to direct mail to networking with soccer moms. Distribution is how are you delivering the services and where, how far will you travel to do so? Your pricing, promotional plans, any guarantee or warranties (these are mostly those of products, our services don’t lend themselves to guarantees of any sort other than showing up and doing the work.) How do you plan to track customers and results of marketing? Methods of payment – how do you intend to collect your deposits and fees, terms for corporate customers, etc. The marketing plan will be covered in a lot more depth in Chapter Four.
– Sales Forecast: This is where you get to make assumptions and predictions. State the assumptions that you are basing your forecasts on like “The first assumption is that more work will be offered as more work is completed from recommendations, word of mouth, repeat customers, etc.” The current version of my business plan only has four assumptions. You can forecast your bookings month-by-month for the current year – confirmed bookings and anticipated bookings from repeat customers, etc. And then forecast for the future based on your assumptions.
– Operations: This is how you supply your business with the material need to conduct business. Where will you get your supplies, terms with vendors, alternative sources for emergencies, and how you will control your inventory of products and equipment? Where do you store your equipment?
– Management and Structure: How is your business set-up – are you a registered company or a sole proprietorship? What is your legal and tax status? Who are your key personnel?
– Risk Assessment: What is your competitors’ reaction to your business? Are you friendly and refer work to each other or are they undercutting you? This is just a statement of fact you don’t have to solve the problems here. List “What ifs…” for external and internal factors. What if… you spill paint on a customer’s white rug? What if… your wrist develops carpel tunnel syndrome? Explain how you plan to deal with the risks – insurance, taking care to avoid situations that could cause injury, etc.
– Environmental Statement: Explain how you are meeting environmental regulations, recycle containers, etc. State any training taken like WHMIS (Workplace Hazardous Materials Information System.)
– Action Plan: The steps to be taken to meet the goals of the Marketing Plan and how the results will be measured – usually would be increased bookings, increased income, etc.
– The Financial Plan is simply statements and numbers. Attach your financial statements and accounting information if you want to. Forecast your income for the coming year, two years and/or five years. Remember that this is just a plan and you can change it depending on what actually happens. Try to assess realistically where you want to be and what you can expect to achieve.
Don’t panic! It sounds like a lot of areas to cover but once you start to make your notes you will realize that a lot of the information will apply to different areas of the business plan. I am not saying that it is a quick and easy exercise, but, by taking the time and doing a bit of research to fill in the information in the template you will be giving yourself a fantastic aid to develop a successful business.
It is not a project that you will complete all at once so do not be discouraged if it takes you a few weeks or even months to actually draft the entire document. But be assured that once you have completed it you will have a firm grasp of the business you are in and be able to go back to it annually to see if you are on track and to make adjustments. Not to scare you but my current business plan is twenty pages long without the attachments – but all I do now is review it and update where necessary and do a major update every five years.
I updated my five-year plan for the third time a couple of years back and it was really interesting to read over my goals and plans from five and ten years previous… I was a bit surprised with how things had altered and progressed as reading over what I put down on paper for my business goals has changed so much. It really is an excellent way to keep track of your goals and how they change with time. Growth will cause changes to your plans, as well as changing interests that you have.
Another benefit to creating and keeping an up-to-date business plan is that it can help you to prove your business intent if you are ever audited. My accountant highly recommended that I do one when I was first starting out in the make-up industry for this reason.
© Shannon Fennell, 2009
with material from “Designs and Templates Volume 1” © November 2007
and “Designs and Templates Volume 2” © March 2008