Purveyors of conventional wisdom would have you believe that the
very first thing you ought to do when setting up a new business
is to create a business plan.
It doesn't matter whether you are selling odds and ends on eBay
from your living room or something larger and more complex,
Business plans are excellent and necessary. Far too few of us
self-employed and freelance people use them.
They force us to spell out our objectives. We have to assign
numbers to our expectations and assign a time-line to our goals.
They become our roadmap and keep us on track.
But I suggest that you can't make a business plan that is worth
anything until you've done your homework.
And that means knowing what you want to do and how you want to
do it. And determining that there is sufficient demand for your
product to generate enough income to cover your costs and allow
a profit.
In other words, before the business plan comes research.
If a body of knowledge already exists, it makes sense to tap into
it and save yourself some work. The US Bureau of Labor Statistics
and other such sources, for example, publish a great deal of
demographic information. Some of it is very useful.
But it is also likely that as a creative sole-proprietor,
meaningful statistics don't exist about your specialty.
Many micro-businesses target a very specialized niche. And many
owned by creative types exist to sell a product or service that
don't follow well-worn prototypes.
It is particularly difficult for such people to find meaningful
published data.
If you fall into these categories, you'll have to generate your
own information.
Don't limit your research to purely business data. You are
building a life as well as a business.
Are the demands and conditions of your proposed business
compatible with the life you want to create?
For example, illustrators often work on short deadlines - meaning
that sometimes they have to work far into the night to complete a
project on deadline. Plus, some clients are demanding and some do
not pay on a timely basis. After all of that, can you still "love
it" enough?
Or, maybe your business is such that sales fluctuate during the
year. How will you make it through the lean months? Can you
handle the uncertainty of a fluctuating income?
So, how do you find information?
First, if other people provide services similar to yours, talk to
them. You will gain a lot of information quickly. Their answers
to your questions will save you a lot of legwork and open your
eyes to factors you may not have considered.
Try to talk to at least five or six people so you can get a range
of viewpoints.
You can find them through trade associations, schools, word-of-
mouth. If the locals are reluctant to share information - perhaps
because they see you as direct competition - look for similar
people in a different locale.
Second, create the information you need.
Mimic and simplify what large businesses do. Reduce their methods
down to a level that is practical and affordable.
For example, perhaps you want to survey potential clients and
customers to get feedback.
If you are a creating a micro-business on a shoe-string, it may
not be affordable nor practical to commission a focus group. But
you may be able to speak to potential targets informally or use
direct mail to send a simple survey.
Eventually you'll have to 'put your toe in the water.' Try it out
in a small way - so you won't lose much if it doesn't work - and
observe the results. Then experiment and modify as needed. Once
it works to your liking you can plunge right in.
This approach, known by the technical term "trial and error,"
can be applied to any facet of your business.
After all, even the largest producers test market new products
before rolling them out.
Put some parameters around your efforts. Decide, in advance, how
much time you want to allow and how much you want to budget.
Then test, test, test.
Use trial and error for every aspect of your business. Experiment
with different ways of packaging your services, different rates
and prices, different types of marketing, etc.
You'll soon find that certain approaches work better than
others. Eventually your experience and data will suggest viable
strategies.
And then you'll be ready to create your business plan.
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