Why do I need a business plan?
The main and best reason to develop a business plan is so that you have a blueprint to run and grow your business. Imagine trying to build a house without plan. If you are starting a new art business, a plan will help you organize your thoughts and help you tackle the challenges faced by startup businesses. If your art business is established a plan will help you in building a great team and allow you to focus on your most pressing problems, opportunities and initiatives.
A business plan will also be required if you are seeking some type of financing either from a bank or investors. Your plan will show what you intend to accomplish, how you will do it and how much money will be required. More often than not a business will prepare a plan with the sole purpose of getting financing. Your plan is an important tool in the success of your business and should be much more than a document just to raise money.
One of the most often overlooked benefits of a business plan is that it forces you to think about your business in new ways! The skills you develop in creating a business plan are universal and transferable to businesses of any kind or size. Perhaps one of the most important benefits of preparing a business plan is that you will start to think strategically, look at the big picture and develop a critical way of thinking about your business.
What is a business plan?
A business plan is a road map formal (formal in the sense that you should write it down) document where you state the goals, objectives and expected results for your art business. You plan can be very long and detailed or it can be just a few pages – it is really up to you to decide what your art business requires. Developing your business plan will make you think about all of the things that affect your art business and what you intend to do to make your art business a success.
Your business plan can be created an internal audience such as yourself and your team and for external audiences such as your bank or investors. You should seriously consider including both audiences in developing the plan for your art business.
The basic questions of business planning
The overall idea behind business planning is really very simple if you consider the following four questions:
Where are we now?
This part of your plan is called a Situation Analysis in that you are trying to get a feel of where you are today and to identify the internal and external factors that affect your business. In answering this question you will be looking at your own strengths and weaknesses, opportunities and threats in the marketplace and analyzing your competition.
Where are we going?
The answer to this question will be wrapped up in your overall mission or vision for your art business as well as the goals and objectives you have developed. You should develop goals for the various business functions such as marketing, finance, creative direction, production and operations, management and organization and your studio and facilities.
How are we going to get there?
Once your overall goals and objectives have been defined it’s time to develop strategies and the steps required to achieve them. Strategies are generally broad and need to be further broken down into the day to day activities or steps that are needed to accomplish a particular strategy. These steps are commonly called tactics, action plans or action steps. No matter what you call them these are the things that you will do to make your overall mission and goals a reality.
How will we know when we have arrived?
An important part of the planning process is to track and measure your progress and take corrective action as needed as you move towards accomplishing your goals. This is an ongoing activity that ranges from analyzing your monthly financial statements to reviewing detailed project plans. How do you measure success?
Reasons to create a business plan:
There are a lot of reasons to create a business plan and the best reason is that it will help you build and run a successful art business. Some of the reasons to create a business plan include:
- You are starting a new art or creative business
- You want to improve the profitability, performance and growth of your existing art business
- You are seeking financing from a lender or investor
- You want to get the members of your team to work better together and to share a common mission and vision
- You want to learn more about business and become a more effective manager and leader
- You want to learn to think strategically and anticipate changes and opportunities rather than react to them
How often should I plan?
It is a good idea to prepare or update your plan at least once a year. Make the planning process a part of your normal business activities. Preparing your plan and monitoring it are two different things. You should monitor your plan on a continuous basis to make sure that you are on track and that you are accomplishing the goals that you have set for your business. If you change the overall direction of your art business or add new employees or partners then reviewing your plan is probably in order.
How far should I plan into the future?
Your business plan can be very long term (5-10 years), medium term (1-3 years) or very short term (the next year). Whatever the term of your plan, it is important that your short term plans contribute to achieving your long term goals. A good planning horizon for your art business is the next 1-3 years. Remember the long run is made up of a lot of “short runs”.
Where should I plan?
It is unlikely that you will be able to do a proper job of creating your plan in one session. It may take several days in a row or evolve over several weeks or months. When you start to build your plan choose a location that will free you of day to day interruptions and allow you to concentrate on the task at hand. Pick a location that inspires creativity.
The bottom line(s)…
If you are starting a new art business or your business is established you need to develop some sort of business plan – if you don’t you are seriously handicapping your chances for success. The business plan process will get you thinking in a different way to be on the lookout for new opportunities and anticipate change rather than react to it. All great businesses are founded with a clear vision of where they going and a plan of how they are going to get there – something well within your reach!
If you would like to learn more about preparing your own business plan, building your art business and selling more art I invite you to check out my book – The Artist’s Business and Marketing ToolBox. Good Luck!
Neil McKenzie is the author of The Artist’s Business and Marketing ToolBox – How to Start, Run and Market a Successful Arts or Creative Business available in softcover from Barnes & Noble and Amazon and as an eBook from iTunes, Amazon and Barnes & Noble. He has developed and teaches the course “Artrepreneurship” at the Center for Innovation at Metropolitan State University of Denver, and is also a visiting professor at University College at the University of Denver where he teaches “Marketing the Arts”.
Neil has over 30 years’ experience as a management consultant and marketing executive, working with some of the world’s top brands. Neil is a frequent lecturer to artists and arts organizations, a guest columnist for Colorado Biz Magazine, where he covers the creative sector of the economy, and the author of several articles for Americans for the Arts, a national arts organization. Follow Neil on Twitter: @neilmckenzphoto