Writing a Business Plan – Distribution (Or, How Will You Get Your Product to the Customer?)

You want to write a business plan for your product but you don’t know where to start. Inside you’ll learn how to make a simple one sheet business plan.

Go get a piece of paper and a pen or better yet, print this article out.

1. What is Your Product or Service

This is your business idea or the product you want to sell. You can sell cakes, mow lawns, sell crocheted hats, or pillowcase dresses, it doesn’t matter what it is, just write your ideas down.

How does your product or service differ from what is already out there?

Assignment:

Go to a store and find a product. How many choices do you have? Which one do you choose? Why?

Some choose because of personal experience with the product, some choose based on packaging or on an advertisement. Others choose based on how it will make them look to their friends or it inflates their ego making them feel good about themselves.

Service products like mowing lawns are different. You need to do what you advertise, do it well, do it on time, and be reliable. Go the extra mile – maybe you can offer one free mowing if the account is paid-in-full for the month.

2. Name Your Business

The name of your business and/or product should be unique, memorable, and easy to pronounce. For example, in America we pronounce Adidas as Uh-deed-ahs while in Germany where the company is pronounces it Ah-dee-das.

Read 15 more well-known brand names that get mispronounced on Business Insider – businessinsider.com/mispronounce-difficult-to-say-brands-2014-9.

Jason Miles, Author of Craft Business Power and co-owner of Liberty Jane Clothing suggests naming your company a proper name instead of some cute insiders only name.

Can you guess the product of the business names below?

Liberty Jane Clothing vs. Momwithahook

In the first example (Liberty Jane Clothing) you know right away that the product is clothing. The name suggests that Liberty Jane may have something to do with the designs.

In the second example (Momwithahook) it is questionable what the product is. Does this mom sell fishing equipment, hooks, pirate themed merchandise? This is my username online as I enjoy crocheting, use a crochet hook, and am a Mom.

Not knowing this about me and not knowing about the hobby crochet you might be clueless about what exactly I’m offering. A better option might be Sara’s Crochet Patterns. You know who I am and what product I sell.

Assignment:

Take some time to come up with a variety of business names. Make sure it describes what you do and your product without confusing or misleading your customer. Use Jason’s suggestion of adding a proper name, it doesn’t need to be yours but it will help.

3. Target Market or Your Customer

Who wants or needs your product or service? It’s important to get this right so you don’t waste time and money.

Considering your product or service – mowing lawns – who is your customer?

– the elderly

– those incapable of doing it themselves

– busy people

– vacation homes

– houses on the market

Assignment:

Take a sheet of paper and divide into four sections. Label the sections Type, Where, What, and Willing.

Now add the type of people who use your product or service, where you will find them, what is most important to them, and whether they are willing to pay someone for it.

4. Getting the Word Out or Marketing

How will your customers know that you mow lawns? Will you create a website? Will you ask friends and family members? Will flyers be a good way to let people know what you are doing?

Assignment:

Brainstorm ways to market your product. For the mowing lawns example, what would be the most beneficial means of getting the word out?

– Churches

– Clubs

– Schools

– Neighbors

– Friends

– Craigslist

5. How Much Will You Charge or Pricing

In any business profiting is the goal. You need to price your product or service competitively and profitably.

Consider the costs of running your business and shipping if you are selling a product online.

Assignment:

Find out the cost per unit made. To do this you will need to do the following:

– hourly overhead costs

– hourly wage

– total hourly wage = hourly overhead costs + hourly wage

– how long does it take you to produce one item (use toggl.com to time yourself)

– total materials cost (everything that goes into to making your product)

– add an extra 10% for unexpected costs

– total price = time to produce one item + material costs x 10% unexpected costs

Read more on pricing your products on TheDesignTrust.co.UK. You might also find this calculator handy: craftscalculator[dot]com.

Assignment:

Time yourself making your product or completing your service. How long did it take? Determine the cost per unit made for your product. For a service based business, how long does it take to complete the project? Add some extra cushion to this for the unexpected.

6. Determine Your Profit

This is the fun part. To get your profit subtract your expenses from your income.

profit = income (sale price) – expenses (materials cost)

Assignment:

Sit down and find the profit for each product or service you plan to sell.

7. Delivering Your Product or Service (Distribution)

This step could also be done between step 3 and 4. Once you know your target market (who will buy your product) and where they are you need a plan for getting your product to them.

Do you sell locally? Will you deliver? What shipping company will you choose?

Products

Choose a shipping company that is reliable and cost-effective. Start small at first by utilizing the United States Post Office or your Postal Carrier.

Decide whether you will ship internationally. Who will pay the customs fee?

Services

How will your service be rendered? Will you go to your customer or will your customer go to you?

Assignment:

Research various shipping options for your product. Try shipping your item to a friend. How did it arrive? Was it damaged? How long did it take?

Sometimes the cheapest way isn’t always the best way.

Conclusion

You should now have a well thought out business plan. This isn’t acceptable for bank loans but it will guide you in starting your own little side business.

And now I’d like to invite you to read more on business and blogging for small business.