Ready to make your creative business dream a reality? It all starts with a business plan.
Even just as a thought exercise, a business plan is a great start towards defining what your business is about, who you need to reach, and what you need to do to make money.
But eventually, if you want to get serious about your business, you’ll need a formal business plan to show potential investors, partners and clients that your business is feasible and worth investing in. And ultimately, your business plan will serve as your roadmap as you make future decisions about your business.
Whipsmart’s been out in the trenches talking to business owners, so we know building a business plan can feel intimidating. But we've given you a guide with tons of info, terms and insights to help you jump start your journey.
When and why do I need a business plan?
All the creative business owners we spoke to said they knew they needed a business plan when they started thinking about scaling up.
“I think in order to create on the scale that we wanted to be able to create on, we realized we needed to become more formalized, more organized, get really clear on what our priorities were, and start to build a roadmap about how to get there,” says Sherri Urann, co-owner of Fat Gratitude Productions in Spokane.
Winfield Ezell started his Tacoma-based creative production company, Obsidian Creative Studios in 2005. Once he started getting offers for bigger jobs, he knew he knew he and his small team could take them on—but he had to prove it.
“Out of necessity I had to create a business process in which I can compete with the larger companies that had, quote unquote, more resources than I did,” says Ezell. “And that's when I knew I needed a business plan. When I knew I was going to scale.”
Anytime you’re starting to scale your business idea up—when hiring, when looking for investors or collaborators, when pricing your time and product or service—is when you need a business plan.
OK, So I DO Need a Business Plan. What’s Next?
In this Whipsmart How-To guide, we’ve dissected all the ‘parts’ of a formal business plan—from the Executive Summary, to the market analysis, to revenue and cash flow, and figuring out operations.
Along the way we’ve spoken to Washington State creative business owners who have gone through the whole painful yet illuminating and incredibly useful process of defining what their business is (and is not) and how it can be successful.
Let’s get started!
A business plan has a lot of moving parts. The jury is still out on exactly what comprises a full business plan: anywhere from 4-10 main components can make up your plan, and it can be anywhere from one page to a hundred.
But no matter how long or short it is, in its most basic shape, the plan is meant to present a holistic picture of what your business is, what it does, and how it does it. At the very least, the business plan tells this story through a business description, market analysis, financial information and an operations plan.
As a creative person, it may seem like a challenge to fit all your wildest dreams and ideas into a formulaic business plan, says Sherri Urann of Fat Gratitude Productions.
“You know, creativity is so intuitive. And a lot of times a business plan is made from a very outcome-oriented perspective. And so then to try and put that into this rigid business structure, can seem like clashing paradigms.”
“And so I think allowing what you're most passionate about to stay at the forefront and to find a way to build your business around that, instead of adapting it into what you think is the needed structure to be successful, is key.”
We’ve broken down all the parts of an executive summary that you’ll need to know:
Business Description (the “what”): What is your business? What does it do? This section outlines the scope and overview of what the business is about—and what makes it unique.
Marika Thomas, owner of Skybox Skincare Bar, was selling her hand-made original soaps and lotions at fairs and to friends long before she had a business plan. But she says, once you take that idea you scrawled on a napkin to paper, it becomes the real deal...and a chance to tell your story.
“You get to write that down and take people with you. And it kind of builds that buy-in, when people read it.”
Mission Statement (the “why”): The mission statement describes your purpose in the world, your motivation for why you started this enterprise in the first place. It’s only a few sentences that answer the “why” of your business’s existence, but they need to be meaningful.
Sherri Urann says one of the most challenging parts of making a business plan as a creative is staying focused on how to do the things you’re most passionate about.
“Once you step into your business pants, it's really easy to forget what motivated you to formalize your creative enterprise in the first place.”
Your business’s mission statement helps you stay focused on the things most important to you, says Urann. “Figuring out what we wanted to guide us also helped us narrow down who we want to serve.”
Vision Statement: The vision statement includes your business’s future goals, and your hopes of what you’d like your business to achieve.
“Having a business plan made me able to truly articulate what the vision was like,” says Winfield Ezell. “The business plan is more a blueprint of your vision, right? Because when that dream becomes ready to be implemented it turns into your vision, and then you start to break that vision down, and turn it into an executable plan.”
This is the fun part, where you can ‘dream big’ and think beyond the scope of what you can do now into the future, and where you can get people on board to go along with you.
“I mean, sometimes in our world, especially creatives, we're selling the dream and the vision,” he says. “But as soon as they want to buy into that dream, guess what the next question is gonna be? What are your overhead costs?”
(We’ll get to that later!)
Value Statement: Think of this part as the heart and soul of your business—the values and ideals you’d like your business to represent and uphold.
Sherri Urann thought the value statement was going to be a piece of cake.
“I always thought values were the most obvious part of the business plan, just be a good person, and what else is there to figure out?”
“But actually, it's really complicated to choose your values, because you have to decide what is most important in the way that you move in the world as an entity.”
But once Fat Gratitude had their values in place (artistic excellence, collaboration and inclusivity through diversity and accessibility) they were able to refocus the scope and scale of what they wanted to offer.
“Honing in on those values actually helps you choose the projects and collaborators you want to work with,” says Urann.
“And instead of feeling overwhelming, it started to feel really genuine to the kind role we wanted to play in the community. And we've gotten the opportunity to work with such amazing people because we've been so clear on who we want to be working with.”
Brand Identity: A brand’s identity includes all visual elements like logo, typography, colors and messaging. What’s your business’s name? How does your brand’s name and overall ‘look’ communicate to others what your business does?
‘Brand Story’: Your brand story is a narrative that tells people who you are and where you came from. It can communicate values, an origin story, a mission and purpose, the behind-the-scenes story of how services came to be or products are made.
For filmmaker Winfield Ezell, getting your story right is just as important as choosing which lens to use.
He recommends following the classic three act story structure and applying it to the origin story of your business idea: “Do I have my beginning, middle, and end? Is there an inciting incident? A resolution?”
There’s another reason to get your story down—what Marika Thomas calls “the encouragement factor.”
“Creating your story builds that self confidence, like oh, I can do this! Why don't I just show them what else I can do? And I think that build up benefited me greatly.”
Personality: While brand identity is a collection of actual assets and copy, brand personality is a bit more intangible. It has to do with values, emotional connection, what you stand for and voice. If your brand was a person, what would they be like? What are the top five words you want people to use when describing your brand or business?
Don’t be afraid to put your own personality in there, after all, your business is an extension of yourself! Marika Thomas found that trying to keep her personality out of her work stifled her creativity.
“And I think that was the biggest misconception I ever had. I found that the more I gave of myself, the more people wanted it!”
Market analysis—Market analysis uses a combination of demographic data, target audiences information, market growth potential and global trends. The market analysis will identify not only your ideal customers or clients, but also your competition.
A lot of people find this part the most challenging, including the creatives we spoke to.
Sherri Urann felt overwhelmed by all the other success stories out there. “When it comes to the market analysis piece, I think, just as humans, we're so accustomed to comparing ourselves to others and becoming discouraged.”
And Marika Thomas struggled with figuring out who her competitors were.
“Market analysis definitely got me stuck, because you think you know who your local competitors are? But I promise you—you don't,” says Marika Thomas.
For Thomas, it was worth hiring a marketing consultant to do this work. “I would say if you had to invest money in your business plan at any point, invest in the market research portion.”
Whether you pay someone else or take it on yourself, here are some basic questions to consider for each part of your market analysis: differentiation, ideal customers and target audience, and the overall marketing strategy.
Differentiation: How is what you’re offering different? How do you distinguish your brand from others selling similar products or doing similar kinds of work?
Don’t get caught up in comparing yourself to the big players—for now.
“I think it was really easy to see all of these huge production companies and feel like somehow we have to try and match this or compete out there,” says Sherri Urann. “I think we were feeling like, oh, do we have the energy that we need to be able to compete in this market? And is that what we want?”
That’s because your biggest competition is more likely to be from similar businesses that are either local to you or fill the same specific niche your business is trying to fill.
“There's no amount of Googling that's going to tell you who your local competitor is,” says Marika Thomas. “And when you start, everybody thinks of the big ones, we never think of the person that lives four blocks from us, that's doing the same exact thing.”
Ideal customers & Target Audience: Identifying ideal customers and target audience isn’t as hard as you think. Take some time and think through these questions: Is there a need for what you’re offering? And who needs it? Who is your target audience? Ideal customers? And most importantly, what are their consumer behaviors?
Marika Thomas recommends brainstorming a list of who you believe your target market is, or what you’re selling to them.
“List them all. Then go ahead and break down those price points of what you're selling. That kind of thing I feel is invaluable because it determines what you produce, what colors you use, what fragrances you may use, where you may sell to.”
Marketing & Communications plan: This is your strategy for all your outward facing communications to the world—and it should be inspired by your mission, vision and values and match the objectives of your business plan. This is where you’ll be planning social media content, email newsletters, and advertising. Present a solid plan of how you’re going to reach out to your target audience, and based on the work you did from your market analysis, what you want to tell them.
If you've been living as an artist or creative, says Sherri Urann, chances are you’re actually really good at balancing your budget.
“Many of us creative entrepreneurs don't give ourselves enough credit. Because many of us need to keep track of every dollar that comes in, or that goes out into supplies.
“So I was already doing business, but I had a strong aversion to calling it business.”
Still, it’s important, Winfield Ezell says, to level up the terminology.
“Like, we kept saying, ‘we got to get the money.’ I would tell my team: ‘no, no, no.’ We need to evolve that. Are we saying we need revenue? Are we saying we need capital? Are we saying we need a budget? Are we saying we need to get financially healthy?”
Here are all the important terms to know when it comes to presenting a balanced budget and healthy cash flow.
Estimated Revenue is an estimate of how much you’re going to make from whatever product or service your business offers. If you’re just starting out, you can base this number on industry standards.
Marika Thomas uses the estimated revenue from her business plan to monitor her sales.
“And it's just mainly like trying to go through every day and check off: Am I doing what I'm supposed to do? Did I hit the price points for all the products that I'm selling? What does success look like in dollars and cents for me?”
In general, when estimating revenue, think about what role you want your business to play in your financial life: is it a primary source of income? A side-hustle? And plan accordingly.
Actual Revenue is how much money you’ve received for selling your product or service. Usually you look back at actual revenue and compare it to your original estimated revenue to see if it matches, and where the discrepancies are.
Fixed Costs are things that always stay the same like rent, insurance, equipment, payroll and accounting services, and host and server space for your website.
Variable Costs are any costs that go into your business that change—like inventory, packaging, or raw materials. For service-related fields, it could be distribution costs, transaction fees, or any labor or hourly wages for contractors.
One-off Costs are things you’ll pay for once, or just once in a while—moving expenses, furniture, software, and other launch-related costs.
Remember to account for the most precious cost of all—your time and the effort that you put into your projects. Give yourself an hourly, daily or project rate (or a salary if you can afford it!) and work that into your budgeting.
Profit - Profit is the amount of money left after deducting all the expenses from your revenue. That difference is known as your ‘profit margin’. Of course—you want your profit margin to be positive! So, if you are ‘in the red’ that means you aren’t bringing in enough money to cover your expenses and so you either have to cut expenses, or find ways to increase revenue.
Assets - Assets are things of monetary value that you own that can be exchanged for cash. While most personal assets are things like houses or boats, a business’s assets are categorized as things that sustain growth and continued production. Assets include cold hard cash but also your investment portfolio, accounts receivable, inventories, and prepaid expenses.
Cash flow - You could be awash in assets on paper (an asset is anything of value that can be converted into cash), but short of cash to actually pay people. Which is why it’s important to track your cash flow—all the money coming in and going out of a business on a daily, weekly, or monthly basis.
What you want to do is find a fixed set of time (like a payment cycle, perhaps) and subtract the money available at the beginning of that time from the end. Then you can get an idea of your average cash flow and be ready for any bumps in the road.
Here are some things to consider as you figure out how you’re going to pull this whole thing together!
Supplies / Equipment / Location: What supplies and equipment do you need to be able to run your business? Where will you run your business from (home office, storefront)?
Employees / Payroll / Hiring: Do you have a team? An accountant? Or are you contracting with others (vendors, freelancers) who will provide goods or services for your business?
Legal and Licensing: What kinds of licenses do you need to do your work / sell your products or services? What are the regulations in your industry? As a creative, are there Intellectual Property (IP) or copyright laws that apply? Do you have a lawyer or an association you can use as a resource for contracts, etc? Do you need to register with the Department of Revenue to do business in the state?
You don’t have to confine your business plan to a Word document. Lots of businesses use infographics, charts and tables, photos, graphic design, and other visual elements in their business plans.
“A lot of people say, I'm going to write a business plan, and the first thing they do is go get somebody else's business plan. And then they start trying to copy and paste,” says Winfield Ezell. He knew his business plan was unique enough to not fit into any pre-made molds. “Well, that wouldn't work for me. So I had to improvise.”
“There's no wrong way to do it,” agrees Marika Thomas.
“I think that if you're like making a business plan for I don't know, a furniture business, like they're gonna be like, I could go without that. I know what a table looks like, thank you.”
But if you're in the creative biz, she says, you can show them “all the pops of color, add pictures, even a silly rhyme, because of the fact that I'm a creative, and I just do what creatives do, right?”
Technically, you don’t need anything more than something to type on to create a business plan. But it’s always helpful to have tools if you have the bandwidth to learn and budget to buy.
Here’s a couple tools recommended by the creative business owners we spoke to:
LivePlan: LivePlan is software that helps you create your business plan step by step through templates, examples, profit and loss visualizations and forecasts. Marika Thomas calls LivePlan “the holy grail” of business planning platforms.
“It basically takes you step by step through every piece of your business plan, every single piece, so it never felt huge.”
LivePlan costs $10 a month, but once you’ve made your business plan you can download it and update it yourself as time passes.
A Business Canvas is a tool that helps you visualize your company’s partners, activities, customer relationships, value proposition, cost structure, and revenue streams, all condensed into a one-page chart. There’s tons of different kinds of business canvas models out there, many for free, and some tailored to specific industry niches.
Winfield Ezell says using the Business Canvas model helped him see all his ideas as one cohesive business plan.
“The model really sets everything up, and you can take this model and scale it or use it to hit whatever milestones you have for your business.”
Ultimately, your business plan will serve as your roadmap and help you make decisions about your business now and in the future. How you use your business plan is totally up to you.
Your business plan is “a living document to say the least,” says Winfield Ezell. “It’s a growing, living document, and the evolution means it's ever-changing.”
Ezell revisits his business plan every 12-18 months, to see what he needs to change as his business grows.
“The things that seem disjointed now will be connecting as you go. You will know when they're going to connect, and when they connect then the plan is enhanced again.”
Marika Thomas goes back to her business plan once a week, it helps her stay focused on her goals and her price points as supply chains and industry trends change.
“I think one thing that you have to remember about business plans is that they're ever evolving. It's never one hit or quit. You can't build it five years ago, and still stay relevant now. It doesn't happen. As what you want to create changes, you have to be flexible.”
When it comes to bank loans, wooing investors, and formal presentations about your business, a business plan will prove invaluable over time. People want to see tangible proof of your goals.
“If you're looking to get any sort of investment, if you're looking to get any sort of support, if it's resources, a partner coming in, you're going to get asked for that.”
Sherri Urann says their business plan provides building blocks for the future.
“It helps us identify our capacity and goals for the next year. And it also puts meaning into the projects that are happening now."
All the creatives we spoke to said their business plan not only provided a path forward into growth, but helped them manifest what seemed like a collection of random ideas into a cohesive idea that laid the foundation for them to make it happen.
“Your business plan is your guide, your blueprint. And it's your model for what you see coming,” says Winfield Ezell.
“It's your place to put the future on paper, the one place you can manifest it. There's no other place other than your mind that you can manifest it and you can only do pieces of parts. But that's the one place you should and could put it all.”
So get out there and start planning!