Why is it so important?

To me, it comes down to… “If you don’t know where you are going, how are you going to get there?”

Yes it takes time, but if you can keep yourself focused, you will save yourself time and money while being more successful at reaching your goal.

Let’s say your local paper approaches you with a great deal.  Normally, it would cost $2,000 to buy 4 ads, but purchase them now and get 25% off!  Wow they will only cost $1,500 and you will save $500.  You buy the ads without thinking about your marketing budget for the year or whether you will have distributors set up in your area where people can buy your products.

Planning ahead reduces reactive, knee jerk decisions.

You’re thinking… But heh – it’s never going to be perfect – it’s so hard to tell if marketing works!

Yes, it can be difficult, but making the best possible decisions in the first place means each year you learn what works and what doesn’t and improve at a much faster rate.

Getting started…

(a simplified version)

To me, planning always begins with an end result in mind.  Being specific is important.  For example, this goal is a bit vague – “I want to make some money this year.”   Make it better such as “By November 15th I want to make $5,000 in net revenue from sales of my organic shea butter.”

Now think backwards – what steps need to happen to make that end result a reality?  For simplicity sake, let’s say your shea butter sells for $25.  Your costs are $10, so you make $15 per sale.  Doing the math, you need to sell 334 containers of your shea butter.  How will you do this?

Grab a calendar and start plotting your efforts.  If you have 6 months to sell those 334 containers – will you sell an equal amount each month, or do you need a couple of months to import and package, find distribution outlets and do some promotion?

Who will be your customer?  Do you expect shea butter to appeal to a younger or older audience?  Male or female?  Where are they located?  What other interests do they have?  How educated are they?

What specific efforts will you take to promote your product to your potential customers?  Will you have a booth at your local Farmers Market?  Will you advertise in your local paper?  Will you sell them online?  How many containers do you think you will sell as a result of each effort?

Are there additional costs you need to consider?   Signage for your booth?  Brochures?  Travel costs to attend events?

Will it work?  Double check your thinking and adjust as necessary.  For example, maybe you need to sell 500 containers to cover the additional costs you have thought of.

What is your break even point?  Yes, you definitely want to do more than break even – but you should know when you will have covered your costs.  Your breakeven point equals your fixed costs / (price per item – cost per item).  In this example, let’s say you have fixed costs of $500 for promotional efforts.  Your break even point would be $500/($25-$10) = 34 containers.

Track and record your efforts, revenue and costs – make adjustments as necessary.  The better your records, the easier it will be to do the next step.

At the end be sure to analyze.  Did you reach your initial goal of $5,000 in net revenue?  What worked?  What didn’t work?  Now plan for the next year with these learnings in mind!

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