Your executive summary is the first part of your business plan, but you usually write it last because it is a summary of all the important parts.
Your executive summary should get the reader’s attention quickly. Tell them about your woodworking business and how things are going. For example, are you just getting started, do you have a woodworking business that you want to grow, or do you run a chain of woodworking businesses?
Next, give an overview of every part of your plan that comes after this one.
- Say a few words about the woodworking industry.
- Talk about your woodworking business.
- Detail your direct competitors. Give an overview of the people you’d like to buy from you.
- Give a quick summary of your plan for marketing. Find out who on your team is the most important.
- Tell what you want to do with your money.
In your business summary, you will talk about what kind of woodworking business you run.
For example, your woodworking business might focus on one of the following:
- Woodworking is the process of making plywood, which is used to build houses, ships, cars, and furniture. It is a cheap piece of wood made in a factory with exact measurements.
- Making wooden furniture: This type of woodworking involves making wood that is often used to make beds, sofa sets, cabinets, dressing units, sitting arrangements, tables, and so on.
- Making jewelry out of wood is a type of woodworking. To make modern jewelry out of wood, people use modern tools.
- Interior woodwork makes things like wooden floors, walls, ceilings, etc. for the inside of a room.
In the company overview, you should say what kind of woodworking business you will run and give some background on the business.
Include the answers to such questions as:
- When and why did you start your business?
- What big steps have you taken so far? Some examples of milestones are the number of customers served, the number of items made that get good reviews, the sale of X number of items, etc.
The legal way your business is set up. Do you have an S-Corp set up for your business? An LLC? A one-person company? Tell us about your justice system.
In your industry or market analysis, you need to give an overview of the woodworking business.
This might seem useless, but there are more than one way to use it.
First, learning about the business of woodworking gives you information. It helps you understand the market better.
Second, doing market research can help you make a better marketing plan, especially if you look for trends in the market.
The third reason is to prove that you know what you’re talking about. This is what you do by doing your research and putting it in your plan.
In the industry analysis section of your woodworking business plan, you should answer these questions:
- How much money does the business that works with wood make?
- Is the market getting smaller or bigger?
- Who are your biggest market competitors?
- Who are the most important suppliers in the market?
- What kinds of changes are happening in business?
- How do you think the business will grow over the next 5–10 years?
- How large should the market be? That is, how big is your woodworking business’s potential market? You can get this number by figuring out how big the market is in the whole country and then applying that number to the people in your area.
In the section of your woodworking business plan called “Customer Analysis,” you should talk about the customers you serve or hope to serve.
Customer segments include furniture stores, home builders, contractors, and individual customers.
As you might guess, the type of woodworking business you run will depend a lot on the type(s) of customers you choose. Obviously, people would respond differently to marketing campaigns than, say, home builders.
Try to figure out who your ideal customers are based on their age, gender, and how they think and feel. In terms of demographics, you should talk about the ages, genders, locations, and levels of income of the people you hope to help.
Psychographic profiles show you what your customers want and need. The more you can figure out about what these needs are and how to meet them, the easier it will be to find new customers and keep the ones you already have.
In your competitive analysis, you should find out who your direct competitors are and then focus on them.
Woodworking businesses compete directly with each other.
Indirect competitors are other things that customers can buy besides your product or service that aren’t in direct competition with it. This includes big stores for home improvement, tool shops, and stores for hobbies or crafts. You should also talk about competitions like this.
For each of these competitors, give an overview of their business and a list of their strengths and weaknesses. You won’t know everything about your competitors unless you have worked for one of them. But you should be able to learn important facts about them, such as
- What kind of clients do they work with?
- What kind of work do they do on wood?
- What is the price range (high, low, etc.)?
- What are their strengths?
- What do they not do well?
Try to answer the last two questions from the point of view of your customers. Don’t be afraid to ask customers of your competitors what they like and dislike about them.
The last part of your competitive analysis is to list the ways you are better than your competitors. For example:
- Will you make items and designs to order?
- Will you offer things that your competitors don’t have?
- Will you give your customers better service?
- Your prices will be better, right?
In this part of your plan, you should think of ways you can do better than your competitors and write them down.
Usually, a marketing plan has four parts: the product, its price, where it will be sold, and how it will be promoted. In your woodworking business marketing plan, you should do the following:
Product: In the “Products” section, you should repeat the kind of woodworking business you talked about in the “About Us” section. Then, describe the goods or services you’ll be selling. Do you, for example, make plywood, wood interior products, wood furniture, or wooden jewelry?
Price: List your prices and how they compare to those of your competitors. In your plan, you mostly talk about the products you sell and how much they cost in the product and price sections.
Place is the location of your woodworking business. Write down the location of your business and how it will affect how well it does. For example, does your woodworking business have a storefront, is it in an office district, or is it only online? Talk about why your website might be the best place for your customers.
Promotions: In the last part of your woodworking marketing plan, you’ll describe how you’ll get potential customers to come to your store (s). Here are some ideas for how to promote your business:
- Put ads in magazines, newspapers, and radio stations in your area.
- Talk to websites.
- Hand out leaflets
- Engage in email marketing
- Advertise on social media sites.
- Improve the SEO (search engine optimization) of your site for the keywords you want to rank for.
You wrote about your goals in other parts of your business plan. In the operations plan, you talk about how you’ll reach those goals. There should be two different parts to your operations plan.
Everyday short-term processes include everything you need to do to run your woodworking business, such as ordering and finding wood, designing products, billing vendors and/or suppliers, etc.
Long-term goals are the steps you plan to take to get there. These dates could be when you think you’ll sell your Xth product or when you hope to make $X. It could also be when you want to move your woodworking business to a new place.
A strong management team will show how successful your woodworking business could be. Show the backgrounds of your key players, with a focus on the skills and experiences that prove they can help a company grow.
You or someone on your team should have experience running a business that makes things out of wood. If so, talk about what you’ve learned and what you’ve done. But you should also talk about any business experience you have that you think will help your business do well.
If you don’t have a strong enough team, you might want to put together an advisory board. A board of advisors would have between two and eight members. These people could give you advice that would help your business. They would answer questions and give planning tips. If you need to, look for people on your advisory board who have run a successful woodworking business or small craft store.
Your 5-year financial statement should be part of your financial plan. For the first year, it should be broken down monthly or quarterly, and after that, it should be done annually. Your income statement, balance sheet, and cash flow statement are all a part of your financial statements.
Most people call an income statement a P&L, which stands for Profit and Loss. It shows how much money you made and how much it cost you, so you can see if you made a profit.
When making your income statement, you have to make some assumptions. For example, do you make 5 items a day? Do you do custom designs? How much will sales increase each year? 2% or 10%? As you might expect, the assumptions you make will have a big impact on your business’s financial projections. Do as much research as you can to try to find facts that support what you think.
Balance sheets show you what you own and what you owe. Balance sheets may have a lot of information on them, but try to focus on the most important parts. For example, if you spend $50,000 on building up your woodworking business, you won’t start making money right away. Instead, it’s an asset that you hope will bring in money for years to come. In the same way, you don’t have to pay back a $50,000 check right away if someone gives it to you. You’ll have to pay that back over time instead.
Report of Cash Flow
Your cash flow statement will help you figure out how much money you need to start or grow your business and make sure that you never run out of money. Most business owners and entrepreneurs don’t know that you can make money and still go bankrupt if you run out of cash.
Make sure to include some of the most important costs of starting or growing a woodworking business on your Income Statement and Balance Sheets.
- Cost of tools and wood materials
- Staff pay or salaries Insurance for businesses
- When you’re starting a new business, you’ll also have to pay for things like legal fees, permits, software, and equipment.