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Create a Small Business Plan

This is not as scary as it sounds! A business plan does not have to be complicated or specially formatted. All you do need to do is think through your finances and income projections. Put them down on paper. Voila! A Business Plan is born.

  1. Target your Market:

    1. Who is your market? The most common approach is to start with birthday parties and preschool events and work up to larger events as your experience, budget, and inventory of equipment grows. Your target is primaily the decision maker (Mom) or the decision influencer (Kids). DO NOT SKIP THIS STEP- IT IS THE KEY TO YOUR BUSINESS.
    2. Write down a description of your target market.
      Example: Women with children between the ages of 3 and 12 that live within X miles of (city) who are planning a party or other event who have a family income greater than $50,000.
  2. Know Your Competition:

    1. Now that you know where you want to compete, find out who your competition is. Start with the Yellow Pages and the Internet. Keep your eye out for flyers at local businesses.
    2. Call every business that rents in your area and pretend to be a potential customer. Fill out the competition chart.
  3. Set Your Prices:

    1. Based on what you know about competition in your area, you can now think about prices. We will revisit pricing later, but go ahead and set pricing as a way to start. Consider what you want to offer:
      1. Hourly or All-day price
      2. Attended vs Unattended Price
      3. Delivery fees
      4. Pick-up Rental Prices
      5. Weekend vs Weekday prices
      6. Multi-day or overnight prices
  4. Estimate Your Start-Up Costs

    1. Equipment
    2. Storage Space (if not your garage)
    3. Business Licenses
    4. Insurance
    5. Marketing
    6. Accounting or Legal Fees
  5. Estimate Your Number of Rentals:

    1. Take what you know and start there.
    2. Start with the number of weeks you should be able to rent. (Most people can count out winter weeks unless you live where it is mild.)
    3. Take your Marketing Plan into account. If it is agressive, plan for more rentals. If you don't have much money or time for marketing, plan less.
    4. Plan slightly on the low side so that you don't get caught short on your cash flow. Plot out by month how you see your business growing.
  6. Determine Your Initial Costs:

    1. Equipment
    2. Insurance
    3. Business Fees
  7. Determine your Monthly Costs:

    1. Marketing
    2. Storage
    3. Interest
  8. Determine your Break-Even Point and ROI:

  9. Your break-even point is when the money you have received covers your initial expenses plus your variable expenses (payroll, rent) up to that point. That is the day you start seeing real profits for your efforts.

    Determine ROI (return on investment) for your marketing efforts. Compare the number of rentals that need to be generated from the campaign in order to pay for the expense of the marketing plus variable expenses involved with each rental and assess whether or not you feel the return will be worth the investment.
  10. Revisit your Pricing Structure if Necessary:

  11. After going through all the steps above, think through pricing again. What if you raised prices $10? Would it affect the number of rentals? What if you lowered them? Do you want to be the cheapest rental in town or do you want to offer more variety and charge accordingly? make sure your pricing still fits your strategy.
  12. You have a Plan!

A template for filling in and calulating sales and costs is available in the Business Documents Package. Or you can create your own plan on paper or using a spreadsheet program.

 
   

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