Lesson 2: Making A Plan

Every business should have a plan. Since you won’t be seeking financing initially, you don’t have to create a 30-page business plan. A couple of pages will do just fine.

In this lesson, we will walk you through the things you should pencil out as you plan your food business so that you have clarity and focus as you go from the drawing board to the cutting board.



Making a Plan

Your recipe for success

You’d think this would be the first stage in creating a food business. But what’s the point of creating a plan if you have nothing to offer? While other business ideas can morph over time to some degree, your end product is the recipes you create and the food you prepare. It doesn’t matter if you’re running your operation out of your kitchen, plying the food truck circuit, or running a full-service restaurant – the food is everything!

So that’s why we started with the Cottage Food Basics because it forced you to think about what it is you’re selling.

Still, you need a plan, and you’ve probably heard countless horror stories about business plans, those 30 to 50-page monstrosities entrepreneurs create so a bank will take them seriously.

No worries. At this stage, you’re not going to need to step foot in a bank unless it’s to deliver a cookie order to an employee. Business plans are for those seeking financial backing. There’s no need to slog through a business planning course or even do a business canvas, which is a short form of the plan.

For now, you need to focus on more immediate things, such as controlling production costs, finding and keeping customers, building brand awareness, finding the right pricing strategy and continually refining your supply chain so you can get the best ingredients at the best price.

If you really want to do a formal plan, head on over to the Entrepreneur Academy, Lesson 3.

For the rest of you, let’s get into the nitty-gritty.

Your “business plan” should be:

    • Readable: A single page, no more than two.
    • Focused: You should be able to articulate what your business is and what it’s going to be in the future.
    • Flexible: We aren’t carving in stone here. Your plan will change. Don’t torture over it.
    • Customer-centric: Your products may be awesome, but it’s your customers that matter. It’s their money that will make your business cook.
    • Connected: The plan should show you all the key aspects of your business and how they relate. From the supply chain and the kitchen to the customer and the sale.
    • Responsive: People reading this “plan” should easily understand who you are, what you’re doing and where you’re going.

Plan Components

A traditional Business Model Canvas covers a lot of ground. Too much for this stage of business. You have little to no control over distribution channels. Your revenue streams are hyper-focused on what comes out of the kitchen. And your key partners may be as simple as the local grocery store or the Costco Business Center down the road.

Rather than go wide, we will instead go deep into five key areas: Customer Segments, Customer Relationships, Cost Structure, Key Activities and Customer Value Proposition.

As your business grows beyond your home kitchen (if that’s your plan), you can add the other segments found in the Business Model Canvas we referenced above in the Entrepreneur Academy. It can also serve as a launch pad for brainstorming new ideas, adding new products or addressing new opportunities in the marketplace. As we all know, the food industry is changing constantly as consumer tastes and preferences change. What was hot only yesterday may be cold to the touch today.

Let’s look at each of these five key areas in more depth.

Customer Segment

Simply put, these are the groups your customers fall into. They can vary greatly, but they often share similarities such as tastes, ages, location, social status, gender, etc. that influence their purchasing habits.

As you look at the audience(s) most likely to buy your products, think about them in a ranked order. Go from the most likely to the least likely. When thinking about this ranking, consider the total value they will bring to you over the lifetime of the relationship. Will they only buy from you once or occasionally? Or will they be a regular customer, one who not only buys from you often, but tells their friends and family to buy from you?

The goal is to figure out who is the easiest and most profitable to sell to in the beginning. Who already knows about your products or are the easiest for you to connect to so you can generate immediate sales? Who will take longer to reach, but perhaps create more value in terms of sales?

As you group them, attach personas to each segment. What do the people in this group want or appreciate? Where are they located? What kind of discretionary income might they have to buy products like yours? What are they looking for? What can’t they find? Are they Early Adopters? Foodies? Trend Chasers? Late Comers? Experimenters?

Segmenting your customers helps you prioritize and focus on those who can 1) help you build sales and 2) create a customer base rapidly. You can’t be all things to all people at the start and you can always attract new customers who may have a longer, more involved sales cycle. Try to remember that as you look at your current and prospective customer bases. Remember, you still have to do all the baking and/or cooking.



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Academy Staff