Once the decision to start a gift basket business has been made, it is best to develop a business plan. A business plan is a written document that outlines all aspects of your business, like its development, needs, marketing, and future. The many steps involved in the creation of a business can be numerous and complicated for those who are doing so for the first time. Many business owners choose to develop a business plan to ensure that they not only follow every step that is necessary, but also to make sure that the process goes as smooth as possible.
Creating a business plan involves breaking down all of the aspects you plan to include in your company. You should be thinking about how you will have it organized, what your product is, your marketing, finances, business structure, and more. It is equal parts road map and checklist, and a crucial part of your gift basket's business towards success.
Why Have A Business Plan?
As previously stated, there are many steps involved in the creation of a business. Missing even one step, while it may not be initially, can result in problems arising that can derail your business' creation and affect its future. A business plan can do more than help you get started; it can function as a blueprint and assist you at every stage of your business as it develops.
Planning--At the planning stage of your gift basket service, your business plan is your blueprint for the creation of your business and its early years of operation. It can, in a way, function as the foundation that you lay all other aspects on and build from. The U.S. Small Business Administration recommends that your business plan cover the next 3-5 years of your business operations and how you plan to grow during and after that time. Going into that 3-5 year time frame with no plan, no clear idea of what you want your business' future to be, can cause your business to not have a future.
Gift basket businesses, no matter how ambitious or well thought out they are, have been known to fail without a business plan. This is usually because they fail to adequately establish any kind of plan and wing it instead. Going into the business with minimal planning is very much like tightrope walking for the first time without a safety net. No matter what happens further down the road, the business plan that you create during the planning stage of your business will be there to catch you when you misstep.
The First Year--In a business as massive as the gift basket industry, the first year of operation is incredibly important. It is during this time that you will first establish yourself and find your footing as a business. Many see the first year of their business as a time of trial-and-error and for learning. It is often how you handle the first year that shows if your business will make it in the years to come.
During your first year, you may find yourself falling back on your business plan during times of uncertainty or in the event of a crisis. Problems arise, sometimes without warning or precedence, and your business plan can help you navigate your way to a solution. Returning to your business plan during the first year your business is in operation is completely acceptable, and will more than likely help you stay on track.
Growth--As time goes on, your business will grow and expand from what you originally started with. This can include growth to your customer-base, your product offerings, staff size, or general presence. It may come along slowly or quickly, and you will need to be able to adapt in either case. You should include growth projections as part of your business plan, as the Small Business Administration recommends, but be aware that they may not occur in the way you initially expect them to.
Whatever way your gift basket service grows, whether it is according to your predictions or well beyond them, it will already be included in your business plan. In cases where a business has bypassed its planned growth, modifications to its business plan have been easily made to compensate. Even if it requires multiple changes in order for it to work, your business plan will be able to guide you as your gift basket service grows.
Industry Declines--The state of the economy can affect the survival of a business, regardless of the industry that it is a part of. The gift basket industry has seen a decline within the last few years and was affected by the 2008 recession. Many of the businesses that managed to survive the recession and the decline were forced to make changes in order to do so. This included what they offered and how they conducted themselves.
Just as your business plan can be modified in cases of growth, it can be done in times of distress or decline. Any changes that you need to make in order to cope with the state of the economy can be done with your original business plan as the template. Treat it as if you are taking something apart to fix it or to add a component. You can keep the original framework and most of the pieces, but some things will need to be swapped out for something newer and better.
Where Do You Begin?
As previously mentioned, there are many steps involved in the creation of a business. Figuring out where exactly is the best place to begin can be overwhelming and problematic if you do not start off with the right steps. Your business plan will be broken down into each aspect of your business, with each section covering the relevant information and your plans for that particular issue. The business plan that you create for your gift basket service should roughly cover topics such as organization, management, finances, marketing, services offered, and an overall description of your business.
Preparation often precedes the actual development of your business plan. Researching the industry, your competition, and all the requirements necessary for you to start and operate a business in your area is highly recommended. Organize all the information you find, breaking it down into the sections you will include in your business plan. Not all of your research will translate into your business plan, as you may not include every single aspect of a gift basket service into yours.
Take your research and apply it to what it is you want to do with your business in order to create your business plan. The plan is for you, so it is best that you are the one to actually write it. It does not have to be overly complex, but it should be detailed enough to prevent you from skipping any necessary tasks and so you may be able to understand it should you need to return to it at a later point. If needed, you may use a template to write your business plan; you can search online for one you like or use one that is preinstalled in your word processing program.
A.I.M: Audience, Industry, Market
There are certain things that you should take into consideration as you make your business plan.
As you create your business plan you need to look at what you aim to do as a gift basket service and what your A.I.M.--Audience, Industry, and Market--is. Just as understanding the driving forces and demands of gift basket services can be a crucial element to your business's success, having an understanding of elements like audience, industry, and market can also affect your success.
Audience--Your business' audience is your customer base. It encompasses those who order your baskets as well as those who receive them. Determining who your audience is and how you will reach them is one of the largest aspects of your business plan. The way you make your baskets and what you include in them will determine who your audience is. It is not necessary to decide on your audience and your product in any particular order, as you may develop an idea for your baskets before you figure out who your audience will be and vise-versa.
As you establish your audience for your business plan, it is best to take into account any changes that might affect you gift basket service in the future. People change their mind about what they like all the time, new trends develop, and what was once a best seller may be left forgotten on a shelf. Look at what you plan on offering for your gift basket service, who its audience is, and what has happened with both up until now. Take that information and implement it into your business plan to the best of your ability, leaving room for adjustments as they may be needed.
Industry--Looking into the industry that you are planning on entering is vital to your business' survival. The connections you make with those in the business--suppliers, competition, allies, and mentors--will help determine how your service functions within your industry. Pay attention to the way the industry operates, how it changes, and the impact it can have on your business. The industry itself should be something you plan to include in your research for your business plan. While your gift basket service may be a single fish in the sea of the gift basket industry, you can still be affected by the smallest of ripples.
Your research into the industry and the inclusion of that research into your business plan can provide you with vital information. While every event in the industry will have a different effect, you can still use information from past declines and recessions to prepare your business for the next one. Research what has historically happened in your industry and what businesses have done in response. What was successful? What resulted in failure? Even if you do not include all of that information into your business plan, it may be a good idea to keep it in the event that you and your service are faced with something similar in the future.
Market--The market your gift basket service will operate in will be noticeably smaller than the industry at large. It will include things such as the specific area you operate out of, where your audience is in that area, and who your competition is. Determining where your market is, and therefore what is within it, will be up to you. Some gift basket businesses choose to remain online only, and limit their market to the United States or local areas for the sake of shipping and delivery purposes. You do have the option of having a physical location to operate out of--something else you need to decide on for your business plan--and you can choose have the same market as an online business would or modify it to whatever you want.
Setting Up Your Business Structure
Now that you have begun the process for writing your business plan and creating your gift basket business, you need to decide on your business structure. Your business structure is the main framework for your business plan. It includes aspects relevant to the functionality of your business, like its name, licensing, legal issues, insurance, and start-up funds.
Naming Your Business
While it may seem like a small detail, the name that you choose for your business is one of the biggest decisions that you will make in this process. It's the identity that you will have within the gift basket industry. The name attached to your business will be what you build your reputation and image on. Your customers and competitors will recognize you by your name and will associate everything connected with it with you.
Choosing a name for your business can seem like the hardest part of creating your business. It can feel very final when you pick a name, as it will still be attached to you even if you change your business' name later on or leave the business entirely. The name you decide on will be on all of your marketing material, licenses and permits, and your product so it can be a big deal. Due to the pressure associated with the task, some businesses wait until they have the majority of their business structure decided on before choosing a name.
As you think about a name for your gift basket business, there are certain issues that you may want to consider :
Appearance--The aesthetics of your name can affect how your gift basket business is marketed. Business names are incorporated into logos, on social media, and into advertisements. Things like text, color, and shape can affect how your business' name looks. Issues such as misprints or manipulation can distort the appearance of your business' name, which can cause inappropriate associations amongst your potential customers. Your name, even when plainly written, should be visually appealing and be easy to look at.
Association--The image that your business' name invokes and its relevance to your product are something that should be high on your list of name requirements. Without knowing anything else about your business, potential customers may have to make a decision about your business based solely on its name. Choosing a name that creates a mental image of something unrelated to gift baskets or can be associated with something negative or inappropriate can lead to problems.
A name that is too similar to another product or company can result in a loss of business. Customers may search online for your business name and come across the website of another company; they may make the mistake of thinking it is yours or associating your services with their products. Search for your potential business name online and through the U.S. Patent and Trademark Office to prevent any confusion of copyright issues that can harm your business.
Relevance--Your business' name, in addition to provoking an association with your product, should be relevant to the industry you are part of. Your customers should be able to look at or hear your business' name and not think that it's the name of a restaurant or clothing store. An irrelevant name for your business can cause your customers to ignore it when looking for a gift basket service, inadvertently sending them to your customers.
Licenses and Permits
In order for your business to operate and function, there are certain legal aspects that you must navigate before you get started. Any business, regardless of what it is that they offer, is required by law to obtain the correct licensing and permits. The requirements for your gift basket business' licensing will be determined by where it is that you are operating from, even if all of your business is going to be online. Different states have different requirements for business licenses, although they usually cover all aspects of your business regardless of the industry you are a part of.
As a gift basket business, you will need, at minimum, a standard business operating license. Depending on the state you are operating in, a standard licenses may not cover all aspects of your business. Adequately researching the requirements for the state you are operating in and what they cover in terms of operation, shipping, sales, and specialty items--again, like alcohol--will help you be sure that your gift basket business is fully licensed by the time you begin.
As not all licenses are permanent, you will need to keep track of when your licenses and permits are up for renewal. This information will be included in your application for your business license and it is your responsibility to know when your licenses are about to expire. Including this information in your business plan--which, remember, should cover the first 3-5 years of your business operations--will allow you to stay on top of your licensing and prevent any issues from arising.
No matter the size of your gift basket service, it may be in your best interest to obtain some form of insurance for your business. Problems can arise in which you can be held liable or possibly cost you financially. Business insurance policies will provide you with coverage that will take the brunt of a problem's outcome off of you. For your gift basket business' insurance needs, you may want to consider some of the following:
Assess Risks--An insurance company will assess you for any risks that can affect your coverage and what they will be responsible for should they have you as a customer. The possible risks associated with you and your business can heavily affect whether you an insurance company will cover you, what it will cover, and what you will pay for that coverage.
Business Owner's Policy--You may encounter some difficulty in finding a policy that will completely cover all aspects of your business, resulting in multiple policies, possibly from multiple companies. Some insurance companies, however, will offer what is known as a Business Owner's Policy (BOP), which combines multiple coverage options at a lower cost. A BOP will cover things such as property, vehicles--useful if you plan on using your own delivery services--general liability, and interruption of business operations. While it may not cover everything, it does cover the major risks that you may face as a gift basket business.
Revisions--Changes in your business, such as growth, can affect your coverage and the amount of liabilities you may be prone to. Your insurance policies will not automatically update themselves as your business changes, leaving any modifications your responsibility. Regularly reviewing the insurance policies for your gift basket business and speaking with your insurance agent about any spots that are lacking can prevent issues further on.
For everything that goes well for your business, there are things that can go awry. As you prepare your business, it is best to look into what potential problems there might be and what legal issues can arise. Some legal issues can be covered under your licensing and your insurance policies, as discussed above. However, this is not the case for all legal issues that your gift basket business may face. In designing your business structure, taking preemptive measures to ensure that you are adequately prepared for any worst case scenarios.
Liability--The biggest legal issue that you may face as a business owner is liability, or responsibility over something as determined by law. The way you design your business and how you operate it can affect your liability should something happen with your company that results in a lawsuit. The insurance policy or policies that you take out for your business may cover liability, which can save you money should occasion arise for it to be needed. Having a plan in place within your business structure for instances of liability can also help if you do not have insurance, or can handle what isn't covered by your liability insurance policy.
Classification--The structure of your business will determine your legal classification, which can affect things like your taxes and how you can be sued. Classification usually is determined by ownership, and is broken down into sole proprietorship and partnership. Sole proprietorship simply means that there is only one owner (you) who runs the business and is responsible for it. Businesses that are sole proprietorships are usually not incorporated and are not really seen as separate from the owner. Partnerships, on the other hand, are usually incorporated businesses legally separate from the owners, which can include two or more people. Profits, debts, and taxes for the business are shared and controlled equally amongst all of its owners.
Copyright and Intellectual Property--This usually involves making sure that your business is not infringing on the property of someone else. It includes names, logos, websites, advertisements, and basket designs. As a business, it is your responsibility to ensure that your business is not violating copyright and intellectual property laws. Likewise, you should look into securing your own property and brand to prevent theft--accidental or intentional--from occurring and affecting your business.
Finances are a key part of business, whether it is operating costs, profits, or paychecks for your employees. When you begin your business, the main focus in terms of finances that you will need to think about is start-up funds. This is mostly made up of the money you will need to get your business off the ground. Start-up funds will go towards paying for the legal aspects of the business like licensing and copyrights, and for purchasing inventory and supplies.
Having start-up funds of any amount does not necessarily mean that you will begin your business on a positive note. The cost of starting your company is going to be contingent on what you want to do and how you want to do it. Some gift basket businesses have been able to start will only a few dollars while others set aside thousands. The money you put towards your gift basket business' start-up funds can come from one of three places:
Out of pocket--To say that your start-up funds came out of your own pocket means that you are the primary source of funding. This money comes out of your bank account and is 100% yours. The biggest issue that some see with out of pocket funding is the fact that if your business fails, you completely lose all of the money put into it. You can end up in the negatives rather than back at step one, which can lead to disaster with your personal finances. However, out of pocket funding carries the biggest reward and degree of satisfaction.
Loans--Getting a loan to finance your gift basket business' start-up isn't very common. Unless you plan on starting your business in a very extravagant manner, a lot of money is not really necessary. Some gift basket service owners, however, choose to request a loan from a family member or friend rather than a bank. If you choose to gather your start-up funds with the assistance of a loan, keep in mind that you are required to follow through with all of the loans requirements.
Fundraising--Using fundraising to gather start-up funds for your business is like asking others--strangers, family, friends, etc.--to be your investors for your business. The money is, legally, seen as a donation to you rather than a loan. It also isn't a total loss for you in the event that the business fails to take off, as you are not the source of the funding. However, those that give to fundraising efforts usually expect some evidence that their money is being used wisely. If you choose to get start-up funds through fundraising, you may want to document the process and share your progress with those who donated to you.