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Are Home Based Business Plans Really Necessary?

Is it necessary to have a business plan for a home based business? The answer is yes and no. If you are considering running a business from home that requires outside finance, then you will definitely need some sort of business plan, and the more comprehensive it is, the better your chance of success.

If you are going to have very little expenditure and few overheads, then your business plan need only be of a more personal kind that will allow you to keep track of your projected and actual daily activity, sales targets, marketing costs etc. Let’s look at the difference between the two.

1. Using a business plan to secure finance – regardless of the kind of business you have in mind, this kind of plan ideally needs to follow a specific format and, unless you are an experienced business person, you may be well advised to take expert advice.

Alternatively you can purchase software that will allow you to tailor the plan to your specific sector. Google “Business Plans Academy” to find for samples of templates for a variety of businesses, from child care to the hotel industry. Each one includes sections such as Executive summary, Description of Business, Product Summary, Business strategy, Financial Summary, Market Research, Market Trends, External Research, Market Estimates, Management Team, Business Location, Business Organization, SWOT Analysis, Competitive Analysis, Customer Segments , Customer Demographics, Sales Strategy, Pricing Strategy, Marketing Plan, Advertising Plan , Objectives & Plans, Resource Allocation, Budget Allocation, Startup Budget, Forecast Profit & Loss Account, Forecast Balance Sheet, Forecast Cashflow, Sales & Profit Forecasts, Sales Charts & Graphs. This, and similar software can be purchased relatively inexpensively and will give you a professional-looking document.

2. Using a business plan to develop and maintain targets – Since you’re not looking for finance this can be much simpler, but no less important. Statistics show that people who create and follow a business plan have a better chance of success. For the home based business entrepreneur it can be difficult getting into the habit of following a structured plan, but necessary. Simply by looking at the elements of the full business plan, it is easy to see which sections will be important to the home based business, but it can be broken down into the following fields:

  • know your product & prices
  • know your market area
  • know your competition
  • know how to get help or training
  • create daily/weekly/monthly ‘to do’ lists
  • decide whether and where to advertise and compile costs
  • set realistic goals and targets

Another important factor is to decide whether your home business will generate immediate income, or whether you will need to consider bolting it on to your existing job or business until it does. By performing the simple exercises above, you will have a much better grasp of your likely earnings than if you start your business with no clear goals or plans.

Finally, a home based business is no different to a bricks & mortar business. It needs commitment and hard work to make it successful. Ask any small business owner how many hours they needed to put into their business when they first set up, and you might be overwhelmed by the answer.

Ask them if they would trade being their own boss to work for someone else, despite the hours, the headaches, the business planning, and everything else to boot, and in most cases you’ll get a resounding NO!

Writing a Business Plan – 5 Reasons Why You Should Write a Business Plan

If you are in the process of starting a business or considering expanding an existing business, most advisors, and books written on the subject, say you must have a Business Plan. You may be doubtful given that it means you need to take precious time out of your busy schedule to put your plans on paper.

But do you really need a Business Plan?

A survey carried out on 400 UK entrepreneurs by SimplyBusiness revealed that 54% of business owners don’t have a Business Plan. Shocked? I was. Based on my experience when dealing with both start ups and seasoned business owners I thought the figure was on the low side! Only 54%?? Come on. I can count on one hand the number of business owners who have a Business Plan.

So, is a Business Plan as essential as we’re led to believe? Can you build a business without one?

What’s the Answer?

The simple answer to these two questions is… yes.

Yes, a Business Plan is essential; and yes, you could still build a successful business without one, but the unknown aspect is, could you have been even more successful if you had written a Business Plan?

You’ll never know but perhaps now is the time to think again.

Perhaps you are not sold on the idea that all the effort required to prepare a plan is worthwhile. If this is you let’s consider 5 key benefits for you and your business.

Feasibility and Viability

Taking time out to write a Business Plan will assist you in assessing the feasibility and viability of your idea. You may assume that sitting back and planning your future empire in your head is going to cover all the aspects of your business. Maybe, but the process of writing your thoughts down on paper will bring to the fore all the risks and potential pitfalls you hadn’t thought of. A Business Plan forces you to put your ideas down in writing and in an orderly manner. The result of this could be you going in the opposite direction or even dropping your idea altogether. Not a pleasant thought, but which would you prefer? Losing your capital or the chance to re-consider your idea?

A Measuring Tool

A Business Plan is an ideal means of monitoring your progress against the objectives you set yourself. By checking the progress you are making against your Plan you’ll be able to quickly identify if you are drifting from your original vision; know this and you will be able to take corrective action.

Consider if you didn’t have this check in place; a slight change in direction, if not spotted or left uncorrected for too long, could be damaging to your business. On the other hand, it may be that a swing from your original vision would be a more profitable alternative, one which may not have come to mind before. At least with a Business Plan you have given yourself the choice.

Get the Numbers Right

Do you really know with 100% certainty how much money you’ll need? Have you covered all the possible financial eventualities? It’s difficult to answer yes to this question if you don’t have a Business Plan.

A Plan will challenge you to consider whether you have the correct amount of funding needed to make your idea work. You may have a rough estimate of the funding you require, but until you prepare your Financial Forecasts you may not realise that a few extra thousand is needed.

Helping to Get the Bank on Your Side

One of the key reasons why banks don’t support requests for finance is lack of information. If your manager doesn’t have a good enough ‘feel’ for your idea or business then you are giving the bank every reason to say no.

A Business Plan will make the bank feel much more comfortable about the risks they are being asked to take. Without information to balance out the pros and the cons it would be easier for the bank to say ‘no’ and move onto the next request. By investing time in preparing a plan you are improving your chances of success of getting support from your bank.

A Business Plan Can Say it Better Than You Can

Not everyone has a smooth way with words and sometimes even the best communicator’s need the back up of the written word. No matter how good a presenter you are, it’s unlikely you will be able to convey your vision as clearly as a Business Plan. Too often a business owner will try to sell their idea to their bank or a potential investor and at the end of the session the manager is none the wiser than he was at the start. A Business Plan leaves little or no room for misunderstandings.

You should now realise that it’s essential to have a Business Plan; it may be the difference between success and failure! It’s all about understanding the importance of planning ahead. Invest time putting your plans on paper because it will pay you dividends in securing the funding you need and the future success of your business

10 Step Business Plan – Your Minimum Starting Point

Before you can began rolling on the fast track with your new business, it takes planning. Don’t skip any of the original 10 step business plan we’ve listed below. Some things are absolute necessities in advance of your opening date for business.

Let’s make it easy and simple. Listed below is a 10 step plan you need to undertake well in advance of your new business opening date. This is only the beginning list but you’ll discover and add more in coming days and weeks.

Your own business expertise and experiences will obviously come into play as you work on your complete business plan. For now, let’s get underway and begin to work through the following list of important business decisions…

1. Decide on Service and/or Product you plan to market/sell.

2. Select Accounting Firm or CPA if required

3. Hire Competent LEGAL COUNSEL

4. LOCATION is an important key to your success

5. Know your FINANCES, Money Source, before making any investments

6. Determine Employee Requirements – background; education; professional; etc.

7. Recruit a Mastermind Team

8. Is a new building required before you can open for business?

9. What licenses are required, certifications, etc.?

10. What is your opening Date for business?

Shooting from the “hip” or without a plan is a disaster waiting to happen. Even the smartest entrepreneurs are NOT willing to take such risks. Are you going “solo” or is this a franchise with a long-term history of success? 90% Vs 10% success rates may give you a reason to make the investment for a franchised business.

Weigh the odds. Research the history, do your due diligence. Don’t let anyone rush you into making a decision because someone else wants the same territory and is waiting with money in hand, ready to roll and cut you off at the pass. Don’t believe it without proof and then only if you are sure this is your choice.

Everyone dreams of owning their own business. Making BIG dollars, driving fine cars with all the goodies, BIG houses in beautiful places to vacation at will, club memberships at the finest golf courses, places for fine dining and meeting the upper crust of society.

Where’s the problem? For most of us, it takes 25 to 30 years of hard work without any guarantees that we’ll ever reach the pinnacle of success. Far too many businesses bite the dust than hit the big time. Taxes, employees, thieves, bankrupt customers are the main culprits of business disasters.

Not a pretty picture but awareness is extremely important. The more YOU know what can happen the better prepared you’ll be. Watch out for any employee with too much “power” in your business who likes to take charge.

Many services you need to run your business are better outsourced than handled internally. Hire reputable people in all areas whether in house or outsourced. Pride yourself on building a company with competent staff, well paid, good benefits simply because it’s your key to a successful business long-term.