If you don’t plan, you’re planning to fail. Don’t jeopardise your home company by failing to make a business plan for your business. In this article we will be discussing how to make a business plan for small business and home-based businesses.
What is a Business Plan?
A business plan is a documented plan for your home-based business. Business plans are required for obtaining a company loan, but even if you do not want outside money, they are a great tool for assisting you in setting goals in your home business, understanding what has to be done, and anticipating future development.
Business Plan Types
- Formal business plans: These are thorough documents that are often created to get outside investment for the firm.
- Informal business plans: These plans are generally utilised as a road map to success by the business owner. It might be as simple as handwritten notes or as detailed as a printed out plan.
Business plans, whether formal or informal, may help you keep focused on the activities that will help you develop a lucrative home business if they are properly prepared and maintained.
Making A Business Plan Can Help You:
- In identifying any flaws in your company concept so that you may solve them before you start for business.
- Identify business prospects that you may not have explored before and plan how to capitalise on them.
- To enhance your concept, conduct a market and competitive analysis.
- Allows you to develop tactics for coping with probable difficulties so that they do not derail your business.
- Persuade potential partners, consumers, and key staff that you are serious about your project and that they should collaborate with you.
- Forcing you to calculate when your firm will turn a profit and how much money you’ll need to get there, so you can be ready with enough beginning cash.
- Determine your target market and the best way to reach them.
Is a business plan always required?
A comprehensive business plan is required if you want to seek outside investment for your company. A business plan isn’t needed if you’re beginning small or have your own means to support your home company, but it may substantially enhance your chances of success.
According to the U.S. Bureau of Labor Statistics, up to 30 percent of all small companies fail within the first two years. Those figures may be rather scary. After all, why would you want to invest time and effort, as well as risk your own money, if your firm has a one in ten chance of survival?
Small and home companies fail for a variety of reasons, but effective planning may help overcome them all. A business strategy can assist you in the following ways:
- Make a list of your objectives.
- Develop a thorough grasp of your industry.
- Organize your home business’s day-to-day operations.
- Recognize your present financial condition
- Make critical management and financial decisions for your home-based business.
- Determine a starting point for measuring growth.
Developing a Business Plan
The answer to this question is determined by two major elements.
Is the Business Plan intended for internal or external use?
You may develop your own company plan if you’re not looking for a loan or investors. Professionals that create business plans for a livelihood bring a lot to the table if you’re attempting to get outside investment, even if you simply need outside help to evaluate the plan to ensure your bases are adequately covered in the document. Furthermore, business plans must be reviewed and checked for language and sentence structure. Well-written company plans enhance the likelihood of obtaining necessary outside finance.
How Would You Rate Your Writing Ability?
If you’re a skilled writer, you can probably develop a business plan on your own, with some help. There is software and example business plans available to assist in the preparation of business plans. Furthermore, the SBA is an excellent resource for assisting you through the procedure. To get started, you should attend their online Develop a Business Plan Workshop if you haven’t previously. While you may easily learn how to write a business plan on your own, you will benefit from having someone else read it, and you may still require outside support, such as a CPA to prepare your financial papers and/or a market research agency to develop data on your markets.
Whether you pay someone to develop business plans for you, write them yourself, or utilise software, you must be actively involved in the process. Whoever creates your strategy must have correct information for each area of the document as well as a thorough grasp of your company.
Gathering information is also beneficial since it helps you understand your business and what you need to do to thrive, and it provides you with a clearer view of your rivals and market.
Make a Business Plan for your Home-based Business
If the aim of the business plan is largely for your personal use, you can utilise a simple home business plan outline.
While basic guidelines are available, if the plan is being created primarily to seek outside money, such as a small company loan, it’s a good idea to check ahead of time to see if the financial institution has any specific requirements it looks for in loan applications and business plans. The following are the basic components of the business plan:
- Executive Summary — A high-level overview of the document that should be written last but is placed first in the completed product.
- Company History and Description – A brief history and description of your company.
- Items or Services – Information about the products or services you intend to sell and how they compare to those of your rivals.
- Market Analysis – Describe your market, your specialty, and the demand for your product or service (supported by documentation). The percentage of market share you anticipate, as well as the findings of any marketing research data.
- Marketing and sales strategies entail how you will market your company, how you will get your product or service to customers, the expenses of distribution and promotion, and how you will assess the efficacy of the methods you want to utilise.
- Organization and management – The legal form of your company (sole proprietorship, LLC, C corporation, S corporation, etc.), who your main actors are, who is responsible for what, and how much they will cost your company.
- Financial data includes your balance sheet, a breakeven analysis, an income statement, and a cash flow statement. You should include both historical and forward-looking financial statements in your presentation.
- Finance Request – This is the area where you will request company funding. If you are not currently seeking outside funding, you may skip this part.
- Appendix – Contains supporting information such as resumes, specifics of market research findings, estimates, and any other paperwork needed to back up what’s in the main body of the business plan.
What should you do with your business plan after it’s completed?
Once you’ve finished the above information, you’ll need to utilise your business plan to arrange your daily to-dos and make business choices. It’s important to remember that your company plan isn’t a set-in-stone document. As you grow your firm, you may discover that you need to make modifications or changes based on the market, your capacity to achieve your goals, and changing market trends. As a result, it doesn’t harm to evaluate and modify your company strategy every six months or so, if necessary.
Keeping your company plan up to date has several key advantages, including:
- If you ever need to apply for extra money through SBA loan programmes or other private funding sources, you will have access to up-to-date information. You’ll save time and money when it comes time to submit revised company plans.
- It assists you in staying focused on the key aspects of your business and avoiding becoming mired down in busy tasks or shiny items.
- It can assist you in identifying areas where you need to develop or expand.