Quite a lot of people who are looking into starting their own home business often tend to overlook the importance of coming up with a workable business plan. Formulating a solid and workable business plan before you start out in attempting to earn money from home, however, is a very important step. Putting effort into creating a good home business plan will help you to concentrate your efforts, reveal, ahead of time, potential pitfalls and possible strategies that may not have occurred to you, and, provide your new business with the competitive edge it needs to help maximize your returns.
I was recently talking to someone who is a successful home-business owner and who told me that when he began his first home business, he had neglected to put in the time and effort to develop a solid business plan for his new start-up. He did, however, toss together a rather shoddy one that he put almost no thought or effort into simply because his bank, from which he was attempting to acquire a business loan, requested one from him before they’d even consider approving his loan. He informed me that it had been a waste of time anyway, as, the bank ended up refusing the loan. He did manage to borrow some money needed from independent investors and go ahead with putting his new home business into practice, but it ended up failing within two years of start-up.
He told me that one of his biggest regrets with that business was his failure to develop a reasonable business plan before going ahead with his business. He said his business ultimately failed because he ran into problems that he had just failed to foresee — problems that only became apparent to him once he was actually running the business. And, of course, since he didn’t see the potential for those problems before hand, he had to scramble to attempt to deal with them as they came up. He was unsuccessful in doing so, however, and the business ultimately failed. He believed that had he put just a small amount of reasonable effort into drawing up a sound business plan ahead of time, he was sure he would have been much better equipped to deal with such problems, and that first business of his might very well still be operating today.
So, it’s a very solid piece of advice: Don’t neglect your home business plan! Your own home business plan doesn’t have to be pages upon pages in length. It doesn’t have to be so in-depth and robust that it takes you days upon days to put together. A reasonable and solid home business plan that is adequate to provide your new home business with a solid start can be created in just thirty minutes or less — as long as you approach it seriously and are willing to spend that thirty minutes putting in a reasonable amount of effort.
A decent home business plan will most certainly assist you greatly in understanding just what your new home business is likely to cost you in getting it up and running. And, of course, this is extremely valuable information to know. You really don’t want your expected costs to be based on a shot-in-the-dark guess. Having a firm understanding of the costs involved will prepare you for a number of important decisions you’ll need to make — what sort of prices you’re going to charge for your products or services that your home business is dealing in being among the most important. The process of creating a solid home business plan will also help you in getting to know your competition — who they are and what they do. Again, this is excruciatingly important information to be armed with.
Even if you’ve been running a successful home business for some time without such a plan, don’t for one minute think that sitting down and creating a home business plan for your already operational business wont be of significant benefit. Formulating a decent home business plan can be of great assistance to any business — no matter how new, or successful, that business may be.
So, what should your own home business plan consist of? What should it contain? How do you go about creating it? Simply taking around 30 minutes, or perhaps a little less, to go through the following steps should get you up and running with a decent, workable home business plan:
Step 1) What, exactly, IS your business? Spend some time describing exactly what your business is. Try to write a few short sentences which accurately and concisely explain the exact nature of your business. Your description should total no more than two or three simple sentences. If you find yourself experiencing difficultly accurately describing your business in just a couple of sentences, then you very likely need to re-think your business model and re-focus your ideas.
Step 2) Is the business idea that you’re interested in starting even needed? Is there a market for it? Will you be able to find customers for your products or services? If so, spend time listing all the reasons why you think so. If you can’t think of any, or very, very few, then it’s likely you’ve missed your guess regarding the demand for your business. You should, in that case, spend some time doing some market research before continuing.
Step 3) Where, exactly, do you see your new business one year from now? Where do you see it in three Years? Five years? Be as specific as possible and try to be realistic. Write out a short description of your realistic expectations for your new home business for each of these time points. Doing so will help you in the future to focus your efforts and amend and adjust your plans if need be.
Step 4) How will your new business be funded? Will you dip into savings? Will that be adequate? Will you max out your credit cards? Will you try to attract investors? Will you try for a bank loan? How much money do you realistically think you’ll need to start your business? What supplies will you need? Equipment? Will you require an advertising budget? What will be your total start-up cost, roughly? What is likely to be your monthly operational costs in the early goings?
And, of course, how will you go about obtaining such funds? Spending some time on this will make you aware of what you need to do in order to raise the funds required, and what you’ll need to keep in mind regarding how you’re going to deal with any debt you incur. If you decide you don’t have enough in your savings, for instance, you’ll need to think about how you’re going to supplement your start-up capital. Don’t want to deal with banks? Then you might need to think about attracting private investors. But, if so, how? How are you going to attract investors? You’ll need to put some thought into developing a pitch or presentation, etc.
Step 5) Which, if any, government or private, business or trade organizations will you need to deal with? List them. And, are there any costs involved? Are there membership or licensing fees involved in getting your new home business off the ground? Will you need to obtain trade publications from such entities? If so, what are the costs for these?
Step 6) Describe, as clearly and in as much detail as possible, who, exactly, your target customer is. Who is the market you’re aiming at? How old is your typical customer likely to be? Are they likely to be predominantly male or female, or will your target market be made up roughly of equal sex? Is your business likely to appeal to people of a certain social class? What is likely to be the approximate income level of your typical customer? If you’re selling information products on how to properly care for luxury yachts, for instance, your target customer isn’t likely to be a 20 year-old high school dropout from a blue-collar family. Having as clear a picture as possible of your typical customer is immensely important. It will dictate practically every aspect of your businesses’s promotional efforts. If you don’t know who your target market / typical customer is, you’ll throw away money on ineffective marketing and your business will likely fail.
Step 7) Why is your new business any different than any other business currently in operation and catering to the same market? What makes your business stand out? Why would anyone choose to do business with you instead of any competitors? Is your quality higher? Are your prices lower? Do you provide some sort of unique service that no other business also catering to your market is offering? Try to think of anything and everything that applies. If you have difficulty here then it’s probably worth spending some time brainstorming some ideas that will set your business apart from the competition.
Step 8) Set out the specifics of your home business operations. Where will you set-up your home office? Will you need to acquire any additional space? Maybe for inventory storage, or for some other reason? What types of equipment will you need to equip your space so it functions as an office? Will you need a separate phone-line, for instance? A dedicated computer or printer, perhaps? A desk or chair? A filing cabinet? Anything? Will you need to acquire day-care services while you’re running your business? What are the total costs involved?
Step 9) How much revenue do you need to earn each month in order for your home business to retain viability? Can you manage a number of months operating in the red? Or, do you need to earn some amount of money right away in order to make ends meet and keep your business afloat? It’s important to know this before starting. If you can’t afford some lean time, then you need to know with as much certainty as possible that you’re not likely to experience such, or else you may find yourself in trouble. Spending some time on this step is important. And, it’s important to be realistic here. Try to arm yourself with as much accurate information as you can before hand, so you know what you’re getting into and unfortunate surprises will be kept to a minimum.
There’s an old adage that says: “Those who fail to plan should plan on failing.” Truer words have rarely been spoken. Creating a decent home business plan will go a very long way in arming you with powerful weaponry needed for securing the success of your new home business. By spending just 30 minutes going through the steps above, you’ll gain a clearer picture of what your business venture needs and how its likely to play out. And, as you begin your business, periodically revisit the plan you’ve created. Take it out and review it. Read it through. And, don’t be afraid to make changes, update it with new information, or even completely rewrite it. Your home business plan is not a set-in-stone, must-follow blueprint. It’s a guide, the purpose of which is to prepare you for running your business successfully into the future. As you learn new information through the operations of your home business, update your business plan with the new information.
And, I wish you the best of luck and success with your new home business! If you have any questions, please don’t hesitate to ask them using the comment box provided below. While I can’t guarantee a personal response, due to time constraints, I’ll do my best to try to answer your questions if I can. Or, perhaps, some other visitor to this site might weigh in with their own ideas.