How to Write a Home Based Business Plan
A Quick Guide to Kick-Starting a Small Business
May 20, 2009
Most home business startup entrepreneurs are terrified of the business plan. It seems like one more hurdle that lenders throw out so they can turn down a loan application. The truth is that there are some very good reasons for writing a business plan- even when the business owner is not looking for a loan. Consider the reasons that banks ask for a business plan.
The standard format for a business plan is designed to organize everything the business owner knows about his proposed business and present it in a form that's easy to digest. The format makes it easy to organize plans and ideas into a cohesive plan for business success.
Here's a quick look at how each section of the standard business plan can help get a business off to a great start- or back on track.
Executive Summary - Key Ideas for the Business Plan
The executive summary allows the business owner to sum up the business idea and why it will work in a few paragraphs. It should be written after all the other parts, and will help put all the important pieces together.
Background
Describing the history of the business and the people involved offer an opportunity to evaluate qualifications and sort out the best roles for everyone involved. .
Current Situation
Evaluating the current situation is a great opportunity to describe the strengths and weaknesses, as well as to make a case for the steps needed to achieve business goals and success.
Future Plans
This section is the ideal place to express measurable objectives and goals for the business. "Making a lot of money" may be a goal, but it's hard to measure and doesn't give much guidance on the how end of things. Instead, ask lay out specific goals such as
- increase sales to local college students by 10%
- secure 10 new clients in the next three months
- reduce advertising budget by 15% per month by taking advantage of free PR opportunities
Description of Business for Home Business Plan
Saying the business sells widgets isn't going to be good enough for the bank, and it shouldn't be good enough for the business plan, either. Go into detail about how the products will be developed, sourced and distributed.
Business Plan Market Analysis
A thorough market analysis is an excellent way to choose a business niche and decide on a marketing strategy for a successful business launch or re-launch. Evaluating the competition and the prospective customers makes it easier to define the best ways to reach the market and outshine the competition.
Marketing Plan
The business marketing plan is the heart of the business plan. It will grow naturally from the market and risk analysis. It should answer important questions like:
- What publicity and advertising avenues can be leveraged?
- How will the product be priced?
- How will the business take advantage of gaps identified in the market analysis?
Risk Analysis
Analyzing risks is a vital part of the plan. Identifying the potential risks faced by the business will help develop a management plan to mitigate or avoid them. For instance, if a vehicle is an essential part of the business, a mechanical breakdown is a risk. It can be managed with an insurance policy that provides backup transportation when needed.
Financial Statements for a Home Business Plan
Surprisingly, the financial statements are really the easiest part of a business plan to work out. It's not much different than working a household budget. Keep in mind that the key is to be realistic when figuring out profit margins and break even lines.
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