If you don’t plan you plan to fail. Don’t get in the way of your home business by not taking steps to develop a business plan.

Business Plan

A business plan is a written blueprint for your home business. Business plans are essential to getting a business loan but even if you don’t need outside funding they are a valuable tool in helping you set goals in your home business understand what you need to do and predict future growth.

Types of Business Plans

  • Formal business plans: These plans are detailed documents usually prepared for a business that receives external funding.
  • Informal business plans: These plans are mostly used by business owners as a roadmap to success. It might be informal handwritten notes or a more comprehensive printed plan.

Whether formal or informal a properly written and maintained business plan provides a way to help you focus on the task of building a profitable home business.

Do you need a business plan?

If you plan to obtain outside funding for your business you will need a formal business plan.

However even if you start small or have your own resources to fund your business a business plan is not required but it can greatly improve your home business’s chances of success.

The U.S Bureau of Labor Statistics estimates that as many as 30 percent of small businesses fail in the first two years. 1 These statistics can be pretty scary. After all why would you spend time and effort and risk your own money when your business has only a 1 in 10 chance? Will it survive?

Small and home businesses fail for a variety of reasons but proper planning can help overcome all of them. A business plan can help you:

  • Get clear on your goals 
  • Gain insight into your market
  • Organise the daily activities of your home business
  • Know your current financial situation
  • Make important management and financial decisions about your home business
  • Set a starting point to measure growth

Writing a Business Plan

The answer to this question depends on two key factors.

Is the business plan for internal use or external use?

If you don’t use a business plan to get loans or find investors you can write your own. If you’re trying to get outside funding professionals who make a living writing business plans even if you’re only getting outside help reviewing plans to ensure your The basics are properly covered in the documentation. Additionally business plans require editing and proofreading for grammar and good sentence structure. A well-written business plan increases the chances of securing the required external funding.

How Are Your Writing Skills?

If you’re a good writer you can at least write a business plan yourself with some help. Software and samples are available to help prepare a business plan. Additionally SBA is an excellent resource to guide you through the process. If you haven’t already you’ll want to Attend their online Develop a Business Plan workshop to get started. While you can easily learn how to write a business plan yourself you can still benefit from having others read your plan and you may still need outside help such as a CPA to create your financial documents and/or Market research companies to develop statistics about your market.

Whether you decide to hire the person who writes the business plan to write it yourself or use the software you still need to play an active role in the process. Whoever writes your plan needs accurate information on each part of the document and a clear understanding of your business.

Gathering information is also of great benefit to you as it can help you understand your business and what you need to do to be successful it can give you a clearer picture of your competitors and your market.

Writing a Business Plan

If the purpose of the business plan is primarily for your own use you can follow a simple home business plan outline. Although if the plan is primarily written to obtain outside funding (such as a small business loan) general guidelines can be used if advance A financial institution has any specific requirements it wants to see in its loan application and business plan. The basic outline of a business plan includes:

  • Executive Summary – A high-level overview of the document which is placed first in the completed document but needs to be written last.
  • Company Description – The history and description of your company.
  • Products or Services – Information about the products or services you plan to offer and how they compare to competitors’ products or services.
  • Market Analysis – A description of your market your niche and the demand for your product or service (supported by documentation). Your envisioned percentage of market share and the conclusion of any marketing research data.
  • Marketing and sales strategy – how you will market your business how you will provide your products or services to your customers the costs of distribution and promotion and how you will measure the effectiveness of the methods you plan to use.
  • Organization and Management – The legal structure of your business (sole proprietorship LLC C corporation S corporation etc.) Who are your key players and who are responsible for the costs and costs they will cost your business.
  • Financial data – your balance sheet break-even analysis income statement and cash flow statement. You need to include both historical and forward-looking financial statements.
  • Funding Application – This is the section where you apply for business funding. If you are not seeking outside funding at this time you can ignore this section.
  • Appendices – Contains supporting information such as resume details estimated from market research results and all other documents required to support what is included in the main body of the business plan.

What happens after the business plan is completed?

After completing the above information you need to use your business plan to organize your daily to-do list and make decisions about your business. Note that your business plan is not a static file that is set in stone. As you build your business you may find that you need Adjustments or changes depend on the market’s ability to achieve your goals and market trends. So it doesn’t hurt to review and revise your business plan every six months or so if necessary.

Keeping your business plan up to date can provide some important benefits such as:

  • If you need to apply for additional funding through the SBA loan program or other private funding sources the latest information is already available. You’ll save time and money when it’s time to submit an updated business plan.
  • It helps you focus on the important elements of your business and avoid getting bogged down in busy work or shiny items.

It can help you identify areas that need improvement or can be expanded.