You are ready to finally get all the information and ideas tumbling around in your head onto paper. It is time to take your ideas, plans, and market research and write a home business plan.
What Is a Home Business Plan?
Here's a quick comparison. An absurdly complicated swing set is delivered to your home. Not only do you get a book of instructions, but also a DVD of instructions. After many hours spent studying that book and DVD, you successfully create the coolest swing set ever. There is no way you could have built that swing set without those instructions.
A business plan is just like a book of instructions. It establishes a route to create a successful and profitable business. Trying to set up a business without some instructions is a recipe for wasted time mingled with disaster.
A business plan is a traditional business document analyzing a business' operation plan, market, and financials.
Why You Need a Plan
- A business plan is required if you seek outside funding from investors or a financial institution.
- A tangible business plan gives you the ability to stay focused and on track. You can always refer back to your business plan to realign or reevaluate the plans you have made (and you should!).
- A business plan is a useful tool to recruit key talent or individuals you may need in order to get your business off the ground.
- A business plan offers the final gut check on whether or not your business is feasible.
How to Write a Home Business Plan
There are two types of business plans, formal or informal. If you seek funding, banks or investors will require a formal business plan of 10-30 pages. A formal business plan adheres to the traditional business plan outline and typically requires a more substantial financial section.
An informal business plan is usually for internal purposes and does not need to follow the traditional business outline as stringently. For a small business interested in creating a simple and informal business plan? Touch on all the sections in the business plan outline, but especially focus on the marketing analysis, SWOT analysis, and marketing plan section.
You have a few choices when it comes to actually creating the document. You can do it the good ol' fashioned way, hire someone to do it for you or use an awesome online business plan tool like enloop to assist in the creation process.
Where possible, try writing the business plan on your own, at least a first draft. Not participating in this process could rob you of the knowledge and insight you’d gain during the research and compilation phase. If seeking outside funding, you may want to seek outside help. This could ensure each section is covered properly and increase your chances of getting funding. Whether you decide to write the business plan in its entirety or not, make sure and recruit some help to review and proofread your final document.
Traditional Business Plan Outline
Here is an example of a traditional business plan outline. Remember, if you are creating a formal business plan in order to secure funding, you will want to adhere to this outline. If you are creating an informal internal business plan, it is okay to veer slightly from this outline as you deem necessary.
Each section is linked to further instructions for that area of the business plan outline.
- Executive summary: This is the “cliff-notes” version of your business plan. Try to keep it to one or two succinct pages. You will write this section last.
- Market analysis section: This section will illustrate your knowledge in three specific areas: your industry, target market and competitive environment. Remember all that market research you compiled? This is where it will pay off.
Industry overview: Trends, threats, major players, growth rates, sales data.
- Target market profile: Demographics, geographic location, profile, how needs are or are not being met.
- Competitive analysis: Direct and indirect competitor profiles, including what they do well and poorly.
- Company description: This section is where you introduce your business and its primary product and goals. Basically, who you are, what you do, and why you will do it well. Here you will also describe your basic operations, including physical location and product manufacturing process.
- SWOT analysis: A concise one- to two-page section outlining the strengths, weaknesses, opportunities, and threats facing your business.
- Marketing plan: An outline on your sales plan, pricing model, advertising strategies and communication plan.
- Organization plan: A summary on how your business structure (e.g. LLC, sole-proprietor), required management/employees, and anticipated payroll expenses.
- Financials: This section can be one of the most stressful to create. Be patient and seek out help if you need it. Items in this section will include a balance sheet, income statement, breakeven analysis, and statement of cash flows. You will also include your request for funding if seeking loans or an investment.
- Appendix: Here you will include relevant and supporting documentation for your business plan. This could include some of your market research findings, case studies, physical property agreements, resumes, and more.