A business plan can help you set a constructive direction for your home business.
When you are starting a home business, it's easy to just jump in and have at it. However, after a while, you get bogged down. Especially if you aren't sure where to go next. At some point within the first year of turning your hobby into a business or starting some other venture, you probably ought to put together a business plan.
Your business plan is essential if you want to expand and qualify for business funding. Whether you are applying for a Small Business Administration loan through the local lender or hoping for a P2P loan, your business plan shows that you are serious about your venture and that you have a direction in mind. Plus, you need a plan to make the money necessary to repay the loan in full.
Additionally, a good business plan can help you navigate the future, crystalizing what you want from your home business and helping you create a road map to get there. As you consider your next move, it can help to have a good business plan.
Elements of a Solid Business Plan
- Executive summary: Brief overview of your business, your plan, and your goals for the future.
- Market analysis: What does the market look like for your industry? Information about the current state of the market and where it is going.
- Company description: A look at what your company does — and how it's different from other businesses in the market.
- Organization: Overview of how your business is structured. You can also include information about management and how your company hierarchy will work.
- Marketing: How will you market your company? You need to describe the steps you will take to ensure that others find out about your home business.
- Products and/or services: Describe what you are selling, whether it is an actual product or whether you are selling services. You should show how it benefits your target market. If it is a product, you need to provide information on how it is developed and how it will be produced.
- Funding requirements: This is where you actually make your request for money. Tote up how much you need to make your business a success and what the money will be used for, whether you are buying raw materials to start up or whether you are looking for a loan so that you can expand your operations.
- Projections: What are your expectations for the business? You need to include information about how profitable you think the business will be and do the research so that you can include a realistic timeline for profitability.
- Appendix: If necessary, use this section to include copies of important information, such as financial statements for the company and for principals. Also, you can include resumes of principles, the leases you have, information on collateral you are offering, and other copies of important documents.
Bottom Line
Even if you aren't requesting funding, going through the process of creating a business plan can be useful. At the very least, create a home business plan that includes the executive summary, market analysis, company description, organization, and marketing sections. It can also be helpful to include a section that details your funding requirements.
No matter how small your home business is right now, you likely have bigger plans. You will be able to approach your business with more clarity and increase your chances of success if you are willing to take some time to sit down and draw up a business plan. It's an eye-opening exercise that anyone can benefit from.
