Are Home Based Business Plans Really Necessary?

Is it necessary to have a business plan for a home based business? The answer is yes and no. If you are considering running a business from home that requires outside finance, then you will definitely need some sort of business plan, and the more comprehensive it is, the better your chance of success.

If you are going to have very little expenditure and few overheads, then your business plan need only be of a more personal kind that will allow you to keep track of your projected and actual daily activity, sales targets, marketing costs etc. Let’s look at the difference between the two.

1. Using a business plan to secure finance – regardless of the kind of business you have in mind, this kind of plan ideally needs to follow a specific format and, unless you are an experienced business person, you may be well advised to take expert advice.

Alternatively you can purchase software that will allow you to tailor the plan to your specific sector. Google “Business Plans Academy” to find business-plans.co.uk for samples of templates for a variety of businesses, from child care to the hotel industry. Each one includes sections such as Executive summary, Description of Business, Product Summary, Business strategy, Financial Summary, Market Research, Market Trends, External Research, Market Estimates, Management Team, Business Location, Business Organization, SWOT Analysis, Competitive Analysis, Customer Segments , Customer Demographics, Sales Strategy, Pricing Strategy, Marketing Plan, Advertising Plan , Objectives & Plans, Resource Allocation, Budget Allocation, Startup Budget, Forecast Profit & Loss Account, Forecast Balance Sheet, Forecast Cashflow, Sales & Profit Forecasts, Sales Charts & Graphs. This, and similar software can be purchased relatively inexpensively and will give you a professional-looking document.

2. Using a business plan to develop and maintain targets – Since you’re not looking for finance this can be much simpler, but no less important. Statistics show that people who create and follow a business plan have a better chance of success. For the home based business entrepreneur it can be difficult getting into the habit of following a structured plan, but necessary. Simply by looking at the elements of the full business plan, it is easy to see which sections will be important to the home based business, but it can be broken down into the following fields:

  • know your product & prices
  • know your market area
  • know your competition
  • know how to get help or training
  • create daily/weekly/monthly ‘to do’ lists
  • decide whether and where to advertise and compile costs
  • set realistic goals and targets

Another important factor is to decide whether your home business will generate immediate income, or whether you will need to consider bolting it on to your existing job or business until it does. By performing the simple exercises above, you will have a much better grasp of your likely earnings than if you start your business with no clear goals or plans.

Finally, a home based business is no different to a bricks & mortar business. It needs commitment and hard work to make it successful. Ask any small business owner how many hours they needed to put into their business when they first set up, and you might be overwhelmed by the answer.

Ask them if they would trade being their own boss to work for someone else, despite the hours, the headaches, the business planning, and everything else to boot, and in most cases you’ll get a resounding NO!

Seven Step Business Plan

To be successful in business, you need to conduct research and write your business plan. Attempting to start a business without a (well-composed) business plan through feasibility study is like a stranger going to an unfamiliar terrain without prior direction. Or better still, it is like a ship without a rudder (which controls its direction). It is in the light of this that the publication of this text entitled “Seven Step Business Plan”, written by Ms. Sheila Holm, a respected business-management expert is a welcome addition to business management literature.

Holm says before preparing this text, she had cycled and recycled clients to every bookstore to work through every business-planning book option. She adds that the clients purchased many books but still wanted more help. Holm discloses that to make it easy and affordable for more business owners to receive help, she started conducting a series of seminars to help owners and their management teams develop their business plans within a seven-step format based upon their dreams and goals.

Holm says the outline of the seminars developed rapidly into a seven-step, one-page form for quick and easy review while updating the business plan according to each change and adjustment to the goals.

The author educates that having a business plan adds value to the bottom line of a business. She adds that this text removes the learning-curve requirement, stressing that she knows you can increase the productivity and profitability of your business when you write your own business plan.

Holm says whether you have not yet written a plan, you have paid a consultant to write a plan, or you have proceeded with your business idea before writing a plan, you are absolutely in the majority. She submits that the truth however is that no other owner, director or team leader can articulate your business idea better than you can, stressing that planning is the key to success and profitability.

Structurally, this text is segmented into seven chapters. Chapter one is entitled “structure”. This author educates here that immediately in your own words, you should begin writing a statement about “how it is around here” according to how you are going to proceed with your business. Holm says many owners, even after they open the doors and operate their business, proceed without a clear statement about their business: how it will meet the needs of customers or how their business relates to the industry. The author adds that their dreams and goals are not in writing or in focus yet.

She stresses that clarity is helpful and has a positive impact upon your bottom line. This author adds that if you want more profit, then you need to gain clarity and if you want more clarity, then you need to schedule a little more time to walk and/or work through the planning process with her.

According to Holm, businesses develop in phases, so it is important to begin the planning process by identifying the part of one or more phases, or stages of development, of the business process your business represents. The author discloses that your business may be at a point where you want to add a phase to your existing plans or it may be an idea that you want to sell to someone else. You may want to purchase a developed product in order to market and distribute it, or you may be starting a business that will include all phases of the business process, expatiates Holm.

She says this stop is a major decision point since it will match your expertise and passion with the type of business you should pursue. In her words, “So, take a moment to get comfortable and get a firm picture in your head of yourself as the owner of the concept or product in one or more of the key phases of the business.” Holm also discusses idea; development; location; production; marketing and sales; distribution; and repairs or redevelopment in this chapter.

Chapter two is based on the subject matter of placement. Here, the author says the biggest mistake owners make is to think they have the most unusual business idea. Holm stresses that she is always concerned when a client says she should hurry up and develop a business plan before someone else steals the idea.

She reveals that ideas are out there and we do not have the market cornered on any idea. The author adds that only very few people with ideas will proceed and develop the ideas into a tangible entity, a business that will become part of the marketplace. She stresses that you are the exception to the rule.

The expert submits that now that you have set out to pursue your idea, it is important that you continue to follow and recognise the needs of the market that initially inspired you. She explains that if you understand the placement of your business within the industry, it is as important today as it will be that every day you are in business.

In Holm’s words, “Too many businesses forget to stay current regarding the trends within the industry and the business, market in general. The business process is a fluid process, so do not plan on making a decision regarding placement and then setting your business idea into a concrete base and forcing it to hold up to this statement for more than a few weeks. This is why I absolutely recommend reviewing the Seven Step Business Plan form each month.”

She illuminates that this phase of planning your business is a good time to meet and interview experts. On the aspect of customers, Holm says if you think everyone is your customer, take a second look at the facts about your business and what it will provide to the community. The author educates that defining your customers will assist you in the process of matching your business with the top competitors in your industry She adds that you have to know your competitors and how they are doing business within your industry.

“Begin with the title ‘Competitors’ on a page of your notepad. Add names to your list each time you identify a business in your industry. Expand your list and add all related businesses, increasing the scope and parameter of your search. This list will also help you gain an objective view of how the various businesses affect your business and your industry,” educates this expert.

Chapter three is on the concept of leadership. Holm says the most important statement you can make about your business is the statement you make about yourself and your involvement within each phase of the business. She adds that the statement you make about each member of your leadership team closely follows the importance of the statement you make about yourself.

According to this author, your leadership ability is critical as it is your ability to inspire others. Holm emphasises that leadership skills and abilities develop into the team strengths that are going to be evident in the business structure and help sell the business to each customer, vendor, employee, and business. “Remember, you are not able to be all things to people within the team. Each leader plays a specific role, and the team’s strengths and support in areas of weakness will define the overall strengths of the business,” guides the author.

The business management expert educates that when you detail your involvement, you should ensure that you align your statements with the phrases you have written to describe your business today and your plans for the future of this phase of the process. She adds that this statement will need to remain flexible in order to complement the plans for each aspect of the business as you continue to refine them.

In chapters four to seven, Holm analytically X-rays concepts such as purpose and highlights; vision and mission statements; operational and marketing plans; and financial and profit plans.

As regards stylistic assessment, the report card of this text is in blue. For instance, a lot of textual and graphical illustrations are used to reinforce the understanding of readers. The book is also very educative in that the chapters are further broken down into many sub-segments to achieve simplicity and easy comprehension on readers’ part. Holm includes one-page fill-in-the-blanks form representing a prototype for a typical business plan to guide readers. What’s more, the language is simple.

However, a technical error is noticed in the text. This is the omission of a hyphen in-between the first two words of the title of the text “Seven Step Business Plan”. Omission of the natural hyphen has grammatically deprived “Seven” and “Step” from becoming a nominal compound modifier to the phrase “Business Plan”. It is structurally supposed to be “Seven-Step Business Plan”. Without a hyphen, one will also be grammatically compelled to add an “S” to “Step” because of the cardinal word “Seven”.

On the whole, the text is a necessary companion for (prospective) entrepreneurs, business managers, etc. What else would you expect me to say if not that “it is highly recommended”? Get a copy of this book today and learn how to write a business plan so that you can achieve business can succeed.

Write Your Own Business Plan for All Types of Business

You don’t need to feel intimidated, you can write your own business plan. People easily feel intimidated by the task of writing a plan. It seems that the financial section is especially intimidating.

A plan put structure to your research to establish if your business idea can be converted into a viable and profitable business. If you have the funds available you can pay an expert to write the business plan for you, but this might not be the best option, because:

The expert may be an expert at writing business plans but he does not necessarily have the passion for your specific business idea.

If you do the plan yourself you will have a far better idea of all the challenges and opportunities involved in your business. Therefore you will be able to take a better decision on the viability of the business

When writing a plan you need as much research done as possible. Use different resources for your research. For example if you want to open a restaurant you need to speak to as many restaurants in the area that you want to do business in as possible. Do not take what the restaurateurs say for granted. Take time to observe what is happing at the restaurants. Get an idea of customer flow for different times and different days.

Use your business plan template as a framework for your research.

All the sections of the business plan are important. Do not skip any of the sections when doing your research.

You can get help from other people for the sections of the plan that you do not feel comfortable with. E.g. get an accountant to assist with the financial section. Try to learn as much as possible in the process. This knowledge will come in very handy if you decide to go ahead with the business.

A well researched plan is a very handy business management tool. It will increase the chances of business success. A poorly researched or incomplete plan can result in the wrong decisions being made and can lead to business failure.

You can follow these steps to write your own business plan:

Choose a business plan template to use. You can use the template in the e book “Strategic Plan and Business Plan Handbook” or search the internet for your own. There are very good templates available, a lot of them for free.

Use the sections and questions in the template as the basis for your research. Speak to a variety of people. Do not be afraid of conflicting opinions.

Use an expert to assist you on difficult sections e.g. the financial section.

Once you have completed the template you have a business plan. Use the plan to decide if your business idea is viable. A proper plan can have a very positive effect on success.