Do You Need a Business Plan?

Are you asking, "Why do I need a business plan for my home business?"

Well, when you go on a road trip you bring a map with you, correct?

A business plan (BP) is to a business what a map is to a road trip. You buy a map someone else created, but you get to create your own BP.

Does writing a BP sound daunting? It's not - as long as you follow a step-by-step process.

Before we get into the specifics of a BP and available resources, let's look a little closer at why you will benefit from having one, and what preliminary steps you need to take before starting to write your BP.

Ask yourself the following 7 questions - your answers may uncover for you the benefits of having a BP for your home business:

The Benefits of a BP - 7 Questions to Ask Yourself

1. Are you confident that the home business you have chosen will work?

You might be thinking, "With any business there are risks." Yes - this is true. However, if you outline each aspect of your business, you can determine if your idea is actually viable.

2. Do you know the who, what, where, when, and why of your day-to-day business operations, including the costs, and projected profitability? A BP will help you get your head around all of this.

3. Do you have realistic milestones for yourself? A BP will help you realistically forecast where your business will be in six months, one year, or five years.

5. What is your financial picture? The process of writing your BP will force you to analyze your financial situation.

6. How are you going to monitor your home business? A BP serves as an ongoing business tool that you can use to monitor your progress.

7. Do you have contingency plans? A solid BP includes some contingency plans. Your business plan (BP) can help you see how and where you can make changes relatively quickly if, and when, necessary.

Now, before we go into the specific section of a BP, let's look at some preliminary steps.

5 Preliminary Steps to Creating a Business Plan:

1. Identify where you see the business going in the next one, two, or five years. These goals that you establish for your home business should adequately reflect your goals.

2. Determine the goal for writing your BP. Typically a person creates a business plan (BP) for one of two reasons - to attract funding or as a guide to running the business.

Usually a home business owner writes a BP for his/her business for the latter reason - as a guide to running the business. If you are seeking funding for your home business your BP can serve both purposes, but you will tailor the BP to more closely focus on the financial needs of the business. You will also make it clear how much money is needed, how it will be spent, and when you foresee paying a profit on the investment dollars.

If, however, the BP is for you, emphasize reaching specific goals and milestones.

3. Clearly define your target audience. Make a list of the data you will need to research and your research sources. For example, what are the demographics of your target audience, who is your competition, and what is your market?

4. Read other BPs - avoid reinventing the wheel. Look for business plans for businesses most similar to yours.

The Business Plan Archive is an online repository for BPs. It's a worthwhile resource.

5. Determine which software program you will use to write your BP. You can use a basic word-processing program or business plan software. Use what suits your needs and level of comfort.

Now that you know the benefits of creating a BP and you have taken the 5 preliminary steps to writing one, let's look at the sections of a business plan:

The 7 Sections of a Business Plan

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