Is a Business Plan a Prerequisite For a Home Based Business?

My honest suggestion to the people who desire to start a home based business without the proper business plan is, “Please don’t start it at all”. It is better than jumping into the rat race by not equipping yourself with this essential document. Your plan will be your road map to success.

Why is that considered important to your long term success?

A business plan of a home based business is considered essential for many reasons. The primary reason is that you will not stand a chance of getting financial help or loans without it.

Apart from that, it helps you to stay focused on your objectives and it helps you to think in a more organized manner at every step of your decision making opportunities. It helps you stay focused when you get discouraged or overexcited. It also helps in figuring out the solutions to the possible problems even before they occur.

A business plan which is created in a comprehensive format assists the owner to know more about his business and it is a lot easier to make presentations wherever required. The format makes it easy to organize your plans and ideas into cohesive plan for building a successful enterprise.

Business plans show a lot of variations depending upon the type of home based business you wish to propose. What suits you well may not be applicable to another organization. You cannot have only a single plan for various types of businesses.

Here is a business plan outline that will help you get organized and it will guide you through the writing process.

Executive summary: It includes the key ideas of the home business plan. The executive summary is written at the end and it summarizes the ideas of the business owner and why they will work. Your purpose, your goals, and what you expect to accomplish within a stipulated time frame.

The business background: It describes your home based business, the formation, and the major players involved.

Description of your products: What you are going to sell, a product, or a service? How will the products be developed and sourced? The answers to these questions will have to be listed in this section of your plan.

Competitive analysis: The investigation of your competitors and, why will your business have a competitive edge over other business? This will help you to evaluate and make entry into the market.

Marketing analysis and plan: A thorough research of your marketing analysis will help you to launch or re-launch your business. A Marketing plan of your business needs to answer the following questions.

  • What publicity and advertising avenues will you choose?
  • How will you price the product?
  • How will the business take advantage of the gaps identified in the marketing analysis?

Management and operations: It would involve your business legal structure, management resources, suppliers, employees needed and manufacturing processes to make your business move.

Financial Plan: This would involve a detailed description of your funding, financial statements, capital investments, license fees, and financial analysis.

If you make a mistake in your financial planning and overall planning, your home based business might come to a screeching halt very soon.