Business Plan Basics, and Why You Need One
Many people who start a home business never take the time to write out a business plan. That is a big mistake, a business plan can greatly increase your chances of success by forcing you to answer key questions about your business.
I know this is the boring stuff. “But I’m the creative type!” You say. Well guess what? If you are serious about your business then you will make the time to do this. Plain and simple.
A business plan is the blueprint for your business, it will help you map out it’s foundation and find it’s weaknesses. It also serves as a road map, giving you a goal to strive for, keeping you on track.
Putting Your Business Plan is Your Business Idea on Paper
I’ve always harbored a secret dream to open my own restaurant. Everyone’s always telling you how you should follow your passion and turn in into a business, so naturally since I love cooking I figured I had my life’s purpose!
Then I worked on a business plan and boy was I in for a rude awakening. You see, the process of working through and creating the business plan showed me very competitive and challenging the restaurant business is. Opening a restaurant takes a lot of money and managing one is labor intensive.
Not exactly in line with my goal of being around for my son while he was in school. So for now I’m rather content to restaurant hop, that way I get all the pleasure and none of the pain. And so that’s how I discovered how important a business plan truly is.
Every Business Needs a Business Plan, Here’s Why
1. A business plan maps out your future. If you have decided you are ready to start a business, your first step should be to write out your plans for what you want to do with the business and where you see the business going in the future. If you are currently employed, this is will give you some guidance on when you can expect to replace your current salary through your business.
A well crafted business plan will plan for growth. How will you handle in increase in business?
You will have to think about your business model, how will you make money? When will you break even? You will also have think about your marketing plans and your strategies for attracting customers to your business.
2. A business plan will help you clarify and refine the purpose of your business. You may have grand ideas planned for your business, but working out the details and mechanics of those ideas will help you spot potential challenges and opportunities you may have missed. For example you may realize you need more startup capital then you previously thought.
You have probably heard the old saying, “If you fail to plan, you plan to fail” That is very true when it comes to your business. The more planning you do in the beginning, the greater success you will see in the future.
3. If you decide to take your home business to the next level, a business plan can help you secure financing. A financial institution will want to see, in writing, the reasons that they should loan you money. Simply walking in and telling them why you know you’ll be a success isn’t good enough.
However, if you can hand your lender a document that states your business idea, your business goals, a list of steps you plan to take in order to reach your goals, as well as your estimated earnings, you will be seen as a professional and the lender will take you more seriously.
4. Your business plan will also help you determine your action plan. Your action plan consists of the steps you plan on taking in order to achieve your goals. This is another task that people usually sidestep. Instead of just “kind of knowing” or having the ideas in your head, you should take the time to put them on paper.
The reason this part of the business plan is so important is that it literally walks you from point A to point B. While your business plan, in general, serves a map, your action plan is the turn-by-turn directions.
5. Having a business plan to present to your spouse can also help your spouse realize your business idea is more than just a passing amusement. This can really help you, especially if your spouse is skeptical. Your spouse can see that you are serious and will become more helpful and more encouraging. Having the support of your spouse can really motivate you and help you find success.
Creating a business plan can be a lot of work, but it is not only worth it – it is an essential step all aspiring business owners should take. At the end of the process you will feel empowered and confident in your decisions. Keep in mind that, like everything a business plan is a document that should be edited and revised to account for the unexpected challenges and opportunities.