Making a Business Plan

I'm just the sole owner of a small home business. I don't need a business plan. Those are just for big businesses. I work out of my bedroom!

This was the answer I got when I asked a coaching client if she had her business plan finished! She had no plan and truly felt she didn't need one. Mistake? Absolutely! If you have a business that you invest time and money in, and if you want that time and money back plus more - you need a business plan. It doesn't have to be a multi-page, formal presentation. Although the typical business plan is approximately 20 pages, my first plan was a single side of one sheet of notebook paper! Size isn't important - as long as your plan is useful.

I'm going to help my client write her plan. If you don't have one yet, let's help you write yours also.

First, what is your objective? Where do you want your business to be five years from now? Are you content to be a one-man small enterprise, working from your bedroom like my client? Or do you someday want to have an actual physical location with dozens of employees? Perhaps you'll even expand into a chain - each location run on your ideas and principles with hundreds of workers. There's no right or wrong answer here, so don't feel less than successful just because you really don't want to grow that large.

How much money are you making in five years? Just enough to replace your job? Enough to completely financially free? Put a number on it. $50,000 a year? $500,000? $1 million? Again, there's no wrong answer.

Now that you know where you want to go, write your plan to get there. How will you do it? Will you need some money up front to invest or can you start small enough that you can come up with your own financing? If you will require financing, where will you get it? Will you be working your business full time or part time while still holding a job? What product or service will you offer? Who is your target market? How soon do you plan to become profitable?

Who are your competitors? How is your product or service different from theirs? How will you market that difference?

What price will you charge for your product or service? If selling a product, how will you distribute it - direct sales, affiliate program, retail distributors such as department stores?

How will you market your product or service? What types of advertising will you use? Sales promotions? What about your PR campaign?

After reading this and answering these questions, you should be ready to prepare your own basic business plan. If you're still hesitant, ask for help. There are several resources available to assist you in creating your business plan. Check out any of the following:

- Small Business Development Centers: SBDCs offer a wide variety of information and guidance to individuals and small businesses. If you need help developing your business plan, the SBDC counselors can help by offering assistance with market research, cash-flow projections and more. And, in most cases, the help is free.

- SCORE: A source for all kinds of business advice, from how to write a business plan to investigating marketing potential and managing cash flow. SCORE counselors work out of hundreds of local chapters throughout the United States.

- Business Plan Pro: The most popular business plan software. Business Plan Pro offers 500+ business plan templates, market research data, and expert advice at every step.

- Creating a Successful Business Plan: This book from Entrepreneur Press is filled with practical advice, easy-to-use how-to lists and forms, and step-by-step guidance to offer you a proven blueprint for creating a high-impact business plan.

Do I Really Need a Business Plan?

I was helping my sister write her business plan for her new venture. It was going slowly and she asked if we really needed to do this. I confess - when I first started in business for myself, I did not have a business plan. And the world did not end. There is no law that says you have to have one. But it sure makes building your business a lot easier! It's one thing to have a business idea in your head. It's another thing entirely to bring it into reality. Creating a business plan will help you through the process.

What's in a business plan? It depends. You can create a fairly elaborate plan with an executive summary, market analysis, business strategy, financial plan, management summary, implementation steps and much more. These are great if you are applying for a loan to start your new business or are bringing in partners or investors. But if you just want a plan to help you get your new home business idea off the ground, it can be much simpler.

First you need to decide what you are going to do. What products or services will you offer? Are there similar products or services already available? What makes yours different? What will it cost to make/get my products? Will I need supplies to offer my services? How much will they cost? What should I charge?

Next you need to do some research. Who is your target market? How big is it? Is it a growing market? How are your competitors doing?

Now you need to decide how you will market your products and/or services. Online? Offline? Both? How will you track the success of your marketing campaigns? What will your marketing cost?

Last, you need to look at your financial status. Is the cost of obtaining your products or offering your services plus the cost of marketing affordable? Will you need a loan a partner to cover these costs? How will you cover expenses until you make a profit? Will you need to work at your job for a while? If you aren't currently employed, do you have enough savings to last until you begin to make money?

Answering all these questions and writing them down in a clear and concise way is the basis for your business plan. Sometimes this is all you need. If you need something more professional and don't want to do it yourself, there are some great business planning software packages available. I personally recommend Business Plan Pro which you can purchase from Palo Alto Software (www.paloalto.com). They offer a variety of business plan software and marketing plan software.