A business plan is really a way getting your ideas together and it doesn't have to be in any particular format. If you are writing a plan that will be shared by an outsider, your bank for instance or a small business advisor, they will probably have forms that will help you. You can also get free advice online - see, for instance, advice from Barclays Bank . But even if you are writing your own home based business plan for yourself only, remember that you are writing for the most important person!
There are three main parts to a simple business plan for those starting out.
- The family budget plan
- The business strategy plan
- The business finance plan
The family budget plan
Does your family have enough money to survive on until the business takes off? Will your business affect your family income or expenditure? For example, will your income be less because of the time you spend on the business? Will household costs increase, perhaps because you are spending more time at home or because telephone or car costs will increase? Will you be investing some of your other income or savings in your business? You should ensure that your family is provided for over the first year, since most new businesses make little money during that period.
At the bottom of the page you will find a list* of the things you should include. Make sure you add any expenditure that you have that is not on the list. Include contingencies like paying for car repairs and so on. Compare that with your family income (without your business!) and if your income is more that your costs, everything is fine. Don't rely on your business to make up any shortfall. OK, family provided for? Now you can concentrate on your business.
The business strategy plan
The title of this section is a bit grand, but it really means what you are going to do, how are you are going to do it, and what makes you believe in its success. Work through the items below, quickly at first, but don't miss any out. Then go back over your initial thoughts to see what you should concentrate on.
Personal and business aims. Consider why you are starting your own home based business. Is it for extra income, as a challenge, to be your own boss? What would success look like to you as a person? Your business aims will be different. What will you provide to your customers, how will you do it, what image will you have, what market share?
Key people. You, of course! But will success also depend on input from others, such as partners , advisers, investors or technical services? What skills or resources will you and they provide.
The market. If you are planning an online business, you will certainly be looking at niche markets, and many offline businesses will do the same. Who are your customers, where are they, do they have spending power and if so, how much? How big is the market (roughly)? How big a share can you get?
Competitors. Who are they, where do they operate, can you compete directly or partially? What do they do, where and how? Don't be put off by the fact that there are competitors, it confirms there is market. But you have to be able to compete.
Strengths and weaknesses. Yours and the competition! Be realistic. What do they do well? What could you do better? Can you correct your weaknesses, bring in other key people to deal with them, or plan your business so that your weaknesses don't matter? Use a SWOT analysis - look at your Strengths, Weaknesses, Opportunities, Threats. Take the opportunities, make plans to avoid or address the threats.
Products and Services. What are you going to provide for customers? Are you selling products direct, or on behalf of other businesses? What are your competitors offering, how will your products fit in or differ? How are customers needs serviced by your competitors? What could you copy, what could you do better or different? What will you charge? NB - few businesses succeed by competing on price alone, so base you strategy on better products or better service to your customers.
Your Unique Selling Point. What is it that will make your business stand out from the competition and make you different enough to attract enough customers to succeed? It doesn't have to be a grand thing. Will your products be better, advertising more focused, service well above the norm?
Marketing plan. How will people hear about you? Why will they choose you instead of your competitors. When will you launch products and advertisements? What will be your proposition to your customers? Have you got a marketing budget? If not, get one, no matter if it is modest at first.
The business finance plan
Again, it's a bit of a grand title for deciding where you will get your money from, how you will earn money, and how you make sure your outgoings aren't more than your income at any stage. There are two bits to this: start up costs, and cashflow.
Start up costs. Every business has some start up costs, they may be minor or they could be substantial. How are you going to pay for them? Can you put in enough money that does not need repaying, or will you have to borrow, from your savings or elsewhere, and pay it back in time? If you are borrowing from a bank, they will want to see in some detail what you have planned or already got.
Cashflow. Every business has to spend money in order to make money. If, for example, you are buying products to sell them later this spending will be a significant part of your expenditure. If you are offering advice and expertise it will be less. But managing cashflow is a must for everyone. Many businesses underestimate the time it will take for money to come in and how quickly the money will flow out. If it takes, say, three months before you see any customers' money and a full year before the income is anything like substantial, will your own business have enough money to pay its bills each month? In the second list below** are suggestions of what should go into a cashflow forecast. Add in anything that is particular to your own business. Use a spreadsheet if you can, with the list of item down the side, the months across the top, and the figures for each item in the right monthly column. Does your money dip into the red at any stage? What are you going to do about it?
But - a Warning
Business plans are important - but they are not the business! Give your plans enough attention to ensure that your own home based business has a strategy and is financially viable. But don't let it take over your business life so that you spend more time planning than on making money!
*List 1 - Family Budget Expenditure
Housing - mortgage/rent
Taxes Utilities - water/gas/electric/oil Insurance - personal/property/health/motor/etc
Savings plans
Loans and credit
Food and household items
Clothing
Telephone/internet
Hire charges
Entertainment - holidays/meals/drinks/music/etc
Subscriptions - newspapers/societies/sports/etc
Motor - taxes/insurance/fuel/other running costs/repair and servicing
Gifts
Children's costs - school/daycare
Contingencies
**List 2 - Business finance
Outgoings-
Purchases and payments to creditors
Advertising
Salaries and remuneration
Property - rents/utilities/etc
Insurances
Equipment Internet/telephone/postage/etc
Travel and motoring
Professional fees and contractors
Carriage and packaging
Miscellaneous expenses
Finance charges - bank/loans/etc
Depreciation
Receipts-
Sales
Own investment
Grants and loans
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