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| Successful Plan for Home-Based Business | A written plan for a home business does not need to be scary, and is not only useful if you're trying to borrow money. Even a short plan can lead to greater success.
The IRS holds that the difference between a hobby and a business is, as a rule of thumb, whether or not you take it seriously. One of the best ways to have the Internal Revenue Service and others, including yourself, believe that you’re actually running a business at home is to have a home business plan. Planning for your home business will force you to think through how seriously you want to take it, and how much money you really think you can earn while working at home for yourself.
Many business owners avoid writing a business plan, believing that they’re only necessary when you want to find a lender or investor. Home business owners are even more likely to avoid writing a plan for the business. In truth, these business owners have it backwards: the reason investors and lenders require a written business plan is so they can find out how seriously the business owner takes his or her business. Any business will be more successful with a plan, and a home business, with its lower overhead, is sure to thrive if it is thought out on paper. Luckier still is the future home business owner who uses a written home business plan to prevent a quick business failure.
A business plan doesn’t have to be threatening. If you run a home business, some parts of a typical business plan can be very short. Planning your home business may seem like a tremendous waste of time, but business owners who plan things out find they save time in the long run.
A home business plan has a few basic elements: the executive summary, company description, marketing plan, operational plan, financial history, and financial plan. None of these needs to be difficult for the home business owner to write.
• Executive Summary
o This is the first part of your home business plan, but should really be written last. In a few paragraphs it sketches out what the business does, how it does it, and where it hopes to go in the future. It should be written last because other areas of the business plan must be written to be summarized.
• Company Description
o The company description for a home business plan doesn’t have to be fancy. If you lay out what you’re selling or doing for money, even in a general way, that’s often enough for a home business. Make sure you lay out how your business is organized - most home businesses are not incorporated, but if you are the specifics should be laid out here.
• Marketing Plan
o This is where it gets scary for a home business, but it doesn’t have to. You’re not trying to impress anyone; you’re just trying to lay out in words what you are already doing. How do you sell your items or services? Is it word-of-mouth? Do you operate entirely online? Do you advertise at all?
• Operational Plan
o This is where you lay out what you’re doing now. How much of your home do you devote to your business? Are there any legal requirements you need to follow? Do you have any employees yet? How do you maintain quality? Do you extend or accept credit?
• Financial History
o If you’re taking your home business seriously or want to, you’re using some kind of bookkeeping software. Coming up with a profit and loss statement and a balance sheet for your home business plan won’t be tough.
• Financial Plan
o This section is where you will put down your predictions about how you will do in the future. It’s understood that you don’t know all the answers, make your best guess based on the information you already have.
Writing a plan down for your home business will usually force you to come up with new and exciting ideas.
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