Business Plans Made Simple
Answer These Questions to Create Your Home Business Plan
One of the first things budding home business owners are encouraged to do is write a business plan. They pull out a business plan book filled with details on SWOT analysis (strengths, weaknesses, opportunities, and threats) and financial reports, and quickly become overwhelmed. But unless you plan to ask a bank for money to start your venture, a business plan doesn’t need to be a tome filled with statistics and graphs. A business plan is basically a road map for success. You start where you are, determine where you want to go, and then fill in the tasks that need to be done to get there. Here’s how to create a simple, short plan for your home business.
About You and Your Business
1. What do you offer? Describe in a few sentences what you’re selling. Is it a product or a service? Is it tangible or digital?
2. What is special or different about what you offer? Competition is good because it means money is being made in the business you want to start. However, in order to compete, you need to set yourself apart. How will your product or service be different? Will you deliver it faster or cheaper? Will you offer more personal service or allow self-service?
3. How will your product or service help people? Answering this will help you craft effective marketing messages. Many businesses focus on what they offer (#1) in their marketing, but really what consumers want is to know how your product or service will help them. You can list your offer and what’s special about it (#1 and #2), which are your features. But then you want to correlate a benefit for each feature. Define what your feature means to the consumer. Fast delivery is a feature—fast delivery so you can start using it right now is a benefit.
4. Who will benefit from what you offer? People buy stuff to solve a problem. If they have a hole in the wall, they need spackle. If they’re bored, they want to be entertained. If they’re sick, they want health solutions. Based on what’s special about you (#2), how will what you offer (#1) benefit people. For example, if you offer a vegan weight loss program, which people are most likely to want and need that?
How the Money Is Made
5. How much will you charge for your product or service? If you’re selling one widget, you might have one price. But many products and services can have multiple pricing structures. For example, if you’re starting a virtual assistant business, you can have one price for hourly clients and a different price for retainer (ongoing monthly) clients.
6. How will you be paid? Getting paid is an important part of the home business equation. The easer you make it for customers and clients to pay and get what they want, the more likely they will do business with you. Will you accept a variety of payment options such as check, cash and credit card? Will you accept PayPal?
7. When will you be paid? If you’re selling a product, you’ll be paid at the time of the sale, but if you’re selling a service, you might not get paid until it is delivered. Or you can charge half the cost upfront and bill the remaining when the service is provided. Decide if you’ll bill monthly, bi-weekly or weekly, and when you expect payment. For example, will clients have 7 to 10 days to pay, or will payment be due on receipt?
Getting Clients and Customers
8. Who is your ideal customer? You’ve already started to define this in #4 when you determined who’d best benefit from what you offer. Now it’s time to learn about them in detail. What is their gender, financial status, interests and their other demographics?
9. Where can your ideal customer be found? You’ll save a lot of money by researching the best places to find your customer. For example, if you offer virtual support services to realtors, you can advertise in the local paper, but you’ll get better results by advertising in your local realtor association’s newsletter. Why? Because that’s what realtors read. Sure, some will read the paper, but they won’t be thinking real estate when they do. Whereas when they read the association newsletter, they’re focused on real estate.
10. How can you entice your ideal customer? You’ve started this as well when you translated your features into benefits. Now it’s time to craft marketing materials that speak your target market’s language. Putting a message that speaks directly to your market where your market hangs out is the best way to get clients and customers.
Getting From Here to There
11. What are your assets to get started? This can be money, but it can also include your computer, other equipment and tools you have to help you get started.
12. How much do you need to get started and where are you going to get it? Many businesses can be started with little to no money, depending on the business. Start by making a list of projected expenses for startup and ongoing expenses, such as website hosting. If you need money to get started, where are you going to get it and how will you pay it back, if necessary?
13. How much do you want to make? In the road map analogy, this is the destination. When you come up with your number, be sure to include overhead and costs related to running your business along with your profit goal.
14. What do you need to do to reach your financial goal? Using the price(s) you set up in #5, determine how many sales or billable hours you need to meet your goal. If you want to gross $30,000 a year and charge $25 per hour for your service, you need to sell 1,200 hours of service per year. That equates to 24 hours a week (with a two-week vacation) or 4.8 hours day (with weekends off). Note, that while you might bill for 5 hours day, you’ll likely work more because of administrative and marketing tasks you need to do daily as well. Once you’ve done this action step, you'll know exactly how much you need to sell to meet your goal.
15. What’s stopping you? What challenges or obstacles do you have now that are making it difficult run your business? This will vary from person to person. Common obstacles are a lack of knowledge, no time, and not enough resources.
16. How can you overcome what’s stopping you? Many would-be business owners don’t do this step. They use the obstacle as an excuse to give up on the dream of owning a home business. But obstacles are just annoyances that, if dealt with, can be overcome. Doing this requires you taking the time to analyze the situation and brainstorm solutions. How can you learn more? (Read, attend conferences, etc.) How can you get more time? (Ask for help.) How can get more resources? (Have a yard sale to make money.)
Each of these questions requires just a few words or sentences, and will help you focus and build a foundation for a successful business. It will help you define what you’ve got and who you’ve got it for, the numbers you need to achieve to reach your financial goal, and areas you need to deal with or overcome.
And don't forget, the Small Business Administration (SBA) has some great tips as well as samples of different business plans to get you started. You can also check out the SBA's website for other helpful information like funding resources and where to get assistance in your local area if you need help.
As you build your business, refer to your business plan for reminders or guidance, and tweak it as needed to help you reach your goals.