Mon, 30 Mar 2020
Plan for Success: The Importance of a Sound Business Plan
P lanning ahead is essential for developing your own home business. A sound business plan may make the difference between a business that succeeds and a business that fails. Approximately 90% of small businesses fail before two years, according to the Small Business Association. And even after that two year mark has been passed, there are no guarantees. Shouldn't you do everything you can to improve your chances?
So what should your business plan look like? That depends, of course, on the business. But, with that said, there are certain things that all business plans have in common. For example, is your business products based or service based? Do you make things and sell them, or do other people hire you to do things for them?
How do your products, if you are a products based business, reach your customers? Will you have a walk-in store? A mail order catalogue? A website? What delivery methods will you use?
Who is your competition? How are you better than they are? Why should people choose your business over theirs?
What is your marketing strategy? How do you plan to get the word out about your business? ("Just wait for business to come to me" is not a valid answer, by the way.) How much money will this marketing strategy cost?
What is your business structure? Are you the sole proprietor? Will it be a partnership? Joint ownership? The answers to these questions will affect your business taxes, so it's important that you are very clear on what your options are, and what will benefit your business the most.
How much overhead do you have? Your overhead includes the cost of supplies, of marketing, of packaging and delivery—in short, any money you have to spend in order to keep your business going.
Where will the money to start the business come from? How much money will it take to start the business? What happens if you run out of money? What happens if you have a slow month?
Suppose your business is more successful than you anticipated. How will you keep up? Do you have plans in place in case the workload proves to be too much? How much work can you do? How much time do you have to devote to the business? Be sure to set aside time for family and for your own relaxation, or you'll suffer from burnout in the first year.
These questions may at first seem overwhelming. But take them one step at a time, and answer them thoroughly and honestly. By taking the time to figure out how all the smaller pieces of the whole fit together, you will vastly increase your chances of surviving, not only past your first two years, but for many more years to come.