Your Home Based Business Needs A Business Plan
A business plan is simply a written document that outlines the steps required to build a successful enterprise
. For larger companies, this document can be quite long, 30 pages or more, with extensive information about the market, the competition, and detailed financial projections. Many times the Business Plan is used to introduce the company to prospective investors, so the Plan is designed to assure investors that the management group has the skills and experience needed to make the venture a success, the market the company will be competing in is large, and the company will have certain competitive advantages that will allow it to outdistance the competition.Your home based business probably doesn't need anything this detailed, but taking time to thoughtfully plan out your business will pay dividends down the line. Understanding your competition is very important. Find out what they are offering, how much they charge, what their reputation is, how successful they are. This insight will help you design your product/service offering so it has the highest probability of success. We can all learn from the successes, and shortcomings, of other home based businesses.
Many business plans start with the fundamental question: why does the customer need my product/service? In other words, what benefits are you providing the customer, how are you saving them time, money or making their lives easier? This is not necessarily an easy question to address. Many businesses go astray by assuming large numbers of customers need what they are offering, and are willing to pay for it, when in fact customers are lukewarm about it, and therefore are not motivated to buy.
How do you find out whether customers need your product or service? Ask them. The numerous business forums on the Internet can be incredibly valuable resources for you to use to conduct informal market research. Describe what you are doing and ask the forum members to react to it. If you have a prototype website, your online marketing brochure, ask people what they think of it. Each opinion you receive many not be useful, but if you see trends the responses, you may be able to use that information to improve the content on your website. Pricing an online product or service is always tricky. If you are going to use affiliates to help you market it, you need to have the price high enough so there is room to pay them a percentage. Asking people what the price point should be can give you at least a ballpark idea of what the marketplace is willing to pay.
Once you understand your competition, and have determined how to position your product/service in the marketplace, now you can get to the heart of planning: figuring out the action steps that are needed to launch your business. You should create a timeline for these, for the next 12 months, so you will be able to track your progress.
Once your action steps are in place, then you can progress to your last step, the budget for your business. Large companies plan 3-5 years ahead, but as with the action steps, doing a budget for the next 12 months, and then adjusting it as conditions change, should suffice. Most of us starting a home based business do not have unlimited funds, so you really need to be sure you have thought of all the costs involved in getting started. You then need to forecast your revenues, and when your business will break even, in other words, bring more cash in than you are paying out for expenses. One word of caution about revenue projections: it almost always takes longer for revenues to ramp up than we suppose when we start. Our natural enthusiasm tends to blind us as to how hard it will be to obtain those first few customers. Err on the side of caution, and assume your business will start out slowly. Then you won't be disappointed or frustrated.
With a plan in place, you can work more confidently toward reaching your goals.
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