Are Home Based Business Plans Really Necessary?

Is it necessary to have a business plan for a home based business? The answer is yes and no. If you are considering running a business from home that requires outside finance, then you will definitely need some sort of business plan, and the more comprehensive it is, the better your chance of success.

If you are going to have very little expenditure and few overheads, then your business plan need only be of a more personal kind that will allow you to keep track of your projected and actual daily activity, sales targets, marketing costs etc. Let’s look at the difference between the two.

1. Using a business plan to secure finance – regardless of the kind of business you have in mind, this kind of plan ideally needs to follow a specific format and, unless you are an experienced business person, you may be well advised to take expert advice.

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Business Plans – A Tool For Better Management

Things are going pretty well, you say? Sales are up. The employees are happy. There is even a little cash left over for that special project you are anxious to start. Why start messing with a good thing? “If it ain’t broke, don’t fix it.” Right? Wrong! Many managers believe that business plans are used for only one purpose: To raise capital. While it is true that business plans are written more for this purpose than any other, it is by no means the only purpose. An often overlooked and significant benefit of a business plan is not necessarily the Plan documentation, but rather, the process itself and its impact on the management team. A business plan requires the managers to take an objective, critical look at their business. The process can change how a business is perceived, open eyes to new opportunities or focus attention on those operations that are not

The planning process involves setting organizational goals that are then translated into departmental goals that are then translated into goals for the smallest logical part of the business, (e.g. each individual sales representative in the case of a sales department). The textbook definition of the smallest logical part of a business is a “Strategic Business Unit.” If you’re not concerned about impressing people, call it a Profit Center.

Profit centers are organized in a manner that makes sense to the particular business. Some businesses may organize profit centers by classes of customers. Other businesses may think in terms of individual product or jobs. Still others think in terms of lines of business. Do you have a different pricing structure for different classes of customers or for certain jobs? Do you require higher profit margins on certain products? Do certain products, customers or jobs just naturally “fit” together? Answer these questions and you will begin to think of your business, if you do not already, as a cluster of smaller enterprises. This cluster of smaller enterprises can be thought of as an investment portfolio with each profit center representing an individual stock. Which should be invested in? Which should be liquidated? An investor has an overall goal for his portfolio. To achieve that goal he may take on higher risk investment for potentially higher return or he may accept a lower yield for proportionally lower risk.

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5 Questions for Writing Your Business Plan

When you start a business, it’s an exciting time. You are passionate about your big idea. You can see it clearly in your head. You know what you want to do. You just need to get on with it. Sound familiar?

Yet one of the main reasons so many new businesses fail isn’t necessarily because the idea was flawed. One of the biggest reasons they fail is actually because they didn’t have a clear plan. The plan is what moves you from ideas to action.Those that have a plan have had the discipline and foresight to really think through their ideas and how they are going to work.

So 5 important questions to ask yourself as you write your plan?

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