I can’t tell you how many times people ask me what a business plan and a mission statement is and how to create one. This brief article should answer most of your questions on the topic.
A business plan helps you to use your resources wisely. The mission statement provides the overall vision for the company. The goals within are ultimate results you hope to achieve. The actions or tasks should support the goals somehow. For example, if your goal is to primarily market online through a website, you would question spending money on print advertising even if it carries your company brand.
- Formalizes strategies you can follow on a daily basis.
- Identifies potential pitfalls which can derail your business.
- Identifies details which support your “good idea”.
- Keeps your business grounded so you don’t begin to think in unrealistic terms.
- Gives you something to compare actual results against.
- Identifies potential sources of help including financial and personnel.
- Gives you the groundwork for making plan revisions as the market changes or your business matures.
- Identifies ways you can differentiate your business.
- Provides a steady plan for growth.
A business plan is a master plan that contains the goals and strategies which you believe will lead your home business to success. Success for a home business is highly personal and can be defined in many ways as every home business entrepreneur has a distinct set of reasons for starting up. How you manage your home business is determined by how closely you are able to meet the goals you’ve defined.
When you write your business plan include your reason for starting a home business. Such as:
- To earn additional or supplemental income.
- To replace current income.
- To create an income source after a layoff.
- To control your own time and schedule.
- To have flexible hours.
Your business plan is your blueprint for creating the kind of business you have in mind. For example, if you are establishing a home based business part-time in order to generate supplemental income, your business plan will outline the plans for reaching that level of profit within the hours you have to spend on the business.
A business plan can include many different long and short term goals. These goals and their supporting strategies are what you will use to keep your focus on the results.
A business plan includes goals related to the following:
- Building a branded image.
- Reaching a particular market niche.
- Building particular sales levels.
- Identifying customer service program.
- Identifying demographics of most likely customers.
- Establishing marketing budget and strategies.
- Developing long term plans for growth.
As you can tell, the business plan is comprehensive. Developing a business plan forces you to think in terms of your vision and what actions you can take to support that vision. A good business plan addresses marketing, the competition, operations, finance and long term growth. It can also include a contingency plan for when things do not go as planned. For example, what will you do if competition prevents planned sales growth? Do you have an alternative marketing or product development strategy?
Too many small businesses believe that business plans are only for big companies. That is not true. In order to develop a successful home based business, you need a plan as much as the largest corporation. It is lack of planning and vision that often causes the fail of the home based business.
Stay Focused on Your Business Plan’s Goals
A business plan is not intended to be written and then placed in a drawer never to see the light of day again. The business plan is a working plan. There are goals and action plans that have been outlined if you did your plan correctly. The goals are your marching orders, so to speak, as you build your business.
When you get your business up and running, staying focused on the goals will stop you from veering off in the wrong direction. For example, if your goal is to promote your product to the consumer who is older than 50 years old, you will not target a niche comprised of mostly young adults. This goal then leads to specific actions in your marketing plan.
You want to review each decision you make in marketing and financial planning against the business plan. You also want to step back periodically and look at the business steps you are taking and see how they measure up against your goals. For example, if your business plan says you are going to focus on the fitness industry then you would question whether you should add a product to your product line that is not directly tied to fitness.
Using the Business Plan to Make Decisions
When you write your business plan, you pay attention to both general goals and specific tasks. This forces you to think through your business from beginning to end. This attention to detail can help you make large and small decisions.
Some Questions to Answer Are:
- What kind of home based business do you want to develop: new start-up, existing business, franchise or combination of one or more?
- Where will you seek initial funding and money for expansion if you meet your financial goals?
- What kind of marketing activities will you use?
- How will you define your customers?
- How much time will you put into the business?
- What sales techniques will work best for you?
- Will you eventually hire employees?
When you must make a decision which impacts your product, financing or marketing, you can turn to your plan and review the strategies and tasks which you defined. Does the plan say you will market only to domestic markets? If so, you will not spend money on global marketing strategies. Does your plan say you will contact 3 or more new customers per day? If so, you need to compare your actual performance against your plan and make necessary adjustments.
Using your business plan can make you a better manager in your home business by keeping you based in reality and on the direct path for reaching your ultimate goals.