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Do you have a business plan
for your home business? ¨Don´t
need one,¨ I can hear some of you saying. ¨I don´t want or need
a bank loan or venture capital, so why bother? Besides, I have other, more urgent
things to do.¨ Think
again. Every business,
no matter how small, needs a business plan. When
I started my first business, the very first step I took was writing a twenty page
business plan from scratch. The idea was to sketch out my thoughts in a coherent
way so I could see whether they made sense, and to define what resources I thought
I would need to put into the business. That
first plan got read by no one but me, my wife, some friends whose opinions I respected,
and my first employees. The basic ideas laid out in it helped us grow the business
to more than $1 million monthly in sales in less than 18 months. Along
the way, a revised version of that plan was shown to a banker, and helped secure
a line of credit. Still
later, after we had enjoyed explosive sales growth, a much revised version made
the rounds of venture capital firms, and helped us raise more than $10 million
in venture capital. But
the first plan was for me, family, friendly advisors and employees. It made everything
else possible. Here
are five reasons your very small home business should have a plan: It
focuses you on the tasks required for success. It is one thing to have
an idea. It is quite a different thing to have a plan. Writing out a plan forces
you to focus on what you need to do to convert your idea into reality, and so
multiplies the likelihood that you will focus on and achieve those tasks. It
helps you to assess the real potential of the business. A lot of potential
businesses seem like great ideas until you think about them in detail. Once you
think about them, though, you may realize that the market is too small, the competition
too fierce, or the investment required too great. You want to figure that out
on the front end, so you can move quickly to another, better business with all
your energy and resources still available. You do not want to figure that out
after spending a year plugging away at a business that a plan would have revealed
was not likely to succeed. It
provides a structure for making the hard choices about where to spend time and
money. You will not be able to pursue every marketing idea or business
opportunity that comes along. You also cannot afford to run out of money or time
halfway through getting the business up and running. Creating a plan helps you
build a coherent list of priorities, which in turn will help you make the right
choices about where to invest your time and money. It
gives you a structured format for sharing your thoughts with others. People
respond more analytically to a written plan. They can spot holes in your thinking
or important unspoken assumptions more easily when dealing with a structured,
written presentation. If and when you get to the stage of having employees or
partners, the written plan also helps them understand your vision for the business
- and having them understand and pursue the same vision is absolutely, positively
critical to your business. Last but not least, if and when you get to the stage
that you need outside support from banks, government agencies, investors, vendors
or landlords, your finely honed written plan will go a long way to persuading
them of the worth of your enterprise. It
shows to family and others that you are serious about this home business, and
helps you in enlisting their support and cooperation. Let´s face
it: sometimes the last people to take your business seriously are those closest
to you. Having a written plan tells people that you take this business seriously
and have made a commitment. Once family and friends realize that you take the
business seriously, they are more likely to take it seriously as well, and more
likely to cooperate and help.
So what is involved in writing a business
plan? To be of value, it has to be based on your thoughts and analysis, and not
cut and pasted from a template or business plan software. What matters is not
that it look good or have the standard boilerplate phrases, but that it provides
a way for you and others to think through the issues surrounding your business. Next
week, we will go into more detail about what needs to be included in your business
plan. For now, the takeaway point is this: start planning. It can be the foundation
of your success. |