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Many new business owners start a home business and don’t take the time to write out a business plan. By failing to write a business plan, you greatly decrease your chances of success. The following are some reasons why every business needs to put a business plan into writing.

You have probably heard the old saying, “If you fail to plan, you plan to fail.” That is very true when it comes to your business. The more planning you do in the beginning, the greater success you will see in the future.

If you decide to take your home business to the next level, a business plan can help you secure financing. A financial institution will want to see, in writing, the reasons that they should loan you money. Simply walking in and telling them why you know you’ll be a success isn’t good enough. However, if you can hand your lender a document that states your business idea, your business goals, a list of steps you plan to take in order to reach your goals, as well as your estimated earnings, you will be seen as a professional and the lender will take you more seriously.

Your business plan will also help you determine your action plan. Your action plan consists of the steps you plan on taking in order to achieve your goals. This is another task that people usually sidestep. Instead of “just kind of knowing” or “having the ideas in your head”, you should take the time to put them on paper. The reason this part of the business plan is so important is that it literally walks you from point A to point B. While your business plan, in general, serves as a map, your action plan is the “step-by-step directions.”

Having a business plan to present to your spouse can also help your spouse realize your business idea is more than just a passing amusement or hobby. This can really help you, especially if your spouse is skeptical. Your spouse can see that you are serious and will become more helpful and more encouraging. Having the support of your spouse can really motivate you and help you find success.

A business plan maps out your future. If you have decided you are ready to start a business, your first step should be to write out your plans for what you want to do with the business and where you see the business going in the future.

If you and your family were going to drive to your vacation destination, you wouldn’t just get in the car and start driving without knowing where you were going. Would you? You shouldn’t start a business without a map either. If you are planning to have a simple home business, built around the Internet, you may not think you need a business plan. You may think only high level businesses need them in order to secure corporate funding but that’s not true.

Every business needs a business plan.

When you sit down to write a business plan, you are literally mapping out the path you want to take in your business. Not only will your business plan help you define what you want to accomplish, it can help you streamline your business and create focus.

You may be under the impression that business plans are huge documents that can be difficult to write. On the contrary, you do not have to create a huge document at all. Your business plan can consist of a single page outlining your basic goals. The point is to put your thoughts and ideas down in writing.

When you take the time to think about your business, where you want your business to go, and estimate your costs as well as your profits, you are much more likely to succeed. Rather than working sporadically and blindly, you will be able to look at your business plan and know exactly what you need to be working on. This can serve as a great motivator and help you reach your business goals.

A common myth is that a business plan is rigid. That once you write it, you have to stick to it. As your business grows, you can change your business plan to suit your needs. You may find certain aspects of your business growing at a faster pace than others and decide to focus more on those areas. For instance, you may have started out in your business strictly as a custom scrapbook artist creating completed albums. However, you found yourself creating more and more themed mini albums and may decide to add that stream of income to your portfolio.

Having your business plan by your side can help you evaluate your decisions and decide what is going to add value to your business and what will take away from your business. Before you start a new project, take out your business plan and see if this new project will fit in with the plans you have already made. This can save you a lot of time, energy, and money.

Home based business owners should use software and resources to help develop their business plans.  There are a number of different tools that can be helpful in designing a home based business plan.

There is a very useful multimedia online tutorial from CIT Small Business Lending Corporation that goes through an explanation of what your business plan is about.  It may also be helpful to look at some sample business plans to fid out what they look like. You may be able to incorporate your ideas into them.

There is also software that you can use to help with your business plan.  Planware is a business planning software tool that can help you get a feel for what you want to have in a business plan.  There are some free trails that you can take advantage of.  If you like what you see you can purchase the software and help draw up your business plan.

Business Plan Pro is software that has great tips on starting up your business plan.  Plan Write is another helpful tool that will guide you through the entire business plan process.  You will be able to construct marketing plans as well.

BizPlanBuilder is a software that works with Microsoft Word and Excel.  You can make up business plans and create some sample business plans.  There are also features that you can use on the Internet that work to help you with finances.

Plan Magic is another business plan construction tool that is available.  It allows you to create a couple of different business plans and has excellent specialty versions that you can use for specific businesses.  This is especially helpful because you can get a feel for what it will be like to write a business plan for a particular business type.

Venture Planning System Pro can be downloaded online.  It is a service that you can get through Advantage Venture Systems.  You can use the ten day free trial and get a subscription later on if you want.

Business Planner Pro is a good tool to plan your business plan out on.  You ill need to have Microsoft Word 2003 and Excel 2003.  Analyzing risks and other possibilities can be done with this tool.  It is excellent for people that are not the familiar with business plans.

No matter what tool you use you have to have a good strong business plan in order.  If you are not able to use any of the tools you should get an opinion about your business plan from a financial planner or small business owner.  It is vital that your business plan takes everything that is necessary for a business plan to work into consideration.

What is a Business Plan?

You can pretty much define a business plan as a resume for your business idea in mind. Some may say it’s like your company’s calling card. When you need money to start your business, or when you need an office space, your business plan is what will do most of the talking to convince your investors / lenders or property managers to believe in your business and give you what you need.

Why is it important to have a Business Plan?

The time that you spend on writing a solid business plan will pay for itself in corporate strategic and tactical clarity as your business grows. A solid business plan: (not in particular order)

• Allows you to describe your vision / concept in writing, helping your potential investors to understand and believe in you; it serves as a basis for discussion with third parties such as shareholders, agencies, banks, investors…etc.
• Allows you to identify the structure of your business, giving you the chance to focus on the big picture. Your business plan is the “framework” which your business must operate within. A solid business plan provides a considered and logical framework within which a business can develop and grow with business strategies in the long run (not for just short-term growth).
• Determines the startup and managing costs.
• Clearly defines your target audience and provides detailed research on your target market.
• Identifies potential opportunities and obstacles that the business may encounter down the road.
• Identifies the strengths and weaknesses of your business and your competitors.

No businesses are the same, and no business plans are the same. Your business plan is like your business blueprint; it should be unique. While it is important to be able to illustrate your business concept well enough for others to understand what you hope to be doing, the business plan is essential for your own use. It is about the process of developing the business plan; the process helps you to focus on exactly what you are trying to achieve. It will give you a lot more clear vision of the entire structure of your business as you develop your business plan through detailed research and planning.

A business plan consists of the following parts:

Executive Summary

• Briefly describes the business concept
• Highlights the important financial points of the business such as sales, profits, cash flows, ROI
• Clearly states the capital needed to start the business and to expand
• States legal information about the business, the owners and key personnel.

Business Description

• Describes the business structure on how it operates / profits
• Describes the nature of industry in which the business plans to operate
• Identifies the business’ current position and future possibilities

Market Strategies

• Defines the target market
• Defines the strategies the business plans to use in order to tap into the target market
• Describes the pricing of products or services with respect to the demand of the target market

Competitive Analysis

• Describes the competitors in your target market and how you plan to obtain your share of the market
• Analyzes your competitors in the following categories: product, distribution, pricing, promotion, and advertising.

Design and Development Plan

• Describes the steps the business will take to carry out its plan with scheduling and cost analysis.
• Identifies the risks during the development period

Operations and Management Plan

• Describes the strategies the business will implement in order to operate and grow effectively

Financial Statements

• Defines all the financial aspects of a business.