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If you are thinking of setting up a home business, writing a business plan is crucial. Many people who are operating a small business on a shoestring from their spare room may think this is unnecessary, but a well structured business plan will help you in a number of ways.
Most newly self-employed people write a business plan because they have to come up with a set of facts and figures to present to the bank manager when they ask for a loan. This gives an estimate of the amount of money the business is expected to make from sales of products and services and a total of outgoings likely to be incurred.
Not everyone starts out with a bank loan and those who don’t often skip the business plan. However, the most important person reading your plan is not your bank manager, but yourself. A good plan will lay out in detail everything that you intend to do for the next year: it will include information on the products and services you are going to sell, the marketing you will do, it will list your business strengths and the areas in which you will need help. The financial details will enable you to see if your sales are going according to plan or if a new approach is needed. You can pretend that everything is going well, but if you have the facts before you in writing, it is much easier to make an objective evaluation of your progress, and, more importantly, to take action to avoid possible losses.
But a business plan isn’t just about you – it’s about your customers and your competition as well.
You need to know who and where your customers are. In order to decide how you will make them aware of your products and persuade them to buy from you, you will have to ask the following questions. What sort of lifestyle do they lead? How can you tailor your products to meet their needs? How you are going to reach them – via the internet, mail, newspaper ads?
Careful planning can help you identify potential pitfalls – and avoid them.
© Waller Jamison 2006
Waller Jamison is a careers advisor and small business owner. For more information on getting started in your own home business go to Home Business and click here for more about Business Planning
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