Home Business Tips: Write A Financial Plan

Writing plans for homebased businesses will get you on the right path and help get you loans. A guide to proposal description, planning finances and profit forecast.

A business plan is an important tool that will help you to focus your home based business, learn more about the competition and be realistic about the profits and expenses. Because many lenders are wary about home based businesses, a properly written plan will also help you to get a needed loan.

You will want to start with a cover page. This will have your business name, your name, address, phone number, email, and web page address. This page introduces you, so it should be exceptionally neat.

The next page is a table of contents, which will tell the page number of each of the important parts of your plan. You can include a small synopsis if you wish.

Start off with a description of the industry you are going to become a part of. Identify some of the competition, including as many as you can find that work from home. You will want to describe the basic procedures for this business and the average income of home workers. Explain how others have started and the areas they market to. This is to show a lender you know what you are getting into and to learn some things about the field yourself.

Next you will want to describe your business. What will be the exact responsibilities? How is it different from the businesses already in this field? Why is yours better? Include your pricing, your market area and any other relevant information. This area will allow you to focus your idea and think about ways you can make it better than the competition.

The next part of your business plan will discuss your goals. Write down all the goals you have for this business in one year and in five years. Make sure these are compatible with your lifestyle and family goals. Your goals should include production, profit, and amount of customers. Be realistic in the expected growth. Think about how you will handle your business if it grows faster than this. What about slower?



Now go into the details of your marketing plan. Will you use salesmen, flyers, direct mailers, TV ads, radio ads, newspaper ads, magazine ads, word of mouth, direct calling or the internet? Which ones will you rely on most? How much will you need to spend for each different type of advertising? Then you will need to discuss the results you have assumed. Do you expect five percent of the people to respond to your direct mailings, and two percent to buy your product? To come up with this number, you can try it on a test market, and interview others in similar businesses. Talk to your potential customers they may tell you of a specific niche you can fill, that will increase your profits. Learning the realistic numbers for expected respondents can be a little depressing, but it's better to have an estimate now than count on responses that aren't going to happen. Be creative in your advertising and you can lower your expenses a little. Maybe you will need to lower your rates in the beginning, maybe even doing some work for free just to get your name out there. Expect to put at least the first six months profits back into your business and at least half towards advertising.

The next section of your business plan is about action. This is where you describe specific things that you need to do within the next year to reach your goal. How many customers or projects do you need? According to your marketing plan what will you have to do to get that amount? Write down all the steps. How much of your time will be spent on each. If things go wrong or take longer then expected how will you overcome these minor set backs? With a step by step plan you will know what to do next, this will allow you to see the whole picture and keep your perspective through hard times.

Now you'll need to discuss your expenses for the next year and for the next five years. Include everything your can think of, like, business license fees, logo and ad design fees, accountant, taxes, lawyers, employee wages, cost of materials, equipment, repairs, gas and driving expenses, copy rights, advertising and any other fees that go along with your specific business. Estimate a little high so that you will always have a little leeway. You can include a statement for the lender about how much you expect to save by operating this business at home rather then a rented office?

The next section will discuss how much money you'll need to get started and how much to keep it going. Then tell the expected income followed by the gross profits. The final statement will be your net profits which if you are applying for a loan will be one of the most important parts. Now state the amount you have to invest in the business, what other sources your money is coming from and how much you need from a lending institution. Include in this section what you will do if you suddenly need a little more money. Will your business fail? (By the way, this is not an option). What is your back up plan. If you have one the lending institution will know you are prepared for nearly every situation. They should feel confident that their money is safe with you.

The last page should have your references, which can include previous employees, clients, lenders, your lawyer and your accountant. It can include positive statements these people have made showing what a wonderful business person you are.

Now you are armed with the tools you need to get a loan to start your business and the plan that will make it succeed.

© High Speed Ventures 2011