You're just starting a small home based business. Do you really need a business plan?

The answer is yes, definitely! But before we get into why you should write a business plan, let's explore a few of the reasons that many home-based business owners don't.

• I’m too busy running the business
• My business is still small – I'll do a business plan later
• Writing a business plan seems way too complicated

Is your "to do" list running your business?

A situation that I see time and time again is people who are working really hard in their business, but not really getting anywhere. They often have a wonderful business concept that they feel inspired by. They also have a daily “to do” list that would keep anyone busy for months. Everything seems equally urgent and so they run around madly trying to do it all. Soon a year or more passes and the business is still not launched.

What's going on here?

Michael Gerber author of classic business book, The e-Myth Revisited, describes this trap as working in your business rather than on your business. This means that if you don't plan your actions according to a bigger picture of what you want for your business, you'll fail to get the results you want.

A lack of planning is one of the top three reasons businesses fail, according to the Small Business Development Center. So the old saying, “Failing to plan is planning to fail” turns out to be true.

If you don't know where you're going...

Don't make the classic mistake of assuming because you are just starting out, a business plan isn't necessary yet. Every business needs a business plan, not just big companies.

Every business starts at the beginning and every business starts small. But what separates the successful business from the struggling business is a vision.The founders of a visionary company have a broad and deep understanding of what they are building. Walt Disney was not creating a cartoon character, he was fulfilling a vision.

Some of the biggest benefits of a business plan are its ability to create focus, to encourage big picture thinking and to help you make decisions for the long-term and the short-term in a way that consistently moves you forward.

There's more than one way to write a business plan

The classic outline for a business plan is not designed for small business owners who are financing their own business. It’s too long and requires too much extraneous information. If you're not trying to get a bank loan, you do not need to write one of those long business plans.

A one page business plan® is a simple solution for including just the information you need and no more. This cuts the writing time dramatically.

More importantly, forcing yourself to discover and summarize the important information onto one page provides a laser focus on what is most important to the management and growth of your business. Parts 2 and 3 of this series will describe the components of a one page business plan®.

You can read Part 2 here and Part 3 here.

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This post was written by guest blogger Amy Grossman, MBA. Amy is a One Page Business Plan® Certified Consultant who makes it easy for solo-preneurs to write a business plan. For more information, get Amy's free 7-part e-course "Top 7 Business Plan Myths Exposed".

Starting a home-based business is an exciting venture. But before you begin, complete this self-assessment so you're prepared for what you're getting into.

The rewards of home-based business

What do you want out of your home-based business? Having a home-based business has many rewards: the freedom of being your own boss, the personal satisfaction of accomplishment, and the chance to earn an income that is only limited by your skill and determination.

The downside of home-based business

There's no arguing that having a home-based business is a wonderful way to make a living. I've done it for the past 20 years and wouldn't have it any other way.

However, having a home-based business takes a level of effort and energy that many people underestimate. It can place incredible demands on your time, your family relationships, and your money.

And the unfortunate fact is that the majority (estimated as high as 70 per cent) of all new businesses fail within three years. It's rare for a new business to provide any significant financial return to the owner in the first two or three years. Yes, you read that right. Even if your home-based business is successful, it may be three years or more before you are making the kind of income that you would like.

Do you have the personal qualities required?

Are you independent, ambitious, confident, hard working, a risk-taker and a problem solver? Do you enjoy working alone? Successful small business owners often have most of these traits.

Do you have the knowledge required?

Are you knowledgeable about the industry or type of business that you are considering? Are you really excited about your idea? Do you have business training in sales, marketing and production? Do you have the ability to put together a business plan?

Do you know your weak areas?

Are you willing to take training courses in your weak areas? Will you hire experts to do the things that you can't do? Do you have the money to pay for this assistance? Do you want to set up a partnership with someone who has the skills that you lack?

Do you have the family support required?

Do you have the full support of your family? When you work at home you are around family members a lot more hours of the day. You also will likely be working longer hours, at least to start. And the money situation will be iffy. What impact will this have on your relationships? Your prospects for success will improve when those close to you share your commitment.

Do you have enough money?

Starting a home-based business is often more costly than you think. And you won't have a regular pay cheque for quite a while. Are you prepared to spend the money required during the start-up phase? Be thorough and realistic about how much you need right from the start so your business isn't jeopardized after you've invested months of hard work.

And here's an excellent entrepreneurial self-assessment quiz that I think you might find interesting.

Money is usually the biggest obstacle that people face when wanting to start a home based business. To determine if you can afford to start a home based business now, follow these three steps.

Step 1: What do you own already?

Make a list of what you own (these are called your "assets"). Include bank accounts, real estate equity (this is the difference between what you owe on a piece of real estate and its current market value), retirement accounts, and other assets.

Step 2: Figure out how to use your existing assets

Once you have your list of assets, figure out how you might use them to help you finance your business. Do you want to use your savings? Sell anything? Use assets as collateral for a loan?

Step 3: Figure out startup costs

"Start-up costs" refers to what its going to cost you to start your business and run it for the first six months. Why six months? Because that's the average amount a time it takes a home based business to get organized and start bringing in money. Keep in mind that your start-up costs need to include at least a minimal salary for you, because you do need to continue to pay the mortgage for that home based business!

Sometimes the decision about where to go next in your home based business gets so confusing that you get frozen and don't take any action at all. At times like this, it's important to take a step back and make an action plan.

Dr. Ellen Weber from BrainBasedBusiness points out that the mind uses questions to move forward, so if you ask the right questions you'll naturally be propelled into action. Here are Ellen's simple but powerful five questions to do just that:

1. What's the target for the next stage of my home based business?

Write your target down along with the reasons why it's a good idea. Also list the barriers that might prevent you from achieving your target.

2. How can I pay for this target?

Be imaginative in considering all types of financing, from loans to reducing expenses. Seek advice from financial professionals.

3. Who can I talk to about this issue?

It’s a good idea to talk to one person, who is successful in the area of your need. And run from pessimists! There will always be naysayers who don't understand the entrepreneurial spirit.

4. Where do I start?

List ten steps that need to be done. Under each step list the component parts, until you have a complete "to do" list. And then check off each task as you complete it.

5. What's my schedule?

Set dates that you can track to see your progress on a weekly basis.

A client of mine (let's call him Pete) created an Internet-based business to offer emotional support to people. You might call it a form of counselling or coaching. He used his passion for helping others and his technical know-how to create a prototype for his business.

The problem was that although he had put in a year and had the beginnings of a wonderful business, he had not been able to finish the work and get the website launched.

There were many symptoms of this problem, including:

• spending time on details that did not leverage his time well
• feeling frustrated, discouraged
• needed to hire help but wasn't bringing in enough revenue to do it
• feeling "stuck" and couldn't think himself out of his constraints
• no revenue coming in for all his work
• not able to actualize his vision for the business

What we did first

When Pete came to work with me to write a one page business plan®, the first step we took was to work at recreating his business vision so that it was idealistic, thrilling, reflects his values and passions AND is achievable.

This narrowing of focus made the vision more real and gave him a place to begin to heal the world. And included in the plan was that in year 4, after he successfully serves his first target market, he can branch out to other target markets.

The next step was easy

The next step of uncovering his unique message and mission was easy now. He held on to his original passion to provide emotional support, but now he's attracting a more specific group of potential clients, and his message is more direct and targeted to them.

Pete's initial vision was to provide emotional support to everyone who is in pain. The revised vision we came to together was to provide information and resources to divorced dads and their families.

The best news is that everything you need to write your one page business plan® is already in your head. After all, you had lots of ideas when you decided to start your business. So now it's time to put those ideas in writing.

This article will give you an outline for a one page business plan®, and an explanation of each section of the 5-step business plan.

The five steps to writing a one page business plan®:

1. Vision
2. Mission
3. Objectives
4. Strategies
5. Actions

Step #1 – Vision

Defining your vision answers the questions of WHO you will serve and WHAT you will offer. WHO - get specific about the people who need, want and will pay for your services and products. You're finding a need and filling it. WHAT - be clear about what those services and products are. Envision your success and even take the leap to “guess-timate” your revenue for the coming year, next year, and in 3 years. Create a bold vision for your business that energizes you.

Step #2 – Mission

Defining your mission is about how you differentiate yourself. What makes you, your services or products unique? With the recent explosion of Internet and other home-based businesses this should be your top concern - to set yourself apart from the pack.

Your mission is where your great business ideas come together with your unique characteristics, skills, experience and passion. There is one thing in your business that no one else can duplicate – YOU!

Step #3 – Objectives

Road races have a set distance so we know when we’ve crossed the finish line. It’s hard to know where we’re headed if we don’t measure our progress. Yet, most home-based business owners do not measure key performance indicators to stay on track or make corrections. Pick several important measurements and track them consistently. Measure what matters and watch your performance improve immensely.

Step #4 – Strategies

Following a daily “To Do” list is not enough to build a sustainable coaching practice. Without long-term strategies, it’s easy to fall into the trap of reacting to situations rather than creating what we want. Being strategic means we are working on our business using systems, principles, policies and values that authentically reflect our business vision and mission.

Step #5 – Actions

Decide on actions that support your business vision, mission, objectives and strategies. It’s hard enough to juggle all the activities of running a business. An action plan recognizes all the functions, sorts out what to do and what to delegate. Take time to write down the most important work to be done, who will do it and by when.

Summary

I hoped you've enjoyed this three part series on the one page business plan®. In summary, writing a one page business plan® will have the following benefits:

• You will have a focused vision of what your business will accomplish, bringing passion, satisfaction and fulfillment
• You have a compelling, clear and consistent way to describe your business with others, bringing confidence and attraction
• You will have a realistic measure of your current results as well as a way of tracking your improvement, bringing clarity, honesty and a sense of accomplishment
• You’ll be strategic and relaxed instead of reactive and stressed out, bringing structure, freedom and consistency
• You’ll have a unified plan of action that saves you time and effort, bringing results, positive habits and peace of mind

Isn't it amazing just how much difference one page can make?

This is the third in a three part series about creating a one page business plan®. You can read Part 1 here and Part 2 here.

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This post was written by guest blogger Amy Grossman, MBA. Amy is a One Page Business Plan® Certified Consultant who makes it easy for solo-preneurs to write a business plan. For more information, get Amy's free 7-part e-course "Top 7 Business Plan Myths Exposed".

I often tell clients that writing an action plan for their home-based business is like dental flossing – everybody knows you should do it, but nobody wants to do it. But the good news is that writing an action plan doesn't have to be difficult, confusing or time-consuming.

What is an Action Plan?

An action plan (also referred to as an "operational plan") is a written summary of what you are going to accomplish in your business for a specified period of time, usually six months to a year. To take the mystery out of it, let’s consider other plans you may have made over the years:

1) holiday plan (where you will go, how much you will spend, where you will get the money, what you want to do there)

2) educational plan (where you’ll enroll, what courses to take, how much studying you’ll need to do, when you’ll find the time, how much it will cost, what the benefits will be)

3) new baby plan (why you want a baby, timing of the pregnancy, who’ll stay home with the new baby, how you’ll do it financially, implications for relationship, when the caregiving parent will return to work)

You get the idea. We’ve all made plans involving:

1) what your goal is
2) why you want to do it
3) how you’ll achieve it
4) when tasks will be completed

Making an action plan is not much different than making any other kind of plan. I think one of the reasons people get intimidated by the idea of writing an action plan is because of the jargon associated with business planning: vision, mission, objectives, strategies, plans. Quite frankly, you don’t have to understand or differentiate among those terms to be able to write a simple and effective action plan. All you need to do is address the four points of what, why, how and when.

So let’s get started. Start jotting down your ideas. You can follow the sample below:

Below is a link to a recording of my teleclass on making the transition to self-employment. The participants are all home-based business people in the early stages of establishing a coaching or consulting business.

During the discussion we heard from several people about challenges in choosing their business niche. That's often a sticking point for new business people making the transition to self-employment.

We also discussed ideas for one participant in particular on how to make the transition from full-time employment to his executive coaching business, keeping in mind that he is the sole income earner for a family of four. Enjoy the recording.

Click here to listen to the teleclass recording...