We’re up to Part 3 in the HostGator Home Business Guide already. We’ve gone over the skills and habits you need to be your own boss, talked about how to set up your home for business, and now it’s time to write your business plan.
You might think you can skip this step, especially if your image of a business plan is a long, wordy document packed with financial graphs and data tables. For most new business owners, though, writing a business plan is less about recruiting investors and more about clarifying what your business will do, who your customers are, what it will cost to operate, and how much money you can reasonably expect to make.
To give you an idea of how to write your plan, we’ll start with the basics and then cover elements that will make your plan more useful and suggest other ways to use your plan.
A basic home business plan
The simplest and least intimidating business plan guide I’ve seen comes from entrepreneur Chris Guillebeau, author of The $100 Startup. It includes a 1-page fill-in-the-blanks business plan that covers the basics, including:
- What you’ll sell, who will buy it, and why they’ll buy it
- How you’ll price your products and get paid
- How you’ll reach customers and win referrals
- How you plan to measure success
There’s also a section for potential obstacles or questions you want to answer before you begin. To those items, I would add your expected basic costs to launch your business, including your web site, business license, and materials and supplies. The Small Business Administration offers a more detailed walkthrough of business plan elements to help you flesh out your plan.
Beyond the basics: Your USP
One of the questions on Guillebeau’s one-page plan is “How will your business idea help people?” This relates to the most important part of your planning stage, which is figuring out your Unique Selling Proposition, or USP. Your business idea doesn’t have to be brand-new, just different enough in a way that customers will value.
For example, if you’re planning to open a kebab stand in a town that doesn’t have one, the fact that you’re bringing delicious kebabs to town is your USP. On the other hand, if your market is crowded with kebab vendors, you’re going to need to stand out. Maybe you lease a prime location near a major office building, so your USP is that you’re the most convenient lunch option for the hundreds of workers nearby. Maybe you’re the only kebab stand that offers unlimited free drink refills. Whatever your USP is, it has to benefit your customers in some way.
Beyond the basics: Buyer personas
Before you know how to reach your customers and win referrals, you need to know who your ideal customers will be. In marketing terms, these ideal customers are called buyer personas. Building one or more buyer personas can help you focus your product offerings, your marketing, and even your physical location. For example, let’s say you plan to sell custom nail decals online. Your main customer is probably a woman under the age of 50 who enjoys beauty and fashion but doesn’t have the time or money for a weekly salon manicure. Another persona may be teen girls who enjoy changing their look often. Next you can find out which social media platforms these personas use, build connections with them there, and skip posting on platforms where your personas don’t hang out.
On the other hand, our kebab vendor is about to sign the lease on his office-complex site when he learns that most of the workers there are with a major vegan/vegetarian lifestyle brand – definitely outside his persona of meat-eating lunch customers. He’ll need to find a location closer to his persona or expand his products to include veggie kebabs for a new persona – hungry vegetarians on their lunch break.
More ways your business plan can help you succeed
A good business plan, even a very simple one, can help you long after the startup stage of your business. In fact, a plan can sometimes steer you away from starting a business that, once you really sit down and plan it, isn’t likely to make you any money. (For example, trying to compete on price with a national chain, or selling to a customer base that’s too small to scale up.)
You can also use your plan to guide business decisions like whether and when to expand your product offerings, target market, or service area. Will these decisions support and enhance your plan, or will they pull your focus away from your core business? If you’re a creative thinker who’s always coming up with new ideas, referring to your business plan can help you decide which ones to run with and which to set aside for now.
Later on, if you want to raise funds for expansion or equipment upgrades, a good business plan is crucial. Your plan will demonstrate your idea to potential lenders and investors and show you can effectively communicate the value of your business – a skill that transfers to reaching customers as well as bankers and investors.
Entrepreneur points out that suppliers may ask to see your business plan before they commit to serving your business, because they want to make sure they don’t go unpaid if your business goes under. Likewise, if you want to vend to other businesses, they may want to look over your plan to get a sense of how reliable and durable your operation is.
Keep your plan up to date
At a minimum, you should review and update your business plan every year. It’s also a good idea to look it over whenever there’s a big change, positive or negative, in how your business is performing, such as a change in your customer base, sales, demand, or costs. Finally, before you make major changes to your website and other marketing materials, check in with your business plan to make sure your updates support your plan and long-term business goals.
Now that you have a plan for your business plan, it’s time to start setting up the accounts and paperwork you’ll need to make your new business official. The next installment in the HostGator Home Business Guide covers the banking and legal chores you’ll need to tackle.