Do I Really Need A Business Plan for My Home Based Small Business? It’s just me!

I’ve been doing some “pro-bono” consulting work for a friend of mine who is just now trying to get her new home based small business up and running. We were talking about the fact that she had a great idea – I’m not going to tell you what it was, because she’s still working on it and it has some pretty good potential.

She wasn’t keen on making up a business plan because she wasn’t looking for any start-up capital to speak of and she believed she had the plan in her head. She thought her work from home company really didn't need a plan. But when I started asking some pretty basic questions, her plans fell far short.

She hadn’t thought through her entire plan and there were some huge holes. Like did she know how many clients she would need to make her top home business productive enough to really make a go of it. Would she be able to get that many? She didn’t have a clue what to aim for in terms of revenue each month and she hadn’t taken the time to really figure out her expenses.

When we talked about marketing, she was only planning on using one channel – networking. But when she realized the people she was most likely to really do business with don’t live in our resort community, networking wasn’t an option. She realized she was going to have to learn alternative ways of networking like Facebook, or Ski Resort Forums, or Linked In – perhaps even Twitter.

She had developed a amateurish brochure -- which is a mistake a lot of people looking to earn extra money from home make,-- and wasn’t sure how to get it distributed, or who she was going to distribute it to. Was it the lodging purveyors, or the lodging guests?

The point is, she hadn’t really thought through much of the idea. She only knows she wants to live in a small resort town, that has lots of visitors, and she wants to be the “go to” person for a large part of those visitors. It sounds very romantic, but even her husband was skeptical.

He wasn’t sure the plan could work, would make any money or would be worth the time, energy and money it was going to cost to uproot themselves from Missouri and move to a small mountain community. Yes, the summers in Missouri are brutal, but the winters in our resort community are seemingly endless.

With just a few simple categories in outline format, we were able to turn her “hare-brained” scheme into what looks like a pretty good business. We figured costs – best and worst case scenarios. We looked at the competition – not much really! We looked at the barriers to entry. We noted her personal strengths and even uncovered a fee weakness. Of the weaknesses, we decided which needed to be corrected for her to be successful and decided she either needed to get more savvy in bookkeeping and numbers, or she needed to hire it out – she decided to outsource – a good decision.

We looked at the external opportunities and threats and decided how to take advantage of the opportunities and either use the threats as opportunities, or to mitigate them.

We researched how much she could charge for her services, then based on her costs we figured best case and worst case profit picture. We then knew how many clients she would need each month to create an income that would support her life-style.

Next, we worked on a marketing strategy and how she could fit facebook and blogging in to her routine, but probably not linked-in, Twitter, or YouTube just yet. And we found a couple of forums that she could join that looked like attracted the kinds of people she needed to network with.

It was all done on less than five pages in a couple of afternoons of solid focus. She was able to take the plan to her husband and show him in black and white, what she wanted to accomplish, and how she was going to accomplish it, and what her contingency plans were all along the way.

Guess what, he’s on board, the house in Missouri is being ready for renting (they want to have a Plan B to fall back on and they can’t afford to buy in this pricey community just yet.) We’re designing professional brochures, I’m helping her with her website, and she is off to the races!

The moral of the story is you need a business plan first for yourself. So you know how you’re going to be successful. Then you need it for those around you whose support you need. And finally, you need it to keep focus as you build your business.

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