Which Elements Do You Need?
A business plan can be a lot of work, but you might be able to scale it down, too. The depth of detail that your plan requires depends on the complexity of your business, the level of risk involved, the nature of the competition, and the margin or room for error. If yours is a part-time service business without inventory in a strong market with few competitors, you can get away with the basics: just pick and choose the elements of the plan that apply to you.
If you're investing your life savings in a highly competitive business with razor-thin margins, however, you need to plan every step carefully and constantly review your progress. This will enable you to make the critical decisions that will determine your success and failure, so you need a strong, detailed business plan. Similarly, you'll need a detailed plan if you're planning to quit your job to launch the business.
If creating a business plan seems overwhelming, break it down into basic elements and tackle it one piece at a time. Start with expense projections, taking it month by month, or work on your business description first — whatever you're most comfortable with. For more help, check out the forms available in business planning books, software, and Web sites.
Of course, you'll also need a business plan if you need outside financing. Banks and other small business loan organizations all require a business plan when you apply for loans or lines of credit. But even if you don't need funding, the plan will help you forecast revenues and expenses, track your progress, and make decisions. It's the process of creating the plan and referring to it later that's most valuable to home-based businesses.
You may also need a full business plan if you're submitting tenders for large contracts (for government work, for example), you want to form a cooperative or strategic relationship with another business, or you've been approached to sell or merge the business.
