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Business Plan Basics

home based business ideasYou are about to embark on a very serious journey. You plan to circumnavigate the globe.

"Come on, we have a boat let's leave!"

Obviously you wouldn't consider leaving on an around-the-world sailing trip without first understanding a few basics about sailing, navigation and caring for the vessel. Not to mention, what do you plan to eat and drink along the way? Obviously we're joking. But building a business is no joking matter.

So why would you make one of the most important decisions of your life without making a plan? A badly run business could cost you your savings, your marriage, your house - maybe result in years of paying off debts! Don't take lightly this part of building a home based business.

The Basics Every Business Plan Should Include

Cover Page
The cover page should simply state the title of the plan, the date it was producedand who drafted it.

Table of Contents
Make it easy for the reader (such as banks or potential partners) to find the important sections of the plan.

Executive Summaryv
This is a summary description of what your business is all about. It has been called the heart of the business plan. Potential financiers or partners will read this before they look any further at your business plan, so get this right the first time. It is also a great idea to have your friends, relatives and especially business contacts read this section and see if they understand your business model. If not - write it again until they do.

The Company
How did your business start? If it has a history describe where it came from, where it is today and, most importantly, where it is going. What has been the evolution of your business and the market it is involved in? What place does your business occupy in the marketplace? How did it get there? What decisions did you take to get where you are? Give your business a personality so the reader will know what it is are all about. For example: if we were to mention different major company names - what personality would you associate with them? Let's say: Walmart (always the lowest price); McDonalds: fast food and a fun place for kids; PetSmart: Everything for pets. What is your company's personality, image? What is it famous for (or what do you want it to be famous for)?

The Market
Who are your customers today and what customers will you pursue tomorrow? How big is the market and what share do you think you can obtain? How is the competition acquiring customers? Is the market for your product growing, and if so how fast? How is your product different than the competition and what makes you think the market will want it?

The Product or Service
Describe your product or service and what makes it so different or special. How is it priced? Do you offer a warranty? What does your warranty include and for how long does it last?

Sales & Marketing
This section defines the methods you intend to use to build a market for your product - the real nuts and bolts of your business. Where will you advertise? How will you promote the product/service? Do you have distributors, sell direct via the Internet or do you have your own sales team? How will you manage customer service? Will you require a public relations person? Explain exactly how you plan to become well known in the market.

Financial Information
If you have been in business for a while, detail your past results and what you expect yuour growth to be for the future. You should include projected cash flow statements, profit-loss statements and balance sheets. This section is one of the most important to get right. Combining all your expected costs for marketing, personnel, cost of sales and other expenses you will truly get an idea of what will be required to get your business profitable.

Business PlanRemember, business plans are supposed to be flexible. If you begin your business and discover things were not exactly as you expected, go ahead and redo the numbers based on the things you've learned. This will help you steer your boat even in troubled waters. Knowing your cash flow, accounts payable and accounts receivable will help you immensly in operating your business. Learn to live by the numbers so you won't have any surprises.

When you get going, don't be afraid to ask people to pay on time. Cash flow is the life-blood of your business. If people don't pay you, how will YOU pay YOUR bills? Be polite but tough when you need to be.

Don't take our word for all this. We have located a few web sites that can help you in writing your business plan.

Inc Magazine - Business Plan Building
Entrepreneur Magazine "How to Create a Business Plan"
On-line business planner from Purdue University

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