Most entrepreneurs agree that a business plan is critical for long term success. Strangely though, most people who set up a home based business fail to take this important step. Is it because they just never get around to it? Is it because they don’t know where to begin? Or is it because they don’t have a mentor or coach who will drive them and keep them accountable? Whatever the reason, failure to take this simple step can have disastrous consequences for the new business owner.
When you start writing your plan down, you will begin to feel more organized. It may even help you to come up with some new ideas that can shape the direction of your business. When I train people who are new to business, I notice some dramatic changes in how they intend marketing themselves, their pricing strategies, product selection and overall feelings about their business.
Many of these changes come from preparation of their Business Plan which unleashes a whole new range of imaginative ideas… ways that may never have been discovered otherwise. Taking time out to walk, think and meditate as well as keeping regular sleep routines will allow your mind to work at an optimum level, thus assisting the creative ideas to flow.
Once you’ve decided on a product or service to sell, do your research. Is there a real market for your product/service? Is it local, interstate or international? Check out your competition. Study their prices. Are they targeting the top, middle of lower end of the market? What is the quality of the goods that they are selling? Is it quality or quantity that they are aiming at? Pricing is important. It can also be one of the most difficult parts of the planning process. Never underprice your product or service. Discounting, when entering the market for the first time, is a sure way to fail. Your potential customers could see your product as cheap or inferior.
When preparing the Marketing and Financial sections of your Business Plan always aim to enter the market by pricing your product in the mid to higher price range. You can then offer short term discounts. Remember that when setting a price you can always come down. It’s never as easy to put your price up. Make sure, however, not to price yourself out of the market. Customers want quality, convenience, uniqueness and value for money first and foremost. Price is a secondary consideration when compared to these benefits. Spend some time figuring out how to deliver the best value to your customers. Learn what they want and then give it to them. It can be as simple as that.
Consider throwing in a bonus or special offer to make the deal even better. Give your customers a coupon or an incentive after they order from your home based business. You want them to feel compelled to purchase from you again and nothing is more attractive to potential buyers than a good deal. These incentives shouldn’t cost much. However, they have the potential to make you a lot of money. Perception in the eyes of the potential customer is what it is all about… value for money is what people want. Give them something which, in their eyes, is of value… not some useless trinket.
Include a projection of your operating expenses in your business plan. Show your invested capital and your break-even point. This is a way for you to determine if your business is likely to be profitable. You should have financial goals set at various periods of time as a check point. These points could be monthly, 6 monthly and yearly.
A business plan can often be the difference between success and failure in small business. There are many free Business Plan templates on Government and Banking websites. Download one now and get started. Ignore this important step at your peril!