Business Plan for Home

What is a Business Plan for Home and how will it help you make money working from home? Do you know the difference between good debt and bad debt?

Definition of a Business Plan

People often spend more time planning their vacations and holiday shopping than they spend planning their business and their lives, for that matter. So, before you start any business, your success will be greater if you actually plan it all out and then execute your plan. You continually will adjust and tweek your plan as you move forward. This can be likened to taking a vacation.

You plan to visit London, Paris, and Berlin on a trip to the United Kingdom and Europe, but while you are in Paris you meet up with some friends who are going to take a day trip and visit Belgium. What great fun it will be to be with your friends and see another country. So you and your family decide to go. When the trip is over you return to Paris and continue with visiting those sights on your agenda.

So it is with business. You have your planned list of products and services, but suddenly a product or service pops up that would be a perfect fit. You realize this widget would be very profitable because of the timing in the market, so you add it. This does not necessarily change the course of your business, but it might. As time goes on you evaluate the profitability and feasibility and adjust your course. You basic business plan is in place as you move forward.


(Sources include Howard University Small Business Development, Microsoft Office,and various other plans)

Writing your Business Plan for Home can be extensive if you are planning a large business. Below is a simple version of a Business Plan. The more complete the information and the more thought out the business plan is, the better chance one will have for success. Leave out those sections that do not pertain to your business. However, be sure to think ahead. If your home business goes quickly, what kind of help will you need?

(Used for financing, partnership, legal, or accounting purposes)

A. Cover Sheet
(Includes name of business, owner(s), address and phone number of the business)
Note: If this is a home business, you may want to establish a PO Box as the address.

B. Summarize the content of the Business Plan
(This is written after you have completed the business plan and should be one or two pages in length)

C. Specifies the "purpose" of the plan if it is for a lender, etc.


A. Description of the Business

1. Legal structure (sole proprietorship, partnership, corporation) of the business
2. List the principles, owners, and investors
3. Products and/or services
Most home businesses are intertwined with the Internet. Even though it is your business, will you be paid directly by the customer or will you be paid by a company? Often you will be paid in both ways.
4. Experience and/or skills that the principles (business owners) bring to the business
5. List things that need to be done to get the business going.
6 Why will the business succeed?

B. The Market

1. What are the trends? Do your homework here. Are you on the beginning, in the middle, or the end of a trend?
2. Who is the target market? (Age, gender, socio-economic level, etc.)
3. Market expansion strategy How will you market/advertise?
4. Positioning in existing market based on price or quality of service or some other factor

C. Competition and Feasibility Study
(Who else and how many others are doing what you plan to do?)

1. Name the top competitors in your field. How are their products/services priced and what portion of the market do they serve?
2. What are their strengths and weaknesses? (length of time in business, market share, key employees.
3. List your strengths and weaknesses (experience, business knowledge, education, financing, etc.)
4. Is there a niche or can one be created? (A niche is a specific area that is currently under served and more open to new competition.)

D. Location of Business
(Put in your home address as well as a PO Box as the address.)

E. Management (If any)

F. Personnel (If any)

When your business grows you may want to hire someone to do data entry or handle some of the technical stuff surrounding the marketing of your business. If possible, have them establish their own business so they become a vendor for you. Instead of paying them as an employee, you would send them a 1099 at the end of the year and they would file their own taxes as well as be responsible for themselves on the insurance side. Check with your accountant to make sure you have this set up in the best possible way for your business.

G. Summary
(Write a short paragraph or two restating all of the information above as part of your Business Plan for Home.)

For a Larger Business See the Complete Business Plan

The following section of your business plan is the most important. Many businesses fail not because the business does not have good or even great products and services, but because the person running the business gets so caught up in the "thing that they do" that they forget to run, or manage, the business like a business.

The KEY to any business is CASH FLOW! There must be cash to pay the person who owns and is often running the business, as well as the bills such as the telephone, etc. If this is the sole income of the business owner, he or she must also be able to live, pay their bills and do some other things that they want to do. If this income is not the sole, or even important income, it is okay to take a short time to get the business up and running. Note, I said a short time. Too many business owners get into a habit of putting all of their money back into the business and even putting other money of their own into the business for a long period of time. If you do not pay yourself, your brain begins to understand that this is a charity and the downhill spiral begins. Pay yourself even if you are putting money into your business so you feel, and this is very important, that you FEEL SUCCESSFUL!

So, the best way is to estimate how much money you will need to run your business until you are cash flow positive, borrow, or do what you need to do, to set that amount of money aside, and set up a CASH FLOW PROJECTION. This includes paying yourself, paying the loan, probably on a monthly basis like the phone bill, as part of your operating expenses. You are making money to put in your pocket and can concentrate on running your business without worrying about finances. This is called good debt. It is an investment in a business that makes income, better known as an asset. Bad debt is when you just buy stuff you cannot afford so you pay for it with a credit card or a loan.


A. Sources and Application of Funding

Top 10 Ways to Fund Your Business

1. Checking or Savings Account

2. Credit Cards
a.Raise Limits
b.Apply for New Ones

3. Line of Credit or Refinance Home

4. IRA or 401 K Loan

5. Signature Loan

6. Student Loan

7. Life Insurance Policy

8. Other Investments

9. Love Money (Friends and Family)

10. Yard Sale, or sell something

B. Capital Equipment and Furniture Lists

Make sure you have the basics to run your business. If you do not have a room or an area set aside to work, make sure you have a laptop, cell phone or headphones for Skype that you can neatly tuck away and bring out as needed to "go to work". All of this needs to be part of your Business Plan for Home.

C. Projected Balance Sheet

Learn accounting terms and what they mean. This is a must if you are going to track your business.
While we are talking about money and forms, it is important to note that reports like this are all readily available when you are using an accounting software package like Quickbooks. Accounting can be done on paper, but for the minimal cost and set-up, you can run your business like a business. Check with your accountant. Yes, you will need to have an accountant. Business people have accountants and you need one too, if you are serious about your business.

D. Break-even Analysis

At what point in your business will you have paid for all of the expenses for setting up your business?

E. Cash Flow Projections

You said you were serious about your business and you have the financing to get you started. Next, you must have a good idea about when you will be having income and what amount of income you are going to have. This enables you to plan your cost of goods and expenses, including paying yourself.

* Three-year Summary
* Detail by Month, First Year
* Detail by Quarter, Second and Third Years
* Notes of Explanation

G. For an Existing Business (also include the following documents)

The following will be needed if you are planning to expand your business and are applying for a loan.

* Profit/Loss Statements for Past Three Years
* Balance Sheets for Past Three Years
* Business Income Tax Returns for past Three Years
* Personal Income Tax Returns for Past Three Years

The following is a list of items to pull together, and questions that may need to be answered if you are applying for a loan.


Personal resum├ęs, job descriptions, personal financial statements, credit reports, letter of reference, letters of intent, leases, contracts, other legal documents, and anything else of relevance to the plan.

STATEMENT OF PURPOSEA brief (less than 1 page) statement of the business plan objectives.

In General: 1. What is the purpose of this plan?
Will it be used as an:
a. operating guide?
b. financing proposal

2. What is the business structure (i.e., sole proprietorship, general partnership, limited partnership, C corporation, or Subchapter S corporation)

3. Who is (are) the principle(s)?

4. What is to be done?

5. Why will it be successful?

For A Financing Proposal:

6. Who is asking for money?

7. How much money is being requested?

8. What is the money needed for?

9. How will the funds benefit the business?

10. How will the funds be repaid?

11. Why does the loan or investment make sense?

For even more questions and ideas, see the business plans for larger businesses at Complete Business Plans.

Click Here for a Complete Business Plan

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