Planning a Home-Based Business
I am often asked what kind of business can be run out of a home. The answer is that it will depend on your municipal zoning by-law and official plan. The very first step in planning a business is to research the municipal, provincial and federal legislation and regulations that apply to the type of business you want to start.
No matter what kind of business you want to start, you should consider creating a business plan. Traditionally, business plans were used to secure financing or investment from outside sources. Today, business plans are more widely used to provide the owner with a guide for getting their business where they want it to be. They have also become commonly used for ensuring staff and clients are fully on board with the business.
The nice thing about business plans is that they are not written in stone. They are meant to be reviewed and revised periodically, to keep the owner on track. They can also be customized to suit a specific audience.
For example: If you are going to approach the bank for a loan to buy equipment, a business plan will be required as part of the application process. If you are looking to secure venture capital to expand an existing business, a business plan will be required as part of the application process. If you are looking to have a solid foundation for a start-up business that can be used to guide your decision-making, a business plan is required. All these different plans can come from the same source, modified to meet the requirements of the audience you are trying to reach.
So, now that you know you need a business plan, what’s the next step? Research!
Thoroughly researching the business you want to start will provide you with endless benefits when it comes to understanding your customers, competitors, suppliers, and employees. You’ll need to find out if there is a market for the product or service you are wanting to provide. If there is a market, is there a potential to make a profit in that market? These are the kinds of important questions that need to be asked during the planning stage of a business start-up. There really isn’t any point in starting a business that is not going to generate revenue for the owner or provide a product or service that customers need or want.
Once you’ve determined that you are in the right market, it’s time to look at your potential clients and competition. What products or services are they currently using? Where do they buy these products and services as a rule? Is there any direct competition for the market segment you are trying to capture? How can you provide the product or service better than the competition? Who is most likely to buy what you have to offer? How much will they pay for it? These are the types of questions that need to be answered for a better understanding of your target market.
Now that we understand who we are going to provide our product or service to, we need to figure out how we are going to get that product or service to the customer. Will you sell your product or service online? Do you need to accept credit cards? Will you need to attend the customer’s location or will they come to your home? Can you sell your product through local vendor’s markets, farmer’s markets or craft shows? While it’s important to be able to offer your product or service to as many people as possible, it is just as important to understand the behaviour and purchasing habits of your customers.
With all the nitty gritty research out of the way, a business plan can begin to take shape. By going through the process I’ve described above, answering the tough questions as honestly as possible, and making decisions as you go, your business plan is almost done even though you haven’t written anything formal. The next part of creating a solid business plan is taking a look at the financial data that’s available and making some educated estimates and forecasts. If you don’t have concrete data for your own business, look at similar businesses. Ask questions to other business owners you trust will give you honest answers.
Now it’s time to put the whole thing together in a formal document. That’s not as easy as it sounds either, but there are hundreds of websites that provide templates for writing your own business plan. AG Small Business Services is also available to go through this process with you and create a personalized plan that meets your exact needs.
Happy Planning!
