Although it may not seem important, it is imperative that you develop a business plan for your home based business. This is due to the fact that you are going to want to completely outline your anticipated capital expenditures, how much money you expect to generate in revenues, how much your monthly overhead will cost, and other issues relating to the day to day operation of your home based business.
We strongly recommend that if you do not know how to put together a business plan that is appropriate for your business that you work with a certified public accountant or professional business planning firm that can assist you through this process.
For a small business plan geared towards a home based business, you are generally not going to need to go into the same level of depth as if you were going to apply for capital for your new business venture.
However, if you do intend to obtain a working capital line of credit or a business loan for your operations then you are going to need to complete a full analysis of your market, your competition, and how you intend to differentiate your home based business from that of other people in the market.
Also, you will need to provide your financial institution with a full five year financial model that includes a profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, as well as important business metrics that focus on your business.
Typically, you will also be required to provide two to three years of tax returns regarding your personal finances. It should be noted that you are absolutely going to need to put up a substantial amount of tangible assets as collateral when you are seeking to obtain a credit facility for your home based business.
Developing your business plan is the first step towards launching your home based business. As we have stated time and time again, the more organized you are as it pertains to operating your business the more likely that you will be able to bring it to profitability quickly while also generating a positive cash flow.
This is one of the foremost things that you are going to want to consider as you progress through your home based business planning operations so that if you decide to operate the business full time then you will know when you are generating your income requirements.