In today’s tech- and cloud-enabled economy, many new business owners have more of a luxury for choosing where they do business than in past decades.
You may choose to open a storefront in a leased or purchased building, work from your home, or even travel to a coworking space where you share an office with different businesses.
But if your customers live in a wider geographical area, you could operate without a physical storefront, provided you have space to create your products or services.
Working from home is an appealing option for many small-business owners. The comforts of a home office can be enticing. You control your space and your surroundings, and you can avoid a dreadful commute. But a home-based business carries some potential risks and drawbacks, such as extra distractions or a lack of human interaction.
Here are some details to consider when choosing your business location:
- Appearance and reputation of the area
- Employee needs
- Climate and seasonality (for example, a snowy climate may not be the best location for a surfing instructor business)
- Competitor location and behavior
- Start-up costs and long-term expenses
- Customer and community demographics
- Geography, travel, and distribution needs
- Physical demands, such as parking, hardware, and manufacturing
- State and local taxes, regulations, and licensing rules
Most experts recommend that new entrepreneurs create a business plan—but what is a business plan, exactly? And do you really need one?
Although writing a business plan isn’t a surefire path to success, studies show that people who create business plans tend to also become successful entrepreneurs, so it can’t hurt.2
Our advice? Whether you write a formal business plan, construct a mental plan, or discuss a plan with a partner, make an effort to create a business plan.
Here’s an outline with descriptions of a business plan’s key parts:
- Executive summary: Write a short overview of your business plan. Although it comes first in the document, it’s best to write the executive summary last. By the time you’re finished with the other sections, you should have a good idea of how to summarize the plan’s contents.
- Business description: Describe what you’re going to sell, how you’ll do it, and why. Give details about your business’s location and owners and about how your products or services will meet customers’ needs and market demands.
- Market analysis: Explain who your competitors are and what your target market is. Lay out your case for success—how your business will leverage its strengths and overcome its weaknesses.
- Products or services: Give relevant details about what you’ll sell customers, such as design, development, production, and distribution.
- People and business organization: Lay out your business structure and management organization. Describe the people involved and how they’ll work together.
- Sales and marketing strategy: Describe your sales process and how you will market, promote, and advertise your product or services. Define how you will measure the costs and successes of these strategies.
- Financial plan: Establish a plan to fund your business and keep it running. Include the costs to start and your financial projections for as far into the future as you can, preferably at least three years.
- Appendix (optional): Attach useful illustrations, charts, or notes that would help a reader understand your plan better.
That may sound like a lot, but don’t think that your business plan needs to be dozens of pages. Keep it short, concise, and readable for your audience.
For an easy-to-follow approach to writing a business plan, we like the basic framework laid out by the U.S. Small Business Administration.