Tips for a Successful One-person or SOHO Business Plan - dummies

Tips for a Successful One-person or SOHO Business Plan

By Steven D. Peterson, Peter E. Jaret, Barbara Findlay Schenck

Going into business on your own definitely has its rewards. No boring staff meetings. No need for employee reviews. No interpersonal conflicts. But to succeed, you need to possess certain key strengths — qualities that not everyone has. You need to be able to accomplish several things that are absolutely critical to a one-person businesses success.

  • Commit to doing one thing well: How many self-employed people have you met who shuffle through a stack of business cards as they explain the many ventures they’re into, personifying the old line “jack-of-all-trades, master of none.”

  • Establish pricing, billing, and collection policies: From the get-go, you need to know what you’ll charge and how you’ll collect. Whether you’re selling time or products, your pricing must be competitive, an accurate reflection of the value of your offering, and high enough to cover your production costs plus an adequate amount of profit to your business.

  • Run your business like a business, not like an adjunct of your personal checkbook or a hobby that you pursue in your spare time: To succeed, you need to turn your idea into a formal business structure — complete with a designated workspace, a dedicated business bank account, and a written business plan that includes financial projections and reporting systems to keep your business on track.

Getting your one-person business off to a strong start is hardly like rocket science if — and this is a big if — you plan in advance and stick to your decisions.

The pros and cons of a solo career

Here’s the upside: When you work for yourself, no one else tells you when to start or when to knock off for the day. You have no salary cap, no performance reviews, no corporate politics, and no supervisors.

But here’s the rest of the story: Solo careerists usually work longer and harder than salaried employees and require more self-discipline. And, although they don’t answer to bosses per se, they do deal with clients, who sometimes make tough bosses look easy in comparison.

If you work for yourself, you get to

  • Be your own boss

  • Determine your own schedule

  • Control your own economic fate

  • Choose the kinds of work you want to do

But you don’t get

  • A regular paycheck

  • Employer-provided benefits

  • Unemployment insurance and workers’ compensation

  • Protection under labor laws

Plan for success

If you decide that the self-employed life is for you, you’re at the precarious point where too many businesses take a giant misstep. You guessed it: They dive in without a formal plan to guide their efforts.

Don’t get hung up on the word formal. When you’re planning for a one–person enterprise, formal doesn’t mean long or complicated. It just means putting a plan in writing to explain your business, your product, your market, your expertise, your goals, your growth plans, and what it will take to be successful.

Naturally, as a one-person business, you’re the primary audience for your plan. But after you have your plan down on paper, you’ll find many reasons to be glad that you wrote it in the first place. Here are just a few:

  • To seek business financing: If you want help financing your business, bankers and potential investors will ask to see your business plan, and especially your financial projections, for proof that that you’re serious about starting and running a successful business. Providing that proof in the form of a convincing business plan is more critical than ever during challenging economic times.

  • To create marketing materials: Your business plan, with its description of your products and services, your target markets, and your customer benefits, will guide what you say to potential customers.

  • To hire an employee or outsource work: When you want to describe what you do, what kinds of customers you serve, and how you run your business, your business plan is available as reference material.

  • To work on the right tasks and objectives: When you’re doing all the work yourself, you can easily find yourself getting side-tracked. A business plan can help you focus on the jobs that really need doing.

Don’t try to keep your business plan in your head. Putting it in writing is important for the following reasons:

  • It establishes a contract with yourself by stating what you intend to do and how you plan to accomplish it.

  • It lists the resources you’ll need to get your business underway.

  • It formalizes your goals and objectives.

  • It provides a road map that will direct your efforts and boost your confidence, two important keys to making a solo career work.

  • It creates milestones that allow you to chart your progress and gauge your success.

  • It helps you anticipate and address funding needs before they turn into funding crises.