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Why Have A Business Plan?
What Is A Business Plan?
What exactly do you think of when you hear the words "business plan"? Most people I talk to think of a boring,old document that big corporations put together and then file in a cabinet.
When asked to write one, most sole proprietors put it off. Why?
I submit to you that most just plain do not want to be bothered. The remainder just would hate to actually be accountable to a written plan.
Would you go on vacation without planning? Would you get married without a plan for the day and the honeymoon?
We all plan those things, yet we leave on e of the most important things in our lives to chance.
This article is meant mainly for people in home based businesses, particularly direct sales. The problem is that most people in this industry never were in business before and they are just trying to escape the rat race.
In over 30 years of tax preparation, I have yet to see more than 10 people that have written a business plan...really!
A business plan is your road map to success. We all make "goals", but we really have no plan to get them. It's like saying you want to go to California without a map! Very silly.
I submit that this is why 97% of people fail in business.
No road map. No direction. A perfect excuse for failing.
A good business plan answers these questions:
**Why and How
If you can put all those down ON paper, that is a great business plan.
What About The IRS
Yes, those very friendly people!
In business, you are allowed to take losses on a business. However, if you do not have the correct items in place, the IRS can disallow your losses.
This is the case with many direct sales businesses. Most people do experience losses and they take them against their job incomes.
The rub is that the IRS wants "evidence" that you intend to profit in this business. The evidence is in the form of a written business plan.
Not only do you have to have one, it must be updated REGULARLY!
The requirement is really for your benefit. They want you to be profitable, so you can pay some tax and, of course, you want to be so you have money in your pocket!
This is a killer requirement that I know, for a fact, that people are getting slammed on.
The IRS makes no bones about it. Why are you in business without a business plan?!
I have to say that I agree. I coach many people in business and I have only had a few come to me with a plan already written.