Who Does Need a Formal Business Plan Then?
If you'll need outside funding in order to start your home business, you should expect to prepare a small business plan. Especially if you're planning to secure funding through a US Small Business Administration (SBA) approved lender, but really for any commercial lender and even for many who are seeking venture capital or angel investor funding. But in that case, the most important thing is that you know what you're talking about and that you've thought through your business idea carefully and have at least some reliable data to support the likelihood that you could be successful.
You Still Need to Plan Your Business
I'm not saying that it's not important to plan before you start a business- it is critical. You still need to know if there's a market for you products or services and you still need to know what the financial potential, startup costs and breakeven point will be.
You also need to have a good idea of how you're going to deliver your products and services and you need to set up a system for keeping good business records. You still need to know what legal restrictions or requirements are in place for your home business idea and you need to plan for how you will handle cash flow and taxes.
The real issue then is not whether you need to plan before you start a home business - you must - but whether you need to take the time and effort to develop a formal business plan document. What would be more important is that you understand your target market and that you establish measurable goals for your business. Then, once you're up and running keep track of how you're doing, make necessary adjustments and learn from your mistakes.
There's nothing stopping you from preparing a business plan later on - after you've learned from some of your mistakes, you have a better feel for the viability of your market and the potential for income and the resources you'll need to continue to succeed. In fact, you may find it useful to set up the outline for your business plan and fill in the details as they become apparent to you. In the meantime, try to make some money and learn what it will take to make your business a success.
Don't forget too, that if you're thinking of buying a franchise or other type of business opportunity you most definitely need to research that opportunity thoroughly before you invest your hard-earned savings in what could turn out to be a loser.