One of the Major reasons for businesses failing is the lack of a business plan!
We know how it works; you’re there at your 9 to 5 job, slaving away for someone else and feeling like life is taking you nowhere! Next thing you know you’ve made up your mind to do it for yourself. Follow the dream and build your own business and be free from having to follow the bosses orders. Right?
When you decide to start a new business the very first thing you should be doing is creating the plan.
The very first thing you probably did was start working on your idea or product and put the planning off until “tomorrow”!
Whether you are starting a traditional business or an online venture you still need some map to refer to on the journey.
It is important to the long term success of your venture to lay that map out early and provide focus to what you are doing and where you want to go!
In your business plan you should outline your business strategies, how you plan to make your business a success, your marketing goals, your financial needs, and your overall blueprint to success.
As the business owner you will find this plan invaluable to staying on your path to success.
You will also use it to demonstrate to potential investors and lenders the factors that will help them to decide whether your business venture interests them as an investment opportunity.
For that reason alone, you should make sure you take the time to create the best business plan you can.
An online business is generally quite different to a traditional business and your business plan needs to reflect that.
Your business plan must also cover the details and nuances of conducting an online business that investors may not be aware of or may not understand.
Begin writing a business summary.
If your business is strictly online then you need to break down all the components of operating an online business including things like what you will offer, how you will attract customers, who will run your business, where will your business be located?
Outline the business name, ownership, structure, and relevant experience of those who are working in it (probably just you to start)
Talk about your businesses products or services and the history of the industry or market that you are targeting.
Explain how your business will operate in the online environment.
Explain what you are bringing to the space that is unique and will help your business differentiate from the competition.
Briefly outline your finances, how much profit you intend making in a particular time frame, what start up funds you need and where you will source them.
Also include your vision statement; the outline for your future plan for the business, your long term goals and the activities you will engage in to reach them.
The business details
This section includes all the details on how your business will be run
Any regulatory, tax and licensing requirements that are necessary to run your business from your current location – if you are running an online business it’s wise to investigate how various countries may have different conditions that may affect the way you trade across borders.
What liability insurances are you going to be required to have in place; Public Liability, Professional Indemnity, Workers Compensation, Product Liability, Business Assets, Business Revenue?
You may be starting out working out of a corner of a room in your house – or even your kitchen table – but with success and growth you may need to consider the type of premises that will be the most suitable for your future business activities. Will you buy or lease, do you need to be close to public transport (for future employees)?
Define your products and services; each one’s full description and price point as well as how they are to be created and how they are to be delivered.
What suppliers will you be using for services that you need – even hosting and domain name registration fall into this category – what software and hardware, communication channels, payment methods, credit policy, warranties and refunds, quality control, memberships and affiliations.
Don’t forget a detailed record of your affiliate arrangements in this section.
Create your marketing plan.
Your Marketing plan must start with a detailed assessment of the market that you are going to be selling your products in; your market research.
You will need to identify your potential customers, your competition and what percentage of the market share you want to achieve; your market targets.
It’s a good idea to cover customer demographics; who they are and how they behave … why they are going to buy your products.
This will require thorough research into your market and include factors like pricing, mark-up, advertising, building your brand, etc.
Make sure the information is current and relevant.
How will you maintain a good relationship with your customers? How will you handle issues and complaints? What customer service standards will you introduce?
What is you advertising and promotional strategy? It’s a good idea to itemise each planned advertising campaign and include factors like date, cost and expected return on investment – new customers, new sales etc.
What is your Unique Selling Position? What will make customers buy from you rather than your competitors? How do you differentiate yourself from the pack?
Detail all your predicted sales and distribution channels including the type, anticipated percentage of sales that each will provide, Advantages and disadvantages for each
As far as possible detail your competitors, their market share, their value propositions, their strengths and their weaknesses. This gives insight into how you may be able to improve on what they offer.
Detail a Management plan.
This will include all the details related the various management duties involved in running your business.
If you are like many online businesses then when you are starting out it’s just you performing all the necessary functions.
As you grow and develop it will become necessary to employ other people to take on some of the tasks of managing and running your business.
Visualise what your organisation structure will look like. Will you need an office manager and operational staff, a marketing manager, designer … there are a range of possible functions that you may need to stop doing yourself when the business expands.
Defining what they are and the type of employee you’ll need to fill them will help you decide when it is time to add them to your business.
Define your key personnel, current and future. What skills will they need and what strategies will you put in place to retain them?
Having the functions and responsibilities detailed from the very beginning gives you and your investors a clear picture of who and when to take those extra people on board.
Your business schedule both current and long term will enable you to outline the key growth points to give the reader a picture of where you visualize your business going.
Set down development times, launch dates, review dates, revenue target dates, all the important milestones that you can visualise in the growth path of your business.
It is important to include reasons that you are setting these particular milestones and what is involved in meeting them.
An action plan listing those key milestones and dates of expected completion of each and the person responsible for the delivery of each will provide a good indicator for the success of your future growth
Your Financial Plan
Of course, you’ll need to cover your financial plan;
• Your start-up capital
• Whether you need to borrow some or all of it
• Your operating costs
• Your projected sales and profits in six month increments for at least a couple of years, but five is best
Strengths and Weaknesses Assessment
A S.W.O.T. analysis – Strengths, Weaknesses, Opportunities, Threats – will give you insights into where the major pitfalls may lie and an opportunity to put plans in place to combat them as they arise. It may also uncover some, until now unconsidered, opportunities for development along with the main purpose of your current venture.
A review schedule
Your business plan is now a write it and forget it document! It is a tool to guide you and any potential investors along the path to success.
As the saying goes; “A battle plan is only valid until the first shot is fired!”
What you believed would work while you are writing your plan may be an exception or it may be a complete flop.
You will almost certainly need at some point to be able to think on your feet and adapt.
Your business plan can help you achieve this if you have created a review schedule designed allow you to make any necessary changes and adjust your course.
You may be surprised to discover that rather than writing this first, you should actually write it last.
That’s because your executive summary should be a clear and concise summary of the information in your business plan.
The best way to attract the interest and attention of a potential investor to read your full business plan is to actually keep the executive summary short.
Anywhere from one page to no more than three pages is good.
This means you will need to pull what you think are the most important facts in your business plan to include in the summary.
You will not be able to include everything you talk about in your business plan, but you will be able to include those that are most important.
Choose the headings that will be most likely to gain the desired and immediate attention from the investors but it is important that what you state in your Executive Summary is factual and matches the information found within the detail of your plan.
The most important thing to keep in mind when writing a business plan for an online business is to address the unique environment that the business will be running in.
Include all the risks and benefits and address any mitigations you feel are available.
Focus on the highly lucrative marketplace that the internet presents, how it’s in its infancy still with a huge potential for growth and expansion.
Detail how you are going to take advantage of the unique conditions to make your endeavours a success.
With a carefully thought out and researched plan in place you have a roadmap to the success that you are aiming for and a way of quickly identifying if the current activity will help you reach those goals.
To your prosperity!