Starting An Online Business?
What’s the Plan? The Business Plan?
There are over 16 billion websites out there. That’s a lot of entrepreneurs all gathered in one place – the cyber marketplace. And if you plan on joining this dynamic collection of giant retailers and small, one-person shops operating out of the basement, you’d better have a plan – a business plan.
I Have a Plan. It’s in My Head.
Are you kidding? Most of us have trouble remembering our kids’ birthdays much less inventory costs six months out. No, a business plan isn’t some general idea, some amorphous blob of dreams and ignorance. Your business plan is your road map to success. And without one, you might just as well stay home.
What Should I Include in My Business Plan?
Of course it’s going to depend on the type of business. Are you selling goods or services or some combination of both? What are your best (and least expensive) marketing channels? Who’s your ideal buyer – your target demographic? All of these questions, along with many more, will shape the information in a business plan.
However, all businesses operate on the same economic and marketplace principles – profit and loss, expanding competition, economic viability and other ABCs taught in Business 101.
At the very least, your business plan should include:
- a vision statement – where you see the business in five or 10 years and how you intend to get there. Keep it concise. The shorter the better, in fact, because if you can state your vision in a sentence, maybe two, it’s at least worth pursuing. If you have to write a book just to explain your business vision, try another business or another approach to the business.
- business scope. How big? How many employees? Remote sites? Market reach?
- a short explanation of the business concept
- feasibility analysis (do you have the resources to pull this off and if so, what are those resources?)
- market analysis. Who are your biggest competitors? How many online competitors are there? How do you plan to compete against this more established and perhaps better funded competition?
- business structure. This includes the people who will be working on the business along with detailed job descriptions. Detailed.
- manageable finances. Nice thing about a web-based business is that you don’t need a ton of cash to open the store front. Getting people inside the store, well that’s another matter altogether. You can start on the cheap but you’ll have to spend money to make money eventually. Got $10K hidden in s shoebox? How about $500 in the penny jar? Either way, you better know, going in, what it’s going to cost to design and build a website, pay web hosting costs and the cost of administrating your business.
Mistakes That’ll Doom Your Business from Day 1
The biggest mistake prospective business owners make is being overly optimistic. They over-estimate revenues, underestimate start-up and operational costs and they rarely prepare for the unexpected. Be realistic. Be pessimistic and if you can still show a profit on paper, move forward.
Ignore the plan’s weaknesses. The whole point of a business plan is to identify and address soft spots and fix them before you undertake the plan. If your approach is, “I’ll deal with it later” chances are you won’t deal with it at all and it may form the underpinnings of your entire business plan. Face problems head on and develop solutions before you start, not as you go along.
Focus on long-term projections. This one is a bit more subtle but if you project turning a profit in five years and you’re losing more than you ever imagined possible, turn some of your attention to short-term projections and get your costs under control.
Lack of testing. You and your dad think it’s a great idea but is the world ready for your vision to become reality? Test market. As much as you can. And don’t just ask friends and family if they think this is a good idea. Ask professionals.
Aren’t professional business consultants expensive?
They can be if you go with the guy in the $2,000 Hugo Boss suit, but there are lots of very knowledgeable people who will give it away – free. There are experts with literally decades of real world experience who will show you precisely how to design a successful business AND put it in writing.
SCORE.org hooks up fledging business owners with experienced, often-retired business people just looking to give a kid (you) a break. This site has an “Ask the Expert” feature if you’re just looking for some quick information on a single topic. Or, you can enjoy online courses, receive SCORE’s newsletter filled with solid information provided by experienced pros and even get hooked up with a local SCORE volunteer with the site’s zip code search.
The federal government offers free advice and counseling (including a business plan template) through the Small Business Administration. A lot of folks believe the SBA will bankroll a new business no matter how off-the-wall it is. Not true. In fact, the SBA should NOT be viewed as a viable lender for an online business.
However, the SBA should be viewed as a terrific source of information and personal consultation. The SBA site offers small business planners, a long list of business services, an expansive menu of tools and even local resources. Want to talk to a successful site owner a few towns over? The SBA may be able to help.
Industry Organizations
In a free market (and the web is the freest by far) industry organizations recognize the need for expanding competition. That’s how these organizations grow themselves as they share industry information with corporate and individual members.
One helpful site that provides links to hundreds of trade and industry associations is Google’s Business Directory > By Industry. You’ll find associations for professions from accounting to web design.
Mentors
The best. These men and women have learned the ropes and they’re happy to share what they’ve learned with you. SCORE employs a mentoring system but you can also find your own mentor through business day networking channels.
Join the local Chamber of Commerce. It’ll cost a little but the networking and mentoring opportunities are priceless. The Jaycees, Elks, Lions and other community service organizations are excellent sources for excellent mentors. There’s no experience like real-world experience and that’s what you gain from your own mentor.
Just Because It’s an Online Business Doesn’t Mean It’s Not a Real Business
Whatever route you choose in the development of a business plan, you must have that plan. Written down. With pessimistic projections (you’ll make less and it’ll cost you more to do so. You can almost bet on it.). With resources, hurdles and challenges, problems and solutions.
No pie-in-the-sky dreams. Facts and analysis. The real deal.
Finally, the most important point of all and the best reason to develop a business plan:
If you don’t have a business plan, you won’t have a successful business.
Now, wasn’t that simple?
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