A business plan is a road map of your online business. It should help you focus on what is important and what needs to be done. It is a necessity if you plan to ask the bank for a loan or if you are proposing a new venture or expansion to a group of investors. At the very least, it is tool that can help you understand your business. It can also help you on those discouraging days to remind you that you are right on target or maybe ahead of your goals.
A business plan can be chicken scratch on a piece of paper, it can be long, detailed notes in a journal, or it can be a formal written presentation of your plans, goals, how to get there, projected financials, and anything else that you deem important to the online business. Although the plan can be a hundred pages in length or just five pages, it should contain seven basic sections. And if it is being submitted to someone for approval, make sure it has a cover sheet and index plus your contact information.
The summary at the very beginning should be concise and direct. It should outline what you need ($$$), why you need it, and who you are. It would also include key elements such as trademarks, awards, and other achievements. The person reading the summary should have a basic knowledge of the proposal without having to go any further in the document. This section of the business plan should be limited in length to probably no more than one page, if that even, and should be straight to the point in understandable terms.
The description will include the history of the market or why your model is needed. It should include current trends as well as future possibilities. But these points should have documentation to support the claims. Your word is not enough. After having given an overview of the business, you need to speak about the pieces of the business. What type of profits are involved and how you know this. Do you have previous sales history to suggest that these ideas are accurate? Others need to know how they will make their money.
You need to clearly understand your target market. And to be sure, it is not all the people on the internet. You should speak about the size of the market and how you plan to tap into those revenues.
This is crucial because there are certain players in an industry against whom you cannot compete, and your potential investors will want to know why you think you can do it better. They will not want to loan you money or invest in your company if they think it is useless.
In terms of an online business, you might talk about how many domains are needed and what will happen to them. For someone in the domain parking business, the business model may depend on buying 500 new domains per month and monetizing them. For others, it may mean building 20 websites per month, and growing them to gross $100 each per month. Be specific!
This section will answer questions such as: How will the business continue on a daily basis? How many people are involved? Who will do all the tasks?
Banks and other investors will want to see legitimate and realistic Projected Income Statements. They will need to know how long it takes to become profitable and what costs are involved.
Finally, it is important to note that the specifics of the business plan will really depend on why you are writing the plan. If it is for yourself as a guide, it may not need to be as long an explanation as if it was for investors. Also, it is a good idea to be honest with yourself. Grandiose ideas and unrealistic numbers are not going to help you whether you must submit the proposal or not.
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