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This helpful article was obtained from:
http://www.marketingtips.com/newsletters/?article=art_november02b
Need A Customized Blueprint For A Successful Online Business?
Write A Business Plan To Fast-track Your Profits!
If you're serious about the success of your business, then you need to find
ways to give yourself every advantage you can over your competition. One
strategy that I can almost GUARANTEE your competitors haven't tried is building
customized blueprints that outline exactly how their businesses will succeed.
The process of writing a business plan for your company can be a crucial step in
getting your profits to where you want them to be.
If you're thinking, "But I'm just a one-person business working part-time out of
my home... I don't need a business plan", think again! Unless you want your
business to stay small and to keep your day job, you desperately need a business
plan. It's one of the best ways to motivate yourself to drive your business to
the next level.
And if your business is still just an idea in your head, and you've been
wondering for months how to get started, here's your answer: Start planning!
Clear your schedule this weekend, print off this article, and get down to
business!
What's Your Purpose?
A business plan can serve a couple of main purposes: In the
world of banking and venture capital, business plans play a huge role for people
who are trying to secure start-up funding from banks or investors. The better
the business plan, the better the chances of landing that big initial
investment.
For smaller companies, who (luckily) do not need to rely on outside funding to
get started, a business plan serves more as a company blueprint. It identifies
the company's purpose, products, market, and goals, as well as the steps the
company plans to take to reach those goals.
So before you start writing, you'll need to decide what purpose your business
plan is going to serve. If you're writing a formal business plan to secure
financing, you'll need to be far more concerned about detail and format than if
you're just preparing one for your own personal use. No matter which approach
you're taking, though, you need to know that there are 7 main sections that
should be included in just about every business plan.
Section 1: The Executive Summary
The executive summary is basically your entire business plan
condensed down into a page or two (at the most). If and when you show your
business plan to others, this is the only part that 75% of them will actually
read. For this reason, you need to make this section as clear, concise, and
exciting as possible.
Your executive summary should contain a few key items. You'll want to start out
with a brief description of exactly what your business does, who your market is,
and what opportunity you've identified as the inspiration for your business.
Explain what sets your company apart from others in the same field.
You'll also need to discuss financial information such as projected revenues
and, if you'll be using this business plan to secure financing, how much money
you need and what you will be using it for. Don't go into too much financial
detail in this section. You'll just want to include the most important figures.
Also, be sure to mention your company's achievements, including all of the
milestones reached to date. Even if all you've done so far is register a domain
name, put together a web site, or file a patent application, be sure to include
this information in this section of your business plan.
Section 2: Description of Business
This section will contain an in-depth description of your
company, including what products or services you sell, who your customers are,
what your operating structure is (Are you a wholesaler? A reseller? A
manufacturer?), the legal details of your company (Is it a corporation? A
partnership? A sole proprietorship?), and your distribution methods.
This is the section of your business plan where you will identify what makes
your company unique and where you'll address the following questions:
* What are you
offering that others aren't?
* What sets you
apart from your competitors?
* Why will
people choose to do business with you instead of other players in the same
marketplace?
If you've already been in business for awhile, you will also want to use this
section to talk about the history of the company. Talk about what inspired you
to start the company and how fast it is growing. Address the more concrete
details as well, such as how much equipment you own or lease and where your
office is located.
Section 3: Market Strategies
Think of this section as your marketing plan. This is where
you'll want to go into detail regarding who your target market is and how you
intend to sell to them. This section will contain information about how big your
audience is, how fast it is growing, and how large you expect your market share
to be.
Some great sites where you can start this research are:
* CyberAtlas --
http://www.clickz.com/stats/
* Nua Internet
Surveys -- http://www.nua.ie/surveys
* MarketResearch.com
-- http://www.marketresearch.com
In this section, you will also talk about how you intend to market your product
or service to your target audience. Will you focus on pay-per-click search
engine traffic? Banner advertising? E-zine sponsorships? How much do you expect
to spend on advertising, and what sort of return do you expect from those
advertising dollars?
Be sure to think carefully about which marketing strategies to include here.
Don't just list off every single advertising technique you can think of. You
need to realistically evaluate all the possibilities, and then focus on the two
or three marketing techniques that will produce the biggest return on
investment.
If you think this sounds like a lot of work just for a business plan, think
again! This is the kind of legwork and research you should be doing anyway! And
once you've figured out how much your marketing and advertising is going to
cost, you can put together a schedule of how much you can afford to spend on
various campaigns each month.
Section 4: Competitive Analysis
The competitive analysis section of your business plan is
where you explain, in detail, the strengths and weaknesses of your main
competitors. This will allow you to realistically determine where you can
position your business in the market in relation to your competition.
Make sure to do an honest appraisal of who your competition is. If your site is
selling board games, your main competition is NOT Toys 'R' Us. Instead, your
biggest competitors are other niche sites that focus on selling board games.
These are the sites that you can realistically expect to compete with for
customers interested in buying your products online.
Nevertheless, you should still pay attention to the "major players" in your
competitive analysis. Take a look at how they are marketing to board game
buyers, and what areas they are lacking in. Based on your research, you should
be able to capitalize on the weaknesses of others in your market space and
snatch customers away from them by positioning your offer to meet a need that
everyone else is neglecting.
A great tool for doing competitive analysis is
http://www.alexa.com which allows you to discover how much traffic your
competitors are getting in relation to your site and see who they are linking
to. Compare your own traffic ranking to your competitors' traffic rankings in
Alexa every month or so. This way, you'll be able to gauge your progress against
your competition. Spend some time getting familiar with this site -- it will
become an invaluable resource tool for you!
Section 5: Development Plan and/or Operational Strategy
If your company is still in the developmental stage (with no
product and/or no revenues), this is the section where you will explain how you
are going to bring your company into the marketplace. The best way to do this is
to write out a development timeline with the projected completion dates for
various milestones your company will need to reach before it can start making
sales.
This is the section where you must plan to profit! Failing to do so is one of
the most common mistakes made by businesses. All too often, people just set up
shop without ever really planning exactly HOW they are going to become
profitable!
If your business is already up and running, but is not currently generating a
profit (if your revenues are not enough to cover your operating expenses), then
this is where you will need to identify how you will make up the shortfall until
you become profitable. For many home-based businesses, the difference is drawn
from the owner's savings or income from another job.
Regardless of what stage you're at, you should still include a table of
projected milestones for your business in this section. Estimate the month and
year of the important milestones that you plan to achieve over the next 1 to 2
years. This not only looks great, it also reminds you of your goals every time
you refer back to your plan.
Section 6: Management
This section is especially important if you are going to be
using your business plan to secure funding. I can guarantee that after a
prospective investor reads through your Executive Summary, they will flip
directly to your Management section before reading anything else. They'll want
to get a clear idea of "who" your company is -- after all, a business idea is
only as good as the people behind it!
So this is where you introduce your management team or, if you are the only
person involved in your business, explain why you are qualified to be running
the company. Focus on your strengths and achievements from your previous
ventures or jobs, and explain in detail how those qualities transfer to your
business.
Make sure to go into detail about what makes you uniquely qualified to operate
this sort of business. What special skills do you bring to the company? How do
your areas of expertise give you a distinct advantage over people operating
similar companies?
If you have accountants, lawyers, or consultants advising you in an official
(paid) capacity, you can mention their names, duties, and qualifications here as
well. However, you need to be sure to get their permission before putting their
names in your business plan.
Section 7: Financials
If you've had a chance to look through a few business plans
before, you'll have noticed that the last half of these documents are filled
with balance sheets, earnings projections, capital requirements, depreciation
estimates, and dozens of other highly detailed financial statements.
Don't let all these numbers put you off! If you aren't going to be using your
business plan to solicit capital from outside sources, you won't need 90% of
this stuff. Instead, focus on your monthly income and monthly expenses. The best
way to do this is to put together a simple 12-month cash flow forecast.
Here's how to do it:
First, estimate how much your business will earn on a monthly basis. Include all
your sales, cash you'll be drawing from your savings, or money your business has
been loaned. This is your "Total Cash In."
Next, determine what your monthly expenses will be. This should include things
like advertising costs, office expenses like phone bills and stationary, the
cost of your inventory, equipment purchases, loan repayments, as well as
whatever cash you'll be drawing out of the business for your personal living
expenses. This will be your "Total Cash Out."
Now, simply subtract your "Total Cash Out" from your "Total Cash In" to get your
monthly "Net Cash Flow." If you see that your Net Cash Flow is a negative
number, you're losing money! If that number stays negative for the entire 12
months, you're going to need to re-evaluate your business plan... and figure out
a way to increase sales or decrease expenses!
IMPORTANT NOTE: You can see why it is so important to be honest with yourself
when writing your business plan! If you exaggerate the sales you think you'll
bring in, your whole business model will be damaged when those sales don't
materialize. So much for that hefty advertising budget you planned, as well as
the generous salary you hoped to pay yourself!
Do-It-Yourself vs. Hiring Out
If you are going to be using your business plan as a tool to
attract capital from banks or investors, then your business plan will need to be
MUCH more detailed than if you are preparing it for personal use. If you need
some extra help preparing a highly detailed plan, you have a few choices. You
can:
*
Hire a professional business plan consultant to work with you,
* Hire an
accountant to help you prepare the "Financials" section of your business plan,
or
*
Purchase a full-featured business plan software program.
If you do decide to have a professional write your business plan for you, be
aware that the costs vary tremendously! A basic 15-page business plan could cost
you anywhere between $500 and $5,000, depending on who you hire. (And a detailed
business plan, which can often exceed 100 pages, can easily cost as much as
$25,000 -- but these are for companies looking for millions of dollars of
start-up capital.)
To locate someone to write your business plan for you, just type "business
plans" into any search engine -- you'll find tons of companies that specialize
in this sort of thing. You can also have professional writers bid on your
business plan project at http://www.elance.com.
The going rate for a business plan here seems to be between $750 and $1,500.
There are quite a few business plan software programs out there. One of the best
seems to be Business Plan Pro 2003, available at http://www.bplans.com for
$99.95. Other options are PlanWrite, located at
http://www.brs-inc.com/pwrite.html for $129.95 and BizPlan Builder, priced at $99.99, at
http://www.jian.com.
If you are running a one- or two-person company out of your home or small
office, you probably won't need to hire a professional to work on your business
plan. This option is really more for people who will be using their business
plans to attract investors or secure bank loans. Most small business owners
should be able to write their business plans themselves.
And unless you are going to be trying to land big investors, I really don't
recommend hiring a professional to write your business plan for you. You'll
learn so much about your business and your competitors doing it yourself that it
would be a shame to let someone else go through the process for you!
Business Plan Resources
I've hand-picked a few of my favourite online business plan
resources to share with those readers who might be looking for a little more
information:
* The
United States Small Business Administration has an excellent resource online at
http://www.sba.gov/starting/indexbusplans.html. They provide an online
tutorial to help you write your business plan, and their site also contains all
the information you'll need if you plan on trying to get a Small Business
Administration loan or grant.
* The
Yahoo! Small Business Centre has a good section about business plans at
http://smallbusiness.yahoo.com/resources/business_plans.html.
* The
Annual Moot Corp Competition challenges top MBAs from around the world to submit
their business plans to be evaluated by a panel of investors. The winning
entries from the past few years are online at
http://www.businessplans.org/MootCorp.html.
* Palo
Alto Software has developed a program called Business Plan Pro 2003 (priced at
$99.95) that will walk you through the creation of your own business plan. But
even if you aren't interested in their software, check out their site at
http://www.bplans.com for a huge archive of
sample business plans that you can read for no charge.
You can also find a wealth of information about business plans at your local
library or bookstore. The Business section will have tons of books explaining
how to write business plans, as well as books with hundreds of sample business
plans for you to look at.
Final Thoughts
Once you've written your business plan, you'll be amazed at
how often you refer to it. It will become your "battle plan," as well as the
tool you'll use to measure how close you are to meeting your goals -- or by how
much you're surpassing them! You can even show your business plan to prospective
joint venture partners, potential employees, or advertisers. Believe me, a
professional-looking business plan will give you a TON of credibility simply
because most businesses never take the time to prepare one.
If you're thinking about starting a business, but you're not quite sure how,
writing out a business plan can be a great way to get things moving. It's also a
great way to evaluate how good that idea of yours really is. For many people,
the process of writing a business plan shows them that their business can make
even more money than they originally thought! Now that's motivation!
If you're already running an online business, the process of writing a business
plan can help you decide exactly what aspects of your business are succeeding
and which areas could be improved upon. When you do an in-depth analysis of your
marketplace, your customers, and your competitors, you'll be amazed by how much
you can learn!
And be sure to make your business plan a perpetual "work in progress." Go back
and review it every three months, and make changes where necessary. If your
sales are twice what you expected, go back and update the figures in your
business plan. This ensures that your map to profitability is always right up to
date.
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