You have a great idea for an online business and you’re ready to dive in and start sharing your product with the rest of the world. While it may seem that you should focus the bulk of your attention on getting your business up and running, you’re going to want to first focus on creating a business plan.
You may not think a business plan is absolutely necessary. After all, it’s just you, your online store and your product or service, right? What’s there to plan, really?
Well, just as you wouldn’t take a road trip without a map or GPS, you shouldn’t start a business — even a small online business — without a general guide for what you want that business to be and where you want it to go.
Your business plan is your roadmap, helping you project three to five years ahead to where your company will go and what kind of revenue it’s going to take to get you there.
Writing a Business Plan: What’s the Point?
A business plan isn’t just a roadmap, however. It can make creating the framework for your business model easier. It can also help you clearly set your goals and objectives, identify and understand your target market and your specific niche within that market, clarify what your business has to offer compared to your competitors and even how you’ll attract and retain customers.
In a nutshell, a good business plan helps you wrap your head around all the aspects of running your business within a structured framework. It can also help ensure that you’re aligning your product with your customers’ needs. Is your product better suited for selling to other businesses or to consumers? Both? And how does the answer to that question affect how you’ll market and even sell your product or service?
As your business grows and changes, your business plan can also serve as a resource for tracking your growth against initial projections. Will you need credit during slow months to help cover your costs until your peak sales season starts? Your business plan can help you know that. Will you need a business credit card to keep your financial management on track? And if so, is your credit good enough right now to get that card?
What Your Plan Should Include
A solid business plan contains nine fundamental components, according to guidance from the Small Business Association. Their website provides a step-by-step guide for putting together your business plan. The most important elements are:
- Executive Summary. This section is a roundup of the highlights of the other sections. It should encapsulate what your business is, including a mission statement, if you have one, and your future vision for your business.
- Company Description. Who are you and what do you do? This section should detail what your products and services are, what markets you serve and what distinguishes your business from competitors.
- Market Analysis. Here’s where you can compile your market research and show any potential investors you have a full understanding of the marketplace. This can be especially important for e-commerce sites because competition has the potential to be global.
- Organization & Management. This section lets you detail your ownership and organizational structure. But you’re a sole proprietor, you say? If you’ll be outsourcing any aspects of your business to help you function, you should include that information here so there’s a good understanding of how your operations all fit together.
- Service or Product Line. Here’s where you tell the story of what your business does and who is served by your product or service. Again, this is an especially important section for e-commerce companies because it can help you in further distinguishing your wares from those of your competitor.
- Marketing & Sales. In this section, you can put together the details of your sales and marketing strategies: How will you penetrate the market, what will your sales channels be, how will you communicate with customers? For e-commerce businesses, this is a critical section and should include a plan for paid media on social sites if relevant, plus a detailed social media strategy.
- Funding Request. If you’re going to be seeking investors, here’s where they need to see details of how you plan to use the money you need. Will you need more money in the future? Under what circumstances? Be sure to include that here as well.
- Financial Projections. This section is particularly important if you need outside funding, because it will show potential investors or lenders that you have a plan to earn enough to cover your funding request. It’s also a great tool for helping you track your successes as your business grows.
- Appendix. This isn’t a necessity, but if you wish to include items like your resume, business permit or other documents, this is a good place to do that.
Opting to create a business plan for your online venture is the first step you can take to strategize and guide your actions towards success down the road. Doing so will make everything clearer — from what resources you’ll need and what expectations you should have to what sales targets are actually achievable. Armed with this information, you’ll have the confidence you need to charge forward and meet your goals.
Written by Constance Brinkley-Badgett
Constance is an editor at Credit.com. She has also worked as an editor for MSN.com, senior digital producer for CNBC, and digital producer for NBC Nightly News. She also is a graduate of the International Culinary Center in New York, has worked for chefs such as April Bloomfield and Jean Georges Vongerichten, and is the founder of Crave Personal Chef Services in Austin, Texas.