The barriers to starting an online business are lower than ever, and that includes the writing of the traditional business plan. Here's a guide to tapping into the emerging technologies market and how to plan for it.
The business landscape continues to change very quickly, and that constant change brings about plenty of opportunities for entrepreneurs. Additionally, the tools and cost-benefit involved in building and marketing an online business have become increasingly easier, cheaper and faster than ever. But in an era where technology is always a part of our lives, you need to make your business idea, model and planning stand out if you want to succeed in the long run.
"People have completely shifted the way that they relate to their technology," says Jon Burg, a senior social engineer who works with Fortune 100 companies on emerging technologies at Digitas. "People are no longer looking at their computers as a screen or a mobile phone as just their phone. Rather, they're looking at it as a gateway to their life. What does that mean? It means there are new opportunities for marketers and entrepreneurs to talk to people in a new environment in a more meaningful manner."
Users are very willing to attach themselves and become loyal consumers around new products and services today, and if you find a way to capitalize on that enthusiasm, you can bring a customer in for good while also gaining a brand advocate (someone who will express their enjoyment to others). When it comes to planning, it's all about your understanding of the target market (as it always has been), but these days its much more reliant upon your willingness to adapt and change.
Business Plan for an Online Business: Deciding What Business to Build
"Don't think of the formal business plan until you actually need it," notes Tim Berry, president and founder of Palo Alto Software, the maker of Business Plan Pro software, who blogs at bplans.com and is the author of Plan-As-You-Go Business Plans. "If you grow as a company, you'll need it then in what is called the business plan event. But it's much less formal then it was in years past, and more pragmatic. Do each part of the business plan when you need it, and don't worry about such formality up front."
While Berry is not suggesting you scrap the idea of a business plan altogether, he is saying that online entrepreneurs need to focus on the innovation and planning of the business first, getting their idea up and running and then being observant and open to changes. While the content of the business plan changes based on your specific business situation, what needs to be included in your plan doesn't. He compares online business planning in 2010 to steering a boat or a car: "if you're driving your car with GPS turned on, you have a final destination, but depending on traffic and weather, there needs to be an ability to change direction and take a detour."
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Business Plan for an Online Business: Steps for Creating Your Business Plan
The web is a powerful tool for companies of all types, and as it has changed, so have the types of companies who prosper. The four main purposes of Internet sites, as described by noted columnist Rhonda Abrams in The Successful Business Plan: Secrets and Strategies, are transactional, content, promotional and relational. Regardless the type of online business you are running, here are the recommended steps in putting together your business plan (read more about writing a great business plan).
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Business Plan for an Online Business: Set Up a Review Schedule (Be Open to Change)
You should never complete any business planning without a review schedule, but it has become increasingly important to do it earlier and more often. Why worry about the subtleties of an executive summary, language or a market analysis if you don't have the most important element for actually using and working a plan? What matters is the planning for the future, not just the formal plan.
This is part of the premise behind Berry's new book, and as he says, "Doing a plan is beneficial to get all of your thoughts on paper, but that one-time process is nothing compared to the ongoing planning process and changes you undergo as a business." He recommends that you set up a timeframe (perhaps the third Thursday of each month) to evaluate your business, your competitors and your customer conversion rate.
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Business Plan for an Online Business: Define Your Business Objectives and Personality
From a very basic level, you need to identify what your goals are as a business. What are you selling, where does it fit within the market, and what is its price in comparison? If you're not a transactional site, you'll still want to define how you plan to make money, whether that's via advertising, traffic and visitors, etc. How do you envision your site being successful, because the definition of success will differ for each entrepreneur and business type?
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Business Plan for an Online Business: Complete Your Financial And Management Summary
You need to outline what kind of experience your management team has and also any financing that you already have lined up. Consider your management summary to be a resume of the qualifications and work history for the people involved in your startup. If it's a smaller venture, which many online businesses tend to be, you'll want to play up your understanding and expertise in the digital space.
While sales, revenue, and established users will be catchy in a business plan, you also want to describe how much capital you already have and will need, what the cost of operation will be, and what type of accounting you plan on utilizing.
"The beauty of starting an online business, if you don't have hard sales numbers," says Berry, "is that you can at least get the site up and live, get a module, get going in a way that is more practical and more close to reality than it was in the past to show potential investors what they're spending on."
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Business Plan for an Online Business: Measure the Market and the Metrics
Focus specifically on the demographics and users you're looking to hit with your new business, and how your price and costs might compare with what the market wants to pay. This is the spot to list your existing competition and what they're doing right or wrong, and remains one of the most attractive and important sections to lure investors or lenders. If you can find a way to show that you have innovative ideas and marketing strategies, you're a step ahead. And in today's business landscape, those innovative ideas must include a social media strategy (yes, Facebook, Twitter and more).
"I love the word personality when it comes to finding your personality in the social space," says Brendan Gallagher, the VP/Group Creative Director for Emerging Technologies at Digitas. " Using social media to evangelize a category or vertical that is your product is an important piece to this, because that's how you find influencers. And when you find influencers, that's how you find people who are related that are around things you make or can help identify the impact its going to have on society."
Regarding metrics, online entrepreneurs are blessed with the availability of way more metrics than any businesses in the past. There are immediate ways to measure your business success that are very practical and very inexpensive, which makes them considerably easier to obtain.
"Online sentiment and what customers are saying is certainly important," says Burg, "but it doesn't tell you whether people are purchasing your goods. The best way to measure success is by taking note of how you are performing with people you already have a relationship with. That gives you a great idea of how effective your business actually is performing.
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Business Plan for an Online Business: Don't Forget an Exit Plan
This strategy goes along with the first pillar above, but as important as planning a regular review strategy is, planning how you exit your business is just as important as how you start it. The goal is to maximize the value of your company before converting it to cash, and to minimize the amount of time consumed. This will differ for every business, and for every person. Is your goal to get the site started and sell to an investor? Is it a 5-year project for you before you move on to another venture, or is it the business you want to stay with. Defining all of these objectives early on, and thinking more long-term, can help you to get your business up and running and also keep your goals in check.
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LOU DUBOIS is a Philadelphia-based Social Media Editor for NBC Universal's local news affiliate (WCAU-TV). He is an experienced writer, editor and marketer who has worked with and written about Fortune 500 companies and small businesses, focusing on social media, emerging technologies, small business success, entrepreneurship, sports business and corporate policy. Previously he worked for Social Media Today, Sports Illustrated, the Associated Press and SOBeFit Magazine, along with various newspapers.