I have been writing about business plans for some weeks now, and have mentioned their importance in many blog pots over the past year. In case you missed the latest posts you can read them here:
What Is A Business Plan?
Why Do You Need A Business Plan?
The Contents Of A Business Plan.

The idea of having a business plan fo domain/web development seems to have caught on in the domain industry, and it is really about time this happens.

In the domain industry, domainers focus a lot the domain name, and just the domain name. They can afford to, because as with domain parking, they do not even need to have common sense in order to monetize the domain name.

However, if you are going to develop a business with the domain name, then when the business plan is drawn up, you will realise that the domain name bears less than 5% importance. Any business can be launched on any domain name. The domain name used is only important when one starts looking at branding.

The process of branding can only commence after the execution of a good business plan. Well, you can start the brand awareness process long before launch, but your branding efforts will only be successful if you plan well. Nonetheless, it is wise to secure the perfect domain name as soon as possible.

In case you are a bit confused, lets look at an example. Facebook is one of the biggest Internet brands today. However, when they started, I believe they were using TheFacebook.com. When the concept became successful, they realised the need for a better domain name and acquired Facebook.com. I believe I read somewhere that they paid some $200,000 for Facebook.com. (Please use the comments section to point me to the right data, if you can).

So, yes the domain name is really important, but the business plan is even more important. Without a good business plan, the domain name is absolutely useless, regardless of how much of a premium domain name it is.

Domainers (people selling domain names on the aftermarket) often criticise companies for going public about products or services  before securing the domain name. Well, whereas in today’s world, where cybersquatters are still at large, you can’t really blame these companies for not paying much attention to the domain name. They are doing the right thing. They may work backwards, but at least they spend time focusing on the right thing.

These companies spend time focusing on the product, service or business as a whole. They draw up the plans that will ensure the viability of the business. If it will be an online venture, then the domain name will only bear importance as a means to an end, as they will have to use one in order to be in business. It’s like drawing up the plans for a store, and then hunting for a space to lease in a shopping mall.

No one leases a space in a shopping mall and then go about deciding what kind of business they will put in it.

This is where domainers get it wrong. However, don’t get me wrong, if you are launching an ebusiness, to secure success, you will at some stage need to start thinking about branding. The right domain name will be your perfect weapon. It is in your best interest to secure the domain name at your earliest convenience.

Domain names are only important to eBusiness owners when they are focusing on branding. Domain names are important to domainers because they often caught up in a get-rich-quick mentality.

The more domainers realise that a good business plan supersedes the importance of having the “perfect” domain name, the more we will see domainers setting more realistic prices for their aftermarket domains.

Stay tuned for more.

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I have covered what a business plan is, and the reasons why you will need one. Now, I can just imagine you asking, “Ok, so what goes in the business plan?”

As I said in the most recent post in this series, your business plan will target different audiences. Each audience will be looking for specific reassurances before making a decision about your venture.

In a nutshell, what they are looking for is that your venture will be viable, will get off the ground, grow and be successful. To demonstrate this, your business plan must eloquently cover four main sections: the business; marketing; finance and the management team.

Just so that you perfectly understand this post, it is written from the perspective that you are writing a formal business plan in a bid to secure external finance, either in the form of a bank loan or from investors and/or venture capitalists. With that been said, the more robust and professional your business plan is, the more credibility you will earn, regardless of the intended purpose of the business plan.

The Business
This is where you give the basic information about your business. This should include the company name, address (registered office or location of business) and details of the current owners.

What you need to point out here is the legal structure of your business and who the current owners are. Are you a sole trader, Limited Liability Company, publicly traded company, family-owned company? This is very important, as it will help investors in understanding how the business will be run in the future.

The next important information regarding the business will of course be the purpose of the business and the product or service that you will provide. You will need to demonstrate why customers will want to buy your product and why you think selling the product or service will be a profitable venture. This is a good time to highlight any uniqueness or superiority of your product or service.

If you business is in the Research And Development sector, you may include any patents or intellectual property owned or filed for by the business.

No matter how popular your business sector is, try to present your business plan as if the audience has no clue whatsoever of the market sector or industry. So you should demonstrate the past and current performance of the sector, and its future potential.

Using competitors to illustrate the potential of the business sector can be a good thing, but it will also help if you can credibly show how what percentage of sales you think you can capture. This is a little bit risky here, as you could fall into the trap of unrealistic speculation. What are really important here are that you can clearly identify who your customers are, and how you will go about getting them to buy your product or service.

Really, this section should demonstrate your goals and objectives for the business, your aim for the business and how you expect to achieve success.

Marketing
The first thing about marketing is that you have to identify who your customers are. Some industries or business sectors may have wide ranging types of customers. So, you may need to accurately profile your target customers.

For example, there are many types of domain buyers. There are the domain investors (buy and hold), the developers (entrepreneurs/ebusiness owners), the domain flippers, and then there are those who will just monetize the domains through domain parking. eBusinessDomains.com specialises in selling quality pre-approved domains to entrepreneurs seeking to establish an online business/brand.

Accurately identifying your target customers will help you understand how to position the product or service in the marketplace, and also help with your pricing strategies.

Your business plan should provide a realistic SWOT (strengths, weaknesses, opportunities and threats) analysis of the industry that you are targeting, including competitors, customers and potential demand levels for your product or service.

Your investors will become very suspicious if they believe that you are not presenting a realistic picture of your venture’s prospects. One word of advice, always provide sufficient details about any competition and how you go about dealing with them.

Finance
It is fairly easy to start ebusinesses on a shoestring budget these days. However, your business plan should clearly demonstrate that you are on top of the finances.

This section of the business plan is where you share all financial data on your business/venture. Include any previous year’s accounts, (up to three years if possible), as well as details of any assets or liabilities (loans). Depending on the scale of your business operation, also include the current management accounts, cashflow forecasts and a breakeven analysis if possible.

Of course, if this will be a new venture, then you would only need to focus on any financial resources that you currently have at your disposal, and any possibilities of any realistic future cash injections.

As much as it is important for you to outline your current financial situation, it is equally important for you to provide realistic financial projections (future earnings and associated expenditure).

Show your audience that you are on top of your game by outlining different scenarios for sales, costs and cash flows, for both the long and short term. Remember that realistic estimation is name of the game. Do not dress up your figures.

A projection showing sales figures growing ever steadily will give seasoned investors cause for concern. Similarly, your costs should be properly allocated and projected. Certain products and business types, such as Internet businesses, may need to plan for a large upfront marketing budget. A projection that spreads an equal amount of your marketing budget across the whole year will seem a bit suspicious.

The management
Tell the audience who will be charged with the responsibility of making the venture a success. All background and experience of all the key members of the management team should be outlined.

Depending on the complexity of your business plan, you should attach CV’s for each individual and outline the strengths and weaknesses of the team as a whole.

Business angels feel more comfortable when they have a hands-on approach, and as such often take an active part in the companies they invest. Venture capital firms will have a wide network of contacts that may be able to join the board in a non-executive capacity. So, if you are missing certain skills in your management team, this can easily be solved.

The Executive Summary
Now, the last thing written is the first thing that appears in the business plan – the Executive Summary. This is the most important section and summarises in two pages what is written in detail in 10 or 15 pages.

This section of the business plan should single-handedly sell your idea to your audience. This is where, among other things, you state the company’s mission statement – a few sentences encapsulating what the business does for what type of clients, your aims for the company and what gives it its competitive edge.

The mission statement should illustrate the business’ current situation and your aspirations.

Similarly to the business plan, the executive summary should be clearly written and powerfully persuasive. It should balance sales talk with realism in order to be convincing. It should be no more than 1,000 words.

This summary may be the only opportunity you get to put your case to investors. Venture capitalists refer to the elevator test. If you can’t convince an investor of how good your business is in the time between when the lift (elevator) leaves the ground floor and when it reaches whatever floor you exit on, you may have missed your opportunity.

Venture capitalists are busy people. Remember, a venture capitalist sees hundreds of business plans a year. So you are actually going to the Dragon’s Den.

This post should be sufficient to give you an idea as to what goes in the business plan. Depending on the nature of your venture and the target audience, you may scale down, or need to beef up your business plan.

There is more to come on this topic. Stay tuned.

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This is my second post in the Business Planning series. You can read the first post here.

Why Do You Need To Plan?
There are different reasons why people write business plans. There are a lot of people that get into business without any basic form of planning, while for some, it is absolutely critical to do some planning.

Simply speaking, most people/businesses write a business plan because they want to have a document to use as a guide in their business processes, or more importantly, because they want to raise money or take on partners.

Writing a business plan is one way of tracking your success, or failure and/or being accountable for your actions. Most business plans, if written properly will highlight that the business will be a failure even before any risk is taken. I see this all the time. On the other hand, some business plans will highlight the risks, but will reveal that the rewards could be even greater if success is achieved.

If you need people to partner with you in your venture, for whatever reason, such as need for expertise, finance or access to resources such as technology, then you will need to demonstrate that your venture has got some stamina.

Let’s look at it from the financial side of things, as that is the most commonly needed external resource.

If you’re putting together a business plan to raise funding for your venture, the plan becomes even more critical in determining the success or failure of your business.

Your business plan will most likely become your only selling document, and will determine if you get the nod or get thrown out of the building.

It’s your business/venture. It will be exciting to you. You should be passionate about it, and you will probably know all the intimate details.

However, when you write a business plan, you should think about your audience, and the information and guarantee that they will need before they commit to parting with their cash.

Your business plan should be presented in a professional manner, where any claims about markets, sales/revenue potential and expenditure are verifiable. Don’t use Jargons that the general public won’t understand.

Remember, your bank manager, business angel or venture capitalist will all be perusing your business plan in great detail before they decide to risk putting their money into your business/venture.

The audience is important. Your bank manager will be keen to see if your business will be able to repay the loan. This is where cash flow statements and projected business growth becomes important.

An investor, whether it is a business angel or a venture capitalist, will want to see the growth potential and the likelihood of very decent returns on their investments.

Bank managers are more concerned with loan repayments, while investors are more focused on their exit route. Investors will either sell their stake in your business for a profit, or earn dividends (a share of the profits).

So, the reason why you need a business plan is to show the various potential stakeholders how their risk taking could potentially payoff if they decide to invest in your business.

Now, if you are thinking that you really don’t need a business plan because all you are doing is developing a website or an eBusiness, THINK AGAIN!

Your business plan as an eBusiness owner needs to be more robust and concrete than the normal bricks and mortar business plan. Why? The average bank manager or investor does not understand the ins and outs of the Internet marketing/online business world.

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I have stood on the mountain and shouted, like a bully. Now let’s have some conversation. I will be doing a lot of series in the coming weeks that will cover business planning and development, and will hopefully move on to branding and so forth.

What is a business Plan?
I have written so many times that when developing a website, if you want to successfully monetize it, you should write a solid business plan. You should really not treat it as a project, but rather as a stand-alone business. There could of course be exceptions, if the whole purpose of developing that website is to support another branded website. In that case the website would be treated more like a project.

When you write a business plan, you simply put on paper, or on your screen what you want to achieve and how you plan to go about it.

In essence, the business plan should really provide the reason why yo are developing the website in the first place, and the steps that you will take to ensure that the purpose is fulfilled.

The business plan should outline the structure of your business, the product or service that you plan to sell, give clear indication about who the customer is, and provide details about the growth potential and the financials.

We will look at why you need to write a business plan in a later post. However, what you write in the business plan should end up inspiring you to achieve set goals and objectives.

You should treat the business plan as a blueprint for what you want to achieve and should give you a clear understanding of how you intend on making it happen.

In most cases, the business plan will act as a rough guide or some sort of map. However, you should not treat it as any sort of prediction that is set in stone. There should be enough room for contingencies. External factors will influence the direction and shape o your business, and you have limited or no control over the future. Nonetheless, a good business plan should at least provide some sort of navigational aid.

A good business plan should help you to develop strategies and allow you to work out how to make your business a success. If your business plan is done properly, it should help you to avoid failure by highlighting dangers and pitfalls that you may encounter in the future.

The key thing is that the business plan should be realistic and should reflect what is achievable with the resources that you will have at your disposal.

By writing a business plan and identifying a set of targets, you will be able to monitor your progress and get your business back on track if anything goes wrong.

Stay tuned for more in this series.

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