Why write a Business Plan?

Making money online isn’t as easy as you think. It requires careful planning and an

analysis of the competition. If you purchased an existing offline business and required

a substantial bank loan, the lending institution would require you to present a

Business Plan.

Even though you can set up an online Internet business with only a couple hundred

dollars, it is a good idea to write a Business Plan. A Business plan will help you identify

exactly how your business will succeed. It will also help you find ways to gain an

advantage over your competitors. A well written business plan is an excellent blueprint

and motivator for your business. It can be a basis on how to drive your business to the

next level and beyond. You can download great samples of business plans on the

internet. It basically consists of an executive summary of your business (usually 1 or 2

pages), description of your business, market strategies, competitive analysis,

development plan/and or operational strategy, financial plans and appendices if

applicable.

There are many books and free online resources explaining how to write a business

plan. There are hundreds of sample business plans to study. Writing a business plan

will guide you on starting a business. It will ensure you do an in depth analysis of your

customers, competitors and your chosen niche market. It can be continuously

reviewed and updated and will help you keep focused on your business. It is

paramount that you firstly research whether a niche market actually exists for your

chosen product or service. This exercise will save you a lot of time and money because

it will assess the business viability and profitability before you anything else.

I highly recommend you do a SWOT analysis: Strengths, Weaknesses, Opportunities

and Threats as part of your business plan. This is a great way to assess the viability of

your business. This should be part of the competitive analysis of your business plan.

The first part of the SWOT analysis is to identify the above four attributes of your

proposed business or niche market.

For example, strengths are the internal factors that are a benefit to the project. The

internal positives may be your skills and knowledge in the niche market, low set up

costs, no loans required, automation of the web site and your uniqueness.

Weakness: Weaknesses are the internal factors that negatively affect the project. The

internal negatives may be lack of knowledge regarding your competitors, lack of

planning, is the market large enough? How much is the cost of advertising to gain

traffic to your site?

Opportunity: Opportunities are the external factors that may lead to further

development of the project. External positives are factors such as industry growth.

Threats: Threats are the external factors that may lead to the diminution of the

project. External negatives such as governmental law changes, social trends and

competition may impact on your business.

The second part of the SWOT analysis is to take on board the information supplied in

the first part and then identify the strengths, weaknesses, opportunities and threats as

they seem to apply to/in your business. This is the strategies and actions that you will

apply to maximize on the business strengths and opportunities, whilst minimizing the

effects of the weaknesses and threats.

The benefit of the SWOT analysis is to assess whether the niche market is viable. You

must find the market first and then develop the product or service. Too many people

make the mistake of developing the product/service first and then searching for the

market. Often they have wasted their time by learning there was no market in the first

place. The SWOT analysis can save you a lot of time and money by properly

researching your market and competitors.

Another advantage of the SWOT analysis is that you can maintain a competitive

advantage. Constant research analysis and education will help you identify and

understand important trends. Continually listening to your customers will ensure you

are meeting their needs, solving their problems and uncovering new niche markets.

As you can see, a well written and researched Business plan may mean the difference

between achieving success or failure.

As Nike says “Just Do IT”.