There are millions of types of online businesses that are launched every single day. From selling T-shirts to innovative products that revolutionize entire industries, the internet has allowed people greater access to starting a business than ever before. Truly, this is a great development. As more competition rises, it results in better products for customers and businesses. If you have the money and skill, you can start a business in less than a day.
Except, should you? Just because you can start a business as soon as possible doesn’t necessarily mean you should. In fact, even if you don’t plan on needing any investors or outside help to launch your online business, there are still many positives to writing a business plan for your online business. Even if you were to control an entire market, taking the time to write out a plan can often benefit you in multiple ways. Here’s how.
• Build A Concrete Structure with Your Ideas
• Assess Market Trends
• Define How Social Media will be Used
• Secure Funding
• The Scalability of Your Business
Build a Concrete Structure with Your Ideas
If you are considering starting a business online, you’ve probably already put a lot of thought into it. You’ve probably thought about product design and what platform you’ll launch your business on. However, there are a ton of factors that will determine the success of your business. On the Internet, you’re not just competing with your local neighbors but with the entire world which can be a little daunting. Writing out a business plan can help you define certain tangibles that you will need.
With a business plan, you can tackle the following:
• Costs of equipment
• Time needed to make an item
• Time needed to grow your business from start to finish
• Note what your product does best
• Note what your product does worst
• Establish clear expectations for yourself, your customers, and investors
• Determine how cash flow will work
• Define your company’s tax status
• Set realistic business goals
(i.e., turning a profit in 6 months)
Writing a business plan helps you narrow down the specifics of your business. Think of common problems that you may run into and how you’ll be able to circumvent them. Do your research before writing out your plan to make the process much more smooth.
Assess Market Trends
Just because you start a business doesn’t mean that people will want to buy from you, even if you have a better product. One of the major parts of a business plan is to define market trends and market opportunities. How big is your customer pool? Some may say “the entire world!” They would be wrong. Just because you sell globally doesn’t mean that your customers want to buy globally. That’s not to mention you’re not only competing with other businesses but the algorithms of search engines, social media platforms, and other components as well.
You may have more access than ever before, but your target customers are not always going to be in the same place. This is where a business plan comes in. You need to do your research and define what motivates your customers, what social media groups they are associated with, and who is leading the pack in your niche.
Understanding your niche is critical to your success. You need to be aware of what your market is doing and how it is evolving. How can you be the next best product, service, or item in your niche?
Define How Social Media will be Used
In large part, social media will likely be your most effective way to grow online other than word of mouth. This begs the question “how will you leverage social media to grow when there are thousands of businesses to compete with?” Due to your research for your business plan, you will probably find companies that you will want to emulate or improve upon. Specifically, you’ll find businesses that will miss out on certain markets or alienate some customers due to their platform choice or marketing style. You need to:
• Identify one platform that you can grow
• Identify social media groups that may be interested in
your product or service
• Identify the best ways to advertise on the platform
• Identify how customers interact with businesses similar to yours
• Identify what tools will make posting easy
• Identify what content your customers will like to see. Guides, tutorials, designs, whichever seems to pique the customer’s interest the most
• Identify how you plan to grow your customer base on your specific platform
Even though a lot of online businesses are started by one person with little to no money that’s not always the case. In truth, a little bit of funding can go a long way. Whether that’s equipment to produce content for social media, securing funding for manufacturing purposes, or anything else, a business plan can help you secure funding for your online business. The right amount of funding may be able to cover some of your weak spots when it comes to starting a business such as website development. Funding could allow you to hire a part-time social media manager so you can focus on what’s most important. It may even allow you to just buy simple tools to make your life easier.
Even if you don’t need funding at the beginning of your online business, that doesn’t mean you won’t in the future.
A past business plan that you update can show realistic goals met and set appropriate expectations for the future. This can be a great way to show the growth your business has made.
The Scalability of Your Business
Lastly, a business plan can help you devise the scalability of your business. Because you’ve done so much research on the process of making your product or service, you know the exact amount of time and effort required. You can use that information to not only gauge when you will be profitable but when you can start hiring extra help. More importantly, you will know the limit of how much work you can accomplish without it damaging your business (or being overloaded). This can be vital information whenever companies start to experience exponential growth.