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Does Your On-line Business Need An Internet Business Plan?

Author: Michael Elia

Just because you are starting a business or have a business doesn't mean you need a traditional business plan. The nature of your business and how you intend to use the plan determines whether you need a business a plan or not and the type of plan that is right for you. Traditional business plans are critical to off-line businesses... Off-line businesses usually require large amounts of cash. These cash requirements, if left unchecked, can drain or kill an off-line business before it even has the chance to gain traction. Traditional business plans are also easier to compile for off-line businesses because, unlike on-line businesses, off-line businesses tend to operate in more predictable business environments, which provide a basis on which to build projections. To raise capital and manage the cash needed to run off-line businesses, owners often rely on elaborate business plans. More important, the people providing the cash to run off-line businesses use these plans to see how off-line businesses are going to use the cash and as a way to track its actual usage. That's why traditional business plans include very detailed financial plans. But, the Net's environment is much different like most small business people's lives, the Web changes very fast. This makes it difficult to project the future of an Internet based business. Fortunately, the typical Internet business does not require large amounts of cash to maintain or operate. In fact, today, some service providers go beyond just providing you with disk space to park a Web site to providing you with all the tools to build a complete Web Business for just under $25 a month…something off-line businesses can only dream about. With such low overhead and cash requirements, preparing a "formal business plan" with thirty-six months of projected income statements, balance sheets, and so on is a complete waste of time for most on-line businesses, unless of course you need to raise capital. "So, I don't need a business plan for my Internet business?" That's not what I'm saying. You absolutely must have a plan. You just don't need a traditional business plan. In fact, how you write your Internet business plan, what you include in it, even how you package and present it will be much different than a business plan for an off-line business. Sure, you still need to understand what it will take to start-up and operate your on-line business. For example, how much will you pay for computer software and hardware? What about monthly hosting fees? How about separate auto-responder and keyword services? If you want to make money, you have to understand your numbers. But, instead of trying to project these numbers ahead thirty-six months, look out the next 12 months. That's about all that's necessary for an Internet business plan - and, given how quickly things change on the Net, you are doing well just getting this done. Avoid getting tied up with elaborate spreadsheets and full-blown business plans. Elaborate spreadsheets and full-blown business plans are great for managing large companies or raising money, but they can easily become major distractions...preventing you from doing the action items that move your business from idea to reality to ringing the cash register. The truth is: it's difficult for on-line businesses to predict the exact time their businesses will generate revenues. On-line business owners often have to be willing to sacrifice some early traffic to build inbound links. So, in the early stages, an Internet business plan must focus on laying out the necessary actions that build content for the site and eventually drive traffic to it. Focus on actions and milestones... As a result, your Internet business plan needs to center more on actions and milestones rather than financial statements. For starters, you'll need to find a niche that you know and love, identify profitable topics within that niche, and then layout the "Content blueprint" for your site, including your perfect domain name. A compelling Internet business plan spells out the key actions that will build targeted TRAFFIC by delivering excellent CONTENT that is related to the theme of your site. This Content must attract free Traffic through the Search Engines, targeted visitors who become PRE-sold about you and your business (i.e., become warm, motivated visitors due to your excellent Content), and who then generate income for you through a variety of Monetization models (ex., they buy your products or services, click on your Google ads, generate finder's fees, click on affiliate links, etc.). If your Internet business plan successfully does this... You will emerge with a business that is right for you...highly profitable, sustainable, and pleasing to you in every way.

Mike Elia is a chief financial officer and an advisor to venture capitalists and leverage buyout specialists. His business plan ebook "Business Plan Secrets Revealed" shows how to make your business the most appealing investment choice to venture capitalist, bankers, and other business investors. Visit his website at for a free business plan guide or more information about writing effective business plans and attracting investors.