It seems easy enough to start an online business. There’s less paperwork, the option to work from anywhere, and fewer expenses. You can just load up your garage with merchandise, hook your website to a drop-shippers, or (even better) provide a service. That way no product has to change hands.
That’s the daydream version of starting an online business. The real setup goes a little something like this:
- Write a business plan.
- Pitch for funding or invest money from your day job.
- Build a website or hire a designer.
- Add products and services.
- Digital and offline marketing.
- Networking and collaborations.
- Process orders.
- Process refunds, returns, and disputes.
- Handle customer service, consultations, Q&A.
- More research and planning.
- Execute business expansion.
Your imagination was right about one thing. DIY web building tools, social media, and video marketing have made it easier than ever to start an online business.
But an easy start has nothing to do with the finish line. It only creates low barriers to entry and more competition.
That’s why every business – even an e-commerce business – needs a business plan. Call it a blog business plan, a lean business plan, or S.M.AR.T. Goals. Whatever you call it, don’t leave home base without it.
Still not convinced that it’s more to online business than you think? Well, here are five more reasons not to start an online business without a plan.
Pssst… Still not sure about your business idea? Get your Dream Business Brainstorming Kit
Five Reasons You Need a Plan for your Online Business
1. Planning helps you get acquainted with key players in similar businesses
When you start researching your industry of choice, you’ll get to know your competitors and much more. Most people don’t spend as much time learning about competition as they do potential customers.
But you should learn about what these other businesses are doing, their processes, and pricing. Then compare it to your plans and work your butt off to do it better.
Use resources like the U.S. Census Bureau and IBISWorld to get information about how much competition you have, the revenue they make, and the opportunities you have to start a business and make money.
To get detailed information about your competition and how they operate, go straight to the source. Visit your competitors’ websites and social media pages or give them a call. Join their newsletters and community groups. This will give you more details about their processes.
2. An online business plan makes you think about your near and far future goals.
Imagine starting a business with little to no money and easy access, but waking up without knowing what actions you will take each day. Here’s what I mean:
Home-based businesses in the United States make up about 50% of all businesses. And that number continues to soar. That has a lot to do with the fact that starting an online business lets you delay or omit certain expenses.
Renting or buying a building, funding office space, paying utilities, and purchasing equipment is not a necessity in the online business world. And I recommend putting off some of these expenses, especially if you’re bootstrapping.
If you’re desperate to get started, you can operate a business using just your laptop or phone. This easy access can leave you tempted to dive right in, but there’s a huge reason why you shouldn’t.
You need direction to know how you will go beyond that laptop and phone as business assets. And you need to know what to do when you get there. The business plan will help you prevent overwhelm by breaking down those goals into bite-sized actions.
3. A plan helps you get realistic about the work involved in starting an online business
It’s exciting to dig into planning, but that’s also when ish starts to get real. That dreamy version of being an online entrepreneur that we discussed above quickly fades away. When you put pen to paper (or finger to keys), you’ll begin to see a clear picture of a day in the life of an online business owner.
A traditional business plan will capture the who, what, where, when, why, and how. And then you’ll take it a step further with goal planning. That’s when you will take the goals, milestones, and metrics that you outlined in your business plan and break them down into yearly, monthly, and weekly goals and tasks. Take a look at my video for a detailed example of yearly activity planning.
Being a business owner in any form requires muscle. Success derives from a perfect combination of working hard and smart. Fortunately, if you’ve thought things through carefully, you will enjoy most of the process. Choose the right niche, something you are interested in and like doing, but also something that will feed your family and business.
4. Business planning gives you a foundation for your sales and marketing strategy
Marketing is critical for success. As I’ve said many times, without marketing no one knows your product, service or business exists. And that pretty much means there is no business. So even if you choose to do a lean plan, make sure you’re thorough in the sales and marketing details.
Create a strategy for:
- Identifying your target market.
- How you will reach your target market.
- How often you need to promote.
- How you plan to sell your products.
Who is your target market?
This is your chance to dig deep and get to know and understand your ideal client or customers. Use tools such as a customer profile, customer avatar, and psychographics. Your target market research should answer these questions.
- Who are you selling to?
- What are their ages, genders, and ethnicity?
- Where do they live?
- Where do they work?
- How much income do they make?
- Where do they shop?
- Where do they hang out?
- What are their hobbies?
- What are their activities online and offline?
- What are their values and morals?
- What’s their personality type?
- What do they do in their everyday life?
How will you reach your target market?
Decide what forms of marketing you plan to use and what tools you will use to execute. Think about digital marketing, print materials, and physical/in-person marketing, radio, or T.V. advertisement. Social media is all the rave these days, but how will you stand out on a crowded platform?
You also want to think about if print marketing materials such as billboards, flyers, or business cards are necessary to reach your sales and marketing goals. Where will you distribute these print materials so that you don’t find them in the dumpster?
Another thing to think about is if you plan to use public engagements as a form of marketing. Since about 80% of online audiences consume their content by video, smart marketers have added that as part of their strategy.
But you can also use the experience of recording and going live to be a public speaker and promote your business. Just choose your options wisely and narrow your focus to a few. This leads to the next part of your sales and marketing strategy.
Know how often you should use each form of marketing
What will your marketing schedule look like? Do you plan to post on each platform every day? Do you plan to post multiple times a day, once a week, or every other day? You need to figure this out and be as consistent as you can. If that means only focusing on one or two social media platforms and devoting other time to blogging and physical marketing activities, then plan it that way.
You can even open space for monthly activities, such as interviews, live streams, public speaking engagements, or networking events. You don’t have to do it all every day. Just decide, plan it, and stay committed.
Decide how you plan to sell your products
This is where you make some solid decisions about how to get your product or service from you to the customer. Think about the needs you have for your system to satisfy your user experience and the customer’s needs. Which shopping cart will check off most of the boxes for those needs. You also want to think about options such as:
- Facebook or Instagram Shops
- Pinterest Shop
- Selling by E-mail
- Selling by Direct Message
- Dropshipping or Print-On-Demand Options
- Video Conference Tools
Jot down the workflow for your appointment booking process. This will help you find the perfect forms and booking calendar to seamlessly gather intake information and set the date. My workflow and the software I choose allows clients to go through the process from intake to booking without my involvement. I even automated the last step of adding their email to my subscriber list.
5. Your plan gives you a clear picture of your funding needs
Where’s the money? That’s the question every startup entrepreneur wants to know. I saved this one for last because mapping out everything above puts you in the head space to see what will cost upfront and what will cost you zero dollars.
Online business continues to be the least costly and has the least requirements to get started. You will still have to invest in your online business eventually. As you grow and gain more clients and revenue, you may need some help. You will also have to invest in tools and technology once the free ones no longer meet all of your needs.
This delegation and automation will reduce your workload and give you time to work on business acquisition and operations. So you’ll shift to working on your business instead of in it. If you plan it right, you will know exactly when those investments are supposed to happen. That’s the information potential lenders or investors want to see. Even if you are using a simpler crowdfunding strategy, you need to know your magic number.
The Most Important Thing you Should Take Away from This
If nothing else is important in your online business plan, it’s your marketing plan and your financial projections. Managing your exposure and your money will help you stay in business.
The upcoming posts will go through the fundamentals of preparing your online space for business. But I didn’t want to move forward without stressing the importance of starting with a business plan.
Business Planning is Detailed, But It Doesn’t Have to Be Complicated
If you’re in the planning phase of your online business, the Dream Business Planning Bundle is the easiest way to write your business plan in record time. This course shows you how to use Live Plan to write your business plan in a day so you can put your dream to work. Learn more about what’s inside!