Online businesses have been trending and booming across the world with the eruption of the digital age. Simply put, it refers to any commercial transaction backed by sharing information through the internet. The model conducts its entire or partial operations through an online platform, especially online sales. The basic requirements of online business include:
- Have a product/service to offer
- Have a platform to make a sale
- Register name/domain
- Provide customer support whenever needed
With the help of electronic devices, networking, and social platform, it is relatively easy to start and run an online business these days. Unlike other companies, it is not mandatory to prepare a plan for E-business. However, it is undoubtedly easier with a well-constructed business plan. Having a solid plot helps you gain insight into running a venture through research on logistics, operation, execution, and marketing lessons.
Many startups that don't work on their business plans beforehand end up in failure. As such, having a plan is vital for a successful venture. Additionally, an improper plan may also lead to a loss. So, it is crucial to review the business plan before its implementation. LivePlan is a cloud-based software that allows a small business owner to create a business plan. For $15 per month (based on the annual plan), you'll get access to 500+ sample plans, as well as other modules such as cash forecasting and financial performance tracking. Having your business plan go through a Live Plan can help you recognize the proposal's flaws and improve them "for good" because...
With adequate correction you can implement your plan into action. Read my Live Plan review before using it, it can help you understand if LivePlan features something that you might need for your business plan.
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The prime purpose of a business plan is to give direction to your business. Although not mandatory, creating a useful online idea requires hard work and dedication. Writing a business plan forces you to research and analyze every aspect of your intended operation. The points below further stress on the importance of planning:
1) Avoid Mistakes
Most companies often fail in the first year due to the lack of proper planning and vision for the long run. Many startups that start without adequate knowledge and end up as a failure. The absence of planning makes us ignorant of the factors that can potentially damage the business. Some of the most common reasons for failure are:
- Lack of capital
- No market needs
- Inadequate team
- Unhealthy competition
- Pricing
2) Set Priorities
While performing numerous activities and transactions, it is evident that one can lose track of the operations. Without a plan, the preferences cannot be sorted out, and one may spend too many resources or too little on areas that need your attention. Hence, before running a business, it is essential to strategically allocate time, effort, and resources to carry out all the required operations effectively, which can be obtained through proper planning.
3) Change Management
Change is an inevitable part that affects every aspect of the business, sometimes positively and sometimes negatively. Change through the external environment cannot be controlled, and the venture needs to cope up as per the change. Only with a proper plan you can review assumptions, track your progress, and adjust with the developments. A plan versus fundamental analysis is required to manage the change efficiently.
4) Set Better Objectives
Objectives are the reason why the business is established. Without clear objectives, the company will have no goal. With objectives clearly defined, the venture can move towards success. For attaining the objectives, the plan helps through:
a) Strategic Alignment: Strategy are means one can implement to achieve overall objectives. The company activities are kept in line with the strategy, as per the plan to meet the fixed goals.
b) Regular reminders: During the heat of the routine, it can be hard to keep on track. The process can act as an everyday reminder to keep track and attain pre-defined objectives.
5) To Secure Financing
Any business needs capital to invest and operate. Without adequate funding, the company may go bankrupt. For financing a venture, nobody would put their money without going through the business plan. As the investor wishes to ensure that their money is in good hands and assure its viability in the long run, they require a business plan before they invest their money.
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6) To Reduce Risk
Opening a business is a risky task as it might go wrong anytime, and you may have to bear huge losses. Without proper guidance, you won't have an idea of how to react to specific situations. Preparing operational strategy, revenue and expense projections, understanding the market through research provides insight and can help you reduce your company's overall risk. Having a business plan can help you view the most transparent view of the company's future by developing contingency plans on your flaws.
7) Critical Decisions
Decisions are vital for the operation and growth of the company. Making a critical decision requires the study and analysis of various factors in the organization. Creating a strong business plan is a function that requires you to study the significant components of the business. It helps you make better decisions, even in critical situations.
8) Induce Growth
Unlike other documents, the process of writing a business plan is essential to the project itself. Writing a proper plan and its periodic review incubates you with the required skills and knowledge needed to put forward your company. Regular goal setting, tracking progress, finding the gaps, taking corrective action, and making contingency changes are tasks that aid in the company's better operation. Studies show that companies that strategise and review grow 30 percent faster than the companies that don't.
A Business plan is a critical tool that guides your decisions and activities. It is a roadmap towards success that clarifies each aspect of the business, be it finance, marketing, operations, or sales. By implementing a proper business strategy, even small companies can thrive through global pandemics. It is not mandatory to formulate a business plan for online business, but having a solid system helps you avoid mistakes, manage change, reduce risk, secure financing, and increase the venture's increased growth.
Author Bio: Alina Burakova
Alina is an expert on the job industry and one of our most experienced writers at EduReviewer. By working with aspiring job seekers on their resumes for over 25 years, she has helped numerous applicants land the job of their dreams.
