Platt Perspective on Business and Technology

Online store, online market space – part 9: business plans and filling in the gaps

Posted in book recommendations, startups, strategy and planning by Timothy Platt on June 25, 2010

I have posted eight installments in this series on building an effective startup online store so far, and have focused on a set of individual detail areas (see Startups and Early Stage Businesses, postings 20-27). I want to step back and look at the larger picture with this installment, in effect bringing all of the research, thought and planning that you would do on these detail areas into a single focus. A business – any business needs to be systematically organized, planned and run if it is to succeed and that means having all the pieces in place and working together. And this is where all of the thought and all of the written notes that you have developed in preparing for and starting to build your tripod, and your web site and ecommerce solutions, and your marketing get woven together as fitting into a single strategically considered plan.

And now I drop the bomb and start talking explicitly about a crucial step that successful businesses do, but that few if any entrepreneurs would want to do: developing and writing out a concise, focused, effective business plan. And before I go into the details I want to explicitly say why and what this business plan is intended to do.

Most entrepreneurs think immediately and essentially entirely of business plans as being documents prepared for an outside audience. According to this, a business plan is a marketing pitch that you write to help you convince prospective backers to invest in your business with an infusion of working capital, and with less detail generally needed for angel investors and more for venture capital investors. Business plans are in fact used this way, as tools for reaching out and to potential backers among others. But the real value of a business plan, if well prepared and systematic, is in its internal use.

This document is your plan for what you will do and how you will do it and with what anticipated timing and resource requirements. It is where you systematically set down your long term and intermediate goals and set your benchmarks for performance and with what specific anticipated investment requirement ranges, and in time and effort and expertise as well as in money. This is the document that you turn to as a baseline in making your reality check due diligence progress assessments to see more objectively if you are on track, ahead of schedule, behind schedule, under, on or over budget – if your business is running into delays or other problems as you build it out and with a basis for quantifying how much and precisely where.

If you do not have a business plan in hand you will drift into making subjective and emotional decisions where objective planning would serve you better.

There are a great many books and web sites on developing a business plan and there are a great many professional writers and businesses that offer business plan documentation as a service. I would recommend that you at least make an attempt at this effort on your own and without the services of a business plan writer and for several reasons:

• This way your business plan really will be yours and its preparation will provide ongoing value for having forced you to really systematically think through all of the details – including the details of areas that are important but that you do not usually focus on in your own hands-on work.
• This way you can be sure that the document you get is oriented towards more effectively helping you as a business development plan. Most professional business plan writers seem to focus on the external funding audience so their plans can be mostly externally facing marketing tools. So even if you get a professional to help you finish your writing and to help you with editing this will still end up more focused to meeting your specific needs for your specific business.
• And it is certain that the process of planning out and writing a business plan with all of its systematic details will bring your thinking and business building into a much clearer and complete focus and you will end up with a much better business as a result.

There is a specific book I have turned to when working with client startups as a consultant and it is the reference I have always suggested they get and follow as a how-to for writing their business plans. It is:

• Balanko-Dickson, G. (2007) Tips and Traps for Writing an Effective Business Plan. McGraw-Hill.

This book divides a standard business plan into ten sections:

1. Industry analysis – an external focus on your competitive environment and on industry trends and the market environment.
2. Market analysis – identifying and characterizing your competitors and their specific strengths and weaknesses, and gaps in what is not being met but that constitutes genuine value to potential customers.
3. Products and services – what you offer, and as a unique value proposition that would meet these real marketplace needs.
4. Business description – setting your vision and mission statements and defining your business goals, and your operational approach to addressing them.
5. Marketing and sales strategy – and this includes price point and pricing determination with your reasoning behind decisions made here.
6. Operations and management – I have seen more startups fail for a lack of coherent planning and follow-through here than from any other aspect of setting up a business.
7. Financial plans – with the three scenarios discussed in brief outline in posting 3 of this series.
8. Implementation plan – with steps and time tables so you can do ongoing due diligence and performance reviews and know when you may be going off track or encountering quantifiable and prioritizable problems.
9. Contingency and emergency planning – which you follow through on, on the basis of your ongoing due diligence and performance reviews, when and as needed.
10. Executive summary, which may show at the start of your finished business plan but that you always write last, and based on all of the planning and writing that goes into the other sections.

The devil as they say is in the details, and here that means in the details that you are going to have to work through but that you have not prepared and planned for. A well thought out and written business plan need not be a lengthy document but it will limit the number of points where you find yourself stepping into uncharted areas that you are not ready for, and that would create adverse consequences as a result.

It amazes me how often startups do not even proactive and aggressively identify and secure rights to their new business names, web site URL’s and other fundamental branding details! It is the unplanned for little details that will kill your new business if anything does.

The next section in this series is going to look in more detail into audits and reality checks, and into conducting effective, focused due diligence as you set up and start your new online store.


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