We are living in a high-tech era where gadget computers and internet has become an important part of our lives. If we try to put it in a simple way we are virtually living in cyberspace. Internet has not only helped us with a better way of communication but has also opened up a doorway to newer and bigger opportunities. One of those unique opportunities is having an online business.

In order to do a successful online business one must have a well coordinated internet business plan. A business plan is actually a proposal stating the fact about your business. Any internet business plan should have a definite goal and a fair budget. But it also needs good entrepreneur skills too.

In the modern world e-commerce has achieved a lot of importance. Online businesses are thriving all over, thus giving a rise to a tough competition. The conception of an online business is not too different from an offline one. It requires a lot of knowledge and research over the business plan. Proper planning foresight and sound knowledge can give u a head start over your competitor.

Internet business plans comprises of businesses like web development, web content writing, online marketing, online banking, online share trading etc. To incorporate an internet business plan one must start from rudimentary level, covering all the aspects like, your targeted customer, marketing strategy, the operations, management and most importantly customer service. In order to promote your business you must choose a brand name which states clearly about your company objectives. In order to be safe from scammer, you must do a thorough research on the company or product you are dealing with. The also needs to be flexible, and should be made keeping the customer’s need in mind.

There are many internet businesses which are home based. Running a business from home can be very beneficial. There are many home based business tips available. if you are doing an online business from your home then you should have a well researched and sound Internet Business Plan and follow some home based business tips, set a schedule and stick to it, have a proper workplace, have 24/7 internet connection, advertise, familiarize with the tax laws, try multitasking etc.

All online businesses weather it is home based or not needs a strong and sound business plans as well as a better idea of what are the basic involvements of a successful internet business.

There are, in reality, three primary reasons you need to have a business plan. Publishers, and a certain number of consumers, like to see Top 10 lists, so I arbitrarily chose Top 8 Reasons, just to be different.

Gleaned from years of working with a variety of business in putting market strategies and business plans together, here are three of the main benefits to you, as a business owner, for having a business plan:

1) Risk Prevention. What? If you’ve been in business for any length of time, and paid for advertising to promote your business, can you quantify how much revenue that advertising has generated for your business? Spending ad dollars to reach potential consumers is a risky gamble that can be prevented with a little research, identification of your market, and an effective marketing strategy. These are all elements of your business plan.

Unfortunately, a majority of business owners fall prey to the “marketing consultants” who sell radio or TV time or space in a magazine or newspaper. Don’t get me wrong, they are all excellent media resources for conveying a message to consumers, but each one has a unique delivery system, targeted audience, and ability to be effective. That’s why you’ll hear the representative say, “There are no guarantees.”

However, if you know your target market and their preferred method of receiving advertising messages they will respond favorably to, your choices for advertising become much more simple. Your ratio of success and odds of increasing sales go up exponentially. That’s one way your plan helps you prevent risk… and lose money!

Another aspect of preventing risk that your plan provides is the development of strategies to handle a down economy or reduced demand for your product or unforeseen circumstances or market trends. When you take the time to think things through and put them into a plan, you create solutions to problems you may only envision happening. Better to do this in advance instead of waiting until it happens. You then know how to react and don’t have to waste time figuring out what to do. The plan goes into action without delay.

2) Management Tool. Yes. Operating a business requires sound management principles and effective managers. One of the key elements a bank or lending institution looks at in providing financing for a business is the strength of the management team. Strong managers are confident in making difficult decisions, and that is important to the bank. If payroll needs to be reduced, lenders like to know the decision will be made for the good of the company and its bottom line.

What management needs, therefore, is a management tool to provide guidance, determine strategies, and effect changes if necessary. This is where the business plan plays a vital role. With a well-defined budget, a pivotal element of a business plan, managers have a tool they can use every month to assess the company’s performance. If sales projections are less than expected, management can implement corrective actions to improve the results. If the plan is well thought out and written with action plans that deal with uncertainties, management succeeds in turning the negative influence around.

On the reverse, if sales are better than projected, management can make adjustments to production or inventory control to meet the increased demand.

The point is that your business plan should be an ever-changing document, part of the fluid process of managing your business effectively with the right tools.

Evaluate the definition of your products and/or services at least twice a year. Do you have sufficient margin to operate in the black? How does your pricing compare to the competition across the board? Is there enough strength to keep your prices where they are and retain the business against competitive influences?

We worked with one client who was afraid to raise prices. She felt she would alienate and therefore lose customers. When we explained that without an increase she would be unable to keep the doors open, and that would eliminate all customers, she understood and raised prices.

There are times when you are working so hard you forget the reason you’re in business to begin with; the adage that you fail to see the forest for the trees is applicable. Get some outside help so you have other eyes to help you take the time to think and see golden opportunities in front of you.

3) Financing. In the economic era of Frank-Dodd legislation, banks and credit unions need to see a business plan to extend a line of credit or provide financing for your business endeavor. There are exceptions, of course.

One of our clients had gone to the bank with his updated business plan and got his line of credit extended. When he went back for financing to add an additional location, he figured he needed another update. The bank told him they were so impressed with his original update they were fine with that version of his plan. He got the funds to open a new store.

Since the economic downturn of 2008, government intervention in the banking and financial business has stifled the growth of our economy. The Fed wants banks to loan money, but keep a certain percentage of their assets in reserve funds. The result is the banks have to be more selective in the types of lending they underwrite, and as they take steps forward, there is an auditor or inspector watching every move and controlling where they can invest. It can be daunting for a business owner.

There are countless stories of business owners having a long-term relationship with a bank that comes to an end because the bank is divesting itself of those types of customers and loan portfolios. The owner stands in the street wondering which way to turn. She may have to work with a banker that is less than receptive to her operations, hopes, and dreams for her business.

The importance here is that the business plan needs to have realistic projections, and the business owner must be able to explain where the numbers came from, how they were arrived at, and how they will be met. If you fail to have the answer, your odds of getting financing are greatly reduced.

Just so you can say there were 8, here are 5 more reasons to have a business plan:

4) Create a new business.

5) Sell your existing business.

6) Share and explain business objectives with management.

7) Valuation of your business for formal transactions, such as estate transfer.

8) Deal with professionals.

A business plan does so much more than layout the internal structure of an organization. It provides some key insight to the money-men, the venture capitalists, the angel investors, the private investment bankers or even the traditional bankers. Remember that these people see hundreds, thousands of business proposals a month. And they’re all looking for certain things that either make them love your proposal — or send it immediately to the shredder. We’ve worked with nearly 50 investment firms at one point or another for clients for whom we have written business plans, and based on our experiences and the people involved, there are some important factors investors look for the most from the business plan.

1.) How much money is already invested? Do the client or other individuals/companies have a stake in the business?

Sometimes the difference between getting a loan and getting rejected is as simple as that. Imagine you’re coming to an investor with a fabulous business plan and you need, say, $500 million for a resort and real estate project. In your proposal you clearly state that you do not have one single dime invested yourself (yes, we had a business proposal like this once!). Do you honestly believe an investor is going to give you the time of day? Of course not. You haven’t taken any sort of risk — why should the investor?

In your business plan, it is key to explain fully, in the executive summary and then later on in the financials, just what monies are involved. Okay, so maybe you don’t have any money involved in that resort project, but you DO own the roughly 50 acres of land it will sit upon which is worth maybe $75 million. Good! Mention that in the proposal clearly and accurately, including what kind of land it is, along with a map, some distinguishing features (is it ready for construction, water, pathways, roads, accessibility, etc.) If you have other sorts of assets, something, ANYTHING that can be used as collateral against your loan, make sure it is explained and described.

If you have partners who have chipped in $250,000 for a project worth at the most $2 million, you have a significant edge over other people. Most investors we have dealt with like to see at least 10% of the required funds already in place.

2.) How accurate is the research involved? Does the client know the market, the competitors, and his or her chances?

We can’t begin to tell you how many business plans we have come across that had little or no market analysis or competitive structure. The client had no idea about the target market, the competition he was facing, nor even demographics of the area. He had an exciting product, but it was difficult to ascertain just how much success he was going to have SELLING it.

In many cases, an investor isn’t as interested in the product as he or she is in the product’s success on the market, so a good business plan should have a clear, accurate description of that market. Many things should be included like:

a.) Demographics of your target market and market analysis, with factors such as age, race, income, etc. Think about your average customer walking into your store for your product or service. What are they looking for? What do they look like? How much do they want to spend?

b.) A market analysis that describes the trends and statistics of your potential market. Will your product or service be in high demand for a long time — or will it have limited ‘shelf-life’ on the market, coinciding with a new fad, for example. Will the product or service be affected by shifts in the market? Is this a stable target market with limited shifts taking place, or does the market wildly fluctuate?

c.) Do you know your competitors? What are the similarities and differences between what they sell and what you sell? How are you better than them? How are you inferior to them? (Yes, you need to include that, as much as you don’t want to.)

3.) How realistic are the financial projections?

Be extremely honest. No start-up business makes a profit in its first year, no matter what you are selling. So make sure not to show that in your business plan. Also don’t be too alarmed at the first-year loss. We had a client with a business plan that showed a $400,000 loss against a $2,000,000 loan in his first year of operations and he panicked. Then we explained that he was going to have a loss because his first year of operations would have high expenses as he organized and finished all his preparations for his new company. Investors expect you to have a lousy first year — don’t beat yourself up about it. It’s not the first year that concerns them anyway — they are thinking 3-5 years down the road. If after three years your company isn’t showing a profit, that is when the investors get nervous. After all, why should they put their money into something if your business proposal shows that you won’t be able to pay them back? Luckily for our panicked client, his second year showed a profit of about $30,000 and his Year Three profits would equal $375,000, almost erasing his first year loss. He was going to have a steady 40% increase every year after that.

In many instances, the investor thinks long-term, and so should you. Your financials should explain what is going on, and what will happen. Don’t try to sugar-coat things, per se, but put a healthy spin on a mediocre beginning. Don’t impress the investor with what IS happening — impress them with what is GOING to happen.

4.) Does your proposal look professional?

You’d be surprised how many proposals are overlooked with something as simple as a large ‘BUSINESS PROPOSAL’ on the first page. This is merely common sense. If you want people to take you seriously, show your most professional side. Your proposal should be checked for errors, misspellings, proper formatting, and headings, and have clear, easy-to-read graphics or images. A client tried to convince us to use a dazzling bold red text over a green bar-chart and we hastily explained to him why it’s not a very good idea to ruin the eyes of a potential lender. Include pictures or illustrations, maps, diagrams and other visual aids, if possible. Also, take a good look at your writing. The character Rusty, played by Brad Pitt, in ‘Ocean’s 11’ said it quite well: “Don’t use 7 words when 4 will do.” Talk about your management team, but don’t drone on about how instrumental a part they have played in your life. Talk about the great product you have, but don’t go on about testimonials from other people,(or if you must, include them in the appendix) And don’t be funny. Humor should be left at the doorstep. If you want to be funny, become a stand-up comic. Treat your document and the people reading your document with the utmost respect.

5.) Is the management team solid? Are there good people involved?

Remember that your business is not, and should never be, about you. There have to be some good people involved with you to make it run smoothly. It does not matter what service or product or project is being offered, if you think you can convince an investor you’re a veritable one-man show, you are out of your mind. A client we recently wrote a business proposal for was creating a new mobile-phone service, and amazed us with the list of engineers, technical advisors and IT professionals he had attained. When we saw how the management structure was fully laid out, and how each individual was going to fit in, we knew right away this particular proposal had a good chance to get in the front door.

Investors want to know who is on board, what their job is, their experience in the field you have chosen to represent, and a little of each person’s background and education. A solid management team, with a full layout as to positions, responsibilities and backgrounds, is a sure-fire way to get an investor looking at your proposal a lot more.

6.) Is the exit plan well defined?

Unless your lender is going to get involved with you through a joint-venture, or partner, chances are he or she does not want to stick around with you forever. Investors want to know what you’re offering them later on down the road, when it’s time to cut you loose and count the money you made for them. Some examples of exit plans include:

a. Creating an initial public offering (IPO). If your business has the possibility of going onto the stock exchange later on, and investors can share in dividends, this is very important for them to know from reading your proposal. Let them know how long it will take to get an IPO, and estimate the price per share you foresee, if you’re offering investors a first-buy once the IPO goes public, etc.

b. Buyout. Perhaps your shoes-string business is going so well, your investor is impressed enough to want to buy your company completely for several million dollars. If you want to offer this alternative to long-term investing, make sure you let the investor know the approximate value of the company after a certain number of years. A business valuation report is very helpful in this regard. Let the investor know exactly what he or she might be getting into and if it’s really worth pursuing. If you can do a valuation of the company based upon your projections, it may assist the investor in determining if you are worth the time and effort to invest.

c. Sell the company to others. If your business has the possibility of going up for sale to other interested parties, the investor should know details such as possible buyers, how much they could pay, the value of the business at the point of sale, etc.

d. Pay out of equity. Let’s say Steve wants equity in George’s company and receives 20%. Steve loans George the initial funding and an agreement is made that Steve will own this equity for 10 years. Each year, George will pay Steve 20% of the gross profits. At the end of ten years, if any money is still owed on the loan, which is doubtful, George will pay the equity of 20% and a balloon payment of anything that remains on the loan. All this, of course, must be agreed upon at the outset, so make sure you define this clearly.

7.) How much money do you need and how will it be used?

As weird as it sounds, we have had business proposals come past our desks that explain how much money is needed — but fail to tell us what it’s being used for. An investor will balk at someone who says they need $100 million for an oil well project yet doesn’t explain where all this money is going. Our business proposals include a special heading for Start-up expenses (when dealing with a start-up company, of course), that explains and lists the expenses the investment will cover, and for how long.

If you want to really impress investors, include what we call a “phase plan”. For example, let’s say you want to start that oil well project. In Phase One, you show the investor what you’ll be spending, in this case, for surveys of the land, preparations for drilling, etc. Phase Two could show expenses for drilling equipment, personnel, and construction of the wells. Phase Three could discuss refining procedures expenditures, and so on. You have detailed out a full “shopping list” for the investor, and they not only know what you’re spending, but how it’s being spent, and an estimated time when it will be spent.

8.) How will the money be paid back?

On the heels of exit plans, an investor likes to know how you’re going to pay him or her back. If you can agree on a certain percentage each month, or each year, that is fine. If you want to offer annual equity and a share of profits, that’s great too. But whatever your options are, make sure the investor knows what you’re offering. Detail out all the pay-back options that are available, and order them in importance to you. You might want to think twice if your business has the ability to make $50 million per year, and your investor only gave you $5 million at the beginning, yet you offer a 35% equity every year! Reward your investors, yes, but don’t shower them with untold riches for nothing. A happy investor is always good, but make sure you’re happy too so that your business continues to prosper.

9.) What is the SWOT like?

SWOT stands for Strengths, Weaknesses, Opportunities and Threats — and if you do not know these, you have no business, well, running a business. Your proposal should describe each of these areas accurately and with great detail, at least a few paragraphs for each.

Strengths: What really makes your business stand out? Where does it excel?

Weaknesses: Where does your business need help? Where is it lacking?

Opportunities: What positive trends, actions or events do you see that will have a profound and positive effect on your company’s success?

Threats: What negative trends, actions or events could cause harm to your business — and how will you sail past those rough waters smoothly?

10.) How relevant is the business to our society?

A lot of people will try to tell you that investors really don’t care about this factor, but from our experiences you would not believe the amount of investment firm applications we have seen that ask this exact question. How your business impacts society, whether locally, nationally or world-wide, can have a positive or negative impact on investor interest. If you have a business proposal that offers 4,000 jobs to your city, or will strengthen economical development, or includes environmentally-friendly factors or some sort, your proposal looks that much better. Try to take the time when writing to think about how your project affects others around you. What are the benefits? The long-term effects? The opportunities for others? Every business has the ability to impact society in some way. Informing an investor in detail about how your particular project will do so, tells an investor that you care enough about your project to do the extra research, go the extra mile — and it shows a great deal of determination and heart.

And every investor loves that!