Plan Your Internet Business, or Plan To Fail

It’s a sobering thought, but 95% of internet businesses fail. Only 5% succeed in selling products on line, and the majority of those do not make consistent profits. Why is there such a high attrition rate in the internet marketing business compared with offline opportunities? The primary reasons must be the relative ease with which one can set up an online business, and the lack of effective planning.

I’m always staggered when I wander through some of our local towns and see shops that open, trade, and then close within six months. Did the shop owners actually have business plans? Did they submit them to the banks for financial backing? Were the banks rigorous enough in their scrutiny of the plans?

Some of the businesses seem doomed to fail from the start. Is there really a market for pet pedicures? Can this town really sustain another Chinese restaurant? How can this isolated shop survive when it’s situated well away from the main shopping areas?

But a significant number of these offline businesses do survive and prosper, in contrast to the vast majority of internet ventures. How many of these internet entrepreneurs have actually taken the time to write a business plan and consider the viability of their ideas? My guess is that it is very, very few. Because online businesses are generally very cheap to set up, there is no requirement to seek additional funding, so there has been no need to submit plans.

I really do recommend that internet marketers put together business plans, no matter how brief. Below I suggest a structure for an internet marketing business plan.

Objective. Just what is the point of your site? What makes it unique? Who is your target audience? What services are you offering, or what do you intend to sell?

Mission Statement. This could be linked to your objective. Write a few sentences that describe what you’re selling, who are you specifically selling to, and how are you different from the competition? What is the ethos of your business – what do you stand for?

Market Research. Make sure you have fully investigated your intended market. For example, if you’re planning to sell running shoes, look at existing sites and consider what you need to do in order to make your site better than the rest.

Product. You need to describe your product. Is it really what the market needs or wants? What evidence is there that it is in demand?

Online Marketing. How will you get your product in front of potential customers? Will you be developing a web presence or a blog? Consider possible marketing strategies and consider how you will incorporate them into your overall scheme. For example – article marketing, SEO, video marketing, paid advertising, affiliate marketing.

Offline Marketing. Don’t ignore the more traditional methods for reaching customers. Consider tried and tested techniques such as trade shows, direct advertising, sales letters, TV/radio, seminars and workshops, etc.

Financial Plan. Include in this section the costings for production, distribution, marketing, etc. How much will your product cost to produce? What will your profit margin be? What is your projected cash flow? What growth do you see in the future?

Evaluation. How will you evaluate the success of your internet marketing campaign? What statistics will you be using to monitor the various elements of the campaign?

The whole process of writing a business plan will really help you to reflect on the potential of your project. Realistically, will it be successful? Are there any areas that need to be radically altered or merely tweaked? Be honest and critical, and if the project really does look dead in the water then don’t pursue it further. Consider other options, and go through this whole planning process again.

It makes real common sense to put a detailed business plan in place before you commit to any long term investment of time and money. Your aim is to be one of the 5% who succeed, and not one of the 95% who don’t.

Plan your internet business, don’t plan to fail.