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How to write a business plan
A business plan is quite simply an explanation of your business model. It serves both as an internal and external document. Internal in that it provides a guideline on day to day decisions, and external in that it tells others what you are about, where your business is going, and how it proposes doing that.
When it comes to selling a business or website a business plan adds to the credibility of the offering. And, you don't need to hire a consultant to help you draw one up. We've produced here a draft business plan that you can copy and modify for your own use. (Note: It is not for reproduction anywhere online and your use is limited to one modified copy to be used internally within your business). Or you can learn how to write your own business plan.
Don't be an underpants gnome
Make famous by the Southpark TV program the underpant gnomes had a simple three-point business plan:
1. Collect underpants
3. Make profit
The second step is not actually defined and everyone assumes someone else knows what it is. This has come to be the archetypical satire of dot com businesses. Does your business plan look like it is er, pants?
Broad outline of a business plan
1. A cover sheet with the date the plan was drawn up, the purpose for which it was prepared and an index as to what's in the document.
2. Operational details: Describe what the business does and what goods/services it sells, number of staff and special skills required, operating procedures, how it's marketed, and a brief analysis of the competition.
3. Financial information: Balance sheets and Profit & Loss accounts for the last three years, management accounts including most profitable lines, breakeven analyses, cash flow statements etc., income projections for the next 2-3 years, and cash flow predictions. (These tools make preparing those statements easy.)
4. Supporting documents: Copies of your company registration and tax registration documents; copies of your lease, employment contracts, and contracts with main suppliers; proof of ISO and other business or quality certifications, and membership of trade bodies; CVs of the principals and directors; and any other important documents.
In the case of a website for sale some of the above documentation may not be relevant but other documents are, like your agreements with advertisers/affiliate merchants, hosting company, merchant services, and data feed providers; proofs of domain ownership, ownership of design/coding (if you have receipts for these services), and ownership of content (if bought); and printouts of WHOIS.
Sample business plan for sale of an imaginary web hosting business
1.0 Cover Sheet
This business plan was drawn up with the purpose of achieving a sale of the business as a going concern.
WW was registered as a Limited Company in June 2001 with a share capital of
£1 and reported a net worth of £55,601 in the last Balance Sheet prepared on
August 31, 2005.
- Quick, reliable internet hosting services catering for a niche in the market i.e. sites about hosting related topics
- Providing that service at no cost, our Unique Selling Point (USP)
- Capitalising on being the first to market with free hosting for this niche
- Leveraging the large traffic and link popularity to sell advertising to businesses who benefit directly from a presence on our site and our highly targeted traffic.
The company is manned by one person, the owner, who spends between 30-40 hours a week running the business.
By the nature of the sites we host our customers are very internet aware and technically savvy. The support requirements are minimal and most of the time is spent attracting advertisers and managing their accounts.
The business can be run by one webmaster familiar with hosting under Apache and Windows.
There is no paid for marketing. All sites hosted by WW are required to prominently display our logos, declare that the hosting was provided free, and linkback to our own website. This naturally attracts new customers who want to avail of free hosting.
2.4 Operating Procedures
Customers wanting to sign up for our hosting service need to fill in a form on our website with details about their business and the content of their site. This is then manually reviewed and either approved or declined. This takes approximately a total of two hours per week.
Advertisers are approached in a number of ways. There is a page on our website with full details of advertising costs and promotional deals. Advertisers are encouraged to commit for longer periods of time on the promise of discounts to their ad costs. Occasionally specific advertisers are approached via a phone call and offered a free trial run to give them a feel of the kind of Return On Investment they can make from advertising with us.
The hosting service is largely self running with automated alerts should a server go down.
3.0 Financial Details
Profit and Loss statements for the last three years are attached and show the steady rise in profits that is likely to continue. Gross and net income predictions for the next three years are as follows:
Projections are based on the consistent 10% p.a. growth in revenue over the last four years. Cash flow statements are also attached as are cash flow projections for the next three years.
4.0 Supporting documents
Please find enclosed
4.1 Company registration certificate
4.2 VAT registration certificate
4.3 Certificate from Nominet on ownership of the domain
4.4 Lease: None, the business is run from home and a nominal rent is included in the Profit and Loss statement
(more coming here soon)