In this episode, we get the opportunity to answer a question
about the proper way to create a business plan.

Marie from St. Lucia asks,

Hi Mel, this is Marie
Piazza. I’m calling from St. Lucia. I’d like to know how to make an online
business plan. I have had businesses before but physical businesses. So, I want
to know what the key things I have to know about online business plan and how
to go about doing that. Thank you very much.

This question will be answered in two parts over two sessions.
In this, let’s grasp the concept of a business plan and what a business plan
outline is. The process of getting a business plan in place is the most
important, not the ultimate document. Depending on the industry or business,
you can always tweak it.

What’s in a Typical Business Plan

1. Executive:
   Executive summary is a high level summary and its idea is to arouse interest. It
   is your pitch to frame the problem, solution, market, competition, team,
   financials and milestones.
2. Company:
   It is about what you are and the things you do. Share an emotionally compelling
   and aspirational vision to drive movement. Talk about the nuts and bolts of the
   business along with its structure, elements, backstory and history.
3. Offering:
   This section is about what you do, and the details of products or services that
   you will offer. Describe who the product will serve and their uniqueness. Share
   proof of concepts, the benefits that customers will get and what its perceived
   value is.
4. Market:
   Who are our customers and their geographic, demographic, psychographic? Define
   the type of market and the current changes. After choosing a realistic target
   market, figure out the delivery mechanism and the competition.
5. Strategy:
   It is the key step-by-step tactics that we use. It is about positioning, timelines,
   milestones and expectations. Plan how you will create connections with the
   marketplace and build loyalty with the customers.
6. Team:
   Team is about who the key players are. Figure out the management team,
   executives and other key members. Their backgrounds, experiences and successes
   should be shared.
7. Money:
   List the financial standpoints as forecasted cash flow. It should have all the
   details related to our cash-in and cash-out. A sensitivity analysis is also
   required to figure out what should be done when things don’t go according to
   plan.

— Begin Transcript —

Hey there, I’m Mel Abraham the author of the number 1
best-selling book, The Entrepreneur’s Solution and the founder of Business
Breakthrough Academy, where we teach you how to design a business and create a
life: A life of financial freedom and
peace of mind.

And welcome back to this episode of The Entrepreneur’s
Solution show and in this one we’re going to get the opportunity to answer a
question that came in on our question line at AskMelNow.com. And it’s a question about the proper way to do a business plan for an
online business.

And so, after this brief introduction we’ll come back and
we’ll answer Marie’s question. But remember that every single one of these
episodes have certain takeaways, tools, templates, worksheets; things to help
you and help you accelerate your success. So, make sure that you go to MelAbraham.com/session032 to
make sure that you get the proper downloads.

And if you’re not at your computer or you happen to be
running or at the gym, go ahead and text MYLEGACY one-word no-spaces, MYLEGACY
to 38470. We’ll make sure that we get you the download links. So, I’ll see you
back here right after this brief introduction. And we’ll listen to Marie’s
question from St. Lucia.

Hey there, Mel Abraham. Welcome back into this episode of
The Entrepreneur’s Solution show and we get a chance to answer a question that
came in on the AskMelNow.com question
line. And this question comes from Marie in St. Lucia and it’s about business
plan. So let’s go ahead and let’s listen to Marie’s question.

Hi Mel, this is Marie
Piazza. I’m calling from St. Lucia. I’d like to know how to make an online
business plan. I have had businesses before but physical businesses. So, I want
to know what the key things I have to know about online business plan and how
to go about doing that. Thank you very much.

Thanks for that question. That’s a great question to ask,
Marie. One of the things that I want to do is actually I’m going to answer this
in two parts. The first part, I’m going to talk about in this session and then
in the next session we’ll talk more specifically about online business plans.
But let’s first get our arms around this concept
of a business plan and what a business plan outline is.

Now, many of you may have heard me speak. In fact, I just
finished up one of my three day deep dive workshop—Business Breakthrough
Academy just recently. A hundred entrepreneurs that was there. It was just … it
was tons of fun. It was off the charts. Amazing to see the visions and the
things that people are doing and the difference they’re making in society. So,
I hope that I get a chance to see all of you there one of these days.

But the bottom line is this. I believe that one of the most important things to get first is this
business plan. We’ve talked about that in a previous session. Then we come
to this concept of a business plan. And I know we get caught up many times with
business plans and I see business plans left and right as an angel investor, as
an analyst, as a consultant, as a strategic consultant, and advisor, and mentor.
I see business plans a lot.

And typically what happens is, we create this document. And it’s
a beautiful document that ends up being put on the shelf, collecting dust and
never used for anything. My philosophy is that if we’re going to use or create
the business plan, there’s a couple of things to think about.

1. The process of
getting the plan in place is the most important. It’s not the plan itself.
It’s actually the process that we go through, the exercise. Think about it this
way—the champion that is out there running the decathlon and doing all those
events and doing all of that. It’s all the preparation work that they did for
that moment that’s most important.

And it’s the same thing with business plans. It’s all the
preparation work. It’s the process that’s more important than the ultimate
document. And when we get the process right, the growth that comes out, the
knowledge, the understanding of your
business is what is more important than the actual written document itself.

So, having that in mind, let’s talk about the document and
let’s talk about the process and what each element of that document may be. Now,
what I’m going to give you is a fundamental
outline of what business plans typically have in them and my thoughts on them.

Depending on the industry, depending on the business, you
get a chance to tweak it and adjust it to make it make sense:

• For the right audience,
• For the right industry,
• For the right product.

So, this isn’t like shackling you and saying, “This is the
only way to do it.” This is a way to do it. It’s a format to look at and then
we tweak it and adjust it on an as needed basis.

So, one of the first things that you’re going to see when
you open up a business plan is this concept of an Executive Summary. And so, this actually, though it’s the first
thing in a business plan, it’s the last thing to do. So, let me take you
through the sections real quickly and then we’ll talk about what’s in each
section and what it takes to put that together.

So, we’ve got the Executive
Summary, we’ve got the Company Background
or the Company Summary. We’ve got the Offering, the products and services.
What it is we do that we’re going to describe in the business plan.

You’ve got the Marketplace.

• Who are our customers?
• What market are we operating in?
• What geographic, demographic, psychographic are
  we dealing with in the context of this market?

And what are our Strategies?

Strategies and tactics. What
are the things that we’re going to do to make this a success?

What’s the broad strategy, the umbrella strategy, and what
are the specific tactical maneuvers and action plans and action items and
milestones that we’re going to take to really move this forward? So, that’s the
strategy and we spend a lot of time looking at strategy in that context.

Then who is your Team?

Especially with startup companies or new companies: the
team, the management, the people become extremely important because they are
really, really the primary element that will drive success and in that place.
Because I got to have a good team in place that’s going to execute well and
make good choices, make good decisions based upon the analysis and so we look
really heavily at the team.

And then the last piece is this concept of Money.

• What’s the financial look of this business?
• What does it look like in that context?
• What is the revenues?
• What are the costs?
• What are the risks?
• What are all of the money factors that come into
  play in doing that?

So, your typical business plan is going to follow this
format:

• Executive
• Company
• Offering
• Market or Industry
• Strategy and Tactics
• Team and Management
• Money and Financial

So, that’s how the format is. Let’s dig a little deeper and
Marie interestingly enough online vs.
offline, traditional business or online business, these factors still come into play. I just … I’m going to identify
some distinctions in the next episode with respect to online businesses and the
things that I would want to see in a business plan for an online business in
addition to these elements or things that we would want to discuss.

But let’s start with the Executive Summary. This is going to be one to two pages max. You do
not want this to carry on. It is a summary. It’s a way for us … it’s almost
like your elevator pitch or your, for those that have been through Business
Breakthrough Academy; your global purpose statement, your emotional story
element that comes into play, that frames what you do.

• The problem,
• The solution,
• The market,
• The competition,
• The team,
• The financial, and
• The milestones.

In just a couple of paragraphs. It’s at a high level but the
idea with this executive summary is

• To entrance them
• To invite them

To enroll them to say, “Hmm, interesting.”

Interesting topic
Interesting product
Interesting team
Interesting market

Looks like there’s something there.” And it’s to get them to
continue to read. It’s to get them to continue to say, “I want to learn more”.
That’s the whole purpose of that executive summary and it’s to be respectful of
whoever you’re giving it to—the reader’s time.

Whether it’s an angel … angel investors, we get a ton of
business plans to look at and possible investments. So, I want to give them all
the meat and potatoes, the real key magnets, the real key hooks about this
business—positive/negative, to make sure that I can get their attention quickly
and get them to continue to move on.

Now mind you, this is actually done last. So, we’re going to
do all the other sections first and then we’re going to extract the pieces from
those sections to create the executive summary after we’ve done everything
else. But the executive summary is the first thing that they’re really going to
see.

The second piece is this concept of “What’s the company?”

It’s about who you are, what you do. Giving the perspective
of vision and here’s the thing that I would invite you to do when you start
talking about vision. Those of you that have been through Business Breakthrough
Academy understand this, it’s that: It’s
not some academic, ivory tower, consultantees (if that’s even a word); some
institutional message about vision. This
is actually an emotionally compelling aspirational vision.

It’s something that, if I state it, when I state it, what I
want it to do is instill emotion in the reader to go, “Yeah, I’m for this.”
That gets them to rally behind it and they go, “This is something that’s a
mission, it’s a movement.” It’s something that’s driven from the heart out. Not
intellectually out.

Hopefully that makes sense is that, the more emotionally compelling, aspirational, and inspirational, and
motivating that vision is; the more it drives movement, getting them to
say, “I want to get behind this.” The
better off you are to bringing them into your battle where they’re going to
go shoulder to shoulder with you toe to toe and be willing to wage battle with
you out there in the marketplace.

• We want to talk about the nuts and bolts of the business.
• Where’s it located?
• Who are the player? (We’ll talk deeper about
  team.)
• Is it a bricks and mortar store?
• Is it a combination of bricks and mortar, or
  online?
• Is it in the US?
• Is it in Europe?
• Is it in some other country?

What are the nuts and
bolts of the operations?

• Is it manufacturing?
• Is it distribution?
• Is it direct sales?

What are the nuts and
bolts of the operation?

And then what’s the
structure?

• What’s the
  organizational structure to the company?
• Maybe it’s in a holding company.
• Maybe it’s a corporation.
• Maybe it’s an LLC.
• In Australia, maybe it’s a Trust.

What are the elements
of that company?

And at the same time in this section, we kind of give the
backstory on the products, services and the company. The history that of the
journey that has got us there. I think that when you look at different
companies, there’s a history of the journey that really got us here.

You look at Jessica Alba’s company and the whole thing about
organic and cared for products for youth and babies. And what they’ve done is
they’ve got a compelling vision, emotionally compelling. It’s attractive.
There’s a backstory to it and there’s a structure to it and the nuts and bolts.

So, think about that in the company, in the company summary
section per say. Who are the players? And all of that.

In the next section, in the Offering, this is really about:

• What do you do?
• What are the products that you’re going to
  offer?
• What are the products that are, you can offer
  now?

In other words,

• In what stage are they in?
• Are they in prototype stage?
• Are they in idea stage?
• Do they have a, do you have a proof of concept?
• Or do you actually have traction in the
  marketplace and you’re already making sales?

What is it?

• What are the products?
• What are the services?

Do you create bundles
of products and services in that context where you’ve got packages and different
packages that are out there?

This section is really focused on the needs of the marketplace that you’re serving.

• The unmet needs that you’re serving.
• The other needs that you’re serving.
• The problems that you’re solving with your
  products.
• And the benefits that are created about your products.

And the other thing to make sure is clear here is: What is the uniqueness?

We talked about this at Business Breakthrough Academy also
is the 3 – 5 uniques. What are the uniques that you bring to the table? What’s
the distinction about your product and service compared to those alternate
products and services that might exist from your competitors or out there in
the industry?

So, we want to be really clear about:

• What our products and services are?
• Who they serve?
• How they’re distinct and unique?
• What needs that they work from or they serve?
• What benefits that the customers will get?
• And what the perceived value is?

Then we turn around
and want to look at the market closer. This is, “Who are our customers?”

This is really digging in and saying,

What type
of market is it?
Is it a wholesale market?
Is it a retail market?
Is it a consumer market?
Is it a business market?
Is it a mass market?
Is it a niche market?

Defining the market is important. Also, defining what is the catalyst for this offering? If
there was a change in the market, what
are changes that are going on in the market right now?

• What’s the dynamics of the market and the
  customers?
• What’s the demand that’s being created?
• What’s the trigger for the demand that’s being
  created?
• I want to be really clear about the geography, where
  is my market?
• Is it broad-based across the world?

And in another session, we talked about this concept of
probable, potential and possible market and that we can’t serve everyone. So
we, in this section, in fact, many times when I see a business plan and in
there it says, “Oh, the geography of my market is global”. But you’re a small
provider. Your geography might be global
but your access to global market is not existent because:

• You don’t have the capital to it.
• You don’t have the reach to do it.
• You don’t have the platform to do it.

So, in this area when we’re talking about the whole idea of
geography, where your market is, I want you to be realistic and not some
idealistic big world view. Say, “Yes the potential is this but we’re focusing
on this and here’s why we’re focusing on this small group of the market to
really capture it, get a foothold, get traction and grow from there.”

Want to understand
how you’re going to deliver it to them?

What’s the delivery
mechanism?

• Is it an online?
• Is it face to face?
• Is it personalized?
• Is it automated?

What’s the system of
delivery?

• What’s the delivery of that benefit that we
  talked about in the offering?
• How are we serving those needs?
• What’s the potential growth in the market?

And again, be realistic. If you turn around saying, “This
market’s growing at a 100% a year” that might be great that it’s growing at a
100% a year but financially if you look at that, you probably can’t participate
in a 100% growth per year because you don’t have the infrastructure to do it,
in many cases. Now, some might but most of them will not.

And the other thing to think about is if I’m in a fast
growth market, the one thing I could always count on is competition. Competition will come into play in that
element so if I’ve got high growth, how
does competition affect that growth on a long term basis? I want to see
when I read that business plan that you’ve thought about the competition and
the growth in conjunction with each other and how that might impact that.

And then again, coming back to this:

• What’s your distinction in your market?
• What’s your positioning in your market?
• Why are you unique?
• Why should they buy from you?
• Why should they look at your product and your
  service as an alternative, as a new step in for what they’re currently using to
  solve those needs?
• And what is that element that attracts them to
  your market?

Then we go into the Strategy.

• The strategy is all about how are we positioning
  ourselves in the market?
• How we position ourselves in the industry?
• What are the timelines, the specific timelines
  and milestones that I want to hit that’ll let me know that I am on track?

I need to hit, I want to get prototype done in three months.
I want to test the market for that fourth month. I want to get feedback. I want
to tweak in that fifth month. And I want to hit the market again in the sixth
month.

What are the key
milestones and timelines that we have in place so I as the reader of the
business plan and you as the creator of the business plan are getting very
clear and distinct understandings about the elements that are going on in your
business? What we can expect one month to the next month to the next month and
making sure that you’ve thought everything through?

So, I have positioning, I have timelines from the strategy.

What are the tactics
that you’re going to use?

Specifically, step-by-step, the tactical action items that
you’re going to take to bring this to a reality. And then how to do those strategies and tactics create connection with the
market place?

Remember, I talk about this. It’s not about A/B/C’s we’ll
always be closing. It’s about A/B/C’s being always being connecting.

How do I use it to
create connection with the marketplace, my consumers, my customers, my clients
and loyalty to build that intimacy and build that loyalty with my customers to
a high level?And building it in that context.

So again, it’s positioning, timelines and milestones,
tactics, connection and loyalty, and then we start to talk about Team.

In this again, I say it’s really important. It’s about who are the players that are going to drive
the bus?

Who’s the management team, the executives, the management
team and the key players that are going to be the decision makers in this
business?

> They’re going to be the drivers of this business that,
and it could be in your case Marie, it could be simply just you.

And I get that. And at some point we may leverage you and
bring some other folks in but who are the players, the key players in this business.
What are their backgrounds?

You can have the resumes in there but:

• What are their key educational backgrounds,
  experience, past experience, past successes?
• How they’ve dealt with challenges in the past?
• What kind of challenges they’ve dealt with.

Understanding that is really important and then what are the roles and the functions
they’re going to play? And I call this the
CORE functions.

What are the CORE
functions that they’re going to serve in that perspective?

And then ask yourself, “What are the critical outcomes that
they’re going to be responsible for from that business?”

And I want to explain all of that in the team section of the
business plan. And then when we get through all of this, we finally get a
chance to look at the Money side
because put all of this together in a mixture.

We do some projections and we start to figure out if we do
this right, when we do this right, what
does the business look like from a financial standpoint? And this is where
we start to do projections of revenues, of costs, of the profits that are going
to be derived once we pay all the expenses.

• When we can anticipate getting cash flow?
• What they say in the industry, what’s our burn
  rate?
• How much cash are we going through on a monthly
  basis?

And for those of you that know me well, you know that I look
at cash as the fifth food group and cash is the life’s blood. It is oxygen to
your business. So, we need to make sure that we understand what our
cash-in and our cash-out is and how we’re going to maximize that cash flow in
an ongoing basis to do that. And as an investor, as someone reading a business
plan or putting a business plan together, I want to understand that to a level
of detail that we can then manage it.

You’ll typically create forecasts three to five years out to
try and understand where this business could go, what the potentials are with
that. And then, that last piece of what-ifs.

In the industry we call it Sensitivity Analysis. But what we’re really looking at is, what if something bad happens?

• What’s the worst case?
• What’s the mid case?
• What’s the best case?

If all we do is look at things as lollipops and tulips and
everything’s great, everything’s hunky dory and nothing’s else is going to go
wrong then you really haven’t thought it through because one thing’s for
certain: We will get a plan done and as soon
as the plan is done things will not go as planned.

It’s just the way plans work. So, we need to be really clear
and honest with ourselves that, “Hey we know that the plan’s not going to go as
planned exactly. So what are the what-ifs?”

What do we do if all of a sudden a supplier
doesn’t, isn’t going to supply us on a timely basis?
What is our, what happens to our operations?

I want to see that someone has really thought that through and
thought about the downsides. In fact,

When I work with my clients.
When I work with businesses.
When I work with entrepreneurs and boards of
directors.

> One of the things that I do is, we actually go through
this. We take the process of doing this.

You see, everything that we’re doing here is a process and
it’s so important—the process is. The plan isn’t as important like I said
before. We take it through the process and:

• We develop the strategies.
• We develop the tactics.
• We figure out the forecasts.
• We do the what-ifs.

And they create the document and many times what I end up
doing is I put the document aside and say, “Great, we’ve got one done. Now
let’s go back to the drawing board and let’s do it another time.” And the
reason for me doing that is to create
alternatives. What I want to do is I want my, the people that I work with
or myself or the people that I mentor to have alternatives.

If we examine and
really look at the possible upsides and the possible risks and downsides before
whatever comes:

• We can solve the problems,
• We can anticipate the problems, and
• Have some alternatives, some options in place to
  reduce the risk.

Some people look at entrepreneurs and say, “Oh they love to
take risk” and I have said it all along, “Absolutely not. That’s completely
false.”

Entrepreneurs don’t
love to take risks. We’re mitigators of risks. We’re reducers of risks.

Our focus is to figure out, “How can we move something
forward at the lowest risk possible?”

It’s not about taking
risks. It’s about taking strategic risks that we’ve thought through.

The business plan process allows you to do that because you
think about things like the company and the offering and the market and the
strategy and the tactics and the team and the money side of it and the what-ifs
and all the risk points and so my invitation to you is that if you’re going to
go through this process ask yourself
what happens if and come up with another plan, an Alternative B.

And I’m not saying that … I have some friends that say, “Oh
don’t have a Plan B. Don’t have a Plan B. Don’t plan it. Don’t have a Plan B.” It’s not about having a Destination B. It’s
about having a Path B and they’re different. I hope you understand the
distinction. When I say, “I get it don’t have a Plan B” which means that don’t
have a destination.

It’s like for me, when I got … my partners and I broke up, I
had a choice to go and follow my dreams and go, continue to build my own
business or I could have gone and gotten a job. That plan B was to go get a
job. So, I figured, I can do a couple of things. If I turn around and go and
try, and it doesn’t work and then I go and take plan B which is getting a job,
that’s not what I mean by Plan B. Because that’s a different destination.

What I talk about Plan B is that, that I’m trying to build
this but this strategy, these tactics aren’t working what’s the next plan to still get me to that destination?

So, I’m not asking you
have alternative destinations. I’m asking you have alternative paths to the
same destination and you do that by thinking about what-ifs and alternatives
and options.

So, I hope Marie, this is the foundation. We’re going to get
more specific to online businesses in the next segment. I hope this helps you
and it helps all of you out there to understand that the process of business planning is more important than the plan itself.

And again, if you want to get the guidebook which actually
I’m giving you some templates for business plans here to download, go ahead and
go to MelAbraham.com/session032.
If you’re not at your computer and you want to make sure that you get this then
go ahead and text MYLEGACY one-word no-spaces to 38470.

And if you want to get your question answered just like
Marie did, go ahead and go to AskMelNow.com.
Leave me your question there. We’ll make sure that we get it in an upcoming
episode so you can feel supported, so you can get the tools, so you can get the
guidance you need to carry your dreams forward.

So, I hope you had fun on this. I had fun on this. I hope
you found it of value and if you did, do me a favor share it with a friend.
Let’s get this information out into the world because the more people that are
out there creating these micro economies, these micro entrepreneurial endeavors
that are making a difference, the better society will be. That’s just my belief
that the entrepreneurs are the key to shifting and changing the things that
we’re doing in changing lives.

And if you haven’t done so already, make sure you subscribe
so you stay with me and I get a chance to stay with you. It’s the only way I
get to be your entrepreneurial mentor. And until we get a chance to see each
other in the next episode, where I’m going to dig a little deeper and be more
specific about online business and those specific elements of a business plan,

May your vision be grand, your journey epic and your legacy
significant!

See you soon. Cheers. Bye!!

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Like this? Please share it and help a few
more people bring their dreams out of the darkness and give life to them
again.  Cheers, Mel

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