Internet Business Plan
If you want to start an internet company or expand your current internet business, you need a business plan.
The following business plan template gives you the key elements to include in a winning internet business plan.
Sample Internet Business Plan
Below is an internet business plan example with each of the key sections to help you write an internet business plan for your own company.
I. Executive Summary
Business Overview
[Company Name], headquartered at [insert location here] is a new, internet-based retail store selling e-books for travelers. Our products will include content provided by a variety of print and internet publishers, all with a focus on articles, magazines, guides, and books that travelers may want to read for entertainment and to save space that physical books would require.
Products and Services
[Company Name] will offer a wide variety of books, magazine subscriptions or individual articles, and guides in downloadable format for use on E-readers, laptops, or smartphones. These products must fit the requirement of being of particular interest to travelers, whether they are related to travel, or are light reading that travelers are more comfortable with.
Services to sellers will include marketing, transaction processing services, and distribution through downloads from [Company Name]’s servers.
Customer Focus
[Company Name] will primarily serve American travelers interested in saving space in their luggage, finding the latest travel-related guides and literature, and/or eliminating the waste associated with printing books and magazines. The demographics of these customers are as follows:
- Roughly 25 million Americans travel overseas each summer according to AAA
- Average income of $54,700
- 38.9% married
- 49.6% in Management/Professional occupations
- Median age: 34 years
Management Team
[Company Name] is led by [Founder’s Name] who has been in the e-commerce business for 10 years. While [Founder] has never run an e-commerce portal himself, he was previously director of strategic development for an e-commerce site devoted to travel equipment. As such [Founder] has an in-depth knowledge of the e-commerce business as well as the needs of travelers, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).
Success Factors
[Company Name] is uniquely qualified to succeed for the following reasons:
- There is currently no e-book seller devoted to travelers and their specific interests and needs. In addition, we have surveyed publishers of appropriate content and received extremely positive feedback saying that they explicitly want to sell their work through our business when launched.
- The management team has a track record of success in the e-commerce and consumer travel product business.
- The e-commerce business is a proven business and has succeeded throughout the world.
- Market trends, such as the growth in digital downloads of music and books, purchases of e-readers and netbooks, and the “green” movement favor this business.
Financial Highlights
Company Name is seeking a total funding of $430,000 to launch its business. The capital will be used for funding capital expenditures, manpower costs, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Website design/build and startup business expenses: approximately $120,000
- Working capital: approximately $310,000 to pay for Marketing, salaries, and lease costs until [Company Name] reaches break-even
Top line projections over the next five years are as follows:
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $731,250 | $2,687,401 | $5,358,945 | $7,650,990 | $10,229,809 |
| Total Expenses | $960,000 | $2,472,423 | $4,438,003 | $5,792,613 | $7,105,296 |
| EBITDA | ($228,750) | $214,978 | $920,943 | $1,858,377 | $3,124,513 |
| Depreciation | $7,440 | $7,440 | $7,440 | $7,440 | $7,440 |
| EBIT | ($236,190) | $207,538 | $913,503 | $1,850,937 | $3,117,073 |
| Interest | $27,768 | $24,297 | $20,826 | $17,355 | $13,884 |
| Pre-Tax Income | ($263,958) | $183,241 | $892,677 | $1,833,582 | $3,103,189 |
| Income Tax Expense | $0 | $0 | $284,186 | $641,754 | $1,086,116 |
| Net Income | ($263,958) | $183,241 | $608,491 | $1,191,828 | $2,017,073 |
| Average customers/day | 102 | 339 | 615 | 798 | 970 |
| Number of orders | 36,563 | 122,155 | 221,444 | 287,415 | 349,355 |
II. Company Overview
Who is [Company Name]?
[Company Name] headquartered at [insert location here] is a new, internet retail store selling e-books for travelers. Our products will content provided by a variety of print and internet publishers, all with a focus on articles, magazines, guides, and books that travelers may want to read for entertainment and to save space that physical books would require.
[Company Name] was founded by [Founder’s Name]. While [Founder’s Name] has been in the e-commerce business for some time, it was in [month, date] that he decided to launch [Company Name]. Specifically, during this time, [Founder’s Name] proposed to his then-employer the concept of adding travel e-books to their product line of travel equipment. His employer passed on the idea. Soon thereafter [Founder’s Name] left the company with the intention of launching his own e-commerce business.
It was apparent to [Founder’s Name] that an unserved market need existed for the product. Furthermore, after surveying publishers of content, this theory was proven.
[Company Name]’s History
After surveying publishers of travel literature, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].
[Founder’s Name] has selected a technology director with project management experience in the development of e-commerce websites.
Since incorporation, the company has achieved the following milestones:
- Developed the company’s name, logo and placeholder website located at www…
- Determined the list of products to be offered
- Determined equipment and development requirements
- Identified three potential wed development companies and solicited proposals from them
[Company Name]’s Products
Below is [Company Name]’s initial product list. As you can see all items are classified under the following five main categories:
- Travel Guides: Selling content from one major travel guide publisher, such as Frommer’s, Fodor’s, Lonely Planet, etc.
- Travel Magazines: Travel + Leisure, Budget Travel, National Geographic Traveler, etc.
- Travel-themed Books: Travel-based fiction and non-fiction
- Travel-appropriate Light Reading: Romance, mysteries, popular fiction, etc.
- Original Content: Articles, columns, and books written specifically for [Company Name]
The website will feature a rotating display of featured and new products on its homepage as well as a searchable database. Products will be downloaded from the website upon purchase for use in proprietary e-reader software or e-readers with which [Company Name] has exclusive arrangements. The content will use digital rights management to prevent copying to another user’s device. .
Website Design
[Company Name] will develop a website whose key elements will include the following:
- Homepage
- Search Engine
- Database of products
- Cart System
- Help and FAQ pages
The website will be built by an established development firm and designed by an accomplished web designer, with the process supervised by the company’s technology director. Where appropriate, existing software applications will be purchased to fill standard needs to keep costs down without sacrificing functionality and to avoid the problems associated with newly-developed software.
[Company Name]’s website will be available at all times, but customer service representatives, answering email requests, will only work 7 days a week, from 9AM to 6 PM.
III. Industry Analysis
[Company Name] directly or indirectly competes with all e-book sellers and with brick and mortar retailers of travel books. Direct competition will come from companies selling digital travel books, similar to [Company Name].
Industry Statistics & Trends
The following industry size facts and statistics bode well for [Company Name].
According to an industry report, the US e-book industry is estimated at $1.5 billion (not including e-readers and magazines). This translates to roughly $1 billion for content providers and $500 million for distributors. Major e-book sellers include Amazon, Ebooks.com, the Ebookstore from Sony, Ereader.com.
An industry report by Outsell explained the following:
The e-books market seems to have been poised for greatness for many years, although the time has never been quite right. The launches of two popular handheld devices in the past two years – the Sony Reader and the Amazon Kindle – as well as the availability of applications to read e-books on devices like the iPod Touch and the iPhone have thrust e-books back into the spotlight, re-igniting interest from consumers, business users, students, and publishers. While technology and content issues remain, e-books have now taken their rightful place as an important strategic building block in many publishers’ digital strategies, and account for an estimated 2.9% of the US book market.
These are additional e-book market trends:
- Books written specifically as e-books and self-published are a growing market trend. Some of these e-books are offered without charge on the internet and others are sold.
- The growth in digital readers (specifically the Amazon Kindle and the Sony Reader), smartphones capable of displaying books (such as the Blackberry, iPhone, and iPod Touch), and netbooks (small, inexpensive laptop computers) all increase the number of platforms available for e-books to be read on.
IV. Customer Analysis
[Company Name] will primarily serve American travelers interested in saving space in their luggage, finding the latest travel-related guides and literature, and/or eliminating the waste associated with printed books and magazines. The demographics of these customers are as follows:
- Roughly 25 million Americans travel overseas each summer according to AAA
- Average income of $54,700
- 38.9% married
- 49.6% in Management/Professional occupations
- Median age: 34 years
We will primarily target the customer segment of “Serial Travelers”. These individuals are defined as American travelers who travel more than four weeks out of the year or on at least 3 round-trip flights per year, this group considers traveling, whether for business or pleasure, a way of life and seeks out new ways to improve their travel experiences.
The following are true of this group:
- Serial travelers are growing more concerned with the weight of their luggage due to airline weight restrictions.
- Many serial travelers have difficulty concentrating while in flight or on trains and cannot read heavy or difficult literature.
- Serial travelers may attempt to cut down on expenses regarding their travel and lodging, but still spend money on items which will improve the quality of their travel and provide entertainment.
- Serial travelers seek out the latest in travel guides and reviews to choose new destinations and be better informed on their trips.
V. Competitive Analysis
Direct & Indirect Competitors
The following e-book sellers are expected to be the key competitors for [Company Name] due to their current brand and resources:
Amazon.com
Amazon sells thousands of titles as e-books, and allows sales and downloads to its exclusive Amazon Kindle reader. The Amazon brand is well-known, and the Kindle received heavy press coverage upon its release.
Although [Company Name] expects that e-books will be increasingly sold via Amazon, its size and generalized brand do not permit specific targeting of a group like travelers. As the market for e-books grows, niche sellers will have an opportunity to take market share.
Ebooks.com
Launched in 2000, Ebooks.com has the largest selection of e-books on the internet and calls itself the leading retailer of downloadable books on the web. Their catalog includes over 100,000 titles and can be downloaded to PDAs, computers, or mobile phones. Ebooks.com also allows for the entire contents of their books to be searched online before being purchased.
Ebooks.com seeks to target those who prefer digital books over print books. However, there is a growing sense that not many readers prefer digital books all the time, but prefer them only in certain contexts. [Company Name] will target one of these identified contexts – traveling – where readers prefer digital books
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Niche Market Focus:By serving the niche market of serial travelers, [Company Name] will be able to focus its products and content on the needs of these customers more so than larger, entrenched competitors.
- Relationships: [Founder’s Name] and the technology director know many of the best programmers and web development companies. As such, it will be relatively easy for us to build the website’s functionality.
VI. Marketing Plan
The Marketing Plan describes the type of brand [Company Name] seeks to create and the Company’s planned promotions and pricing strategies.
The [Company Name] Brand
The [Company Name] brand will focus on the Company’s unique value proposition:
- Offering a wide variety of traveler-focused digital reading material for sale
- Making the experience of searching for books and magazines fun and easy
- Providing excellent customer service, with dedicated customer service representatives
Promotions Strategy
The Company’s promotions strategy to reach the target market of serial travelers includes:
Public Relations
We will contact travel magazines, travel sections of newspapers, and television stations and send them a press release describing the opening and unique value proposition of [Company Name].
Search Engine Optimization
The Company will develop its website in such a manner as to direct as much traffic from search engines as possible. The original website designer will use knowledge of search engine optimization to orient the website’s content towards this end and begin a program of link exchange to move up the search engine rankings (particularly Google). Ongoing search engine optimization of this type will be executed by an experienced SEO firm contracted on a monthly basis.
Pay-Per Click Advertising
Additionally, [Company Name] will use highly-focused, specific keywords to draw traffic to its website through text pay-per click advertising on Google Ads and banner ads on other appropriate websites (brokered by Google or another ad placement company). Advertisements will be targeted at potential clients who will find our content-rich site to be a valid resource and applicable to their interests, rather than an interruption or distraction.
Email Marketing
[Company Name] will publish a monthly email newsletter to tell customers about trends in travel literature and offer other articles and columns of interest to customers. Email addresses will be gathered from users who opt-in when using the website and the email newsletters will support the brand of the site as an expert in travel-related books. In addition, emails presenting exciting new offers or products may be sent as often as once a week to customers who have opted-in to keep them informed of the latest information on the website.
Affiliate Website Partnerships
[Company Name]’s affiliate web program will allow other businesses and websites to earn commissions on products sold on the [Company Name] website by referring their site visitors to our website through links to the homepage or to specific products. Potential affiliates include e-book stores looking to “outsource” the travel section of their website, travel authors and publishers publicizing their products on their own sites, and online travel guides and blogs.
Print Advertising
[Company Name] will initially advertise in travel magazines and newspaper travel sections in order to gain awareness.
Pricing Strategy
[Company Name] pricing will be appropriate for the digital medium. That is, they will be priced lower than physical books, but not so low as to be threatening to content providers who are attempting to sell the same books in printed form. Pricing must allow for profit for the content providers and margin for [Company Name]. Downloads will be on par with the pricing of Amazon or ebooks.com pricing for downloaded books.
VII. Operations Plan
Functional Roles
In order to execute on [Company Name]’s business model, the Company needs to perform many functions including the following:
Administrative Functions
- General & administrative functions including legal, marketing, bookkeeping, etc.
- Sourcing suppliers of content and managing supplier relations
- Hiring and training staff
Website Functions
- Developing additional website features
- Site maintenance, updates, and bug-fixing
- Ongoing search engine optimization
Service Functions
- Customer service
- Writing and producing copy for monthly newsletter
Milestones
[Company Name] expects to achieve the following milestones in the following [] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize web development contract |
| [Date 2] | Complete prototype design of website |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Launch [Company Name]website |
| [Date 5] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is led by [Founder’s Name] who has been in the e-commerce business for 10 years. While [Founder] has never run an e-commerce portal himself, he was director of strategic development for an e-commerce site devoted to travel equipment previously. As such [Founder] has an in-depth knowledge of the e-commerce business as well as the needs of travelers, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).
[Founder] graduated from the University of ABC where he majored in Business.
The technology director, [Tech Director Name], has 15 years of web development management experience. He has experience managing web development projects for e-commerce at for squidoo.com, creating an e-commerce portal much like that of [Company Name]. He received an MBA in Business Information Systems from XYZ College.
Hiring Plan
In order to launch the store, we need to hire the following personnel:
- Sourcing Assistants (2 – responsible for finding content and making deals with content providers)
- Customer Service Representatives (2– responsible for fielding emails and calls from customers about potential, current, and past orders).
- Part-Time Bookkeeper (1 – will manage accounts payable, create statements, and execute other administrative functions)
At a future date, the following staff will be added:
- Programmer (1 – to be hired in the second year of operation, will work under the technology director implementing new developments and bug fixes on the website. Before this time, programming services will be on a contract basis).
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come from the sale of e-books and Emagazines.
The major costs for the company will be cost of goods sold (license fees and royalties to suppliers, internet connection fees, etc.) and salaries of the staff. In the initial years, the company’s marketing spend will be high, as it establishes itself in the market.
Capital Requirements and Use of Funds
[Company Name] seeking a total funding of $430,000 to launch its business. The capital will be used for funding capital expenditures, manpower costs, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Website design/build and startup business expenses: approximately $120,000
- Working capital: approximately $310,000 to pay for Marketing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions and Forecasts
Below please find the key assumptions that went into the financial forecast and a summary of the financial projections over the next five years.
| Number of customers per day | |
|---|---|
| Year 1 | 10 |
| Year 2 | 20 |
| Year 3 | 35 |
| Year 4 | 55 |
| Year 5 | 75 |
| Average order price | $12 |
| Annual increase in order price | 6.00% |
| Annual Lease (per location) | $50,000 |
| Yearly Lease Increase % | 2.50% |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRE-TAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
