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Chapter 3. Step One: Create a Business P... > The Components of a Winning Business...

The Components of a Winning Business Plan

Now that you have the outline of your business plan in your head, let's look at how to translate your story into a written document.

In essence, you take your oral story and write it down, in a logical order. The typical business plan is divided into several distinct sections—each of which maps to a part of your business story. What you have to do is take the story you just told and sort it out into short sections that help the reader understand just what it is your business is about.

Of course, your particular business plan can contain more or fewer or different sections than presented here, but it should contain the same information—because this information will describe and drive your new business. If you were writing a business plan for a big corporation, each section might be several pages long. For the purposes of your eBay business, though, think along the lines of a few sentences or paragraphs, instead.

You see, the length of your business plan document depends entirely on your particular circumstances. If your business plan is solely for your own personal use, there's no need to make it any longer or fancier than it needs to be; it's even okay to write in bullets rather than complete sentences. If you expect to present your business plan to others, then by all means go a little fancier and use proper grammar and punctuation. The key thing is to include all the information necessary to get your points across.

This chapter presents the type of bare-bones business plan you need for a small eBay business. If you want to create a really serious business plan—or a plan for a larger business opportunity—check out my companion book, Teach Yourself Business Plans in 24 Hours (2001, Alpha Books).

Next, we'll look at the individual sections of your business plan separately.


This part of the plan, typically just a sentence or so long, describes your dream for your business—why you're doing what you're doing. Although this is the shortest section of your plan, it is sometimes the most difficult section to write. That's because many people find it difficult to articulate the reasons why they do what they do.

Sometimes called a mission statement, this section describes the what—what your business does and what you're trying to achieve. Someone reading your Mission section should know immediately what your business does—and what you don't do.

A mission is different from a goal in that a mission defines a general direction, while a goal defines a specific target. A business will have but a single mission but can have many individual goals.

Using our ongoing example, a relevant mission statement might be something like: “I intend to sell high-quality gift baskets to targeted buyers on the eBay online auction site.” It should not be “I plan to make a lot of money on eBay;” that isn't a very specific mission, and it certainly isn't market-driven.


This section, sometimes called the market dynamics or market analysis section, describes the compelling reason for your business to exist—in other words, it presents the market opportunity you've identified. Typically, this section starts out by identifying the target market, sizing it, and then presenting growth opportunities.

The goal of this section is to describe the market opportunity you seek to pursue, and to convince potential investors that it's a significant enough opportunity to be worth pursuing. As such, this section will include narrative text (you have to tell a story about the market) and some amount of numerical data. Which data you choose to present, how you choose to present it, and how you weave it into your narrative will determine the effectiveness of this section.

When the Opportunity section is complete, the reader should understand the basic nature of the market you choose to pursue, the size of that market, the market's growth potential, and the types of customers who comprise the market. You can obtain most if not all of this data by searching eBay for similar types of merchandise, or by browsing through relevant categories.

Why do you need to present market data in your business plan, anyway? The answer is simple—to help you sell prospective lenders and investors on your specific business strategy. You also need to realistically size the opportunity for your own needs; you don't want to pursue merchandise categories that aren't big or robust enough to achieve your financial goals.

In the case of our ongoing example, you might want to include data on the number of similar auctions during a particular period, the average selling price for these items, and the close rate (number of auctions that result in a sale) for this category.


This section of your plan describes how you'll exploit that immense market opportunity described in the previous section, and puts forward your potential eBay activities. This section typically includes information about the products you'll be selling, as well as how you plan to obtain and market these products. In essence, you want to describe the business you're in, what you plan to sell, and how you'll make money. You'll probably want to include some sort of timeline that details the major milestones you will likely face in successfully implementing your new business.

For our ongoing example, you'd explain that you're selling gift baskets (and maybe describe what a gift basket is), present where and how you're obtaining your merchandise, describe how you'll be selling the items on eBay, and then detail the selling price, cost, and profits associated with your sales.

Organization and Operations

This section describes your company structure as well as the back-end operations you use to bring your products and services to market. If your employee base consists of you and no one else, that's okay; if you have plans to hire an assistant or two, throw that in. The key thing in this section is to describe your “back office,” how you plan to get things done. That means describing how you'll create your item listings, how you'll warehouse your inventory, and how you'll pack and ship your merchandise.

In short, this section of your business plan is where you detail how your business is structured and how it will work.

Strengths and Weaknesses

This is the last text section of your plan. A lot of businesses don't include this section, but I think it's well worth writing. In essence, this section lays bare your core competencies and the challenges you face—which are good to know before you actually go into business.

I like including strengths and weaknesses in a business plan, for several reasons. First, summarizing your unique competitive advantages serves to highlight those unique aspects of your business strategy. In addition, ending the text part of your plan with a list of your strengths is a great way to wrap things up; you leave your readers with a summary of the key points you want them to remember. Finally, by detailing potential challenges you might face, you get the chance to reassess the reality of what you're about to attempt—and to proactively address these issues before they become real problems.

Remember, when you answer potential challenges with distinct strategies, you turn your weaknesses into strengths—and present yourself as being both realistic and proactive.


The final section of your business plan document is the Financials section. This is where you present the financial status of and projections for your business. Put simply, these are the numbers—at minimum, an income statement and a balance sheet. You'll want to include your current statements (if your business is already up and running), and projections for the next three years.

Whether you're borrowing money or trying to attract investors, your potential business partners will want to know what size of a business you're talking about, how profitable that business is likely to be, and how you expect to grow revenues and profits over the years. Your financial statements provide that critical information. In addition, this section helps you come to grips with the financial realities of what you plan to do.

In a way, the Financials section defines the goals you have for your eBay business. The revenues and profits you project for future years are your company's financial goals—they're the yardstick with which you'll measure the success of your business strategy over the next several years.

Although there are a few common financial statements that everyone will want to see, know that different lenders and investors will have different requirements in this regard. You may want to enlist the assistance of a qualified accountant or financial advisor to help you prepare these financial statements—and to prepare for any financial questions that may be asked of you.

When you're making your projections, you should make sure that the numbers you forecast actually make sense. Is there a logic to the revenue buildup over the period? Do the projected expenses make sense in relation to the projected revenues? Are these numbers realistic? Are they achievable? Are they comfortable—to both you and to your investors? Bottom line, do the numbers feel right?

Remember, the numbers you put together quantify your financial goals; once you accept them, you're committing yourself to running a successful eBay business.

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