Social Network Business Plan

Social network business plan -- how to create one that works.
A social network business plan is challenging to write because it is not quite like other business plans.  You must understand what factors to consider, and what’s critical to success.

General Business Plan Templates

The nonprofit organization SCORE, which is partially funded by the SBA, is an important resource on business plans.  At that link, find business plan templates, advice on creating your business plan, and SCORE’s online quickstart business plan.

Unique Features of Social Network Business Plans

In the post Social Network Business Plans:  What Makes Them Different?, another adviser and I discuss how niche, markets, major costs and revenue sources make social network business plans somewhat different from others.

Sample Social Network Business Plan

Online Outdoor Community Plan Gale Business Plans.  Includes sections on business plan, market approach, financial strategy, launch plan, organizational structure, business challenges.   I am not necessarily recommending this plan as a model, but it is the only published plan I could find.  Note the plan calls for 10-12 million to launch, so this plan is probably from the dot.com era.  Turns out there is a websites outdoorsman.com, with 9,500 unique visitors a month.  Don’t know if its launch was based on this plan.


Factors to Consider BEFORE You Draft Your Business Plan

Research and think hard about these four factors before your start writing your business plan:  niche, passionate users, competition and monetization.

Niche

Too often startup entrepreneurs want to be the next Facebook.  They don’t appreciate how Facebook built its empire, or the marketing costs associated with broad-based websites.  Unless you’ve got venture backing already, you should pick a specific industry or user niche and focus on that. Refine the software and customize it for that niche. Make the revenue work for that niche. Then expand into other areas. Don’t try to be a broad social network initially.

Recall that Amazon started with books, mastered that niche and developed a revenue stream. Then they moved sequentially into electronics, fashion, shoes, sports and more. The problem with aiming broadly is that you can’t focus your marketing dollars to get enough traffic to your site to get it to take off.

Fanatic, Passionate Users

Social networks are by definition social, involving groups of people who interact.  It is very hard to start from scratch to build such a group and whip up their enthusiasm for your social network.  People are busy and likely to be active in other social networks already.

To succeed, you must start with a passionate group of core users to help you test, launch and grow your site.  The enthusiasm and energy of  fanatic users, preferably influential ones, is the key to your success.  That group can be small to start with, but aim for a critical mass of 50-100 or so users to get things off the ground.

The most successful communities are designed for a specific group of users with a specific need. Linkedin, for example, was build to meet the needs of corporate humans relations managers.

Competition

Think about your competition broadly.  People may not have a social network to interact as you plan, but they are online and interacting already.  Consider forums, question and answer sites, social sharing sites, and general networks all to be part of your competition.

Carefully profile your most direct competition.  Have someone on your team join and interact there.  Understand their strengths and weaknesses.  Create a table that compares major features and costs of the competition.  Study their revenue streams.  Make a list of advertisers on this site.  These same people may wish to advertise with you, or even sponsor parts of your site as well.

Monetization

The key to success, of course is monetization, figuring out profitable revenue streams for your social network.   There are many alternative business models, including the ad model, membership model, and freemium model.