How to Write a Well-Crafted eCommerce Business Plan from Scratch
As the saying goes, “A goal without a plan is just a wish.” So, if you wish to build your own eCommerce empire, having an eCommerce business plan is crucial to your success.
But maybe you have no idea where to start. Of course, you don’t want to leave out something important. In this article, we’ll discuss how to write a well-crafted, simple business plan from scratch for your eCommerce small business and what are the key elements that should be included in it.
Let’s get started!
Why You Need an eCommerce Business Plan
Abraham Lincoln once said, “Give me six hours to chop down a tree, and I will spend the first four sharpening the axe.” So, planning is almost everything you should start with.
Although it can be hard work to put together a comprehensive eCommerce business plan, it’s such an important step for the below-mentioned four reasons:
- Establishing a Clear Roadmap: Well-written strategic planning will help you set clear goals and set an action plan to reach them. It will also help you to set priorities and realistically estimate the time and effort needed to achieve them.
- Being Ready for Any Sudden Changes: Change in the eCommerce business world is happening quicker than ever before. And this increases the value of planning. Having a data-driven business plan gave managers a dashboard to work with navigated sudden change.
- Securing Funding: If you are looking for a loan or an equity investment for your startup, getting a business plan document right is absolutely essential because an organization that will provide the money wants to make sure that you know what you are doing and have a clear path to profit.
- Avoiding Costly Mistakes: If you are considering setting up a small business with limited resources, having a startup business plan helps you know exactly what resources are needed to avoid wasting resources down the drain and to make the most of them.
Before You Start Planning: 3 Key Questions to Answer
In order to build a well-written online business plan, you need to answer the following questions:
- What Are You Selling? Are you selling physical products (i.e apparel, home appliances, etc.), digital products (i.e online courses, ebooks, software, etc.), or services (i.e marketing services, consulting, car repair, etc.)?
- For Whom? Do you sell to individuals (B2C) or organizations, corporations, and non-profits (B2B) or are you are a part of a marketplace acting as a broker just like affiliate marketing?.
- Who Are Your Suppliers? Do you manufacture your products in-house, or outsource a third party manufacturer? Do you partner with a dropshipping manufacturer or you depend on wholesale?
With great data comes a great business plan. Answering this line of questioning will give you an initial overview of what your business is and it’ll be like a starting point.
How to Structure a Business Plan for Your Online Store
Let’s agree from the start that the business plan will not be perfectly completed on the first try. It will continue to evolve as you create each of the planning stages and you’ll be making edits along the way.
There are six basic sections your eCommerce business plan should include that are:
Let’s delve deeper…
1. Executive Summary
Any eCommerce business plan should start with an executive summary of just one sheet summarizing each section of your business plan. Although it is placed at the beginning, it should be the last section to be written.
The executive summary is the first thing your prospect investors would read and it creates the first impression for your project. So, make it simple, easy-to-understand, and attractive.
The executive summary should include:
- Business ideas presentation
- Business model
- Products and services
- Target audience and target market
- Management team
- Success factors or the points that differentiate your company
- Financial strategy
2. Company Overview
This is the next section that includes detailed information about your business and identified the competitive advantage of your online store. It covering some features such as:
- Brand Name and Founder’s Name: Your online store name and who is behind it.
- Brand Traits: List just 3 to 5 words that describe your brand that you want your online store to be identified with.
- Domain Name: It’s the URL. It should be short, simple, memorable, and doesn’t include numbers.
- Company Type: How your business operates.
- Value Proposition: It’s a short statement that shows how clear your idea is.
- Mission Statement: The reasons behind your business existence.
- Vision: The goals that you want to reach long term. They must be realistic and ambitious so they can be motivating.
3. Market Analysis
Conducting market research around your eCommerce small business idea is essential. It tells you whether or not people will buy what you’re selling.
Market analysis is broken down into 3 main sections:
a. Industry Analysis:
Industry analysis outlines the industry size facts and statistics bode well for your eCommerce business. It answers questions like:
- What does the market look like for your industry overall?
- Has it grown or changed over the years?
- Is there is any anticipates of growing up or slipping down in the future?
- Are there factors that could impact its growth?
Industry analysis is likely to be one of the most difficult parts of your eCommerce business plan, but fortunately, research and whitepapers are abundant in almost all industries, besides free tools like Google Trends.
b. Market Segment:
The market segment or audience segmentation helps you to create your “Buyer Persona” which represents your target audiences’ various demographic sets (gender, age, geography, education, income level, ethnicity, etc.). The market segment includes both your target market and niche selection.
It’s important to provide an overview of your niche, whether there’s a micro-niche included, and why you chose it.
C. Competitive Analysis:
Competitive Analysis provides an overview of who are your market leaders and direct, indirect, and potential competitors. It also identifies your competitors’ key strengths, weaknesses, opportunities, and threats, focusing particularly on where you can defeat the competition or add unique value to your business.
Creating a comprehensive competitive analysis includes 4 key phrases that are:
- Identify Your Competitors
- Select a Competitive Analysis Framework
- Collect Data on Your Competitors
- Write Your Competitive Analysis Report
4. Marketing Plan
By now, you’ve covered almost all your company-related aspects, your customers, and your competitors as well. It’s time to talk about how you’re going to reach your customers and drive traffic to your eCommerce website.
The marketing plan describes the planned promotion strategies, business growth strategies, pricing strategies, sales strategy, and how much can you afford to spend on your marketing efforts. In order to come up with a well-defined marketing strategy, you need to deeply know your customer inside out.
It’s important to keep in mind that every potential customer is different, and there are many organic and paid marketing techniques that you can use to reach each of them. From SEO, social media, content marketing, email marketing to influencers, these proven techniques will surely acquire customers and drive traffic to your online store.
So, this stage is all about defining:
- Which marketing channels are best for you to reach your customer?
- How much can you afford to acquire customers to your online store?
5. Operations Plan
Operational planning reflects the task-flow of your eCommerce store and how they’ll be divided. It includes your daily tasks as an online store owner. There are some basic things that should be established such as your work schedule, your daily tasks timetable, your location, and your product stock.
Your tasks will include:
- Offering support
- Managing the stock
- Managing returns
- Negotiating with suppliers
- Dealing with unforeseen events
- Promoting your store
- And much more
List all of your daily tasks and how your routine will be to make sure that everything in your business plan will be under control. If you are a startup and you’re the only person in charge, it’d be hard to manage all tasks. So, it’s important to have initial planning on paper, and then make small modifications down the line to hire a staff and management team.
6. Financial Plan
For many people, this is the most difficult part of a business plan, however, it’s extremely important. It outlines the major costs for an eCommerce business that includes the cost of goods, internet connection fees, salaries of the staff, etc.
If you’re seeking to get outside funding, your financial statement should contain the following documents:
- Summary of Funding Requirement: It’s an outline indicating why you are applying for a loan, the cost for raw materials and operational machines, and how much money you need.
- Use of Funds Statement / Income Statement: It shows how profitable your business would be during a given period and describes how you plan to use the funds you’ll get.
- Business Budget: This displays cash inflow and outflow statements over a specific period of time.
- 3-Year Profit and Loss Projection: It’s assumptions that are stated clearly and in detail to communicate your vision of the company’s future and how you anticipate achieving that vision.
We are living in a world of fast-paced digital transformation. Almost all businesses are thinking of building a strong online presence. Being prepared and having a well-crafted business plan for your dream eCommerce website helps you focus on what exactly you want your business to be in the future and provide a map of how to get there in no time.
Remember! Creating your own eCommerce business plan won’t be that easy, but success comes to those willing to put in the work and if you did it right you will witness a great increase in sales and revenue. You can seek help from experts who can help you plan your business effectively