If you ever plan to find investors, partners, or employees for your ecommerce startup, you need to know how to create a business plan. Many people make this process more complicated than necessary. If you get it right, creating a business plan doesn't have to be that difficult.
In this guide, I'm going to break down everything you need to know to create a powerful ecommerce business plan, step by step.
What is an Ecommerce Business Plan?
Have you ever thought about something that you wanted to achieve in your company? You will likely write a few lines that discuss strategies, costs, and methods for the steps to take to achieve these goals.
If you've ever done this, you've got a basic business plan in place, and there's not much else to it. An ecommerce business plan is a strategy for how your business will work, how you will fund it, who your target audience will be, and how you want to be successful.
Understanding how to create a business plan is key. It requires research, understanding of your audience, budgeting, and more.
The general key to creating a business plan is to create something that is comprehensive enough that you never have to wonder what step is next. Don't leave anything to chance as you navigate the sometimes challenging process of starting an ecommerce business.
If you are struggling or struggling to envision the next step, don't worry as your business plan outlines exactly what you will do, when you will do it, and how much it will cost.
Another aspect of creating a business plan is finding investors or partners. You need to set up your ecommerce business in a way that is easy to understand. Investors will not jump on board something that is out of sight or appears disorganized.
A thorough business plan that goes straight to the point shows investors that you know what you're doing and that you have a specific strategy for success.
How is an ecommerce business plan different from other types?
The way ecommerce companies reach their customers varies greatly. For example, in a brick and mortar store, pedestrian or vehicle traffic contributes to a lot of free advertising for the company.
Ecommerce stores, on the other hand, can very easily be buried in the SERPs and not seen by anyone unless you know how to speak. You need to consider these types of things when putting your business plan together.
When researching and developing your business plan, standard companies need to consider local licenses, regulations, building codes, and other factors that can affect where and how they can do business.
Fortunately, ecommerce doesn't have to worry that much, but that doesn't mean you can ignore it too. It is your responsibility to understand any restrictions or requirements that may prevent you from sourcing and selling your products.
Why Ecommerce Business Plans Are Important
Understanding how a business plan is made means nothing if you can't see the meaning behind it. While I believe there are more important aspects to starting a successful business, every ecommerce business should have a solid foundation starting with a business plan.
Business plan = GPS
You are the driver of this business, but you will end up going in circles, wasting time and money if you don't know where you are going. A solid business plan will guide you through the steps of starting and growing a business. Think of the plan as your company's GPS. If you ever get lost, you can go back to your original plan.
It helps you generate ideas
This process is a lot easier than it seems. It may seem like that looming dark cloud of horror, but once you dive in, the juices flow and you will find that you probably have a lot of great ideas. This may be your new company's first project. Therefore, business plan templates and guides can be helpful.
It can help you understand the market
Getting the right audience is the most important aspect of any e-commerce business. If you try to reach everyone, you will not reach anyone. A big part of your business plan needs to be developing a customer avatar. This avatar is your perfect customer. They buy everything you sell because they love you and your brand.
It helps with funding
Whether you are looking for funding or business partners, you need a business plan. A strong strategy shows investors that you are confident in what you are doing, that you understand the business, and that investing with you is a wise choice for them.
It's a great way to track achievements
What better way to look back and bring everything you've dreamed of to life? You can map the next few years into a business plan and look back when it all comes together and track everything you have achieved. A business plan serves as a to-do list for your new company.
What does an ecommerce business plan look like?
If you're wondering what to include in a business plan, it might look a little different than what you originally thought. The days of massive 15-page business plans are over. You don't need a super complicated plan to find investors and sell your products.
Lean business plans are becoming increasingly popular. This e-commerce business plan involves a one-way "pitch" of your company. They document the problem you are solving, your unique solution, your market, the competition, your team, and some information about your company culture.
Part 1: Summary
Think of a summary as an overview of your company's goals. If you had to give someone a piece of paper that explains so much about your company in 250 words or less, what would you say?
It should contain information such as:
- A description of your products and what you are selling
- Your goals as an e-commerce provider
- Identify your target audience
- Explanation of your competition and how you stack up
- Overall growth potential
- Financing needs
While you won't be elaborating on any area here, this is the most important aspect of the business plan as this is your overview. When people think of your ecommerce brand, they think so too.
part 2: Description of the company
Who are you, what is your experience and why should you have the right to sell products to other people?
The company description is much less about how it should be and more about how it is. You put yourself, your experience and your skills here.
A good business example here could be:
In this description we have covered what we are selling and provided the owner's credentials, thereby building trust with potential investors and partners.
step 3: Market and industry research
If you don't understand your audience or the industry you work in, you are doomed to fail. Market research is vital, and this is where there is a big difference between standard business and e-commerce.
When researching the market for a retail store, your target audience is very limited, so it's a little shorter and drier.
As for e-commerce, the world is your audience, but you need to narrow it down to a specific demographic in order to serve your products and market these people.
Ask questions like:
- What problems do my customers have?
- How can I solve these problems?
- Which products solve these problems?
- When do people buy these products?
- How often do you buy them?
step 4: Operational plans
Forget about learning how to make a business plan. We all do business to profit, right? With an operations plan, you can make sure you stay profitable by keeping all of your costs in line. This section of the business plan discusses administration, staffing, product preparation, order fulfillment, inventory management, customer service, and more.
In this part you can explain what a typical day in your company will look like. How will it go, how will people convert, and how will you obey these commands?
Think about things like:
- What equipment and accessories do I need?
- What is the chain of command? Who is responsible?
- Do I have to develop products or do I resell others?
- What are my staffing needs?
- Will my business change or stay the same as I grow?
Make sure you consider your industry, market and audience when creating your operational plan. You don't want to venture in the wrong direction as you dive deeper.
step 5: Marketing Plans
It's a no-brainer that you have to market your business if you want to succeed but need a plan. In ecommerce, you have a few different options and the choices you make will determine a lot.
You need to highlight the methods you plan to use so that partners and investors can see that you have a clear path to success. Some of your choices can be:
- PPC (Pay-Per-Click)
- SEO / content marketing
- Guest Post
- Social media
I recommend using a combination of all of these as they each have advantages and disadvantages. For example, SEO are relatively inexpensive, but it takes time. If you don't have the knowledge yourself, you'll need to hire an agency to do it for you.
PPC can be costly if you don't know what you're doing, but results can be quick as you overtake a lot of the competition.
Whichever marketing method you choose for your ecommerce business plan, it is important to highlight them and explain how you plan to use them.
step 6: Cost and income forecasts
Now you need to wrap up your business plan and put a nice bow over it. Based on everything you've put on your business plan so far, how much does your cost compare to your income? Keep in mind that first year earnings aren't always extravagant, but you need the potential to generate more income in the future.
As long as investors and partners realize that you have the potential to grow, they don't worry too much about first year losses. The goal should be to keep your costs as low as possible and your income as high as possible (makes sense, doesn't it?).
Forecast the total cost of ownership for your company in the first year or two and include that in the plan. Then also anticipate and include the sales forecast.
If you've followed everything in this guide, there should be a clear path leading you to these numbers. You should know how much it all costs to start and run the business for a year.
Based on your market and the activities of your competitors, you will receive your sales forecasts for the first year here.
Make it transparent and keep it simple.
What do I do with an ecommerce business plan?
After knowing how to create a business plan, what are your next steps? What are you planning to do with the business plan? Most people use their business plan to find investors, partners, and employees when they start out.
When considering targeting investors, you should make careful choices as not all investors are the right choice for you. Even if someone is willing to give you what you ask, they may not be the right fit and if you take their money you will be led the wrong way.
First, you want to look at an investor's expertise. When they have experience in a particular field, it will be easier for them to understand your potential and they can provide guidance to help you succeed.
Second, what stage is your business in? Different investors specialize in different phases. Some invest in pre-seed, while others don't hear your pitch until you generate income.
Third, how much do you think you need? What you think you need and what you need are two different things.
How do you want to involve your investors? Some investors will financially support you and stop offering you anything, while others will ask for consistent financial updates and reports while offering guidance and assistance. You need to determine how much you want your investor to be involved in your business.
Now that you know how to create a business plan, the rest is up to you. Remember, gathering information and understanding something is important, but it is nothing if you don't apply what you have learned. Follow and deploy the steps outlined in this guide.
If this seems a little daunting, we have plenty of resources to help you out. Your business plan doesn't have to be this lengthy essay. You can complete it in a day with the right strategy.
What do you think is the most important part of creating a solid business plan?