It's natural for a soon-to-be business owner to want to dive straight into launching their eCommerce store and make their ideas into reality. However, by failing to create a detailed business plan, they would be missing a crucial first step.
While it's true that not every eCommerce company starts with writing business plans, those aiming for growth and financial stability should be careful not to overlook this process. In fact, existing companies can benefit from creating a plan as well. The following are some of the key reasons and benefits of researching and creating a clear business plan document-
- Set clear goals and financial budgets
- To attract investors and secure business funding
- Market research
- Resource planning
- To expand operations
With a clear plan, businesses can turn an abstract idea into a tangible step-by-step plan, identifying the best tactics and strategies to utilize in their operations.
8 Steps for Creating an Ecommerce Business Plan
While each eCommerce business plan will be unique to the company, there are main components all plans should include. By following the 8 general steps, businesses can ensure their plans contain all of the key information necessary.
1. Start With a Company Description
In this opening section, give an overview of the business. Create business operations summaries and start listing the owners, founders, and anyone with leadership responsibilities within the business and explain how they add value and experience to the operations. This section should also include information on the business model being used, such as B2B or B2C, and the type of business partnership, LLC, and sole proprietorship.
2. Describe the Products
Document the main product lines using broad terms and focus on their benefits and competitive advantages. Describe the main product lines without going too far into detail about every product but describe why these items stand out from the competition. This section should also contain operational information such as the costs associated with the inventory, the product life cycles, and sourcing methods.
3. Summarize the Operations
This involves looking at how to get the products from the initial manufacturer to the customer. List the physical locations of where the business operates, employees and management, product suppliers, packaging and shipping providers, available storage space, and third-party service providers.
4. Conduct a Market Analysis
Market analysis can be broken down into three areas- audience segmentation, industry analysis, and competitive analysis. Audience segmentation involves identifying the target market and key demographic the business is aiming to attract. The industrial analysis involves researching the market for overall industry information such as market size and recent developments. In this section, businesses can discuss any anticipated growth within the industry and how this will affect profits. Finally, the competitive analysis involves identifying competitors and their strengths, weaknesses, and online presence (SEO, PPC) in relation to your own online business.
5. Draft a Marketing Strategy
This involves detailing how the business aims to gain and retain customers by utilizing different platforms such as social media and SEO. A marketing strategy may involve organic search and content strategy, public relations, paid search (PPC) and social media campaigns, email marketing, customer loyalty initiatives, and special marketing campaign promotions.
6. Create a Financial Plan
For businesses seeking outside funding, this may be the most crucial section in the overall business plan, as lenders and investors will want reassurance on the return on their investment. A financial plan should contain detailed information on any and all raw operational costs. This can include rent, product acquisition costs, salaries, payment processing fees, shipping fees, software tools, advertising budget, and more. This section can be further separated into fixed and variable expenses.
Furthermore, the financial plan should also list out any current assets, customer acquisition costs, scalability, and projected cash flow. Businesses can use forecasting software to produce in-depth and reliable financial projections to determine their break-even point and reassure investors of the profitability of their business model.
7. Make and Celebrate Milestones
Setting big and small milestones can be incredibly helpful in measuring success and progress. These metrics could include the company's first sale and first 1,000 followers on a social media platform or reaching the break-even point.
8. Write an Executive Summary
The executive summary will be the last section to be written up in a business plan, however, it will be the first section of the plan, followed by the table of contents. By creating this section last, businesses will have all key information organized and all budgets established. This section can also include the mission statement, objectives, projected start date, and summary of growth.
For eCommerce businesses seeking funding, the work doesn't end there. In addition to creating business plans, the management team should create a document detailing their financial needs, as well as the reason for seeking additional funding or a potential investor. Businesses seeking investors will also need to explain the terms and ROI involved with the investment.