Writing The Ultimate Ecommerce Business Plan
Ready to start your own ecommerce business? If so, you should definitely consider creating a business plan beforehand; it’ll help you out in the long run, no doubt!
If you happen not to have your brand name picked out yet, test our Ecommerce Business Name Generator Tool. The Generator can help you generate new brand names, check domain name and social media account availability.
Writing a business plan is an important factor for any business’s success. It’ll not only help you with your business in the long run, but it forces you to consider all aspects of your business. Creating a business plan is seen as a chore to many; that’s why we’re going to provide you with the necessary tips and advice to help you build an effective plan!
The Background to your Business!
What truly influenced you into joining the ecommerce industry? How long have you been thinking about this business? How many people are or will be involved in it? Have you carried out any work for it thus far? Also consider thinking about the potential constraints that may arise and perhaps a possible solution to them.
Creating Your Business Plan
You need to sum up your business at a glance in a clear and concise manner. This will help you to solidify your goals.
In your summary, you should describe the product you will be selling; explain how it is different and what the advantages are. Is your product something that is not yet available? If so, explain what makes it stand out from your competitors and how it’ll prove to be useful.
Include your financial projections and how you plan on building a profit — be realistic with your projections! Try to also include the estimated amount of funding you will need; make sure that it’s in sync with your financial projections.
Marketing and Sales!
Marketing and sales are the key to revenue and profit. There are many aspects that come in consideration when dealing with marketing and sales.
You need to figure out the proper pricing for your product — both wholesale and retail. Take into consideration what category your product falls in; what is the quality of it? How will your product meet the needs of the consumer and how is it superior to its competitors?
It is necessary to know how you’re going to advertise your product. There are plenty of advertising channels to choose from such as Google AdWords. Establish a presence on social media sites such as Twitter, Facebook, etc. Search engine optimization (SEO) helps you rank higher on search engines; thus attracting more customers. Other tactics include affiliate marketing and advertising on the sites of others.
A final consideration is, what contribution is each part of your business making to your overall profit? For example, if you’re selling fashion accessories and most of your revenue is coming from watches; include that in your plan.
Operations and Assets!
Explain the operations that will exist in your company and provide detail of the assets of the company. Figure out what is necessary and what isn’t.
Do you need your own website to sell your products? Online marketplaces such as Shopify, [p2p type=”slug” value=”shopify-versus-squarespace”]Squarespace[/p2p], and Bigcommerce are a good place to start before building your own ecommerce site. Figure out the facilities that may be needed such as fulfillment centre to process your orders. How many people do you plan on hiring and what will their cost be? Are there limits to your production ability? Will there be a problem with over stocking?
These are the type of questions you must ask yourself beforehand as it’ll greatly benefit you once your business starts to expand!
It is crucial to build a team with a compatible and complete skill-set. Explain the qualifications of your management team. What are their strengths and weaknesses? What is the background of each individual and how is that relevant to their current position? What experience do they have and how will certain skills be distributed among the team?
It is essential to describe your team when creating a business plan; your team will be responsible for a significant part of your success so keep that in mind!
Be Realistic with your revenue expectations
These forecasts are the proof behind your previous statements about your intent for the business. You should be realistic with both your sales and financial forecasts! It can be difficult but we’ll provide you with some useful factors to keep in mind.
For sales forecasts, you should consider how long it will take for you to start selling. What’s the potential for loyal customers? How will you be able to capture potential customers? How often will leads turn into sales? Figure out the average price of your stock within certain categories.
For financial forecasts, you should estimate what your monthly income will be. How much profit are you gaining? Does your business have enough money for it to thrive in today’s tough environment? Will operations, wages, etc. be a problem to your business’s profit? Include your profit and loss forecast as this gives investors a clear view of what you plan to achieve.
It is necessary to consider where your business could go wrong. Could you expand too quickly and lose customers as a result? Is there a possibility of losing a large amount of staff some day? Are you making loss more than profit? What do you plan on doing when these potential risks arise?
Always consider the worst case scenario and how you will adjust accordingly in any circumstance. Risk has always been a part of business, but by being observant, you should be able to keep your business running smoothly.
To better understand what the roadblocks may be in your business, there is a concept created by MJ Demarco called the CENTS principle for his book The Millionaire Fastlane.
- Control: You must be in full control of the income stream. This means that there cannot be anything someone else (who isn’t the government) can do that can interrupt or take away your income stream. For this reason, the stock market and affiliate marketing are NOT fastlane.
- Entry: There must be a high barrier of entry, or a low chance that a newcomer can just come in and compete with you. Essentially, if all it takes is a WordPress account, $40 and a registration then it’s not Fastlane. If it’s easy to do, it’s probably not worth doing.
- Need: There must be a market need. This is probably the easiest to fulfill because we all need things and services.
- Time: There must be a low (or no) correlation between your income stream and your time spent. If your marginal income is directly dependent on your time, it cannot be Fastlane. This is why not all businesses are Fastlane.
- Scale: There must be an ability to reach out to a large audience. Large is subjective: if your entire town can use the product and WILL use the product, and your town has 40,000 people in it, it could very well be Fastlane. Of course, this is where Internet companies shine. If your idea(s) can meet the needs of CENTS, then you have a worthwhile fastlane business that you can fully scale. IF not, then no matter how much work you put in, you will find yourself in a few months or a few years packing it up because of missing something here.
This can help you determine what type of idea you have (full time business, part time hobby/side hustle)
From this you can find the flaws in your business and work to improve them.
Presenting The Plan!
You must present your plan in a way that will impress the person reading your report. Avoid writing a lengthy business plan and be concise! Make it clean, organized and professional as possible. Adding a title, headers, etc. will give your business plan a more legitimate feel.
Make your key points more prominent to the reader so that they are able to understand your intent. Proofread the document for any spelling or grammatical errors. Feel free to show the plan to friends or experts and ask how you can improve!
Ultimately, you now have a guidance tool that provides a clear vision of where your business is headed!