Are you planning on finding partners or investors for your e-commerce business? Do you want to focus on your objectives from the start to the end? Then, it would help if you started your e-commerce startup by having a business plan. Some people make writing an e-commerce business plan look complicated, but think of it as a roadmap; you must identify steps to guide you. When you create your business plan properly, it will help you save a lot of time and money in the long run. Remarkably, this is because you will be better positioned to identify opportunities and challenges before you begin the business. This article will explain the step-by-step process of developing a successful e-commerce business plan.
Brief Elaborative Summary
In this section, provide an overview of your business in an elaborative manner. The aim is to help stakeholders to comprehend what the plan will consist of. Notably, an investor who only has time to read a little part of the plan should see the most crucial elements of your business highlighted in the executive summary. It should showcase your unique selling points or value proposition. You can observe a simple framework like showcasing the problem and solution you are resolving or following this format:
- Describe target audience
- The problem or gap identified
- How will you resolve the issue mentioned above
- Competitors
- Finances
Tip: Despite the executive summary appearing first on your plan, you must write it as the last part as it covers every section of your project.
Want to learn how we help entrepreneurs fund their business? Register for our free webinar! (Scroll down to continue reading this blog).
Business Overview
This section should be detailed since it highlights your business agendas. You describe the company’s history, mission statement, and objectives here. Notably, this helps investors know your goals and the purpose of starting the business. When giving a mission statement, you need to understand that it should describe why your startup will exist. It should show exactly why you are venturing into that business. Before creating one, think carefully about your motivation, what led to the opening of the company, problems you are resolving, and other broader issues you care about. An effective mission statement needs to reflect two things:
- Emotional Aspect to grab and captivate readers’ attention
- Inspiration aspect to make others also believe in your purpose.
Tip: Your mission statement should go hand in hand with your purpose and core values.
Also, when describing the company’s history, consider the following areas:
- Date of starting
- Any milestones made
- Locations
- How many will/are employed
- Products or services
- Top leadership positions
In conclusion to this section, ensure your objectives are specific, measurable, achievable, realistic, and time-bound to ensure they have explicit goals. Notably, this will help employees to work towards a common agenda, positively impacting the company’s growth.
Briefing of Market Research and Potential Customers
In this sector, you need to showcase that you understand your potential customer as well as the possible size of the market. Before you start a business, you need to understand the potentiality of the market. Here, provide the demographic details like:
- Your target location
- The income
- Age
- Education level / Profession
- Gender
- Hobbies
Ensure that your target market is narrow enough. Otherwise, it will raise an alarm for investors as they will suspect that you don’t know what you are doing. For example, if you sell interior design for homes, your target audience should be homeowners, real estate developers, architects, supervisors who can recommend you, etc.
Tip: Ensure you are very specific when it comes to the target audience. Remember, the target audience will help you determine the market size.
Describe Your Products and Services
In this sector, provide details about your products. Foremost, give an overview of the products you will offer and the unique features of your e-commerce site. Also, as you list all the items you will sell, remember to add their purpose to answer the why question. Describe why you are choosing that particular product and incorporating certain services.
After describing all your products and services, offer your pricing model. We understand that determining the pricing in a startup can be challenging. Hence, you must resolve it early by setting up a pricing model from the word go. You can use a sales pricing calculator to aid in determining the prices. Also, describe the benefits of your products or services, the production process, and the life cycle of your products. In addition, when describing the benefits, focus on the following:
- Unique features of your products
- How it makes a customer’s life better or easier
- Any patterns or intellectual property rights
- Does it affect a customer’s emotions?
Also, go ahead and show the production or service process, if any, by answering the following:
- Will you pay for the services on the site?
- Will you be creating new products or services?
- Do you have raw materials for your products?
- Where is the manufacturing place?
- Do you have a warehouse for storage?
- Will make you deliver?
- Do you have an inventory or bookkeeping?
- Describe your market analysis.
It is a good idea to show potential investors that you understand the market you are venturing into. Analyze your competitors, list them down, and their strengths and weaknesses. Show how you aim to be better than them and which service or product will make you unique. Show how your business will improve your competitor’s weaknesses. Understanding the market analysis assists in providing a framework for future marketing campaigns. Researching your competitors can be overwhelming, but trust us, it is the most helpful part before launching a business. Here, you can define your ideal customer and target market in general. To be even more effective, answer the following questions about your competitors:
- What kind of advertisements do they invest in?
- Do they have any press coverage?
- Do they have good customer service?
- How do they price their services or products?
- What is their rank on third-party platforms?
Take some time and think about what sets you apart. Note down all the pain points your business will be resolving. Also, if you don’t have any direct competition, complete this part; look for other companies that provide similar services or products.
Carefully Strategize Your Marketing & Sales Plan
A well-strategized marketing plan is crucial for every business. It serves as a roadmap to show how you plan to build awareness, increase reach and visibility, and make sales online. Here, you showcase how you will position yourself to your target audience. Which marketing strategies will you use? For instance, social media marketing, search engine optimization, Google Ads, email marketing, and PPC. Understand the marketing strategies that promote your services or products and provide reasons. Also, have a sales plan that you will use to sell and retain customers—for instance, giving discounts, offers, and gift vouchers word of mouth, among others. You also need retention services, such as offering redeemable bonus points, referral points, and customer service.
Indicate Employees and Roles
It would help if you had a team to help you run your business successfully. Indicate your team members and the roles they will be playing. Also, add their qualifications and reasons you think they will help grow the company. In this section, besides indicating the people you already have, indicate positions you will hire as you grow. In addition, add the cost of hiring these experts. Lastly, ensure you budget for a manager and an accountant, among other employees.
Outline your Business Financial Considerations
You may wonder which financial data you will give while trying to start your business. Well, you need to have a budget and financial plan before starting your business. In this section, describe your legal and financial structures. For instance:
- Startup costs
- Sales forecasts
- Break-even analysis
- Projected profit and loss
- Funding requirements, if any
Also, to ensure you start your company on the right track, add the following:
- Which percentage of the revenue will you reinvest in the business, and how much will you retain as your net income
- After how long will you collect invoices from clients
- If you take a loan, how do you plan on repaying it
In this section, provide three to five years of financial reporting, projecting how much you foresee your company earning in five years. Also, be careful to provide accurate figures. Lastly, research before providing a loss or profit statement.
Tip: Ensure that the cost of your service or product includes all of your expenses, even the overhead. It would help if you did this to determine the sale price that will generate a profit. Doing underestimations will eventually catch up to your business and adversely affect your industry.
Compile an Appendix
Provide a well-organized appendix with any document or information supplementing your plan. For instance:
- Legal documents
- Permits, if any
- Intellectual property and patents
- Business registration certificate
- Any contracts
Here, provide any document that proves your credibility and will help investors to conduct due diligence.
Conclusion
With the increasing number of people conducting online shopping, an e-commerce business must have a plan. An e-commerce business plan will keep you organized and resourceful when seeking investors to comprehend your business. It acts as a tool to help you grow your business by giving it direction. We have provided you with an outline. Now, it’s up to you to start planning. Remember, if you don’t plan, you plan to fail.
With the increasing number of people conducting online shopping, an e-commerce business plan is essential before starting. It will act as your guide to a successful business.
