A business plan is an essential part of creating a strong foundation for your e-commerce store. The competition is fierce and without a good strategy and thought-out plan, your path towards success can be filled with bumps and roadblocks.
By writing a comprehensive business plan, you’ll be able to create a clear guide for your team. Based on the plan, your team can take data-driven steps that will help you thrive. Considering that about 80% of e-commerce businesses fail, writing a business plan can assure that careless mistakes don’t make you a part of this statistic.
In addition, a business plan can help you raise funds for your business. Investors will be more willing to support your idea when you present them with actionable steps and detailed facts about how your business operates.
If you are determined to succeed, you need to get yourself a business plan. The thought of writing a business plan may be intimidating, but that is only until you get guidelines on how you should approach it.
In the following lines, you’ll learn everything you need to know about writing an effective business plan for your e-commerce store.
Why Does Your E-Commerce Store Need a Business Plan?
A business plan can benefit your company in many ways. If you’ve associated the plan solely with attracting investors, you’ll be surprised by the variety of useful roles that the plan has.
Here are some of the key ways in which a business plan can help your e-commerce business:
- It will motivate you to do thorough research
- It will inspire you to think through all your ideas and decisions
- It can help you to properly prepare for starting your business
- It can push you to develop a smart business strategy
- It will help you identify necessary resources
- It will keep your focus on set goals
- It will make your goals more achievable through predefined milestones
- It will give your team members a roadmap to success
- It can help you understand important business topics (marketing, finance, etc.)
- It will help you convince investors and lenders that your business is worthy of their funds
Once you finish writing the business plan, you’ll have no doubts about what you need to do. The evaluation will lead you to the right solutions for your business growth.
Define the Essential Elements of Your E-Commerce Business
First of all, you need to create a clear concept of your business. The closer you define your niche, goals, and purpose, the easier it will be for you to write the plan.
The questions you need to answer to contextualize your business are:
- What are you offering?
- Where will you get the goods (that is, who is your manufacturer)?
- Who is your target audience?
The answers to these questions will make sure that you determine the key factors that round up your business strategy. When you sort this out, you can start writing the plan.
A business plan should contain the following segments:
- Executive summary
- Company introduction
- Market analysis
- Products and services
- Marketing plan
- Operations plan
- Financial plan
Let’s clarify what you need to cover in each segment of the plan.
1. Executive Summary
As the title suggests, the executive summary will summarize your plan in a concise one-page text. Since the summary wraps up the whole plan, you want to write it last.
The summary acts as an introduction to the plan. It gives the readers a glimpse of what you’ll address later. When you finish and revise your business plan, you should get back to the summary and share a few key ideas.
What you can include in the summary is:
- What you do
- Products you sell/services you offer
- Your target audience
- Your goals
- Your mission and vision
- Your sales channel (website, Amazon, eBay, etc.)
- Your unique selling proposition
- Your monetization strategy
The purpose of the summary is to help readers create a general idea of your company. The reason why a summary is relevant is that without an effective summary, the reader can give up on your e-commerce right away.
2. Company Introduction
This segment will help the readers get to know your business. You need to give them an overview of what you do and what makes you unique.
While you should be as succinct as you can, this part is vital for showing how you can add variety to the market.
The information you want to address in the company introductions is:
- The name of your brand
- What inspired you to start your e-commerce brand
- Your niche
- Mission statement
- The key people in your team (CEO, partners, HR manager, sales manager, marketing manager, logistics manager, copywriter, etc.)
Aim to present your brand as an innovative and unique team of people who can make a difference. If you manage to evoke an emotion in the reader, you’ll have a higher chance to compel them.
For example, a mission statement is ideal for giving the reader a reason to believe in your company. Whether you need to convince investors to provide you with funds or motivate your team to give their best, a well-written mission statement can make that happen.
Here’s an example of an impactful mission statement by Wayfair to inspire you:
“We give you the power to create spaces that are just right for you. We provide true partnership to help you define your vision. We empower you to create spaces that reflect who you are, what you need, and what you value so that you and the ones you love can feel right at home.”
3. Market Analysis
The market determines the demand for your products or services. Thus, your market report and analysis will clarify the need for your products. If you don’t conduct this analysis, you won’t validate your business’ and products’ potential.
What you want to pay attention to in market analysis is:
- Target market
- Target audience (buyer persona)
- Industry trends
- Your business’ position in the market
Think about both your strengths and weaknesses when analyzing the market. Do the same for your competitors. Aim for that overlap where your services fill in the gaps in your competitors’ offers. That’s how you’ll be able to pin down what’s your unique selling proposition. That unique selling proposition is what will make your products stand out on the market.
The market analysis needs to be specific, supported by data, and realistic. The better you assess the market, your strategy will be more customized and effective.
4. Products and services
The products or services will be mentioned throughout your business plan. However, they do deserve a separate segment dedicated to them solely.
Describe what you sell in detail. Mention specific items, price, quality, how you sourced products, whether you want to expand the product range, the ingredients/materials you use, and similar.
For example, if you are selling natural cosmetics, stating that the products are natural won’t suffice. Instead, share the ingredients you use, explain the process, and even share technical lab reports that prove the quality of your finished products.
You want to state your product’s features and benefits. The benefits should explain how your products make customers’ lives easier. For improved readability, use bullet points for these lists.
If you already have some bestsellers, share them. You can also include your customers’ reviews. Or, if your e-commerce is yet to be launched, include testimonials from pre-launch tests.
The product reviews can reveal what customers like most about your products. They can also be the proof of customers’ loyalty and your experience in providing customers with high-quality products or services.
5. Marketing Plan
Without a good marketing strategy, your brand can fall in the shadow of well-advertised e-commerce stores. Therefore, you need to develop a marketing plan and include it in your business plan. In this way, the investors will see that you have a thought-out promotional strategy. On the other hand, your team will have a marketing plan to follow.
Think about the following when writing your marketing plan:
- Marketing methods (social media marketing, affiliate marketing, etc.)
- Unique selling proposition
- The customers’ needs and pain points you’ll target
- Marketing team
- Future marketing plans
Bear in mind that your marketing strategy needs to accommodate your target audience. Thus, create your marketing plan with your audience in mind.
6. Operations Plan
The operations segment of your business plan will help you revise requirements for running your business smoothly. When writing and reviewing your day-to-day operations, you might spot room for improvement. This is a good opportunity to realize how your company can grow.
Explain how you run your business by elaborating on these business aspects:
- Supplier (who supplies the products or materials)
- Production (who makes the products, how long does it take)
- Shipping (shipping costs, time, delivery process)
- Demand (how you deal with increase/decrease in demand)
- Inventory (how long you keep the stock, where you store it)
- Facilities (which facilities you use)
- Staff (people responsible for handling day-to-day operations, cost of paying for the staff)
Your e-commerce business operations and costs that come with them will help you define and write the next segment—the financial plan.
7. Financial Plan
Lastly, you need to address the financial part of your business. The financial plan should focus on your present and future monetary dispositions.
This segment can include the following:
- Economic analyses (include a balance sheet, an income statement, and a cash-flow statement)
- Funding requirements
- Funding plans (angel investors, crowdfunding, etc.)
- Sales forests
- Financial projections
To outline the projections, you should look into your market analysis and product demand. It might be a good idea to look into case studies of e-commerce start-ups or successful e-commerce brands to get a better understanding of their financial operations.
The financial plan will help you calculate what you need to do and how you need to handle your funds to stay afloat. You can also take into consideration your ROI (return on investment) potential and what actions are necessary for keeping your business running.
While creating your financial projections, do it with risks in mind. The business world isn’t ideal, so if you don’t count on risks and drawbacks, you’ll miscalculate your possibilities.
Writing Tips for Creating a Comprehensive Business Plan
You need to pack all that information in a readable and understandable format. How you write the plan is just as relevant as what you share in it.
Therefore, here are some useful tips for achieving brevity and clarity.
1. Prioritize quality over quantity
Don’t focus on the length of your business plan. How many pages you’ll have depends on your type of business. A startup can’t have the same amount of information as an e-commerce store that runs for 5 years. Therefore, focus on including information that adds value—nothing more and nothing less.
2. Use simple language
Use everyday language so that everyone can understand it. You don’t want your team or investors to use a dictionary to decipher your writing. If you must use industry jargon or terminology, include a short explanation.
3. Personalize it to your target reader
Try to adjust your business plan writing to the readers. If you are writing the plan for internal use only, you can use industry terms that your team knows about. However, if you’ll be sending out the plan to investors from your industry and other industries, you’ll need to keep it plain and simple.
4. Add additional documents in the appendix
If you have any documents you want to supply, add them in the appendix. Your business plan will be easier to follow if it’s not filled with unorganized documents. Overall, you shouldn’t let the additional documents lessen the readability of your plan.
5. Use specific data
Whenever an opportunity arises, support your claims with statistics. Numbers make your statements credible. Thus, you should always aim to add quantifiers to your business plan.
As an e-commerce business owner, you need to have clarity of your past wins and misses, as well as your future strategy. You also need to keep up with the situation in the market and with the needs of your target audience. A business plan will motivate you to cover all of this.
While you write the business plan, you’ll get a complete understanding of what your business needs to reach the desired profit. It will also be a tool that can get you the funds you want to develop your e-commerce store. So, look at the business plan writing as a process of immense value that can help you take strategic steps to success.
Guest Article by Jessica Fender
Jessica Fender is a professional writer and educational blogger at Writeload, an aggregator for useful college resources and websites. Jessica enjoys sharing her ideas to make writing and learning fun.