Business Plan Benefits
A business plan is a document which contains all the information about the business in order to help make decisions for the future. It can be used to assess how an organization is performing and to identify any areas that require improvement.
Key benefits of making a business plan are:
- Provides clarity of direction
- Helps identify potential risks
- Assists in executing strategy
- Allows assessment of performance (current or projected)
- Assists in planning for future growth/opportunities
- Aids communication internally and externally
Sections in a Business Plan
There are important sections to include in a business plan. When starting an ecommerce business, you’ll want to ensure your business plan contains the following:
- Executive Summary
- Vision and Mission Statement
- Products and Services
- Market Introduction and Profile
- Competition Section:
- Company background
- Strategic plans
- Competitive analysis
- Marketing and Sales Strategy:
- Key opinion leaders
- Marketing objectives
- Market segmentation
- Target market
- Goals of the company
- Marketing strategy
- Marketing activities to achieve marketing objectives
- Various other factors such as marketing strategies
- Current or projected balance sheet
- Income statement
- Cash flow statement
- Customer information
- Business credit building strategy
Recommended: Use our free business plan template to master each section of the business plan.
Write a Business Plan
A business plan will help you get your company up and running and prevent you from making costly mistakes. Here is how to create a business plan for an ecommerce company.
1. Start by asking and answering some typical business plan questions:
- What is your company's mission?
- What is your company's vision?
- What is your company's business model?
- What is your company's differentiation strategy?
- What are you selling or offering?
- What is your company's competitive advantage?
- Who are your clients and what value do you provide to them?
- How does your company make money and spend it?
- What is your daily method of operation to generate sales?
2. Next complete the plan:
After answering some vital questions, structure them in a formal business plan arrangement to help your plan take shape.
Questions jumpstart your thinking, while writing helps bring your plan together.
Five Business Plan Attributes
There are five business plan attributes that should be included in your ecommerce business plan to help you define your goals and provide your business with a concrete direction. These attributes ensure that your business plan will help you create a daily method of operation, plan the business’s financials, and develop a forward-thinking exit strategy should you someday want to sell your business.
Business plan attributes:
- "Vision" attribute, which is about defining your goals.
- "Road map" attribute, which includes how you're going to get there.
- "Operations" attribute, which includes how you're going to run the company’s day-to-day operations.
- "Financial" attribute, which includes projections and analyses on cash flow and profitability.
- "Exit strategy" attribute, in case you ever want to sell or go public with your business.
Ecommerce Business Planning Costs
There are many factors that determine the costs of an online store. The type of business, where you are based, and what you sell are all pieces to consider. Here are some steps to help you calculate and manage your ecommerce costs.
1. Start by Understanding Types of Cost.
We can break down costs into two main groupings:
Fixed costs refer to expenses which do not change over time. For example, setting up your website domain name or designing your logo might fall into this category. You will have to pay these expenses upfront before starting your business even if you don't generate any revenue. Fixed costs may also include hiring a lawyer for drafting contracts with suppliers.
Variable costs are ongoing expenditures that vary month to month. These types of expenditures are more challenging to manage. For example, paying utilities or a metered hosting plan would vary monthly.
A good strategy for determining variable costs is to estimate a range. Then factor this range into your business plan.
2. Decide What Products and Services You Need to Purchase
When starting an ecommerce business, you will need a good hosting plan for your ecommerce website. There are a lot of choices to pick from. To help you decide, we've reviewed the best hosting options available.
You may also need additional services:
- Business planning software
- Business bank account
- Business credit card
- Building business credit
- Business phone line
- Accounting software
- Business formation service
- Payroll service
- SEO services
- Tax software
- Registered agent
- Business license
- Annual filing service
- Business insurance
3. Add Up All Costs
Once you know what your ecommerce business needs and know what you want to buy, you should add up all your proposed costs. This is simple math — take the price of each item and add it to the next.
4. Manage Costs
After you make your purchases, start managing your finances with a business accounting software.
Managing your costs will help you with future business decisions, make filing taxes easier, and improving the financial side of your business plan.
Keep Your Ecommerce Store Running Successfully
Staying on top of your ecommerce store is a lot of work. However, if you stay on top of your business and put in the effort, you can keep everything running smoothly.
Below, we've listed just a few ways that you can keep your store in tip-top shape and ensure it's always running efficiently and has the best chance of succeeding:
- Keep up with inventory: Keeping up with inventory is an important part of keeping your store running smoothly — and it's important because if something isn't there when someone tries to purchase it, then you may find yourself with an upset customer and a lost sale.
- Keep costs down: Ensuring you manage costs effectively will better help ensure you have more money coming in than going out. The old saying is: Only buy what you need!
- Focus on money producing activities: Running an online business is different from operating a forward-facing business like a brick-and-mortar boutique. For one, you’re typically working remotely where it is easy to get sidetracked and find yourself doing activities that don’t necessarily help your business.
- Keep your store clean and marketing working: Your job is to make sure your online store is clean, inviting, and fully stocked with items your customers want and need and that your marketing is working for you and not against you.
- Stick to your ecommerce business plan: There’s nothing worse than taking time to create a business plan only to never look at it again. The business plan should be something you are constantly looking at to keep you on track and focused on growing your business. Inside your plan, you may have a daily method of operation where you have listed those money producing activities you’ll do everyday to ensure your success. Let’s stick to the plan!
Starting an ecommerce business requires planning just like any other business. Start with a good plan. Ask questions that get you thinking about your business and the directions you want for it. Use a business plan template to create a business plan that works for your vision. Factor in financials, deciding what you will need to get started and then to maintain your business. Then transition over to the day-to-day operations and decide what you must do to run a nimble ecommerce business successfully.
Frequently Asked Questions
What are the disadvantages of not making a business plan?
Insufficient planning can stop a company from growing. It can also cause the company to fail without any comprehensive strategy.
Things to consider:
- Without a comprehensive strategy, any marketing campaign will fail to have an impact on consumers.
- A business plan will help maintain focus on goals which are achievable and measurable.
- New problems will arise and a business plan is an important tool for assessing how to best tackle complex problems.
Who should I involve in my business plan?
The focus of a business plan is to provide a roadmap for the future of the business. It should detail what the company will do, how it will be financed, and what return on investment investors can expect.
Business plans are often written by entrepreneurs outlining their own vision for the company. But, it is important to involve other parties in the process as well. This includes investors, stakeholders, and customers. They can offer valuable insights into your product or service that you may not have considered before.
How do I know if my business plan is successful?
If you are thinking about creating a business plan, it is important to know what qualifies as a successful one. There are many different aspects of a business plan that can qualify it as successful. These aspects include the competition, the market, the financials, and more.
The best way to know whether or not you have created an effective business plan is to assess it at periodic intervals. At each benchmark, decide if you are where you want to be or not. If you are meeting or exceeding benchmarks, consider your plan successful. If you are not meeting your goals, you may need to reevaluate your business plan.