Most ecommerce websites are built on a dream, a passion, or a noble goal of fixing something that lacks a proper solution.
But unfortunately, many businesses don’t last more than a few
months. A discouraging truth about ecommerce is that 90% of startups fail in the first 120 days.
Suffice to say that in order for your business to survive its
first precarious years—and to thrive beyond them—you need a solid business
plan.
After all, some of the most common reasons why businesses fail
include lack of capital, inadequate management, and a faulty business model.
Much of this is a symptom of poor planning. Here’s how you can better plan for
your brand’s future and create a strong ecommerce business plan.
What is an ecommerce business plan?
A business plan is a roadmap for how to structure, operate, and
manage your business. It includes the important elements that define your
company—such as your name, description, capital needs, product categories,
target market characteristics, and business goals.
A thoughtful business plan can prepare your store for a successful
launch and/or help it to scale in the right ways. In the latter case, an annual
business plan review and revision can help you adapt to industry changes and
anticipate new trends or consumer behaviors.
In a nutshell, a business plan helps you to:
How to create an ecommerce business plan
An ecommerce business plan is structured similarly to a
traditional business plan. However, it will detail things like your website
builder, sales channels, fulfillment process, and goals that are distinct to
running an online store.
Here’s a breakdown of what you should include in your plan and how
to create it:
In this section, you’ll want to outline the who, what, and why of
your business. Rather than going into details about the products you plan to sell
(this comes later), talk about your vision for the company. Share your
motivations, values, and problems that you plan to solve.
Your description can include things like:
·
Brand name - Selecting a meaningful name is particularly important for ecommerce
businesses since your website domain will be closely associated with your
brand. Jeff Bezos famously named Amazon after the world’s largest river because
his goal was to create the world’s largest bookstore, but also didn’t want to
be tied to books. Similarly, you’ll want to pick a name that you won’t outgrow.
If you need some inspiration, give APNABAZAR store name generator a
whirl.
·
Domain name - At this point, you’ll want to have registered a domain name. Use
APNABAZAR domain name search to check if your preferred domain is
available. If the domain is taken, you can take one of several steps: contact
the site owner directly, tweak your domain (e.g., add a verb like “get” to the
front of your name), use a different TLD than .com, or use an abbreviated form
of your name.
·
Background - Your description is a great place to share why you started your
business in the first place. What inspired you to create your brand? Who do you
plan to serve? What do you plan to accomplish? While you want to avoid waxing
poetic here, it’s worth giving your readers an inside look into the history of
your company.
·
Vision - Your vision statement should capture the
ideal state of your business. In other words, what is the future that you’re
building towards—not just now, but five or 10 years from now?
·
Mission - Your mission statement, on the other hand,
should express what you’re striving and able to achieve now. While your vision
statement provides the 30,000 foot view of your company, your mission statement
acts as a compass for your team and keeps them motivated to do their best.
·
Business structure - Be clear about whether your company is a sole proprietorship, an
LLC, s-corporation, c-corporation, or partnership. If you’re not sure which applies to you or
which one to pursue, consult a lawyer or accountant.
·
Key personnel - Name key team members like your cofounders, CEO, partners, and
upper management. There should be no question about who owns the company, and
who is responsible for managing what. This is not something just meant for
appearances—your team should be well-structured to ensure efficiency and
growth.
·
Core values - Your values should represent how you plan to run your business.
Investors and employees will want to know that they’re backing the right horse,
not just from a financial perspective but from a human perspective. Your values
will naturally make an appearance in your vision, mission, and background, but
make sure that your values are clearly stated for readers to refer back to.
Your business plan should include extensive information about your
industry and the people you plan to serve. The last thing you want to do is
enter the ring blindly or operate based on assumptions alone.
·
Target market - Estimate the number of consumers who need your product (based on
real independent research) and how often they may make a purchase. Revisit your
buyer personas and describe who you’re planning to target.
Is the need for your product growing, based on the climate of your industry?
What consumer behaviors have you observed? Are there any doubts or questions that
you should address?
·
Competitive analysis - Identify your top competitors and perform a
deep dive into their strengths, weaknesses, top products, pricing strategies,
and more. You should know how your business stacks up against these players.
For example, many companies manufacture and sell hair and body care products,
but Lush built its reputation by taking a stand against animal testing, over
packaging, and harsh synthetic ingredients. The company has a clear niche
within the cosmetics and bath products industry. They create unique, memorable
products that are easy to differentiate from competitors (and fuel brand
loyalty). The most important thing at this stage is to be honest in your
assessment. Don’t turn a blind eye to areas where your company needs to improve
or any risks that you run. At the same time, zero in on any product gaps or
niches that your company can effectively target to get ahead of competitors.
· Special considerations - As an ecommerce business, you may not simply sell D2C from your branded site. You may also choose to sell on third-party marketplaces like Amazon, sell wholesale, or open brick-and-mortar locations. Each of these may involve a different set of competitors and buyers. Take the time to look into each of these channels separately. Understand how you plan to compete on all of these different fronts (or perhaps now is a good time to define which is most important to start off with).
By now, you’ve likely mentioned your product several times within your business plan. Still, you’ll want to have a section that clearly lists out your products.
In this section, describe your pricing, product positioning, margins, product life cycle, and key differentiators. You can include pictures and product reviews if you’ve already tested your items in the market. Or, if you’re still in the research and development phase, describe your timeline and progress in detail.
It should be clear whether your products are private label or sourced elsewhere. If you only sell a few items, provide a more detailed description of each. Alternatively, if your catalog is too large to list out, give a more general overview of each product type, plus the strategy behind them.
If your business plan is meant to serve as an internal doc for your team to use (or even if you want investors to see where your capital is going), include a section that describes how you plan on tackling logistics and operations. There are tons of things to keep track of on this front, from the suppliers you’ll need to work with to the storage space you’ll require.
Here’s a breakdown of information you can include.
·
Suppliers - List out your suppliers for raw and/or finished goods. Where are
they located? How do you plan on connecting with and managing them?
·
Production - Are you drop shipping, manufacturing,
hand-crafting, or buying your products wholesale? Include details like lead
time, contingency plans (for when demand spikes), and other essential details
about your supply chain.
·
Equipment - What hardware and software will you need to conduct business?
Include your website builder and other subscription-based tools that you’ll
need.
·
Warehousing - Explain where you plan on storing your products—whether that be
your own warehouse or a third-party logistics (3PL) provider.
·
Facilities - Do you plan on opening a brick-and-mortar location, or will you
have a designated office space? Include where your team members will be
operating out of and how that might change as you grow.
·
Personnel - You’ll want to be clear about the chain of command and which
roles are filled or need to be filled. Don’t forget to think about any legal or
accounting needs, in addition to board members, consultants, and employees.
·
Inventory - How do you plan on handling inventory management?
This is an area where lots of businesses stumble, so you’ll want to have a
clear strategy (and the necessary technology) to keep this in check across all
of your sales channels.
· Shipping and fulfillment - Do you plan on fulfilling orders on your own or will you outsource this responsibility? Moreover, how will you handle international shipping if your brand plans on selling overseas?
That’s why you don’t want to
haphazardly build your ecommerce marketing strategy. Think of—and document—the
various components of your strategy:
·
PPC ads
·
Social media ads
·
Content marketing/SEO
·
Organic social media
·
Email marketing
·
Influencer marketing
·
Promos/discounts
·
Affiliate marketing
·
Loyalty programs
·
Events/pop-ups/trade shows
·
Radio or TV
· Brand partnerships
A strong marketing plan doesn’t necessarily require a big
advertising budget. But you’ll want to name your top channels upfront and
specify whether these things will be handled in-house or with an agency’s help.
So you’ve got big plans for your business. How will you fund them?
This is where you reassure readers that your head isn’t just in the clouds. While this is probably the least fun to write, the viability of your business (and your reader’s confidence in you) relies on having a firm grasp of the numbers.
If
you plan to seek financing, then investors and lenders will want a sales
forecast along with your list of expenses (this includes both fixed costs and
variable costs) to ultimately ensure that they’re making a sound investment.
Or, if you don’t plan on seeking third-party funding, a financial
plan still tells you how much money you’ll need to run your business and helps
to protect you from unwelcome surprises. The last thing you want is to run out
of money before you can establish yourself—which is one of the top five reasons
that ecommerce startups failed in the same survey mentioned above.
Consider including theses elements within your financial plan:
·
Startup cost
·
Income and expenses
·
Balance sheet
·
Cash flow statement
·
Breakeven point
·
Customer acquisition cost
·
Key assumptions
·
Financial projects for next five years
·
Whether you’ve just dipped your foot in ecommerce or have been in business for years now, you’ll need an up-to-date business plan to run a tight ship. Download our free business plan template today and build a solid foundation for your brand.