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Every month in the United States, around 550,000 businesses start, and about 80% survive the 1st year, 70% for two or more. Approximately 50% of companies survive for the 1st five years, and 1/3rd stay in business for ten years.What is the reason behind this notable failure of start-ups? The answer lies at the start of their lifecycle. Many businesses failed to start with a concrete strategy. Whereas successful businesses possess one common attribute — A brilliant business plan.[lwptoc skipHeadingLevel="h1,h4,h5,h6"]This blog post is a practical guide to rational business planning. At the end of this article, you’ll be able to determine how to draft and customize an eCommerce business plan and how to utilize it for promising success.
Ecommerce Business Plan
Intelligent and fruitful business plans help businesses stay focused on a predetermined goal and free from distractions. They also assist business owners in showcasing their businesses to investors and other patrons. If you're doing an online business, your eCommerce business plan is your great asset to rely on. Start with defining your business, your journey, and then set your goal - how to achieve it.
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The human mind is filled with the clutter of information, including useful and garbage, so it’s best to visualize or paper down this information. The ideal business plans appear like mainstream travel plans. They include drafts for growth, projected achievements, and financial summits. Like real-world travel planners, they outline plausible roadblocks, contingency backups, and preventive measures. They clarify vital segments like cash flow, expenditures, support tools, and distribution mediums in detail. In simple words, your eCommerce business plan or strategy serves as the foundational base of your enterprise.
Why do You Need an Ecommerce Business Plan?
Your eCommerce business plan or strategy serves as the lifeline of your company. Writing this vast content and information helps you filter out your priorities and mark the apparent and latent problems before they start to happen. While creating a business plan, you have to:
1. Know your Business
Most of the ideas we got randomly while walking, reading, or taking a bath, and sometimes it took years for someone to formulate an idea. Either way, writing a business plan can help a lot in filtering facts from fiction.Many entrepreneurs start by listing down the critical point effortlessly, like bullets or mind maps, and expand this listing further. You can’t learn to swim by directly diving into the ocean in stormy weather, so it's better to leave complex questions related to tax, supply chain blockages, warehousing, employee satisfaction, etc., for later.
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At this stage, what you’re searching for is a precis document of your final business plan. To ensure the completeness of your plan, ask yourself these crucial questions and answer them:
- What are you going to sell - tangible products, software products, or services?
- To whom are you going to target – Customer and Market?
- Is a dedicated social media page or a website is required?
2. Identify the resources needed to run your business
You have now prioritized and filtered your ideas in a managed form. Now, you need to collect the resources for practical implementation. Whether small or huge, every business requires some investment in terms of money, but the list of supplies cannot be generalized. You have to categorize your monetary resources and consumption into three segments:
- Financial Resources
- Physical Resources
- Human Resources
Let's discuss this in detail.
Financial Resources
Most entrepreneurs start with a limited budget and capitalize on it as they start progressing. I can buy tools from your savings for the greater good; that’s perfectly fine. If you can’t, there are four alternates to meet this challenge:
- Apply for a business loan
- Financial partnership
- A Patron in the form of investor
- A Private or Government-owned crowdfunding facility
Physical Resources
Filter out the most essential; that’s a technical utility you’ll need for your eCommerce business at the least: one fast PC or a laptop, budget-friendly camera equipment for product photography, and a printer. If you are planning to manufacture your goods, you are required to buy some raw materials. And don’t forget to invest in other essential and apparent items, like the workplace, communication medium (digital and physical), and machinery.
Human Resources
Some entrepreneurs prefer to work in isolation, while others in the form of a clan. It is better to involve some like-minded partners while going for a hike. You can share ideas, financial resources, and more than everyone can learn from the skills and experiences of others.Human resources also include employees, outsourcing vendors, supply chain staff. You need skilled and dedicated people on your side as it’s your company against the world. Money is the biggest ever motivation, so you’ll have to pay them fairly.
3. Build a road map
Where do you assume yourself in the next five or ten years? Are you planning to station an international-level eCommerce platform? Do you want to create job opportunities for your locals or help people grow in underdeveloped nations– No one knows your priorities and end goals better than yourself?Your business plan draft is your success strategy to list your growth strategies, sales targets, and motivation. You have to set the milestones and outline key performance indicators (KPIs).
4. Know your competitors
Many confused entrepreneurs spend most of their time pondering over the doubts like whether or not their business plans are unique or trustworthy? It’s okay if your plan doesn't sound like that of other successful ideas you ever heard of. The only thing that matters is how smartly you gear up against your competition.Take some time to evaluate the strengths and weaknesses of your rivals. Try to learn from their success as well as failures. Focus on producing the goods or unique services with lower cost and higher quality than those offered by your competitors. By doing so, you’ll be able to make your place in the eCommerce marketplace.
5. Seek the opportunities
Opportunities are scattered everywhere in the Universe; you just have to use the appropriate lens and perspective to see. You can easily team up with the already existing companies whose products can align perfectly that with yours. For instance, if you make a charger, they might be making data cables.
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Don’t underestimate the power of influencers and social media figures. Partnerships with popular Instagram, YouTube, and Facebook influencers can give you the utmost benefits in the form of word-of-mouth marketing up to the next and smart level. As their followers inspire, product recommendations and suggestions made by influencers can rapidly lead to fame, trend and success.
Comprehensive Business Plan
Efficient and comprehensive business plans are very complex documents. Before you start writing, just go through some business plan templates or designs. Read a couple of sample business plans. After doing so, ask yourself the following three questions and answer these questions with your strategic roadmap.
What are you selling?
As discussed earlier, eCommerce companies sell three different products: goods, services, and digital products. You need to spoon-feed your audience what you are trying to sell and why. You can explain in a general way if you are selling a large variety of items or services, but if you’re a single-item retailer or have limited stuff to sell, don’t hesitate to go into detail.If you sell digital equipment, be clear about its specifications and how customers can get their hands on them. Will consumers download software, music, tutorials, or educational documentaries from your site? What about licensing and other regulatory requirements?If you’re a service provider, explain to your audience precisely what kind of services you will provide and where? Are you bound to local services? How far can you travel or tend to provide services? Do you plan to expand your service-based company for cross-border functionality? It is advisable to maintain FAQ sessions on your site.
Who is your target customer?
Many eCommerce businesses directly trade with consumers. Data is a new commodity. If you’re a business-to-consumer (B2C) facility, maintain a consumer database to use for an online marketing strategy for your product.Some online retailers and service providers operate a business-to-business (B2B) facility. Such as, Manufacturers or vendors who sell raw ingredients to food companies or components to electronics manufacturers fall into this segment.Whether you’re B2C or B2B, you need to figure out why your consumer will fall for you. How helpful for them to visit your site? Why should they opt for you over other available options? Maintain some level of uniqueness in this matter.
How will you acquire necessities?
Some eCommerce companies have in-house manufacturing facilities. But let's say you make tripods or silicon mobile cases; maybe you work on android app development or store management systems. You have to buy raw material or deploy a downloading service in such cases, and you’re ready to take off.If you plan to outsource via a third-party manufacturer, try to maintain a healthy and trustworthy relationship with your vendor before the launch date, and don’t forget to complete any legal or personal documentation, if necessary.Other product-sourcing alternatives are Dropshipping or Wholesale.
Ecommerce Business Plan Outline
All business plans are unique, but most contain these seven primary and essential elements; one cannot miss out. You might decide to add additional topics as per your feasibility and choices, but if you start with the following key issues, you’ll be able to stay on the path.
- Executive summary
- Company overview
- Market analysis.
- Competitive Analysis
- Products and services
- Marketing plan
- Logistics and operations plan
- Financial plan
Executive Summary
An executive summary refines your business idea into a clear perspective and a very simple one-page outliner in a busy routine. Your executive summary joins the plan with the beginning of your plan-making journey, but you might want to reshape and reform it once you have done planning because you will get a new perspective after understanding your venture, customers, and stakeholders. Read it in the end, and don’t hesitate to make any updates and changes. Let's discuss how the executive summary will look like and what should be added to it.
Purpose of your business do?
Provide a brief account of what your facility does. Make it attractive and easy to digest. Must ensure completeness by answering these three questions:
- Are you a B2B business or a B2C business?
- Do you sell products or services?
- What industry is your business in?
- What goals does your business want to achieve?
- Write about your objective and mission. What do you want to attain? Why are you better than the rivals? Why should one choose you?
- What products do you sell?
Provide a brief but information-rich note of the products you sell. If you sell a lot of products, it’s okay to provide a point summary and description. If you believe that your goods or services are better than your rivals', notify what makes you unique.
Who is your audience?
Give a briefing about your target audience here. If you plan to sell your products to a variety of different demographics, tell your audience who they are.
External Resource: eCommerce Business Plan Templates (Link)
Where are you going to sell your products?
If you have a physical outlet as well as an online platform, mention it here. If you’re strictly an eCommerce facility, you might have different online sales mediums such as a brand website, eBay, Amazon, etc.
What is your monetization strategy?
Offer a brief and complete summary of your monetization plan here. Are you going to work with wholesale vendors? Are you collaborating with social media influencers, or will you opt for SMS or email marketing?
Company Overview
Now you have to provide the audience with a detailed and in-depth overview of your business. For now, they’ve done overviewing your company description, mission, and vision; reviewers will know what type of facility you run, what you are selling, and what makes your presence unique.Start with a catchy but straightforward opening statement, and then discuss the following attributes:
- Brand Name
- Domain Name
- Mission
- Vision
- Background Statement
- You and your team
Market Analysis
To win in the dynamic and continuously evolving eCommerce Universe, you have to sharply filter out your target market. While writing this segment of your business plan, you’ll get to know your target sector. You’ll learn about your rivals, your company’s survivability skills in a market, your strengths and weaknesses, and your consumer demographic categorization. Run a SWOT analysis routine. Some key areas to keep in mind here are:
- Market Opportunities
- Industry Trends
- Customer Behaviour
Competitive analysis
To know your rival is the first step towards success. If you fail to understand your competitors, you can’t supersede them. Conducting a competitive analysis can help you overtake the crowd. First, try to filter out the key monopoly giants and potential rivals in your industry; then, list your direct and indirect competitors and act accordingly after observing their strengths and weaknesses. Once you know what your competitors have to offer, you can strategically station your company as a better alternative.
Products and Services
You gave a brief account of your products or services in your executive summary session. Now it’s time to expand that brief section. As we have discussed earlier, make your products and services section attractive and easy to comprehend. To do so, keep paragraphs short, better to use bullets, use non-technical vocabulary.
Marketing Strategy
Your business plan is almost ready, and you’re geared up completely. Now you just have to attract traffic and influx of audience to your eCommerce platform and convince visitors not to leave your online site without buying any product. Here engagement is the key. In simple words, you need a smart marketing strategy.The marketing budget should be kept in mind. You need to find a way to put your product in front of the most accurate and targeted customers without spending irrationally.Keep in mind these 4 Ps to develop an effective and complete plan:
- Product: How will your product sustain consumer between demand?
- Price: how strong your price competition edge is?
- Place: which product placement strategy can drive more attention?
- Promotion: Which marketing medium will you utilize to showcase your product?
Paid Marketing Channels
- SMS marketing
- Social media ads
- Influencer marketing
- Organic Marketing Channels:
- Search engine optimization (SEO)
- Social media pages
- Content marketing
Logistics & Operational Planning
What are your physical and objective requirements to operate your eCommerce business? Your business plan’s logistics and operations segment involves all essential aspects from technical utilities such as PCs, printers, cameras to inventory or warehousing. Your logistics and operations plan should cover Suppliers, Production, Shipping & fulfillment, and Inventory details.
Financial Plan
Nearly all organizations, either small or big, need a certain amount of money to start or support progress. Some entrepreneurs put their own money in this effort, while others build alliances with stable partners and patrons, seek crowdfunding campaigns, or opt for loans.Most financial plans possess the following three economic analyses:
1. Income statement
Your income statement provides a breakdown of your revenue sources and expenses over a specific period. The difference between these variables calculates your deficit or surplus in the form of loss or profit.
2. Cash-flow statement
Cash-flow statements are like real-time income statements. These statements involve the record of both cash inflows and cash outflows over some time, hence helps a lot in managing budget and control expenses.
3. Balance sheet
Entrepreneurs use balance sheets to determine how much equity they have in their facility. The difference of liabilities and assets is calculated as the business’s shareholder equity.
Conclusion
An efficient and smart eCommerce business plan possesses a concrete and promising foundation for success. As you research and paper down your strategy, you can explore more essential topics and insights of market dynamics, trends, challenges, and financial hurdles, as well as solutions.Let us know in the comments section below if the guide was helpful or you have suggestions to make the guide better. Also, feel free to share your e-commerce business experience.