In such a progressive time, generating ideas remains a natural process. We may create a significant breakthrough to solve people’s problems, find ways to satisfy their needs, and make a profit from it. But there’s something that lies between an idea and the actual formation of a business – a good business plan.
Some e-commerce business owners might skip this step and concentrate on the urgent tasks on their to-do list, like launching a website, connecting online payment platforms, and presenting a product. But other founders choose to take some time to research their field, come up with a business strategy, and set goals to take their business to the next level.
A solid business plan can be a firm grounding for your startup business. It’s the blueprint for your company and it will help you to set objectives, identify potential risks, set financial targets, develop marketing strategies, and identify resources required to launch your e-commerce business. Creating a business plan will give you clarity about what steps you need to take to make your dream of growing a successful e-commerce business a reality. Let’s look at an actionable guide on how to create a thorough business plan for your e-commerce business.
- What is the difference: business model vs. business plan?
- Strategic business planning and business strategy
What is an e-commerce business plan?
A business plan is a written document that describes in detail how a business – usually a startup – defines its objectives and how it is to go about achieving its goals.– Investopedia
A business plan is best described as a roadmap from the current starting point to the goal. It includes all the possible ways to get your online store where you want it to be, sets deadlines, and covers potential issues.
Creating an e-commerce business plan is an essential exercise for any new online business owner or even those who are already on board. A good business plan won’t only help you to organize your ideas and financial projections, but it will also give potential investors confidence in your business idea.
Here are some statistics to convince you that a well-thought business plan is a must-have for each business without exceptions:
- The quality of a business plan has significant effects on the perceived preparedness and investor’s funding decision.
- 4.5% of strategy potential is lost to poor action planning.
What is the difference: business model vs. business plan?
As we’ve already mentioned, a business plan describes your business workflow, its development goals, and commercial achievements. In its turn, a business model is a detailed statement of goal and action framework. When you’re deciding on a business model for your company, your main objective is to choose the right way to generate profit.
According to the GoForth Institute, a business model includes these five key elements:
- Business concept: a short description of your product or service, its benefits, and customer profile.
- Value chain position: your business’s place in the value chain.
- Calculating customer value: the estimated value of your product or service for the core audience.
- Revenue sources and cost drivers: sources of income and expenditure.
- Competitive advantage: outstanding and unique features that help you differentiate from your competition.
Strategic business planning and business strategy
E-commerce business strategy is the art of thinking ahead and making informed decisions about where your business will go next. It’s the science of figuring out how you can help your business get there. In other words, a business strategy is a high-level plan for what you want your business to achieve in the future, and how you intend to get there.
Strategic planning, on the other hand, is an activity that precedes business strategy. It’s a detailed process of analyzing the strengths, weaknesses, opportunities and threats that your e-commerce business faces or is likely to face. This helps you understand where your company is now and where it needs to get to next.
In a nutshell, a business strategy is an outcome based on a particular theory that was converted from verbal ideas to a step-by-step strategic plan that’ll be taken into action.
According to Roger Martin, Professor Emiritus at University of Toronto’s Rotman School of Management, here’s how you can distinguish these two terms:
|Strategic business planning||Business strategy|
|“We’re going to…”||“We want this to happen”|
|You control costs.||You don’t control the customers.|
|You’re playing the role of the customer because it’s up to you how to organize everything (how much to offer, raw materials to buy, etc.).||Your actual customers are the customers whose opinion and preferences you need to take into consideration.|
|It’s convenient since you control everything.||You don’t control the revenues.|
What is the purpose of an e-commerce business plan?
If you’re running a startup, your online store business plan will show how profitable your small business strategy is and how likely it’s to succeed. When presenting your idea to future investors, you may use the most powerful and persuasive words. However, when it’s put on paper, your investors will see clear ideas, numbers, and perspectives. As a result, they’ll be able to evaluate your deal and make business decisions quicker.
Although useful for newcomers, every company would benefit from a comprehensive business plan. Here are the things any business will achieve with a solid business plan:
- Smart planning. Thorough planning of your actions, goals, expenses, and business activities will save your time, money, and, consequently, your business.
- Ideas evaluation. If you find it difficult to focus on one single idea in your head, a strict business plan could help you choose the most successful one and devote all your attention to it.
- Deep research. You’ll need to find your target audience and research the industry market. Studying your competitors will help you analyze your strengths and weaknesses in order to improve and beat them in the long-run.
- Partnership. If you plan to integrate with other companies, it would be easier for them to understand your company and product when they see your business plan, especially if these companies are more developed than yours.
Types of e-commerce business plans: which one works best for you?
There are two different types of e-commerce business plans: a traditional business plan and a lean start-up business plan. The traditional business plan is more widely used, according to the U.S. Small Business Administration. They’re standard and contain many details.They include an executive summary, marketing and sales strategy, financial analysis, and other sections on operations, management, products and services. The traditional business plan is often used for outside funding or when applying for grants or loans.
The lean start-up (“experimental”) business plan uses the same structure, however, it’s only one-page long, and therefore has fewer details. Lean start-up methodology helps reduce risk and increase innovation by focusing on the essentials, accelerating time to market by streamlining processes, and reducing unnecessary spend. A lean start-up approach focuses on the customer, testing new ideas with customers, and measuring results to drive future decisions.
Which aspects to consider before creating your own business plan
A well-organized and researched business plan will serve as your virtual guidepost for launching your company, keeping you on track with your objectives, budgeting, and marketing strategies throughout the life of your e-commerce business.
To get you started with the creation of your business plan, e-commerce business must first decide on:
The type of products you’re selling:
- Physical products;
- Digital products;
Your target customers:
- Business to Business (B2B);
- Business to Consumer (B2C);
From where you get the products and how you store them:
- Manufacture in-house;
- Third-party manufacturer;
After deciding on these, you can go further – create a structure for the future informative business plan.
Structure for business plan templates: How to write a small business plan step by step
A business plan can seem like an overwhelming undertaking, but it doesn’t have to be one. Once you understand the components of a business plan, it’s much simpler than you think, especially when you have business plan templates in front of you.
Here’s an e-commerce business plan outline containing eight crucial sections, each acting as a separate business plan step you need to take:
- Executive summary;
- Company analysis;
- Market and competitive analysis;
- Products and services analysis;
- Customer analysis;
- Marketing plan;
- Logistics and operations plan;
- Financial plan.
As you can see from this business plan structure, you can divide the whole process into two sections: analysis and actual planning based on the information you’ve got from the first 5 steps. Now let us tell you about each of them in detail so that you know the ins and outs of creating a solid business plan.
Section 1. Executive summary: introduction
Even though this is one of the most crucial parts of your business plan, make sure you complete it last. Here you should write all key points about your business. What does it do? What is unique about it? What are your goals? How will you achieve them? How profitable will your business be? Why should your business succeed? These are the core questions, answers to which will sum up your e-commerce business strategy in general.
Explain how your business will serve the market and what its competitive advantages are. Outline the schedule for taking your business from the idea to the first sales.
In case you already have an established business, you may include your company information. Provide a brief history of your company and product or service. Write when it was started, who the owners and key staff are. Describe the evolution of your e-commerce business – how it’s grown, including year-over-year revenue increases, profitability, increases in the market share, number of customers, etc.
If you’re looking for additional financing for expansion, then give a brief financial summary.
Make sure you think thoroughly about all the points and spend enough time writing them down.
Section 2. Company analysis: background
In this section, you’re to describe what your business is and what you’re planning to do. Mention your business format, business model, long-term and short-range goals. Also, write some information about each member of your staff.
Your vision and values define your company, so this is the right section to describe what your company will deliver to your customers.
Section 3. Market analysis: search the trends
Selling online may be a struggle if you choose the wrong market. When looking for a potential market, please pay attention to the customer profile, needs, industry trends, and audience size. Your target audience is the one that needs your product or service, who will purchase it and use it.
Consult government statistics offices, various associations, research news articles, and other reliable sources to collect as much precise data as possible. Serving the market that you can identify and classify is much easier.
Section 4. Products/services and competitive analysis: what differentiates you from the competition
Extended information on your products and services is expected here. Describe the characteristics, features, and benefits of the products and services. Are you going to launch new products or services? Great! Do mention them and how they will increase the company’s income.
Analyze your competitors strength(s) and weakness(es). What is their goal? Why does your solution stand out among your competitors? Which weaknesses of the competitors can you turn into the opportunity? Take your time to analyze as many details as possible so that you have the foundations for the future steps in planning.
Section 5. Customer analysis: create your ideal customer
We’ve just talked about your target audience, so now it’s time to turn to your ideal customer. Take your average customer and describe them using general and specific criteria, such as location, age, education, behavior patterns, leisure time, occupation, preferable technology in use, salary, employment, beliefs, values, opinions, etc.
You should understand that a woman in her early 20s has different preferences and needs in shopping, traveling, or leisure activities when compared with a 70-year-old man. Choose relevant information according to your products or services and find out who your customers are and what they’re interested in. It will help you understand the consumer needs better.
Section 6. Marketing plan: create a marketing strategy
First, you need to choose your market and a platform on which you’ll be selling. If you want to launch an online business on Instagram, you should invest in this platform. However, if your target audience isn’t on Instagram, you should change your marketing strategy and start selling where your customers may easily find you. To become an e-commerce business owner, you should open an e-commerce store – for example, you can think about opening a store on Amazon.
Set a price for your product or service and explain its value. Describe what exactly you’re selling and how different it is from your competitors’ products or services. Explain how you’ll promote it to your target customers and where you’ll sell it.
Consider which marketing channels you’ll be utilizing to reach your customers:
|Paid marketing channels||Organic marketing channels|
|Affiliate marketing||Social media posts|
|Social media marketing||Content marketing|
|Influencer marketing||Email marketing|
Section 7. Logistics and operations plan
The logistics and operations section is everything you own physically – from technical equipment to a warehouse. All information about the suppliers, production, shipping and fulfillment, facilities (if you decide to have a physical retail space), equipment, and inventory should be mentioned here.
Show that you have a decent understanding of how to run an e-commerce company. Your product pricing will also depend on how much you spend on logistics and other operations included in your workflow.
Section 8. Financial plan
Financial planning helps you track your financial health. Do you have a good command of accounting basics? Is your cash flow positive or negative? Where do you record your business transactions?
The easiest way to keep hold of your accounting is to record transactions with the help of accounting software. Synder provides accounting services for e-commerce business owners who use multiple sales channels, payment platforms, and want automatic and precise reconciliation of all financial activities.
With the help of accounting software, you may analyze the following information for your e-commerce business plan:
- Income statement. Your income statement shows your income and expenses over a month, a quarter, or a year. If you subtract your expenses from your income, you’ll come up with your net profit. Synder lets you compile top-notch P&L statements indicating such useful information as item and customer info, discounts, shipping fees, locations, etc.
- Balance sheet. In order to calculate how much equity you’ve got in your business, you should use your balance sheet. In the left column you should write all your assets (machinery, stock, business premises, vehicles, etc.). And in the right column you should point out all your liabilities (accounts and wages payable, business loan repayment, business credit card payments, taxes, etc.). If you subtract your liabilities from your assets, you’ll get your business’ shareholder equity.
- Cash-flow statement. Cash-flow statements are almost like your real-time income statements. With Synder, you can synchronize transactions to your accounting books with just one click and get 100% precise reconciliation.
Business plan tips:
When it comes to bringing your e-commerce business idea to life, there’s no shortage of things you need to consider. From accounting and taxes to market research and competition, you’ll need to think about almost every aspect of launching your business – from the initial plan to growing it into a successful venture. Keep these things in mind when you start the e-commerce business plan writing process:
Make your goal clear
If you rely on funding for your business, make sure you write a comprehensive business plan. If you’re writing it just for yourself, you can make it less detailed.
Know your audience
When you know who’s going to read your business plan, please include the most relevant information. If you need to omit or add any sections, feel free to do so.
Keep it short and stick to the point
Your business plan shouldn’t be longer than 15-20 pages. Valuable additional materials may be added as appendices at the end of the plan.
Invest time in research
Most of the sections can be written according to your vision of the e-commerce business. However, some sections might require some additional study or a specialist’s consulting.
Avoid mistakes and inconsistency
It’s advisable that one person writes a business plan, and then it should be edited and proofread, so that there are no mistakes that would distract readers. It ensures that the structure is consistent and logical.
Have a plan B
The most important thing for investors is getting profit after investing in your business. They’d like you to offer them some ideas on how they can achieve maximum profit.
Tying it all together
What’s one purpose of writing a business plan before entering the market? It’s to be ready for the challenges that naturally occur in every e-commerce business owner’s life. A business plan is a foundation for your business to grow. Some business plans include more detailed information, some less. You may choose the one that’ll correspond to your business needs.
If you’re new to the e-commerce business industry, writing a business plan isn’t just compulsory. It will help you learn more specific details about your own company, product or service, management, finances, and much more. However, if you’ve had your e-commerce store for a while, creating a business plan may help you improve your business services level, increase your profit, set bigger goals, and achieve them.
Synder Sync is one of the e-commerce solutions made just for your business. Its team is ready to support e-commerce business owners 24/7. Get a free trial of the most detailed and accurate e-commerce business accounting software or book a demo session to see that bookkeeping and accounting for your e-commerce business may be done in one place in no time!