Are you thinking about creating an online shop? If you think it is as simple as setting it up and starting to wait for clients to come, you are quite wrong. You need a business plan for you online shop.
Even if you are not a startup and you don’t need to get people to invest thousands of euros in your project, the business plan is still essential to put your best foot forward.
Having a business plan will save you a lot of headaches, such as finding out that your online shop doesn’t sell as you expected.
In today’s article we will show you the main points your business plan must include so you can start working on it today.
Are you ready to jumpstart your online shop?
Why do you need a business plan for your e-commerce?
There are two types of actions in life:
- Those that bring gratification first and pain later.
- Those that bring pain first and gratification later.
When we have an idea, what we want is to get it off the ground as quickly as possible. We can picture ourselves killing it with our e-commerce shop and what we don’t feel like is wasting time on writing down a business plan.
“Everything is in my head!” you’ll hear.
Creating a good business plan is one of those actions that bring pain first, but that leads to huge rewards afterwards.
A business plan can help you earn lots of money, or save it, if while creating it you realize that your project wasn’t as perfect as you thought.
Another reason to do it is that you may need to show it to someone: investors, banks, or even friends.
In any case, let’s take a look at the key points that it has to cover.
1. Executive Summary
It is the first thing your supposed investors would read if you were looking for funding since it is the synopsis of your business plan.
This summary creates a first impression for your project and this is why many entrepreneurs make the mistake of making it too long or overwriting it with extravagant words. Experts actually recommend consolidating it.
Just one sheet of paper summarizing every section of the business plan should be enough. Although it is typically placed at the beginning, it should be the last section to be written.
What the executive summary should include:
- Idea presentation: In one or two sentences it has to define your project, the value proposal, and the main competitive advantage.
- Who is behind the idea: A good idea needs the support of a good entrepreneur. It is time to introduce yourself, but don’t overuse the standard CV formula. Be honest, creative, and original.
- Basic information: This is your planned name, the legal status it will acquire, location, and foreseen scope. You can show this as a chart to make it easier to read.
One of the issues that are not always analyzed in depth is the matter of the legal requirements. It shows that you have read them and that you can resolve them easily. Include them briefly, and then you can go into more details if necessary.
2. Description of the Company
The goal of this section is to identify the competitive advantage of your online shop so that you can make use of it in the future. You must reflect the company’s identity by defining:
- Mission: the reason behind your shop’s existence, the role it plays in the market, who is it directed toward, and what its differential factor is.
- Vision: the objectives that you want to achieve long term, which must be both realistic and ambitious so they can be motivating.
- Values: the universal ethical principles that you want your shop to be identified with. Only choose those values that you will be committed to upholding with every action you take.
At this point it will be helpful if you do a SWOT analysis.
We’re going to take a quick look at what’s behind those letters.
A SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) allows you to carry out an external and internal assessment of both positive and negative points of your project.
It is a matrix where each quadrant includes one of the letters.
On one side, the external factors are analyzed:
- Threats: These represent what could happen or what already exists in the market that may be a trouble for the project.
- Opportunities: These could be change of legislation or any other favorable situation, whatever the reason may be.
These are factors that don’t depend on the business itself, but rather that the business either exploits them or foresees the risks.
The internal aspects:
- Weaknesses: These are our weakest points. We may not master the technical part or we may have a lack of resources.
- Strengths: What are we good at and how does that give us an advantage over competitors?
If we had to define the relation between the SWOT analysis and the business plan in a sentence, it would be this:
The business plan should show that the strengths outweigh the weaknesses and that, at the same time, they are strong enough to combat the threats and exploit the opportunities.
Now let’s jump into the next point.
3. Environment analysis
Once you have completed the SWOT analysis it will be really easy to complete this one.
A business plan for an online shop should include an analysis of the environment, which we are going to divide into three types:
If you are thinking that the existence of competitors is a negative point, you are wrong.
A lack of competitors would be even worse since it would mean that there is not enough demand.
Your business plan should show that there are competitors, but not enough as to be a threat: turn it into an opportunity!
Analyze the main competitors and repeat the strengths and weaknesses process which each of them. This will give you a very clear scenario to see where exactly you can surpass them.
Finding out who your competitors are is very easy with the Internet. Have a look on Google at the best-positioned pages and the ones with the most authority for your main keywords. In addition, analyze the behavior of your ideal client and find out what they visit and what they buy.
At this point you have to dig deep into the legal aspects within your market.
A modification to the law may mean both a risk and an opportunity.
For some sectors, it would be essential to stay up to date regarding the technological level of the market.
Summarize the main tools that you need:
- Do they require investment? Will it be just one or will it be recurrent?
- Do you have the necessary knowledge to use them?
- Will you need to hire a third party?
The business plan for your online shop should answer those questions.
If you want to further develop this point, you can include a sociological or cultural analysis, but be careful not to include too much irrelevant information because it won’t help you achieve your goals.
4. Products and Services
What is my product going to offer to clients? This is the fundamental question you need to ask yourself at this stage of your business plan for your online shop.
Your target clients and the problems you are going to solve for them must be crystal clear. If there are similar products in the market, clearly establish what your added value is compared to the other options.
Again, you can use a table. The table will show your products, their price, and the estimated profits.
If you are looking for funding, what matters to the risk analyst regarding your business plan is not the price. What really matter is why users will be willing to purchase and how much you’ll be getting from it.
Talk about pricing strategies and expenses. A company that has 100% control over where its money goes is already on the right path.
5. Marketing Plan
We have already shown how and what we offer to our webpage visitors. This section includes every action planned in order to get sales.
Another common mistake, both online and offline, is to put too much effort into getting it ready and then just “opening the door” and waiting.
In a physical shop, at least passersby will see you, but for an online one that is just starting up, there is not even a street.
Bear in mind that a website, at the beginning, is located in a desert with nobody around. Telling your friends and family to visit you will make it look better at the beginning, but the real struggle is to make strangers come and make a purchase.
The marketing plan within the business plan should answer the following question:
How are we going to get constant visits to the shop?
Indeed, if this is not the most important part, it’s close. Gaining visibility is a slow process that must be planned.
A good marketing plan starts with a thorough analysis of the market . Identifying your direct competitors and deciding which strategies you will implement to try to overcome them will be essential.
In addition, this section will include which channels you will use to convey your message and to get leads that will become clients.
- Email marketing
- Social networks
- Videomarketing and YouTube.
- Content marketing
- Paid traffic with AdWords or Facebook Ads.
Don’t forget to clearly state how you’ll use each of them.
6. Operational Planning
The operational planning includes your daily tasks as a entrepreneur. You must establish basic things such as your work schedule, your location, your daily tasks timetable, and your product stock.
If reflects the task-flow from your e-commerce shop and how they’ll be divided.
If you are the only person in charge, you need to show what your routine will be.
Bear in mind that at the beginning you will have more tasks related to promoting and growing, but after some time you will have others to do:
- Manage returns
- Offer support
- Deal with unforeseen events
- Manage the stock
- Negotiate with suppliers
- And more
Surely you will have to go through it again in the future , but it is important to have an initial idea on paper, and then make small modifications down the line.
By doing this you, will show that everything is under control in your business plan. ;)
7. Financial projections
Once you’ve gotten to this point, you will have to think about where you want to see your shop in 1, 3, and 5 years time.
For those who don’t know where they are going, no wind is favorable.
That’s even truer for an e-commerce or an online business.
The reason for doing this is to give you a direction for moving towards your goals and, most importantly, to ask yourself how are you planning on achieving them.
Based on this fact and when you start getting your first sales, you should establish which percentage of the profits you are going to reinvest into making your business grow.
Making an accurate prediction about your profits is difficult—and the person reading your report will know this—but at least you are showing that you have worked on it. Just don’t write figures without a rhyme or reason.
8. Funding Application
This is the last step of your business plan, in the case that you need external funding. It should include the amount of money you need and the exact ways that you plan on making use of it.
Put yourself in the investor’s shoes. Imagine that you are the one who is going to invest your money and think about what information you will like to read.
You may know the idea, the risks, the opportunity, and how to exploit it, but the other person doesn’t.
Be careful with the language you use—be precise and specific, and avoid vague expressions like:
“My experience and my multifaceted profile give me everything I need to comprehensively manage the business that I need your money to start.”
If you are only specific about the amount of money that you need, forget about the funding.
Use a chronogram in order to show your plan visually. It is easier to understand it if it comes with a graphic instead of just having a bare text.
This may not be necessary since you can start with a budget based on the popular family and friends funding in addition to your own funds.
Remember that the three Fs (Friends, Fools, and Family) will help you get started, but they can’t be the foundation of your strategy.
How to present the business plan of an e-commerce
You already know how to create your e-commerce business plan step by step and now it’s time to take action.
Remember that it is just a document and that you can write yourself with just a bit of time. As you can see, you don’t need to have studied business administration at university to be able to write your own business plan.
You don’t need to be a graphic designer. The important part is the content—don’t steal its thunder with an opulent presentation.
Once you have a rough draft with all of the information, bring into a Google Doc or Word document and save it as a PDF.
Just like with other aspects, less is more.
To wrap things up, here you can download lots of examples of business plan templates.
Use the examples carefully. Each project is different and if you just copy-paste it, the result will be a boring, non-informative text.
Get inspired by the templates and this post, then create your own version and make people fall in love of your idea.
Do you remember what we starting off talking about?
The things bring in the most profits are the ones that require effort before you see any rewards.
Don’t forget that when creating your business plan. That way, you’ll do it with the love and attention it deserves.
Also think about the fact that the main beneficiary is you. It is also true that it will open the doors to funding, but you don’t want funding for a project that isn’t viable.
The business plan will help you in two ways: to get to know your project more deeply and, if it is viable, to gain the resources to make it work.
And don’t worry about the difficulty of writing it. It doesn’t matter whether it is about a clothes shop, a shoe shop, or a shop that sells fishing equipment. You are the person who best knows the project and that is you need to have is knowledge about your project and your sector, as well as a general strategic vision.
This is the first step towards creating the online shop you dream of, so what are you waiting for?