How to make a business plan for an eCommerce company that is legally compliant
Many businesses are founded on a dream, passion or noble goal to solve a problem that is not solved.
Unfortunately, many businesses fail within a matter of months. The sad truth about eCommerce is that 90% fail
within the first 120 days.
It suffices to say that a solid business plan is essential for your business to survive the first few years of uncertainty and to continue to grow.
Businesses fail for a variety of reasons, including inadequate management, lack of capital and poor business models. This is often due to poor planning. This is how to plan better for your brand’s future, and create strong eCommerce businesses
Let’s get back to basics: What is a business plan, exactly?
provides a guideline for how to organize, manage, and run your business. It contains the essential elements that will define your company, such as your name, description and capital requirements, product categories, market characteristics and your business goals.
A well-written business plan will help you launch your store successfully and/or scale it in the right way. An annual review and revision of your business plan can be helpful in adapting to industry changes, anticipating new consumer behavior and anticipating future trends.
A business plan is basically a blueprint that helps you:
- Get funding. A business plan should detail the who, what and whereabouts of your company. This will make it easier to build trust with investors and pique their interest.
- Remove distractions. It is crucial to have a plan in place that holds your company accountable for achieving specific goals.
- Do your research. It’s easy to get carried away by the excitement and follow your gut instincts when you first start to figure how to create a business. You need to take the time to research your target market, products, financial plan, and other details before you can create a business plan.
- A long-term plan. This will allow you to determine where your business should go in the short and long-term. The plan can be used as a compass to help you determine the best way to get to your destination.
- Build your team. The business plan gives you an idea of who and when to hire, and binds your team to a clear vision.
- Your operations can be improved. Your tech stack, staff and supply chain are all important to make your eCommerce business a success. This will help you to strategically plan your operations.
What should an eCommerce business plan include?
An eCommerce business plan works in the same way as a traditional plan. It will include details such as your website builder and sales channels, fulfillment process, goals, and other information that is specific to operating an eCommerce store.
Here is a list of things you should include in your planning:
- Executive summary
- Company name and description, as well as domain
- Market analysis
- What Products are you selling?
- Operations plan
- Advertising and marketing plan
- Financial plan
01. Executive Summary
Although this summary is usually published at the end of your business plan’s first section, it should be last.
It is just as it sounds. This summary connects and introduces each component of your document to give readers a quick overview of your business. It is similar to an elevator pitch or hook that motivates readers to scroll on.
This summary should be brief. This summary should not exceed one page. It should include a short description of your product/service, growth opportunities, as well as why your business is poised for success. What information do investors and colleagues need to know?
02. Name and description of the company
This section will outline your business’ who, what and why. Instead of going into detail about the products that you intend to sell (this is for later), discuss your vision for the business. Talk about your motivations, values and the problems you want to solve.
You can add things like:
- Name Choosing a meaningful name for your eCommerce business is crucial as your website domain will be closely linked to your brand. Jeff Bezos named Amazon after the largest river in the world. He wanted to establish the largest bookstore in the world, but he didn’t want to be tied down to books. You’ll also want to choose a name you won’t grow tired of. Wix’s Business Name Generator can help you get some ideas.
- Domain name – You will need to have registered a name domain. Wix’s domain name search will let you know if your desired domain is available. You can contact the owner of the domain to modify your domain (e.g. add “get” or “get” at the beginning of your name), change the TLD from.com, or abbreviate your name.
- Background – The description is a great way to explain why you started your company. What was your inspiration to create your brand Who do you plan to serve? What are you trying to achieve? Although you don’t want to wax poetic, it is worth sharing the history of your company with your readers.
- Vision – Your vision must capture your ideal business state. This is how you envision the future of your business. Not just for now but also in five to ten years.
- Mission – Your vision statement should, on the contrary, express what you are able and willing to do. Your vision statement gives a 360-degree view of your company. However, your mission statement is what keeps your team motivated and on track.
- Business structure – Make sure you understand whether your company is a sole proprietorship , an LLC or a s-corporation . Consult an accountant or lawyer if you aren’t sure which option is right for you.
- Name key personnel – Name cofounders, CEO, partners and other top management members. It should not be a secret who is the owner of the company and who is responsible to manage it. This isn’t a matter of appearances. Your team must be well-structured in order to maximize efficiency and grow.
- Core values – These values should reflect how you intend to run your business. Employees and investors will want to feel confident that they are backing the right horse. Your vision, mission, background and values will naturally reflect your values. However, it is important that you clearly state your values so readers can refer to them.
03. Analysis of the Ecommerce Market
Include detailed information about your industry, as well as the people you intend to serve in your business plan. You don’t want to enter the ring blindly, or operate solely on assumptions.
This section should include everything, from barriers to entry to how your company fits in the existing landscape to the potential opportunities. You are the expert. You won’t have the same industry knowledge as the person who receives the doc.
- Target market Using real research, estimate the number of people who will need your product and their likelihood to make a purchase. Revisit your buyer personas to determine who you are trying to reach. Based on the industry climate, is there a growing demand for your product? What consumer behavior have you observed? Do you have any questions or doubts?
- Competitive analysis Identify your top competitors, take a deep dive into the strengths and weaknesses of their top products, pricing strategies and more. It is important to know how your company compares with these competitors. Many companies make and sell hair and body products. However, Lush has a reputation for standing up against animal testing, over-packaging, and harsh synthetic chemicals. Lush has a distinct niche in the cosmetics and bath product industry. They develop unique products that are memorable and easy to distinguish from other competitors. This helps build brand loyalty. It is important to be open in your assessment. Do not ignore areas that your company can improve on or take risks. To stay ahead of your competitors, you must also identify any gaps in product or niches that your company could effectively target.
- Special considerations – You cannot simply sell HTML2C on your own site. Third-party marketplaces such as Amazon and wholesalers are also options. You may have to deal with different buyers and competitors. Each channel may require you to take the time to study it individually. You need to understand how you intend to compete on each of these fronts. Or, perhaps this is the best time to decide which one is most important.
04. What products are you selling and why?
You’ve probably already mentioned your product in your business plan several times. You’ll still want to include a section listing your products.
This section will describe your pricing, product positioning
margins, Product Life Cycle
, and other key differences. If you have already put your products on the market, you can include photos and reviews. If you are still in research and development, be sure to describe your progress and timeline.
It is important to clearly state whether your products are private-label
or sourced from another source. You can provide more detail if you are only selling a handful of items. If your catalog is too big to list, you can give a general overview of each product and the strategy behind it.
Include a section explaining how you plan to tackle logistics and operations if your business plan is intended to be used internally by your team. This is a huge area to be aware of, including the suppliers you will need to work with and the storage space that you’ll need.
Here are some examples of information that you could include.
- Suppliers – List your suppliers for finished and raw goods. Which countries are they located? How can you connect with them and manage them?
- Production – Are you droppingshipping or manufacturing, hand-crafting, wholesale, or buying your products wholesale. You should include details such as lead time and contingency plans for spikes in demand, as well details about your supply chain.
- Equipment – What hardware and software do you need in order to run your business? Your website builder, and any subscription-based tools you will need.
- Warehouse Describe where you intend to store your products, whether it be in your own warehouse or with a third party logistics (3PL) provider.
- Facilities – Will you open a physical location or have an office space designated? Consider where your team members will work and how it might change as you grow.
- Personnel – It is important to understand the hierarchy of command and what roles are needed. You should also consider legal and accounting requirements, as well as the needs of board members, consultants, employees, and other stakeholders.
- Inventory – How will you manage inventory? This area is where many businesses fail, so it’s important to have a clear strategy and the right technology to manage your inventory across all sales channels.
- Shipping and fulfillment – Will you be fulfilling the orders yourself or outsource it? How will you manage international shipping if your brand intends to sell overseas?
06. Advertising and marketing
It is no secret that you need a solid marketing and advertising plan to grow eCommerce business .
You might be surprised to learn that 37% of the startup owners surveyed said poor online marketing was the reason their business failed. 35% of this group stated that poor online marketing was the main reason for their businesses’ failure.
This is why you shouldn’t haphazardly create your eCommerce Marketing Strategy
. Consider and document the various components of your strategy.
- PPC ads
- Adverts on social media
- SEO/Content marketing
- Organic social media
- Email marketing
- Marketing to Influencers
- Affiliate marketing
- Loyalty programs
- Radio or TV
- Brand partnerships
Strong marketing plans
don’t always require large advertising budgets. However, you will need to identify your top channels and indicate whether they will be handled internally or by an agency.
07. Financial plan
You have big plans for your company. How do you finance them?
Here you can reassure your readers that you aren’t in the clouds. This is the most tedious part of writing, but it is crucial for the viability and confidence of your business.
Investors and lenders will need a sales forecast and a list of expenses if you are looking to finance your business. This includes both fixed and variable costs.
Even if you don’t intend to seek third-party funding for your business, a financial plan will still inform you how much money is needed to run it and protect you against unexpected costs. It is not what you want to do. According to the same survey, eCommerce startups fell for five reasons.
These elements should be considered when creating your financial plan.
- Startup costs
- Income and expenses
- Balance sheet
- Statement on cash flow
- Break even point
- Cost of customer acquisition
- The key assumptions
- Future financial projects