Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their ecommerce businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an ecommerce business plan template step-by-step so you can create your plan today.
What Is a Business Plan?
A business plan provides a snapshot of your ecommerce business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start an ecommerce business or grow your existing ecommerce business you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your ecommerce business in order to improve your chances of success. Your ecommerce business plan is a living document that should be updated annually as your company grows and changes.
Source of Funding for Ecommerce Businesses
With regards to funding, the main sources of funding for an ecommerce business are bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
The second most common form of funding for an ecommerce business is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan.
Venture capitalists will fund an ecommerce business but not in its infancy. You will need to first achieve sales traction. Once you do that venture capitalists might invest $2 million to $100 million into your business over time.
Ecommerce Business Plan Template
Your ecommerce business plan should include 10 sections as follows:
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of ecommerce business you are operating and the status; for example, are you a startup or do you have an ecommerce business that you would like to grow further.
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the ecommerce business industry. Discuss the type of ecommerce business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
In your company analysis, you will detail the type of ecommerce business you are operating.
For example, you might operate one of the following types of ecommerce businesses.
Ecommerce businesses based on businesses model:
- Drop Shipping: you sell the product on your website and the product’s supplier fulfills it
- Wholesaling And Warehousing: you sell the product on your website and the fulfill it yourself (through your own warehouse and systems)
- Private Labeling And Manufacturing: you sell the product on your website and you manufacture it yourself or have someone manufacture it for you
- White Labeling: you sell the product on your website and have someone manufacture it for you (but unlike private label, your product is not unique; the manufacturer is also creating the product under other brand names)
- Subscription: you sell the product or service on your website on a subscription basis (customer pays you every week/month/year)
Ecommerce businesses based on customer model:
- Business-to-Business (B2B): your business is selling to other businesses
- Business-to-Consumer (B2C): your business is selling to consumers
- Consumer-to-Consumer (C2C): your business provides a platform for consumers to sell to other consumers (e.g., ebay)
- Consumer-to-Business (C2B): your business provides a platform for consumers to sell to businesses
- Business-to-Government/Administration (B2A): your business is selling to governments or administrative agencies
- Consumer-to-Government/Administration (C2A): your business provides a platform for consumers to sell or communicate with governments or administrative agencies
In addition to explaining the type of ecommerce business you operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, customer milestones, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry analysis, you need to provide an overview of the ecommerce business.
While this may seem unnecessary, it serves multiple purposes.
First, researching the ecommerce business industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards subscription businesses, it would be helpful to ensure your plan calls for offering subscription options.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your ecommerce business plan:
- How big is the ecommerce business (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your ecommerce business. You can figure out your relevant market size by multiplying the amount of target customers by the amount they might spend on a product or service like yours each year.
The customer analysis section of your ecommerce business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: college students, sports enthusiasts, soccer moms, techies, teens, baby boomers, manufacturing plants, state government agencies, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of ecommerce business you operate. Clearly baby boomers would want a different offering and branding than teens or government agencies.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other ecommerce businesses.
Indirect competitors are other options that customers have to purchase from you that aren’t direct competitors. This includes offline stores or other ecommerce companies that offer similar products or services. You need to mention such competition to show you understand that not everyone who needs the products or services you provide will frequent a business like yours.
With regards to direct competition, you want to detail the other ecommerce businesses with which you compete. For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What products do they offer?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And check product review websites to learn what your competitors’ customers like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide superior ecommerce services?
- Will you provide ecommerce business products/services that your competitors don’t offer?
- Will you make it easier or faster for customers to acquire your products/services?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an ecommerce business plan, your marketing plan should include the following:
Product/Service: in the product section you should reiterate the type of ecommerce business that you documented in your Company Analysis. Then, detail the specific products and/or services you will be offering.
Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu of items you offer/will offer and their prices.
Place: Place refers to the location of your ecommerce business. In general, the place for an online business is well, online. But if there is a physical component to your business, document that here.
Promotions: the final part of your ecommerce business marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Search engine optimization
- Search engine marketing
- Traditional public relations
- Reaching out to local bloggers and websites
- Advertising in physical newspapers, magazines, radio and television
- Partnerships with other websites and/or organizations
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your ecommerce business such as warehousing, invoicing, serving customers, procuring supplies, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 10,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new product or service.
To demonstrate your ecommerce business’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in the ecommerce business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in ecommerce businesses and/or successfully running retail businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement: an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you serve 100 customers per day or 200? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets: While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your ecommerce business, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement: Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 contract, that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now to fulfill the contract. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an ecommerce business:
- Website and technology buildout
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include agreements you’ve negotiated with developers, manufacturers and/or employees.
Ecommerce Business Plan Summary
Putting together a business plan for your ecommerce business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the ecommerce business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful ecommerce business.
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