Thursday 16th February 2017
How to Write a Focused, Inspirational eCommerce Business Plan
Writing a business plan is an important step, both for new and expanding eCommerce businesses. A strong business plan can help to give your store clear direction, purpose and values. It can also be a vital tool in securing funding and investment for your eCommerce idea.
However, many eCommerce store owners put off writing a business plan. Knowing exactly what to include, and how to condense all of your enthusiasm and motivation for starting your eCommerce business into a single document can be tough.
Here’s our guide to writing your eCommerce business plan…
Describe Your Business
First things first, you need to be able to concisely sum up your business. Start your business plan by setting out your eCommerce store idea and concept.
This should take the form of a simple outline for your business idea - what your brand is, what you will sell, who you customers will be etc.
You should also lay out the personnel involved in your eCommerce venture and set down their specific roles and involvement.
This is very valuable for everyone involved in your venture, as well as being important information to provide to any potential investor. Clearly defining the roles and responsibilities of each member of your business allows your organisation and structure to remain clear.
You should also include the key aims and outcomes for the period of your business plan - is your core strategy to increase total revenue, customer loyalty, market share etc.? You could also highlight any potential barriers to the success of your eCommerce business - such as stock management, resourcing, skills etc.
Finance and Funding
Setting out a clear path for financing your eCommerce venture is another vital aspect of any business plan.
Without proper funding, the rest of your business plan doesn’t represent a viable investment. You should set out where funding for your business will come from, as well as laying down financial projections for the period of your plan.
You should explain exactly what funding your eCommerce business will require, as well as how funding will be used from each source. If you’re looking for investment from a bank or investor, those reading your business plan will need to see demonstration that funding will be used appropriately and efficiently.
Be sure to also include here any additional funding that will be required in the future once your venture begins to grow.
In order to build a well informed and accurate business plan, you’ll need to include thorough research.
You’ll need to research:
- The current market for your product or service
- Market growth and trends
- Any competitors
- Your target customer
All of this will help you to understand the market for your product, and allow you to create a well informed strategy for selling, marketing and growing your business.
Create Customer Personas
You can use the results of your research to craft precise customer personas for your business plan. Explaining how you will target potential customers, and why you have chosen to do so.
When creating your customer personas, you should be asking yourse:
- Where is your target customer based?
- What would lead them to use your products?
- What are their values and personality traits?
- What does their lifestyle look like?
Here, it is also important to set out the advantages your products will have in the market, as well as any challenges your eCommerce store could face. Knowing these challenges now will help you to navigate them effectively and build a healthy business.
Conducting a SWOT Analysis
It’s also a good idea to conduct a SWOT analysis of your products, your brand and their position in the market to clearly outline the opportunities and threats for your fledgling eCommerce business.
You can use information from your research process to create a detailed SWOT analysis of your brand and positioning. This is important, as it will allow you to spot any threats on the horizon or weaknesses you’ll need to counter.
Conducting a SWOT analysis also shows any potential investor that you are realistic about your store and understand the challenges you might face.
What Will You Sell?
Once you understand the market and your target customer, you can set out exactly what your product offering will be.
Make sure to outline exactly what products your business will be selling - emphasising their USP and advantages in the market. When explaining your products, you should cover how they will be developed and manufactured. You should cover any issues that could arise in the development process here also.
For example, Woodbuds is a unique headphone brand creating wooden headphones. Their development and manufacturing process would likely be more complex than competitors using more well trodden materials like metal and plastic. A strong business plan would have outlined these issues and addressed a solution.
You should also include a plan for sourcing your products reliably. Any investor or financier will want to be sure that you can continue to source your products for a stable price, and that your profit margins are viable.
If it’s relevant to your business, you can also add in a plan for protecting your product or service rights. This might include intellectual property or patent applications, if your store is selling a product of your own design.
How Will You Sell It?
Selling online offers access to a varied range of different business models and capabilities, often at a low cost. So you’ll need to set out a model for how you’ll sell your products.
For example, you may decide to implement a subscription model for your store to allow repeat purchasing and develop a steady revenue stream. You may also wish to supplement sales on your eCommerce store by using marketplaces like Amazon and Etsy to help spread your brand.
Whatever model you choose, be sure to outline it clearly in your business plan and consider the customer journey. What will your business model look like from the perspective of your customers? How will they interact with it?
This section of your business plan is also where you should introduce pricing structure for your products. This is an essential part of your marketing positioning and strategy. Think carefully about how your products will be priced, how this fits in with your brand and how your research aligns with this.
For example, you could opt for a cost plus pricing model and maintain a steady margin on your products. Alternatively, you could implement a penetration pricing model and undercut competitor prices to gain traction in a price sensitive market.
A brand like Thyme understand that they are providing high quality and very unique products, so adopting a pricing strategy that attempts to undercut competitors undersells their product. Adopting the wrong pricing strategy can damage your brand, as well as your bottom line.
How Will You Market Your Business?
At this point, you should definitely be thinking about how you’ll market your eCommerce store to customers.
While your business plan doesn’t have to contain a fully fledged marketing strategy for the launch or growth of your business, it should have a detailed plan for how you’ll conduct marketing and allocate resources.
Your business plan should outline your chosen marketing avenues and platforms, justifying your choices and goals for each tool.
You’ll need to think about your business’s core marketing values, the message you want to get across to customers and be sure to outline it here. You can then consider which methods and tools would be best for conveying these messages,
You could include planning for…
Paid & Free Ads
Consider what paid and free advertising you will conduct. Will you use social ads? Or perhaps Google Adwords? You may wish to combine this with traditional advertising mediums such as TV and print?
You’ll need to consider the time needed to manage social media channels and interact with your community. This will form a large part of your brand building and interaction with customers. Think about how this will align with your core marketing aims and activities.
You’ll also want to plan your email marketing activity and allocate time and resources for building your mailing list. This is an important method of reaching engaged customers, so you should dedicate a section of your business plan to laying out email marketing plans for your eCommerce business.
Content is an important part of marketing your eCommerce business, so how will you manage and run a content strategy? will you create content in-house, or hire an external agency?
You’ll also need to promote and feed this content to your customers, so how will this be done? Will you promote via email, social, or elsewhere?
PR is a great tool for creating an initial buzz around your eCommerce store, so what avenues will you use? You may choose to hire a PR agency to handle relations for your, or handle them yourself.
Think about how you will generate PR opportunities for your business on an ongoing basis, and what resources will be required for doing this.
Web & Optimisation
Continuing to develop and optimise your site should be a core component of your eCommerce marketing strategy. Think about the resources you’ll need to allocate to optimising for search, improving your conversion rate and increasing usability.
There are so many different mediums and platforms that could play a part in marketing your store. Your business plan should set out a mix that you intend to use, as well as budget allocation and what you expect them to contribute towards meeting your business goals.
Which eCommerce Tools & Platforms Will You Use?
The eCommerce platform and tools that you select can have a big impact on your allocation of funds and resources, so outlining them here would be beneficial.
Consider which eCommerce platform you will be using to run your store and provide some context for your choice in your business plan. This will effect how your business is run and how you organise your operations.
Also lay out how this platform will develop over time and what additional costs may be incurred. For example, choosing a platform like Shopify would allow you to quickly scale up and add additional features. You would otherwise have to include provision for growing hosting and integration fees as you grow.
You should also consider any additional tools you may require. For example, you may wish to include provision for a paid email marketing tool, CRM system or accounting platform.
There are plenty of tools and services that your business might require for operational reasons. Your business plan should make a case for why each one will benefit your business and lay out why you have chosen to use it.
Set Out an Operational Plan
It is also important that your eCommerce business plan sets out how the day to day running of your business will look.
There are plenty of logistical and organisational issues involved in running an eCommerce business, so setting out a well defined plan is important.
You should set out the order processing process, including processing payments, picking, packing and shipping. Demonstrating that you can effectively plan for this will show that your eCommerce business can run efficiently.
As well as eCommerce specific activities, it’s also a good idea to include more general practices such as administration and customer service. You should also add a supplier strategy to ensure that re-stocking is efficient.
Any investors will want to be assured that you have a reliable and even exclusive supply of products if necessary. Outline which suppliers you will use, any contractual arrangements you have with them and how you will handle re-stocking operationally.
Making sure that your business plan covers these areas will help you to gain a clearer direction and highlight potential costs or problems.
How Will You Measure Success?
Your eCommerce business plan has already set out clear goals and aims. So also including how you will measure these goals is essential.
What does success look like for your eCommerce business?
You’ll of course be measuring sales and profits for your business, but what other metrics will give great insight into the success of your business? We’ve written another blog post on eCommerce metrics, but we’ll cover some useful ones here…
Customer lifetime value calculates the average total value of a customer. A high CLV is a great indicator of loyalty, and shows that customers are returning for your products.
You may also want to look at metrics like average order value. Higher order values mean a lower cost per acquisition, so you’re going to make more from each order. Having a high conversion rate could also be a useful for business efficiency, and reducing the costs of acquiring customers.
There are plenty of different KPIs you could use, so choose the ones most appropriate to the goals you’ve set out for your eCommerce store.
Add an Executive Summary
Once you have completed the rest of your business plan, you need to head right back to the beginning and add an executive summary.
This should be the last thing you write, and provides an overview of your plan to readers. A concise and impactful executive summary should sum up your business concept and plan, detailing what your business plan will cover.
Writing an eCommerce business plan can be a daunting task, but one you must tackle. Having a strong business plan will give your eCommerce business direction and clarity of purpose, making the road ahead clearer and making your business more attractive to investors and financiers.
Take writing your business plan section by section, developing a detail picture of the business you want to build.
Interested in finding out more about how Statement can help you grow your new and ambitious eCommerce business? Just get in touch and we’d be happy to discuss your next project with you - whether you need further advice and insight into your plan and journey, or need support with marketing or developing your online store.