Been buying from famous e-commerce websites for years now? Think you’d be able to create a popular and profitable e-commerce site too? Before you get started, we suggest you write a business plan for your future e-commerce site. This strategic document will help you assess your financial situation and come up with a concrete action plan that will conquer the e-commerce market! 🚀
What is an e-commerce business plan?
A Harvard Business Review study showed that entrepreneurs who write a comprehensive business plan are 16% more likely to turn a profit!
And with good reason: the effort you put into writing it will come in useful when you look for investment because the document will reinforce your project’s credibility in the eyes of the bank and external investors.
The e-commerce business plan also helps you:
- Plan the stages necessary to create your e-commerce site
- Set out your needs and goals
- Analyse the competition
- List the human and material resources required
- Limit the costs associated with creating, maintaining and managing your e-commerce site
An e-commerce business plan answers some key questions. For example, which suppliers will you work with? What kinds of products will you stock and sell? Who is your ideal buyer? How are you going to promote your business? Are you going to offer free delivery? Will there be multiple payment options? Or discounts when clients spend a certain amount?
How to write an e-commerce business plan
It’s important that you write a business plan for your e-commerce business. This document will help you focus on your goals. Let’s look at the key elements of a business plan for your online store.
1. Determine your firm’s goals 🎯
Your e-commerce site’s short-, medium- and long-term goals should be laid out. For example, you could pick a certain turnover to aim for after two, five and ten years.
The goals can be general (e.g., number of visits to the site in seven days). Or, they can focus on specific and measurable actions (SMART goals).
The most reliable approach is to consider your short-term goals as springboards that will get you to your long-term ones. For example, “Reduce the site bounce rate by 25% in 12 weeks” could help you achieve an objective in the medium term: “Increase conversions by 50% in a year”.
We also suggest you list the products you want to sell on your e-commerce site in this section of your plan.
Next, define your buyer persona or target client.
👉 Define your target audience
We all know it’s important not to put people in boxes. But there’s one exception: when you’re writing a business plan. Categorise the profiles of clients who could order from your site.
Include this demographic data:
- Age
- Location
- Gender
- Income
- Educational level
- Relationship status
- Profession
You should also consider what drives them to buy your products, their needs and their desires.
To do this, provide information about the following:
- Interests
- Favourite activities
- Values
- Purchasing habits
- Buying behaviour
2. Create your company identity card 📇
The second step is to pinpoint:
- Your business name
- Its legal status
- The website domain name (often the same as the business name)
- The extension (.com, .net, etc.)
- Your mission (e.g., Tinder’s is “to keep the magic of human connection alive”)
- Your company history
Once you have your “professional ID card”, you need to list the people who will help you build your e-commerce site.
Here are some examples:
- The e-commerce site owner (you)
- The web developer (who will give you technical support)
- The customer services person
- The logistics person
- The SEO/SEA specialist
- The content writers or copywriters
- The translators specialising in e-commerce sites, etc.
3. Carry out market research 🔎
E-commerce sites face stiff competition.
So, it’s crucial you do some market research to identify your competitors’ strengths and weaknesses. With in-depth market knowledge, you can build a business that’s stronger than those of your competitors.
Market analysis considers your ideal client, market conditions (sector trends and long-term prospects) and how your company will fit in.
The aim of target market analysis is:
- To identity more and less accessible markets
- To develop buyer personas
- To identify gaps in the market (which you can fill)
- To assess product/service viability
- To improve business strategy
4. Create a marketing strategy for your e-commerce business
Ask yourself how you can get the message out about your e-commerce store, and there may be lots of answers.
👉 Paid acquisition channels
Paid acquisition channels must be included in your financial plan. They include PPC (Pay-Per-Click and CPC, Cost-Per-Click), affiliate marketing, paid advertising on social media and influence marketing.
👉 Organic communications strategies
To spread the word about your brand and generate website traffic, use organic communication. This type of marketing includes SEO, social media posts, international newsletters and more…
5. Plan how to manage the logistics chain 🚚
This part of the e-commerce business plan covers what you physically need to manage your e-commerce business. It describes how you will manage the flow of goods from the supplier to the consumer. You can’t open an online store without a well-established supply chain.
Your logistics plan should include the following elements:
- Supplier location (Where do your raw materials or products come from? Do your suppliers or wholesalers require payment before or after sales? Do you have a back-up supplier in case things go wrong?)
- Production type (Are you going to make your products yourself or use a third party? If you make your own products, where will you do it? What are your operating costs?)
- Shipping and returns (Who is going to deliver your products? Are you going to provide international product shipping? How much stock will you keep and where will you put it? How will you track incoming and outgoing stock? Do you need a warehouse?)
6. Consolidate your financial plan 🔢
You may already have a provisional financial plan. But if not, don’t worry! We’re going to go through all the elements a financial plan needs to have.
This step will prove to investors that you know where you’re going and how to get there. To consolidate your financial plan, include:
👉 Your provisional profit and loss statement
Lay out the money your business will have coming in and going out for a given period (e.g., a year).
👉 Your forecast balance sheet
A forecast balance sheet sets out your debts, monies owing and stocks.
This accounting document helps you calculate how much equity your company has. It details your assets (what you own), your liabilities (what you owe) and your equity (the money invested in the company + earnings).
The financial section of your e-commerce business plan is where you demonstrate the feasibility of your future online business and calculate your start-up costs.
How to write an e-commerce business plan: a recap
In summary, here are the six key steps involved in writing a watertight e-commerce business plan:
1️⃣ Determine your e-commerce business’s goals
2️⃣ Draw up your company identity card
3️⃣ Carry out market research
4️⃣ Create a marketing strategy
5️⃣ Plan how to manage the logistics chain
6️⃣ Consolidate your financial plan
Once you have completed these six steps, it will be time for you to look at the technical side of creating your e-commerce site.
But before you start, check out the 10 most effective marketing trends of the moment! 📌
