What is a business plan? : How to Create a Business Plan from scratch for E-commerce

Whatever your business idea, whether it's selling jewelry or raising animals, a business plan is the best way to pitch your idea for success. This will help you think about the feasibility of an idea and this plan should reflect the purpose for which you are writing it and suitable for the audience who will read it. If you want to start a project or expand an existing business, you can start by developing a basic business plan that refines your goal. This will allow you to take off and move forward.

What is a business plan?

A business plan is a document which highlights business goals and strategies on how to reach those goals. It also defines the key aspects of starting and running a business.

Essentially, it is a roadmap that will include where you want to go and how to get there. It is a way to describe where you see your business with details about the actions that are needed to reach that destination.

There is no need for a business plan to be long or exhaustive. It is likely that no one will analyze that plan, except for you and people you get involved in the project, so make it concrete and spot on. 

 

 

The Benefits of having a business plan

Having a plan of action for any business is always recommended. Here is why:

A better Organization

A business plan helps you stay organized. When you have a business plan as a reference, you will always know what your next steps are and what you need to complete preparation. Being organized helps you save time and effort by determining a roadmap you will follow.

 

 

Good Time management

We all know that time is of crucial importance, especially when starting up a business as you will soon become overwhelmed with the number of tasks you will face with. However, if you have a business plan, you will be able to organize your time much more efficiently.

Perfect Asset distribution

Since a business plan has the information about the estimated costs, this is an excellent reference when thinking about your available assets and how you are going to distribute those.

Unified approach

Finally, a major benefit you will see with the business plan is the fact that you will recognize activities that will require different departments to work together. 

This is simply a matter of organizing and distributing work, but the point is that E-commerce is and should be seen as a part of global business running. 

Combining the power of sectors such as online marketing brings more benefits for your business by joining the forces to work on achieving the common goal.

 

Determine your goals

 

Determine your main reasons for developing a business plan.

A business plan can have several objectives and if you list each of them, your business plan will be longer, more detailed and more complex. First, to write a business plan, you must determine the main reason you are writing this project. This reason will help you focus your efforts on a basic business plan that will answer some of your most burning questions about your business.

 

Meet your business partner.

If you are starting a business on your own, you do not need to follow this step. But if you're working with someone else, you need their input and collaboration to write a business plan that takes into consideration each of your interests.

 

Recognize the unique nature of your business.

No two business plans are the same. Understand and know what makes your business unique, from product to service to customer to your marketing approach. This will elevate your business and interest your customers more and, in the long run, may lead you to success.

 

Have an idea of ​​the business for which you are writing the plan.

 Are you starting a new business or do you want to expand an existing business? Several approaches are available for writing a business plan, but there will be some significant differences between the plan of a business that is starting up and that of a business you are looking to improve.

 

With an already existing business, you will have clear ideas about your market, sales, marketing and so on. You can also add solid evidence to this business plan. With a new business, these elements are more speculative.

 

Choose the format you want to use.

The more succinct and general the business plan, the less clutter you will have to write. Instead of using long, detailed paragraphs, you could use dashes. Some formats are limited to between 1 and 4 pages, although a well-detailed plan can go up to 50 pages.

 

The shortest business plans get straight to the point. They present the different expressions in simple terms, making it easy for a novice to understand the content. There are all kinds of business plans online.

 

Determine the target of your business plan.

A business plan must be able to be read by any individual. Often the business strategy is written for investors or loan officers who need to quickly and thoroughly understand the nature of your business and your plans for success.

 

This demonstrates that you have thought about key issues, including marketing and finance. It will show your ability to repay a loan officer or build a profitable business for an investor.

 

Mention contingencies.

While you want to stay positive about the possible success of your business, it's good to think about ways that will make or break your business.

 

Think about how you will be able to solve problems, such as a declining customer base or the loss of a key supplier. If you think there is something about your business that might not be working, try to figure it out and how you would respond and fix it.

 

Provide information on key players in your business.

A good business plan will not only describe the business and its services, but also the staff and those who run the business. Provide a description of the key people involved, their role in the company, their background and their suitability for being part of your business.

 

Put their resumes in the appendix to your business plan. If the business is yours alone, fine. Give yourself a title and summarize your experience that led you to a business idea.

 

Many business plans include the following parts:

·       Executive summary,

·       company description,

·       market analysis,

·       service or product description,

·       marketing approach,

·       financial projections, and

·       appendix.

 

As you learn more about what goes into a business plan, you will be able to choose what is important in your business plan.

 

Some business advisors believe that small businesses need a simple questionnaire to understand the objectives of the business plan at the start, or they just need an “internal work plan”.

 

·       What is the product or service?

·       who are the customers?

·       how long will the business last?

·       how much will this business make you spend? and

·       what will your profit be?

 

Focus only on those segments that will help you with defining your vision and determining a set of actions you will take.

The followings are the main parts of your business plan

This part of a business plan should contain basic information about your business. These include:

Your Business name

The business name is the name you choose for your business. It is the name that should eventually become recognizable, distinctive and associated with your business. It will become a part of your brand. 

This is why determining a business name is a crucial decision in the business plan. It requires a lot of thinking, piling up the ideas and eventually choosing the right one.

When it comes to making a decision on which business name to choose, it is helpful to know characteristics of a good business name. These are

 A good business name must:

•  Be easy to spell
•  Be relevant and associated with your products
•  Trigger emotions
•  Contain keywords
•  Be clear and professional
•  Be powerful and have deeper meaning
•  Be unique

A good business name must not:

•  Overuse keywords
•  Have irrelevant keywords
•  Have negative connotations
•  Infringe upon anyone’s rights
•  Be offensive
•  Be difficult to spell

Your website

Ideally, your business name should match your website name. Use a tool, such as this business name generator, and check if a particular website domain name is available. 

The tool will also show plenty of alternatives, so even if the name is not available, you will get suggestions on which modifications of that name are available.

Your Logo

Depending on the scale of your business and the budget you have, you could hire a professional designer who would design a logo once you have a business name. Or you design it yourself.  

Apart from a business name, it is helpful to share some keywords and topics that are associated with the brand, the story behind the name, etc. This helps with the process of creating a logo.

If you prefer DIY method, here are some tools to help you out:

Logomakr 

The tool offers low quality + CC license with free logo, while you will need to pay for high-resolution photo.

LogoShuffle

Provide your business name, slogan, and keywords, select the icons, font categories and change colors to get logo mockups. Shuffle the ready-made designs, and once you find the one, you can buy it.

Tailor Brands

You will provide a logo name and a short description after which you will be offered a series of example pairs where you will choose the one your prefer. This will enable the tool to create a logo tailored to you, after which you can purchase the logo.

Online LogoMaker

Add text, choose symbols or upload an image, and get started creating your logo.

A free logo includes a low-resolution image, while payment is required to download a full resolution logo.

Other business details can include:

•  Social media profiles
•  Blogs you can cooperate
•  List of competitors
•  List of keywords you want to associate with your business

 

Your Product information

The next part of the business plan is focused on your products. Start with defining what you are selling and how you are going to sell.

The Product to sell

When you start with developing this business plan, you already have in mind the exact product you are selling. However, what you need to define here are the following things:

Produced product or sourced externally

If you are creating products, you will need to provide information about the supplies needed, the way you will obtain supplies and the time required for making those products. 

On the other hand, if you are going to buy products to sell them in your store, you will need to focus on choosing suppliers. The goal is to get the best product for the best possible price. 

Planning these activities in advance helps you stay organized and prepare everything to quickly implement the plan Digital or physical products In most cases, you will either sell digital or physical products. 

However, when it comes to books or music, you can choose which one to sell, a digital format which is downloadable and instantly available, or a physical product. You can always offer both formats.

Place to sell 

Since E-commerce is focused on sales that are conducted online, the primary place to sell products is the internet. 

However, this does not stop you from selling off-line as well. Choosing between a physical or a virtual store is simply a matter of how you want to run your business.

The main convenience an online store offers is that it can be accessed anytime anywhere. There are no limitations regarding space which means that the customer base is much wider than when it comes to a physical store.

In terms of business owners, a virtual store primarily represents a smaller investment. The only costs involve web hosting and technical support if you need it. You can always opt for an option to run both virtual and physical store. 

You could open a physical store alongside a virtual one. When we focus on the virtual realm, there are a couple of ways you can sell online. Firstly, you can have your own website. 

Alternatively, you could join marketplaces and sell through their website. This choice is also something to include in the business plan. If you are planning on using several marketplaces, provide all of this information in the business plan, to help you further along with the planning and promoting products.

Your Investment

Opening any business requires an investment. Even though running an E-commerce business does offer this advantage of being the one that needs a small investment, you will still need a certain amount of assets to open and start running a virtual store. 

It is helpful to determine the assets you can invest, and then compare those to the actual costs you will have when opening up an e-commerce business.

Your Web domain

The domain is the first thing you will have to purchase when setting up a business. The actual costs may vary depending on the provider, as well as on the type of domain extension you choose (.com, .net, .shop, etc.). 

The domain is bought yearly, but you can choose between one year, two year or even five-year period.

 

The Hosting

Hosting is an online storage for your website, and it is the place where your website will be built on. 

There are many hosting providers on the market, offering hosting packages anywhere from $5 to $10 per month for first-time customers and basic plans. 

For e-commerce, you will need a hosting that is flexible and can grow as your business grows.

Technical support

Although running an online store is a more convenient method of commerce in general, it still requires a bit of know-how, especially when it comes to setting up a website, online payments, etc. 

You might be able to handle some portion of the tasks, such as setting up and optimizing a website, but you might want to hire a professional to handle sections with online payments (credit card payment, PayPal integration, etc.). 

In case you are not able to set up a website yourself, the costs here will be greater. Additional costs can include:

•  Website optimization expert to improve performance of your website
•  Photographer for product photos
•  Content writer for product description/blog content
•  Administrator for handling management and customer support
•  Marketing expert to work on promoting your products

 

In case you opt for a marketplace instead of your own website, you will obviously avoid a part of these costs, such as the domain and hosting. 

Still, selling through marketplace usually requires a certain fee, that is often calculated as the percentage deducted from the sales.

Your Product related costs

This section of the investment can vary hugely from business to business. For starters, you might sell products by acquiring them directly from the  manufacturer.

 

In this case, you usually do not have to buy the actual products, but instead, you will simply purchase them once you receive an order.

On the other hand, if you make your own products, you will probably need some kind of materials to make them. These costs should all be included in the calculation of your business investment.

When it comes to offering services, you will think about the following:

•  Who will be handling the service (this person’s time should be paid accordingly)
•  Costs related to providing the service (if you need to drive yourself to a location to provide the service, the costs of transport should be included in the price of the service)

 

Sometimes it is not possible to predict the exact costs but an approximate value. Then it is always better to calculate a higher value, just in case. Once you have all the values, the sum of those is the investment you will need to start your business.

 

 

These three elements make up a core of the business plan. These are the base from which you will form a strategy later on. 

For example, having determined a business name, you can then work on social media marketing strategy, by creating online profiles with this name. 

While a lot of information is included in these three parts, there are still more aspects of E-commerce website you should have in mind.

Other things in the business plan

Your Predicting profit 

Each E-commerce has a goal of acquiring profit through sales. This is the primary goal you want to achieve, and we will focus on different methods for achieving this goal later on, but when setting up a business and defining a business plan, it is helpful to try to predict the profit over a given period.

Since each business requires an investment, the first income you acquire from sales will be enough to cover this investment, and it might be a while before you start gaining profit.
Here is how to predict the profit:

•  Choose a period you want to focus on
•  Predict the number of sales you can expect (based on the market research, previous experience, etc.)
•  Multiply the predicted number of sales with the product price
•  Predict the recurring purchase trend, and add this to the previous sum
•  Subtract the investment needed for the same period from the total predicted revenue

 

Pricing

Another part of the business plan you will work on is pricing for the products or services that you offer. 

Since the price essentially should cover the costs needed for that product or service to be provided, plus some profit for you, a good starting point is predicting the costs to make (or buy) an individual product or to provide a particular service. 

It is how you get an estimate on how much to charge. Even though the cost of website hosting is not directly part of the product cost, it is an expense you will have to pay from the revenue you obtain. 

Thinking about overall predicted costs might give deeper insights into how to form the product selling price.

The second thing you should consider when determining the pricing is the situation on the market. Make sure you explore the internet and look up businesses that offer the same products or services. 

Take a look at their pricing, and check out if there is a space to modify your price further.

Special offers

Special offers are usually a part of the company strategy, which is why you could plan and predict those offers with the initial business plan. Here are a couple of options:

•  First-time offer 

Offering a special discount to first-time customers only

•  Newsletter discount 

 Sending out discount codes to your subscribers

•  Bundles 

When selling product, you might want to provide a special (discounted) price for buying a bundle of products

•  Seasonal offers 

Holiday seasons are popular times to offer discounts and special offers, so you might want to plan this for Christmas, Easter, etc.

Your Plan for promotion

So far, the business plan was focused on what to sell, where to sell and how to determine costs and pricing. Finally, the business plan should also include a section on how you are going to promote the products. 

Since promotion includes an important part of your strategy and it helps with estimating profit, it is very helpful to plan online promotion in advance.

 

Your Channels for promotion

Channels for promotion include the platforms you will use to advertise your products and try to reach the online customers. 

Unlike traditional marketing channels used for reaching customers, E-commerce is focused on the online media, and the usage of the following channels:

•  Website
•  Third-party websites (gaining inbound links)
•  Social media
•  Paid advertising

 Promotional activities

Besides a direct promotion, which can range from promoted posts to paid video adverts, other promotional activities that are not as direct when it comes to promoting the actual product, but still are efficient at raising awareness of your brand. Those include promotional activities such as:

•  Special offers
•  Discounts
•  Loyalty club
•  Contests
•  Giveaways
•  Collaboration with other brands

 

Despite the fact that the promotion of the actual product is not a direct goal, these activities are still called promotional because they help with:

•  Placing your brand on the market
•  Raising awareness of what you do
•  Increasing interest in your brand
•  Engaging those interested in your brand
•  Improving the level of loyalty with rewards, benefits, etc.

 

Since promotional activities improve your online influence, try planning them in advance inside a business plan. The main reason why it is good to prepare them in advance is the fact that you will be able to define the budget for each of these activities. 

 

 

Furthermore, you will be able to plan the exact period when you will be organizing each activity. You do not want to host several of those at the time, nor do you want to overlap with other activities you plan for your business. 

 

 

For example, when introducing a new product in your store, you might not want to offer a discount for that product, but instead, you could host a contest or a giveaway.
To successfully plan promotional activities, think about these:

•  Type of the activity you want to organize
•  Goals you want to achieve (promotion of the products, introducing new products, engaging previous customers, etc.)
•  Period during which the promotion is going to be active
•  Terms and conditions for participation
•  Cost related to organization

Thank you for reading

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