8 Steps To Write an Effective eCommerce Business Plan

According to a common statistic, 34% of startups close within their first two years. Another statistic shows 90% of businesses fail within the first five years of operations.

But the good news is the success rate of eCommerce business is also extremely high.

All you need to make a solid plan considering all ins and outs of your business.

Business plans help define your goals and show the path your business needs to take to achieve them.

Here we have compiled an all-inclusive list of areas you should consider while writing a business plan for your online shop. Have a quick trip of this step-by-step guide to create an effective eCommerce business plan that will actually work.

A Brief Explanation of eCommerce Business Plan

A business plan is a written document that outlines company goals and describes the way in detail to achieve those goals.

This guide describes your business, its objectives, its products/services, income source, its leadership and staffing, the market it is in, its operations model, its financial forecasts, and many other things essential to its success.

An eCommerce business plan guides you throughout your journey from starting to managing your online store fruitfully. You can use this plan as a roadmap for how to organize, operate, and grow your new business. Also, it helps you get funding or bring new business partners for your shop.

Why Writing an eCommerce Business Plan Is So Important

Oftentimes, businesses fail as a result of weak management, targeting the wrong audience, poor customer service, inadequate products, or many more.

If you can comprehend the key success elements and risk factors of your business, you can easily set strategies with the lowest chances of failure.

A well crafted business plan brings all the essential components of your business one place so you can easily monitor each and every metric.

Investors, however, feel confident if they have proper documentation showing the proper way to get a return on their investment. Thus, your business plan can be a great tool to convince both people who are working with you or investing in your company. 

A constructed business plan lets you and your team members walk on the right track considering all the bottlenecks and possibilities.

How to Prepare a Winning Business Plan

If you're thinking about starting a new business, then you likely already have some idea of what you want to sell, or the market you intend to enter. Now it's time to make a document of those ideas and analyze all ins and outs of your business.

Let's see what you should take care to make your eCommerce business plan workable-

1. Keep Your eCommerce Business Plan Short

A business plan rather long but don't make it too long. Better limit your document in 15 to 20 pages if you really want your business plan to be read. Also, you may need to update your plan over time. Whereas an extremely large business plan is difficult to revise. So preferably keep it concise and include only essential information. In fact, if you need to add some extra documents with your plan- provide them as appendices.

2. Know Your Audience

When you know who you're writing for you can explain your ideas in the right way that can communicate the right audience. Investors, lenders, and partners are three primary groups to be your readers.

So write your plan using language that your audience can easily understand. Suppose, your company is developing complex software. But your prospective investors are non-technical persons.

In that case, instead of writing programming terms, you should use some generic words that they can easily perceive.

3. Have a Clear Goal

To plan your plan, you have to first determine what your goals and objective in business are. Close your eyes and imagine where you want to see your empire after 5 years and then set your strategy accordingly.

As part of this, also account for the possibilities and obstacles to reach the final destination for the business you intend to start or are already running. When you know where you want to go, you can possibly better plan for it.

4. Understand Your Competitors

Before starting any business also take time to understand your competitors' tactics they've used to gain their present position. So, you can upgrade your plan and avoid the mistakes they have done in their journey. However, you need a strong grasp of the industry you are planning to lead.

8 Steps to a Perfectly Written eCommerce Business Plan

Here we have shared a sample outline to help you proceed with your eCommerce business plan. So that you don’t need to start from scratch. Just copy it on your blank document and start planning for your own eCommerce store.  

Here're the mainly 8 sections to include in your business plan:

1. Executive summary
2. Company overview
3. Market analysis
4. Products and services
5. Marketing plan
6. Logistics & operations plan
7. Financial plan
8. Disaster planning

Executive Summary

An executive summary is a brief introduction to your business and a summary of your business plan. You should include your business objective, your target market, future goal, and financial highlights in this section of your plan.

Some key components that you should include are:

• The main purpose of your business
• The people who are involved in this business
• The date when it started or intend to start
• The points that set you apart from others
• The problems you are going to solve & how
• Financial summary & funding requirements
• Future milestones that you intend to accomplish

It would be better if you write this portion last. After all, this section is a summary of everything else that you're going to describe elaborately in other parts of the plan.

Here is a sample of an executive summary for a pet sitting company:

Your executive summary should not be more than two pages. If you can summarize it in a single page, it would be better.

Company Description

This part of your business plan provides a complete overview of your business. It tells who you are and what are you planning to do including all the high level goals and how to achieve them. Also provides important information about your company- history, management team, location, mission statement and legal structure

A quick rundown of what to include in your company overview:

• Business name
• Location
• Legal structure (i.e., sole proprietorship, LLC, S Corporation, or partnership)
• Management team (key personnel and their salaries)
• Business’s vision, mission, and values
• Company history (when it started and important milestones)
• Description of products and services and how they meet the needs of the marketplace
• Target customers (who will buy your product or services)
• Competitive advantage (what sets you unique in the market to allow you to succeed)
• Business objectives and goals (both short and long term)

Clarifying these details is still a good practice even if you are the only person to read it. As it gives you a clear guideline of heading in the right direction and fulfilling the expectations.

Market Analysis

The market analysis part of your business plan gives a detailed overview of the industry you intend to sell your products or services. This section looks into:

• the size of the market both in volume and in value
• the various customer segments and buying patterns
• your competition
• how you want to make a place for your own products/services

You should also consider and include the economic environment in terms of finding the barriers to entry. Adding a SWOT analysis could be an effective way to demonstrate your strengths, weaknesses, opportunities, and threats.

Let's prepare a SWOT analysis for a meat pie manufacture company:

Products and Services

The products and services section is the centerpiece of your plan. Though each section of your business plan is equally important but this is the point around which other parts are built. This section will not only showcase the list of your products or services you are going to offer. It also describes why people need them and how it stands out from the other same type of products or services available in the market.

Your products and services section may include-

• A detailed overview of products/service you are offering or plan to offer
• Prices of your products/services
• A comparison with other businesses selling the same or similar products and services
• Sales literature you plan to use
• A short description on how you will process your customers' orders
• Your requirements regarding products' shipment and smooth customer service
• Intellectual property- such as trademarks, or legal issues
• Future products/service in your queue

Your product and service section should cover the quality, features, value, and benefits that your business provides- especially if you decide to use this blueprint to get sponsors or find partners for your business.

Financial Projections

This section includes three key financial statements: an income statement, a balance sheet, and a cash-flow statement.

If you have an established business then add your income statements, balance sheets, and cash flow statements for the last three to five years. For startups, you can include your forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, it would be better to get more specific and use quarterly or even monthly projections. Explain your projection clearly and use the necessary statements to prove your claims.

Following things should be considered while working in this part of your plan:

• The cost of raw materials & operating machines
• The available current fund and possible investment
• Previous profits and future prognosis
• Budget for advertising and different promos
• The changes you want to make in pricing to scale up your business

Here is an example of financial plan for 5 years long. You can also break down these statements and show them in monthly basis.

Use charts and graphs to tell your business financial story in a more convenient way.

You may also like to read: Turn One-Time Customers Into Your Loyal Repeat Fans.

Full Proof Marketing Plan

This section of your business plan describes how you will reach your target audience and turn them into your loyal customers. Collectively, focus on your short-term (6-months) marketing plan to meet goals that are just on the horizon and long term (1-year) marketing plan for the business growth in the long run.

Your online shop marketing plan should include-

• Website development and SEO strategy
• Social media marketing
• Sales and distribution plan
• Video & influencer marketing
• Paid advertising and promotions plan

Remember, your USP is the heart of your marketing plan. That's why your selling propositions should be precise and to the point.

Let's see some examples from renowned brands-

While planning you should consider both online and offline marketing methods though it largely depends on your business type. A profitable way could be- figure out the places where your target audience gathers most. So you can reach them easily with some alluring offers.

Logistics & Operations Plan

This part elaborates the whole process to turn your raw materials into products and get them into customers' hands.

Inside your company, there must be several departments; in the case of your online shop, various sectors are correlated and work collaboratively to process an order successfully. Also, there must be different ways to complete the same task appropriately. It's your duty to set the priority and discuss the procedure you want to follow and the reasons to satisfy your statement.

This section may include-

• From where you will collect the raw materials
• How you will manage the production and handle a sudden spike in manufacturing demand
• Intended number of stuff for each department & their working place
• The hours that people in different departments will work per week
• Working procedure & rules (production, equipment, shipment, refund policies, etc.)
• Where you will store your products & how you will track the inventory.

This section must pacify your readers that you have a strong command over your supply chain and the ability to hold consistency in any uncertainty. Even if your reader is only you, it gives you a clear understanding of how to fix the price for your products/services and control the expenditure inside your dream online shop.

Related Resource: Why eCommerce Businesses Fail & How to Resolve Them.

Disaster Planning for Your eCommerce Business Plan

Having a disaster preparedness guide helps your business to survive in any crisis and discover a way to recover from the distress situation. Describe your ideas to make your business prepare for the worst condition. It could be a fire, flood, or even data loss. Also, include a disaster recovery policy to feature some possible solutions and available backups. So that you can resume your regular business activities quickly during any emergency or pandemic like COVID-19.

To sum up, if you can make out time to set concrete but achievable goals and chart a plan to success, it will help you realize your dream and make your business flourish.

Download A Sample eCommerce Business Plan Template

A Well-Designed eCommerce Business Plan Directs Your Shop in the Right Way

A complete business plan has many functions from securing external funding to measuring success within your business. It's a complete guide to represent your business from marketing, financial, and operational viewpoint.

The main wings to be covered in a well-defined eCommerce Business Plan are:

1. Executive summary- A snapshot of your business
2. Company overview- Describe who you are & what do you do
3. Market analysis- research on your niche market & competitors
4. Products and services- what you are offering to your customers
5. Marketing plan- how you will promote your brand & increase sales
6. Logistics & operations plan- explain your business structure, workforce activities & product delivery
7. Financial plan- how much money you will need in the next 2-3 years & how to manage them
8. Disaster planning- how to recover if somehow you fail in the business or any disaster happens

Hence this plan gives you a clear direction to reach your destination within a predefined time frame.

Are you new in eCommerce industry? You should know about the common terms and phrases of this arena. Check this eCommerce business glossary with 80+ essential terms.

Still, have some doubts in mind? Do use the comment section below to share your views with us!

Also Read: How to Write a Business Case (Examples & Ready Template)