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How to create an ecommerce business plan

Saturday, December 05, 2015

Highlighting business strategy for your ecommerce company

Ecommerce can be defined as commercial transactions that take place online, specifically through the internet, company websites, and ecommerce platforms. Ecommerce has been a booming industry in the last decade and, most notably, during the COVID-19 pandemic. The level of online shoppers has greatly increased, with many new potential customers seeing the benefit of shopping through an online store. Customers want to access goods through easy, quick, and straightforward methods – all of which can be found in online shopping.

With this growth, it has become even more imperative for companies with ecommerce business models to include a business plan for a detailed roadmap of how to grow and expand their online business. This article will define the parts of an ecommerce business plan and how to go about writing a plan that will help business owners share pertinent information with their target audience.

Why write a business plan for your ecommerce business?

A business plan is a formal document that often follows a business plan template. This template includes key elements of what comprises the business (including a cash flow statement, executive summary, market analysis, competitive advantages, legal structure, liabilities, etc.). Ultimately, a business plan outlines your financial goals and how you will achieve them over time. With ecommerce businesses, you may find that particular categories or sections will need to be included to outline the unique marketing plan and financial plan for your online business.

A good business plan for your ecommerce store will support you in taking the next steps for your enterprise, whether in funding, partnerships, growth, expansion, or development. It is crucial that small businesses operating in the online space have a plan so that they can capitalize on tools such as email marketing to maintain a strong customer base. More and more investors are interested in investing or supporting ecommerce-based businesses, and developing a plan for your own business will help you stand out among the many new businesses in the ecommerce space. A plan can help potential investors make the decision to invest in your company, especially if they feel there is a product-market fit for your product or service, if you have a strong team in place, and if your business has the potential for scalability.

What are the parts of an ecommerce business plan?

Whether working with investors or seeking a strong customer base, a business plan should serve as an overall operations plan to follow as you grow your business concept. No matter what type of business you have, it is important to include the key elements of a business plan so that readers have a strong sense of your brand and the overview of your business. Your business plan acts as an introduction to your company for those who may have never engaged with your online presence before.

The primary parts of a business plan are as follows:

  • Executive summary. The first part of your plan is the executive summary. This should be a high level overview of your business, including the mission statement, and a brief description of your online product or service that will add value for online customers. You can even include the founding story of your business (as space allows). This is the first glimpse at your business that your target audience will see, and therefore it is important that it draws them in and leaves them wanting more.
  • Company description. The company description should provide the demographics of your business; for example, the name of your entity, your location, the leaders or key members of your company, as well as the type of structure that your business is registered as. If you have established owners of the business, it is also necessary to include their percentage of ownership. If you are running a startup business and still building your team, you can include positions that you aim to hire for in the future. You may also want to include links to articles about your ecommerce business, social media accounts, and examples of engagement with your website.
  • Business goals. This section in an ecommerce business plan is one of the most important as it outlines the actual goals you and your company are working toward. You can include high level goals and then specific objectives that can serve as milestones along the way, therefore detailing what will make your company a successful business. In seeking funding, it is critical that you tie the goals to the needs for funds. This will help potential investors see how their contributions can help your business get off the ground. With financing, you can even make some financial projections that will help your company meet the outlined goals included in the business plan.
  • Business structure. The business structure section of your business plan helps you go into more detail about your management team and the specific areas of expertise and qualifications that your team members have. Outside of existing team members, you should identify roles that you still need to hire in the growth process as well as projected costs of new hires that will contribute to the overall financial bottom line of the business. You may also indicate any third party support you are receiving, either with a contracted bookkeeper, lawyer, or CPA. This will help investors see that you have the support in place to manage all aspects of business operations.
  • Products and services. This section goes into more detail about the value proposition of your specific product or service. You can discuss the benefits of your product or service, the production process, the lifecycle of your product or service, and how your product or service stacks up against other competitors. Also, you can share more about your target customers who will engage with your business online. You can include the pricing of your product as well as a competitive analysis of other ecommerce businesses. If you use particular technologies (apps, for example), this is worth mentioning in this section. Lastly, this section may include a SWOT analysis (strengths, weaknesses, opportunities, threats) that help explore various aspects of product development and launch.
  • Marketing and sales plan. If you are seeking a business loan or funding, it is important to include a marketing and sales plan that details how you will grow and eventually be able to meet profitability and pay back borrowed funds. For online businesses, you may include strategic partnerships you have with investors as well as specific marketing campaigns or marketing channels you are developing. This part of the plan can include your actual marketing strategy that will help your brand grow and gain visibility with your target market, including the use of social media and other technological tools. For example, online businesses benefit when your website and information is easy to find online. Using tools like search engine optimization (SEO) will help with this process.
  • Business financial analysis. If your company has already begun operations, this section can include income statements, profit and loss statements, cash flow statements, and balance sheets. This section will help support your actual business needs that require additional financial support. If you are a startup and have yet to launch, this section will function more like a financial plan, specifically including a budget and areas of expenses and income that investors would need to be aware of. You may also include startup costs for your ecommerce business so that external parties see where the most amount of investment is needed. Ecommerce businesses may have low costs with brick-and-mortar operations; however, there may be higher costs for shipping or manufacturing needs related to your business’s supply chain.
  • Financial projections. Financial projections help funders, lenders, or investors see where your business idea can go long-term. Based on existing financial data, you can project future revenue and income that your company will gain in addition to overall profit margins. For businesses that primarily earn income from credit card transactions online, you may consider providing data about sales over longer periods of time that support your financial forecasting.
  • Appendix. The last section of your business plan should be an appendix that includes any additional or supplemental pieces of information that would be helpful for the readers of your business plan. Business registration documents, patents, certifications, industry associations, or other legal documents could be helpful to include. It is important to label each part of the appendix so that your readers understand what type of document they are reading.

How do you write your ecommerce business plan?

So, you have an idea of the elements that go into a great business plan for an ecommerce company. The next step is to begin the writing process. Research, discussion, and review will have to take place before writing so that you know what details you want to include. Researching other online business plans could be helpful as you get started. Once you have a sense of what you want to write, make sure you have someone to review the content, edit, and provide recommendations along the way.

Here are the steps to go through as you pull everything together for your company’s business plan.

  • Create an executive summary.
  • Compose your company description.
  • Objective statement or business goals.
  • Describe your organization and management.
  • Summarize market research and potential.
  • Describe your product or service.
  • Develop a marketing and sales strategy.
  • Compile your business finances.
  • Explain your funding request.
  • Compile an appendix for official documents.

Within every section, make sure you are coming back to the goals of your business, your product offerings, and the opportunities for your business to be successful. This will remind readers, investors, and funders of why your ecommerce company is a desirable investment and how you can grow and expand long-term.

Plans for the future

As you build, develop, and grow your ecommerce shop, a business plan is a helpful tool to make sure you aren’t missing any important steps along the way. Ecommerce businesses are unique in that they benefit from online traffic and engagement, and so it may be useful to pull online metrics and demographics about your customer base to show your investors that there is a strong demand for your services. Having real-time data is one of the benefits to implement in an ecommerce business plan that more traditional businesses may not have as much access to.

Ultimately, your ecommerce business plan is amplifying your business strategy by bringing it to life and seeking support from financial investors, business-to-business partnerships, and a strong customer base. With recent shopping trends shifting online since the pandemic, the ecommerce industry will only continue to grow. With a plan, your business will be ready to thrive and meet your financial bottom line.

Next steps

Are you ready to roll out your ecommerce business plan? Are you ready to create a comprehensive plan in-house? Are you ready to integrate your marketing plan, financial plan, and operations plans all together for your ecommerce company?

Heartland is ready to help.

Heartland helps nearly 1,000,000 entrepreneurs make and move money, manage employees and engage customers with human-centered technology solutions that allow them to rise above the daily grind and lead their businesses into a brighter future. Learn more at heartland.us.