Ecommerce Business Plan Guide: What Should You Include?

Why do you need a business plan?

A business plan is NOT:

• A document for investors’ eyes only (though investors may want to read it)
• Difficult to create
• 20 pages longA one-off document that you can “set and forget”

No business works in a vacuum. It enters a market with suppliers, competitors, customers, and so on. Ecommerce is a thriving industry that is changing rapidly and it is essential to understand where your business sits as it enters the market, where it needs to be after a year or five years, and how it’s going to get there.

How will your business operate? How will it grow? What resources do you need? How will you promote your products? How will you navigate the inevitable bumps in the road? What do you want it to look like in a year? Five years?

A roadmap for your ecommerce business

A business plan helps you answer these questions, distilling this valuable information into a simple, concise document that can act as a roadmap for your business. But it is not just made for other people to read.

It is a living, breathing document that can help you as the business owner with the following:

• Understanding the business goals
• Assessing the main challenges you will face
• Minimizing the risks and threats to your business
• Identifying where the opportunities lie in your market
• Answering important questions and solving problems
• Saving time and money
• Bringing clarity to the direction of your business
• Addressing the main financial challenges you will face

After all the excitement of developing your new idea for starting an ecommerce business, the simple exercise of writing a business plan will get you thinking about the reality of your enterprise.

How are you going to make money and navigate the road ahead?

Ultimately, you need a business plan because, without one, you may be heading rudderless into the future with the prospect of not ending up where you need to be.

Where do you start?

A couple of points to bear in mind before you start:

• A business plan that lives only in your head is NOT a business plan. It is just a collection of mental notes. A true business plan needs to be written if you want the benefits described above.
• Your business plan should be written “in pencil” not “indelible ink” – it is likely to evolve as you work on it so be prepared to make changes and tweak it. Don’t aim for perfection from the start.

A key component of your business plan will be the ecommerce business model you propose to operate under. A dropshipping model is very different from manufacturing products in-house.

This is different again from a private label model, where you outsource the manufacturing of products you design to a third party or white labeling. Then there is wholesaling, which is different again.

Most business owners start by answering three simple questions:

• What are you selling? Be specific about the products you will sell in your store
• How will you source your products? Dropshipping, private label, white label, wholesale?
• Who are you selling to? Are you selling to retail customers or other businesses?

What to include in your ecommerce business plan?

While most business plans follow a convention, there are some notable inclusions required for an ecommerce business plan as opposed to one on another market sector.

Rather than deviating too far from the standard structure, it’s best to follow what other established businesses do:

Overview of your business

First, include the key details of your business, such as:

• Company and brand name: your brand name, especially, deserves considerable thought. List 5-10 words that summarize what your business stands for.
• Company type: LLC, S-corporation, sole proprietor? Speak to an accountant or startup business advisor before forming your company as the structure may have tax consequences.
• Personnel: who are the people that will “power” your business? Detail everyone from the CEO to the copywriter or SEO consultants.
• Domain name details: this should reflect your brand name and consider SEO implications
• Value proposition: a short, concise statement to explain how your business will benefit your customers.
• Mission: explain why you are starting your business.
• Vision: explain the “dream”. i.e., where you see your business in the future (10- or 20-years’ time).

Competitor and market analysis

Every successful ecommerce entrepreneur has a clear understanding of and insight into the target market.

Your business plan will force you to examine the market before you start your business so that you are aware of exactly what you are getting into, who the competition is, and your target customer demographic.

Your target ecommerce market and customers

What niche are you entering? Ladies’ swimwear? Animal-friendly cosmetics? Men’s grooming products?

Whatever niche market you enter, be as specific and targeted as possible and detail it in your business plan.

Who are your target customers? Where do they live? What is their gender, age, education, ethnicity, profession, and income level? Why is now the right time to enter this market?

Include answers to these questions as well as a general overview of the industry you are entering.

Main competitors

Who are the market leaders and businesses that you will be competing with, directly or indirectly? How crowded is the marketplace?

Research this first using industry reports (find on Google), keyword research (looking for popular search terms with Google’s keyword planner or JungleScout), as well as more traditional means, such as speaking to business owners in similar sectors and at trade shows.

When you add these details to your business plan, be specific and include competitors’ business models, monthly traffic, product description/features, pricing, and how they have achieved growth. This may all influence your own business operations.

If you like, create a spreadsheet of the top five businesses/competitors in your niche. This process may uncover opportunities as well as challenges – for instance, gaps in the market for your products to fill.

Products and marketing

Briefly describe your products, their features and benefits, and why there is a demand for them in the current market among your target audience. Include the search volume on Google or Amazon, for instance.

The business plan should include details on how you will manufacture your products (if applicable) and distribute them.

Also, if possible, detail plans for future products you will develop as you grow. These may be complementary products that can be offered as upsells or cross-sells to the main range you promote.

Some products may be high-profile/low-profit while others vice versa. Include information about why you are offering your products and how they fit into the overall business plan.

Also, include pricing and profit margin information for your products and an analysis of why you charge the prices you have set. Include the following information:

• Target price
• Supplier cost of product
• Total cost per unit
• Net profit per unit
• Profit margin per unit

Ecommerce platform and marketing plan

How are you going to get customers into your store and ready to buy your wonderful products?
Every ecommerce store must:

• Attract traffic
• Provide a user experience that encourages visitors to buy

You need to detail how this is going to happen in your ecommerce business plan.

The first major decision is which ecommerce platform to use: we recommend Shopify, which is an integrated platform (includes hosting) but alternatives might be WooCommerce, BigCommerce, Wix, or another platform.

Every marketing strategy starts with knowing your customer, so your previous analysis of your target customers will be the bedrock of your marketing plan.

Then, you will need to decide how to reach them: social media, email, SMS, pay-per-click advertising or another channel?

Decide how much you can afford to spend on your marketing and then the channels you will use:

Paid marketing channels

• Pay-per-click advertising, e.g., running Google Shopping campaigns
• Facebook ads: attracting buyers from social media
• Affiliate sales networks: offering commission to bloggers and other websites that sell your products
• Influencer marketing: hiring industry influencers to promote your products on social media platforms

Other marketing channels

• Search engine optimization (SEO): attracting organic searchers on Google etc.
• Social media: reaching out on Facebook, Instagram, Pinterest, etc.
• Content marketing: creating articles that draw potential customers into your store
• Email marketing: reaching out to customers on your list by email
• SMS marketing: reaching out through text messaging

If you use Shopify, you will have a wide choice of apps to assist you with marketing, many of which automate some of the most time-consuming processes associated with marketing.

List the technology/apps/services you will use to implement your marketing strategy in your business plan—and their associated costs.

Your financial plan

In your ecommerce business plan, you need to address the all-important question of how to finance your business and what the expected returns will be.

The key questions are:

• What are your startup costs?
• Are there any other capital expenditures projected?
• Do you need a business loan?
• How long will it take to make your initial outlay back?
• How much do you need to sell for the business to start making a profit?
• What are the projected profits?

You can use this section to forecast the expenses, sales and net income of the business over the next 12 months. Include the projected revenue from sales, fixed expenses (e.g., rental) and variable expenses (which usually increase with the volume of sales).

These financial projections are meant as guidelines only and are unlikely to be completely accurate. Businesses with recurring revenues (from subscriptions, etc.) will manage this section a little differently from those selling one-off products.

A quick word about the executive summary

The executive summary will be at the beginning of your ecommerce business plan but is included last here because you should write it after you have written the other sections.
You should include details of the business model you will use, your products, your market and target customers, your financial plan, and your marketing/sales plan.

Plan your ecommerce business

All of the above theory counts for nothing unless you sit down and start work on your ecommerce business plan.

After reading this ecommerce business plan guide, you should be emboldened for the task ahead. It will likely be easier than you imagined.

Get organized and put the right information in the right places and your business plan will guide you and help you navigate the months and years ahead.