Our culture thrives on instant gratification. Streaming media, medical appointments, and online shopping are all just a point and click away.
Online sales are booming, and more people are launching ecommerce businesses than ever before. The best way to prepare for success is with a business plan for your ecommerce store.
Over the past five years, ecommerce has doubled in share of global retail sales, and it shows no signs of slowing down. It might be tempting to jump right in – because it’s easy to start up an ecommerce business.
That’s true. Breaking into ecommerce is easy. Being successful, however, takes a bit of work – so pair your enthusiasm with preparedness.
A 2019 study from Startup Genome found that 90% of ecommerce startups fail within their first 120 days of operation. Some of the reasons for failure include poor search engine visibility, a saturated market, and financial issues — all of which could have been addressed ahead of time with an ecommerce business plan.
It may seem like a headache, but learning how to create a business plan is the best step you can take to ensure long-term success.
In this guide, you’ll learn:
What is an ecommerce business plan?
An ecommerce business plan is a roadmap to profitability – a document that outlines your business idea, what you want to achieve, how you’re going to get there, and everything in between. It’s just like the business plan you’d put together for any other business.
Potential investors may have questions about your business, and your ecommerce business plan answers them. It also lays out goals, discusses operations strategy, plans for growth, and anticipates issues. It’s a summary of how you plan to achieve success — because a successful business turns a profit.
Who needs a business plan?
If you’re in commerce, you need a business plan. Brick and mortar, ecommerce, B2B, B2C, nonprofit, for profit, lemonade stand, door to door salesman – everyone running a business needs a business plan.
Communicating your goals and methods is part of being a business owner. You’re bringing consistency and accountability to the table, because your plan isn’t just for you. You’re likely working with investors, bankers, employees, partners, even customers. Your objectives need to be clear to the people you’re working with and working for.
A business plan benefits everyone involved in a business. Not every ecommerce brand launches with a formal business plan, but there is value in taking time to step back and study the market you’re looking to enter. That way, you can formulate a strategy to launch and grow a successful ecommerce site.
Why do I need a business plan?
Outside of keeping your business operations on track and organized, ecommerce businesses need business plans because they need capital. Like most businesses, if you’re not already rolling in dough you will need financing.
There are a few options. You could find investors or you can secure a business loan. Either way, having a business plan for your ecommerce store increases your chances of getting financing. Investors and banks don’t just throw money at strangers who ask for it – they need proof of business viability. That viability depends on the plan you’ve created.
A solid business plan empowers you to:
Develop a strategy for growing your businessDetermine potential obstaclesIdentify the human, physical, or financial resources neededEvaluate the viability of your business idea
Sell your products online, worry-free
Officially recommended by WooCommerce, our hosting is made for online businesses like yours
What do I need to start my ecommerce business plan?
If you’re figuring out how to create a business plan, you’ll need to consider all the details of building your business, including:
What products and/or services you’ll be offeringFinancial models for your businessOperations plansStaffing plansAn expected timeframe for achieving your goals
You can find templates online, but it’s important to understand the relevance of each component and how it relates to your business.
You should also consider that templates may be geared toward brick and mortar businesses and not everything may apply to your individual situation.
For example, if you’re a dropshipper, you won’t need to think about factoring in overhead costs.
What is in an ecommerce business plan?
Think of your startup’s ecommerce business plan as Cliffs Notes for your company. The high level components are detailed, but day-to-day decisions aren’t. You’ll outline your marketing strategy, not what your social media manager tweets out on Thursday.
Not every business plan is exactly the same. All businesses have different needs. All business plans contain a few key parts:
Executive summaryCompany overviewMarket analysisProducts and servicesMarketing planOperations planFinancial plan
Let’s explore what each component of an ecommerce business plan entails.
Business plan template: how to create a business plan for ecommerce
Writing a business plan is not as complicated as people assume it will be. Here’s how to create a business plan for your online business.
1. Sum up your plan with an executive summary
The executive summary outlines the key points discussed in the rest of the ecommerce business plan. The executive summary is often the last section to be written, but it should be the first thing someone reading your plan sees. Keep it brief — an executive summary shouldn’t exceed one page.
The executive summary is where you identify your products and services, describe your target audience, and communicate how you solve customers’ pain points.
You will also detail where you expect your business to go in the future. If you’re planning on expanding offerings, developing new products, or adding new delivery methods, you should mention that in the executive summary.
Executive summary exampleColleen’s Cookie Keepers is a sole proprietorship that sells specialized cookie containers that features proprietary cookie preservation technology ensuring fresh baked cookies stay soft and pliable for up to 3 weeks. It offers a premium cookie experience, expanding the niche market of plastic food storage serving home cooks and bakers who encounter inferior storage options for baked goods.
Colleen’s Cookie Keepers’ ideal customer is a woman who has children or grandchildren and considers herself a “home baker.” Given the focus parents place on healthy options for their children and the trend of moving away from processed foods, there is a renewed market interest in high quality home preservation options. While canning and vacuum sealing attempt to meet needs, the underserved market of baked goods shelf-life leaves a gap in the market.
Colleen’s Cookie Keepers offers airtight cookie containers in 5 sizes and are available exclusively online at ColleensCookieKeepers.com. Our products range from $6.99 to $129.99. Production costs are $0.73 for the smallest size and scale up to $14.32 for the largest size.
The company’s sales projections for the year are $650,000, with an expectation of 35% growth over a period of five years. By year three, we project 80% gross margins.
The business is run by Colleen F. Snickerdoodle, founder, who has extensive home baking experience and a degree in Advanced Plastics Engineering from the Harvard School of Tupperware.
Your executive summary is your 30 second elevator speech. You have to sell your readers right away to keep invested parties reading through your plan. They’re forming impressions about your capacity for success – so now’s your time to shine.
Make sure to include:
A brief overview of what your business doesWhat your company sells, or what services you provideWho your customers areWhere you plan to sell your productsGoals for growthFinancial considerations (think how participants explain their valuation on Shark Tank)How much financing your business will needWho leads the company
Being told to simultaneously be brief but include all these important details feels like conflicting information. You’re giving the reader a taste of why your business is worth financing. Touch on the major points — the more substantial information is fleshed out later in the plan.
Some instances do not require the amount of detail a full business plan goes into. A “lean” business plan is usually a one-pager and will contain the information from your executive summary and your company overview.
2. Introduce your company with the company overview
Your company overview breaks down why your business exists – and when you’re seeking financing, you need to present your business in a manner that inspires confidence.
By the time a reader finishes this section of a business plan for your ecommerce startup, they should understand the fundamental aspects of your company.
Your business is one of likely hundreds they’ll review this year. When you’re creating an ecommerce business plan for your startup or existing business, you are essentially forming a very detailed marketing document.
The company overview will be defining your company’s identity. This gives you room to be creative while also defining your mission, values, and vision. It gives you the chance to tell your company’s story and introduce the major players.
This section should provide an overview of your business in terms of:
Company and brand nameBrand mission, vision, and valuesBusiness history: How did your company start?Business structure: Are you a single proprietorship, partnership, corporation?Business model: Do you sell products directly to consumers? Will you get into affiliate marketing?Value proposition: What makes your company unique?
Company overview example
Company nameColleen’s Cookie Keepers
Company historyOur founder Colleen F. Snickerdoodle grew up making countless batches of cookies for her family, but would often have many left over. They’d often go stale or grow mold. Knowing there had to be a better way, she developed the initial prototype and launched Colleen’s Cookie Keepers…
Mission, vision, valuesColleen’s Cookie Keepers offers specialized containers that keep home baked cookies fresher for longer…Our vision is to have a world without stale cookies… Colleen’s Cookie Keepers promotes a culture of health and safety
Business structureColleen’s Cookie Keepers is a sole proprietorship led by Colleen F. Snickerdoodle. The company employs 14 staff…
Business modelAt this time we are a direct sales company that offers one product, but in the future we plan to introduce an affiliate rewards program, additional products, and gift cards.
Value propositionWe are the only science-proven cookie preservation device on the market, guaranteed to safeguard your cookie from the elements, mold, and even Uncle Randy.
GoalsMove 100,000 units by Q4 2023.Introduce 3 variants in 2024.
TeamCEO: Colleen F. SnickerdoodleBusiness Manager: Chip Florentine
The company overview is where you get to tell your company’s story. How did it start? What do you offer? Where did the idea come from? What pain point does your business solve? Tell stakeholders why your company is unique and marketable.
If you’re finding it difficult to come up with your mission, vision, and values – think about why you’re in business in the first place. Did you want to make things easier for a specific group of people? Were you sick of products that didn’t really achieve the results they promised so you built a better mousetrap?
You should cover what type of company your ecommerce business is (sole proprietorship, partnership, corporation, LLC, etc) as well as which business model you are operating.
When we say value proposition, we’re talking about why your business brings value. Why should people buy from you? What are you doing great or unique?
If you have not developed goals for your ecommerce business, it’s a great time to start. If you’re presenting a business plan to investors, partners, staff, or customers, it is very important that they know where you expect your company to go.
A note about goals
If you have not developed goals for your ecommerce business, it’s a great time to start. If you’re presenting a business plan to investors, partners, staff, or customers – it is very important that they know where you expect your company to go.You might be familiar with S.M.A.R.T. goals already. It’s a framework for goal development that stands for:
Specific: Saying you want to do better next year is a goal, but it’s vague. Spell out what you want to happen. Increase revenue? Expand capacity? By how much? Define the goal as clearly as possible.Measurable: Goals require tracking. Determine what data needs to be tracked and analyzed each quarter and set up spreadsheets to monitor your progress.Achievable: Understanding what your business can afford to re-invest, how much product is on hand, and factoring in availability/supply chain issues can help you develop an attainable goal. If you can’t stock 1,000 items, you won’t be able to sell 10,000.Relevant: Does your goal align with your company’s mission and purpose?Timebound: Goals are projects. Projects have deadlines. Setting deadlines gives you the boundaries in which you can measure if your goals are successful.
S.M.A.R.T Goal Examples
Increase sales by 10% between Q2 and Q3.Create and launch an ad campaign for Black Friday in one week.Decrease returns by 15% by Q4.
Finally you should outline who the key staff are that are involved in running your business.
The contents of your company overview is information you’ll likely be able to repurpose. When developing copy for your ecommerce site – your “About” page, for example – you should be able to pull from your company description.
3. Study opportunities by conducting a market analysis
When you’re running a brick and mortar store, a lot of your success will depend on location. It’s common to believe that ecommerce totally removes that barrier to success when anyone, virtually anywhere, can visit your online store.
Despite access, there’s still plenty to consider from an analytical standpoint. As such, it’s important to do some market research.
This section of your business plan should discuss:
Market size: How big is your potential market?Market share: What percent of the market have you captured?Industry trends and growth: Explore other trends that may arise over time and other markets you can branch out to. A SWOT analysis can identify strengths, weaknesses, opportunities, and threats.Competitive analysis: How do you fare compared to your competitors? What strategies are you going to adopt? Will you differentiate, segment, or offer competitive pricing?
Studying the market you’re breaking into allows you to determine if it is oversaturated and where you can fill gaps. Knowing the size of your potential customer base helps you to figure out inventory needs. It helps define your target audience, ensuring that you’re focusing your intent on customers that want to buy your products.
Analyzing the market is beneficial for ecommerce business planning, because trends develop and change fast. Looking into industry trends and analytics can help you identify new market opportunities, as well. Some great, free resources for market analysis can be found here.
A well-prepared business owner doesn’t stop at a market analysis. They also conduct research on their competitors. For ecommerce startups, you should also include the following when doing a competitor analysis:
Website metricsSocial media engagementCustomer servicePricingReviews
The better you understand the market you’re entering, the better prepared you are to run a successful ecommerce business.
4. Get into more detail about your products and services
You will mention your products and services in other parts of your ecommerce business plan, but you can dig into the particulars in this section.
A products and services section is crucial if you sell niche products or provide a unique service. If you sell a variety of items, you can include general descriptions of each here.
It’s a great idea to include images of your products so potential investors and stakeholders can visualize them. It’s also important to showcase how your product is new, different, or better than what is already available to consumers.
If you’re providing a service, include detailed descriptions of what each service entails, how the service is delivered, and what benefits the customers will experience. Since you do not have a tangible product, you must effectively make the case for why someone would hire you for this specific service.
Whether you’re manufacturing products yourself or reselling items, this is a great area to talk about sourcing components, who your vendors are, where products are manufactured, assembly operations (if that applies) and other product-specific logistics.
If you’re providing services, it is useful to note what credentials you possess that make you the ideal service provider.
Whatever you’re selling – or intend to sell in the near future – make sure you include everything you’re offering. If you’re a large retailer selling thousands of different items, it may be more helpful to list product categories.
5. Convince your target audience to buy with a marketing plan
Once you establish that you have a winning product to sell to a promising market, it’s time to determine how you’ll convince customers to buy. This could involve working with bloggers and influencers, sharing branded quips with market leaders on LinkedIn, or by signing up as a retailer with Amazon.
A marketing plan discusses your strategy to advertise your business and reach potential customers. Your plan will highly depend on the profile of your target market. Your ideal customer is the foundation of your marketing plan. Visualize what kind of person you want to buy your products or services to create a buyer persona.
Go back to your market research and use your findings to outline your ideal customers. You should also consider their specific behaviors — how do they spend their time and money?
For instance, a stay-at-home mom has different interests and spending habits compared to a college student.Come up with a set of general demographic characteristics such as:
You can use the Segmentation, Targeting, and Positioning (STP) approach to fine-tune your marketing plan. Our partners at HubSpot have a great resource on STP marketing. Anticipating who your customers are, where they live, what their spending habits are, and what their values are can help you make better marketing decisions.
Once you’ve determined what you’re selling and who your target audience is, you’ll need to decide how you want to market your products or services. Consider your budget, and determine what is feasible.
If you’re opting for paid campaigns, this is where you detail your strategy for advertising, email nurtures, commercials (if you’ve got that kind of budget), etc.
Organic marketing strategies include content creation like blogs, videos, and social media posts. When you’re using keywords strategically in your content, it’s easier for customers to find you in search engine results pages.
Talk about how you will utilize paid, organic, or both strategies to attract customers and increase sales, or whatever is relevant to your business goals.
Most ecommerce marketing strategies include information on what Neil Borden calls the 4P’s:
Price: How much do your products and services cost? Why did you price it that way?Product: What are the product’s features? Why should people buy it? What makes it different from competitors?Promotion: How are you getting the word out? Are you going to do it through social media advertising? If so, what platform?Place: What ecommerce platform will you use to sell your products?
Your investors may like your products, but even great products don’t always sell. Developing a solid marketing plan for your ecommerce business helps show financiers that you’re prepared on all fronts for success.
6. Share your ecommerce startup’s day-to-day with an operations plan
The operations plan details how you’ll run your online business. This section should demonstrate to potential investors that there are contingency plans in place if difficult situations arise. It should also define the specific nature of your ecommerce store, such as whether it involves dropshipping or print on demand.
Think about everything you need for your business to run. You may have an office or retail space. You may need various types of equipment. You’ll almost definitely need computers, internet access, bookkeeping software – the list is exhaustive. Outline what you need, the procedures operations will require, how packing and shipping will be handled, etc.
Your operations plan should cover every aspect of the supply chain:
Suppliers and service providers: Where are your products sourced or produced? What about any raw materials production requires?Production: Are products made, bought, or will they be dropshipped? Are they physical products or digital products? Facilities and equipment: Do you plan to have an office, physical retail space, or warehouse?Sales channels: Aside from your chosen ecommerce platform, will you also be selling on social media?Inventory: How much product will you have on hand? Where will it be stored?Delivery fulfillment: What is your delivery lead time? Will you offer both local and international shipping?
Over the past few years, more ecommerce retailers have experienced shortages due to supply chain issues. Knowing how to mitigate these issues ahead of time helps to prevent issues should anything arise.
If you’re using WooCommerce, there are built-in backorder options. There are also plenty of backorder management plugins that add even more options, making maintenance easy.
Use the operations section to detail contingency plans, productions operations, timelines, and anything else vital to your company’s day-to-day business operations.
7. Demonstrate profitability with a solid financial plan
The time or effort you invest won’t matter much to potential investors if you don’t have a demonstrable history of financial health. Their top consideration is a business’s financial feasibility.
Your financial plan is one of the most critical sections in your ecommerce business plan. With 82% of companies failing due to cash flow problems, potential investors want to know if a business will be worth their while. Digging into the financials will also help to determine how to fund initial startup costs.
No two businesses are identical, so the specifics vary depending on your particular business needs. That being said, most financial plans include:
Income statement: This includes revenue sources and income statements which show whether the business was profitable or not.Balance sheet: This provides a snapshot of your business’s equity, which is the difference between the assets and liabilities.Cash-flow statement: This is similar to the income statement but provides a real-time report of your revenue and expense flow. More income than expenses indicates a positive cash flow, while the opposite indicates a negative cash flow. Aim for the former to keep your business solvent.
Why is a financial plan important when you’re asking for funding? Investors and banks do not want to invest in a company that feels risky. If you demonstrate financial literacy, they’re more likely to trust you with their money. Detailing the fiscal health of your budget adds to the viability of your company.
Final thoughts: how to create a business plan for ecommerce
An ecommerce business plan facilitates your business’s success by providing direction for where it should go. Writing an effective plan for your online store does not have to be complicated.
If you spend time gathering information on your company, competitors, and future plans, then your business plan can be a roadmap to achieving your business goals. Then, after you’ve established your store, the next step is focusing on your ecommerce growth strategy.
You handle the business plan, and we’ll handle your website. Jumpstart your ecommerce company with Nexcess’s managed WooCommerce hosting packages.
This blog was originally published in July 2021. It has since been updated for accuracy and comprehensiveness.