If you're starting a new ecommerce site, you need a solid business plan to guide each step toward success. This document defines the scope of your company and describes what you plan to achieve, as well as how you'll get there.
A strong business plan establishes elements like the store's purpose, objectives, target market, and financial structure. It improves the likelihood of building a profitable ecommerce business and seeing a solid return on investment in this growing industry. To help put you on the right track, we've developed this detailed eight-step guide to writing a business plan as a new ecommerce entrepreneur.
{{text-box}}
Why Is It Important to Have a Business Plan for Ecommerce?
The business plan acts as a roadmap, giving direction to the decisions you make and creating a clear path to achieve your ecommerce objectives. Although that's the main purpose of this document, your business plan can also:
- Provide important information for lenders and investors if you need money to start your ecommerce company. These audiences review the business plan to determine whether you'll be financially stable.
- Clarify the ideas you have for your ecommerce business. Writing everything out in the form of a business plan can help you focus on the most important goals and action items. You'll also avoid putting money and energy into aspects of the business that don't support success or fall outside your intended scope.
- Drive the research you need to succeed in your segment of the ecommerce market. If you haven't already explored the competitive landscape or developed a customer persona, it's time to take those essential steps.
- Connect you with potential partners who can help your business succeed. Working with successful companies in related areas of ecommerce can attract new audiences. You can also learn about business strategy, vision, marketing, and much more from a smart collaboration. Many possible partners will want to see a strong plan before they commit.
- Attract talented team members if you need to expand your operation. You can use the business plan to showcase your new brand so you can hire the right people even before you have an online presence.
Investing the time to develop this document has big benefits for your new ecommerce business.
The Elements of an Ecommerce Business Plan
Executive Summary
This section introduces your plan with an overview of important points. The executive summary should briefly cover the industry for your ecommerce business, the purpose of the new business, the goals you hope to achieve in the first six to 12 months, details about the competitive landscape, and current financial standing. It's the first place people look for a quick overview of the overall plan.
Business Description
Here, you'll describe the overarching principles behind your business, like mission, vision, and values. You may also want to provide some company history if you're not writing a plan for a brand-new business. This section emphasizes the purpose of your business by explaining why you're starting an ecommerce company and what you hope to achieve.
Organizational Structure
This part of the plan indicates the legal structure of your business, whether you plan to run your ecommerce company as a corporation, LLC, partnership, or sole proprietorship. You should include the name and title of each owner and executive along with a brief bio.
Product and Service Description
This section details the products or services you'll offer. It provides a pricing model with information about competitor costs. You should also express the unique value proposition of your ecommerce business - in other words, explain why someone would buy from your brand rather than an established alternative.
Market Research
Your plan should document details about your target market and competitors in that niche. You'll estimate the size of your audience, describe the demographics of your ideal customer, analyze your close competitors, and explore opportunities and challenges in the market. Most importantly, you'll explain what sets your company apart in the competitive ecommerce industry.
Financial Projections
You'll need to provide information about how your business will succeed financially. As a new business owner, this section requires projection based on research about your expenses, competitor pricing, sales goals, and other factors. If you've been in business for a bit before you write your plan, you should also include balance sheets, profit and loss statements, and cash flow statements for at least the past two years.
How to Write an Ecommerce Business Plan in 8 Steps
The process of writing your business plan is almost as important as the final product. Along the way, you'll gather the knowledge and resources you need to succeed in ecommerce. At the end, you'll ideally have a clear path toward a thriving business with targeted goals and action items to get you there. Start the journey with these eight key steps.
1. Write the Executive Summary
In this section, you'll gather the key information about your ecommerce business. Your executive summary should provide:
- The purpose of your business, such as the market gap it fills or the problem it solves for your target audience
- General goals for the business in one year, five years and 10 years
- Information about your target audience and why they'll want to buy from your online store
- Market analysis of your industry within ecommerce, including a snapshot of opportunities, threats, and trends that could affect your new company's trajectory
- A history of your business if it already exists as a physical location, including revenue, suppliers and other applicable information
- Details about your competitors, including factors that set your site apart from the crowd
- Objectives over the next 12 months with dates for key milestones
- Financial projections
Although this sounds like a lot of information, remember that you're just summarizing each of these items. You'll go into more detail later in the business plan. Ideally, the executive summary should only be two to three pages long.
2. Create a Detailed Description of Your Business
In this section, you'll familiarize readers with the big picture of your business. The description should include information about your ecommerce model, your short-term and long-term objectives, your industry, your unique value proposition and your team. The reader should understand why your business exists and what you stand for as a brand.
3. Conduct a Market Analysis
If you haven't already examined your target market, you'll need to take a close look at your intended audience and your competitors to see where you stand. A comprehensive market analysis should cover:
- Demographics of your target audience
- Information about your competitors, including their strengths, weaknesses and distinguishing qualities
- Opportunities for you to enter the market, such as a service gap or unfilled need
This exercise helps determine where your business can stand out from competitors. Consider these three common ways to distinguish your ecommerce brand:
- Segmenting your audience to target a very small group. Once you gain a foothold in this niche, you can begin to expand into other market segments.
- Providing something your competitors can't match. Your product or service has features and benefits that fill a gap in the market.
- Offering better prices for similar products and services. You can improve affordability without sacrificing quality.
You can define the unique value proposition of your business based on one of these competitive models.
4. Get To Know Your Audience
Now that you've taken a broad overview at the market, it's time to explore the habits, activities, preferences, and online behavior of your target audience. Developing a persona for your ideal customer helps you understand how to market your brand to that individual. Consider features and attributes such as:
- Gender
- Age
- Geographic location
- Buying patterns
- Education level
- Occupation
- Income
- Relationship status
- Values
- Interests
- Hobbies
- Political views
- Favorite social media sites
- Internet browsing patterns
You should also be able to describe why your product or service appeals to your customer persona. Know the needs you fill and problems you solve from an audience perspective. If you plan to serve more than one market, you can create separate customer segments to speak directly to each group.
5. Put Together a Marketing Plan
Developing your audience persona provides insight into where your target audience spends time online. Your ecommerce brand needs to show up in the same spaces, from social feeds to SMS inboxes, to build strong recognition.
Some of the most important ways to market your new ecommerce business include:
- Social media advertising through TikTok, YouTube, Instagram, and other platforms
- Affiliate marketing, which connects customers with your business through links on other websites
- Pay-per-click (PPC) ads through Google
- Influencer marketing through partners who promote your product on social media
- Email promotions such as sales emails and new product announcements
- Search engine optimization (SEO) to help ensure your brand shows up in search results
- Content marketing including white papers, blogs, guides, FAQs, and other publications that position your brand as an industry expert
- Social media engagement by posting on your audience's go-to networks and apps
6. Consider Operations and Logistics
You'll also need to map out the operational process of your ecommerce business. You have to identify suppliers and vendors and determine how you'll get their products to your buyers. Important factors to cover in this area include:
- Whether you'll source raw materials for production, work with a manufacturer to create original items, resell wholesale products, or buy from third-party supplies and distributors
- Details about your selected vendors, including payment terms such as minimum order value
- Whether you'll store inventory or use a dropshipping model to fill orders
- The cost of necessary equipment, workspace, technology and other assets
- Your overall operating budget including expenses and projected sales
- Shipping logistics such as whether you'll pack and ship independently or use a third party, your service area, and other considerations
7. Set Out SMART Goals
Your business objectives should be specific, measurable, achievable, relevant, and time-bound (SMART for short). Using this framework helps you create realistic action steps that produce progress toward larger goals.
Let's look at a sample SMART goal for your business plan. Instead of simply stating "reach more customers," break it down by looking at each initial. You could write something like "I want the website to have 250 unique visitors during the first month in business and increase traffic by 25% per month for the first year."
Establishing specifics allows you to track each achievement and adjust goals as needed. You can set milestones to illustrate progress toward success.
8. Provide Financial Projections
Finally, you'll add financial statements to show how your business will succeed over the first months and years. Since you're starting a brand-new ecommerce company, this section of your business plan should include:
- Details about the expected start-up and overhead costs of running your business, categorized as fixed and variable expenses
- Information about how you plan to fund these initial expenses
- Monthly or quarterly revenue projections for the first 12 to 24 months, or at least up to the break-even point where your company will start to make money
- Balance sheets and cash flow statements
- The estimated cost of acquiring new customers
Even if you don't need funding right away, this section helps you determine whether your business is financially viable. If the numbers don't add up, you'll be able to make judgments about where to cut costs and decide how to drive more revenue.
Common Business Plan Mistakes and How to Avoid Them
Understanding common business plan mistakes before you start writing saves time while ensuring a quality end product. You should avoid:
- Overestimating the profits or underestimating the cost of running your business. A conservative approach supports sustainability and growth.
- Paying too little attention to the competitive landscape. You need deep knowledge about your competitors and your target market to attract an audience in ecommerce.
- Writing too much. Stick to the relevant facts rather than fleshing out your plan with unnecessary details.
- Omitting the executive summary. Lenders and investors expect a quick way to evaluate your ecommerce ideas before reading the entire business plan.
- Failing to focus on how you can help customers. If you don't have a unique value proposition that prioritizes user needs, your business plan needs more work.
Skipping the business plan entirely is the biggest mistake you can make. If you don't have this road map to follow, you could invest effort and money into programs and services that don't support your ecommerce objectives.
The Benefits of Working with Pay.com as Your Payment Service Provider
You can partner with Pay.com to accept many different payment methods, including digital wallets, credit and debit cards, electronic transfers, and more. Ecommerce customers expect to see familiar ways to pay, so offering lots of options reduces cart abandonment rates.
We also create a seamless checkout process, so you won't lose buyers because of a slow, buggy buying experience. It's even quick and easy for international customers to shop on your site with our smooth global payment processing.
Payment security is a primary concern for ecommerce companies, but you don't have to handle it alone. Pay.com complies with Level 1 of PCI DSS, so you'll benefit from tokenization and other top-tier security tech when you work with us. We also use 3D Secure 2.0 for multi-factor authentication, which prevents fraudulent transactions by requesting added identification when needed.
It's easy to set up your customiz-ed checkout page with our no-code templates. You can also integrate Pay.com in your existing site with our developer-friendly API. Our solutions are designed to work for your new ecommerce company now and as your business grows.
Click here to get started with Pay.com now!
The Bottom Line
Opening an ecommerce shop connects you with more than 2 billion consumers who shop online. To succeed in such an expansive market, you need a business plan to guide choices that support your goals.
Selecting a payment services provider is one of the most important decisions you'll make as you start your online business. Pay.com provides the platform you need to accept multiple payment methods, including credit cards, debit cards, electronic transfers, digital wallets and more. We also take care of security through PCI DSS compliance so you don't have to worry about meeting the requirements on your own.
