Ecommerce Business Plan
If you're serious about the success of your online business,
then you need to find ways to give yourself every advantage
you can over your competition. One strategy that I can almost
GUARANTEE your competitors haven't tried is building customized
blueprints that outline exactly how their businesses will
The process of writing the ecommerce business plan - "battle plan" - for your company can
be a crucial step in getting your profits to where you want
them to be.
If you're thinking, "But I'm just a one-person business
working part-time out of my home... I don't need an ecommerce business
plan," think again! Unless you want your business to stay
small and you want to keep your day job, you desperately
need an ecommerce business plan. It's one of the best ways to motivate
yourself to DRIVE YOUR BUSINESS TO THE NEXT LEVEL.
And if your business is still just an idea in your head, and
you've been wondering for months how to get started, here's
your answer: Start planning! Clear your schedule this
weekend, print off this article, and get down to business!
What's Your Purpose?
An ecommerce business plan can serve a couple of main purposes: In the
world of banking and venture capital, ecommerce business plans play a
huge role for people who are trying to secure start-up
funding from banks or investors. The better the business
plan, the better the chances of landing that big initial
For smaller companies, who (luckily) do not need to rely on
outside funding to get started, the ecommerce business plan serves more
as a company blueprint. It identifies the company's purpose,
products, market, and goals, as well as the steps the
company plans to take to reach those goals.
So before you start writing, you'll need to decide what
purpose your ecommerce business plan is going to serve. If you're
writing a formal business plan to secure financing, you'll
need to be far more concerned about detail and format than
if you're just preparing one for your own personal use.
No matter which approach you're taking, though, you need to
know that there are 7 main sections that should be included
in just about every ecommerce business plan.
Section 1: The Executive Summary
The executive summary is basically your entire business plan
condensed down into a page or two (at the most). If and when
you show your business plan to others, this is the only part
that 75% of them will actually read. For this reason, you
need to MAKE THIS SECTION AS CLEAR, CONCISE, AND EXCITING as
Your executive summary should contain a few key items.
You'll want to start out with a brief description of exactly
what your business does, who your market is, and what
opportunity you've identified as the inspiration for your
business. Explain what sets your company apart from others
in the same field.
You'll also need to discuss financial information such as
projected revenues and, if you'll be using this ecommerce business
plan to secure financing, how much money you need and what
you will be using it for. Don't go into too much financial
detail in this section. You'll just want to include the most
Also, be sure to MENTION YOUR COMPANY'S ACHIEVEMENTS,
including all of the milestones reached to date. Even if all
you've done so far is register a domain name, put together a
web site, or file a patent application, be sure to include
this information in this section of your ecommerce business plan.
Section 2: Description of Business
This section will contain an in-depth description of your
company, including what products or services you sell, who
your customers are, what your operating structure is (Are
you a wholesaler? A reseller? A manufacturer?), the legal
details of your company (Is it a corporation? A partnership?
A sole proprietorship?), and your distribution methods.
This is the section of your ecommerce business plan where you will
identify what makes your company unique and where you'll
address the following questions:
- What are you offering that others aren't?
- What SETS YOU APART from your competitors?
- Why will people choose to do business with you instead
of other players in the same marketplace?
If you've already been in business for a while, you will also
want to use this section to talk about the history of the
company. Talk about what inspired you to start the company
and how fast it is growing. Address the more concrete
details as well, such as how much equipment you own or
lease and where your office is located.
Section 3: Market Strategies
Think of this section as your marketing plan. This is where
you'll want to go into detail regarding who your target
market is and HOW YOU INTEND TO SELL TO THEM. This section
will contain information about how big your audience is, how
fast it is growing, and how large you expect your market
share to be.
Some great sites where you can start this research are:
CyberAtlas -- http://cyberatlas.internet.com
Nua Internet Surveys -- http://www.nua.ie/surveys
MarketResearch.com -- http://www.marketresearch.com
In this section, you will also talk about how you intend to
market your product or service to your target audience. Will
you focus on pay-per-click search engine traffic? Banner
advertising? E-zine sponsorships? How much do you expect to
spend on advertising, and what sort of return do you expect
from those advertising dollars?
Be sure to think carefully about which marketing strategies
to include here. Don't just list off every single advertising
technique you can think of. You need to realistically evaluate
all the possibilities, and then focus on the two or three
marketing techniques that will produce the biggest return on
If you think this sounds like a lot of work just for an
ecommerce business plan, think again! This is the kind of legwork and
research you should be doing anyway! And once you've figured
out how much your marketing and advertising is going to
cost, you can put together a schedule of how much you can
afford to spend on various campaigns each month.
Section 4: Competitive Analysis
The competitive analysis section of your ecommerce business plan is
where you explain, in detail, the strengths and weaknesses
of your main competitors. This will allow you to realistically
determine where you can position your business in the market
in relation to your competition.
Make sure to do an honest appraisal of who your competition
is. If your site is selling board games, your main
competition is NOT Toys 'R' Us.
Instead, your biggest competitors are other niche sites that
focus on selling board games. These are the sites that you can
realistically expect to compete with for customers interested
in buying your products online.
Nevertheless, you should still pay attention to the "major
players" in your competitive analysis. Take a look at how
they are marketing to board game buyers, and what areas they
are lacking in.
Based on your research, you should be able to capitalize on
the weaknesses of others in your market space and SNATCH
CUSTOMERS AWAY FROM THEM by positioning your offer to meet
a need that everyone else is neglecting.
A great tool for doing competitive analysis is
http://www.alexa.com, which allows you to discover how much
traffic your competitors are getting in relation to your
site and see who they are linking to. Compare your own traffic
ranking to your competitors' traffic rankings in Alexa every
month or so.
This way, you'll be able to GAUGE YOUR PROGRESS AGAINST YOUR
COMPETITION. Spend some time getting familiar with this site --
it will become an invaluable resource tool for you!
Section 5: Development Plan and/or Operational Strategy
If your company is still in the developmental stage (with no
product and/or no revenues), this is the section where you
will explain how you are going to bring your company into
the marketplace. The best way to do this is to write out a
development timeline with the projected completion dates for
various milestones your company will need to reach before it
can start making sales.
This is the section where YOU MUST PLAN TO PROFIT! Failing
to do so is one of the most common mistakes made by
businesses. All too often, people just set up shop without
ever really planning exactly HOW they are going to become
If your business is already up and running, but is not
currently generating a profit (if your revenues are not
enough to cover your operating expenses), then this is where
you will need to identify how you will make up the shortfall
until you become profitable. For many home-based businesses,
the difference is drawn from the owner's savings or income
from another job.
Regardless of what stage you're at, you should still include
a table of projected milestones for your business in this
section. Estimate the month and year of the important
milestones that you plan to achieve over the next 1 to 2
years. This not only looks great, it also reminds you of
your goals every time you refer back to your ecommerce business plan.
Section 6: Management
This section is especially important if you are going
to be using your ecommerce business plan to secure funding. I can
guarantee that after a prospective investor reads through
your Executive Summary, they will flip directly to your
Management section before reading anything else. They'll
want to get a clear idea of "who" your company is -- after
all, a business idea is only as good as the people behind
So this is where you introduce your management team or, if
you are the only person involved in your business, explain
why you are qualified to be running the company. Focus on
your STRENGTHS AND ACHIEVEMENTS from your previous ventures
or jobs, and explain in detail how those qualities transfer
to your business.
Make sure to go into detail about what makes you uniquely
qualified to operate this sort of business. What special
skills do you bring to the company? How do your areas of
expertise give you a distinct advantage over people
operating similar companies?
If you have accountants, lawyers, or consultants advising
you in an official (paid) capacity, you can mention their
names, duties, and qualifications here as well. However, you
need to be sure to get their permission before putting their
names in your business plan.
Section 7: Financials
If you've had a chance to look through a few ecommerce business plans
before, you'll have noticed that the last half of these
documents are filled with balance sheets, earnings
projections, capital requirements, depreciation estimates,
and dozens of other highly detailed financial statements.
Don't let all these numbers put you off! If you aren't going
to be using your ecommerce business plan to solicit capital from
outside sources, you won't need 90% of this stuff. Instead,
focus on your monthly income and monthly expenses. The best
way to do this is to put together a simple 12-month cash
HERE'S HOW TO DO IT:
First, estimate how much your business will earn on a
monthly basis. Include all your sales, cash you'll be
drawing from your savings, or money your business has been
loaned. This is your "Total Cash In."
Next, determine what your monthly expenses will be. This
should include things like advertising costs, office
expenses like phone bills and stationery, the cost of your
inventory, equipment purchases, loan repayments, as well as
whatever cash you'll be drawing out of the business for your
personal living expenses. This will be your "Total Cash
Now, simply subtract your "Total Cash Out" from your "Total
Cash In" to get your monthly "Net Cash Flow." If you see
that your Net Cash Flow is a negative number, you're losing
If that number stays negative for the entire 12 months, you're
going to need to re-evaluate your ecommerce business plan... and figure
out a way to increase sales or decrease expenses!
IMPORTANT NOTE: You can see why it is so important to be
honest with yourself when writing your ecommerce business plan! If you
exaggerate the sales you think you'll bring in, your whole
business model will be damaged when those sales don't
materialize. So much for that hefty advertising budget you
planned, as well as the generous salary you hoped to pay
Do-It-Yourself vs. Hiring Out
If you are going to be using your ecommerce business plan as a tool to
attract capital from banks or investors, then your business
plan will need to be MUCH more detailed than if you are
preparing it for personal use. If you need some extra help
preparing a highly detailed plan, you have a few choices.
1) Hire a professional ecommerce business plan consultant to work
2) Hire an accountant to help you prepare the "Financials"
section of your business plan, or
3) Purchase a full-featured ecommerce business plan software program.
If you do decide to have a professional write your business
plan for you, be aware that the costs vary tremendously! A
basic 15-page business plan could cost you anywhere between
$500 and $5,000, depending on who you hire.
(A detailed business plan, which can often exceed 100 pages,
can easily cost as much as $25,000 -- but these are for
companies looking for millions of dollars of start-up
To locate someone to write your ecommerce business plan for you, just
type "business plans" into any search engine -- you'll find
tons of companies that specialize in this sort of thing.
You can also have professional writers bid on your ecommerce business
plan project at http://www.elance.com. The going rate for a
business plan here seems to be between $750 and $1,500.
There are quite a few ecommerce business plan software programs out
there. One of the best seems to be Business Plan Pro 2003,
available at http://www.bplans.com for $99.95. Other options
are PlanWrite, located at http://www.brs-inc.com/pwrite.html
for $129.95 and BizPlan Builder, priced at $99.99, at
If you are running a one- or two-person company out of your
home or small office, you probably won't need to hire a
professional to work on your ecommerce business plan. This option is
really more for people who will be using their business
plans to attract investors or secure bank loans. Most small
business owners should be able to write their business plans
And unless you are going to be trying to land big investors,
I really don't recommend hiring a professional to write your
business plan for you. You'll LEARN SO MUCH ABOUT YOUR
BUSINESS and your competitors by doing it yourself that it
would be a shame to let someone else go through the process
Best ecommerce Business Plan Resources
I've hand-picked a few of my FAVORITE ECOMMERCE BUSINESS PLAN
RESOURCES to share with those readers who might be looking
for additional information:
- THE UNITED STATES SMALL BUSINESS ADMINISTRATION (SBA)
has an excellent resource online that provides a tutorial
to help you write your best business plan. Their site also
contains all the information you'll need if you plan on
trying to get a SBA loan or grant. Check them out at:
- THE YAHOO! SMALL BUSINESS CENTER
has a good section about business plans at:
- THE ANNUAL MOOT CORP COMPETITION challenges top MBAs from
around the world to submit their ecommerce business plans to be
evaluated by a panel of investors. The winning entries from
the past few years are online at:
- PALO ALTO SOFTWARE has developed a program called Business
Plan Pro 2003 (priced at $99.95) that will walk you through
the creation of your own business plan. But even if you
aren't interested in their software, check out their site at
http://www.bplans.com for a huge archive of sample best business
plans that you can read for no charge.
You can also find a wealth of information about business plans
at your local library or bookstore. The Business section will
have tons of books explaining how to write business plans, as
well as books with hundreds of sample ecommerce business plans for you to
Final Ecommerce Business Plan Thoughts
Once you've written your ecommerce business plan, you'll be amazed at
how often you refer to it. It will become your "battle
plan," as well as the tool you'll use to measure HOW CLOSE
YOU ARE TO MEETING YOUR GOALS -- or by how much you're
You can even show your business plan to prospective joint
venture partners, potential employees, or advertisers.
Believe me, a professional-looking business plan will give
you a TON of credibility simply because most businesses
never take the time to prepare one.
If you're thinking about starting a business, but you're not
quite sure how, writing out a ecommerce business plan can be a great
way to get things moving. It's also a great way to evaluate
how good that idea of yours really is.
For many people, the process of writing a business plan shows
them that their business can MAKE EVEN MORE MONEY than they
originally thought! Now that's motivation!
If you're already running an online business, the process of
writing a business plan can help you decide exactly what
aspects of your business are succeeding and which areas
could be improved upon. When you do an in-depth analysis of
your marketplace, your customers, and your competitors,
you'll be amazed by how much you can learn!
And be sure to make your ecommerce business plan a perpetual "work in
progress." Go back and review it every three months, and
make changes where necessary. If your sales are twice what
you expected, go back and update the figures in your
business plan. This ensures that your map to profitability
is always right up to date.
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