The eCommerce industry is booming right now as more and more people shop online. Shopping online used to be a convenience and a luxury. Now, it’s a necessity. 

The future of eCommerce is incredibly bright. But, starting an eCommerce business is not easy and demands many steps and decisions to come together at the right time. You need to write a solid eCommerce business plan which helps bring your ideas and thoughts together. With it, you can easily set your eCommerce strategy with the lowest chances of failure. But before starting everything, you should view more this tutorial about [Ecommerce Roadmap] How To Start An Ecommerce Business (A Step-By-Step Guide)

What is a business plan?

A business plan is a guide for how a company will achieve its goals. For everyone who wants to start a business, crafting a business plan is a vital first step. Having these concrete milestones will help track the business's success.

A business plan helps companies maintain focus on a predefined set of goals. It also helps company owners present their businesses to lenders and investors.

First, define your business and then describe where you want to take your business and how you will get there.

There are five major factors to consider when building your eCommerce business plan.

Your Business Model: What type of eCommerce business is right for you?

Selling and shipping products is the first thing that pops into most people’s minds when you say eCommerce. But there are many eCommerce businesses that do far more than that: from stocked goods and drop-ship items to made-on-order products and digital downloads. You have plenty of selling options in an eCommerce business. Deciding what to sell is the first step in defining your business and building your eCommerce business plan.

Your Operation: How will you deliver products to your customers?

The type of products you sell dictates how they are delivered to your buyers. If you sell physical goods, you can stock and ship items yourself or outsource this to a fulfillment company. You even can minimize your costs and sell drop-ship goods exclusively. While sellers of digital products don’t have these concerns. They need to think about how to deliver downloads or provide access to online products. Some great delivery solutions for you: Advance delivery date & time for virtuemart, Magento Delivery Date Extension

Your Sales Channels: How will you sell your products online?

Once you decide what to sell, and how to deliver products to customers, it’s time to decide on how the eCommerce businesses sell their products. Online stores, eCommerce-enabled blogs, seller marketplaces, online auctions, and social media sites?

Your Marketing: How will you promote your eCommerce business?

After you choose your business model, you also need to let your target market know about all this. ECommerce promotion of marketing is a holistic practice that is done on and around your store website to increase its awareness & reach within your target buyers online. The purpose of eCommerce promotion is to build brand awareness, drive curiosity of potential buyers, increase product sales with new or old customers. 

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Your Income: Can you price your products profitably?

To be profitable in your eCommerce venture, you must budget any product, operating, and marketing costs into your business plan to determine a profitable pricing strategy for your products. Pricing your products is one of the cornerstone decisions you’ll make, because it impacts almost every aspect of your business. Your pricing is a deciding factor in everything from your cash flow, to your profit margins, to which expenses you can afford to cover.

Now after you answer all the above questions, you should have a picture of the eCommerce business you want to build, and how to craft a profitable pricing eCommerce strategy, it’s time to put an actionable plan in place.

Why Do I Need a Business Plan?

Your eCommerce business plan is the most important strategic document you’ll ever produce for your company. Writing it helps you clarify your goals and pinpoint problems in advance.  Taking the time to write a business plan might seem like a lot of work but it can save you a lot of time and money in the long run by better preparing you for potential challenges and opportunities that you’ll face.

Gain a deeper understanding of your business

Writing an eCommerce business plan can help you get to know your business better. You will probably think of things you hadn’t thought of before and you will clarify the good ideas you already have. The goal of this section is to identify the competitive advantage of your eCommerce businesses so that you can make use of it in the future.

Many businesses begin with a concise list on a small piece of paper and expand their plans from there. If you run into subjects you don’t know much about (tax questions, supply chain issues, warehousing needs, employee benefits options, and so forth), put them on a separate list and research them later.

At this point, it will be very helpful if you do a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) which allows you to carry out an external and internal assessment of both positive and negative points of your project.

●       Threats: These represent what could happen or what already exists in the market that may be a trouble for the project.

●       Opportunities: These could be change of legislation or any other favorable situation, whatever the reason may be.

These are factors that don’t depend on the business itself, but rather that the business either exploits them or foresees the risks.

The internal aspects:

●       Weaknesses: These are your weakest points.

●       Strengths: What are you good at and how does that give you an advantage over competitors?

Remember that your eCommerce business plan should show that your strengths outweigh the weaknesses. And at the same time, they are strong enough to combat the threats and exploit the opportunities.

You’ll know how to allocate your resources

A professional eCommerce business plan delineates how various parts of your business function together, and it differentiates the titles of your directors, staff, and their various duties. Additionally, a properly prepared eCommerce business plan can also help you access loans and other resources your business might require.

Let’s look at the three main resource categories: financial, physical, and human.

Financial Resources. Financial resources is the money you have available for spending. It commonly used in business include venture capital, cash in the bank and assets your company can convert to cash easily. Most SMBs owners start with relatively limited budgets and build capital as they progress.

Physical Resources. Think about the type of tech you’ll need for your ecommerce business, such as a computer, a decent camera to take product photos, a printer, and shipping supplies... If you plan to manufacture your own products, you’ll need raw materials or ingredients. And don’t forget about the big items you might need, like business premises, vehicles, and machinery.

Human Resources. Some SMBs prefer to work alone, while others like partnerships. Partnerships have several advantages: you can pool ideas and financial or physical resources, for example. Human resources also include employees, subcontractors you rely on to perform essential tasks (couriers, freelancers, etc), and people in your supply chain.

When you can see what your potential future is going to be, you can make adjustments to your journey so that you can avoid the obstacles that get in your way on the path toward success.

It’s A Map To Your Business Goals

A good eCommerce business plan will help you to navigate the jungles of the business world. With it, you can check up on your business objectives, and check whether you are still on course to meet your predetermined objectives. It is kind of your plan for success. In it, you will describe your expansion strategies, your sales goals, and your personal ambitions. You will come up with milestones and identify key performance indicators.

Evaluate what your competitors are doing

6 Tips For Successful Market Research that you should know. A competitor is someone who targets the same market segments as you with a similar product. Generally, competitors are divided into three types:

Direct competition. These businesses offer the same products and services to the same clients within the same territory as your business.

Secondary or indirect competition. Businesses that offer slightly different products and services or target a different clientele within the same territory.

Substitute competition. Businesses that offer different products and services to the same clients in the same territory.

A competitive analysis is a strategy where you identify major competitors and research their products, sales, and marketing strategies. By doing this, you can create solid eCommerce strategies that improve upon your competitor's. Knowing who your competitors are, and what they are offering, can help you to make your products, services and marketing stand out.

To better understand your customer

In order to make a professional eCommerce business plan, you should know who your customers are by doing customer analysis. Customer analysis is a method of using the data you have about your customers  (from their demographics to their purchasing behavior) to understand more about their habits, preferences, needs and decision-making.

The goal of customer analysis is to get to the root of what your customers are looking for when they shop for the products you sell and how you can position your business to better meet those needs, from your marketing campaigns to your online or in-store shopping experience to what happens post-purchase.

An in-depth customer analysis is essential to an effective eCommerce business plan and to a successful business. Understanding your customers will not only allow you to create better products and services for them, but will allow you to more cost-effectively reach them via advertising and promotions.

Customer analysis gives you insight into how your customers interact with your company, what drives their purchasing decisions and what keeps them coming back. It also helps you identify your target customers, anticipate their purchasing needs, and then use both qualitative and quantitative data to ensure that your product satisfies those needs which leads to happier customers who are likely to buy from you again.

Reduce the risk of pursuing the wrong opportunity and uncover new opportunities

The process of creating the eCommerce business plan helps to minimize opportunity costs. ECommerce is now a multi-trillion dollar industry, globally, and growing more rapidly than ever. Opportunities are everywhere. But very few notice or take advantage of them. The key to spot your next opportunity lies within your ability to profoundly grasp and acquaint yourself with the current eCommerce climate and recognize the true market potential.

Firstly, do your due diligence. Investigate, research and acquire as much information about the market. Take a hard look at the market statistics such as market size, market worth, major players, growth percentages, projections.

Secondly, find out more about competitors, what they are offering or lacking in, to open yourself to more possibilities.

Thirdly, consider going to networking events and connecting with key people and industry experts in the industry to help understand firsthand.

After collecting all that information and spotting opportunities for your eCommerce business,  writing the eCommerce business plan helps you assess the attractiveness of those opportunities. So you could make the best decisions.

Make confident strategic decisions

Often the biggest decisions you will make for your business are amidst volatile periods of growth, decline, or even external crises. This requires you to make highly consequential decisions far more quickly than you may like. Without up-to-date planning and forecast information, these decisions may be less certain or strategic than they need to be.

By having a written eCommerce business plan that you’re regularly reviewing, you can make confident decisions. You will have all the information necessary to know when you can hire new employees, launch a new product line or make a major purchase. At the same time, you can also plan ahead in case a decision doesn’t work out as expected, minimizing your potential risk.

An eCommerce business plan is more than a document. It’s a guide that helps you outline and achieve your goals. It’s also a management tool that allows you to analyze results, make strategic decisions, and showcase how your business will operate, and grow. In short, if you’re thinking of starting a business or plan to pitch your business to investors, writing an eCommerce business plan can improve your chances of success.

Who Needs a Business Plan?

Everyone! Every single business must have a business plan if they want to be successful. Your eCommerce business is no exception. But let’s look at how a business plan will help in all areas of an eCommerce business.

Startups: Setting clear, concise goals with an actionable plan is one of the most important steps to starting a new business.

Fundraising: A business plan serves as an effective tool for pitching to potential investors.

Growth: Small businesses that are looking to grow to the next level must have a business plan since it’s the only way to ensure that actionable steps are being taken toward growth.

How to Write an E-Commerce Business Plan?

Few things are more intimidating than a blank page. Starting your eCommerce business plan with a structured outline and key details about what you will include in each section is the best first step you can take. There are six basic sections your business plan should include:

Problem And Solution

Two important questions you have to answer in your eCommerce business plan are:

  1. What is your customer problem?
  2. How does your business solve it?

These questions make up something called the "problem statement". A problem statement is a communication tool and it guides your actions. When you write the Customer Problem Statement, you will have to think about your customer’s thoughts and feelings, which will increase your likelihood of creating something valuable for your customers. It also sets your goals for work and ties all of the actions within your organization together.

To create a Customer Problem Statement, be sure to describe the customer’s current conditions and situation. Consider how they feel, how they’re being impacted, and any other important details about their thoughts or feelings. Below are some steps to find your customer problem and solution for that.

Step One: Define your target customer

Different Types Of Customers And How To Approach A Customer? Without customers to buy your products, you’re not going to make any money. The better you understand who will buy your products or services and why, the easier it will be to describe the problem your business needs to solve.

To know your target customers, we recommend working out a customer persona, which is a very specific, detailed description of the customer you're most likely to attract. You will want to understand this person in detail, including their average age and income, where they're located, and why they need what you sell. 

Many eCommerce businesses use customer personas to help them make the right choices as they start, grow, and advertise their business. Being able to think and behave like your customers is the key to being able to communicate with them effectively.

Creating a persona doesn’t have to be hard and it will lead to a better product, better marketing, and a better business. In other words, it is a small investment that can pay off big time. Some businesses will have more than one customer persona, but it's best to keep to a small number. There is no business where "everyone" is a target customer, and being too general won't help you figure out what problem you are solving.

Taking the time to create a detailed customer persona will accelerate your marketing, sales, and product development efforts. The time you take to create a solid persona will pay off many times over in the growth of your business, so make the time and see how it affects your business development

Step Two: Define the customer online purchasing behavior

Customers always take the center influencing business strategies. All businesses need to focus on the factors that influence customer experience. No exceptions, this is also an important issue to your eCommerce businesses. In fact, for an eCommerce business, enhancing the customer experience becomes the top priority.

After doing customer personas, you will have the tools to understand why customers buy your products or services. In order to do that, you need to understand the factors that influence your customer online  purchase behaviour:

Convenience. Your website or mobile app interface play a crucial role influencing the buying prospects of your customers. Make sure your site loads quickly, whether on a computer or a mobile device. Focus on navigation and don’t forget about site search. The more convenience a customer finds your page or app, the better are the chances of buying your products or services. 10 Proven Techniques To Improve Customer Experience (CX)

Quality of Product Description. People feel compelled to buy a product when they can clearly see how it fulfils a need or solves a problem they have. Your product description needs to give them all that, explaining the item’s value proposition in a way that is simple and easy to understand, and that appeals strongly both to the heart and the head. Plus, do not underestimate the importance of high quality product images. Start thinking about how the product descriptions and product images should play together right from when you set up your site. Some products benefit from more images, while others need detailed descriptions of specs.

Shipping Costs. Shipping costs are a key aspect of online shopping for consumers because they are an unavoidable part of online shopping. The cost is added onto the final item price and can significantly impact how customers perceive. ECommerce businesses that offer flat-rate shipping or free shipping may often do better in sales than others.

Return Policy. The return policy is the most important thing that gives customers the ability to return an unwanted item or purchase that doesn’t meet their expectations or needs. There is nothing worse than receiving a product and feeling like their money was wasted. Without a proper return policy, a customer might have a hard time making a purchase decision because they are forced to put too much faith into your eCommerce business. As a result, a great return experience helps to increase sales and your customer loyalty.

Payment. Customer expectations for convenience payment are incredibly high when it comes to online shopping. You need to make sure their checkouts are not only secure but look and feel secure. Why would someone risk putting their card details into a site that doesn’t look secure? Errors in the checkout will also lead to abandonment; slow payment processing and lack of payment options are big considerations for eCommerce businesses.

Customer Reviews. This is a really important factor affecting your customers' buying decisions. Online reviews can reveal a lot about your online store. That is why your new customers will likely consider if they should purchase your products or services by reading other buyer’s reviews. Make sure you earn maximum good reviews as possible. But remember that a single review with a few positive words makes up an opinion, but a few dozen that say the same thing make a consensus.

Step Three: How are you solving their problem?

Once you understand what your customer's problem is, then you can describe how your product or service will meet that need or solve that problem.

Is the feature you’re building solving a real problem? Is this problem based on existing customer needs? If you were to build a solution, would it change anything for your customers? Would it change anything for you? These are all fundamental questions you need to answer to make sure you invest your time and efforts in worthwhile opportunities.

Having hooked your customers into the problem, now you want to paint a picture of what the world will be like when you solve the problem. Your proposed solution should relate the current situation to a desired result and describe the benefits that will accrue when the desired result is achieved.

Market Research

ECommerce market research is one of the most important aspects of a successful eCommerce strategy. To create a strong and firm ground for your business, market research proves to be very beneficial. From exploring potential competitors to preparing the business for any threat, you always have an upper hand and a competitive edge. Performing market research, you will have all the information you need to grow your eCommerce business.

How to do market research?

Read now 6 Tips For Successful Market Research

Start by identifying your target market

People who have the problem that you solve and are willing to spend money on your solution are your customers. Now imagine the details about these people. Who are they? Can you describe them?

They are your ideal customers. This “ideal customer” is your target market. Each business might have several target markets, but it is the best to keep your list of target markets to two or three.

Each of your target markets should share common traits. These might be demographic traits such as age group, gender groups, income levels, or locations.

Creating multiple target markets is doing what’s called “market segmentation.” All you are doing is dividing your target markets up into different groups. Each market segment might have different characteristics and might buy your product or service for different reasons. You need to end up with different marketing campaigns for different market segments or even customizing your product or service for each segment.

Talk to your potential customers

Once you have identified your target market, you need to go and actually talk to people in your potential target markets. This is called primary market research. You also can do online surveys and other research.  By doing this, you’ll gain more insight into your customers and get a better understanding of how they make buying decisions.

Find out if your market is big enough

After doing all the above steps, you need to do research to figure out if your target market is big enough to sustain your eCommerce business. If there aren’t enough potential customers, then you need to consider changing your product or service offering.

To figure out if your market is big enough, you need to do some research. Use the attributes you defined in the target market step and then figure out how many people meet your demographic, psychographic, or location criteria. If you are targeting an existing market with established competitors, you could look for industry reports and read trade publications for your industry. These publications often summarize the market size.

Collect, analyse and act on the results

After identifying the source and type of information you need, you can start to collect it.

It is important not to allow your opinions or preferences to affect your research. Having a preconceived idea of the results will bias your research and provide false information. Remain open-minded and be prepared for unanticipated results.

When processing data make sure you:

●       Keep your market research objectives in mind

●       Categorize data according to what is most relevant for your business, don’t become side-tracked by information that is just interesting

●       Collate your data using tables or lists to make it easier to identify certain trends and themes.

You may need to collect additional information if your results are inconclusive.

Analyzing the data should allow you to draw some conclusions regarding your initial objectives.

Update your business and marketing plans with the information collected from your market research.

Common market research methods

Surveys: the most commonly used

Surveys are a form of qualitative research that ask respondents a short series of open- or closed-ended questions, which can be delivered as an on-screen questionnaire or via email.

They’re easy and inexpensive to conduct, and you can do a lot of data collection quickly. Plus, the data is pretty straightforward to analyze, even when you have to analyze open-ended questions whose answers might initially appear difficult to categorize.

Interviews: the most insightful

Interviews are one-on-one conversations with members of your target market. Nothing beats a face-to-face interview for diving deep, but if an in-person meeting isn’t possible, video conferencing is a solid second choice.

Regardless of how you conduct it, any type of in-depth interview will produce big benefits in understanding your target customers. By speaking directly with an ideal customer, you’ll gain greater empathy for their experience, and follow insightful threads.

Focus groups: the most dangerous

Focus groups bring together a carefully selected group of people who fit a company’s target market. A trained moderator leads a conversation surrounding the product, user experience, and/or marketing message to gain deeper insights.

Doing this kind of research is expensive and hard for beginners. While marketers hope to get honest responses from a random sampling of average users, there’s no guarantee that a focus group will provide such honesty. Focus groups only work best when paired with both quantitative and qualitative data from other market research strategies.

Observation: the most powerful

During a customer observation session, someone from the company takes notes while they watch an ideal user engage with their product (or a similar product from a competitor).

It does not cost much but you’ll see people interact with your product in a natural setting without influencing each other. The only downside is that you can’t get inside their heads, so observation is no replacement for customer surveys and interviews.

There are lots of different ways you could conduct market research and collect customer data, but you don’t have to limit yourself to just one research method. Which method you use based on your business type. ECommerce business owners have different goals from SaaS businesses, so it’s typically prudent to mix and match these methods based on your particular goals and what you need to know.

Business Model

When creating an eCommerce business plan, the first thing to think about is the type of business transaction you’re going for. Do you have an idea for a type of eCommerce business that you’ve been thinking about for a while?

Who are your customers? It’s important to ask yourself this question as it will determine how you set up your business. So the first thing you have to consider before making a decision about your eCommerce business model is to find out who you are selling to.

B2B: Business To Business ECommerce

A B2B model focuses on providing products from one business to another. A product is made in an organization, and offered to the distributor. Then the distributor offers those products to the retailers. It is usually a situation whereby a company provides goods or services online with other companies as its target customer.

B2B ECommerce Pros

Bulk orders: Businesses are more likely to buy in bulk and place large orders, meaning each sale is typically worth more money to you.

High buyer intent: Businesses are more likely to be ready to buy when they are searching for a product.

Strong growth: The B2B market is growing rapidly, which means there’s money to be made by tapping into this business model.

B2B ECommerce Cons

Fewer sales: While your orders are likely to be worth more money, the time between each sale is typically longer.

Steep learning curve: Selling to other businesses can be tough for a beginner. It helps to have a deep understanding of how businesses operate.

Price competition: B2B customers are always hustling for the best deal and buying in bulk means they have more leverage to negotiate.

B2C: Business To Consumer ECommerce

The B2C model is the most common business model. B2C businesses sell to their end-user. Anything you buy in an online store as a consumer is done as part of a B2C transaction. It’s the most traditional retail model and probably the easiest for someone who’s new to eCommerce. B2C eCommerce is experiencing rapid growth as more customers choose to shop online, rather than visiting brick and mortar retail stores.

B2C ECommerce Pros

Low Set-up Costs: You can technically start a B2C eCommerce business for almost nothing using dropshipping. It’s very affordable to get started.

High Sales Volumes: It’s possible to make regular sales that keeps the cash flowing and provides you with a steady income stream.

“Passive” Income: While B2C eCommerce is not strictly passive you have the potential to make sales 24/7, which means making money while you sleep.

B2C ECommerce Cons

Highly Competitive: You’re competing against multinational corporations, established brands, and other online sellers just like you. It’s a crowded marketplace.

Customer Service: Consumers have high expectations when it comes to eCommerce these days. You have to deal with orders, questions, complaints, and returns.

C2C: Consumer To Consumer ECommerce

As the name suggests, a consumer-to-consumer interaction occurs when one individual sells goods or services to another individual. It presupposes interaction between parties through a third one, mostly an online auction or trade website. Due to this phenomenon, selling and buying via the Internet has never been so easy. Various internet resources help sellers and buyers to find each other by charging a small fee or commission.

In recent years, there has been a rise of sales platforms and marketplaces created by third-parties to better enable consumer-to-consumer commerce.

C2C ECommerce Pros

Low Set-up Costs, Increased Profitability: The costs to run a consumer-to-consumer company are fairly low because most companies don’t need to pay for a brick-and-mortar storefront, inventory storage, or employee wages. Low costs also mean higher profit margins.

Low Marketing Cost: Marketing a C2C business is often simple to do. Because most businesses of this type are hosted on a third-party platform, that platform brings in the audience. Your responsibility is to attract them to your particular product or store, over those of your competitors.

Increased Customer Base: Online consumer-to-consumer businesses are often more convenient and attract a wider audience. In addition, your products and services are visible by a worldwide audience which help increase the chances for conversion.

C2C E Commerce Cons

Competition: C2C eCommerce is easier than other business model with low set-up cost so you have to many other competitors, especially with businesses that provide the same products but at lower price.

Payment Issues: Depending on the marketplace platform provider, there might be a payment guarantee for the transactions being made, or not. There have been complaints from C2C eCommerce sellers that customers scammed them, and depending on the platform’s policy, it might be difficult to dispute and resolve the issue.

Platform Fees: Some platform providers might charge money for the use of the platform on a standard, recurring fee, or a profit percentage basis.

C2B: Consumer To Business ECommerce

Consumer-to-Business (C2B) business model is the opposite of the B2C business model. In the C2B model, consumers contribute to the business to make a profit along with the business. The Internet made it possible for the end-users (individuals) to connect with the business and benefit from the same. For better understanding, affiliate marketing is one of the best examples of C2B business models.

C2B ECommerce Pros

Improves market reach: The C2B business model gives the opportunity for individuals to connect with businesses and share their value. They do share their experience with your products or services. These happy customers may or may not get the monetary benefits for sharing this knowledge. It will increase the reach of your business and improve the trust of your customers.

Understanding of consumer demographics: In the C2B business model, you will be able to interact with the consumers, which will definitely give you a better idea about your product. Considering all these ideas, you can upgrade your catalog as per the needs of the customer.

Amplification of sales: When so many people are talking about your business, your brand awareness will automatically increase. This will automatically improve the trust upon your business and invite more referral customers than the direct ones.

C2B ECommerce Cons

Novel technology: The C2B business model came up with the digitization of businesses. Since it came up with the novel technology, it is quite unstable. You can’t rely upon this business model single-handedly, and you need to be aware of the changes that may come.

Negative reviews: When you are counting on the positive approach of contributors, you must be ready for negative experienced customers as well. Indeed, negative thoughts spread more quickly than positive ones. You need to be extra cautious about handling such cases

No matter what eCommerce business model you choose, each has its benefits and challenges, and many companies operate in several of these at the same time.

Business Costs vs. Potential Revenue

Cost analysis and revenue analysis analyze the inputs and factors that impact the mix of products and services companies provide, procurement practices, resource utilization, sales and marketing efforts, and product and service delivery. The information gleaned from this analysis helps owners and managers identify actions of your eCommerce strategy needed to take to reduce costs and drive additional revenues.

Determine your startup costs

After working on a cool business idea, the prime question often arises is “How much will it cost to start  an eCommerce business?”

In order to get a profitable eCommerce store running, you need to make a lot of decisions, including choosing the right product, how to manufacture and store it, great branding, and so much more. Many of these decisions will have long-term financial impacts on your operations and profit margins.

With so many decisions to make, you can easily get paralyzed. The problem isn’t the cost of each decision, necessarily, but the uncertainty. How much will each decision cost you? How will these costs impact your business?

Every single industry and business requires vastly different expenses, which means there’s no simple formula for calculating startup costs. But that doesn’t mean you can’t make an educated guess that accurately reflects the needs of your business.

Your financial plan is an overview of your current eCommerce business financials and estimates for growth. Having realistic startup costs, even if they’re just estimates, is one of the key elements of building a viable financial plan. Understanding what it will take to start your business can help you:

●       Estimate profits

●       Conduct a breakeven analysis

●       Extend the runway of your business

●       Identify potential tax deductions

Set your price

One of the secrets to business success is pricing your products properly. Price your products correctly and that can enhance how much you sell, creating the foundation for a business that will prosper. Get your pricing strategy wrong and you may create problems that your business may never be able to overcome.

There are a variety of different types of pricing strategies in business. However, there's no one surefire, formula-based approach that suits all types of products, businesses, or markets. Pricing your product usually involves considering certain key factors, including pinpointing your target customer, tracking how much competitors are charging, and understanding the relationship between quality and price.

Once you understand consumer demand within your market, review your own costs, supply chain, and profit goals as a way to inform your choice on pricing strategy.

Create your sales forecast

Your sales forecast is the backbone of your business plan. People measure a business and its growth by sales, and your sales forecast sets the standard for expenses, profits and growth.

Forecasting is mainly educated guessing. So don't expect to get it perfect; just make it reasonable. A sales forecast is an estimate of the quantity of goods and services you can realistically sell over the forecast period, the cost of the goods and services, and the estimated profit. A sales forecast period can be monthly, quarterly, half-annually, or annually.

Typically this is done by:

●       Making a list of the goods and services to be sold

●       Estimating of the number of each to be sold

●       Multiplying the unit price by the estimated number of goods or services to be sold

●       Determining the cost of each good or service

●       Multiplying the cost of each good or service by the estimated number to be sold

●       Subtracting total cost from the total sales

If your business has a huge number of items in inventory it may be necessary to condense unit sales/costs into categories.

Calculating a realistic sales forecast

There are two approaches startups and small businesses can take when creating a sales forecast.

The Top-Down Approach

This approach uses your knowledge of the market to make an assumption that you can capture a certain percentage of the market within your first year of business, and increase that percentage each year. This may give you an optimistic forecast that may be unrealistic to investors. The forecast could also hinder your business decisions when actual numbers come in.

The Bottom-Up Approach

This approach will give you a smaller forecast, but more realistic figures as it takes into consideration actual numbers and your own output capacity.

Tip: Check public company annual reports and filings to help determine financial and product information about potential competitors. Comparing competitor information against your own business model will give you more insight.

Proof Of Concept And Beta Testing

Before writing your eCommerce business plan, you need to develop a proof of concept. You need to have these steps completed so you can write up your findings and how your business is going to succeed.

Proof of concept, also written as POC, precedes your prototype and beta testing. It answers the question: Is your idea feasible? For an idea or product that hasn’t been done before, you will need to collect significant data to prove feasibility.

Then we enter the prototype phase. Once all aspects of feasibility have been addressed, you can then design an internal version of your idea for you and your team to test (known as alpha testing). When it is ready for the public (doesn’t have to be perfect), then you enter your beta testing phase.

NOTE: If your product has a unique mechanism that you created, you may want to patent it. Once you get the “patent pending” green light, you are free to share your product via beta testing without risk of it being legally copied.

Whether your product is an app or a tangible item, you want to test it on a subsection of your target demographic. Some beta tests are used to gain feedback on usability, errors, or malfunctions.

Decide what you are using beta testers for before you go looking for them. You want your beta testers to give you accurate and actionable feedback, so you have to give them clear and detailed instructions. Maintaining ongoing communication is key to success.

Market Your Product

To create your eCommerce business plan, you need to create a stand-alone marketing strategy. You need to detail where your potential customers live on the internet. Be detailed when it comes to your marketing strategy. If you’ve already implemented marketing campaigns, be sure to include results in your business plan as well.

Your product or service will not be for everyone, and that’s OK. So you need to target a specific demographic. As you get more feedback from your beta group, you’ll learn which groups enjoy your product the most. Honing in on buyer personas and using your earlier market research will allow you to craft specific campaign ads and messages.

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Marketing is more than just an advertising campaign; it should result in revenue for your business. Depending on your product, your marketing plan may include email marketing; paid marketing, such as Facebook ads and influencers; and organic marketing, such as SEO, content, and social media. No matter which marketing methods suit your industry, product, and use, detail what information you need in order for your plan to be successful. Understanding the different ways to promote your product or service can help you make the right choice for your business.

Planning your marketing strategy will help you determine the best way to promote your product or service, allow you to measure your success against set goals and provide you with a clearer idea of where your strategy may need adjustments.

Including these six key sections in your eCommerce business plan will create a starting road map for your business. While there are other components to a business plan such as your executive summary and team bio, this has everything you need to hit the ground running.

Conclusion

Creating an eCommerce business plan can be challenging. The keys to success for an eCommerce business are to think through each section of this outline one at a time, step by step. That way, you won’t get overwhelmed by it all.

Just remember, a simple business plan with the standard eCommerce business plan template is better than no business plan.

Do not despair — you are up for it! We - Cmsmart is always here to support and give you the best service. We are very happy to be part of your success.

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