Business plan for an online store

The article explained what a business plan is and why it is important to draw it up if you are planning to open an online store. We also described the general structure of a business plan and examined the mistakes that entrepreneurs often make when creating a document.

A business plan is a document detailing the features of an online store, providing financial calculations, and showing potential difficulties and ways to solve them. Different businesses have their specifics, so their business plans will be significantly different. But they are all created on a common step-by-step principle, according to the same structure. In this article, we have described in detail how to create a business plan for an online store, told you what you need it for and what mistakes there are in creating it.

How an online store business plan helps

Evaluating investments in production

If you are planning to open a manufacturing facility, you need to be clear about

• whether you have enough money for it;

• Whether you will be able to produce products in the beginning without making a regular profit;

• Whether the business will pay for itself;

• Whether it is more profitable to resell finished goods from suppliers.

Researching a potential niche for trading

There are many avenues for trade, but without in-depth research on a niche, it is hard to know if it will be profitable in your case. Planning and detailed calculations can help you determine this and, if necessary, find a more promising niche. You should use Google Trends for this, keep an eye on information resources with quality analytics, and build on your own experience. It is much easier to sell a product that you understand.

Assessment of financial possibilities

It is necessary to understand clearly where the start-up capital will go. How much will be spent on purchasing or producing the product, marketing, packaging, labor, office rent, etc. If your finances are not enough to launch and the early few months you may be operating without profit, it is better to review your plans. For example, take up dropshipping.

Identifying Potential Difficulties

The document can anticipate some difficulties and offer options for solving them. For example, if you sell dishes, there is a risk that customers will receive them with damage. So you should develop a mechanism for obtaining compensation from the delivery service and spell out the warranty period for use.

Assessment of the company's competitiveness

Researching competitors in the chosen niche will allow you to understand whether you can stand out from them and compete with them in Google and Facebook advertising auctions. If you plan to sell fashion electronics, you will need large advertising budgets, reliable suppliers, etc. If you cannot provide this, you should start with a less popular niche.

Help in obtaining financing

A business plan is brief and detailed information about your company and its prospects. It will be the primary tool for attracting investors or obtaining a grant from the State Employment Service.

Mistakes in making a business plan

Lack of clear goals

"Catch up and overtake Amazon" or "make the first million" are not clear goals but dreams. The goals should be specific and achievable within a certain time frame. All your actions should be subject to the achievement of goals. For example, if the goal is to completely switch over to selling your products in a year, you need to invest more in materials and hire new people.

Lack of in-depth market research in the chosen niche

Entrepreneurs often pay a lot of attention to production issues but fail to tell how and to whom they will sell their goods. They invest in the products purchased, and then it turns out that the market is full of them or that competitors sell them 20% cheaper due to preferential terms from the supplier.

The details are not well thought out

The more detailed the plan, the better to spell out information about suppliers, the ability to obtain investment, production processes, marketing plans, etc. These are not insignificant details that should better come out in advance.

Improper business valuation

Without detailed calculations when launching a business, you may find that it costs significantly more than the planned amount. Therefore, you will have to seek funds urgently or refuse to launch.

Structure of the business plan

Title Page

This page is a business card that carries the reader basic organizational information about the business and its creator. It should include

• site name;

• the name of the company implementing the project;
• the location of the organization's office;

• channels by which you can contact the manager - phone number, e-mail address, and so on;

• full name of the owner of the online store; 

• name, surname and patronymic of the owner;

• date of writing the plan;

• confidentiality conditions - readers agree not to copy the document and not to pass it on to third parties.

Summary

The purpose of this section is to attract interest in the business plan. Based on it, readers form their first impression of the business. Therefore, it is necessary to summarize all the main points and objectives. It is better to create a summary after you have written the plan entirely in order not to miss any key points. The executive summary should briefly describe

• business objectives;

• available resources;

• process of realization of the goals;

• company's level of competitiveness;

• possible sales and profits;

• Key markers of business efficiency.

If investors see the document, the summary should also state how much money they need and when investors will profit from the business.

Product

In this part of the business plan, you need to detail the products you plan to sell in the online store. To do this, you need to:

• describe how the product differs from that of your competitors;

• note its advantages;

• indicate the platform on which you created the online store;

• show the competitiveness of the product;

• add the necessary certificates, licenses or patent rights;

• note the environmental friendliness of the product;

• indicate the features of packaging, delivery, and so on;

• talk about the peculiarities of the use of goods.

Niche evaluation

The primary objective of this section is to ensure that the chosen business sector is promising and that the business owner knows how to work with it. In this part of the business plan, it is necessary:

• talk about the current situation in your chosen industry;

• show the prospects of the chosen niche;

• suggest how profitable it is to sell these particular products;

• show that you understand the market situation, which means you know how to work and compete in the industry;

• tell you about the latest trends in the niche;

• list your competitors;

• research the advantages and disadvantages of the main competitors.

Marketing part

It is one of the most crucial parts of the plan. In this section, it is essential to:

• clearly define the market for the goods to be sold;

• prove that the business organizers will be able to sell the goods to potential buyers;

• study the potential market;

• develop an action plan and list sales channels;

• determine who will buy the goods;

• talk about methods that will help to influence demand.

Production section

The main task of the section is to describe in detail the process of producing products and the equipment and personnel needed for this.

• tell how you can regulate the number of products you produce;

• describe how much work you plan to outsource, why you chose them, and how much they charge;

• list the equipment and materials needed, with details of their suppliers and costs;

• describe the equipment you will need in the future;

• calculate the cost of goods and estimate production costs.

Organizational part

This section should show all the official information about the company that created the site and give the contact of its owners. In brief:

• list what the company does;

• describe the products sold by the online store;

• make a portrait of the potential client of the online store;

• to specify the legal form and organizational structure of the company;

• list the founders, employees, and partners of the company;

• state the date of opening of the company; 

• write the address of the company

• write the address of the company and the opening hours of the online store;

• tell about the seasonality of products;

• choose a platform to create an online store.

Financial calculations

Accurate and realistic calculations are needed to understand what funds will be necessary to create an online store, purchase goods, pay for office rent and start production. In this section, it is essential to:

• plan the income and expenses of the online store for the next year and the next few years;

• create a plan showing the flow of funds and the planned balance;

• conclude the breakeven of the enterprise;

• show what the investment will go for;

• plan sources of business financing;

• show repayment of borrowed money;

• analyze the project efficiency.

Risk analysis

There is no perfect business environment, and all entrepreneurs sooner or later face difficulties. It is essential to analyze risks to come out of difficult situations with the fewest losses. In this section, you should:

• list the potential difficulties that the online store may face;

• Indicate ways to overcome these difficulties.

For example, competitors, errors in the development of marketing strategy, malfunctions in production, irresponsible employees, and so on can carry risks for the online store. You can use the SWOT method, quantitative analysis and others to assess risks.

Requirements for the business plan

1. Choose the optimal size of the document, which will allow you to describe all the relevant points detailed but will not be overloaded with unnecessary data. The average business plan consists of 30-40 pages.

2. Fill the plan with specific facts and figures. You can place additional data in the appendix section.

3. The text of the business plan should not be too complicated. Write it as for non-specialists.

4. Use understandable terms. If the ones you need are highly specialized, give them an explanation.

5. Use realistic data and honest analysis. Planners occasionally tend to downplay the cost of launching a site or overestimate projected revenues. It makes it complicated going forward.

6. If this is your first business, find an example of a business plan for an online store of similar subjects to check with him on the points of importance.

7. You should confirm all assumptions and projections with calculations.

8. Mitigate potential risks and detail the options to address them. It is essential for both you and potential investors. But all information provided must be truthful.

9. Structure the business plan to make it easier to understand.

Conclusions

A business plan is useful both for the owner himself and for possible investors. With its help, you can see the opportunities for launching an online store and analyze the chosen niche, competitors, market situation, etc. This data will help to find the prospects for the upcoming business.