Why Your Ecommerce Store Needs a Business Plan (and How to Write One)

If your first thought when hearing the words "business plan" is "yuck", then you're not alone.

For most people, the thought of writing a business plan brings up painful memories of past homework assignments and many online store owners view them as something only "real world" businesses and Silicon Valley startups need.

And lets face it, there's all that fun marketing stuff you could be doing like taking product photos, writing blog posts and opening social media accounts.

But the truth is, the fun stuff will only be meaningful if you build your business on a strong foundation.

And that's where writing a simple business plan comes in.

Why You Need a Business Plan

Even if you don't actually need funding for your business or need to submit a business plan to anyone, there are still some compelling reasons you should consider writing one for yourself.

For example, let's say that you're just starting out. You've created an online store, you may even be making some sales. Creating a business plan at this stage could help you see the bigger picture and chart a strategic course for future growth.

Or maybe you're five years into running your business and you're starting to feel stuck and things are beginning to plateau. Creating a business plan at this stage could help you think outside of the day-to-day grind of running of your business and discover new ways to market it or new products you could be selling to boost revenue.

On the flip side, maybe your business is trending downward. Creating a business plan in this scenario could potentially help you either change the way your business works as a whole or cut your losses before you're in deeper trouble.

The point is, if you haven't written a business plan, you should take the time to do so, no matter what point in your business's lifecycle you're in.

And the best part? It's not that hard.

Let's look at how you can do it.

Components of a Good Business Plan

Remember, if you're just doing this for yourself, there's no need to go overboard and turn this into a major project that holds you back from launching and making some initial sales. Think of it as something designed to help open up some ideas for your business and shed light on some angles that maybe you haven't thought of yet.

In the future, if you actually need to submit a formal business plan to someone, you could always use this one as a starting point and spruce it up as opposed to having to start from scratch.

The key areas of a business plan include the following. Find out how defining each can help your business.

Executive Summary - While it's the last thing you will write, it's the first part of the business plan. This part summarizes the main highlights of the rest of the sections.

Company Description - This is a high level overview of your company, products or services, types of consumers, and competitive advantages. Ultimately, think of it like what you would tell someone in an elevator ride about your business if you wanted them to invest in it. Also known as an extended elevator pitch.

Market Analysis - This is your research about your industry and target market. If you haven't formally defined your target customer, this will help you do so.

Operational Plan - This covers the day to day operations of your business, from location and hours to inventory and accounting. As you go through this, you can make sure that each of the vital processes in your business are running as smoothly and efficiently as possible.

Organization & Management - This tells people about the main players in your business - who owns it, who manages it, etc. It will help you define all parties involved with the foundation of your business so everyone has a clear understanding of where they fit and who does what.

Products & Services - This is where you describe the products and services offered by your business. You should think about them from your customer's perspective. It will help you to better sell your products and services once you've defined them using this approach.

Marketing & Sales - This is where you layout how you will reach your target market, identify prospects, and sell your products and services. While composing this section, creative marketing and sales strategies might emerge.

Financial Projections - This is where you really dig in and figure out how much your business will make over the next five years. As an established business, you will include historical data and be able to make your predictions based off of that. Coming up with these numbers could be a huge motivation boost and keep you working towards a specific goal as opposed to just seeing what happens.

Funding Request - This is the part of the plan where you define your outside funding needs and exactly how you plan on using those funds as well as pay them back. Even if you're just investing your own money into your business, this can help you really focus your spending so it is all allocated and documented properly.

As you can see, creating a business plan can be a huge eye-opener for your business, no matter what stage you're at.

Business Plan Templates & Resources

Fortunately, there are a lot of great resources on the web that you can use to make the business plan writing easier. Best of all, many of them are free. Here are just a few.

If you want more samples, you can try this (really long) Google search for industry business plan filetype:pdf -template -sample -checklist -outline -format. Just replace industry with your own to find sample PDF business plans.

Business Plan Competitions

Did you know that there are actually business plan competitions annually?

The winners of these competitions get funding for their small business. And the ones that don't still get good publicity and recognition by the organizations they submit them to.

Here are a few examples of the latest business plan competitions for 2013 to give you an idea of the kinds that are out there.

You can also search for business plan competitions on Google to find ones that are specific to your region or your industry. If you do need funding and have an awesome business plan, this could be a good way to go about getting it.

Have you created a business plan for your business? What did you learn from it?


The Ultimate Guide to Business Plans

This free, step by step guide will show you exactly how to write a business plan and set yourself up for success.

Read the Ultimate Guide to Business Plans now.

11 comments

  • Adeel Vanthaliwala
    Adeel Vanthaliwala
    July 18 2013, 12:27PM

    Thanks for the post Mark. This seems to be a really painful part of business for many entrepreneurs and many avoid it all together.

    However, writing a business plan is the single best exercise you can go through to really think about your business.

    It’s okay if you have little data or your projections are not founded in assumptions, the fact is that you’ll learn so much about your business from this exercise, that you’ll definitely come out a much better and perceptive business owner.

  • Jonathan Wilhelm
    Jonathan Wilhelm
    July 18 2013, 03:52PM

    Ha! I would love to hear Richard Branson tear this new one. Also, what did Bill Gates, Steve Jobs, Michael Dell, and Mark Zuckerberg all have in common? They didn’t use a business plan because they understood that time is money and action is a million time more profitable.

    We should keep business plans in the early 20th century where they belong.

  • @Shopify Mark Macdonald
    Mark Macdonald
    July 18 2013, 04:24PM

    Taking some time to understand your market, how to position your business in that market and how to present your business’ value proposition to your customers is never a bad thing. Should you worry about getting this perfect to the point where it gets in the way of shipping? Absolutely not.

    This doesn’t have to be major time drain. Buffer got $500k in funding with 7 slides:

    http://onstartups.com/tabid/3339/bid/98034/The-Pitch-Deck-We-Used-To-Raise-500-000-For-Our-Startup.aspx

  • Mark Dunkley
    Mark Dunkley
    July 18 2013, 04:37PM

    Just don’t spend a week writing it. I keep an evernote including keywords to rank for (market analysis), revenues goals (financial analysis), the next product ideas (products and services).

    Branson was famous for his notepad and recording this data, of course he had a business plan.

  • Wes Coughlin
    Wes Coughlin
    July 19 2013, 01:06AM

    I would recommend reading “Rework” by the folks at 37 Signals before thinking about writing a business plan. Basically “Rework” taught me more about running a business then my undergraduate in business.

  • Suzanne Grant
    Suzanne Grant
    July 19 2013, 09:13AM

    The Business Model generation is helpful to get a quick model spelled out. A traditional “plan” may be cumbersome, however, the thinking process is useful. Also a good tool to get buy in from your co-founders etc.

    Recommend keeping it point form.

  • Jonathan Wilhelm
    Jonathan Wilhelm
    July 19 2013, 11:27AM

    I agree with Wes Coughlin, I read Jason Fried’s article in Inc. each month and they really have a strong understanding of how to make things work for you and more importantly how to shut down or pass on things that aren’t working or don’t work.

  • Mary
    Mary
    September 04 2013, 06:35PM

    I recently decided to start a business. I had in mind a website, e-commerce site, where I will sell high end gifts. In researching website building and all the companies that will help you do this a friend suggested Shopify and I believe that is the company I will go with eventually. In the meantime that same friend has made me more aware of the business world and I do feel, for me, a business plan will be helpful in getting started and will keep me on a strong and healthy business path. So after our conversation I typed into the Google search bar “How to write a business plan to open an e-commerce website” and your article came up. Serendipity? Perhaps. This article has been really helpful and I plan on doing more research to help build a strong and successful business. This has been a great starting point for me. Fingers are crossed! Thanks for the info!

  • Matthew
    Matthew
    September 10 2013, 01:08PM

    Good article. I like the layout.

  • thanks  for the nice programme writteen
    thanks for the nice programme writteen
    June 02 2014, 08:32AM

    please keep it up.

  • Andrea
    Andrea
    September 03 2014, 07:16PM

    Thanks for this exhaustive article. Business plans are still important in the 21th century, not only to convince investors but also to anticipate and mature one strategic vision.

    I’m working on my first ecommerce business plan. The major difficulty is to define hypotheses. I found a very useful Excel template, but it is in french, it is not really suited to the US market. If anyone has something to propose, it would be very helpful.

    http://www.lafabriquedunet.fr/blog/plan-marketing-web-budget-previsionnel-ecommerce/

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