Noah is currently the COO at Palo Alto Software, makers of the online business plan app LivePlan.
How to Write an eCommerce Business Plan + Template
10 min. read
Updated March 8, 2023
If you’re starting an online eCommerce business, it’s tempting to dive right in and set up your digital shop. After all, eCommerce businesses are often less expensive to start than physical businesses and the risk may seem lower. Unfortunately, that’s not the case. There’s still risk involved and money you may lose if you don’t start your business the right way.
So if you want your business to be successful you’ll want to start with a business plan first. Not having a business plan is one of the primary reasons businesses fail and it’s an easy first step that you can start for free. Businesses that do take the time to plan are actually proven to be significantly more successful than those that don’t.
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Why write a business plan for your eCommerce business?
If you’re looking for funding from investors for your eCommerce business, you’ll definitely need a business plan. But, business plans aren’t just for entrepreneurs who are looking to raise money for their business. There are many other reasons why you should consider writing a plan.
- Strategy. Writing your plan down will help you clarify your business strategy and figure out key aspects of how your business will run. You’ll think about your marketing plan, fulfillment, sales strategies, and more.
- Test ideas. Business plans can help you figure out if an idea will work. A plan will help you figure out which ideas will be profitable and which will struggle to make money.
- Know your numbers. Developing your financial plan as part of your business plan will help you understand what it’s really going to take to start an online business. Running the numbers will help you determine profitability and what it will take to get your business up and running.
- Market research. Your business plan will help you answer questions about who your customers are and how you can best get your product in front of them.
- Marketing and advertising. Getting your eCommerce business running online is just the first step. Now you need to bring customers to your website. Having a plan and knowing how much it will cost you before your start will improve your chances of success.
- Business plan competitions. An often overlooked way of getting money for your eCommerce business is business plan competitions. There are thousands of them every year that include cash prizes. With a solid business plan, it’s usually free to enter.
A business plan can help you develop your strategy, test your idea, figure out how much money you’ll need to get up and running and identify potential roadblocks. It’s a critical step that will ensure that you don’t waste time or money as you get your business off the ground.
How to write an eCommerce business plan
Every business plan follows a fairly standard format, but for eCommerce you will need some extra detail in the marketing and fulfillment sections. Here’s an outline of what you should include.
If you’re ready to get started you can also download a free business plan template right now.
Every business plan needs an executive summary. Usually, you write the summary last, after you’ve fleshed out all the details of your plan. The executive summary isn’t a repeat of the full plan—it’s really just a brief outline that should be 1-2 pages at the most.
When you’re getting introductions to investors, you’ll probably just share your executive summary to start, and then share the full plan if an investor is interested.
Your executive summary should summarize your vision for your online business, the products you’ll be selling, a short description of your target market, and highlights of your management team and financials. If you did a market analysis, don’t get into tons of detail, but cover enough that a casual reader will understand what you’re trying to accomplish.
Opportunity: Problem and Solution
The first chapter of your business plan describes your opportunity. That’s a description of the business you are building and the problem you are solving for customers.
Every business needs to solve a problem for customers. For your business to stand out and be successful, you’ll ideally fill a gap that other companies haven’t filled yet.
Even if you’re selling the same types of products as other companies, your business could offer a better shopping experience, lower prices, or better customer service. The problem you are solving then is that customers can’t get good customer service or low prices from other companies in your industry. They will come to you, instead, because you do offer those things.
You can also solve problems for customers by offering a product they’ve never seen before. Perhaps you’ve developed a new line of kitchen utensils that are designed for older hands and wrists. Or maybe you’ve invented a new line of soap that is more sustainable than traditional hand soap.
Arguably, the target market section of your business plan is one of the most important components. Your target market describes the types of customers you hope to attract. Trying to please everyone is bound to be a failure—instead, focus on a specific group of people or type of person and build from there.
For example, maybe you’re trying to sell to young professionals who value good design. Or, maybe you’re targeting new families who are looking for sustainably made, affordable kids toys.
When you’re writing the target market section of your business you’ll describe exactly who your ideal customer is, what their demographics are, and how large your target market is.
There are a lot of details that you can include in your target market section of your business plan and we’ve got a great article that covers everything you might want to include.
Marketing and Advertising
For an eCommerce business, getting the word out about your business is critical. Unlike a physical storefront that potential customers might walk or drive by, an online store needs to figure out how to get customers to its virtual doors.
In the marketing and advertising chapter of your business plan, you’ll want to detail your marketing plan for your business – how are you going to get customers’ attention? How will they know you exist?
Here are a few tactics you may want to consider:
- Content marketing. Start writing blog posts that your potential customers may find interesting so that you can attract prospects to your business. Also, consider guest posting on other blogs that your potential customers might read.
- Social media. These days, most consumers expect that the companies they shop at will have some form of social media presence. Pick the networks that you plan to be active on and determine a strategy that will engage your potential customers.
- Traditional PR. Traditional PR isn’t dead. If you can get popular publications to cover your company launch and your products, you’ll be able to drive new customers to your door.
- Advertising. Online advertising will almost certainly be in your plans. The good thing about online advertising is that you can measure its effectiveness and fine-tune things as you go. Depending on your business and how much cash you have on hand, you may consider traditional off-line advertising as well.
- Email marketing. For many eCommerce businesses, email is a core strategy for driving sales. If you have a content marketing plan, you can use that content to drive email subscriptions. You can also offer deals to build your email list, such as free shipping or discounts on orders.
Successful eCommerce businesses are all about ensuring that their operations are running smoothly and efficiently. Use your business plan as your chance to figure out what your operations plans are ahead of time before you jump in and get started. This is where many businesses can get tripped up, so taking the time to get your operations set up properly is worth the up-front investment of time.
Areas you’ll want to cover include:
- Locations. Even though your business may be online, you’ll still need to run the business from somewhere. Perhaps you can run the business entirely remotely, but potentially you may need some office space for employees or warehouse space for product storage. Think about where these locations are located and what it will cost to keep them running.
- Suppliers. You’ll need suppliers for raw materials if you’re making products and you will also need suppliers if you are reselling products. Use your plan to figure out who you’re going to work with, what their purchase terms are, and what kind of delivery timeframes they can provide for you.
- Production. If you’re assembling raw materials into products, you’ll need to know how and where you will be producing your products.
- Storage & fulfillment. If you’re not drop-shipping from products from a supplier, you’ll need to store and ship your own products. Your business plan should detail where and how storage and fulfillment will take place and what the costs will be. Don’t forget to think through how you’ll handle returns and exchanges.
- Technology & payment processors. All eCommerce businesses need technology to function. You’ll want to think about the platform you’ll use for your online store, what functionality you need, and how you’ll accept payments.
Company & Management
This chapter of your business plan describes the structure of your business and who is running it. If you’re going into business with other people, you should establish a partnership agreement. Your plan will need to explain how your business is structured and who owns what portions of the business.
You’ll also want to include a company description that includes details on the management team and the highlights from their resumes. Potential investors will be looking for experienced owners and managers to get an eCommerce business up and running, so this section of the plan should explain why your team is qualified to build the business into a success.
If you aren’t looking for outside investment, this section of your plan is still important. You should think about the different positions you’ll need to fill and who is going to do each job in the business. Even if you don’t plan on hiring employees right away, having a plan for who you’re going to hire and when will be enormously helpful when the time comes.
Finally, your business plan will need to include a financial plan. Investors will want to see a sales forecast, income statement (also called profit and loss statement), cash flow statement, and a balance sheet. If you use a tool like LivePlan, you’ll be able to build out your financial forecasts relatively quickly, even if you don’t have experience with business numbers.
Even if you’re not working with investors or getting a bank loan, you should run your numbers. This is arguably the most important part of your business plan. You need to know if the numbers work for your business based on your forecasted sales and planned expenses.
It’s much better to find out if you need to make changes to your business model while it’s all just an idea on paper rather than a business that you’ve already invested money in.
If you need additional help, we’ve created a guide to creating the financial statements you need to include in your business plan.
Ecommerce business plan templates and examples
If you want to see how other eCommerce businesses have created their plans, check out our free library of eCommerce business plans. You can download all of them in Word format so you can jump-start your own business plan.