Without a plan, you are just a sailor with no wind in your sails and no direction you want to arrive at.
An idea can come to you anywhere and anytime, what matters is if you are capitalizing on it. There are so many ideas that have popped in our heads and we have delayed working on it due to sheer laziness. So, if you are here researching on your crazy business idea, then we applaud you for your diligence. You have won half the battle already!
Importance of Business Plan
“It does not do to leave a live dragon out of your calculations, if you live near him.”- J.R.R Tolkien
The author was speaking of an imaginary world, but it could be applicable in real world scenarios too. Think about it, starting a business without a contingency plan for risks, like the dragon, would be negligent. Along with planning for your business, you need to find all the elements that will affect your business directly or indirectly.
Business Planning will make or break your business. Without a plan, you are just a sailor with no wind in your sails and no direction you want to arrive at.
You can read more- Business Models
Business Planning will help you:
Account for risks and weaknesses
Knowing the strength of your competitor and the potential risks that your business could face will help you prepare for it better. It will help you understand where your weakness lies and how you could work on improving. Knowing is better than ignorance.
Communicate with Stakeholders
Your business plan will help you find a direction and motto which can be communicated to the investor, employee or partner easily. It is a tool that will put your business ideas on paper and if the stakeholders like the direction you are taking, you have successfully convinced them.
Make better decisions
Your focus doesn’t get concentrated in one aspect of your business, say- sales strategy. With a business plan, you work on management, human resources, finance, marketing etc with equal attention, hence helping you take informed decisions.
Getting funds for your business
Potential investors will want to see a written document of your business plan before they finalize on you. It is better to give them a detailed and thorough plan so they are on the same page as you. Your funding will depend on how good and professional your business plan will be.
Things to do before making business plan
Determine when you need to have a plan
It’s a trick question. You always need to have a plan. However, a business plan needs to be put in place when you are starting something, for example: You are just starting out with your business, you are looking for funding or if you are venturing into a new niche within your existing business.
Research on competition
You can begin to make your plan by researching on requirements as well as taking inspiration from companies that are in the same niche as yours, i.e competitors. It will help you understand what strategy is working for them and what isn’t.
Find a promising niche
You need to be unique in what you are selling, that is the only way an audience will come to you. You have to give the customer what they want and aren’t getting elsewhere. So, do a heavy research on what you want to sell.
Starting an Online store
The first step would be obvious- building a website. You can try Shopify as it is a platform completely dedicated to building ecommerce stores and managing them. Shopify is easier to use as compared to other website development options because it has minimal manual work. Since you are new to the ecommerce world, it has a lot of resources providing information about online selling.
Dropshipping would be a great option for new sellers as it is budget friendly.
You can learn more – What is Dropshipping 101
Printrove is a dropshipping company that gives you a free Shopify trial.
Starting out on a platform like Shopify will help you kick-start your business.
Elements of an e-commerce business plan
The choice to enter an e-commerce business at this time is proactive and wise because recent studies have projected an 84 billion ecommerce market by 2021 in the country.
Nevertheless, that doesn’t rid you of the responsibilities and meticulous planning an e-commerce business plan requires.
Ask yourself these questions and their answers will lead you to a concrete business plan.
What is your business model?
How do you want to deliver your products?
What sales channels will suit your business?
What is your marketing method and budget?
What is the pricing of your product and profit margin?
How do you plan to launch your business?
Once you have established answers for these questions, you’ll have a rough sketch on what to put in your e-commerce business plan. You can arrange it according to the following elements:
You will be writing this at the end but it will be an outline that will cover your entire plan. Organization of your content will make things clearer for you and also avoid extra work. Your selling point will strongly emerge in this summary.
You will have to include these in your summary:
- Your mission statement which should be crisp and reach the point you are making directly.
- The objectives you will be targeting, there can be many objectives but ensure they all work towards a singular goal.
- The essential information of start date, founders, key players etc.
- Product information because that is your main pitch
- Growth plan
This will be a longer description of your summary, delving deeply into your company information and how you choose to describe it. It will include:
- Stating who the ownership mantle belongs to
- what the business model will be
- what are the company requirements
- how will the operations go about.
This is where you emphasize on what product you are selling and how will it be a success. You have to account for:
- Expenses of raw materials and production
- Method of acquiring the product
- Determining the life cycle of the product so you’re aware of how often you need to update
- Making a strong distinction of the product from its competitors
This involves defining who your target audience is and how you plan to attract them towards your store. The research and analysis will help you strategize your sales and marketing plans.
Under this element, you will be studying about the market segmentation, competition and industry.
Like any other business, even an ecommerce store will have to put in place a competitive marketing strategy to boost sales. Being an ecommerce store, you will have a good digitally active audience so you should use it to your benefit.
- Prepare a content strategy for social media and website
- Promote your store with Online and Offline Ads
- Hire a PR team to look after your media mentions
- Write catchy taglines
You can read more – How to Market Your Ecommerce Business with Dropshipping
It might sound tedious and redundant but it is important. Your operation plan will include deciding on the the office hours, employees, location and management team. This part of the plan will be the main activity you will be doing the entire day. So, plan well for your hours and employees because they are huge contributors to your business.
You can still forget about making a business plan but you can’t escape from making a finance plan!
Financial planning will reduce risks or surprises of sudden losses because you have accounted for them already. You will only achieve success if your financial planning has been smart and you haven’t incurred a lot of losses.
You mainly have to account for the raw operational cost as the capital remains fixed, current assets and profit/loss projections. This operating cost will be of raw materials, production, advertising, compensation etc.
Introducing dropshipping into your ecommerce business can help you cut down on a lot of costs. Learn about the pros and cons of dropshipping here.
How will you judge if you have done well without celebrating the small victories? It is very important for employee morale and company growth that you set small targets and acknowledge them when you achieve them. It will become a regular motivational boost.
Your growth tracker will be defined by you, so it can be getting a blue tick on social media or getting your first bulk order, it is up to you. It can be smaller goals such as crossing 100 likes on Instagram and getting 5 positive reviews.
The next step..
Once you have your business plan ready, it is time to approach investors and get the funding you need for your business. It can seem a little intimidating to have so many things in place, but when you have a plan, you have a direction. Without a direction, you will be just a headless chicken running around!