how to make an ecommerce business plan for your startup

How to Make an Ecommerce Business Plan for Your Startup

Darren DeMatas

February 28, 2024

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So you’ve decided that you want to quit your day job and start your very own ecommerce empire. That’s great!

But before you become the next Jeff Bezos  (and definitely before you quit your job!), it’s worth spending some time thinking about a business plan. In this article, we’ll dive into the key elements of an ecommerce business plan, which is very different than writing traditional business plans.

Why You Should Create a Business Plan

We know that starting an ecommerce business is exciting, and it can be tempting to jump right in without constructing a business plan. READ: PLEASE DON’T DO THIS.

If you haven’t put your ideas, questions and concerns on paper, then you haven’t given your business model enough thought .

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 as a first-time entrepreneur. Think of it as a roadmap for your new business venture.

It’s exciting to start your own ecommerce business. However, you want to be well prepared and not jump into anything without having a solid, foolproof ecommerce business plan in place.

After all, you wouldn’t jump out of a plane without a parachute, so why start a business without a safety device in place? That safety device is your business plan.

The business plan is the brainstorming process that ensures your concept and goals are realistic.

This is more than just mental notes. True business plans take your ideas , questions, and concerns and put those in writing.

As you start creating your business plan, you’ll soon understand that it’s more than a single piece of paper with handwritten details on it. It’s a clearly constructed format of how your business will be created, how it will operate, and what you hope the future holds in terms of a successful ecommerce business.

When you write your business plan, be sure to have a target audience in mind. Are you going to look for investors or put a Kickstarter campaign into motion and use this as your descriptive platform? If so, make sure that your business plan contains everything the audience would want to know about your business (and more!). Many traditional funding solutions require a business plan in order to give you capital. However, there are alternative solutions, such as  Payability  that specialize in ecommerce and don’t require credit checks, a business plan, or any complicated paperwork. They can also get you approved in as little as 24 hours.

When your business plan is completed, you should have achieved the following goals:

• Knowledge:  A greater sense of knowledge of the business aspects.
• Resources:  The resources you’re going to need to make your business successful, such as partners, money, employees, etc.
• Road Map: Have clear set goals to take you from the very beginning of your business and onward.
• Viability: In other words, is your business possible? Will you have enough profit margins to keep the doors open long-term?

Now that you know why you should create a business plan, it’s time to move on to how you can create your business plan and get started putting your ecommerce business into motion.

How to Start an Ecommerce Business Plan

At the very beginning of the planning stages, it’s a good idea to develop a framework for your business model. This business model will continue to evolve as you create each section of your ecommerce business plan, so don’t strive for a perfect completed plan on the first try. You will be making tweaks to the plan of certain steps along the way.

There are many ways to sell products online and different business models  to pursue. Research and learn from successful ecommerce business examples in the market. The exact business model you follow will be one that makes the most sense with your resources, skills, and interests.

In order to create the best online business plan with your product in mind, you need to figure out the following things:

What are you selling?

The first step to creating an online business is to learn the absolute basics of what you can sell.

• Physical products: Clothing , shoes, home goods
• Digital products: Software as a Service products, ecourses, ebooks
• Services: Consulting services, home cleaning

Who are you selling to?

• Business-to-Business (B2B): You are selling to organizations, corporations, and non-profits rather than individual customers
• Business to Consumer (B2C): This means you are selling to individual consumers rather than businesses
• Marketplace: You are acting as a middleman by bringing businesses and (B2B or B2C) customers to one website.

How are you sourcing your product?

• Manufacture in-house: You make your product or service in-house
• Third-party manufacturer: You outsource the manufacturing of your product or service to a third-party manufacturer
• Dropship: You partner with a dropship manufacturer. Basically, this means that they make your product, package it and ship it directly to your customer while your company handles the entire customer relationship.
• Wholesale : You buy goods or services from other companies in bulk and re-sell those products on your online store

Additional References

• Entrepreneurship: Business & Marketing Plans
• Small Business and Entrepreneurship
• Entrepreneurship Resources
• Business Plan Resources

Executive Summary

The executive summary will be written according to your goals, and it’s recommended that this is done at the very end of your business plan completion. This will ensure that you include all of the important factors about your business and present your ideas in a concise and complete way.

Some of the features you’ll include in the executive summary include information showing that you’ve done your research, you have concrete sales forecasts, and the main details about your brand.

Business Model

When you’re figuring out your business model, you have to consider four different areas:

• Monetization strategy
• Product/industry
• Target market
• Sales channel

Monetization Strategy

The monetization strategy delves into the methods you are going to use to sell your products.

This strategy will look at different product monetization methods, including white label, private label , affiliate marketing, wholesale, dropshipping, and even selling ads.

Product/Industry

The product industry section is where you summarize your main niche.

For example, “Vegan Skincare Products.”

Target Market

In the target market section, you will write a sentence or so on who your target market, or ideal customer, is in the community.

If you’re selling vegan skincare products, your target customers might be women who embrace the vegan lifestyle and use natural skincare products in their daily beauty regimen.

Sales Channel

The sales channel refers to where you’re going to sell your products.

For example, you might be selling your products on your own website, and this should be entered in this section.

Business Overview

This next section covers your company overview.

This section of your business plan will cover various features of your company, including the following:

• Company type
• Domain name
• Value proposition
• Brand traits

The brand name section lists your business name or brand name.

This is an extremely important aspect of your business plan as it’s what will set the tone for everything that follows.

Pick a brand name that’s simple yet unique and is something that can be used in a wordplay manner, if desired, but not pun-worthy.

Company Type

The company is how your business operates. For example, you might label your business as an LLC , S-corporation, sole proprietor, or some other type of business organization.

The best way to determine how you should categorize your company is to speak to your accountant. There are various tax and legal aspects to forming your business in a certain way.

Speak with the professionals in the company and corporation formation field to determine how to label your company and which company type best benefits your business in a variety of ways.

Domain Name

This section is where you list your domain name.

Choose a domain name that is memorable and embraces the overall traits and features of your business.

And, when choosing a domain name, be sure to think of SEO aspects when doing so. You’ll find out just how much all of these things tie together and ensure a frequently-visited website is the end result.

Keep in mind that with ecommerce, the domain name is just as important as the brand name. Maybe even more so!

Value Proposition

A value proposition is a short, crisp statement that will gauge how clear your idea is. Write this section as if you had one minute to explain your business to a potential investor or customer and then practice it over and over again.

The value proposition can be used on your ecommerce store as your company description.

Here’s a good example: Say you’re looking to start a hiking company called Atlas Hiking Co. which sells premium performance hiking shirts. A possible company description could be the following:

Atlas Hiking Co. is a lifestyle hiking company that produces high-performance hiking shirts for outdoor lovers. Our proprietary SPF40 fabric is one of the lightest fabrics on the market, providing mountain lovers with maximum comfort, both from a breathability and sun-protection standpoint. Our product is made in the U.S.A. and a portion of our profits are donated to preserve national parks around the country.

Pay special attention to all the sensory words !

The mission statement in your business plan is the “why” of it all.

For example, why you started the business, why you are selling the products you are selling, etc., can all be added to this section of your business plan.

You can make this portion as simple or detailed as you like. Just make sure to properly and clearly explain your business mission.

The vision part of the business plan is your “how” in the grand scheme of things. It is the dream you have for your company and the path you’re going to take to realize that dream.

When you write the vision portion of the business plan, think long-term. What are you hoping to achieve, not just in the near future but for the long haul of the life of your business?

Look into the future and plan out where you see your business in 5, 10, even 20 years from now.

This will help you construct the rest of your business plan if you know where you want your business to head, now and in the future.

Brand Traits

The brand traits section is a short section in your company overview.

Basically, in the brand traits section you’re going to want to list three to five words that describe your brand.

Think of your brand personality and describe it using a few separate powerful words.

The personnel section lists all individuals, including yourself, who will be involved in the daily operations of your business. You can create a separate section for a full operations plan or add that later.

Some business owners choose to handle all duties on their own or with a partner, while others will hire individuals to fill the following roles:

• CEO (usually the business owner)
• Management team
• Customer service/logistics
• PR/Social media specialist
• SEO manager
• Advertising manager

Competitive Market Analysis

Here’s a fact you can bank on: there has never been a successful e-commerce entrepreneur that didn’t understand his/her target market cold.

That’s why this section is one of the most important in the entire business plan. It will force you to understand the industry in which you operate, the overall industry analysis and outlook, the existing competition, and your target customer demographic.

Market Segment

The market segment portion of the business plan will help you to put your ideas down on paper, make them more focused, and get your team together.

This area will include your niche selection, target market, and competitive analysis.

Niche Selection

The niche section  provides an overview of your niche, why you selected it, whether there’s a micro niche included, and the type of niche you’ve chosen.

The purpose of this section is to crystalize the ideas that you have and make sure they are understandable and viable.

The target market section covers an overview of your target market plus describes your market segments.

Ask yourself who your  target customer  is (population size, age, geography, education, ethnicity, income level) and consider whether consumers are comfortable with buying your product category online.

When listing the target market information, make sure to mention your target audience size as this is important for ensuring that your audience will be adequately covered.

Competitive Analysis

With the competitive analysis portion of your market analysis, you want to list your market leader and direct and indirect competitors.

After you mention who these entities are, you need to list the characteristics of each one, such as domain name, business model, monthly traffic, and pricing range.

However, before you even get started in writing this section, you need to spend several hours researching your target market.

Here are some of the most efficient ways to research a particular market:

Industry reports

Google is your best friend. Look for any recent industry reports on your market of choice. This will give you a good sense of how much growth the industry is experiencing, why this growth is happening, and what are the largest customer segments. In our example of Atlas Hiking Co., we should research the outdoor apparel market.

Let’s say that through our research of the outdoor apparel industry, we discovered that there was a huge boom in youth hiking apparel. Perhaps parents were increasingly concerned about their kids’ exposure to UV rays while hiking, so they began to spend more money on their kids. We could use this valuable information to guide our business strategy.

There’s only so much you can read online. Go to a nearby store that sells similar products to yours and interview the store representative. The store rep has interacted with hundreds of interested customers, which can lead to thousands of valuable insights! It’s amazing how these insights can translate into a meaningful business opportunity.

Here’s an example:

If I were going into Billy’s Outdoor Store to research the outdoor apparel market, I would probably ask Billy the following:

• What are your best-selling products?
• What are your worst-selling products?
• Find products similar to yours and ask the representative his/her favorite features on products similar to yours.
• How much are customers generally willing to spend on these types of products?
• Do customers make repeat orders of any of these products?
• Do you get a lot of customers that are looking to buy last-minute hiking gear before they go on a hike?

Competition

Create an Excel spreadsheet of all of your competitors. In your spreadsheet, you should have the following columns:

• Competitor Name
• Price point
• Product Description
• Key Features (e.g., fabric, waterproof, slim fit, etc.)

What is the competition missing? Is there a gap in the offering? Where you can add some additional value?

After conducting the competitor analysis, Atlas Hiking Co. might find that the competition’s hiking shirts offer very few features at a low price point, but no one offers a luxury hiking shirt with additional features at a higher price point.

This is just an example of the types of insights one can gain from market research which can drastically alter your business model.

Keyword Research

By using Google’s keyword planner  and trends pages, you can get a good sense of how in demand your product is and whether it’s trending upward or downward. Google is great for a general idea, just don’t bank on it.

Some other keyword tools you can use for keyword research include Ahrefs, JungleScout, and Viral Launch. Check out this list  for more ideas.

Trade shows

Are there nearby trade shows that you can go to? Again, creating connections with other people in your industry is a surefire shortcut to countless hours of reading on the internet. Trade shows are also a great opportunity to talk to competitors, meet manufacturers, and better understand where things are heading in your industry.

Once you finish researching the relevant industry, you should summarize your findings by answering the following questions:

General Industry

• How big is the overall industry?
• How big is the specific sub-industry in which you intend to operate?
• Where has most of the historic growth in the market come from?
• Why is this the right time to enter this market?
• What are the sub-segments that are poised for future growth (e.g., youth apparel)?
• How crowded is the product category with competition?
• How is your competition distributing its product (online, retail, wholesale, etc.)?
• What’s missing from the competition’s product offering?

Products and Offers

So we know we want to sell hiking shirts, but how do you research specific products?

But for some of us, we’re not quite sure what we should sell. To succeed in online retail, you need a product that is trending upwards in a growing niche.

Different types of products

Some of the different types of products include the following:

• Convenience products: Frequent purchase products, little effort on buying
• Shopping products: Less frequently purchased in between purchases, little more effort and planning, shop around
• Specialty products: Strong brand preference and loyalty, will buy no matter what the price

The various types of niches include the following:

• Hobby niches
• Lifestyle niches
• Problem niches
• Weird/embarrassing niches

Existing products

Come up with detailed specifications for each product or service you intend to sell. If it’s a hiking shirt we’re selling, we would want to have:

• Detailed sketches of the shirt
• Fabric weight, materials, type
• Key features (e.g., pre-shrunk, water-proof, SPF 40)

Future product pipeline

What are other products that you have in the pipeline? Perhaps once you’ve successfully sold hiking shirts, you’re able to leverage your manufacturing relationships to provide hiking socks and shorts. Include that information in this section.

The products and services section will cover the various selling categories of items.

These product offerings will include the following:

• Core product

Each product group will have its own purpose in your sales catalog. For example, tripwire is the product that brings customers to your ecommerce store or online marketplaces  while the core product is your main seller.

Knowing what products you’ll include within each section allows you to have a firm grasp on what your main product will be and how the other types of products will work alongside your main product.

This section will also cover the search volume and Amazon pricing range.

You’ll need to calculate your true costs. You have to make sure you don’t overestimate your margins.

To tabulate your total true costs, you need to write down the costs in the following areas:

• Target price
• Supplier cost of the product
• Total cost per unit
• Net profit per unit
• Profit margin per unit

Once you complete the pricing portion, you’ll have everything on one sheet and readily accessible whenever you need it.

Marketing Plan and Operations

So, now you’ve concluded that you have a great business idea, and it’s in a growing market. That’s fantastic – but how are you going to drive traffic to your ecommerce website and get customers to buy it ? And how much can you afford to spend on your product?

Marketing  is everything. It’s important that your marketing efforts match your business model.

If you have a website and no marketing, your site won’t have any visitors. With no visitors, you will make no sales. Then how do you grow and sell your ecommerce business (if that’s your long-term goal)? Even with the best possible products, nobody will buy them if they aren’t directed to them in some way.

In order to come up with a marketing strategy, you need to first know your customer inside out. You should be able to answer such questions as:

• How old is your customer?
• Where does your customer live?
• What is the population of your customer base?
• What is their education level?
• What is their income level?
• What are your customer’s pain points?

With so many channels to reach your customer, which one is best for you?

Once we know pretty much everything there is to know about our target customer, we can shift focus to our marketing strategy. You want to choose marketing strategies that equal positive conversion rates. What channels should you use to grab the attention of your customer demographic? Some of the key marketing channels include:

Paid Marketing

• Pay-per-click – this online marketing typically involves using Google Shopping campaigns  and managing a product data feed.
• Affiliate sales networks – Allowing other blogs and websites to sell your product for a cut of the revenue. List the different affiliate sale networks that you plan to promote through.
• Facebook ads ⎯ Ads posted on Facebook to draw in buyers through social media means.
• Influencer marketing ⎯ Hiring industry influencers to get the word out about your product through their social media platforms and contacts.

Organic Marketing

• Social media (Facebook, Instagram , Pinterest, etc.): What is your strategy for social media, and where will you dedicate your attention?
• Search Engine Optimization : Create and promote awesome content so people find your product organically through search.
• Content marketing: Figure out how you’ll use content marketing in your business. Consider various article topics that will persuade your target audience to buy your products.
• Blogger networks: could be organic or paid through affiliate sale programs.
• Key bloggers: Develop a list of the key bloggers in your product category. For Atlas Hiking Co., this might be an influencer that blogs about the best hiking trails in America.

Finding the optimal mix of these advertising tools depends 100% on your customer segment as well as your product type. For example, a SaaS product targeting millennials will require an entirely different marketing strategy than an e-commerce physical product targeting baby boomers. Perhaps that should be a post on its own for another day!

How much should you spend to acquire a customer?

In order to understand this, we need first to discuss a concept known as customer lifetime value or LTV. In essence, this is a formula that helps you better understand how much an average customer will spend over time.

Here’s  a good read on how to calculate LTV.

It’s important to remember that for new businesses, you don’t have a lot of data on customer purchase habits so it’s a good idea to be more conservative with your assumptions in calculating LTV.

Let’s say, for Atlas Hiking Co., I determine that the average LTV per customer is $300. This means that over time, the average customer will spend $300. Let’s say, on average, if I receive $300 in revenue, $100 of that will translate to gross profit before I factor in my marketing costs (basically, I’m just subtracting the cost of making the shirts).

Knowing that my gross profit is $100 per shirt is a critical piece of information because it tells me that I can spend up to $100 in marketing to acquire a customer and still be profitable!

Some of the marketing options include social media marketing and content marketing.

Think about your business model and then line up your marketing budget. Your marketing budget may include the following items:

• Sales/branded content
• SEO/blog content
• Facebook/Instagram ads
• Influencer marketing
• Marketing tools
• Niche advertising

Choosing The Right Technology

With so much technology and SaaS products out there, it’s important to understand the various moving parts and diagram how they all integrate with one another.

Some of the different elements include:

• Shopping Cart Platforms  – e.g., Shopify , BigCommerce , WooCommerce , or any open-source platform
• Hosting – Nexcess , BigScoots , Kinsta , WPX
• Payment Processo r – e.g., Stripe, Paypal
• Fulfillment Center – e.g., Amazon, ShipBob
• Apps – e.g., Zipify, BuildWooFunnels, Gelato
• Accounting & Taxes  – e.g., Quicken, Xero
• Marketing Automation – e.g., Klaviyo , Mailchimp
• Marketing Tools – e.g.  Buzzstream, Ahrefs
• Customer Loyalty Programs  – e.g., Antavo, Smile

Come up with a detailed list of the different products and services you need to run your business as well as the monthly and per-transaction cost of each of them. This will be important in understanding the impact of these services on your margins.

Matching your business model to your technology is essential, too. Certain website platforms are better suited for specific sales models.

Email marketing is another type of technology that should be carefully considered and matched up correctly with your business model.

Keep in mind that it takes, on average, 6-7 interactions with a brand before someone makes a purchase, so you need to keep using technology to get them back to your website.

As you explore the technology options and find out ways to draw potential customers in and keep them happy while they’re there, here are some key points to keep in mind:

• What you say about yourself and your products with your website content
• How you respond to questions on live chat and email support
• How to make use of chatbots
• How you connect on social media
• The information you send through email marketing
• What bloggers and influencers say about your brand
• How existing customers review your company
• How you advertise
• How you establish loyalty beyond sales

After you figure out your technology methods, you have to come up with a technology budget.

The business plan must also include the operations side of things. Determine who will be your manufacturer, secondary manufacturer, and shipping and fulfillment  provider.

When looking at supply chain costs and options, ShipBob  is an ecommerce fulfillment provider you can consider.

Financial Plan

When figuring out your financial plan, evaluating and pinpointing your startup costs  is essential.

The focus of the financial plan is how long it will take for you to make your money back. You also need to figure out if you need a business loan .

Traffic and conversion rates will help you determine how long it will be until you start making money back.

You’ll also want to use an income statement to detail financial information.

This section is used for financial projections, such as forecasting sales, expenses, and net income of the business. Ideally, you’ll want to create a monthly Excel balance sheet showing the following:

• Projected revenue:  First, come up with your projected number of units sold and then come up with your projected revenue (Projected Revenue = # of Units Sold * Average Sales Price).
• Fixed expenses:   these are expenses that are fixed no matter how much you sell. Typically, these relate to monthly SaaS subscriptions, employee salaries, or rent.
• Variable expenses  – these expenses change in direct proportion to how much you sell. Common examples include the cost of goods sold and credit card payment processing fees.

This helps business owners better understand what they need to achieve to hit their profit goals. In reality, projections are usually always off the mark, but it’s good to give yourself some measurable goals to strive for.

This section should aim to answer the following questions about your product offering:

• How much product do you need to sell per year to meet your income goals for the business?
• What are the margins on your product? If you sell one hiking shirt for $50, how much do you make after paying your supplier, employees, and marketing costs?
• What is the lifetime value of a customer?
• How much can you spend to acquire customers? If you conservatively project that the average customer will spend $300 over time on your shirts, then you can afford to spend an amount less than $300 to acquire that customer using the paid marketing channels described previously.
• Do you have any big capital expenditures early on that would require you to need to bring in investors?
• Can you improve gross margins by making bigger orders from your suppliers?

There are various acquisition channels that will help your traffic to convert including:

Your revenue plan will contain a 12-month revenue forecast plan to help you map out each month of earnings.

There are different business earning models you can go through to determine how much you can make with your business.

You want to calculate how much traffic costs. This all depends on the methods you use to gain traffic to your site.

As you determine what your profit might be with your ecommerce business  or ecommerce businesses, there are certain math formulas to use:

• The profit equation
• Break-even analysis
• Units needed to achieve the profit target

You should also consider how you will use fintech companies in your ecommerce business.

What are the key elements of an ecommerce business plan?

The main components of an eCommerce business plan include the executive summary, company description, market analysis, organization and management structure, product line or service, marketing and sales strategy, financial projections, and funding request, if applicable.

How do I create a budget for my ecommerce business?

Start by estimating your initial startup costs and ongoing expenses. Consider costs like website development, inventory, marketing, shipping, taxes, and any necessary licenses or permits. It’s also important to factor in a contingency plan for unexpected costs.

How do I find the right product to sell?

Research is fundamental. Look at market trends, customer needs, and competitor products. Use tools like Google Trends or social media platforms to understand what customers are currently interested in. Always consider your passion and knowledge about the product too, as this can drive your business forward.

How can I differentiate my product from competitors?

Differentiation can come from unique product features, superior customer service, better pricing, or a compelling brand story. Understand what your competitors offer and how you can do it differently or better.

Wrapping Up Your Business Plan

Careful planning is crucial to get your e-commerce business from the planning phase to the launch phase and to ensure its successful future.

Going through the exercise of writing a business plan will cement your own understanding of your business and your market. It will also position you to take advantage of lucrative opportunities while mitigating harmful threats to your business down the line.

Your turn! Have you written a business plan for your online store? Do you have anything to add? Tell us about it in the comments below!

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How to Write an Ecommerce Business Plan [Examples & Template]

Published: January 11, 2024

If you have a promising idea for an online e-commerce business , it’s important to create an e-commerce business plan to ensure your vision has enough stock to be profitable.

Having a business plan for your online store will help you define your target market, establish your monthly and quarterly sales goals, and increase the likelihood of long-term e-commerce success.

In this post, we’ll go over an online store business plan and how you can create one for your e-commerce startup. Let’s get started.

What is an e-commerce business plan?

An e-commerce business plan is a document that outlines your business and its goals, analyzes your industry and competitors, and identifies the resources needed to execute your plan. It also lists the e-commerce retailers you’ll use to distribute your products and the marketing strategies you’ll use to drive sales.

Whether a company operates as a startup or has years of operations and growth under its belt, an e-commerce business plan is essential for evaluating a business and determining areas of improvement.

An e-commerce business plan is essential, with increasing numbers of shoppers conducting business online. It's estimated this number has reached over 2 billion . An e-commerce business plan keeps you organized and is useful when seeking investors who need to understand your company.

So, let’s dive into some examples of e-commerce business plans and what goes into writing one using our free template .

Free Business Plan Template

The essential document for starting a business -- custom built for your needs.

• Outline your idea.
• Pitch to investors.
• Secure funding.
• Get to work!

You're all set!

Click this link to access this resource at any time.

E-commerce Business Plan Template

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Table of Contents

1. Define your e-commerce business idea

2. set up your business, 3. source or develop your products, 4. set up your e-commerce website, 5. figure out order fulfillment, 6. market your e-commerce business, how much does it cost to start an e-commerce business, tips for starting an e-commerce business .

An e-commerce business sells goods, services and funds over the internet. Starting an e-commerce business is a lot like starting any company: You’ll need to create a business plan, get licenses and permits and set up dedicated finances. You’ll also need to choose an e-commerce website builder , source your products and market to online customers.

Follow these six steps to get your e-commerce business up and running.

The first step in starting any business is to hone your idea. Online business ideas can include selling physical or digital products as well as professional services. Whatever you choose, you’ll want to define your e-commerce business model and write a business plan that outlines your niche.

During this process, you’ll start to ask a lot of questions: How will you get your products or services to your customers? What sort of licenses or permits do you need? How much will it cost to get your business up and running — and how will you foot that bill? Your business plan should answer these questions and provide a road map for the coming months.

More resources to help shape your idea:

What is e-commerce? Understanding how it works  

Our picks for the best business plan software

Can your business idea actually make money?

Once you've solidified your e-commerce business idea, the next step is to set your company up for success.

This includes back-office steps like:

Choosing a business structure . There are benefits and drawbacks to each of these entity types, so talking to an attorney may be helpful as you choose the one that’s right for you.

Naming your business. Consult your local secretary of state's website as well as the U.S. Patent and Trademark Office to ensure that you're not choosing a name that belongs to another company. Check to see if your potential business domain name is available as well.

Applying for an employer identification number (EIN) . You can get an EIN from the IRS for free online or by mail, fax or phone. Not all businesses need an EIN, but having one can help you separate your personal and business finances.

Opening a business checking account . NerdWallet recommends all business owners have a dedicated bank account for their business.

Getting licenses and permits your city or state requires. This probably includes a business license, and if you perform services, you may also need an occupational license. Check your state or local government website for requirements for your area.

Answers as you set up your business:

Do you need a business license to sell online?

What’s the difference between an LLC and a sole proprietorship?

Our picks for the best free business checking accounts

Shopify Ecommerce

Next, you'll need to source the products you're going to sell. If you’re selling physical products, you may need to make them yourself or work with a manufacturer.

A key decision at this point: Are you going to order products in bulk and keep inventory in stock? If so, you’ll need to think about storage space and raising capital to order goods upfront. However, you’ll have the power to ship items yourself.

Other businesses choose to rely on dropshipping , in which products are manufactured or sourced at the time the order is placed. In general, dropshipping may keep your overhead costs lower, but it can be more difficult to manage since inventory levels and shipping will be out of your hands.

Other options for sourcing e-commerce products include:

White-labeling, or ordering items in bulk from a manufacturer and then branding them with your company’s identity.

Print-on-demand, or paying a third party to print your company’s designs on merchandise like T-shirts, mugs and posters. Print-on-demand normally functions like dropshipping, in that a customer places their order, then the manufacturer creates the product and ships it directly to the customer.

Retail arbitrage, or buying discounted items from retail sellers and listing them in your own store at a markup. 

If you're selling professional services, you might just have to describe and list what you offer on your business website. Still, you’ll need to figure out how much to charge and decide how many clients you can see each day or week.

More to help you develop products:

16 e-commerce business ideas

How to find products to sell on Amazon

How to make money on Shopify

Your e-commerce website will be your storefront. It’s where your customers will learn about you and your business, browse your products and make purchases.

The easiest way to set up a website is to use an online store builder . These platforms can walk you through the process of launching your website, from buying a domain name to managing your inventory to taking credit card payments.

Popular e-commerce website builders include Shopify , Squarespace , Square Online and BigCommerce .

If you’re a very small business or just experimenting with online sales, a free e-commerce website builder may be a good place to start. But to list unlimited products and access more robust suites of tools — which can help with things like shipping label printing, order management and sales analytics — you’ll typically need to spring for a subscription.

In general, many online store builders should be simple enough for someone without web development experience to navigate. But most offer the option to pay a professional designer or developer if you don’t want to build the website on your own.

The best e-commerce platform for you fits into your budget and is appropriate for your skill level.

Choosing the right website builder:

Our picks for the best e-commerce website builders

Wix vs. Squarespace: Head-to-head comparison

Shopify vs. Square Online: Head-to-head comparison

Order fulfillment is the process of getting customers’ purchases in their hands.

Most e-commerce website builders offer shipping label printing, which is the first step in the fulfillment process. Some also offer the ability to add shipping costs onto customers’ orders at checkout.

If you choose to handle order fulfillment yourself, research shipping rates so you have a sense of how much it’ll cost. Look for an online store builder that can help make the shipping process easier or research shipping software providers like Shippo .

Note, too, that e-commerce may connect you to customers across the world. If there are places you’re not willing to ship to, make that clear on your website.

If you don’t want to manage order fulfillment, you can outsource it to an e-commerce fulfillment center or use a service like Fulfillment by Amazon. Fees for fulfillment services vary depending on the size of your products, how far they’re traveling and how much you’re shipping.

More to help you manage orders and inventory:

Our picks for the best inventory management software

What is just-in-time inventory?

Shipping services that integrate with WooCommerce

Now that you've started your online store , you're ready to start serving customers — as long as they can find your products.

Your small-business marketing strategy might include:

Omnichannel commerce , in which you list your products on third-party marketplaces like Amazon and Instagram. Some e-commerce website builders can help facilitate this.

Influencer marketing, in which you pay popular social media creators to plug your products. 

Social media content or paid social media ads.

Optimizing your business website for search engines.

Sending email campaigns to past and future customers.

Many e-commerce website builders include some marketing features, which can help you do things like create social media ads or send emails to customers when they’ve abandoned their carts.

But if you want to develop more sophisticated campaigns, consider investing in marketing software . These tools can help you create email templates and campaigns, text customers, keep track of how individual customers are responding to your emails and more.

More help with marketing:

20 free marketing ideas for small businesses

Online marketing strategies and tips

Content marketing for small businesses

The cost of starting an e-commerce business can vary widely depending on what you’re planning to sell and in what volume. Your expenses may include:

Your e-commerce website. Subscription plans for online store builders generally start around $25 to $30 per month when billed annually. You may also need to spring for a domain name if your e-commerce website builder doesn’t include one — and make note of annual fees to keep your URL registered. 

Payment processing fees. In general, the company that provides your payment processing will take a cut of around 3% from each online sale. 

Stocking up. If you plan to order inventory in bulk, be prepared for significant upfront costs — even before you’ve started generating revenue. Inventory financing may be able to help you bridge the gap.

Order fulfillment. In general, you’ll pay a third-party service to fulfill each order, with rates varying depending on item size and weight. The more customers buy at once, the less you’ll have to pay per item. Order fulfillment services may also include warehousing, for which you’ll pay a per-item storage cost. 

Warehousing. If you’re buying more inventory than you can keep in your home or garage but not using an order fulfillment service that provides storage, you may need to spring for warehouse space of your own.

General costs of running a business. These could include monthly or annual fees for accounting software , business insurance , any employees or contractors you plan to hire and more. You may also need to set aside money for small-business taxes .

As with launching any business, starting an e-commerce business can feel overwhelming. Here are some tips for managing the transition.

1. Start simple

If you’re not certain e-commerce is the right path for you, set up an online store with low overhead first. This may mean starting with the free version of an e-commerce website builder, ordering a small amount of inventory or selling only one or two types of products. 

Starting small can limit how much startup funding you need and make it easier to pivot if your first idea doesn’t land. As your business starts to get traction, you can trade up to a more robust e-commerce platform and expand your product line.

2. Cultivate a loyal customer base

Your e-commerce business needs customers who appreciate your products enough to buy them more than once and, ideally, customers who will promote them to their networks.

Establishing a strong brand presence on social media can help you build a following. But the more information you can gather from your customers, the more you can market directly to them, whether that means creating an email marketing campaign, sending discount codes through text message or letting them know where your booth will be at an event in their region.

3. Invest in multichannel selling

Loyal customers may be willing to visit your website frequently. But to reach new ones, you might have to meet them where they are — which might be on Amazon, Instagram, TikTok or elsewhere. Start with the platforms where your customers are most likely to be, launch those integrations and then see how they perform. You can add platforms later if they fit into your business strategy. 

Keep in mind that selling in person is a channel, too. Craft fairs, local shops and industry or trade events may help you connect with new customers while generating some revenue.

A version of this article originally appeared on JustBusiness, a subsidiary of NerdWallet.

On a similar note...

Creating a Stellar Ecommerce Business Plan for Your Online Store

Choose the Right Ecommerce Platform

For years, you’ve purchased items from online businesses or marketplaces like Etsy, eBay and Amazon and thought to yourself, “I could do something like this, too.”

Starting your own ecommerce business may seem intimidating — writing a business plan, even more so.

However, a business plan allows you to validate your business idea, assess your financial position and create a concrete action plan for how you’ll deliver a product from the original source to the end consumer.

In other words, while the business plan might seem like it’s ultimately meant for other people’s benefit — potential investors, business partners or well-meaning family members who keep pestering you to write one — in reality, the business plan benefits you, the business owner, the most.

You’ll shape the vision and mission for your business and map out how you’ll get there. One study by Harvard Business Review found that entrepreneurs who write a formal business plan are 16% more likely to achieve viability than those who don’t.

An ecommerce business plan is a document that outlines your business purpose and goals, analyzes your industry and competitors and identifies the resources needed to execute your plan.

For example, which suppliers will you work with? What types of products will you stock? Who is your ideal buyer? How will you advertise your business? Can you afford to provide free shipping and still make a profit?

Here’s a step-by-step primer on how to write a business plan for your ecommerce store, what elements to include and how to use your own business plan to increase your chance of success.

How to Create An Ecommerce Business Plan

Business plans help entrepreneurs maintain focus on their goals and shape the day-to-day running of a new business. The key elements of an ecommerce business plan template describe blueprints for growth, projected timelines and financial goals — clarifying topics like cash flow, expenses, marketing tools and distribution channels.

Draft an executive summary.

An executive summary provides a concise rundown of the key points in your business plan. In short, it should summarize your chosen industry, business purpose, competitors, business goals and financial position. Executive summaries average 1-3 pages and are ideally under two pages.

What does your business do?

Explain the raison d’être for your startup. What problem will you solve for your customers? Who is the target audience? Where do you want your business to be in one, five, or 10 years?

Here are the main elements of an executive summary:

The problem statement or business opportunity : Describe a pain point or gap in the market that you are uniquely qualified to fill. (“As someone who used to own a convenience store, I heard many of my customers complain about the lack of healthy food options while traveling domestically.”)

Your business idea : State how you plan to approach the problem (“XYZ is a ready-to-eat meal company that lets travelers order and pack healthy meals ahead of trips so they can avoid eating fast food.”)

Company history : Describe what milestones you have achieved. Are you already working with suppliers? What is your current revenue? (“In 2021, XYZ fulfilled over 10,000 orders, generating $150,000 in revenue.”)

Industry and market analysis : Outline the trends in the market that affect your business, market size, and demand for your product. (“In 2022, the global health and wellness food market was valued at $841 billion and is projected to increase to one trillion by 2026.”)

Competition : Explain who your competitors are, outline their strengths and weaknesses, and make it clear how you will differentiate.

Timeline for key milestones : Project when you plan to achieve goals like breaking even, launching an IPO, or other key milestones.

Financial plan (if you are seeking funding from investors or banks).

What goals does your business want to achieve?

Set short- and long-term goals for your business, such as achieving a certain amount of revenue or testing a new product idea. Business goals can be general and high-level or they can focus on specific, measurable actions (SMART goals).

The most realistic goal-setting approach is to set short-term goals as stepping stones to your long-term goals. For example, your short-term goal to decrease website bounce rate by 25% within 12 weeks might help you reach the long-term goal of growing conversions by 50% within one year.

Timeframes for short-term goals can range from a few hours to a year, while long-term goals generally take 1-5 years to achieve.

What products do you sell?

Outline your product offerings and specify where you’ll source each item. Some ecommerce businesses manufacture products in-house. Others work with wholesalers, manufacturers or print-on-demand businesses to resell their products.

Curate a tight product line that demonstrates your value proposition. Why should someone buy from your online store rather than another brand? Why would someone choose your products over a substitute if you don't produce goods in-house?

Ecommerce companies sell three types of products: goods, services and digital products. Tell your readers what you intend to sell and why. List each item and its purpose. For each, you want to answer the question “why?” Why are you choosing to offer these specific products and services? How do you plan on fulfilling orders?

If you’re offering a service, explain what you do and where. Are you local? Do you travel to your customers? Will you partner with similar service providers in other areas?

How will customers access the item if you're offering a digital product? Will they download software or education videos from your site? Will they pay a subscription or usage-based fee? What about licensing requirements? Mention intellectual property ownership (if applicable) including trademarks, patents and copyrights.

Who is your audience?

Describe your ideal customer. Define your product or service from their point of view. What problems does your product solve for them? What benefits or features do customers look for when shopping for that product type?

Create customer profiles that summarize your target audience in terms of demographics (age, location, gender, etc) and psychographics (pain points, interests, buying patterns). Consider creating customer segments based on shared characteristics if you cater to a wide audience.

Demographic data should include the following points:

Education level.

Relationship status.

Occupation.

Meanwhile, discover your target customer’s motivations, needs and wants as much as possible. Psychographic data should include the following points:

Where are you going to sell your products?

Outline your sales channels, both future and existing. For example, your main point-of-sale might be your ecommerce site. Be sure to include stats on site traffic and conversions so readers know how your site is performing.

Still, you might also offer your products online on marketplaces like eBay, Amazon and Etsy. Explain how each of these channels is performing and how you’re optimizing them for product discoverability and conversions (eg: following SEO best practices, using high-quality images, highlighting user-generated content).

Identify your company overview.

Tell your brand's story , its purpose, and how the company was founded. In addition to the company description, provide details on how you currently run the business. List your business partners and employees and describe the business's legal structure.

The best brand names are memorable and communicate the essence of your business. Brand names gain icon status because they represent an excellent product or service, so don’t obsess over it.

That said, the right brand name can be your brand’s most valuable asset, driving differentiation and speeding acceptance. In fact, 71% of consumers prefer to buy from brands they recognize.

If you’re struggling to come up with a name, try using an online brand name generator as a jumping-off point. Remember, you’re not locked into a single brand name forever.

Business structure

Describe the legal structure of your business. Is it a sole proprietorship, LLC, an S-Corp or a partnership? Consider speaking to an accountant if you’re not sure. Who is in charge of the business? List founders and officers and their contributions (both capital and expertise) to the company. Who works for the company? Include an org chart that illustrates who currently works for the business and the roles you plan to hire for . List their responsibilities, salaries and terms of employment (freelance, full-time, part-time).[

Your business structure]( https://bristax.com.au/business-articles/business-structures/ ) affects how much you pay in taxes, your ability to raise money, the paperwork you must file and your personal liability in the event of business bankruptcy, so this information is important to lenders. Also mention if you have filed or plan to file for any applicable licenses or permits.

Domain name

Register a unique domain name for your business. A catchy brand name is essential because the domain is less likely to have been claimed by another business. Keep your domain name as short as possible and ensure it includes your brand name for SEO purposes.

Your mission describes the fundamental purpose of your business. It should tell people why the business exists and how it benefits its customers. For example, LinkedIn’s mission statement is “connect the world’s professionals and make them more productive and successful.”

However, be careful not to exaggerate. An overly aspirational mission statement is disingenuous and wishy-washy — no single corporation or small business will single-handedly “change the world.”

A vision statement is a declaration of what you want your business to achieve in the future by fulfilling its purpose. It describes your company’s “why,” while the mission statement describes the “who” and “what” of the business.

Your vision statement should define your values as a business (eg: reducing waste generated by single-use toiletries) and future goals (achieving a zero-waste world by implementing a circular economy).

Background information

Tell the story of how you conceived your business idea. Say you’re a former school teacher who discovered your artistic flair from making handmade pottery in your garage on weekends. Describe how your business has grown and changed since you first started it.

Your team and key people

List the key personnel in your company. Aside from the founders and executive team, who keeps the business running each day? Here are a few examples:

Company owner — that’s probably you.

CEO — that’s probably also you.

Management team.

Customer service manager.

Logistics manager.

PR and social media specialist.

Advertising manager.

SEO manager.

Copywriters.

Conduct market research.

Ecommerce businesses face intense competition and are liable to market disruptions because they rely on third parties (suppliers, shipping companies, wholesalers) to deliver a product or service. Knowing the market in and out will help you build a more resilient business.

A market analysis considers your ideal customer (their purchase habits and behaviors), competitors (their strengths and weaknesses), market conditions (industry trends and long-term outlook), and how your business fits into this landscape.

The point of a target market analysis is to:

Identify the most and least valuable markets.

Develop buyer personas.

Find gaps in the market to fill.

Assess the viability of a product or service.

Improve business strategy .

Market opportunities

The first step to identifying your target market is determining your total addressable market (TAM) — the maximum market size for your product or service. Who are your customers? What are their demographic and psychographic traits? When and how often will they buy your product?

The best way to obtain a high-level overview of your customer base is to consult your social media and web analytics. These dashboards show where your customers live, their age, gender, general interests and more. You can also use U.S. Census Bureau data to pad up this information.

Competitive analysis

Analyze the strengths and weaknesses of your current and potential competitors. First, find out who your direct and indirect competitors are. You can perform a Google search of businesses that sell similar products or scope out rivals in your local area.

Here’s what you need to know about your competitors:

What markets and segments they serve.

What benefits they offer.

Why their customers buy from them.

Details of products and services, including pricing and promotional strategies.

Search for publicly available information about your competitors. Aside from that, do some of your own primary research. Visit their website and complete an order or visit their physical outlet.

Next, analyze the information. Is there a segment of the market your competition has overlooked? Is there a product they don’t supply? Did you have a bad customer experience when you walked into the store?

Detail your competitive advantage in your business plan. Don’t just list things that your competitors do — that’s not analysis. The competitive analysis section aims to persuade the reader that you are knowledgeable about the competition and that your business idea has a significant advantage over the competition.

Products and services

List the products and services you provide and how customers will access them. If you’re selling digital products, will customers have to stream or download the content? Do they pay a subscription fee to access a content platform or do they pay for each individual content piece? If you’re providing a service, will you provide it on physical premises or will you travel to customers’ homes? Will you sell physical products in a physical store or online? What is your website like? List each product, including a short product description and pricing information.

Develop a marketing plan.

You need a go-to-market strategy if you haven’t already launched your business. How will you spread the word about your business? How and where will you advertise and what is your budget? If you run social media ads, for example, what platforms will you use and who is your target audience? Will you do content marketing and SEO? A thorough marketing plan answers all of these important questions.

Marketing channels

Define which channels match your consumer demographic. Do your potential customers spend time on Facebook or do they prefer YouTube? First, figure out where your potential customers are. Next, create attention-grabbing marketing strategies and use them to reach your customer base.

Paid marketing channels

PPC advertising : Advertise on Google’s search engine and pay only once someone clicks on your ad. You can bid for ad placement in the search engine’s sponsored links when someone searches a keyword related to your business offering.

Affiliate marketing : Embed links to another business’s products in your content and receive a commission when someone makes a purchase using your unique affiliate link.

Social media ads : Run paid ads on social media apps and platforms like Facebook, Instagram and YouTube to reach targeted audiences. Ads can use different creatives such as images, videos and GIFs.

Influencer marketing : Work with a popular influencer who will promote your products to their followers. Influencers are paid based on conversions or reach.

Organic marketing channels

Brands must use an organic marketing strategy to build brand awareness and engagement and drive website traffic.

Examples include:

Search engine optimization (SEO) : Optimize your website, web pages and blog posts for maximum discoverability on search engines. This involves doing keyword research for your industry, creating high-quality content that attracts and converts and using keywords in the right places.

Social media posts : Organic social media posts build brand awareness and humanize the brand by providing a behind-the-scenes look at the company and allowing you to share engaging visual content to inspire, educate and entertain.

Blogger networks : Collaborating with trusted bloggers on link exchanges can help you build website backlinks, improving your search engine ranking.

Content marketing : Organic content includes blog posts, white papers, SEO pages, and more. This gives you content to post on social media and improves the discoverability of your website. Websites that publish high-quality content consistently rank higher in search results.

Email marketing : Create email templates for new and potential customers, cart abandonment, promotions and announcements and more.

Logistics and Operations plan

This portion of the business plan covers what you physically need to run your ecommerce company. Basically, it outlines how you’ll manage the flow of goods from the supplier (you or a third party) to the consumer. You cannot start a business without an established supply chain.

Your logistics and operations plan should cover the following:

Suppliers : Where do your raw materials or products come from? Do you work with a manufacturer who produces your product idea or are you reselling products from a supplier, wholesaler or distributor? What is the minimum order value? Do they require payment upfront or after the sale? Do you have a backup supplier in case demand spikes or there is a problem with fulfillment?

Production : Will you create your own products or use a third-party manufacturer or dropshipping company? If you’re creating your own products, where will this be done? What assets and equipment do you need? What are your operating costs?

Shipping and fulfillment : Outline how the product will reach the end consumer. How long will it take you to pack and ship products to customers? Will you use a third-party shipper? Will you ship internationally?

Inventory : How much inventory will you keep on hand and where will you put it? How will you track incoming and outgoing inventory? Do you need warehouse storage space?

Establish a financial plan.

The financial section of your business plan is where you prove the feasibility of your business idea and calculate your startup costs. It includes financial projections and statements that show your business’s current financial position and project where you hope to be in the future. This is one of the essential components of the business plan, particularly if you are seeking investment funding, a bank loan or a business partner.

Income statement

In this document, you’ll forecast the company’s revenues and expenses during a particular period. Total revenue is the sum of both operating and non-operating revenues while total expenses include those incurred by primary and secondary activities.

If you subtract your expenses from your revenue sources, you’ll come up with your bottom line (profit or loss).

Balance sheet

A balance sheet helps you calculate how much equity you have in your business. It summarizes your company’s assets (what you own), your liabilities (what you owe) and equity (money invested into the business plus profits).

A balance sheet enables you to calculate your net worth. All of your assets (machinery, inventory, business premises, etc.) go in a column on the left and your liabilities (accounts and wages payable, business loan repayments, business credit card payments, taxes) go in a column on the right. If you subtract your liabilities from your assets, you get your business’ shareholder equity.

Cash-flow statement

This document shows how much cash is generated and spent over a time period. Cash flow determines whether your business is primarily gaining or losing money. Positive cash flow and profit margins are important because it enables your business to repay bank loans, purchase commodities and keep the lights on.

How to Increase Ecommerce Sales

Explore our collection of free resources designed to help you scale smarter and accelerate your online growth from $1 million to $100 million.

The Final Word

Writing a comprehensive business plan is crucial not only for staying on track in the first year or so after launching your business but also for securing funding, finding a business partner and evaluating the viability of your business idea.

FAQs About Ecommerce Business Plans

Who needs an ecommerce business plan, what are the benefits of creating a business plan, how do i start an ecommerce business with no money, browse additional resources.

How To Create an Ecommerce Business Plan for Your Online Store

Our culture thrives on instant gratification. Streaming media, medical appointments, and online shopping are all just a point and click away.

Online sales are booming, and more people are launching ecommerce businesses than ever before. The best way to prepare for success is with a business plan for your ecommerce store.

That’s true. Breaking into ecommerce is easy. Being successful, however, takes a bit of work – so pair your enthusiasm with preparedness.

A 2019 study from Startup Genome found that 90% of ecommerce startups fail within their first 120 days of operation. Some of the reasons for failure include poor search engine visibility, a saturated market, and financial issues — all of which could have been addressed ahead of time with an ecommerce business plan.

It may seem like a headache, but learning how to create a business plan is the best step you can take to ensure long-term success.

In this guide, you’ll learn:

• Why you need an ecommerce business plan.
• What the elements of a business plan are.
• How to create a business plan for ecommerce.

What is an ecommerce business plan?

An ecommerce business plan is a roadmap to profitability – a document that outlines your business idea, what you want to achieve, how you’re going to get there, and everything in between . It's just like the business plan you’d put together for any other business.

Potential investors may have questions about your business, and your ecommerce business plan answers them. It also lays out goals, discusses operations strategy, plans for growth, and anticipates issues. It’s a summary of how you plan to achieve success — because a successful business turns a profit.

Who needs a business plan?

If you’re in commerce, you need a business plan. Brick and mortar, ecommerce, B2B, B2C, nonprofit, for profit, lemonade stand, door to door salesman – everyone running a business needs a business plan.

Communicating your goals and methods is part of being a business owner. You’re bringing consistency and accountability to the table, because your plan isn’t just for you. You’re likely working with investors, bankers, employees, partners, even customers. Your objectives need to be clear to the people you’re working with and working for.

A business plan benefits everyone involved in a business. Not every ecommerce brand launches with a formal business plan, but there is value in taking time to step back and study the market you’re looking to enter. That way, you can formulate a strategy to launch and grow a successful ecommerce site.

Why do I need a business plan?

Outside of keeping your business operations on track and organized, ecommerce businesses need business plans because they need capital. Like most businesses, if you’re not already rolling in dough you will need financing.

There are a few options. You could find investors or you can secure a business loan. Either way, having a business plan for your ecommerce store increases your chances of getting financing . Investors and banks don’t just throw money at strangers who ask for it – they need proof of business viability. That viability depends on the plan you’ve created.

A solid business plan empowers you to:

• Develop a strategy for growing your business
• Determine potential obstacles
• Identify the human, physical, or financial resources needed
• Evaluate the viability of your business idea

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What do I need to start my ecommerce business plan?

If you’re figuring out how to create a business plan, you’ll need to consider all the details of building your business, including:

• What products and/or services you’ll be offering
• Financial models for your business
• Operations plans
• Staffing plans
• An expected timeframe for achieving your goals

You can find templates online, but it’s important to understand the relevance of each component and how it relates to your business.

You should also consider that templates may be geared toward brick and mortar businesses and not everything may apply to your individual situation.

For example, if you’re a dropshipper, you won’t need to think about factoring in overhead costs.

What is in an ecommerce business plan?

Think of your startup’s ecommerce business plan as Cliffs Notes for your company. The high level components are detailed, but day-to-day decisions aren’t. You’ll outline your marketing strategy, not what your social media manager tweets out on Thursday.

Not every business plan is exactly the same. All businesses have different needs. All business plans contain a few key parts:

• Executive summary
• Company overview
• Market analysis
• Products and services
• Marketing plan
• Operations plan
• Financial plan

Let’s explore what each component of an ecommerce business plan entails.

Business plan template: how to create a business plan for ecommerce

Writing a business plan is not as complicated as people assume it will be. Here’s how to create a business plan for your online business.

1. Sum up your plan with an executive summary

The executive summary outlines the key points discussed in the rest of the ecommerce business plan. The executive summary is often the last section to be written, but it should be the first thing someone reading your plan sees. Keep it brief — an executive summary shouldn’t exceed one page.

The executive summary is where you identify your products and services, describe your target audience, and communicate how you solve customers' pain points.

You will also detail where you expect your business to go in the future. If you’re planning on expanding offerings, developing new products, or adding new delivery methods, you should mention that in the executive summary.

Executive summary example Colleen’s Cookie Keepers is a sole proprietorship that sells specialized cookie containers that features proprietary cookie preservation technology ensuring fresh baked cookies stay soft and pliable for up to 3 weeks. It offers a premium cookie experience, expanding the niche market of plastic food storage serving home cooks and bakers who encounter inferior storage options for baked goods. Colleen’s Cookie Keepers’ ideal customer is a woman who has children or grandchildren and considers herself a “home baker.” Given the focus parents place on healthy options for their children and the trend of moving away from processed foods, there is a renewed market interest in high quality home preservation options. While canning and vacuum sealing attempt to meet needs, the underserved market of baked goods shelf-life leaves a gap in the market. Colleen’s Cookie Keepers offers airtight cookie containers in 5 sizes and are available exclusively online at ColleensCookieKeepers.com. Our products range from $6.99 to $129.99. Production costs are $0.73 for the smallest size and scale up to $14.32 for the largest size. The company’s sales projections for the year are $650,000, with an expectation of 35% growth over a period of five years. By year three, we project 80% gross margins. The business is run by Colleen F. Snickerdoodle, founder, who has extensive home baking experience and a degree in Advanced Plastics Engineering from the Harvard School of Tupperware.

Your executive summary is your 30 second elevator speech. You have to sell your readers right away to keep invested parties reading through your plan. They’re forming impressions about your capacity for success – so now’s your time to shine.

Make sure to include:

• A brief overview of what your business does
• What your company sells, or what services you provide
• Who your customers are
• Where you plan to sell your products
• Goals for growth
• Financial considerations (think how participants explain their valuation on Shark Tank)
• How much financing your business will need
• Who leads the company

Being told to simultaneously be brief but include all these important details feels like conflicting information. You’re giving the reader a taste of why your business is worth financing. Touch on the major points — the more substantial information is fleshed out later in the plan.

Some instances do not require the amount of detail a full business plan goes into. A “lean” business plan is usually a one-pager and will contain the information from your executive summary and your company overview.

2. Introduce your company with the company overview

Your company overview breaks down why your business exists – and when you’re seeking financing, you need to present your business in a manner that inspires confidence.

By the time a reader finishes this section of a business plan for your ecommerce startup, they should understand the fundamental aspects of your company.

Your business is one of likely hundreds they’ll review this year. When you’re creating an ecommerce business plan for your startup or existing business, you are essentially forming a very detailed marketing document.

The company overview will be defining your company’s identity. This gives you room to be creative while also defining your mission, values, and vision. It gives you the chance to tell your company’s story and introduce the major players.

This section should provide an overview of your business in terms of:

• Company and brand name
• Brand mission, vision, and values
• Business history: How did your company start?
• Business structure: Are you a single proprietorship, partnership, corporation?
• Business model: Do you sell products directly to consumers? Will you get into affiliate marketing ?
• Value proposition: What makes your company unique?

Company overview example

Company name Colleen’s Cookie Keepers Company history Our founder Colleen F. Snickerdoodle grew up making countless batches of cookies for her family, but would often have many left over. They’d often go stale or grow mold. Knowing there had to be a better way, she developed the initial prototype and launched Colleen’s Cookie Keepers… Mission, vision, values Colleen’s Cookie Keepers offers specialized containers that keep home baked cookies fresher for longer… Our vision is to have a world without stale cookies…  Colleen’s Cookie Keepers promotes a culture of health and safety Business structure Colleen’s Cookie Keepers is a sole proprietorship led by Colleen F. Snickerdoodle. The company employs 14 staff… Business model At this time we are a direct sales company that offers one product, but in the future we plan to introduce an affiliate rewards program, additional products, and gift cards. Value proposition We are the only science-proven cookie preservation device on the market, guaranteed to safeguard your cookie from the elements, mold, and even Uncle Randy. Goals Move 100,000 units by Q4 2023. Introduce 3 variants in 2024. Team CEO: Colleen F. Snickerdoodle Business Manager: Chip Florentine

The company overview is where you get to tell your company’s story. How did it start? What do you offer? Where did the idea come from? What pain point does your business solve? Tell stakeholders why your company is unique and marketable.

If you’re finding it difficult to come up with your mission, vision, and values – think about why you’re in business in the first place. Did you want to make things easier for a specific group of people? Were you sick of products that didn’t really achieve the results they promised so you built a better mousetrap?

You should cover what type of company your ecommerce business is (sole proprietorship, partnership, corporation, LLC, etc) as well as which business model you are operating.

When we say value proposition, we’re talking about why your business brings value. Why should people buy from you? What are you doing great or unique?

If you have not developed goals for your ecommerce business, it’s a great time to start. If you’re presenting a business plan to investors, partners, staff, or customers, it is very important that they know where you expect your company to go.

A note about goals

If you have not developed goals for your ecommerce business, it’s a great time to start. If you’re presenting a business plan to investors, partners, staff, or customers – it is very important that they know where you expect your company to go.You might be familiar with S.M.A.R.T. goals already. It’s a framework for goal development that stands for:

• Specific: Saying you want to do better next year is a goal, but it’s vague. Spell out what you want to happen. Increase revenue? Expand capacity? By how much? Define the goal as clearly as possible.
• Measurable: Goals require tracking. Determine what data needs to be tracked and analyzed each quarter and set up spreadsheets to monitor your progress.
• Achievable: Understanding what your business can afford to re-invest, how much product is on hand, and factoring in availability/supply chain issues can help you develop an attainable goal. If you can’t stock 1,000 items, you won’t be able to sell 10,000.
• Relevant: Does your goal align with your company’s mission and purpose?
• Timebound: Goals are projects. Projects have deadlines. Setting deadlines gives you the boundaries in which you can measure if your goals are successful.

S.M.A.R.T Goal Examples

• Increase sales by 10% between Q2 and Q3.
• Create and launch an ad campaign for Black Friday in one week.
• Decrease returns by 15% by Q4.

Finally you should outline who the key staff are that are involved in running your business.

The contents of your company overview is information you’ll likely be able to repurpose. When developing copy for your ecommerce site – your “About” page, for example – you should be able to pull from your company description.

3. Study opportunities by conducting a market analysis

When you’re running a brick and mortar store, a lot of your success will depend on location. It’s common to believe that ecommerce totally removes that barrier to success when anyone, virtually anywhere, can visit your online store.

Despite access, there’s still plenty to consider from an analytical standpoint. As such, it’s important to do some market research.

This section of your business plan should discuss:

• Market size: How big is your potential market?
• Market share: What percent of the market have you captured?
• Industry trends and growth: Explore other trends that may arise over time and other markets you can branch out to. A SWOT analysis can identify strengths, weaknesses, opportunities, and threats.
• Competitive analysis: How do you fare compared to your competitors? What strategies are you going to adopt? Will you differentiate, segment, or offer competitive pricing?

Studying the market you’re breaking into allows you to determine if it is oversaturated and where you can fill gaps. Knowing the size of your potential customer base helps you to figure out inventory needs. It helps define your target audience, ensuring that you’re focusing your intent on customers that want to buy your products.

Analyzing the market is beneficial for ecommerce business planning, because trends develop and change fast. Looking into industry trends and analytics can help you identify new market opportunities, as well. Some great, free resources for market analysis can be found here .

A well-prepared business owner doesn’t stop at a market analysis. They also conduct research on their competitors. For ecommerce startups, you should also include the following when doing a competitor analysis :

• Website metrics
• Social media engagement
• Customer service

The better you understand the market you’re entering, the better prepared you are to run a successful ecommerce business.

4. Get into more detail about your products and services

You will mention your products and services in other parts of your ecommerce business plan, but you can dig into the particulars in this section.

A products and services section is crucial if you sell niche products or provide a unique service.  If you sell a variety of items, you can include general descriptions of each here.

It’s a great idea to include images of your products so potential investors and stakeholders can visualize them. It’s also important to showcase how your product is new, different, or better than what is already available to consumers.

If you’re providing a service, include detailed descriptions of what each service entails, how the service is delivered, and what benefits the customers will experience. Since you do not have a tangible product, you must effectively make the case for why someone would hire you for this specific service.

Whether you’re manufacturing products yourself or reselling items, this is a great area to talk about sourcing components, who your vendors are, where products are manufactured, assembly operations (if that applies) and other product-specific logistics.

If you’re providing services, it is useful to note what credentials you possess that make you the ideal service provider.

Whatever you’re selling – or intend to sell in the near future – make sure you include everything you’re offering. If you’re a large retailer selling thousands of different items, it may be more helpful to list product categories.

5. Convince your target audience to buy with a marketing plan

Once you establish that you have a winning product to sell to a promising market, it’s time to determine how you’ll convince customers to buy. This could involve working with bloggers and influencers, sharing branded quips with market leaders on LinkedIn, or by signing up as a retailer with Amazon.

A marketing plan discusses your strategy to advertise your business and reach potential customers. Your plan will highly depend on the profile of your target market. Your ideal customer is the foundation of your marketing plan. Visualize what kind of person you want to buy your products or services to create a buyer persona.

Go back to your market research and use your findings to outline your ideal customers. You should also consider their specific behaviors — how do they spend their time and money?

For instance, a stay-at-home mom has different interests and spending habits compared to a college student.Come up with a set of general demographic characteristics such as:

• Education level

You can use the Segmentation, Targeting, and Positioning (STP) approach to fine-tune your marketing plan. Our partners at HubSpot have a great resource on STP marketing . Anticipating who your customers are, where they live, what their spending habits are, and what their values are can help you make better marketing decisions.

Once you’ve determined what you’re selling and who your target audience is, you’ll need to decide how you want to market your products or services. Consider your budget, and determine what is feasible.

If you’re opting for paid campaigns, this is where you detail your strategy for advertising, email nurtures, commercials (if you’ve got that kind of budget), etc.

Organic marketing strategies include content creation like blogs, videos, and social media posts. When you’re using keywords strategically in your content, it’s easier for customers to find you in search engine results pages.

Talk about how you will utilize paid, organic, or both strategies to attract customers and increase sales, or whatever is relevant to your business goals.

Most ecommerce marketing strategies include information on what Neil Borden calls the 4P’s :

• Price: How much do your products and services cost? Why did you price it that way?
• Product: What are the product’s features? Why should people buy it? What makes it different from competitors?
• Promotion: How are you getting the word out? Are you going to do it through social media advertising? If so, what platform?
• Place: What ecommerce platform will you use to sell your products?

Your investors may like your products, but even great products don’t always sell. Developing a solid marketing plan for your ecommerce business helps show financiers that you’re prepared on all fronts for success.

6. Share your ecommerce startup’s day-to-day with an operations plan

The operations plan details how you’ll run your online business. This section should demonstrate to potential investors that there are contingency plans in place if difficult situations arise. It should also define the specific nature of your ecommerce store, such as whether it involves dropshipping or print on demand.

Think about everything you need for your business to run. You may have an office or retail space. You may need various types of equipment. You’ll almost definitely need computers, internet access, bookkeeping software – the list is exhaustive. Outline what you need, the procedures operations will require, how packing and shipping will be handled, etc.

Your operations plan should cover every aspect of the supply chain:

• Suppliers and service providers: Where are your products sourced or produced? What about any raw materials production requires?
• Production: Are products made, bought, or will they be dropshipped ? Are they physical products or digital products? Facilities and equipment: Do you plan to have an office, physical retail space, or warehouse?
• Sales channels: Aside from your chosen ecommerce platform , will you also be selling on social media?
• Inventory: How much product will you have on hand? Where will it be stored?
• Delivery fulfillment: What is your delivery lead time? Will you offer both local and international shipping ?

Over the past few years, more ecommerce retailers have experienced shortages due to supply chain issues. Knowing how to mitigate these issues ahead of time helps to prevent issues should anything arise.

If you’re using WooCommerce, there are built-in backorder options. There are also plenty of backorder management plugins that add even more options, making maintenance easy.

Use the operations section to detail contingency plans, productions operations, timelines, and anything else vital to your company’s day-to-day business operations.

7. Demonstrate profitability with a solid financial plan

The time or effort you invest won’t matter much to potential investors if you don’t have a demonstrable history of financial health. Their top consideration is a business’s financial feasibility.

Your financial plan is one of the most critical sections in your ecommerce business plan. With 82% of companies failing due to cash flow problems , potential investors want to know if a business will be worth their while. Digging into the financials will also help to determine how to fund initial startup costs.

No two businesses are identical, so the specifics vary depending on your particular business needs. That being said, most financial plans include:

• Income statement: This includes revenue sources and income statements which show whether the business was profitable or not.
• Balance sheet: This provides a snapshot of your business’s equity, which is the difference between the assets and liabilities.
• Cash-flow statement: This is similar to the income statement but provides a real-time report of your revenue and expense flow. More income than expenses indicates a positive cash flow, while the opposite indicates a negative cash flow. Aim for the former to keep your business solvent.

Why is a financial plan important when you’re asking for funding? Investors and banks do not want to invest in a company that feels risky. If you demonstrate financial literacy, they’re more likely to trust you with their money. Detailing the fiscal health of your budget adds to the viability of your company.

Final thoughts: how to create a business plan for ecommerce

An ecommerce business plan facilitates your business’s success by providing direction for where it should go. Writing an effective plan for your online store does not have to be complicated.

If you spend time gathering information on your company, competitors, and future plans, then your business plan can be a roadmap to achieving your business goals. Then, after you've established your store, the next step is focusing on your ecommerce growth strategy .

You handle the business plan, and we’ll handle your website. Jumpstart your ecommerce company with Nexcess’s managed WooCommerce hosting packages .

This blog was originally published in July 2021. It has since been updated for accuracy and comprehensiveness.

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Ecommerce Business Plan Template

Written by Dave Lavinsky

Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their ecommerce businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an ecommerce business plan template step-by-step so you can create your plan today.

Download our Ultimate Ecommerce Business Plan Template here >

What Is An Ecommerce Business Plan?

An ecommerce business plan is a detailed and comprehensive document that outlines the strategies, objectives, and operational blueprint of an online business. It serves as a roadmap guiding the company’s operations and growth within the dynamic and competitive digital marketplace. The plan typically covers various aspects, including market analysis, target audience identification, product or service offerings, marketing and sales strategies, competitive analysis, financial projections, and risk assessments.

Why You Need an Ecommerce Business Plan

Source of Funding for Ecommerce Businesses

With regards to funding, the main sources of funding for an ecommerce business are bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for an ecommerce business is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan.

Venture capitalists will fund an ecommerce business but not in its infancy. You will need to first achieve sales traction. Once you do that venture capitalists might invest $2 million to $100 million into your business over time.

Finish Your Business Plan Today!

Below are the 10 sections a sample ecommerce business plan should include:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of ecommerce business you are operating and the status; for example, are you a startup or do you have an ecommerce business that you would like to grow further.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the ecommerce business industry. Discuss the type of ecommerce business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.

Company Analysis

For example, you might operate one of the following types of ecommerce businesses.

Ecommerce businesses based on businesses model:

• Drop Shipping: you sell the product on your website and the product’s supplier fulfills it
• Wholesaling And Warehousing: you sell the product on your website and the fulfill it yourself (through your own warehouse and systems)
• Private Labeling And Manufacturing: you sell the product on your website and you manufacture it yourself or have someone manufacture it for you
• White Labeling: you sell the product on your website and have someone manufacture it for you (but unlike private label, your product is not unique; the manufacturer is also creating the product under other brand names)
• Subscription: you sell the product or service on your website on a subscription basis (customer pays you every week/month/year)

Ecommerce businesses based on customer model:

• Business-to-Business (B2B): your business is selling to other businesses
• Business-to-Consumer (B2C): your business is selling to consumers
• Consumer-to-Consumer (C2C): your business provides a platform for consumers to sell to other consumers (e.g., ebay)
• Consumer-to-Business (C2B): your business provides a platform for consumers to sell to businesses
• Business-to-Government/Administration (B2A): your business is selling to governments or administrative agencies
• Consumer-to-Government/Administration (C2A): your business provides a platform for consumers to sell or communicate with governments or administrative agencies

In addition to explaining the type of ecommerce business you operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include sales goals you’ve reached, customer milestones, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

While this may seem unnecessary, it serves multiple purposes.

First, researching the ecommerce business industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards subscription businesses, it would be helpful to ensure your plan calls for offering subscription options.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your ecommerce business plan:

• How big is the ecommerce business (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your ecommerce business. You can figure out your relevant market size by multiplying the amount of target customers by the amount they might spend on a product or service like yours each year.

Customer Analysis

The customer analysis section of your ecommerce business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: college students, sports enthusiasts, soccer moms, techies, teens, baby boomers, manufacturing plants, state government agencies, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of ecommerce business you operate. Clearly baby boomers would want a different offering and branding than teens or government agencies.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other ecommerce businesses.

Indirect competitors are other options that customers have to purchase from you that aren’t direct competitors. This includes offline stores or other ecommerce companies that offer similar products or services. You need to mention such competition to show you understand that not everyone who needs the products or services you provide will frequent a business like yours.

With regards to direct competition, you want to detail the other ecommerce businesses with which you compete. For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What products do they offer?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And check product review websites to learn what your competitors’ customers like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide superior ecommerce services?
• Will you provide ecommerce business products/services that your competitors don’t offer?
• Will you make it easier or faster for customers to acquire your products/services?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Product/Service : in the product section you should reiterate the type of ecommerce business that you documented in your Company Analysis. Then, detail the specific products and/or services you will be offering.

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu of items you offer/will offer and their prices.

Place : Place refers to the location of your ecommerce business. In general, the place for an online business is well, online. But if there is a physical component to your business, document that here.

Promotions : the final part of your ecommerce business marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Search engine optimization
• Search engine marketing
• Traditional public relations
• Reaching out to local bloggers and websites
• Advertising in physical newspapers, magazines, radio and television
• Partnerships with other websites and/or organizations

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your ecommerce business such as warehousing, invoicing, serving customers, procuring supplies, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 10,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new product or service.

Management Team

Ideally you and/or your team members have direct experience in the ecommerce business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in ecommerce businesses and/or successfully running retail businesses.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you serve 100 customers per day or 200? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your ecommerce business, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 contract, that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now to fulfill the contract. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an ecommerce business:

• Website and technology buildout
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include agreements you’ve negotiated with developers, manufacturers and/or employees.

Ecommerce Business Plan Summary

Putting together a business plan for your ecommerce business is a worthwhile endeavor. If you follow the online store business plan template above, by the time you are done, you will truly be an expert. You will really understand the ecommerce business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful ecommerce business.

Download Our Ecommerce Business Plan PDF

You can download our ecommerce business plan PDF here . This is a business plan template you can use in PDF format.

Ecommerce Business Plan FAQs

What is the easiest way to complete my ecommerce business plan.

Growthink's Ultimate Ecommerce Business Plan Template allows you to quickly and easily complete your Ecommerce Business Plan.

Where Can I Download a Free Ecommerce Business Plan PDF?

You can download our ecommerce business plan PDF template here . This is a business plan template you can use in PDF format.

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How (and Why) to Write Your Ecommerce Business Plan

Reviewed by

December 22, 2021

This article is Tax Professional approved

Visions of becoming a successful ecommerce entrepreneur may have you browsing domain name ideas and virtual storefront websites. After all, what’s easier than launching an online business from your living room in just a few clicks?

I am the text that will be copied.

The truth is that prospective ecommerce business owners who don’t have a step-by-step plan can face major challenges later on. An ecommerce business plan can help you anticipate future growth and avoid common obstacles.

Why you need an ecommerce business plan

You may wonder why a business plan is even necessary if you’re just going to have an online store.

Even though you won’t be selling products out of a traditional brick-and-mortar shop, you still have to clarify your goals, finances, suppliers, and marketing strategies. More importantly, you can use the plan to convince prospective lenders and investors to back your ecommerce company financially.

Without a roadmap for planning your online shop, it’s easy to lose direction and focus. The ecommerce business plan serves as your guide on your journey from a small start-up to a potentially profitable venture. A solidly written business plan will not only help you get your business off the ground, but it will also be an indispensable tool to help with future expansion.

An e-commerce business plan can help you:

• Validate your business idea.
• Define your target audience and which products and services to sell.
• Detail the financial, physical, and human resources you need to get the business off the ground.
• Create a game plan, including measurable goals, for sales and future expansion.
• Understand who your competition is and how you will gain the upper hand in the marketplace.
• Convince investors and lenders to help you establish your business and expand later on.

What an ecommerce business plan includes

An ecommerce business plan will act as the guide describing the how’s and why’s of your future business.

The plan should include the following:

• Values that the business will offer to customers and clients. These can include finances, time, convenience, and customer service.
• How and when your ecommerce business will be profitable.
• Any resources necessary to operate the business, such as funding, employees, and equipment.
• Plans for expansion, including new products or services you plan to offer in the future.
• How your business stacks up against the competition.
• Current financial reports and projections.

Writing your ecommerce business plan

Now that you know what to include, you can begin writing your formal ecommerce business plan. There are many free business plan templates available for download, but we like this easy-to-follow ecommerce business plan template from the Shopify website .

Templates and formats will vary, but there are five main components you should always include in your ecommerce business plan:

1. Executive summary

Think of the executive summary as an introductory short story about your business that should draw potential investors into the rest of the plan. This first section sets the stage for your small business and should leave readers with a strong impression.

Make sure you address the following factors:

• The business name and domain name, both of which should be easy to remember and accurately reflect what you’re marketing.
• The products and services your business will provide.
• The target market for your business.
• If the ecommerce site will be run from your home or from a rented office space.
• Short and long-term goals of the business.
• What marketing strategies you plan to use.

For example, say your business is going to specialize in sugar-free candy. You’ll can use your executive summary to introduce the business with an easy-to-remember name—something like “The Low Sugar Shop,” maybe—with a similarly catchy domain name to go with it.

2. Company overview

This section, also known as the company description, could be considered a biography of the company. Be sure to include in-depth details, such as:

• The history of the company, including how you came up with the idea for the business.
• The legal structure of the business (LLC, S corporation, C corporation).
• If you are a B2B or B2C ecommerce business.
• The management team, as well as any partners.

The company overview should also include your mission statement, which is the reason you are starting the business. It can be a simple statement or a more detailed description.

A sample mission statement

For your sugar-free candy shop, a mission statement might look something like this:

The Low Sugar Shop is dedicated to offering a wide variety of the highest quality, low and no sugar candy at affordable prices. At the Low Sugar Shop, we believe sugar-free candy should be just as satisfying as its high-sugar counterparts. That’s why we offer a complete line of the most popular low and sugar-free candy available today.

3. Market research and analysis

Every business needs a market—without customers, your business won’t succeed. How you identify your market is key to your ecommerce business’s success. The more information you have about your potential customers, the more faith your investors and lenders will have in your business.

Recent industry reports can usually be found online, and they’re a great place to research growth in your target market. These reports include information such as how much growth there is in the industry, what may be causing this growth, and the demographics of the industry’s largest customer segments.

The market analysis section should include:

• The demographics of your target market, such as population size, age, education, and income level. If it’s a niche market, is there enough demand for your business to be successful?
• The needs and search habits of your target customers, as well as your ability to meet these demands.
• Your anticipated competitors, as well as what will differentiate your business from theirs. This requires some competitive analysis to uncover their key product features, pricing strategy, monthly website traffic, mission statement, and business model.
• Once you know what you’re up against, you can strategize ways to stay ahead of your competition, such as offering unique products, concentrating on specific in-demand items, and offering more attractive discounts.
• Your marketing plan, including the marketing channels you plan to use.
• Your marketing strategy will be informed by your previous work in this section since the shopping behaviors of your target personas will impact where you choose to advertise. This will include social media and any paid advertising methods, such as pay-per-click ads, affiliate marketing, and influencers. You can also include other unpaid strategies you may use, like email marketing or writing SEO-driven blogs and articles to help increase traffic to your website.

Market research for the Low Sugar Shop

To continue our example, in conducting your industry research for the Low Sugar Shop, you discover there is tremendous growth in this area since many people are cutting down on their sugar intake for health reasons. The taste and quality of sugar-free candy have also improved significantly in recent years, adding to the demand and appealing to more consumers.

Your research also indicates that your target demographic will be relatively well-educated, health-conscious consumers in their 40s and 50s.

Your candy business can start by looking into the popularity of specific brands of other low-sugar and sugar-free candy products. This information gives you an idea of how to stock your ecommerce store so that you meet that demand.

Include how you will target your advertising, which in this case may be in publications and websites that cater to healthy eating.

4. Logistics and operations

If your business will be selling physical products, your logistics and operations plan will describe how your ecommerce business will manage product inventory and deliveries. This is where you can demonstrate a thorough understanding of your supply chain, including contingency plans for any issues with timelines and raw materials.

If you are only selling digital or virtual items, this will not be an issue. However, you must still specify how these items will be delivered, such as via email or by navigating to a download website. This assures your stakeholders that your products will be readily available for your customers upon request.

This section of your business plan should contain the following information:

• Where you will obtain your inventory from, and how much lead time is needed to ensure adequate stock of all your products. Include who your suppliers are along with their costs. This includes any wholesalers to purchase products in bulk for resale or if you plan on using a dropshipping service.
• The amount of inventory you will have on hand and how it will be stored.
• Any restrictions for shipping to international customers.
• The projected packing and shipping times of your products from your wholesaler and estimated shipping time to your customers.
• Any contingency plans you have in place for peak demand periods.

5. Financial plan and projections

Prospective stakeholders will go over your financial plan with a fine-tooth comb. After all, they want to be assured that they are making a wise investment in your ecommerce business.

This section shows potential investors how long it will take you to make your expenses back and help determine if you need a business loan.

You’ll need to include the following supporting documents in this section:

• Income statement : Your income statement includes all of your projected startup costs, including supplies, licenses, fees, and deposits, as well as costs for creating the business structure. Be sure to include additional fixed expenses, such as domain name registration and server fees. Your variable projected expenses are the cost of products sold and credit card payment fees.
• You can calculate your projected net income by subtracting all of the above expenses from your projected total revenue.
• Startup balance sheet: Your balance sheet lists the business’s assets, such as inventory, equipment, supplies, on one side and liabilities, such as taxes and loan repayments, on the other.
• Subtract the liabilities from the assets to arrive at a projected amount of shareholder equity.
• Cash flow statement : The cash flow statement documents your projected cash inflow and outflow. Here you will list the amount of money you plan on having at the beginning of each month, total sources of cash from sales, loans, lines of credit, and expenses you plan on incurring.

How Bench can help

A detailed projection of your start-up costs and revenue assures investors that you’ve carefully considered every possibility, which makes your ecommerce business a better bet. Stakeholder confidence soars when you can provide professionally prepared financial statements to prove that you already have a solid bookkeeping system in place.

Bench can help by assigning a dedicated bookkeeper to handle your pre-revenue startup tasks, including preparing your projected financials.

After your e commerce business is off and running, your Bench bookkeeper keeps your books in order so you can focus on the day-to-day responsibilities of your new business. Learn more .

Putting it all together

We get it: writing up a business plan may not be the most exciting activity, but it can save you time and money in the long run and help prepare you for the challenges ahead. The plan puts all of your ideas, questions, and concerns with their solutions in writing, providing a roadmap that guides you throughout your business start-up journey.

Join over 140,000 fellow entrepreneurs who receive expert advice for their small business finances

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How to Create a Business Plan for Launching an Ecommerce Website

• Business Plan for eCommerce Startup

Last Updated: June 30, 2023 By TRUiC Team

This guide will show you how to create a business plan to launch an ecommerce website. It will also offer tips on what to do to increase your chances of success. Here’s what you need to know.

Business Plan Benefits

A business plan is a document which contains all the information about the business in order to help make decisions for the future. It can be used to assess how an organization is performing and to identify any areas that require improvement.

Key benefits of making a business plan are:

• Provides clarity of direction
• Helps identify potential risks
• Assists in executing strategy
• Allows assessment of performance (current or projected)
• Assists in planning for future growth/opportunities
• Aids communication internally and externally

Sections in a Business Plan

There are important sections to include in a business plan. When starting an ecommerce business, you’ll want to ensure your business plan contains the following:

• Executive Summary
• Vision and Mission Statement
• Products and Services
• Market Introduction and Profile
• Competition Section: 
• Company background
• Strategic plans
• Competitive analysis
• Marketing and Sales Strategy: 
• Key opinion leaders
• Marketing objectives
• Market segmentation
• Target market
• Goals of the company
• Marketing strategy
• Marketing activities to achieve marketing objectives
• Various other factors such as  marketing strategies
• Financial: 
• Current or projected  balance sheet
• Income statement
• Cash flow statement  
• Customer information
• Business credit building strategy

Recommended: Use our free business plan generator to master each section of the business plan.

Write a Business Plan

A business plan will help you get your company up and running and prevent you from making costly mistakes. Here is how to create a business plan for an ecommerce company.

1. Start by asking and answering some typical business plan questions:

• What is your company's mission?
• What is your company's vision?
• What is your company's business model?
• What is your company's differentiation strategy?
• What are you selling or offering?
• What is your company's competitive advantage?
• Who are your clients and what value do you provide to them?
• How does your company make money and spend it?
• What is your daily method of operation to generate sales?

2. Next complete the plan:

After answering some vital questions, structure them in a formal business plan arrangement to help your plan take shape.

Questions jumpstart your thinking, while writing helps bring your plan together.

Five Business Plan Attributes

There are five business plan attributes that should be included in your ecommerce business plan to help you define your goals and provide your business with a concrete direction. These attributes ensure that your business plan will help you create a daily method of operation, plan the business’s financials, and develop a forward-thinking exit strategy should you someday want to sell your business.

Business plan attributes:

• "Vision" attribute, which is about defining your goals.
• "Road map" attribute, which includes how you're going to get there.
• "Operations" attribute, which includes how you're going to run the company’s day-to-day operations.
• "Financial" attribute, which includes projections and analyses on cash flow and profitability.
• "Exit strategy" attribute, in case you ever want to sell or go public with your business.

Ecommerce Business Planning Costs

There are many factors that determine the costs of an online store . The type of business, where you are based, and what you sell are all pieces to consider. Here are some steps to help you calculate and manage your ecommerce costs.

1. Start by Understanding Types of Cost.

We can break down costs into two main groupings:

Fixed costs refer to expenses which do not change over time. For example, setting up your website domain name or designing your logo might fall into this category. You will have to pay these expenses upfront before starting your business even if you don't generate any revenue. Fixed costs may also include hiring a lawyer for drafting contracts with suppliers.

Variable costs are ongoing expenditures that vary month to month. These types of expenditures are more challenging to manage. For example, paying utilities or a metered hosting plan would vary monthly.

A good strategy for determining variable costs is to estimate a range. Then factor this range into your business plan.

2. Decide What Products and Services You Need to Purchase

When starting an ecommerce business, you will need a good hosting plan for your ecommerce website. There are a lot of choices to pick from. To help you decide, we've reviewed the best hosting options available.

You may also need additional services:

• Business planning software
• Business bank account
• Business credit card
• Building business credit
• Business phone line
• Accounting software
• Business formation service
• Payroll service
• SEO services
• Tax software
• Registered agent
• Business license
• Annual filing service
• Business insurance

3. Add Up All Costs

Once you know what your ecommerce business needs and know what you want to buy, you should add up all your proposed costs. This is simple math — take the price of each item and add it to the next. 

4. Manage Costs

After you make your purchases, start managing your finances with a business accounting software. 

Managing your costs will help you with future business decisions, make filing taxes easier, and improving the financial side of your business plan.

Keep Your Ecommerce Store Running Successfully

Staying on top of your ecommerce store is a lot of work. However, if you stay on top of your business and put in the effort, you can keep everything running smoothly.

Below, we've listed just a few ways that you can keep your store in tip-top shape and ensure it's always running efficiently and has the best chance of succeeding:

• Keep up with inventory : Keeping up with inventory is an important part of keeping your store running smoothly — and it's important because if something isn't there when someone tries to purchase it, then you may find yourself with an upset customer and a lost sale.
• Keep costs down: Ensuring you manage costs effectively will better help ensure you have more money coming in than going out. The old saying is: Only buy what you need!
• Focus on money producing activities: Running an online business is different from operating a forward-facing business like a brick-and-mortar boutique. For one, you’re typically working remotely where it is easy to get sidetracked and find yourself doing activities that don’t necessarily help your business.
• Keep your store clean and marketing working: Your job is to make sure your online store is clean, inviting, and fully stocked with items your customers want and need and that your marketing is working for you and not against you.
• Stick to your ecommerce business plan: There’s nothing worse than taking time to create a business plan only to never look at it again. The business plan should be something you are constantly looking at to keep you on track and focused on growing your business. Inside your plan, you may have a daily method of operation where you have listed those money producing activities you’ll do everyday to ensure your success. Let’s stick to the plan!

Main Takeaway

Starting an ecommerce business requires planning just like any other business. Start with a good plan. Ask questions that get you thinking about your business and the directions you want for it. Use a business plan template to create a business plan that works for your vision. Factor in financials, deciding what you will need to get started and then to maintain your business. Then transition over to the day-to-day operations and decide what you must do to run a nimble ecommerce business successfully. 

Frequently Asked Questions

What are the disadvantages of not making a business plan.

Insufficient planning can stop a company from growing. It can also cause the company to fail without any comprehensive strategy.

Things to consider:

• Without a comprehensive strategy, any marketing campaign will fail to have an impact on consumers.
• A business plan will help maintain focus on goals which are achievable and measurable.
• New problems will arise and a business plan is an important tool for assessing how to best tackle complex problems.

Who should I involve in my business plan?

The focus of a business plan is to provide a roadmap for the future of the business. It should detail what the company will do, how it will be financed, and what return on investment investors can expect.

Business plans are often written by entrepreneurs outlining their own vision for the company. But, it is important to involve other parties in the process as well. This includes investors, stakeholders, and customers. They can offer valuable insights into your product or service that you may not have considered before.

How do I know if my business plan is successful?

If you are thinking about creating a business plan, it is important to know what qualifies as a successful one. There are many different aspects of a business plan that can qualify it as successful. These aspects include the competition, the market, the financials, and more.

The best way to know whether or not you have created an effective business plan is to assess it at periodic intervals. At each benchmark, decide if you are where you want to be or not. If you are meeting or exceeding benchmarks, consider your plan successful. If you are not meeting your goals, you may need to reevaluate your business plan.

Home » Building Online Stores » Ecommerce Business Plan Template: How to Make a Business Plan

Ecommerce Business Plan Template: How to Make a Business Plan

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Written and researched by:

As the Benjamin Franklin quote goes, “by failing to plan, you’re planning to fail” – and it’s a sentiment that’s just as relevant today just as it was in the 1700s.

Particularly if you’re an ecommerce business.

After all, one research project (a collaboration between Forbes, Huffington Post, and Marketing Signals) suggests that a whopping 90% of ecommerce businesses fail in the first 120 days of their existence. So how can yours avoid being part of that short-lived majority?

With an ecommerce business plan, that’s how.

So read on – we’re walking you through what ecommerce business plans are, and why you need one. You’ll find a complete ecommerce business plan template below, too – so you can start planning for your own online enterprise’s future, today.

What is an Ecommerce Business Plan?

An ecommerce business plan is a document that outlines your online business’s objectives and strategy. That’s a summary of both your goals and how you plan to achieve them.

A good ecommerce business plan should identify all the potential challenges your online enterprise will face as you chase profitability, scalability, or simply sustainability. They’ll lay out the groundwork, too: including an analysis of the market you’re planning to enter, and the customers you’re intending to target.

And, of course, an ecommerce business plan should get specific. How will you source your products? Which tactics will you use to market them? How will you fund your fledgling business, and maintain cash flow when times get tough?

Though they’re also useful for keeping you on track with your goals, ecommerce business plans are vital for attracting and securing outside investment, too – so it’s important you get yours right.

Food products are an excellent option for selling online, and you find a list of examples here . But remember, you need to factor regulations and food safety requirements into your business plan.

Why Create an Ecommerce Business Plan?

There are plenty of benefits to creating a comprehensive business plan for your online store:

• Gaining a deeper understanding of your business – your blockers, biggest assets, and most lucrative opportunities.
• Understanding the state of the market, and where you want to position your ecommerce store within it.
• Planning for what’s ahead – getting to grips with industry trends, and how they might affect your burgeoning business.
• Testing how viable your ecommerce store’s idea and concept is, and any weak points inherent in the premise.
• Assessing the outlay required – be it time, effort, or money, this is useful for understanding the scope of the work that lies ahead.
• Obtaining funding – business plans are, after all, super useful for selling the idea of your online store to potential investors.
• Clarifying your strategies for marketing, logistics, and finance, as well as exactly who your target audience is. Making your business idea a little more tangible – it’s starting to feel real now!

Ecommerce Business Plan Template

Ready to start penning your plan?

Read on – the ecommerce business plan template below offers a handy framework to get you started.

Executive Summary

Like a blurb on the back of a book or an abstract at the start of an academic article, an executive summary is designed to give time-poor readers a concise, compelling overview of your ecommerce business plan’s contents.

While your executive summary should take pride of place at the top of your business plan, you shouldn’t write it until the end. That’s because you’ll figure out more about your ecommerce store’s plans, ambitions, audience, and strategies as you flesh out your plan – and you’ll want these to be reflected in that punchy, persuasive first statement.

So what should an executive summary include for an ecommerce business, exactly?

Here’s a quick (non-executive) summary:

• What your business does
• What goals you want to achieve
• What product or service you’re selling
• Where you’re selling
• Who you’re targeting
• Who your competitors are
• How you plan to make money
• How you’ll implement the business plan that follows

Remember, an executive summary needs to be crisp, clear, and to the point. Don’t waffle on with overlong or unnecessary analysis – you’ll lose your reader’s interest!

Company Overview

With your reader now hooked, it’s time to explain exactly who you are, what you do, and why you do it.

A company overview should include:

• Details of your products/services – what are you planning to sell?
• Your company’s key details – your name, tagline, logo, and any top-level branding information.
• Your key individuals – your founder(s), CEO, and COOs.
• Its legal structure: have you set up as a partnership, or a Limited Liability Company (LLC)?
• Your vision, mission , and values. Beyond making money, what does your ecommerce store stand for? What do you believe in – and what higher purpose gets your staff up and out of bed in the morning?

Market Analysis

Next up in your ecommerce business plan, you’ll need to provide a detailed analysis of the market you’re entering into. This is crucial – after all, if there aren’t any existing market gaps for your business to service, it’ll struggle to make an impact.

Your market analysis should include an exploration of:

• Market size
• Current competitors
• Any gaps, opportunities, and threats

To do all this, a SWOT analysis is a pretty good place to start. It stands for Strengths, Weaknesses, Opportunities, and Threats. It’s a form of situational analysis that can help you understand the nature of your business vis a vis the competition.

Customer Research

Who are you planning to sell to? It’s a key question you’ll need to know – and that any potential investors will demand to know – before your ecommerce business gets off the ground.

So, your ecommerce business plan needs to get specific about that sweet slice of the pie you’re targeting. That includes a deep dive into the demographics – specifically, your prospective customers’:

To gain this info, you can conduct market research into the portion of the market most interested in – or most likely to buy – your products or services. That could involve running focus groups, or sending out incentivized surveys.

Advice from the Experts

Top tip: for an even more granular way of conceptualizing your potential customers, create buyer personas . these are fictional depictions or real consumers, with pain points, goals, likes, dislikes, and demographic info all fleshed out..

By tailoring all your messaging to one or more of these personas, you can increase the effectiveness of your comms.

Marketing Plan

Next up? Details about how you plan to spread the word of your business.

This will include which communication channels you intend to prioritize, which marketing strategies you’ll implement, and which milestones and metrics you’ll use to measure it all.

Your marketing plan should make clear:

• Your marketing goals
• KPIs: such as engagement rates, traffic, conversion rate
• Key channels: email, SEO content, paid SEM marketing
• Your key marketing tactics: will you focus on social media, or plow your resources into influencer marketing? Perhaps a blend of both?

Need some digital marketing tips to add clarity and clout to your marketing plan? Our comprehensive guide has you covered.

Logistics Plan

You know how you’re going to entice your customers to buy from you – but how will you actually get your products to their doorstep once they do?

This is what your ecommerce business plan’s logistics section aims to explain. It’ll include:

• Where you’ll source your products
• How (and where) you’ll store those products
• How you’ll deal with orders
• How you’ll fulfill orders – in-house, or via a 3PL (third-party logistics) supplier?
• How you’ll handle deliveries, and which shipping provider you’ll partner with
• How you’ll deal with returns

3PL suppliers like ShipBob store, sort, pick, pack, and ship your goods – so they can be a fantastic option if you’re a growing business, and outsourcing the fulfillment process makes sense.

Financial Plan

As it so often does in the world of commerce, your business plan all boils down to this –  the money .

Your financial plan describes how you’ll first fund your business, then keep it afloat. Here, you’ll set out your fiscal stall with a series of projections around cash flow and income. The goal? To convince investors (and, on some level, yourself!) that your business has legs.

Your ecommerce business plan’s financial chapter should include:

• How you’ll fund your store’s start-up costs
• How you’ll price your products
• How much profit you’ll make on each product sold
• Financial projections
• Income statement
• Balance sheet

Do I Need a Business Plan?

Yes. Yes, you do.

It can be easy, as a business that only exists online, to get complacent – to assume that you don’t need a business plan.

‘Business plans are a traditional document,’ you think. ‘They don’t have a place in the world of modern ecommerce businesses.’

Well, guess what? They do – regardless of what you call, or how you classify, your business. But there are certain types of ventures where a comprehensive business plan will be especially useful. Among these are:

• New ecommerce stores
• Businesses seeking investment
• Businesses looking to expand into new markets
• Ventures attempting to increase their share of an existing market

Even if your ecommerce store falls into none of these categories, a business plan is always a good idea. It’ll clarify and crystallize your professional goals, hold you accountable to your ambitions, and keep you on track to making your dreams a reality.

In this article, you’ve learned exactly what a business plan is, and why it’s vital for commercial success – particularly for brands of the ecommerce persuasion.

You’re also well-versed in the structure and contents of an ecommerce business plan:

• Executive summary
• Company overview
• Market analysis
• Customer research
• Marketing plan
• Logistics plan
• Financial plan

What now? Well, it’s time to get researching and writing. So remember – keep it simple, keep it tight, and make sure it reflects the heart and soul of your business (and all that passion you feel for it, too!).

Putting together a business plan is exciting. It’s that tangible, real expression of your goals and vision for your ecommerce store – so it shouldn’t be a chore. Go enjoy it!

How can I write an ecommerce business plan?

Can i hire someone to write my ecommerce business plan for me.

Hiring someone to pen your ecommerce business plan for you will cost anywhere between $5,000 and $25,000. You can recruit them from most of the platforms where creatives dwell: such as Airtasker, Fiverr, and Freelancer.com.

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Start an ecommerce business in 2024

• BACK TO TOP

What is an ecommerce business?

• Why start an ecommerce business?
• Step 1: Research idea

Step 2: Source products

Step 3: choosing an online selling channel, step 4: set up an online store and list products, step 5: market and promote your business, 6 tips for running your online business.

• Launch in Amazon stores

Helpful resources

Ecommerce business faqs, b2b ecommerce examples:.

• Wholesale suppliers
• Office supply stores
• Industrial equipment manufacturers
• IT services providers
• Software companies
• Business consultants

B2C ecommerce examples:

• Clothing retailers
• Electronics stores
• Home goods stores
• Grocery stores
• Health and beauty retailers

What does "ecommerce" mean?

Why start an ecommerce business in 2024?

• Earn money passively
• Set your own hours and be your own boss
• Work from anywhere with internet connection
• Have the potential to grow fast as more people shop online
• Expand into other products or categories to scale revenue and profits

How to start an ecommerce business from scratch in 5 steps

• Researching and validating your business idea so you know what’s likely to sell
• Procuring products or sourcing them from reliable suppliers
• Choosing selling channels to connect products with shoppers
• Setting up an online store and listing products
• Marketing and promoting products to raise sales

Step 1: Research and validate your business idea

• What are the common problems people face in your industry?
• Why are they facing these problems?
• What products can you offer that will solve these problems?
• What trends have you noticed in the world that you can capitalize on?
• What activities do you enjoy? What products would improve those activities?

Find a way to improve a product that already exists

Talk to potential customers about their frustrations.

• Offer to buy 5-10 people a cup of coffee in exchange for 30 minutes of their time.
• Use your meeting to talk about the challenge and see if the pain point is something they would pay money to solve, or if it doesn’t bother them much.
• Avoid bringing up the product you have in mind, as this may influence the answers you get. Instead, focus on how they feel about the challenge, how they currently deal with it, and whether they would pay to solve the problem. If so, how much would they be willing to pay?

Spot opportunities with competitor research

• Product features and benefits
• Price ranges
• Customer reviews

Resell existing products

Create or build products, use dropshipping or print-on-demand (pod), work with a manufacturer, sell on an existing ecommerce website, try social selling.

Selling in Amazon stores

• Speed: Get a store up and running quickly thanks to the minimal work involved in setting up the store.
• Scalability and efficiency: Selling in Amazon stores frees you up to create and sell great products—you don't have to solve every business problem. Use Amazon’s infrastructure, tools, and customer reach to grow your business.
• Reach: A listing in Amazon stores has the potential to reach more than 300 million active customer accounts .
• Ecommerce support: Use Amazon’s tools for processing payments, collecting reviews, running promotions, and even A/B testing of product pages at scale.
• Built-in SEO: Amazon product pages are built to serve search engines the right content and show up competitively in search results. When you launch products in Amazon stores with well-written product pages, you’ll be primed to rank competitively for the keywords and product searches relevant to your brand.
• Market awareness: Customers come to Amazon to shop for products. That’s why it’s the go-to for product search .

Launch an ecommerce business in Amazon stores

Starting an ecommerce business can feel overwhelming. it doesn’t have to be..

• Find free courses and online tutorials through Seller University
• Plug into a network of driven entrepreneurs through Seller Forums , an online discussion board for Amazon sellers
• Tap the Service Provider Network , a source for vendors and experts who can assist with daily operations, scaling, and more

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• Ecommerce development company

How to Write an eCommerce Business Plan for Your Startup

Jane Vyshnova

The Basics and Purpose of Business Plan for Online Store

1. start with a summary, 2. describe your company, 3. add illustrations of products, 4. analyze the marketing opportunities (target audience), 5. operations in your business, 6. assessment of your finances, 7. proposal for funding.

A business requires proper planning before implementation and any further development. eCommerce business planning makes things easy for startup owners who would also perform the strategy in real life. Sure, an organization plan might sound easy, at first, but there are certain rules to follow once you get going.

Have a project in mind?

Lets talk about it

eCommerce has risen rapidly in 2022. It almost feels like homework or an assignment to write an agenda of your enterprise. Of course, the plan is different for an offline establishment than the online startups.

There is a plan for a venture that consists of all the characteristics in a particular format. Mostly, bank provides a loan based on this write-up to set up the industry. In the U.S., it is recommended to provide a proposal of about 40-50 pages in order to be effective at convincing the authorities.

Such plans are quite formal, detailed and accurate. They may also contain financial analysis with forecasting. A merchandising strategy gives you a direction to follow and helps you analyze whether the idea is profitable or not.

Building a strategy and strictly implementing it is crucial. Listed below are some other points that will explain its importance:

• Funding - the scheme will ease your way to get a credit from a bank or funding from stakeholders. You should be affirmative that you build your financial report very well to convince the stakeholders of the required funding.
• Figure out the destiny - it will provide you the right direction to follow if you want to grow your already established online company. An entrepreneur never stops, they always want to expand, and a plan helps in the expansion. It will assist in figuring out the issues, making any necessary changes.
• Find new ways - when all the doors seem locked, the strategy will open up a few to provide you some challenges. If you feel like there are no challenges, the scheme will come in handy. It is not necessary to create the plan beforehand. You can make this proposal in five or ten years (and as many times as you want).
• Discover problems - sometimes, when your company is suffering hefty financial losses and you make common changes (that you can see visually) in the commodities or marketing ideas, you still may not see any different outcomes. It is time to make a comprehensive business plan.
• Before starting - got an idea and have enough motivation? Great! But first, make a plan. It will decide the immediate objectives, resources, and set a proper sequence of actions.

Business Plans for Online Stores

An online store business plan consists of various parts, including a checklist of your business. All these parts can be further subdivided based on the size of the shop and the stuff offered. You must remember that, while describing them, you need to be specific, thorough, and honest. Now, let us go through the components one by one:

An executive summary will elucidate your business in short and will consist of a quick analysis. It also involves the main points of the other parts of the later-described plan. Some of the things that must be included are:

• The main purpose of the business;
• The people who are involved and the date when it started or intend to start;
• The points that differentiate your company, and
• How your commercial business has flourished.

This part will include detailed information of your business. Details that may be a part of this point can be the manufactured items or services that the company is dealing with, the target audience, and the benefits that the company will have (in the form of a brief financial report). In this synopsis, you must include:

• The person who owns the company and if there is a group (all names should be stated);
• A short description of the background which might encompass schooling, university, and the work experience;
• The operations that take place in the company, including the costs for the same;
• The resources required for the starting or expanding the business; and,
• The representation of your business type (B2B or B2C).

You already provided a brief synopsis of your company, so you must have mentioned the amenities which you are going to provide. Now, this segment will provide a detailed view of the service within the company. The major points you must incorporate are:

• The place to source your products - you will also provide an explanation of, for example, the business stereotype. For example, whether the things will be produced in your factory or bought from a wholesale market.
• A detailed analysis of the costs that you will require to produce or buy the stuff - you may provide costs of the required resources.
• The lifecycle of the products - you might want to mention how long the products will last or if they can be recycled.

This is an important component that should be written carefully. You must perform deep research regarding your targeted clientele. The supply method should also be included in the scrutiny. This part requires you to give finer details concerning the clients who will buy from you.

The main wings to be covered are:

• A segmented analysis of the audience along with their demographic, age range, economic status, and personality.
• An assessment of the industry - an analysis of the current situation which you can perform based on the survey of your rival companies forms the main portion.
• You must also study the companies that are in your competition - their performance, strategy, and their current financial status will be important to consider.

You need a plan for your operations to work properly. There are different directions in which your work will be distributed and you have to make sure everything goes smoothly. The agenda will organize all your operations based on priority and departments:

• You must mention the hours that people in different departments will work per week.
• Staff members are also important. If you did not begin yet, you can mention the intended number of staff in each department.

A financial report of your past sales or a report of your investments should be included. This is important for stakeholders, as they must be convinced that this deal will bring them profit. The following should be considered:

• The cost for raw materials and operational machines;
• The current funds that are present;
• Previous profits and future prognosis;
• The costs that you will spend while attracting a customer;
• The funds for advertising and different promos; and,
• The rate at which you intend to make changes or scale-up in business.

If this report is meant for you to receive funding from stakeholders, you should provide a brief paragraph stating how important it is for your enterprise to receive the finances, as well as a reason why they should give you the funds (on what basis):

• Mention the reasons to believe and trust in you;
• Describe the profits that the executive board investors can expect;
• Outline the steps to be taken in case of crisis (risk assessment);
• Go over the things you have achieved in the past or intend to achieve in a particular time-frame.

Examples of an eCommerce Business Plan Template

It is not enough to know the points that must be considered. Visual memory has been said to be the best. We will show you some examples that will assist you to understand the exact structure.

Preparing the plan by just writing it out makes it look boring, so you may add some color to it by adding figures. It makes understanding the financial stuff easier. Also, such a presentation is visually attractive and more preferred. In your financial analysis section, you can add several figures using a special online chart tool that will explain what is going on with your company.

Here is an exemplar of a business plan for an online shopping website - you may go through the whole business plan template by clicking here . It is this plan, for Instant, that also provides solutions related to software.

Your financial report should look something like this. You should divide your budgets into several parts like past financial status and projections, and present it in such a tabular form. Of course, some figures within those tables will also prove to be helpful.

Here is a perfect business plan for eCommerce startup that was intended for an investor to finance the organization. It is quite detailed and well presented, and it is also a startup plan. They mentioned their requirements in point with the costs, which makes it clear how important the funding is to the company and how much profits can be earned. A full version of the template is available here .

Here is a PDF version of a perfect business agenda by pipedream.com. It is well explained and quite detailed with more points and some other details. You can just click the link and review their plan.

Read more in our blog The Best E-commerce Books for Online Entrepreneurs in 2023 .

Once you perceive the importance of an agenda and how to develop one, the important points might change according to size and the merchandise you are selling. A business plan for an online shop will show you the right direction and performance. Some of the extra pieces of a business plan can include competition, strategic partners, website and technology, and an overview of the management team.

If you encounter any questions regarding your plan, you can contact Dinarys to get assistance with these types of solutions. If you are stuck when starting from scratch on the plan, rest assured that the team will show you the right direction. Just contact us to write your scheme and get going!

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How to start a web design business in 7 steps

This guide will take you through all the steps necessary to start a web design business.

Illustration by Ashger Zamana.

Aaron Gelbman

13 min read

With the surge of online brands and services, now might be a better time than ever to start a web design business. But if you’re on the fence about whether to make this your full-time gig, then you’ll want to take the time to understand what you’re getting yourself into. 

After all, it’s not just about having the technical know-how; it’s about understanding the market, the challenges and the true value you can offer to your clients.

For web designer Derek Hairston, his ‘aha’ moment came with the realization that “most web design agencies leave clients in the dark with unexpected costs, delays, and no visibility into the process.”

“We bring our clients’ vision to life and give them peace of mind at every step of the way,” he says about his full-service agency, Olam Sites . “We specialize in building custom websites and features on Wix Studio.” 

Learn more about how to manage your agency on Wix Studio .

Below, we cover the essential steps of starting your web design business. Keep reading for tips on running an agency and finding your own conviction to get started. 

How to start a web design business

Every business is a little bit different, but in general, you’ll need to take these steps: 

Choose your niche

Decide which web design services to offer

Register and license your web design business

Create a business plan and set goals

Price your services

Build your portfolio or website

Promote and market your web design business

01. Choose your niche

To stand out in a crowded market, you’ll want to know your “who” and “why.” In other words, it’s a good idea to narrow down your focus and decide on the types of clients you’d like to take on. 

“Deciding on your niche is a blend of self-discovery and essentially asking the question, ‘Who would I be excited to wake up and serve every day?’” notes Brad Hussey, web designer and founder of the Creative Crew community. “You’ll be spending considerable time, energy and money being around these people at trade shows, on podcasts, writing content for, networking with—and ultimately producing solutions for.”

Remember that just because you decide on a particular niche now doesn’t mean you can’t broaden your reach and services later on. It’s much easier to start small than to start too broad, or to bite off more than you can chew.

If you’re struggling to decide on your niche, start by defining why you do what you do. For example, are you passionate about the restaurant industry and see an opportunity to build more professional online experiences for them? If so, start there. 

In the video below, Hussey gives additional tips for solidifying your niche and the “why” behind what you’re doing. 

02. Decide which web design services to offer

Once you’ve settled on your “who” and “why,” the “what” should come somewhat naturally. Decide what services you can (and want) to offer your clients. Your services could include:

Website design and development

Ecommerce solutions

User experience (UX) design

User interface (UI) design

Search engine optimization (SEO) 

Mobile app design and development 

Website accessibility  

Graphic design  

Custom web application development

Online branding 

Think about which services can be offered on a regular basis—such as graphic design or SEO—and thereby supplement larger one-off projects by bringing in recurring revenue. Also, consider ways in which you can package your services together to better service your clients. 

03. Register and license your business

Before diving into creative work, it's important to address the legalities of starting your own business. You’ll need to register your business with the relevant authorities. In most U.S. states, this will be your Secretary of State. 

To register your business, you’ll need to choose a business name  and decide on your legal business structure. 

Consider, how big do you plan on growing your team? Do you plan on managing the business alone or with a partner(s)? Ultimately, what is the vision for your business and how it will evolve?   The answers to these questions will help you choose between several structures, the most popular of which include:

Sole proprietorship : Owned and operated by a single individual. As the owner you have unlimited personal liability and business income is reported on your personal tax return.

Limited liability company (LLC):  Combines elements of partnerships and corporations, offering limited liability for owners (members) and flexibility in management. Income is typically passed through to individual tax returns.

Partnership : A business owned by two or more individuals who share profits and liabilities. There are general partnerships (equal sharing) and limited partnerships (with limited liability for some partners).

Corporation:  A legal entity separate from its owners, providing limited liability protection. Shareholders own the corporation and it can be taxed as a C corporation (double taxation) or an S corporation (pass-through taxation).

As shown above, each structure has its own tax obligations, protections and requirements. You’ll therefore want to make sure to thoroughly research your options and consult a business attorney, consultant or accountant before making a final decision. 

At this stage, consider whether you’ll need to apply for an Employer Identification Number (EIN)  from the IRS and open any business accounts with your bank to keep your finances in order. Make sure to obtain all necessary licenses, insurance and permits for running a web design business in your region, too.

04. Create a business plan and set goals

There are many other decisions you’ll have to make from both an operational and strategic side. A good place to start is by tackling your business plan. Your business plan will serve as your roadmap, outlining things like:

Your business description

Target market 

Competition 

Organization and management 

Services and products 

Goals and strategies 

Financial projections

Do your due diligence and don’t rush this step. As you build out your business plan, you may realize things you hadn’t before—like the need to secure outside funding.

“I started off as a penny-pinching bootstrapper, although I’m not convinced that’s the best way,” reflects Hairston on the early days of Olam Sites. “I projected revenue based on the potential customers in my immediate environment, but this limiting mindset put a ceiling on our earnings and scalability.” 

“My suggestion when getting started,” he adds, “is that your projections and confidence should justify raising funds for greater scalability. Otherwise, what’s the point?” 

Whether you need extra resources to expand your services, grow your team or invest in marketing—a business plan can help you decide when and how to raise money. It can also show where the money will go when approaching investors, banks or other potential backers. 

05. Price your services 

As your financial and personal goals for your business start to take shape, so too will your perspective on how to price your services. 

Oftentimes deciding on what price to charge can feel like taking a shot in the dark. Or, you may feel pressure to price your services low if you’re just starting out.

However, you’ll want to avoid selling yourself too short. At the same time, know what your competitors are charging. Identify your differentiators while weighing your expenses and ideal profit margin. Think about the different clients you plan to take on as well as the different web design pricing  models you can offer:

Flat fee (a.k.a. “Project-based pricing”): A fixed amount that you and your client agreed on at the start of the project.

Hourly fee: An hourly cost, ensuring that you get paid the agreed-upon amount for every hour you spend on a project. 

Monthly fee (a.k.a. “monthly retainer”): A contract, either measured in time or value, that involves monthly payments for a certain amount or type of work. 

Learn more: Choosing the right business model

06. Build your portfolio or website

A strong portfolio is key to attracting clients and showcasing your design skills. This is your chance to show (not just tell) future clients what you’re capable of creating online. 

When creating a website for your web design business, consider using a platform that can host both your website and your work for clients. This not only helps to keep everything in one place but also helps you to get ultra-familiar with the web tool you’re offering your clients. 

The most effective creative portfolios include sections, pages or CTAs like:

About : Introduce yourself and your team, including your credentials like any relevant education, industry awards and your value proposition.

“Our Work” : Showcase projects that represent your best work, and make sure there is a brief but clear backstory so that visitors understand how you solved your clients’ needs. Keep in mind that before uploading client projects, you should always get client approval in case projects are confidential or not yet live.

Services : List the different services you offer so that you’ll spend less time weeding through requests and more time connecting with relevant prospects whose needs match your skills.

Contact : Make it easy for people to contact you with any questions, and consider embedding a form into your site to collect useful information from prospects (such as their company name, current website’s URL, etc.). 

“Book a Meeting” : Offer high-intent prospects the opportunity to meet you face-to-face via an online booking feature.

A solution like Wix Studio, for example, is tailored for agency work. It brings together features—including AI tools—for web design, development, SEO,  eCommerce, website maintenance, CMS and more. Beyond having the tools to design cool, interactive sites for your clients at scale, you can enjoy built-in capabilities that allow you to expand your services. 

Build your agency site on Wix Studio with one of these responsive templates . 

07. Promote and market your web design business

Once you’ve published your site and opened yourself up for business, take steps to establish your brand and to proactively get in front of potential clients. 

“Building authority in your industry by creating content is like investing money in the stock market,” says Hussey. “When I started creating videos, writing blogs, appearing on others’ podcasts—those efforts may not have produced results in the immediate term, but over time, the benefits have paid me back in multiples.” 

Exercise your existing network and ask for referrals. Engage with folks on social media. Scour job boards, including LinkedIn, for any calls for help. Here Hussey suggests four additional ideas for your outreach:

Don’t forget to invest in your personal brand. Given how nearly 70% of consumers  trust influencers, friends and family over information coming directly from a brand, it’s always a good idea to use your own sphere of influence to connect people with your agency. 

Note that Wix Studio includes marketing integrations  that allow you to schedule social posts, send emails and track performance—both for your clients and yourself. Use these tools to your advantage as you spread the word about your business. 

Web design businesses and agencies built on Wix Studio to inspire your own

One way to jumpstart your business’s website creation is to follow the examples of established, successful agencies, like the sites below. In addition to providing fundamental information, each of these sites packs a creative punch and demonstrates the creative potential to future clients.

The Boathouse Agency

This creative design agency   shows that there is no limit to the growth potential of your web design business. The Boathouse Agency goes beyond web design and offers complete 360 creative and branding solutions for brands of all sizes.

Visual Identity

Visual Identity  is a web design studio specializing in site design, UI/UX, development and branding. Their site’s black-and-white design, typography and visual elements create a bold and impactful statement about their vision and purpose.

Scopetheory

Scopetheory  leads with results-driven design for their clients that involves taking branding to another level. The homepage makes it easy for prospects to see the agency’s results, with prominent callouts that highlight their clients’ accomplishments. 

What is a web design business?

A web design business is a type of design agency that specializes in creating and maintaining websites for clients. However, more often than not, it’s about more than just design; it’s about building functional, user-friendly online spaces that serve a specific purpose for a client. 

The scope of work involved in a web design business can be broad. They can range from simple static pages to complex web applications and everything in between. Whether it's an eCommerce platform, a personal blog or a corporate website, each project comes with its own set of design and development challenges and requirements.

Why start a web design business?

The web design industry offers a world of business opportunities for creative and tech-savvy entrepreneurs. Starting your own web design business not only taps into a field that blends art and technology but also positions you in a market with high demand for your services.

The benefits of starting a web design business are numerous. Here are some of the most compelling reasons to consider:

High demand:  In a digital age, nearly every business needs a website, increasing the demand for skilled web designers.

Flexibility : Running your own business means you can set your own hours and work from anywhere, be it your home office or a beach in Bali.

Creative freedom:  As the owner of a design business, you have the freedom to express your creativity and make decisions that align with your vision—from the clients you choose to take on, to the design and website niche you specialize in. 

Considerations when starting a web design business

Starting your own web design business is a big step professionally and it's often accompanied by a set of important considerations that any new business owner should be aware of. 

Is web design a profitable business?

The profitability of a web design business can be significant if managed correctly. Here's what you should keep in mind:

Demand for services: With more businesses going online, the need for professional web design services is on the rise. Tapping into that demand can mean a lot of work for a web design firm. You’ll need to think about things, such as your sales process for your web design business , amongst other key business needs.

Pricing strategy : Setting competitive rates that reflect the quality of your work and the value you provide is the key to profitability. To do this, you’ll need to have an idea of what your competitors offer and how they package similar services. Be mindful of value-pricing, which is setting your rates according to the value of your work, not just the time spent on it.

Marketing : You’ll need to promote your business to give yourself the best chance of securing long-term and profitable clients and projects. This could include networking or connecting with related online and offline communities to promote yourself and your business. Encourage your current clients to refer you to others who might need the same services and build your freelance community  along the way.

Diversify your services : Offer a range of services within the field, including content management and social media promotion, if relevant to your expertise.

Build client relationships : Establishing long-term relationships with clients is crucial to getting repeat business and securing more freelance design clients.

Stay updated with industry trends and changes : The web design industry is constantly evolving. Keep learning new skills and staying abreast of trends to remain competitive.

Can I start a web design business with no experience?

With no prior experience, starting any type of business can be challenging. However, focusing on education and growth from the outset can help you maintain momentum and see measurable development over time.

These steps can be a solid guide for your first few months:

Learn the fundamentals: To understand web design from the ground up, get familiar with user experience, content writing and responsive web design. While these days it’s not necessary to create websites with code, an online coding class  in HTML, CSS or JavaScript will help you understand the backbone of your websites.

Practice your skills: As you learn new concepts, put them to use. One option is to recreate websites you find online, down to the details of hover interactions and entrance animations. Practicing on Wix Studio can help you focus on your web design skills, since the platform has extensive no-code design capabilities .

Share your progress: Whether you’ve created wireframes, designs or live websites, share your real-time process and finished products on your social channels. You’ll receive encouragement and feedback from professionals, plus you’ll enjoy going back to your old posts to see how far you’ve come.

Connect with professional heroes and mentors: “Become an apprentice of someone who is already successful in the industry to gain the skills, experience and industry insight,” advises Hairston of Olam Sites. “ This could be in a variety of forms: employee, mentee or YouTube channel subscription.” Choosing a professional hero—someone whose style you admire and want to emulate—will give you a wealth of creative inspiration. Plus, it’s never a bad idea to get in touch with them; they might be happy to provide mentorship and feedback as you find your feet. 

Build your online presence: Now that you’ve completed a few projects, organize everything on a portfolio website. You’ll have one link that you can easily share to show off your past work, whether you’re looking to take on clients or build up your network. 

Can I start a web design business from home?

Starting your web design business from home brings great advantages like no commute time, significant cost savings and complete control over your work environment. 

And though this also comes with its challenges, you can overcome them with these best practices:

Enlist time management for work-life balance: Different from project management, time management helps you organize your day across your different tasks, including any personal tasks that you may have to take care of while at home. Set a clear start and end for your work hours, as well as offline times for lunch and screen breaks.

Create a Zoom-friendly space:  Video conferencing isn’t unique to working from home, but take notice of what’s behind you when you’re on camera for video calls. Make a good impression by clearing away laundry and dirty dishes, and find a space away from household interference.

Connect with online communities and local organizations: Without an outside office space, it can be more difficult to cross paths with like-minded professionals for shared learning and networking. But with a little effort, there’s a big payoff. Join online professional communities like Freelance Fam  for web design freelancers, and Creative Crew  for web design agencies. Find nearby events to attend via resources like Meetup .

Schedule in-person meetings:  While it’s comfortable and convenient at home, health experts encourage getting out of the house daily for physical and mental well-being. Do this by finding time to meet with colleagues or clients face-to-face, whether for business meetings or casual coffee chats. 

Learn more: Guide to Remote Work

Tips for managing your web design business

Effectively managing your web design business helps keep projects flowing—on time, on budget and on brief—and ensures a positive experience, both for your team as well as for your clients. First create a solid project management process and then choose a project management software that meets your needs and budget. 

Best practices for project management

Keeping projects on track ensures client satisfaction and repeat business.

Clear communication:  Establish open lines of communication with clients to manage expectations and keep them updated on progress.

Project management tools: Utilize software like Monday or Asana to organize tasks, owners, dependencies, deadlines and collaborations.

Hairston provides some insight into Olam Sites’s efficient management practices: “Our operations strategy is centered around standard operating procedures, leveraging efficient tools (Asana, Hubspot, Wix Studio, etc.), and a phenomenal project manager. Wix Studio centralizes all client websites and team access, making the deliverable handoff process seamless and scalable.”

With Wix Studio’s management tools , you can work from a unified workplace no matter how many employees are working together. And for teams on the go, the mobile app keeps everyone involved and up to date. Other features include a collaboration suite, handover resources and reusable assets. 

Business software solutions

Leveraging the right business tools can greatly enhance your efficiency as a business owner.

Invoicing and accounting:  Software like FreshBooks or the Wix invoice maker  can simplify financial management by helping you create invoices.

Time tracking : Tools such as Harvest or Toggl help you keep track of billable hours for each project.

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How to Start an Airbnb Business: A Step-by-Step Guide

10 Min Read

Have you ever stayed at an Airbnb and pondered starting your own Airbnb business? If so, you’re in the right place.

Starting an Airbnb is more than just Airbnb listing a room or house. It involves many decisions and preparations. You must tackle a lot to ensure your venture thrives.

This includes picking the best rental location which means making a welcoming space. It also involves understanding booking and guest happiness.

But do not worry, we’ve got you covered. This guide will take you through the basics of starting your Airbnb business. It will give you the knowledge you need to make smart choices and create a standout listing.

Is owning an Airbnb profitable?

Yes, owning an Airbnb can be a good way to make money. It’s about renting out a space you have, like a room or a whole house, to travelers looking for a place to stay.

Airbnb’s revenue from listings almost doubled globally from $3.88 billion in 2020 to $6.85 billion in 2021. That means their revenue grew by 76.62%, but this number isn’t set in stone. Some hosts ramp up their game by managing multiple properties full-time.

Your potential income is dependent on the following factors:

• Your rental rate.
• Number of bookings.
• Size and amenities of your place
• Seasonal demand
• Reviews and ratings

All of these are influenced by the effort and money you invest. You are responsible for making your place inviting and well-maintained.

Invest in your space to make it more appealing, usable, and comfy. Also, address guest questions and concerns. This will improve your reviews.

Assess your performance in many categories. They include the experience. Also, listing accuracy, cleanliness, communication, check-in, location, value, and amenities. Great reviews can boost visibility in Airbnb’s search. This leads to more bookings and higher earnings.

Now, let’s see how you can start your Successful Airbnb Business in a few straightforward steps.

How to Start an Airbnb Business?

• Check if it’s legal or if you need permission
• Find and prepare your Airbnb space
• Draft a business plan
• Set your pricing
• Make your Airbnb business legal
• Get zoning regulations and licensing in order
• Get a business insurance
• Assemble a network of local support teams
• Create and optimize your listing

1. Check if it’s legal or if you need permission

Before renting out a place on Airbnb, it’s important to check the local rules.

If you renting the place, talk to your landlord or property manager to check if Airbnb is allowed. If you own your home, check with your homeowners association. Ask about any rules on short-term rental property.

Look up your local laws about renting places for short stays. You should get a permit or a license first.

Read your rental agreement to make sure you can rent out your place. If you have a loan on your home, ask your bank if Airbnb is okay.

Following these steps is key to avoiding problems or fines and helps you start your Airbnb correctly.

2. Find and prepare your Airbnb space

Starting your Airbnb journey has two important steps. You need to find the perfect spot for your rental and set it up to welcome guests. These two aspects are important to turn your Airbnb property into a profitable and fun space for world travelers.

Finding the Perfect Airbnb Property

Look for properties in popular areas with tourists or business travelers.

The success of your Airbnb depends on its location. A prime spot not only attracts more guests but also allows you to charge competitive rates.

Consider areas that tourists like to visit. Also, think about areas for business travelers or near local attractions and amenities. Locations with public transportation, dining, and entertainment are very appealing. They have easy access to these things.

When looking for potential properties, keep in mind the local laws and regulations regarding short-term rental properties. Some cities have strict zoning laws or require specific permits and licenses to operate an Airbnb.

Preparing Your Airbnb Space

Make your Airbnb space welcoming and comfortable. Provide essential amenities, invest in good security, and decorate it beautifully.

It’s all about creating standout Airbnb experiences. Here are key elements to consider:

• Cleaning Service
• Amenities and Supplies
• Design and Layout
• Listing Your Property

Choosing your location and preparing your Airbnb will set the foundation for success. Guests always want unique and memorable stays. Welcome to the exciting world of hosting, where you bring a memory to last lifelong.

3. Draft a business plan

Launching a successful Airbnb business requires more than just an appealing property. It demands a full plan. A good business plan is your blueprint for success.

It outlines your strategy from idea to operation. Here’s how to develop a detailed business plan for your Airbnb venture:

• Executive Summary
• Market Analysis
• Operational Structure
• Financial Overview
• Marketing Plan
• Pricing Strategy

Download Airbnb’s business plan , It helps you to guide on how to start your planning process. This will help you create a full plan tailored to your unique venture. Remember, success comes from detailed planning.

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4. Set strategic pricing

Setting strategic pricing for your startup costs is important for competitiveness and profitability. Moreover, flexible pricing can lead to more bookings and more guests.

Market Rates

Research other listings in your area to understand the going rates of your competitors. Setting low prices can attract more guests. This is especially true when you’re new to the market.

Seasonality

Adjust your prices based on demand fluctuations throughout the year. Charging higher rates in peak seasons would be favorable. Lower prices in off-peak times can boost your earnings.

It can also boost your occupancy in the market. Take advantage of local events, holidays, or festivals. Adjust your pricing to reflect the higher demand.

Pricing software

Having software that automatically adjusts your rates based on market data, demand, and other factors. This can remove the guesswork for pricing. It can help ensure you’re always competitively priced.

Value Proposition

Don’t just compete on price. Add unique amenities and experiences for guests.  This could include anything from a fully stocked kitchen, to a guide to local hidden gems. It could also include partnerships with local businesses for discounts.

Remember, your pricing strategy can change. This can happen as you learn more about your market and guest preferences. Reviewing and adjusting your prices often will keep you competitive.

5. Make your Airbnb business legal

The first step to making your Airbnb property legal is setting up a framework for your business. Choosing a structure like a Limited Liability Company (LLC) can create greater importance. It separates your assets from your business dealings.

Acquiring the necessary business licenses is equally essential. This process can vary a lot by location. You need to look into local requirements. It is also important to follow the zoning rules of different locations.

You cannot skip this step if you want to avoid legal challenges later. It will help you move to the operational phase of your business.

6. Get zoning regulations and licensing in order

Once your business structure is set, you must focus on the zoning rules and licensing.  The goal here is clear.  You must ensure your Airbnb follows your local laws. You must ensure your property is eligible for short-term rental properties.

Then, get any required permit or business license. This strengthens your business’s legal standing. It also sets the stage for efficient operation.  It sets the stage for efficient, non-complex operation, free from regulatory non-compliance.

7. Get business insurance

Once the legalities have been completed, it’s time to focus on insurance. You need to have strong insurance. It guards against unpredictable incidents.

It covers property damage and liability. Consider these types of insurance:

• Property Insurance
• Liability Insurance
• Short-term Rental Insurance
• Commercial Property Insurance
• Business Interruption Insurance

Taking this step will protect your things and money. It will protect them from all the problems. It brings peace of mind as you welcome guests from around the world.

8. Assemble a network of local support teams

Recognizing the importance of building a network of local support is important. It is the main thing to the seamless running of your business. You should build strong relationships with:

• Cleaning Services
• Property managers
• Maintenance professionals
• Electrician

This ensures that your property is always in top condition. It indeed enhances the guest experience. The network you will form will help you to support the operations of your Airbnb.

It also helps create memorable stays for your guests, which leads to positive reviews and repeat bookings.

9. Create and optimize your listing

Making an Airbnb listing and improving it is important. This process involves more than uploading property photos. It’s about presenting your space to attract guests and get more bookings. Here’s how to craft an appealing and effective Airbnb listing:

High-quality photos : It’s the first impression of your space. Potential guests will see them first. So, they must be high-quality and show off your space’s best features. Consider hiring a professional photographer to capture your property in the best light.

Accurate information : This includes the number of bedrooms, bathrooms, spare bedrooms, and any special amenities. It also includes any house rules your space has for the guests. Transparency is key to avoiding misunderstandings and building trust with your guests.

Guest Reviews : Encourage Airbnb guests to leave reviews after their stay. Good reviews such as five-star reviews can greatly improve your listing. They help you rise in Airbnb’s rankings and attract more guests.

Not everyone is good at optimizing their Airbnb property. This includes using the Airbnb website and local attractions. Some of the optimization techniques include:

• Airbnb Fees
• Update Regularly
• Responsive co-host
• Legal and Business finances

You can improve your Airbnb host listing by the above techniques. It will also boost your bookings and revenue. Remember, success in the short-term rental market is not about having a great space. It’s also about how well you market it and manage potential guests.

Benefits of Starting an Airbnb Business

Additional Income: Airbnb provides a platform to earn money, whether as a side hustle or a full-time job.

Flexibility: You have the control to manage bookings according to your schedule.

Meet Diverse People: Hosting guests from around the world enriches your cultural experiences.

Utilize Spare Property: Turn an unused spare room or property into a profitable venture.

The journey to starting an Airbnb business is an adventure. It blends the art of hospitality with the details of entrepreneurship. It requires dedication, creativity, and strategy.

You need dedication to find the perfect property. You need creativity to make a nice space. And, you also need a go-to strategy to market to get the right audience.

Yet, something that is equally important to your success is taking action. Start your own business by getting your Airbnb listing live as soon as possible. Waiting for everything to be flawless might cause missed opportunities as the market waits for no one.

Be ready to make adjustments. This iterative process is key. It involves refining and enhancing your offering. Success lies in starting and then refining your business. You must do this to meet and beat the expectations of world travelers.

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Frequently Asked Questions

What do i need to prepare my property for airbnb.

To prepare your property for Airbnb, make it clean, welcoming, and well-maintained. Provide amenities like fresh linens, Wi-Fi, an equipped kitchen, and toiletries. 

Consider adding thoughtful touches. They will enhance the guest experience. Examples include local guides, snacks, and a beautiful welcome note. 

Can I manage an Airbnb remotely?

Not everyone can be a full-time Airbnb entrepreneur. So, Yes handling an Airbnb rental remotely is manageable with careful planning. Use digital tools for communication, booking, and payment processes.

Invest in smart home technology, like keyless entry, to help guest access.

Partner with local cleaning and maintenance services. They are reliable. They handle day-to-day operations and any issues.

How much does the average Airbnb owner make?

Airbnb income varies widely. It depends on the property’s location, size, and occupancy rate. The total revenue of Airbnb worldwide reached 9.92 billion U.S. dollars in 2023.

You maximize your earnings by strategic pricing as the Airbnb venture acts as a recurring income. You must maintain high guest satisfaction for better reviews.

What are the biggest challenges of starting an Airbnb business?

Some of the challenges while setting up your vacation rental include:

• Navigating local rules
• Getting permits
• Keeping high occupancy
• managing property logistics
• meeting guest expectations.

Also, you must understand and manage financial aspects. These include knowing tax purposes taxes such as sales tax, and property taxes. They are important for a successful Airbnb business.

About the Author

Shyam Dua is a seasoned tax professional with 40+ years of experience & a mentor at SCORE. He stands out due to his exceptional business planning skills. With a keen eye for detail and a strong financial acumen, Shyam crafts compelling business plans that pave the way to success. A CPA with a philanthropic heart, Shyam's strategic expertise, and dedication make him an invaluable asset in shaping thriving business ventures. Read more

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How To Start a Landscaping Business and Make It a Success

There are nearly a million people working in the landscaping industry throughout the United States, according to the Bureau of Labor Statistics. A career in this industry enables you to beautify your environment, work with your hands, and engage your creativity.

But, what if you want to do more than just work for a landscaping company? What if you want to own one? This guide will explain how to start a landscaping business, including steps like developing your skills, purchasing required supplies, and more. The tips will help you get a successful company off the ground and maximize your chances of consistently turning a profit.

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Key takeaways

• You'll need to develop landscaping skills to start a landscaping business.
• Purchasing landscaping supplies can be an expensive but essential upfront investment.
• A business plan will help you make the right decisions for your growing company.
• The right business structure can help protect you from liability.
• A detailed marketing plan will help you find the right customers for your landscaping business.

Pros and cons of starting a landscaping business

• There's a steady demand for landscapers.
• The barriers to entry are relatively low.
• You can work outdoors or lead a team from your office.
• The work may be seasonal in some parts of the country.
• You may have high equipment and labor costs for certain kinds of landscaping work.
• There's intense competition.

As long as there are homeowners and commercial buildings that need lawns mowed and flowers planted, there will be a demand for landscaping services. Since all you need is some basic equipment to get started, you can take advantage of the low barriers to entry and the high demand to get your company off the ground.

Unfortunately, in parts of the country with unfavorable winters, your work may be seasonal, and you may be forced to venture into related fields — like snow plowing — during the winter months. This can require finding a new customer base and purchasing additional equipment.

Depending on the type of landscaping you do, you may also incur high business expenses and startup costs for labor and for equipment. If you'll be doing specialized work that requires a bulldozer or other machinery, for example, it could cost tens of thousands of dollars to purchase this equipment. You could also face intense competition in many areas of the country.

Steps for starting a landscaping business

When you are figuring out how to start a business in the landscaping field, you'll need to both make sure your landscaping skills are up to par and make smart choices about the business side of your operations. Here are nine steps to take to get your company off the ground and make it a success.

1. Develop your landscaping skills

If you expect people to pay you for your landscaping skills, you'll need to make sure your talents in this industry are well-developed. There are a number of ways to do that.

You could obtain formal education, such as by completing an academic program focused on landscape management or horticulture. You could also complete various certifications through the National Association of Landscape Professionals .

Depending on what type of landscaping jobs you plan to focus on, you may also want to undergo additional training. For example, you could become a landscape architect if you hope to focus on complex landscape design work, but would need at least a bachelor's degree and would be required to complete a Landscape Architect Registration Examination.

You will likely also need real-world training, especially if you are going to be working with machinery or performing complex tasks such as hardscaping. This can often be obtained on the job by working for a landscaper or through certification programs.

2. Purchase landscaping supplies

Landscapers use many tools, and you may need to purchase a variety of different supplies depending on the kinds of services your company plans to offer. Some of the supplies you may need include, but are not limited to:

• A truck to transport landscape equipment and materials
• A lawn mower
• Various shears and trimmers, including string trimmers (weed whackers) and hedge trimmers
• Edgers to create perfect borders around flower beds
• Rakes and leaf blowers to remove leaves and debris
• Shovels for removing and adding soil, mulch, and plants
• Spreaders and/or sprayers to distribute fertilizer and weed- or insect-control applications

If you plan to do larger jobs such as installing a swimming pool or moving large rocks, you will also need to buy or rent equipment such as a bulldozer or a skid steer.

3. Create a business plan

Running your own landscaping business involves more than just focusing on your landscaping talents. In order to become an entrepreneur, you'll need to develop your business skills as well, starting by making a business plan. Business plans serve as a guide or roadmap to help you lead your company to profitability and make cohesive decisions as you begin operations.

Traditional business plans are incredibly detailed and include things like:

• A description of your company
• An analysis of the market
• Details about your organizational structure
• A description of your product line and services
• Your marketing plans and sales methods
• Financial projections for when your landscaping business will become profitable and how much you might charge for different services.

You could also opt for a lean business plan that focuses just on the key elements of your business.

4. Choose a name for your business

You'll need to select a name for your new business. This should be something catchy, simple for customers to remember, and distinctive to your brand. You'll also want to register it with your local government if required, which can usually be completed through the secretary of state's office where you plan to operate.

You will need to make sure no other companies have the same business name as you, or you will not be able to register it. You'll likely also want to register an online domain name with your company's name so you can set up a website people can navigate to when searching for your services or information about your company.

5. Decide on a business structure

You'll need to decide on the right type of business entity your landscaping company should operate as. You have several options, including the following:

• Sole proprietorship. No paperwork is involved in creating a sole proprietorship, and you and your business are the same legal entity. You'll declare business profits and losses on your personal taxes and have no protection from liability.
• Partnership: If you are going to start the business with another (or more than one) person, you can choose to operate as a partnership. Partners in general partnerships share liability and are responsible for operations, whereas partners in limited partnerships are more hands-off and are typically protected from liability. Whatever type of partnership you choose, make sure you put a partnership agreement in place. And, you and your partners will declare company profits and losses on personal tax returns.
• Limited Liability Companies. When you create an LLC, your business has a separate legal identity. You'll typically have to file tax returns and register your business with the state. LLC owners are called members and are protected from personal liability. Profits and losses still pass through to them and are declared on personal taxes.
• S corporations: S-corps are also separate legal entities that must file their own tax returns and be registered with the state. They can be more complicated to create but provide liability protections as well as some tax flexibility, as you can declare certain income to be a distribution rather than wage income, which can have favorable tax benefits. Profits and losses pass through to owners with an S-corporation as well.
• C corporations: C-Corporations are separate entities without the restrictions on ownership that exist with LLCs and S-corps. Many large and publicly traded companies are C-corps. C-corps file their own taxes and declare profits and losses, which creates a risk of double taxation, as owners are also taxed on dividends the corporation pays.

The right business structure will depend on your goals for the company, your tolerance for paperwork, and how important it is for you to put liability protections in place.

6. Register your business for taxes

Once you start your company, you will typically need to apply for an Employer Identification Number, especially if you plan to hire workers to staff your landscaping business. You can apply for an EIN on the IRS website.

If your business exists as a separate legal entity, your company's EIN is used when filing tax forms with the IRS on behalf of the business.

7. Get licenses, permits, and insurance

Depending on where you live and what kind of landscaping work you plan to perform, you may need to obtain specific business licenses and permits to operate.

For example, you may need a commercial applicator license to apply pesticides as part of your landscaping work. Or you may need a landscaping construction professional license if you intend to design or plant trees, grasses, or nursery stock or may require other special licenses to do tree work. It's a good idea to research the specific requirements in your state to find out what the mandates are.

You will need business insurance to protect against financial loss as well. You should purchase general liability insurance in case you harm someone or damage a customer's property. If you will be hiring any workers, unemployment and workers' compensation insurance may also be necessary. And, it's a good idea to get business interruption insurance in case a covered event causes you to temporarily pause operations.

8. Fund and budget for your landscaping business

You will need money to operate your landscaping business, so you should open a separate bank account to keep your company funds in. You'll also need to look into how you will secure funding to get your business off the ground. You could rely on your savings, pursue a business loan, get a small business credit card , or ask investors to help fund your startup landscaping enterprise.

9. Market your business

The key to figuring out how to make money as a landscaper is knowing your target market and being proactive in reaching customers.

To do that, you'll need to identify who you want to provide services to, if there's a niche you want to fill, and how you will reach potential customers so they'll know you can provide the services they require.

There are a number of ways to market your landscaping company, including through ads in local magazines, creating a website, connecting with customers through local groups, creating a word-of-mouth referral program, or posting pictures and videos of your work on social media sites like Houzz, TikTok, Instagram, and LinkedIn. Don’t forget to print and hand out your business cards.

Consider what kind of marketing is most likely to help you reach your target audience — and what kind of marketing is within your budget and skill level.

What is landscaping?

Landscaping is the process of improving and maintaining a property's grounds. There are different kinds of landscaping work that you could do, with landscaping tasks ranging from planting flowers to installing a patio or pool to adding other ornamental features such as ponds and outdoor kitchens.

What is the difference between landscaping and lawn care?

Lawn care focuses specifically on lawn maintenance. A lawn care business could include mowing, trimming and edging, pest control, leaf blowing, and fertilization. Landscaping can include lawn care services but also involves a broader array of services designed to make land more attractive. Landscaping could include planting flowers and trees, leaf removal, or adding pools or other outdoor structures.

How profitable is a landscaping business?

According to a survey conducted by the National Association of Landscape Professionals (NALP), the typical landscaping business owner's salary ranged from $54,000 to $115,000. However, the salary of a landscape business owner — and the profits a landscaping business makes — will vary depending on many factors, including geographic location, reputation, and services provided.

How much does it cost to start a landscaping business?

The cost of starting a landscaping business varies depending on what kinds of services you wish to perform. If you simply plan to mow lawns, you could potentially get started with a few hundred dollars. If you need an equipment truck or specialized equipment such as a bulldozer, then you may need tens of thousands of dollars to get your business off the ground.

How do I make my landscaping business successful?

To make your landscaping business successful, you must develop both your landscaping skills and your business skills. You will need a business plan and a marketing plan so you can reach customers, set prices, and determine how to become profitable. It can help to have certifications or other advanced training in landscaping. And getting good reviews once you begin work can become referrals and positive references to provide potential clients.

Bottom line

Figuring out how to start a successful landscaping business can be a challenge, but it is worth the effort if you want to help people enhance their homes or buildings — while also making a good income. Start working on these steps today, and your company will be off the ground before you know it.

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How to Start a Lawn Care Business: A Step-by-Step Guide for Budding Entrepreneurs

Self-starters who want to learn how to start a lawn care business can follow these 11 steps to help create a lawn care business sure to grow..

By Amber Guetebier | Updated Mar 19, 2024 5:30 PM

We may earn revenue from the products available on this page and participate in affiliate programs.

Photo: istock.com

When it comes to types of businesses an entrepreneur can start, opting for a lawn care business can be full of benefits. Overall, lawn care business start-up costs are relatively low and the industry has the potential for high revenue; some lawn care businesses can bring in six figures annually. Add to that the perks of independence and spending time outdoors, and starting a lawn care business becomes even more appealing. To offer customers individualized, reliable lawn care, the best lawn care services start with a comprehensive, executable lawn care business plan. Those interested in starting a lawn care business will find the steps listed can help them on their path to a flourishing lawn care business.

Before You Begin…

When entrepreneurs are researching how to start a lawn care business, there are a number of key factors to take into consideration. Before launching a new venture, aspiring business owners will want to consider any existing lawn care businesses in their marketplace, what those businesses have done to be a success, and how a new lawn care business can compete.

In many locations, lawn care isn’t a year-round business, so taking the weather and climate into consideration will help an entrepreneur formulate the right plan. Many lawn care businesses offer winter snow or ice removal in areas with heavy snowfall. Those with milder winters may be able to work nearly year-round if they plan to offer lawn care preparation and seasonal cleanup as part of their services.

Tips for Starting a Lawn Care Business

• Create a well-researched business plan and set a budget.
• Decide on a business structure, such as sole proprietorship or limited liability company (LLC).
• Research required licenses and permits, such as those required for pesticide application.
• Invest in necessary equipment and software.
• Create a targeted marketing plan to create brand awareness and reach a wider client base.
• Recruit and hire employees to help the lawn care business scale.

STEP 1: Write a comprehensive lawn care business plan.

Writing a business plan is a logical first step for any entrepreneur, and it’s no different for a lawn care business. In order to create a robust, actionable business plan for lawn care companies, the owner needs to start off with market research and make decisions about the scope of the lawn care business they want to run. Many lawn care companies begin as a small lawn care business but may scale into a larger operation, so thinking about company structure is important. For example, will this be an LLC or a sole proprietorship? Is the goal to be a solo operation or to eventually become a franchise? A strong lawn care business plan includes a list of the equipment and tools the owner will need from the start, the start-up and operational budget for the business, and a marketing plan that includes outreach to let new customers know that the business is up and running.

STEP 2: Choose a business structure and register your business name.

There are several different structures an entrepreneur can choose for their business, including a sole proprietorship, a partnership, a corporation, an S corporation, or a limited liability company (LLC). For each of these structures, there are different requirements to register with the state or local government. Business structure affects taxes, paperwork requirements, personal liability, and where potential funding comes from. Aspiring entrepreneurs will want to consider their lawn care business structure carefully, as choosing to restructure in the future may come with restrictions and complications. The U.S. Small Business Administration (SBA) website offers business owners information to help them determine which structure is best for their company. Entrepreneurs can also choose to work with a professional to register their business; for example, they may choose to work with one of the best LLC services , such as LegalZoom or Northwest Registered Agent , to register their business as an LLC.

STEP 3: Get the necessary business licenses and permits as required by your state or local government.

Business owners typically need to register their lawn care business name with state and local governments. They’ll also want to consider the adjacent states where the company may conduct business and research whether the business needs to be registered there as well. Generally, if the company is an LLC, corporation, or partnership, the business owner may be required to register in any state where the company will regularly conduct business. Business names do not need to be registered on a federal level, but paying taxes to both state and federal tax agencies is a requirement.

In addition, the business owner will likely need to get a business license , though the specifics will depend on their location. There are a number of different types of business licenses , and new lawn care business owners will want to research what licenses are required in their area. For example, some states may only require a general business license for lawn care companies to operate legally. Others, however, may require lawn care businesses to obtain special pesticide application certification or permits.

STEP 4: Obtain business insurance coverage.

Lawn care companies frequently work with equipment such as riding lawn mowers or rototillers on clients’ property. They may work on drainage and irrigation as well as lawn care and maintenance. Because of this, purchasing the best insurance for lawn care businesses (such as a policy from NEXT Insurance or Thimble ) is a critical investment for any lawn care business. In many cases, a certain amount of insurance coverage is required by law in order for a business to acquire a license and operate legally in the state in which it’s located.

The good news is, the cost of lawn care business insurance is relatively affordable, with the national average at about $45 a month. Having lawn care business insurance can help protect the company in the event of an accident, damage to a client’s property, injuries to a client, and in some cases, stolen or damaged equipment.

STEP 5: Get financing and open a business bank account.

The national average lawn care business start-up cost is $6,900, which includes a business license, taxes, insurance, equipment, and operating supplies. This amount can fluctuate depending on location, existing equipment, and other factors such as number of employees and vehicles. Commercial lawn care companies may need to invest in larger and more powerful equipment, such as one or more of the best riding lawn mowers , rather than basic push mowers, and this can be a larger investment up front. Creating and finalizing a budget, possibly with the help of an accountant, will help a business owner see the profit they need to succeed and help secure the right amount of financing. It’s also essential to have a business bank account to help manage income and outgoing expenses.

STEP 6: Invest in software to help run and organize the business.

With so many moving parts involved in starting a lawn care business, investing in accounting or other business management software can provide a new business owner with the support they need to manage the daily operations of a lawn care business, including scheduling, invoicing, and budget tracking. The best lawn care scheduling software programs (such as Jobber ) can help address the specific needs associated with operating a lawn care business.

STEP 7: Purchase quality lawn care tools and equipment. 

Starting a lawn care business requires a business owner to invest in certain types of equipment, not the least of which is a lawn mower. Purchasing the best lawn mowers will help any new lawn care business operate successfully. If the lawn care company will operate as a commercial business, with clients that could include golf courses, sports stadiums, or parks, the owner may want to consider larger mowing equipment such as a zero-turn or tractor-style riding lawn mower . Riding lawn mowers are a greater initial investment, but they enable the lawn care business to serve more clients in less time. Entrepreneurs will want to keep in mind that some equipment, such as rototillers or skid-steer loaders, can be rented on an as-needed basis until the business grows.

“Investing in quality equipment and tools will allow you to apply [lawn care products] faster and more efficiently while putting less wear and tear on your body,” says Mark Marino, owner of Lawn Phix , a lawn care company based in Bellingham, Massachusetts. “I now primarily use a ride-on spreader/sprayer with a walk-behind fertilizer spreader and two battery backpack sprayers (one for herbicides and one for liquid nutrition). This setup has instantly doubled the number of properties I complete daily…compared to [using] the push spreader and battery backpack sprayer alone. Plus, I’m less tired at the end of the day, and it’s a lot of fun to ride around, too.”

STEP 8: Invest in top-quality lawn care products.

In addition to having quality tools, a new lawn care business will need to have a selection of quality lawn care products, such as fertilizer, weed control, and pest control products. Lawn care businesses can keep these types of products on hand to make it easier to maintain and beautify clients’ yards.

There are several factors for aspiring lawn care business owners to keep in mind while researching the best lawn care products for their company. First, they’ll want to consider safety. There is a lot of value in choosing a company that offers environmentally friendly products, and doing so could give a lawn care company an edge against the competition if other companies in the area aren’t using eco-friendly products. Second, they’ll want to think about the reputation of the company providing the lawn care products they’re considering. Entrepreneurs can research the different brands available, asking local companies what products they recommend and reading reviews on the effectiveness of each type of product.

Lawn care products are a critical component of any lawn care business, so it’s vital that an entrepreneur include them in their budget and shop around to find the best products for their money.

STEP 9: Choose and price the services your lawn care business will offer.

It’s common for many lawn care companies to offer up-front pricing on their website and on flyers or advertisements. By researching the lawn care cost in the area in which the lawn care business will operate, new lawn care companies can remain competitive in their local market. The national average cost for lawn care services is $124, with a range between $48 and $206. Pricing can be dependent on many factors including geographic location, frequency of service, lawn size, and any additional services the lawn care business will offer, such as pesticide application, additional landscaping services, or seasonal cleanups. In areas with heavy snowfall, many lawn care businesses pivot to offer snow removal and holiday lights installation.

STEP 10: Create a marketing plan to build a solid client base.

A marketing plan is an integral part of cultivating and maintaining a client base. Marketing includes everything from lawn care business cards to a dynamic website. It also includes targeted advertising, such as flyers and door hangers, in neighborhoods businesses wish to serve. The use of social media outreach is also important to build brand identity and interact with customers.

Another way for a lawn care business owner to get more clients is to tap into their existing customer base. “Something that’s worked really well for us is simple word-of-mouth advertising,” says Jeremy Yamaguchi, founder of Lawn Love . “We’ve gathered tons of new customers simply through being recommended by satisfied customers. We make it a habit to always ask our satisfied customers to recommend us after completing a job for them, and we also run lots of promotions where we will offer discounts to people who recommend and get others to do business with us. Lawn care is one of those services that is inherently personable and connection-focused, which is why this has always been an effective approach for us.”

Additionally, entrepreneurs will want to consider purchasing vehicle wraps or magnets with their business name, logo, and contact information and place them on their business vehicles. This helps the business become more visible in the community, which can attract more customers. Finally, business owners can ask their current customers if they can place a yard sign with their business info on the customer’s property—this way, passersby can see the business’s contact information while also admiring their handiwork.

STEP 11: Hire employees to help you run your lawn care business.

While a small lawn care business may start out with a single owner and operator, the workload will grow alongside the client base. In order to effectively scale a business, many lawn care companies will reach a point at which they will need to hire employees. Investigating the average wage and benefits will be a big step in the process for the business owner. Offering employees a fair wage and good benefits will help with employee retention, and it can help ensure trust and loyalty between employer and employee.

“I have seen wages increase steadily over the past 10 years. For instance, an inexperienced crew member started at about $11 per hour in 2014 compared to $18 per hour today,” says Jennifer Nichols, president of GreenWeaver Landscapes in Lenni, Pennsylvania. “Along with wage increases, benefits have grown over the years, and we now offer health and dental insurance, a retirement plan, and liberal vacation and education benefits for all new hires…Landscaping is a skilled profession and our employees deserve a living wage, just like all the other trades. I believe the public is beginning to understand and accept this. This simply means that wages will most likely continue to increase in the near future, and they should.”

When learning the ins and outs of how to start a lawn care business, from writing an initial business plan and securing funding to marketing and hiring employees, entrepreneurs can create a thriving business that helps beautify the neighborhood while earning a living wage. By dedicating the time up front to create a well-researched business plan, the grass really will grow greener.

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