Online retail businesses are booming as more and more people choose to shop from the comfort of their homes, swiping and clicking to browse, compare and buy easily instead of braving crowded high streets.
It’s a good time to start an online retail business and we understand that it can be very tempting to jump straight in.
But no matter how great your idea is, it’s always best to do your homework and craft a solid business plan before you launch.
What is a business plan?
A business plan maps out your business idea, analysing strengths, weaknesses, your competition and the marketplace. It also sets out your SMART goals and projected financial performance.
Put simply, it’s your company’s strategic blueprint and if done well, it can help you secure partners, investors, grants, loans or other funding.
Something that can also help your planning is a Business Model Canvas. It is a handy tool to help you build out your business plan.
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Do small online retailers really need a business plan?
In our view, yes. Compared to a traditional bricks-and-mortar company, setting up an online business can be inexpensive. You may not have to worry about the cost of commercial real estate or even need to secure an investor or bank loan.
However, business plans are not just for attracting investment — doing the research and putting your plan into writing means your business is more likely to succeed. Factors to consider as part of the business planning process include the following:
Think about the cost and logistics of delivering your products or services to customers, including sending digital products or making them accessible to customers.
There are lots of different ways you can sell products online, including online stores, seller marketplaces, online auctions and social media sites.
The fact that it’s relatively easy to set up an online business means competition is stiff. You’ll need to invest in marketing to stand out.
As an online retailer, your website is your shop. To impress visitors, it needs to look great with clear calls to action. It should also be informative, easy to find and simple to navigate.
Without shop staff or call centres, customers are likely to look to social media to engage with your brand and ask for help. Will you have time to be active and responsive?
Why you should write a business plan
- If you decide you do want to attract an investor or business loan, you’ll almost certainly need a strong business plan.
- Use it to identify threats and challenges, come up with solutions, plus establish your unique selling proposition and get to know your competition.
- Working on your financial model and projected income will help you demonstrate how your business idea will make money and grow over time.
- Setting short, medium and long-term SMART goals, such as launching a new product, will give you direction as well as a way to benchmark your business performance.
- Researching your target demographic will help you better understand their shopping habits and preferences, laying the foundation for your marketing strategy.
How to write an online retail business plan
We’ve included detailed guidelines on the type of information you might want to cover in our free online retail business plan template but typically such a document would cover the following sections:
- Executive summary
- Business overview
- Audience and market
- Products and pricing
- The team
- Business finances
If you need help with your finance section, take a look at our guide page on how to get more accurate figures for your business plan.
Making the most of your business plan
With time, your business and the marketplace it operates within are bound to change, and the idea is for your business plan to reflect this.
Revisit it annually and update it if there have been any changes to your company, technology, competition or the marketplace that impact your plan. Check your SMART goals monthly to see if you’re on track and add in any recent, useful customer input or testimonials.
Want help with your business planning?
Your accountant or your bank’s small business adviser should be able to talk you through any questions you have. You can also use our online template, which comes with lots of tips and guidance on what to cover.
Business plan template for online retail companies
Want to create a business plan for your online retail company but not sure how to do it? Download our free and easy-to-use business plan template and you can get started.