Why Your eCommerce Store Needs a Business Plan and How to Write One

Business plans are often seen as a chore that’s only required if you need to raise capital. The truth is every business, no matter how big or small, needs a business plan. This includes online business – even if it’s a small business ran by a single person. Taking the time to create a business plan is crucial to business success.

Why You Need a Business Plan


A business plan can help you plan the direction your business will take. It is your road map. It projects 3-5 years into the future and shows how you will set goals and reach milestones. It helps you separate what’s crucial and what’s not. It will also give you an idea of when it will be profitable. It informs your decision-making. It’s part of business planning. This information will be critical if you’re getting financing.

eCommerce often changes faster than regular old brick and mortar commerce. I consider this an advantage of doing business on the web. You can change your direction much quicker and perform ‘coarse adjustments’. A business plan helps you see the need for changes and can help you know what those changes should be. It can help you solve small problems before they become big problems.

Established vs Startup

Your web store needs a business plan regardless of whether it’s a brand new startup or has been running for a while.

At startup it teaches you more about your business idea and helps you figure out if it’s viable or not. It makes you think about the tough questions that are easy to ignore. It helps you see the bigger picture and build a strategy for success.

After it’s been running for a while it helps you make decisions about the business’ sustainability. It can show you when is the best time to introduce new products and what those products should be, or when to drop a product or make pricing changes.

No matter what your business is or where your business is in its life-cycle, you need a business plan.

The Components of the Business Plan

There are nine components that make up a business plan. These documents are the same regardless of whether your business is eCommerce, brick and mortar, door-to-door service, for profit, non-profit, or any other type of business you can think of. These components build the structure of the complete business plan document. These documents should be compiled into a single document with an index.

1. Executive Summary

This is a summary of all of the business plan components. It’s considered the most important component and should be written last. It tells the current status of the company, where the company is headed, and why it will be a success. Anyone who needs a brief introduction to your business will use the executive summary.

It should include information such as:

  • Mission statement
  • Company information
  • Products and services
  • Growth projections
  • Financial information
  • Future plans

Some of this information won’t be available if you’re starting up. Include a summary of what you do have. This should take about a page.

2. Company Description

This is a snapshot of what your business is. It describes the nature of your business and how it operates. It lists the type of customers you have and how you will meet their needs. It lists any competitive advantages you have over your competitors and what the value is that you bring to your customers. It’s an elevator pitch. It’s how you describe your business in the time it takes to ride an elevator and gives someone the crucial information so they understand what your business is.

3. Market Analysis

This explains your industry and your experience in it. It will include information such as:

  • Industry description – exactly what is the industry and target market. Is it seasonal?
  • Outlook – describe the historical growth trends and future projections.
  • Customer need – what are the needs of the customer and how are they being met? Where are they and how will you reach them?
  • Size of the market – how large is the market? How much do they spend on this industry per year? What are the future projections? Will it grow or diminish? By how much?
  • Your projected market share – how much of the market do you expect to obtain and how will you obtain it?
  • Pricing and margin – define your pricing structure and profit margin.
  • Your competition – who are your competitors and what is their market share? Using a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats), what advantages do you have over your competition and how will you use that advantage to gain market share? What barriers will you face and how will you overcome them?
  • Regulations in the industry – what are the customer or government regulations in your industry? How will you comply and what will it cost?

4. Organization and Management

This shows the organizational structure of your company. It shows who the owners are, who the management team is, and what their qualifications are. It shows who does what and what they’re responsible for. It will discuss the number of employees you will have and how the pay structure works. It shows what the internal departments within your company are and describes what they do. It will also show the legal status of the company and its ownership. Is it a corporation? Limited liability? Partnership? Sole proprietor?

5. Service or Product Line

This gives detailed information about your services and products. What are the services or products you provide and what are their benefits? Does it include any patents, copyrights, or trade secrets? What are your research and development activities? What is its current stage of development? How much will it cost to develop? What is the life cycle of the product? How will they meet your customer’s needs? What advantages will they have over your competition?

6. Marketing and Sales

This will describe your marketing and sales strategy. It will show how you will obtain customers and how you will keep them. It will show how you can use them to obtain more customers. It will show how you will enter the market, how you will grow, and what sales channels you will use.

Will you use social media? Will you use banner ads? How will you communicate with your customers? Will you use affiliate programs? If so, describe the program in detail. What are the activities required to create a sale? What is the projected success rate of those activities? What is your projected cost of sale through each of your sales channels? How will your website help in your marketing efforts? Talk about your SEO, newsletters, social networks, etc.

7. Funding Request

This section contains the detailed information that investors need in order to make the decision to provide funding for your business. It should describe what your funding requirements are, including possible funding for the next 3-5 years. It will show the type of funding you need, including Capitol, Acquisition, etc. It will show how the funds should be received and used.

It should also include any future financial plans. It should include the amount you’re currently asking for, the amount you will ask for in the future and when, and terms for the loan. It should include both historical (if available) and projected data. This will include what hardware and software you need and the manpower to operate it. Will you need programmers, graphic designers, etc.?

8. Financial Projections

This will include two possible financial statements:

  • Historical Financial Data – this is for established businesses. It shows historical data for the past 3-5 years. It should include income statements, cash flow statements, and balance sheets.
  • Prospective Financial Data – this is your projected income for the next 5 years. It should include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budgets. The first year should show monthly or quarterly. The rest would show quarterly or yearly.

Use charts to show ratio vs. trend for both types of financial statements. All financial information must be accurate. Since financiers will critique these numbers you should spend extra time and take special care with this section. Your projections should match the amount you’re requesting. It’s okay to make assumptions but give clear information as to how you came to the conclusions you did.

9. Appendix

The appendix will show specialized information that you don’t want just anyone to see. For this reason it should not be included in the main document and only be given on an as-needed basis. It will include information such as:

  • Resumes
  • Letters of reference
  • Credit history – for both personal and business
  • Legal documents
  • Leases
  • Permits
  • Licenses
  • Contracts
  • Lists of consultants
  • Images of products
  • Market analysis
  • References – personal
  • References – articles to support your data and analysis

You should include a privacy disclaimer that readers would sign in order to view this document.



Use your business plan to show how your business will stand out from the crowd and why customers will want to buy from you. If you don’t know these for certain then you haven’t done enough research.

Get as specific as you can about what your product is and who your customer is. Figure out what makes your product unique and why your customers need or want it. This will help you market to them and keep you from wasting time and money marketing to the wrong crowd and will help you stand out from your competitors.

Don’t spread your business too thin. Get very specific about your products and services and don’t try to do too much. It’s better to do one thing and do it better than anyone (to quote Orville Redenbacher) than to be a Jack of All Trades and Master of None. Niche down until you have your specific market. It’s better to specialize to a smaller market and be the go-to source than to fight the bigger fish in the much larger ocean of business. It’s easier to stand out in a specific niche than in a general topic.

Perform a survey in your target market to determine if your products match their needs. This will also uncover areas of opportunity.

Don’t rush. Spend time developing your plan and insure that your data and analysis are correct.

Revisit your business plan at least quarterly and make changes as needed. The business plan should be considered a living document that will change and grow over time, adapting to new challenges and leading your business into the future.


You can build your business plan online for free using the SBA Business Plan Tool. You can save your business plan as a PDF and refer back to it and edit it as often as you want.

Other online resources include:

Most of these resources have sample plans and instructions to get you started.

Final Thoughts

Business plans are a crucial part of business development and planning but creating them doesn’t have to be difficult. Accuracy and completeness are vital. Done right, they’ll give you the tools you need to get financing and drive your business into the future.

Have you created a business plan for an eCommerce website? Do you have something to add? Let us know in the comments below.

AuthorRandy Brown

Randy is a freelance writer specializing in WordPress and eCommerce. If he's not writing or reading, then he's probably playing guitar. You can see Randy's writing services at randyabrown.com.

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