The Importance of Ecommerce Business Plan

Maybe the idea of a business plan when you start an online business sounds a little bit too much like a case of using a traditional tool of business on a new aspect of business that doesn’t need it. You would be wrong to think this. The important word is ‘business’ and writing a business plan is just as important for an online business as it is for any traditional business type.

You are either an existing business or you are just starting out – the business plan is just as vital in either case. If you are an existing business then you will know that your business plan needs changing and upgrading every year. As situations change or targets are reached it is necessary to revise your planning. As a business start-up you will need the plan both for your own sake and for the benefit of your financial backers. A business plan is a way to see how your new business could or might grow and succeed without taking the actual risk of investing any cash. It should include details such as cash flow forecasts, break-even forecasts and a business model. It should be based on research that you have carried out to a high and accurate standard and should include all aspects of the business, not just finance but the goods and services that you have on offer, your marketing, your structure and your administration. A good business plan lays down the direction that the business will take and delineates targets and objectives. It is used as a management tool; a tool which shows that you know what you are doing! And you are going to need to show it to the bank manager. Not necessarily because you want to borrow money, but because you will need your business account to be awarded a special status called ‘merchant status’ if you intend to take payment over the net using debit or credit cards. Because you are remote from the buyer you need a system that will take payment on the basis of ‘Cardholder Not Present’.

All business activity takes place within a certain context. Within this context business objectives are set. You then need to define the strategies (or plans) by which you intend to reach these objectives. Imagine yourself as a runner going for a five-mile training run. You have a mission, an objective and a strategy. Your ‘mission’ could be to keep fit, it could be to enjoy yourself or it could be to be faster than anyone else. This mission could be embodied in your ‘mission statement’, which would be very different depending on which of these three was your aim. Your mission statement as a business outlines your general aims and gives an idea of the context in which your business will operate. It provides the framework for your business activities and gives direction to your business planning. You can see from even this simple example that a very different training plan would be needed depending on which of the ‘missions’ was chosen.

Your ‘objective’ will be more precise and probably shorter term – to get to the end of the five miles. You may be able to set a target – one that is quantifiable or measurable – taking a particular time to cover the distance, for example, or beating a previous time. A business will have certain objectives and short-term targets that should be fairly easy to measure. Your ‘strategy’ is the method you employ to reach your aim. In the case of your run, it might be a lengthy training program, it might be harnessing your natural talent, it might be enrolling on a weight watchers course! A business will look at the possible ways to bring about the result that it wants. Your business also operates within certain parameters or constraints often laid down by legislation, sometimes just accepted good practice. These include trading laws, taxation and consumer protection issues – the last perhaps being even more important for web-based trading than for normal business transactions due to the remoteness of seller from buyer. You need to start your business plan by considering what the mission of your business is (and ‘to make a profit’ is neither sufficient nor smart, although it is likely to be one of your aims). The mission statement says, ‘This is what we do; this is why we are in business’ and should generally be customer focused.