“I what to start up an online business – how do I create a start up business plan?”
When you have found your perfect business idea for your online business, the first step should be to create a eCommerce business plan. I’ll really recommend you to do this “homework” and not just start “head over heals”. I have tried both and I’ll can honestly tell you that the later is the best way to go when starting an online business from scratch.
What is a Start Up Business Plan?
Now you are maybe asking yourself: “What is a start up business plan?”. A business plan is a description on how you want to start up your online business. While writing it, you get to reflect on your idea and the aspects you need to work with to make your new online business a success. Below I will try to give you some things to consider when writing your business plan.
Here is how how to make a business plan.
1) The product vs. services.
Your products or services are the lifeblood of your new online business, therefore it is of great importance that you analyse the service/the product from different angles.
Things you need to consider are:
Who are my suppliers? It is vital that you find a good supplier and that you both agree on the terms that your are going to do business on.
How am I going to stock my product? A lot of new online business start up by having their products stocked in their garage. Some suppliers do also offer the opportunity of drop shipping, which means that you don’t have to stock the products yourself. This will be handled by the supplier as well as the delivery. The only thing you have to do is to concentrate on selling the product. This can of course be an advantage for a new start up, as it reduces the risk of having a lot of money tied into a big pile of stock.
What is the revenue before taxes on my product or service? Before going any further it is a good idea to calculate your revenue. You also need to compare the selling price of your product/service to the one of your competitors (see section 2)
Here is how you calculate the revenue /contribution margin of your product:
+ Selling price ex. sales tax
– My cost price
– transport/custom etc.
= contribution margin:
2) Market analysis
Launching a new product. If you are starting something completely new it can be hard to know what the market potential is. If you can think of some substitutable or complementary products you can try to estimate the demand on these products by using Google Adwords and see how many searches the product or services has.
Google Adwords is also a good tool if you want to estimate the size of an existing market. Be aware however, not all searches on a product or service means that the consumer is willing to buy. You can read more about starting a Google Adwords Campaign here.
How is the competitors. It can be hard to find out how tough the competition in your market is. A way to go about this, is to type in your product or service in google and see which sites comes up. Try looking through these sites and see what your competitors do. Write down what you see as their strengths and weaknesses.
Positionering – what is special about you?A very important step when making a new business plan is to determine yourmarket positioning – that is how you want to target your market. Why should the customers buy from you? Where are you different from your competitor? When thinking about this, see if you can use some of the weaknesses of your competitors and convert these into your strengths. A very important thing to ask yourself in this process is: “will this benefit my customers?” and “are my customers demanding this?”.
3) What is my sales channel (website or webshop)
If you want to start an online business your webshop or website is essential. However you don’t have to choose an expensive eCommerce solution to begin with. There are a lot of Open Source software (free software) you can use to get started. I have good experiences with Joomla and Virtuemart for example. There is a steep learning curve on these solutions but they offer a lot of features and growth potential and they are free. Regardless if you set up the webshop or -site yourself or if you let someone else do it for you, it is important to think about the usability and what you would like to express with your site/store.
Unfortunately customers don’t come out of the blue. You have to do some marketing for your new small online business, which is why an essential part of developing a business plan is to find out who your customers are.
I often try to describe my typical customer or customers as detailed as possible, by answering the following questions.
- How old are they?
- What are their profession?
- Family background?single, married, children?
- How do they live? house, apartment etc.
- Their economy?For example, do they drive a car, bike, bus, train?
- Interests? What do they do in their spare time?
The above is for private customers, if you are targeting business customers similar questions should be asked. The better you are able to describe your customers the better you will be able target them with your advertising.
After you found out who your customers are it’s time to decide on how you what to target them. The possibilities for targeting your customers are endless but here are a few of the more traditional on the internet:
- Adwords. Paid advertising per click on google.
- SEO (Search Engine Optimization). Very simplified this is to make your website know to the search engines).
- Online Magazines.
- Affiliate Marketing. Advertising on pages with subjects that has to do with your product)
To start up an online business with no money is not completely possible, there will, at the very least, be some establishing costs for a domain name and hosting. Therefore it is a good idea to make a budget where you estimate the cost of establishment and daily operations. Another budget you might want to consider making is an sales budget, where you estimate how much you expect to sell (including cost and revenue of goods sold, delivery etc.).
This was a quick walkthrough on how you can create a Start Up Business Plan for your online business.
Remember: good ideas are worth nothing if you don’t follow them through and this often calls for hard work and persistency.