A business plan is an important step in figuring out where to go next for your Shopify store. Here’s how to make one.
What’s a business plan?
Can’t I just wing it?
You can get really far by just winging it, diving in and making it happen. Not to mention that most business owners will tell you plenty of times things didn’t go according to plan. But a business plan can help guide you forward, give you direction, and something to fall back on when things start to go off-kilter.
A few good reasons to have a business plan from the beginning
- It’s essential to get most types of investment and seed funding
- A plan helps you delegate tasks as your business grows and you take on more staff
- The market and competition research you do in order to make a business plan helps you find your competitive edge and understand your position in the market.
- Setting goals through your plan helps you figure out what needs to be worked on as you move forward
- Thinking through all the steps you need to take now can help you manage your time and resources so you are not scrambling with everything at once. This is especially important if you don’t have a steady revenue stream yet and need to allocate resources wisely from the beginning.
What should be in my business plan?
1. Executive Summary
An executive summary is a one-pager that covers the basics of everything else. It’s short, persuasive, and outlines your business concept, company vision and goals, what you’re planning on selling, who you’re planning on selling to, and what makes you different.
2. Company Profile
A company profile is a longer look at your business, and should summarise:
- Company name, ownership and legal status, and assets
- What products and services you’re selling
- What is your unique sales proposition?
- What business model you’re using, like B2B or B2C
- What structure are you using? Sole proprietorship? A cooperative?
- What goals, vision or mission do you have?
This section is where you dig a bit deeper into what exactly it is you’re going to sell, while including details about what makes your company different than Kenny down the block. Don’t forget to include:
- Acquisition and sourcing: Where you’re going to get your product from and what tools or materials you’ll need to have
- Differentiators: How is your product different from your competitors?
- Costs per unit: You don’t need to go into way too much detail here, but roughly how much is your product going to cost you? What profit margins are you looking at?
4. Market Analysis
Time to put your spy glasses on. Here is where you show your research on how your company fits in with everyone else. Doing market research at this stage can help you prove your product-market fit is going to help your products actually sell. You should dig into the following indicators:
- Product viability
- Market viability
- Industry trends and projected growth
- Main competitors
- Level of saturation in the market
- Target customers, or groups of customers (making customer personas helps)
Another way to conceptualize a lot of your market analysis is what’s called a SWOT analysis. They’re not exactly the same, but going over your company’s current strengths, weaknesses, opportunities and threats can give you a good picture of how to build up your business. A strength, for example, could include the fact that you sell something unique. On the flip side of that, a weakness could be that it costs quite a lot per unit. An opportunity could be a new way you’ve found to target customers. A threat could be that there is limited market penetration and it will take a lot of work to get people to adopt a new product they haven’t heard of.
By identifying industry trends in these categories, you can better understand what you’re up against and plan for the future, as well as dig for opportunities to step into the market with a unique sales proposition.
5. Sales and Marketing Plan
This is where you plan out how your customers are going to find out about you. Be sure to think about:
- What channels are you going to use for marketing? Think: affiliate marketing, influencer marketing, paid advertising, sponsoring events, etc.
- What’s marketing going to cost you?
- Are you contacting press? What kind of press?
- What are your primary sales channels? Just your website, or are you selling on Amazon and other online marketplaces; or do you also have a retail store?
6. Operations Plan
How is the show going to run? What’s the day-to-day going to look like, and who do you have on board to do it?
- Who are your suppliers for anything you do not manufacture yourself?
- What facilities are you working out of and storing your inventory?
- What staff roles are needed, now and in the near future?
- What equipment do you need to get going? Just a laptop and a desk, or specialised tools and technology?
- How are you handling shipping and fulfilment? (see this resource for more on shipping strategies, and this one for Shipping and Fulfilment 101)
- How much inventory are you keeping on hand, and how will you keep track of it all? (see this article on third party inventory management software)
- Do you have a mechanism for getting feedback on your products that you can incorporate into the next round?
- How much or little customer support are you offering? How do you plan for returns, customer complaints, etc.
- How much turnaround time do you need between putting an order in for manufacturing and getting it to a customer?
- If your business is seasonal or expects surges of demand at particular times of year, how do you deal with it?
7. Funding Need and Projections
The fun part. If you are submitting a business plan, you will need an income statement, cash flow sheet, and a balance sheet. Your income statement reflects all of your revenue minus expenses, and can include projections. Your cash flow statement shows your liquidity - how much you currently have on hand. And your balance sheet is a snapshot of what you own less what you owe. All three give a slightly different picture of your financial health, and can help you figure out what amount you need to ask for from investors - as well as how long you might have before you really have to start making a profit.
The money you need to start with can be broken into two main categories: start-up expenses (also called capital expenses) and operating expenses. You can use multiple years side by side to differentiate between these expenses.
You can find some decent basic templates on Shopify’s Business Plan Guide.
How are you going to measure progress? What goals do you need to reach and by what deadlines? It is incredibly easy, and incredibly useless, to make big lofty goals. We want to take over the majority of the market! We want to reach every person who has a phone! It’s not going to happen - at least not at your planning stage.
A SMART goal is specific, measurable, actionable, realistic, and has a time-frame. This is a good framework to keep in mind when setting goals for marketing, sales and operations. For example:
Dumb goal: I will sell a thousand copies of my album
SMART goal: In the next month, I will contact six radio shows, ten music bloggers and ten clubs and promote my album to them with samples.
The difference is that a SMART goal gives you something to work off of, and can help you break big hopes into small, achievable tasks. Of course, using the above SMART goal can help this business work toward selling 1,000 copies, but in doing so helps give them a more concrete path.
When creating both your Advertising and Sales plan, and your Operations plan, try to stick with SMART goals.
9. Partnerships and Leverage
Do you have any other companies that you’re partnering with with complementary aims? What time, money and other kinds of resources do you already have at your disposal? Especially if you’re getting funding from an investor, having partnerships to leverage shows you’re lower risk than.
You’re ready to roll
Well, first you have to actually make the plan. And there’s one thing you’ll know for certain: it is going to change along the way. But hey, developing a business plan and changing it as you go still puts you in a better position than your competitor who didn’t.
Elkfox is here to help e-commerce stores get started or get growing on Shopify. Come talk to us.