Ecommerce Business Plan advice

[outdoorman24]

I am in the process of creating a business plan for an ecommerce website and was wondering the best way to go about the financials? I am using the BPlans software which is quite useful and gives some good advice and tips but there’s not enough emphasis on ecommerce.


Sales forecast
· Would it be better to break down website categories for the sales forecast or just do a general forecast? If yes, how far would you drill down? For example if there are two categories, Home and Garden, would you then split those in to sub categories?


VAT
· My forecasts show I will need to be VAT registered from year one. Do I include VAT in any of my figures?

I’m sure I will have more questions as I work my way through the plan but any general pointers / tips would be much appreciated to help me put together my ecommerce business plan.

 

[DavidBerryACMA]

Hi

The first thing to consider is your audience. Are you seeking investors/angels or is the plan just for your own purposes?

It is relatively easy to predict expenses within a business plan. It is simply a matter of how many cheques you can write. Sales is the most challenging aspect as who knows whether you will achieve them.

Having set up and run several very successful ecommerce companies myself, I go about the business plan in a very different way. I throw out all my days as a Management Accountant.

Think about how much investment you need to make to make one sale - just one sale. Could you for instance used a WP site rather than bespoke site etc. How quickly can you make that first sale, first ten sales, first hundred sales. It is all about creating a blueprint. Facebook did it, Google did it ... they all followed the same methodology. If you need more advice or want some help PM me.

I hope this helps

David

 

[Chris Ashdown]

There is little difference in either e-commerce or bricks and mortar shops, just slight differences so don't bother about it to much

Most banks will give you a good starter pack for setting up a new business (free) and they normally come with good explanations of what you need and include working spreadsheets for things like Profit and Loss and Cashflow

Starting up you will not get any grants in most area's and banks will generally only lend you 50% of what you want with you having to provide the rest and also you have to put your house up as guarantee, so basically finance is hard unless you have the money available

For sales it would be best to break up as much as possible into different products or area's and please be realistic in your plan as most start-ups from scratch massivly over state potential sales, any sale is hard to get and with e-commerce it can take months to get going unless you are paying for PPC (Pay Per Click) and that can be expensive

Lots of choices of software available for the shop, some you pay about £10-20 per month and basically rent others you buy straight out at a few hundred some free, but remember if your company takes off you want software that will grow with you and preferably something out of the box so you dont need expensive helf getting it going

You will also need a Payment service provider to allow you to take card payments be it Paypal or one of the other dare i say it more professional ones who are significatly cheaper in the long term

Good luck

 

[DavidBerryACMA]

There is little difference in either e-commerce or bricks and mortar shops, just slight differences so don't bother about it to much

Most banks will give you a good starter pack for setting up a new business (free) and they normally come with good explanations of what you need and include working spreadsheets for things like Profit and Loss and Cashflow

Starting up you will not get any grants in most area's and banks will generally only lend you 50% of what you want with you having to provide the rest and also you have to put your house up as guarantee, so basically finance is hard unless you have the money available

For sales it would be best to break up as much as possible into different products or area's and please be realistic in your plan as most start-ups from scratch massivly over state potential sales, any sale is hard to get and with e-commerce it can take months to get going unless you are paying for PPC (Pay Per Click) and that can be expensive

Lots of choices of software available for the shop, some you pay about £10-20 per month and basically rent others you buy straight out at a few hundred some free, but remember if your company takes off you want software that will grow with you and preferably something out of the box so you dont need expensive helf getting it going

You will also need a Payment service provider to allow you to take card payments be it Paypal or one of the other dare i say it more professional ones who are significatly cheaper in the long term

Good luck

I like your advice but it makes running a business sound so simplistic, wouldn't you agree? It sounds like you get some software, pop into the bank, write a plan, borrow some money and, bingo, you are making profits. Why is it that I have therefore found it to be much much tougher than that? It comes back to one thing, making sales - the hardest line to write in a plan and the hardest one to deliver. Speaking as a fellow entrepreneur, you don't need software, VAT calculations, break downs by product line - you need to think about how you make a sale - just one to someone who you are not related to. Once you have made one - double it, then double that and so on. You will then discover that the bank will be banging on your door, the business plan becomes a piece of cake and you can invest your profits in buying stock rather than spending it on software packages and paying interest.

 

[Chris Ashdown]

I like your advice but it makes running a business sound so simplistic, wouldn't you agree? It sounds like you get some software, pop into the bank, write a plan, borrow some money and, bingo, you are making profits. Why is it that I have therefore found it to be much much tougher than that? It comes back to one thing, making sales - the hardest line to write in a plan and the hardest one to deliver. Speaking as a fellow entrepreneur, you don't need software, VAT calculations, break downs by product line - you need to think about how you make a sale - just one to someone who you are not related to. Once you have made one - double it, then double that and so on. You will then discover that the bank will be banging on your door, the business plan becomes a piece of cake and you can invest your profits in buying stock rather than spending it on software packages and paying interest.

I find that comment quite a insult, i never made any point of it being easy in fact its the hardest thing you will probably ever do in your life and yes Sales are incredibly hard to achieve especially if you have had little or no training,

BUT

the business plan is the whole research into the viability of a company before it starts, what you would like to do, how you aim to do it, what the competition is doing, costs involved, how you will get sales, how you will get supplies and pay for them and have money left over to remain positive in cashflow

One of the biggest mistakes people make is to get far to many sales and overtrade so you let the customers down as your cash flow is negative and you cannot pay either wages vat or suppliers on time

 

[DavidBerryACMA]

Apologies if you feel my comments were insulting. As a matter of interest, what percentage of companies do you know in this current climate have a problem with overtrading?

I encourage clients to rethink business planning. You are absolutely spot on with the idea of borrowing. However much the banks try to say they are lending - they are certainly not lending to startups. So without investment, we need to think differently.

I encourage people to think about sales and ignore VAT rates, sales breakdowns etc. Worry about VAT once you near £75,000 of sales meanwhile focus on making profitable sales.

We are in a time of lean start-ups - and jusy like TQM and JIT revolutionised production 20 years ago - business planning is changing today and entrepreneurs needs to keep up and think differently.

 

[DaftBlogger]

Could you please share what will you be selling?

 

[James twinli]

Hey there! Can you please tell what type of product you are going to sell? I would make as clear about business and we may help you with a better advice.