Online Store Business Plan

The question that often creates a hurdle in our minds is- how to make a business plan for an online store? An online business plan is like your north guiding star. It is a blueprint of your business. It highlights the key metrics pertaining to the business, helps you understand them, and lastly helps you examine some of the hurdles that you might face.

Let us try to the key challenges faced in an online store business plan:

1. One-time capital investment: A brick and mortar and a digital store will have different capital requirements as their nuances are different. For example there may be expenses like higher rents and cost of furniture and fixtures associated with a physical store, while for online selling, the costs may not be required to those tunes, while costs like digital marketing may be much more.

Thus, you need an expert to identify the primary areas where investment is needed more than the numbers.

2. Recurring Investment: Understanding the difference between Recurring one time and variable costs is important. Any expenses that are repeated in nature, irrespective of the sales can be classified as recurring.

For example, the Rent. It is fixed every month, and it recurs irrespective of the sales. Whereas electricity- is based on usage, and hence it is variable in nature.

While saying purchasing an enterprise software will require a one-time fee for a license. Understanding the type of expense and accounting it in the correct header will let you control your online business sales to expenses better.

3. Budgets for major expenses: For an online selling business plan provisioning of major expenses that will occur immediately and in the near future is pivotal so that you run out of cash for your most important activities, or else it will affect your business sales. In an online retail store business plan , the most important and bulky expenses are in digital marketing.

For the first six months, pre-launch and six months post-launch, it should be budgeted for. This is where you will need expert help in executing this.

4. ROI- return on investment. Basic thumb rule metric. In simple terms, the returns garnered (Net Income) from online retail store business over the investment you have put up is the ROI.

It is a performance measure used to evaluate the profitability of an investment. If the investment is arranged or sourced – it also used to compare with its cost to see if the business is giving you adequate returns.

5. CAC important: In very simple terms, Customer Acquisition Cost is the cost of acquiring a customer to purchase your product/service. It is the key metric for any e-commerce business plan.

With CAC, you can gauge how much you are spending on acquiring each customer. The CAC can be calculated by simply dividing all the expenses (marketing and more importantly, digital marketing) you have done on acquiring the new customers by the number of new customers acquired in that period.

Understanding CAC gives you an idea about the kind of investment (marketing expenses, digital marketing) the business needs, as it is a well-known fact that any online business is about how many users you can get to your portal to interact with.

6. Negative Cash Flows period: it understandable that an online store business plan will have a negative cash flow at the beginning and maybe for some time due to the cash burn done (digital marketing and discounts) to acquire new customers and form a strong base But it is important to gauge till when would this happen so that you do not run out of cash or let your business run in a loss for a very long time. Thus, you need an expert in understanding this for a period of at least 5 years to gauge the impact.

7. Breakeven points: This is the inflection point. Above which the business is profitable and below which is a business loss-making.

In other terms, it is that point at which the total cost is equal to the total sale. That is the profit is Zero. We could go deeper in breakeven analysis to understand Net Profit Break-Even analysis rather than just gross profit.

Understanding this helps you put a number to what is the minimum sale needed to keep you afloat.

For any retail store business plan - to ensure you do not miss out on any major factors, take the help of eCommerce experts, as they know what is yet not known to an entrepreneur before starting. YRC comes with all the necessary experience of having dealt with online brands and has helped them evolve as a successful brand.

Our core expertise is just not limited to defining SOPs but it extends to every business function associated with an online store. We have in-house startup consultants who can help you set up an online store right from the start.

Get advise for Retail Business Consulting :  www.yourretailcoach.in/contact/

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YourRetailCoach
Category: eCommerce Solutions and Developers Profile: Your Retail Coach (YRC) is a retail consulting and outsourcing company in India offering a wide range of services in retail offline, retail eCommerce, and retail omnichannel catering to a multitude of industries. Your Retail Coach (YRC) helps retailers and retail enterprises set up their eCommerce business right from planning (eCommerce business consulting) to implementation. Our experience and expertise in both offline and online retail channels will help businesses overcome challenges in adop ...