Does your project need a business plan? You can answer this question only if you know well what this tool is and why it is essential. Let’s figure it out.
Why Do You Need It?
A business plan is an individual document that describes all the fundamental aspects of the future enterprise, analyzes all the issues you may encounter, and also determines how to solve them. Therefore, a correctly drawn up business plan ultimately answers two questions: Is it worth investing money in this business? Will it bring income that will cover all the costs of workforce and resources?
A well-developed plan allows you to effectively develop your business, attract investors, partners, and the necessary resources. Besides, it also helps to solve the following problems:
- To study the prospects of future market development;
- Estimate the costs of the products that the market needs, compare them with prices to determine the potential profitability of the business;
- To find all “pitfalls” that await any business during its implementation;
- Identify indicators by which it will be possible to monitor the state of affairs regularly;
- Track new trends and use them in your activities;
Moreover, when creating a new project, a special plan is necessary for both investors and entrepreneurs. Potential investors need it to assess the financial and economic efficiency of new projects to obtain the desired profit. For entrepreneurs, a business plan is required to find out if partners are needed and how to increase its investment attractiveness.
What Is Hiding a Dropshipping Business Plan?
In general, the scheme will look like this:
1. Goals and objectives
At this stage, you need to analyze the idea (SWOT analysis). Reveal strengths and weaknesses, as well as opportunities and threats.
- Analysis of the idea;
- The purpose of the activity (what you want to achieve);
- Characteristics of the industry.
2. Product (service)
This part should be written in a clear, concise language that is understandable to a non-specialist.
- Description of products or services and their application;
- Technologies and qualifications required for the business;
- License / Patent Rights.
3. Market analysis
Market and marketing are a decisive factor for all companies. First, you should collect and process a large amount of “trial” information.
- Competitors (their strengths and weaknesses);
- Market segments;
- Market size and growth;
Analyze the market, what is most in-demand, what competitors offer, what is on the market.
Analyze your own experience and personal preferences. Think about what you have more experience with and what your hobbies are.
Make your choice by choosing the most suitable market niche:
- The main focus of the business will be directed to individuals or legal entities;
- Define pricing (high-end brands or mid-priced products);
- Define age criteria (children, older people, youth).
Checking the selected niche. Having learned the opinions of potential customers, you can make the final decision on choosing a market niche.
4. Production plan
You should consider all issues related to the premises that you occupy, their location, equipment, staff.
- Location of premises;
- Sources of necessary materials and equipment supply;
Description of the industry and company
Here you need to provide complete information about the company and project implementation: details, mission, and goals, the company’s management, its structure, history and achievements, the company’s place in the market.
Describing the market, indicate: who the leading player in the market is, what products it produces, what strengths and weaknesses your competitors have, what pace the industry is developing, what new firms have appeared in recent years, what the prospects for market development are, etc.
Description of services (goods)
Here you need to describe your project as qualitatively as possible. If we are talking about production — describe the product being manufactured or several products, if you intend to provide services — describe what the service is. Also, it is crucial to add a photo (sketch) of the product. When describing, you must provide the following information about it:
- application area;
- characteristics of a product or service;
- availability and necessity of a patent, copyright, license;
- delivery terms and packaging;
- warranty and service;
- terms and conditions of use;
- how to dispose of the product.
“Besides, be sure to write at what stage of readiness your product is — development, preparation for implementation,”- advises BenGrant a marketer and writer for Linksmanagement service.
Sales and Marketing
This section of the plan is called the “marketing plan.” Here you need to describe how you are going to sell the product (service). Also, try to indicate who is the consumer of your product, whether you plan to supply it to wholesale customers or end consumers.
Be sure to write down the characteristics of your customers (age, gender, names of wholesale buyers-enterprises, what will be the size of their purchases). To draw up a marketing plan, you must answer the following questions:
- Who is the consumer of the product or service;
- What determines the price of your products;
- How do you plan to advertise a product or service;
- What is the budget for advertising;
- How you can increase sales;
- Whether the service is planned, what are the costs of organizing it;
- How to increase the reputation of a product or service, enterprise.
This section should contain a detailed description of the production process. Also, here you need to provide such vital data as:
- What is the maximum amount of products you can produce (per day, per month or quarter);
- Will you use the services of subcontractors? If so, who are they, what operations will be performed, what are the costs of subcontractors;
- What equipment you need to purchase or rent; what is its value;
- Do you need additional premises for warehouses;
- How many personnel will be required to ensure production;
- Calculation of fixed and variable costs; production cost.
This section is critical, as it shows the attractiveness of the project. You need to write all the essential calculations, explain their correctness. It can be presented in the form of a table of income and expenses. The following calculations should be displayed in the financial report:
- Preparatory Costs;
- Expenses of the primary period;
- Costs associated with servicing a loan (if applicable);
- Tax or tax expenses;
- Income from sales;
- Other income and payments;
- Report about profits and material losses;
- Forecast balance;
- Payback period.
Warranties and risks of the company
An essential part of writing a business plan is warranty and risk. Here you need to list all the possible risks and identify potential threats, actions that help reduce risks, and an action plan to minimize the negative impact on your business. Also, describe all the warranties you have. Calculate the financial risk ratio. The closer this indicator to 0, the more financially independent company is considered.
Can an online store be an instant decision to achieve business success? Of course not. As with any other online store, you will need to spend time and effort.
But dropshipping offers a great way to start a business and is an excellent opportunity for those who do not have significant start-up capital. With the right approach, it will help you to build a solid background for the great success of your future online store.
Marie Barnes is a writer for GearYoda. She is an enthusiastic blogger interested in writing about technology, social media, work, travel, lifestyle, and current affairs.