Before you begin your new business venture, it is important to take time to write a business plan. You will want to make sure that you start off on the right foot and get your numbers correct before you commit to anything.
In this section of our guide we will discuss a series of questions that you need to be able to answer.
1. Choosing your product
What is your product? Have you got an idea of what it is that you want to actually sell? Sounds like an obvious question doesn't it, but you would be amazed how many people start their business without having a clear idea of what products they will sell!
Your products could be something you create yourself or even something that you buy or import from a manufacturer.
How big will your product range be? Will you sell a lot of different types of products, like a department store or do you intend to focus on a niche product and keep your range relatively small?
Grab a notepad and make a list of all the different product categories that you plan to sell. It doesn't have to be perfect and is likely to change as your business evolves.
2. Ideal customer
Who is your ideal customer? Think carefully about who you plan to sell to. What sort of person are they? Make a list of the following details:
- where they live
- interests / hobbies
- what social networks do they use?
3. Delivery method
How will you get your product to your customer? You will need to think about what type of product you will sell. Is it a physical product that needs shipping? Is it a virtual product that can be downloaded?
For virtual products, will you allow repeated downloads and what if you make changes - do customers automatically get to download the new version? Have you considered a subscription based model for your product?
For physical products can it be posted or will they need to collect the item? If you are going to post it, which countries are you planning on shipping to? Have you considered which delivery companies you plan to use?
4. Business to business vs business to customer
Retail or wholesale? Do you want to sell directly to the customer, or do you want to sell to other businesses at wholesale rates?
If your product is physical, you may want to consider getting it out into shops where a wider range of people can see your product. You may also want to think about offering trade discount and target specific shops to stock your products.
Make sure you know your profit margin before you start offering your trade prices though. If you are importing products don't forget to include import duties and shipping fees into your cost of sales calculations. We'll get to that next...
5. Calculating your product prices
What will the markup be on your products? It is vital that you get this right for your business to succeed. Make sure you cover your costs and include enough profit for your business to be worthwhile.
When calculating your cost of sales there are many things to consider. Make sure you know your unit cost for each item, which may include any of the following costs:
- Cost of materials
- Cost of manufacture
- Purchase cost of item
- Shipping costs
- Import duties
- Payment processing fees
Don't forget to include the cost of picking, packing and dispatching your orders. As your business grows you may want to employ a member of staff to fulfil orders so that will need to be accounted for.
6. Choosing your payment methods
What payment methods will you accept? Be thinking about this now and plan this into your strategy. You may want to offer multiple payment options to increase sales, but beware - add too many and you will overwhelm your customers. Do this at the risk of losing sales!
This is where knowing your ideal customer will really help as you will have a good idea of their existing purchasing habits. This will help you to know which payment gateways they are confident in using.
Depending on the format of your products, you may want to use direct debit payments, as the payment fees are very low. We use GoCardless for our subscriptions.
7. Physical store
Do you also have a physical store, or are you planning to have one? If so we recommend that you choose a payment system that can accept card and cash payments and integrates with your online sales.
Ideally, you'll want a system that can sync your inventory because manually updating stock levels between your store and your website can be a real headache!
8. Packing your products
How will you pack your products ready for dispatch? You want to wow your customers with a great experience and you know what they say about first impressions!
For example, adding a small packet of sweets or a hand written label can really add a personal touch!
Choose your packaging carefully and also think about what you can include in your parcel. Shopify wrote a great article about how to create a memorable unboxing experience for your brand - it is well worth a read.
9. Choosing your channels
Where online do you want to sell? What will your shopping channels be? By this, we don't mean how will we drive people to your website, but whether there are other places you can list your products that will help your products to be seen.
Alongside your eCommerce website, you may want to sell on one of the following marketplaces, to name a few:
- Not On The High Street
Once you start selling in multiple places, things can become very disjointed, so we recommend that you use a system to keep all of these channels in sync.
Initially, your channels can be integrated by using your website as the central system to manage stock and inventory and keeps everything up to date.
As your business grows, you will inevitably want a more comprehensive solution which will also take some of the heavy lifting away from your website, making it just one of many channels that you sell through.