How To Write A Dropshipping Business Plan?

How To Write A Dropshipping Business Plan?

Every ecommerce newcomer needs a business plan to get a smooth start and successfully run their venture. In a way, it’s your roadmap to success: here, you set your goals and decide how to reach them. Today we are going to explain how to make a solid dropshipping business plan and stick to it throughout your journey!

If you’re just starting out, and you have nothing but a business idea, it’s necessary to draw up a plan you could keep to. Sometimes, writing a business plan is considered useless, extra, or just unnecessary because it is completely divorced from reality, but it takes you some time to create it.

However, planning is a prerequisite for success. It allows you to find the holes in your thinking, save lots of money, and therefore increase your profit margin significantly.

What is a business plan?

In fact, a business plan is your business roadmap that describes in detail what you have to do step by step in order to achieve your business goals. Its main purpose is to help entrepreneurs in forming a full picture of their business performance and analyze the potential advantages and disadvantages of making certain decisions.

A business plan is not something you create once and then keep it in your bottom drawer. You should regularly update it because your business is growing, and the market conditions are constantly changing.

The length of the business plan varies greatly from business to business. As a rule, most business plans cover the first years of the company life and fit into a 10 or 20-page document.

Why do you need a dropshipping business plan?

a picture showing why planning is crucial for business

Developing a business plan takes much time and energy, but it is really worth it.

Firstly, it allows you to set direction and priorities. Let’s say, you have already created a dropshipping store and even made some sales.

What’s next? What will you focus on? Will you start promoting your store on Facebook or Instagram? Why? Why not? Will your business model concentrate on selling trending products or ‘evergreen’ items?

I guess, if you don’t have a clear strategy, it will be difficult to answer all these questions.

What’s more, having a business plan allows you to see a complete picture of your business and chart a strategic course for future growth.

Secondly, it helps you identify potential pitfalls in your business and avoid a lot of mistakes most ecommerce entrepreneurs make.

Lastly, it lets you save your money, time, and energy. If you have a plan, it will be easy to ignore unnecessary things that hinder your business development.

How to write a dropshipping business plan?

If you’ve decided to write a business plan, there are 2 options for you: create a traditional business plan or focus on a lean startup format.

The traditional business plan is very detailed, that’s why this is a very time-consuming activity to create it. It’s about 30 to 40 pages in length and describes every detail that can contribute to the business success. This type of business plan is a must for entrepreneurs who are going to attract investors or get money from different financial institutions such as banks, etc.

The lean startup plan, in turn, requires less time and contains the key elements only. This one is perfect for self-employed entrepreneurs who are just starting out or who have no previous experience in writing any business plans. As for an ecommerce store, we recommend you use lean planning because of its simplicity and convenience. In addition, you can easily and quickly adapt and change it if necessary.

Key components of an effective dropshipping business plan

a picture showing an example of a dropshipping business plan
The elements of a good business plan can vary from business to business. However, there are some mandatory parts of dropshipping business plans. Let’s look at them.

#1 Identity

To start with, you should clearly understand who you are, what you do, and who you do it for. As you create a lean startup business plan, it’s enough to write some words about your store, your audience, and the products to sell.

If you have some difficulties, imagine that you need to answer the question “What do you do?” briefly and plainly.

For example: “I run a dropshipping store called SuperEduToys that offers high-quality educational toys for children aged 3-10”.

Don’t forget that there can be lots of similar stores with similar ecommerce products. That’s why you need to find ways to make your business unique. In that case, your potential customers will prefer to buy from you when looking for a store to buy from.

#2 Problems and solutions

List here the most important problems that will be solved with your offer. In other words, define why your products will be popular with your customers, and what other aspects will stimulate them to deal with you.

For example: “Regular toys don’t help kids develop their skills. Educational toys allow them to improve the fundamental abilities such as critical thinking or problem solving”.

Make your potential customers feel strong interest in the products or services you sell online. Find some problems people are highly likely to have and give them a solution!

#3 Customers

Research your target audience and describe your potential customers. Try to find the answers to the following questions:

–  Who are they?

–  Where do they live?

–  What is their income level?

For example: “The target audience is adults from middle-income countries who wish to buy high quality educational toys for their children or grandchildren”.

Of course, this list can include a lot more questions, but we recommend that you concentrate only on the most important things that really affect your business.

By the way, if you think that targeting all in a row is a great idea, that’s not exactly true. In that case, you risk not to get enough sales volume, and your profit margin is likely to be extremely low.

#4 Competitors

Make a short list of your top competitors, try to determine their strengths and weaknesses, and write a few sentences on why you are better than they are. As in the previous example, take care to write down what’s important only.

For example: “Company A offers a wide range of products, but they are very expensive. My price is much lower, meanwhile, the quality of products is at the same level”.

By doing that, you will give your potential customers one more reason to choose your company when evaluating all the offers on the market.

#5 Channels

Describe how you will reach your potential customers. What channels and marketing strategies will you use to attract your website visitors? Will you think of using some social media platforms?

If you have some problems in making this list, feel free to read our articles where we describe the most efficient ways to attract new customers.

For example: “The main channels to reach my customers are email marketing, Facebook ads, Google ads, and YouTube videos”.

In fact, marketing channels are extremely important on the road to success. If you manage to pay enough attention to this aspect, choose the most suitable channels for your business. In that case, the success is definitely going to be within reach.

#6 Revenue streams

Describe how your company will actually make money. Will you make a profit only by selling products online, or will you also focus on the revenue streams such as affiliate programs or Google advertising?

You can start with a couple of the most effective revenue streams and add some after a while.

For example: “The main revenue streams: dropshipping store, YouTube Ads. Additional sources: Google Ads”.

#7 Expenses

Besides shipping costs, there are lots of other expenses. Try to think of every potential cost of your online business and write about how much money you’re ready to spend on it.

Will you build a WordPress website on your own? Or will you prefer to order a ready custom store or get a premade dropshipping store right now? How much money can you afford to spend on your advertising campaign? Is it affordable for you to use some automation tools to alleviate running your business?

Think about it very carefully because all these points are crucial for the way you will run your business and its performance!

For example: “The AliDropship plugin is $89. Monthly costs for advertising – $30. Other expenses …”

Remember that if you do everything right, all the money spent on advertising, automation, etc. pays off very quickly. That’s why, in most cases it is worth it!

In fact, that’s it. Your dropshipping business plan is ready to use! It was easy, wasn’t it?

To sum it up: creating a dropshipping business plan

If you already have a business or just think of starting one, you need to understand that writing a business plan is an integral part of running both long-term and short-term businesses.

As we have already found out from the article, there are lots of aspects which you should keep in mind when writing a business plan. They can vary a lot depending on the type of your business. Nevertheless, we are ready to highlight the ones that suit any ecommerce business.

Let’s briefly name the main aspects you should keep in mind when creating your own business plan:

1) Identity

2) Problems and solutions

3) Сustomers

4) Сompetitors

5) Promotion channels

6) Revenue streams

7) Expenses

In fact, that’s it!

If you have done everything right, your dropshipping business plan will fit completely onto one page.  Now it’s high time to test it when starting your own profitable venture and see if your ideas work. Good luck!

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