Simply put, business plans can make or break your business. Starting a Drop Ship business online is no different from starting a traditional non-online business. With strong emphasis individuals place on writing business plans for starting up non-internet-based companies, it is equally crucial to prepare a business plan for your online business.
A business plan serves many important purposes for online business. First, because business plan has a detailed list of tasks to undertake, it is a call to action for you to promote your business actively and not procrastinate on your marketing efforts. Second, it provides a blueprint that describes your company effectively: market, products and steps you need for effective marketing. This serves to guide your business through months ahead.
Business plans normally comprise of five sections:
1) The Objectives. This section will describe objectives for venture, and mission statement that defines online business. It states both financial and strategic objectives and is normally about one page long. There should be a concise description of Drop Ship business at start. A brief example:
‘Magical Stores Online is an internet company that provides quality tools and resources for magic tricks. We aim to consistently provide magicians with reliable tools for conducting magic tricks, and also accurate information and guides on how to properly perform magic tricks with our tools. In our first year online, our target is to have U.S. $400,000 in revenues and $100,000 in profits. This can be achieved by attracting an average of about 5000 visitors to our website every month through effective internet marketing. Our strategy is to attract recurring traffic to our website by continually updating useful resources and information on our website. Magicians will constantly return for more useful tips on magic tricks. This cuts our marketing costs drastically and adds to our profit margin.’
2) The Executive summary. The executive summary should contain a few important details. It should outline basic model of company, how business functions, market environment, and also business opportunity in market. A continuation from previous example:
‘Magical Stores Online is a retailer of magic products on internet. We specialize in card and coin tricks and stage magic, and classify our products according to age group, skill level, features, and occasion they are used for. Magicians can browse product catalogue on our website and buy their products with a shopping cart software. They can choose to pay either by credit cards or by checks. We use a third party credit card merchant to process our payments, hence eliminating need to have a merchant account ourselves. A profit is realized whenever a sale is made, because we obtain our products at a wholesale price and we sell them at a retail price. Since our supplier, Company XYZ, drop ships products directly to customers’ address, we do not need to hold any inventory. Our market comprises of magicians of any age group who specialize in card and coin tricks and stage magic. The opportunity lies in internet as a marketing medium for magic products. Since rise of internet in mid 1990s, we find that major magic product retailers do not use internet effectively to market their products. With effective internet marketing skills, we believe that we can reach a wider audience than other major players, thus claiming a large market share.’
*Note that in a real business plan, business owner should aim to provide a more detailed version than examples given above. The examples here only serve to illustrate an overview of what basic business plan should encompass.
3) Marketing Strategies. In this section, you will describe steps you intend to take in order to market your business effectively on internet. There are a few basic marketing methods available on internet. Mentioned below are three of most popular methods.
- Email Marketing. Ezines and newsletters are powerful tools. It is simply most cost-effective form of marketing on internet. Sending out email promotions or newsletters to your subscriber base costs virtually nothing, except for time you spend on writing your newsletter. With web form on your website, you can capture names and email addresses of customers who subscribed to your newsletter. I do not recommend that you send your subscribers with product promotions regularly, but you should continually provide them with useful tips and information. In this way, you establish your credibility as an expert and maintain a strong relationship with your customers, instead of appearing as someone just out to make money. Promotions for your products should only be sent out about once or twice a month.