Free E-Commerce Website
Business Plan
Obtaining Business Financing
When obtaining a business loan
for an E-Commerce Website business, it is imperative that you have a properly
structured business plan that will assist you in showcasing how you intend to
operate your E-Commerce Website, how the business will operate, how you intend
to market the business, the anticipated financial results of your company, and
how you intend to repay your debt obligations. This sample loan business plan
will provide you with the framework that you need in order to acquire a business
loan for starting or expanding this type of business.
Executive Summary
Introduction
When obtaining a business loan
for a E-Commerce Website, it is imperative that your business plan has a clear
and concise executive summary that provides an outline of what are seeking to
accomplish, how much capital you are seeking to raise, the management biography
of the business owner, and an overview of the anticipated profit and loss
statements of the business. Here is an example of how the title paragraph should
be written:
E-Commerce Website, Inc. (“the
Company”) is seeking a business loan of $100,000 in order to launch the
operations of an E-Commerce Website business that will be based in
San Francisco,
California. The Company was founded in (Insert Year).
The business was founded by Mr. John Doe.
Products and Services
In the next segment of the
business loan and business planning document, you should showcase the products
and services that you will be providing to the general public. For instance:
The E-Commerce Website will
specialize in the distribution of in demand products that will be retailed via
the Company’s online platform. The business will generate revenues not only from
the sale of products but also from shipping costs associated with products
distributed by the business. The Company will use multiple forms of
advertisements in order to generate revenues for the business.
The third section of the
business plan will further discuss the products retailed and distributed by the
E-Commerce Website business.
Business Loan Terms
Now it is time to discuss the
anticipated terms of the business plan that you are seeking. An example
paragraph of how this is stated:
At this time, Mr. Doe is
seeking a conventional business loan in the amount of $100,000. The interest
rate, loan terms, and loan covenants are to be determined during negotiation.
However, this business plan assumes that the business will receive a seven year
business loan with a seven percent interest rate due on the outstanding
principal balance.
Management Biography
Now that the summary of the
business has been provided, it is time to provide a brief overview of the owner
of the business. An example paragraph summing up the owner is as follows:
Mr. Doe is a highly experienced
business person that has years of experience regarding the direct ownership and
management of businesses. He will be able to effectively bring the operations of
the E-Commerce to profitability while ensuring that the business loan’s payments
and its covenants are met at all times.
Financial Statements
The most important thing to
your lender when applying for a business loan is how you intend to repay the
bank. In this section of the business plan, you should provide an overview of
the finance’s of the business discussing the anticipated revenues, expenses, and
profits/losses. You can also discuss the applicable collateral within the
business plan that will be used to secure your business financing.
Expansion Plans
One of the most important
aspects of your business plan is how you intend to expand the business over a
three to five year period. Banks and finance companies always want to see that
the business will experience a moderate to strong level of growth. This is
especially true in business lending because as your business grows the cash flow
that secures your business loan will decrease proportionality against your
monthly credit obligations. An example of how this is stated is as follows:
The E-Commerce Website will
aggressively invest its after-tax profits into search engine optimization
campaigns and pay per click marketing that will drive additional traffic to the
business’ website. The Company will also continually expand the product
offerings of the business as time progresses.
The Financing
Use of Business Loan Proceeds
In this section of the business
plan you should focus on how the proceeds of the business loan will be used. An
example of this would be as follows:
- E-Commerce
Website Establishment - $50,000
- Opening
Inventory and FF&E - $10,000
- Working
capital - $40,000
Management Equity
In this section of the business
plan you should discuss the percentage ownership of the business among the
owners of the business. For example:
Mr. Doe will own 100% of the
E-Commerce Website.
Board of Directors
When applying for business
financing, the bank will also want to know who serves as the board of directors.
For small businesses, usually the owner serves as the director of the business.
An example of how this is worded:
Mr. Doe will be the sole
director of E-Commerce Website, Inc.
Exit Strategy
Any bank or financing company
is also going to want to know what you intend to do with the business over a set
period of time. Many business owners will develop and expand a business with the
intent to sell the company to a third party at a later time. When drafting this
part of the business plan you should focus on what you intentions are in regards
to potentially selling the business. This is often worded as:
Mr. Doe would most likely sell
the E-Commerce Website to a third party for a significant earnings multiple.
E-Commerce Websites usually sell for approximately one to three times earnings
given the financial strength of the business. In this event, the business would
be sold by a business broker and the business loan sought in this plan would be
repaid according to the covenants of the business loan agreement.
Products and Services
When developing a business plan
that is appropriate for obtaining a business loan or other business credit
facility you need to clearly showcase the services or products that you will be
offering to the general public. An example of how this section is worded goes as
follows:
As stated in the executive
summary, the E-Commerce Website will develop an expansive platform that sells a
plethora of products that are in demand by the general public. The business will
generate gross margins of approximately 35% on each item sold. The business will
use an expansive marketing campaign that will consist of using search engine
optimization and pay per click marketing in order to drive substantial traffic
to the website.
The Company’s secondary
revenues will come from markups from shipping costs related to products sold by
the business.
Industry and Market Analysis
The
Current
State of the Economy
It is important to let your
financial institution know that you are well apprised of the financial situation
of the general economy when you are applying for a business loan. This is
especially true in today’s environment where lending has become more difficult
and will remain more difficult in the foreseeable future. Specifically, you
should gear this section of the business plan analysis towards the industry that
you are operating within. For example:
The current economy has
remained difficult over the past few years. However, E-Commerce websites tend to
operate with a strong degree of economic stability as the costs related to these
businesses are very low. As such, even during difficult economic climates, the
business will be able to remain profitable and cash flow positive at all times.
The business will also be able to scale back its operations if required due to
outside economic circumstances.
The E-Commerce Industry
In addition to providing your
business loan officer with an understanding of the general economy, it is
important that you showcase that you have an equal understanding of the industry
in which you are operating within. As such, you will need to provide you
business loan institution of a brief overview of your industry and any potential
changes that may affect the way that your company does business. An example of
how an industry overview is as follows:
According to the US Economic Census, e-commerce businesses are expected to
generate nearly $500 billion of revenues in the next fiscal year. There are now
more than 1 million businesses that operate in an e-commerce capacity. The
growth trend of this industry is expected to grow significantly as more and more
people acquire high speed internet and are able to place orders for goods
effectively on an online basis.
Target Market
In this section of the business
loan application and business plan analysis, you should focus on the
demographics of your localized market (or national market if applicable). This
section should discuss how many people live in your area, the anticipated number
of people that would require the use of E-Commerce Websites, the median
household income of people living in the area, poverty line statistics, and any
applicable laws that would apply to your operation of E-Commerce Websites.
Competition
Many people that are developing
new businesses or expanding existing businesses often feel that their business
does not have any competition or limited competition at best. However, this is
almost never the case. Unless you have re-invented the wheel – you will have
competition. When applying for a business loan, you should clearly showcase your
competition in your business plan. This is especially important to your banker
as they will be able to gauge your ability to be successful in your targeted
market. Many business loan underwriters will aggressively confirm that
competitive nature of your local market and your local industry.
When drafting this section of
the plan you should heavily discuss the competitive advantages that you intend
to have over your competition.
Marketing Plan
In addition to all of the above
information that we have covered, your business loan officer is also going to
want to know how you intend to market your business to the general public. Most
people do not quite understand how to effectively market their business outside
of prominent signage or flyer distribution. When applying for a business loan
(again in this difficult lending climate), your banker is going to want to see
that you have a clear methodology of how you intend to market your services or
products to the general public. In this section of the business plan – we will
overview how to showcase your services/products to the general public.
Marketing Overview Example
- The
E-Commerce Website will use substantial search engine optimization campaigns in
order to drive traffic to its website..
- The business
will also using popular sites such as EBay and Amazon.com in order to generate
additional sales from outside of its online domain.
Marketing Strategies Overview
Additionally, you will be
required to further drill down (in your business plan) how you intend to
implement your strategies when you launch or expand your business’s operations.
In this section of the business loan and business plan documents, you should
amplify the bullet points from the section above. For instance:
Management intends on using a
number of high impact search engine optimization and pay per click marketing
campaigns that will generate substantial revenues for the business as time
progresses. At the onset of operations, the E-Commerce Website will use pay per
click marketing strategies that will ensure that the business is able to
generate immediate sales through its online platform. Once the search engine
optimization strategies take hold, the business will scale back its pay per
click marketing and profit from natural search engine optimization results.
The business will also use
major sites such as EBay and Amazon.com to generate additional sales.
The Financial Plan
Beyond any other part of your
business loan application or business plan, the financials section of these
documents are what matters most when applying for a business loan or any other
type of credit facility. Ultimately, this section of the business plan showcases
not only what your anticipated profitability will be, but also how you intend to
repay the funds that you have borrowed through your business financing facility.
An example of how this section is structure is as follows:
Assumptions
- E-Commerce
Website, Inc. will have an average annual growth rate of 10% per year.
- Mr. Doe will
acquire $100,000 through a business loan in order to launch the operations of
the business.
Proforma Financials for a
Business Loan
Now it is time to showcase how
you intend to repay your loan, generate a profit, and increase the book value of
your business over a three to five year period. BusinessPlansForLoan.com has
developed an easy to use financial model that you can use when drafting out the
financial model for your business plan and business loan application. Through
your business loan application, you will be required to have the following:
- Profit and
Loss Statement for your E-Commerce Website
- Cash Flow
Analysis for the E-Commerce Website
- Balance Sheet
for the E-Commerce Website
- Business Loan
Amortization Tables
Please see images below