Starting a dropshipping business may sound like an easy thing to do. You don’t need to buy stock, rent a warehouse, or invest thousands of dollars in inventory. Sounds great, right? Especially if you consider how popular this form of fulfillment method is and how many people made a fortune by following it. But, there’s so much more to starting a dropshipping business than having a laptop and setting up an e-commerce store.
So, what does it take to become a successful and professional drop-shipper? The answer is simple- you need to have a well-thought-out business strategy to guide you, and a business model you plan on following. All of this needs to be a part of your written business plan.
Below, we’ll answer the following most important questions of writing a business plan for your dropshipping business:
- What is a dropshipping business plan?
- Why do you need one?
- How to write a dropshipping business plan in 9 steps?
Let’s break it down.
What is a Dropshipping Business Plan?
As we’ve already mentioned, you can’t even begin to think about starting a successful dropshipping business, without a business plan.
Why?
Because there are so many details to consider and take care of before you begin selling, that it’s impossible to handle it all without a written plan and strategy.
A dropshipping plan is thus a necessity you shouldn’t skip. But, what is it exactly?
It’s quite simple:
- A dropshipping business plan is a written document that summarizes how you plan on handling your business, from founding it and making your first sales, to running it successfully.
It’s a plan that helps you make the right choices and cover all the essentials of running a dropshipping business. Without it, you can easily fall on the first bump in the road.
Why Do You Need a Dropshipping Business Plan?
Imagine going on a vacation and sleeping in a new, unfamiliar apartment. As you wake up to go to the bathroom, you forget to turn the light on and start walking in the dark. Eventually, you do get to the bathroom, but you’ve earned some bruises as you were knocking down the chairs and bumping your head against walls.
That’s what doing dropshipping without a business plan looks like.
It is possible to do it, but with more failed attempts, bad investments, and poor business choices.
So, a dropshipping business plan is written to help you:
- prepare for your new business venture;
- get funding from financial institutions;
- create a growth strategy;
- control your finances.
Simply put, it’s there to make the process of starting and growing a dropshipping business more successful.
9 Steps to Write a Dropshipping Business Plan
Now that you understand why a dropshipping business plan is a necessity, we can focus on the writing process. We’ve made a chronological list of the 9 crucial steps you should follow. As a result, you’ll have a detailed, efficient, and professional business plan that will help you launch, run, and develop your dropshipping business.
Here are the 9 steps to write a dropshipping business plan.
Executive Summary
The opening section of your business plan needs to be convincing and concise. Your executive summary is supposed to share all the most important information about your business with the readers.
As a result, they’ll instantly understand who you are and what you plan on achieving with your dropshipping business.
Here’s what information to include:
- your unique business idea;
- your target market and customers;
- your projections and objectives for the future;
- what makes you unique and specific.
This is the opening section of the business plan, but you can write it in the end, once you finish writing all the other sections. This section will summarize everything that comes after.
Business Description
The next step is writing a brief business description section that will provide the reader with important information about your company. This is a technical matter that you simply need to cover.
So, write the following business information:
- company name, location, and legal structure;
- company owners/partners;
- legal permits, licenses, and tax ID numbers;
- company mission and vision statement;
This will help the reader get to know you better and start building an image of your dropshipping business in their minds.
Products Offer
To get funding for your dropshipping business, you’ll need to wisely select the type of products you’ll be selling. You need to do research and choose products that are:
- currently trending;
- in demand by your target group;
If you plan on selling products in different categories, briefly explain what makes each product category promising and profitable. Provide details such as:
- market research that shows products are in demand;
- how you’ll price the products;
- how much will your suppliers charge you;
- the profit you expect to see;
- special deals you’ve made with vendors;
- financial advantages of selling these products;
Also, explain how your products will solve the problems your target audience is facing or satisfy their current needs.
In other words, explain why the products are going to sell.
Your business plan needs to justify your financial expectations and show the reader there’s true potential in your business idea.
Another important factor is the careful selection of your supplier. There are tens of thousands of suppliers and resellers in China, so it can be difficult to find one who can provide you with consistent service, top quality products and fast delivery. Even if you manage somehow to fish out one, there could be language barriers, or they could not take you seriously, since they trade with several bigger customers.
Your best option is to start working with someone who has proven experience with dropshipping fulfillment, and who can help you automate a big chunk of your business.
Someone like Yakkyofy who can:
- Provide Real-Time B2B quotations for your products;
- Provide an all-in-one integration for several eCommerce platforms;
- Customise your Products and Packaging;
- Automate your fulfillment Process;
- Fast Ship your items in many countries in the world;
From Yakkyofy’s dashboard you can manage all your dropshipping business’ logistic side, which means that all you need to do is simply marketing your products!
Competitive Analysis
Next, you want to show you’ve done enough market research and are ready to compete for your piece of the cake.
Here’s what you should do:
- create a list of your biggest competitors
- explain what products they offer
- analyze their website, social media, and all channels of advertising
Show your readers that you managed to answer the most important competition-related questions:
- What are their biggest strengths/weaknesses?
- How can I set myself apart from them?
- What can I offer that is unique and specific?
This will further strengthen your business plan and show the readers you have a clear idea of how to stand out from the rest, and sell your products.
Pricing Formula
How much do you plan on charging for your products? What’s the margin going to be for you?
Your business plan needs to include this information, so you’ll need to decide on the pricing for the products you’re selling. Here’s the best way to decide:
- ask for an automatic price quote with Yakkyofy;
- see what the selling price is for these products;
- decide how much you can charge;
You need to be aware that you’re new on the market, so a lower margin might get you more sales. You can change this margin as you grow stronger. But remember, you won’t make a fortune overnight- it’s one of the dropshipping myths you have to be aware of.
The pricing strategy of your business plan should include:
- information about suppliers;
- formulas and calculations you used to decide on the prices;
- costs of production and delivery;
- your profit margin;
Be specific and clarify the methods you used and will continue to use to form the right prices.
Marketing Plan
As a new dropshipper in a popular niche, you stand no chance against your competitors unless you have a strong marketing strategy that will help you stand out. Your business plan should briefly describe your future marketing strategy in terms of:
- the platforms you’ll use;
- the type of content you’ll provide;
- content writing plans (outsourcing, hiring a content writer, or writing yourself);
- social media presence;
- your blog;
- email marketing;
- the visuals you’ll use;
This will also determine your marketing budget which is important for your overall financial plan.
So, write a marketing plan that goes into details about the methods, platforms, and strategies you’ll be using to reach specific business goals:
- increase sales;
- raise brand awareness;
- gain customer loyalty;
If you plan on outsourcing marketing services, write about the costs you’ll need to bear and how they will eventually pay off. Explain how this will reflect on your finances positively and why it’s a necessity.
Owners & Employees
Depending on the legal structure of your business, you’ll need to include information about the people behind the business. It could be just you, as the sole owner, or your partners who are in the business with you.
The information your readers will care about are:
- personal and contact information;
- education;
- business experience;
- responsibilities in the future business;
Explain how you and your partners are qualified and skilled to perform each of the tasks in managing your business. Give the readers strong evidence of what makes you a great business leader and entrepreneur.
Also, explain if there’s a need to hire people to perform minor tasks that will keep the business up and running. Potential employees will influence your investment budget significantly, so don’t skip this step.
Most newly established drop shippers consider hiring:
- a content marketer;
- a personal assistant;
- a customer support agent;
- a web developer for a website;
If you do want to hire any of these professionals, write it in your business plan. Research how much their services cost and create an estimate of how much they’ll cost you.
Financial Plan
Finally, your business plan needs to include a detailed and data-based financial plan that projects how your business is going to grow, develop, and earn profit. This might be the most important section of your business plan since most people reading it will be interested in the finances.
You’ll need to cover and go over the most important aspects of your financial projection:
- your initial investment in personal funds, loans, or funding from a bank;
- market size projection for the next 5 to 10 years;
- your predicted market share in percentages;
- expected sales and profitability by product category;
- repeat customer predictions;
- your revenue;
- your expenses in operating the business;
- the expected return of investment;
Simply put, you need to do the math and show it to the readers. They need to see the numbers and understand whether your business idea is plausible or not.
Make this section of the business plan more convincing and understandable by using tables, charts, and reports to show the data you’re using.
Additional Documents
Once you finish writing all the main parts of your business plan, consider adding one final section with all the documentation that can support your ideas, claims, and plans.
This can include:
- a report from research and analysis you did of the market, products, competitors, etc;
- documents proving your legal status;
- your business licenses and permits;
- credit history;
- information about your suppliers;
End the business plan on a strong note and add any documents that will support your business plan.
Final Thoughts
Yes, writing a business plan for a dropshipping business is a bit complex and certainly overwhelming, whether you’re a beginner or not. But, it’s the one thing you’ll need to make sure you make all the right calls, get the funding you need, and start your new business strongly.
The 9 steps we’ve shared with you above are going to guide you through this process. Use them to start writing your business plan today and set foot in those entrepreneurial waters like a professional.
For everything else, you’ve got Yakkyofy:
BIOGRAPHY OF THE AUTHOR
Jessica Fender is a professional marketer and a content writer. If you ever wondered, “I wish someone would write my paper for me“, she is one of those professional academic level writers that will save you time and your degree. She enjoys the beach, martial arts, and literature.
