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The minimal requirement for opening a Fulfilled by Amazon (FBA) business is a double-edged sword. On one side, almost anyone can open an ecommerce store and profit from it. On the other, with $700 billion worth of products sold last year, the marketplace is saturated. To outshine your competition, you need a well-thought-out FBA business plan.
An FBA business plan outlines a comprehensive strategy for successfully selling products on Amazon. It aims to show an organized plan for starting and expanding your business. Three key elements must be evident in your business plan:
Additionally, it covers various aspects of the business, including but not limited to:
A business plan lowers risks and costs amid tough competition and evolving ecommerce trends on Amazon. It offers data-driven insights so you can make informed decisions, acting as a roadmap that guides your business to its intended destination.
Your FBA plan will be beneficial when you scale your business. It can help you secure funds when dealing with potential partners, investors, or financial institutions. It also plans out the growth of your FBA business and should be modified yearly as your business expands and changes.
Detailed planning leads to streamlined and transparent operations. A well-developed business plan can act as your compass.
Running a business is rarely linear. Every year, the economy changes, new rules emerge, technology advances and digital marketing evolves. Running a business without a detailed plan is like driving blindfolded in this unpredictable environment.
Your FBA business plan is your roadmap, as it:
A business plan is valuable to a business regardless of its size. However, it has added value for established FBA businesses seeking to scale. Expanding your business requires juggling many balls; without a detailed plan, you're bound to drop a ball or two.
Your FBA business plan helps you:
A comprehensive business plan means transparency, which is an essential factor for potential partners and investors. Your FBA business plan becomes a crucial tool they'll examine to see if investing in your business is worth the shot. Your potential financiers will need assurance that you have a clear understanding and roadmap of your business. Your documented plan is proof of your business's potential for growth and profitability.
It's important to remember that while Amazon FBA plays a significant role in your business, it's not your overall business. When writing your plan, don't just concentrate on the FBA aspect.
Nine out of ten Amazon sellers say their business is profitable. While it's good news, it also highlights the fierce competition among Amazon sellers. To set your business apart, you must understand your market thoroughly, including your industry, niche, products, audience, consumer behavior, and industry trends. A market-driven business is more appealing to investors than those driven by new technology or services. Your product's market value and profitability potential are more important than its technical features.
Market research can involve various methods and tools. For product research, you can use Threecolts or AMZScout to determine the profitability of your product. Threecolts has a range of services and solutions to help you with specific studies. For instance, if you sell books on Amazon, you can use ScoutIQ to check which books are always in demand. You can also use FW Alerts to monitor your brand reputation.
Make sure to conduct a competition analysis and analyze your rivals. Look into their strengths, weaknesses, marketing, and pricing strategies. This will help you differentiate your selling proposition and avoid frequently used tactics.
This is applicable in two different ways. First, you need to be clear and concise in your wording. Use a professional tone fit for business, but avoid using jargon. High-frequency words can be misunderstood, and fluff content doesn’t add anything of value. Make sure to keep the structure uncluttered.
Second, have clear goals and specific strategies. Set aside your gut feeling and focus on data-driven insights. Use quantifiable targets, and avoid generic tactics or simple summaries. Outline step-by-step action plans. Specificity reveals your in-depth knowledge of FBA services. Most of all, make sure your goals are SMART.
Revisit your FBA business plan often to ensure you're on the right path. Conduct a quarterly review to track your progress and update the plan according to changes in market conditions. Neglecting to do this just defeats the purpose of your business plan.
There are many elements you can include in your business plan. The more your business grows, the more extensive your plan will be. Here are some key elements that should be included:
An executive summary sums up the critical points of your business, providing a high-level overview. It should persuade the reader, particularly potential partners, to take a closer look.
Ideally, the summary should be one page. That means you highlight only the salient information of your business. Briefly introduce your company and its key members, describe your business model, identify your value proposition, and emphasize the elements that differentiate your FBA business from the competition.
Despite being the first section of the business plan, it should be the last thing you write.
Example Template:
(Company Name) is an Amazon FBA business from (location) delivering high-quality products within the (specify product niche) category.
This section is an in-depth look into your company. It should include the business name, history (for established businesses), and owners or founders. As an FBA seller, you should note your FBA business model, such as an arbitrage reseller or white-label. It's essential to add the company's mission and vision. Provide short-term and long-term goals.
Example Template
If you're adding a company history, highlight the key points:
(Owner's name) is an experienced entrepreneur in (industry) who identified a gap in the market for (state product line or category). With a keen understanding of consumer preferences, (Owner's name) founded (Company name) in (year).
Building on (Owner's name) expertise, (Company name) successfully developed distinctive product lines. Initially starting with (mention a few early products), the company quickly gained recognition within (location.) Currently thriving in (location/s), (Company name) has established a loyal customer base and plans to expand (nationally/globally).
This critical section comprehensively outlines your business's sales and marketing strategies. Start by listing your key marketing goals with a timeline, and be specific.
Focus on the four Ps of marketing (product, pricing, placement, and promotions) when creating your marketing plan. Organize your strategies around your SMART goals like this:
Specify the type of marketing strategies you'll use to achieve your objectives, such as:
Along with the marketing tactics, list the budget per strategy.
The same thing applies to your sales strategies. Write, in detail, how you will promote your products to increase sales. You can use the following tactics:
Part of the sales and marketing strategy is your tactics to acquire new and retain old customers. Make a list of strategies for customer retention as well. This may include:
Here's an example of how you can structure your marketing plan:
A huge part of having a business plan is showing that your FBA business differs from your rivals. This section will compare your product, marketing strategies, and operations to those of your competition. A competitive analysis will help you identify your Unique Value Proposition or how your product differs from or is better than others.
Different methods can present this analysis. A commonly used method is SWOT, which evaluates the Strengths, Weaknesses, Opportunities, and Threats of your and your competitor's products.
Don't analyze and list all your competitors. Stick with the ones you're most actively competing (or will likely compete) with. Assess and compare the following:
At the end of this section, list your competitive advantage outside of what FBA services provide. For example, if you have built a solid social media presence on your own, highlight how you have a base they can reach out to and a community they can be a part of.
The operation plan section outlines how to turn your plans into actions using the data you've consolidated. It provides an in-depth description of the daily operations of your business and how each step contributes to achieving your goals. These operations may include, but aren’t limited to:
Your operation plan sets the benchmark for your business. Short-term goals involve smoothly running the day-to-day operations of your FBA business. Long-term goals are milestones you want to achieve.
This is one of the most critical parts of your business plan. In general, it's also the most extensive and requires regular checkups. If your FBA business plan is intended for potential partners and investors, this part should be as detailed as possible. Brief or broad, though, your financial plan must be rooted in reality. That means exact sales figures, profit and loss, and costs. For projections and goals, base the assumed numbers on facts.
Include a financial model for the next three or five years. The financial statements must be broken down monthly, quarterly, and yearly. Included in this model are your:
Income statement (Profit and Loss)
Ideally, your Profit and Loss statement should show substantial growth, stable profit margins, and positive net profit.
Balance sheet (Assets, Liabilities, Equity)
This explains your business's capital structure, investment, and financing policies. To honestly assess the financial risks, your potential partners must see and compare the financial debt level on the balance sheet to the equity value. Any financial debt must be repaid, which increases the risk, while equity doesn't need to be refunded.
Cash flow statement
This determines how much money you need to scale your business without draining your resources. Your cash flow statement must detail your operating, investing, and financing cash flow.
Apart from these crucial elements, your financial plan section must discuss revenue streams and break-even analysis.
You can add a Management section and an Appendix apart from these key elements. The management section highlights the key members of the business as well as their roles, experience, and expertise. This section is best suited for an established FBA business. A solopreneur or a small business may not need this section. Instead, the names of the personnel can be added to the company overview.
The Appendix section is not a requirement but a bonus section. It's where you can add more information about your product lines and trademarks. You can put an exhaustive list of your marketing materials and packaging designs. You can also put the company's contact information, including social media profiles.
Benjamin Franklin said it right: "By failing to prepare, you are preparing to fail." Without a well-developed plan for your FBA business, you're putting your company at risk. Help set your business up for success by creating an FBA business plan to serve as your guide to navigating the treacherous ecommerce landscape.
You can make this easier by using Amazon tools and resources to help ensure your plan is accurate and relevant, such as Threecolts—a multi-solution platform for your Amazon and ecommerce needs. It has unique solutions to help your FBA business grow and thrive against stiff competition. Get started now to learn more.
Browse through our blog and read our other posts and data-driven insights from our very own proprietary data. Learn more about Mother's Day trends and best practices, Easter sales, price elasticity of demand, Amazon FBA fee changes, Amazon product title optimization, winter seasonal products, Amazon end-of-year sales, Valentine’s Day trends and best Amazon fulfillment centers by location, and throughput.
