So you’ve ticked off everything on your business plan checklist down to a T. All products are ready to be listed, supply arrangements sorted, distributor partnerships signed, all packages properly labelled, and Amazon system records on point.
Great! So you’ve got an FBA business. Or do you?
If you’ve made it to this stage, the good news is that you’re off to an excellent start. The bad news? Listing products on Amazon is just the tip of the iceberg. With such low barriers to entry, almost anyone can start an Amazon FBA business. To differentiate yourself from the competition, it’s important to have a plan of how you are going to get there.
Amazon FBA is the answer that can help you bring your business to the next level. By letting Amazon manage your logistics, it makes operations easier, and with such a large audience that shops on the platform, it is also a good place to find new customers at the same time. The result? Products become more visible to millions of Amazon customers while providing world-class fast shipping and acclaimed customer service.
Crafting an FBA business plan from scratch can be taxing and overwhelming but it’s going to be worth it. The true success of an FBA seller lies within your ability to make functional plans that are transparent and measurable, be willing yet flexible, and open to leveraging your competitive advantage. With the right attitude and openness to possibilities, we’d love to share with you our Amazon FBA Business secret recipe for success this 2019. More about it here.
Here’s a bit more depth on how to create a modern business plan for the 21st century. In this article, we take a closer look at how to create a business plan specifically for selling on Amazon FBA.
Now, let’s get you started.
Pens Up. What to Write in an Amazon FBA Business Plan Template:
An Amazon FBA Business Plan Template serves as the internal roadmap to implement when starting and growing your business. It’s a vital part of establishing the groundwork required, streamlining your business positioning, analysing the step-by-step process in realising your goals, and ensuring that you have some type of viable commercial potential.
Here are the core parts of the comprehensive A2X Amazon FBA Business Plan Template:
- Executive Summary: This is the most critical part of business planning. This is where you introduce your business. It is a smart tool that consolidates all key elements of your plan – an essential tool to structure your business plan. Ideally, this is recommended to be completed last to summarise each section of your plan.
- Company Description: Basically it’s the overview of the company. You may include your mission and vision, company formation information, founders, location, and notable achievements, if applicable. It features three important sub-sections:
- Main Objectives: This subsection answers your goals and purposes of starting this FBA business.
- Products or Services: This is where you identify your products. This involves the development stages, product images, pricing, past test results, and anticipated future products.
- Value Proposition: This defines your edge over the other competitors. Your value proposition is there to answer the questions, ‘What do you offer, what makes you different, and why do you do what you do?’. Essentially, this gives you a good gauge how clear your business trajectory is.
- Marketing Plan / Analysis: An absolute must have, this serves as a vital guide for the merchant as to which marketing activities need to be done, how they will be executed and where the future goals tie into your Amazon FBA Business Plan. This holds the key information that all your partners and potential investors are going to want to know. You may include the following, depending on your needs:
- SWOT Analysis: Strengths, weaknesses, opportunities, and threats. This analysis focuses on determining the best opportunities to pursue in order to achieve your growth goals. A SWOT analysis may look something like this.
- Financial Projections: Based on your expected sales figures, how much do you envisage your business turning over?
- Target Market Research: Target market size, total addressable market (TAM), market research/trends, and what you do. Note: to learn more about trends for any particular niche, try the Google Trends tool, and Jungle Scout web app.
- Customer Segments / Target Customer Profiles & Personas: This is where you identify your mass and niche markets. Here, you identify the groups of people who are most likely to buy your products, and the qualitative factors that matter most to them.
- Customer Relationships: Strategies to build a lasting relationship with your target market.
- Brand and Product Positioning: Where in the market does your brand sit? Are you offering a premium range of items? Does your brand convey cheap and cheerful? Is design a major selling factor?
- Elevator Pitches and Taglines
- Marketing Plans / Channels to be used: Include details of whether you plan to reach customers via paid ad placement or organic search engine ranking, affiliate outreach, or a combination of all three?
- Marketing Ideas and Strategies
- Marketing Budget: Based on your company’s finances, how much can you afford to spend on marketing?
- Estimates of Cost Per Action of any testing conducted: this can include cost per click, cost per conversion, sampling costs and more. Whilst it can be very easy to get bogged down in detail, it’s important to only focus on metrics that actually matter to your business.
4. Operational Plan: This part is intended to organize the moving parts of your business and allow for a practical understanding of the industry and your products. If you are starting out on a shoestring budget, much of the operational plan will be irrelevant. However, we have included a detailed checklist of components to consider for businesses with access to larger amounts of capital and bigger plans. Here are the most important things to keep in mind:
- Facilities and space needed: Either within FBA warehouses, or if you are also handling warehousing, then this would include the space needed in your own house/distribution center/other facilities.
- Technology needs: There are a range of software and cloud-based technologies that can be useful for simplifying the operations of an Amazon seller business. For example, A2X simplifies Amazon accounting by automating the flow of financial data from Seller Central to your cloud accounting system.
- Equipment needs
- Supply chain management: Stock requirement prediction tools such as Forecast.ly and inventory management applications like Cin7 can be very helpful.
- Logistics and distribution plans: Consider including details about your prep warehouses and freight forwarding partners.
- Order and fulfillment processes
- Quality control checks
- Legal and accounting needs
5. Management & Organization: In a nutshell, this section of your Amazon FBA Business Plan discusses your management and industry experience of your team and provides a rundown on the assigned people for each task. You may be keen to include some or all of the following, depending on your needs:
- Founders and executive team
- Any owners and shareholders
- Board of directors
- Consultants and special advisors
- Key team members and department heads
5. Financial Plan: This is a critical part of your Amazon FBA Business Plan because this is where you show the exact figures and a run through of your current financial state, thorough startup cost, forecasts and goals. This is geared towards providing secure funding of what you need and a product/business development budget. For those who loaned the startup funds, it is here that you want to include a repayment schedule, rundown of the exact use of funds, steps you plan to reach your goals, payment schedule in detail, petty cash funds, and contingency funds. Here are some prompts for what to include:
- Revenue Streams: Look at what you are charging and if you could be charging more. How are you receiving your payments and does it contribute enough to overall revenue?
- Cost Structure: Pin down fixed and variable expenses to give you an opportunity to see what you can improve on.
- Current Balance Sheet: This is applicable for existing FBA businesses.
- Past two years’ financial list, if applicable.
- Projections for 12 months and annually through year 5
- Break even analysis
- Cash flow projections
- Income and expenses
- Expense projection
6. Appendices: This includes the finer details that are referenced throughout the business plan. You may want to Include the following:
- Articles of incorporation and company status
- Shareholders agreement and company constitution
- Resumes of founders and key team members
- Copies of insurance contracts
- Trademarks and patent registrations
- Employment and supply contracts
- Deeper research data or links to references
Consider keeping it brief:
Ideally, your Amazon FBA Business Template should be kept short, simple, and straightforward. In the above section, we have included a detailed rundown on everything that you might decide to include in your business plan – however, these elements aren’t necessarily required.
During the early stages of a startup, it is important to lean towards action rather than meticulous planning. If you are a funded venture with significant amounts of capital, or are looking for lending/investment, you will probably be required to produce a detailed business plan. On the flipside, if you own or manage an established business that is considering Amazon FBA as another way to reach customers, it may also be a good idea to formulate a detailed business plan. Just remember: keep it appropriate for the scale of your business.
It is often advised that you should keep your business plan to a one-page document in the early stages of building your business. This will help to gain clarity through brevity. A good tool to help is Plan Cruncher.
Plan Cruncher is a web tool that creates a one-page (give or take), visual summary of the meaning behind your. It is only composed of compact descriptions and visual icons to expand your thoughts into tweet-sized paragraphs composed of 280 characters in bullets.
While this is not geared towards replacing the conventional business plan templates, it can serve as an interesting deviation to establish your plan overview in a quicker, direct, and more functional manner.
It can be done and read fast enough that it wouldn’t get in the way. It’s a good way to plan the present and organise the future in an easier, more direct manner without the need to get drowned in a sea of words.
Sample Amazon FBA Business Plan
This example FBA business plan is for a hypothetical food product that uses quinoa to provide a healthier alternative to traditional cereal foods.
We are a new company that aims to diversify our products – hoping to successfully saturate the existing and new markets by pioneering a swerve from the usual cereal buzz.
- Fuel is the healthier alternative to the commercial cereals, as it is made with quinoa nibbles, assorted berries, mānuka honey, and dark chocolate.
- It comes in two forms: the 2-in-1 100 gram handy pack, nutrient-loaded quinoa nibbles and a family pack for ultimate value-for-money.
- It allows maximum mobility for breakfast eaters who do not have time to sit down and have a proper meal for breakfast for the active, on-the-go people, and the 350 gram big box in contoured shape for home use.
- Our products are packaged in sugarcane-based products. We add value to our product as we aim to lower our carbon footprint through our environment friendly packaging process, as well as our corporate advocacy towards supporting Fair Trade.
Marketing Plan / Analysis
SWOT Analysis (Strength, Weaknesses, Opportunities, and Threats).
- Our products are made with premium and high quality quinoa, dark chocolate, and Manuka honey blended with organic and tasty dried berries.
- Quinoa: An impressive protein content, quinoa is the perfect gluten-free substitute for pasta, rice or couscous.
- Manuka honey: Sweet, organic and healthy. It’s packaged in a wide range of forms (Investment opportunities in/from the New Zealand honey industry).
- Dark chocolate: Dark chocolate is packed with various benefits to human body and is popular all around the world.
- Packaging: Our hip packaging adopts the modern technique to reuse and recycle 100% of the package. It is biodegradable and non-toxic for the planet.
- Quinoa, is expensive to grow as it is grown only in some parts of the world and is harvested manually.
- There are reports of the booming success of the quinoa plantation in Western Australia and Tasmania—a beneficial effort for our brand.
- Being expensive may prevent people from buying our product
- Fuel is targeted at a niche product where people would be likely to pay more money for the benefit of convenience, good taste, and natural energy that cannot be gained together from other substitutes.
- Breakfast foods is a saturated market, which we can tell just by looking at shelves in the supermarket. There are wheat, oats, and cornflake-based cereals, mixed with various nuts and dried fruits.
- Potential supply chain issues on high demand ingredients such as mānuka honey.
Target Market Research and Customer Segments:
- Both male and female, aged 7-80 years old.
- With high nutrients, luxury ingredients, and a portable design, Fuel is targeted for office workers, outdoor & gym goers, school kids, and people on special diets.
Marketing plans / channels to be used. Include which ones are paid or organic:
- We work on communicating our product and its values to our potential customers.
- Social media and word-of-mouth may be used to establish authority outside of Amazon.
- Office workers and outdoor goers need networking in their daily life – so we will attend professional networking events in our locale, the San Francisco Bay Area.
- School kids are the consumers, but their parents are more likely to make purchase decisions. In consequence, forums at job, outdoor, and kids education related fields would be our advertising targets.
Marketing Ideas and Strategies:
- Free: Organic promotions on social networking sites and websites. We will utilise Facebook, Twitter, Instagram, and Pinterest, Tumblr, WordPress, and Blogger amongst others.
- Paid promotions: With the massive impact of digital marketing, we can capitalize on Google Adwords, Google Analytics, Search Engine Optimization, Tag Manager, Search Console (formerly known as WebMaster Tools), and Visual Website Optimizer.
- Production costs include logistics, allocation for rent, packaging, office staff salaries, etc.
- Operating costs of quinoa importation from our suppliers facilities in Western Australia and/or South America, acquisition of the other ingredients.
- Other relevant determinants of price include operations management expenses, packaging, distribution expenses, stages of product life cycle, research and development, and promotion tactics.
- Suggested retail price: Fuel box is $7.99USD/350g, and Fuel On-the-go Pack is $2.99USD/box (with 50g nibbles and 100ml milk).
It all depends on your business…
Whilst some businesses are best suited to meticulous planning, for others (such as starting a coffee cart or applying a retail arbitrage FBA strategy), it is better to be action-biased.
Hopefully, our FBA business plan template and guidance helps you to gain a clearer understanding of what matters in your business, and what doesn’t really matter.
On a final note, it’s important to begin with the end in mind. By understanding where you want to go, you can get a better idea of the most important activities to do today. Check out our free guide on how to sell your Amazon FBA business to learn more.