Amazon FBA Business Plan Template

Amazon FBA Business Plan

Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their Amazon FBA businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an Amazon FBA (Fulfillment by Amazon) business plan template step-by-step so you can create your plan today.

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What is an Amazon FBA Business Plan?

A business plan provides a snapshot of your Amazon FBA business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes target market research to support your plans.

Why You Need a Business Plan for an Amazon FBA Business

If you’re looking to start an Amazon FBA business, or grow your established business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your Amazon FBA business in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Amazon FBA Businesses

With regards to funding, the main sources of funding for an Amazon FBA business are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

Personal savings is the other most common form of funding for an Amazon FBA business. Venture capitalists will usually not fund an Amazon FBA business. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual Amazon FBA could never achieve such results.  With that said, personal savings and bank loans are the most common funding paths for Amazon FBA businesses.

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How to Write a Business Plan for an Amazon FBA Business

If you want to start an Amazon FBA business or expand your current one, you need a business plan. In the following Amazon business plan template, we detail what should be included in each section of your own business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of Amazon FBA business you are operating and the status. For example, are you a startup, do you have an Amazon FBA business that you would like to grow, or are you operating multiple Amazon FBA businesses or storefronts?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the Amazon FBA industry. Discuss the type of Amazon FBA business you are operating. Detail your direct competitors. Give an overview of your target market. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
 

Company Analysis

In your company analysis, you will detail the type of business you are operating.

For example, you might operate one of the following types of Amazon FBA businesses:

1. Reseller: this type of business finds products from other businesses to resell on Amazon.
2. Private Label: this type of business buys existing products and rebrands them to sell on Amazon.
3. Proprietary: this type of business is where a business creates a unique product to sell on Amazon.

In addition to explaining the type of Amazon FBA business you will operate, the Company Analysis section of your Amazon FBA business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, number of positive reviews, growth in product line, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the Amazon FBA industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section:

• How big is the Amazon FBA industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your Amazon FBA business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

 

Customer Analysis

The customer analysis section must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: Millennials, Generation X, and Baby Boomers.

As you can imagine, the customer segments you choose will have a great impact on the type of Amazon FBA business you operate. Clearly, Baby Boomers would respond to different marketing promotions than Millennials, for example.

Try to break out your target market in terms of their demographic and psychographic profiles. With regards to demographics, the customer segments may include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other Amazon sellers.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes traditional brick and mortar stores, branded websites, or people who make their own product at home. You need to mention such competition as well.

With regards to direct competition, you want to describe the other Amazon FBA or other retail and ecommerce businesses with which you compete. Most likely, your direct competitors will be FBAs with similar product lines.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What types of products do they sell?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide a broader range or higher quality product line?
• Will you provide services that your competitors don’t offer?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.
 

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an Amazon FBA business, your marketing plan should include the following:

Product: In the product section, you should reiterate the type of Amazon FBA company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to your core product line, will you provide customization, or warranties, or any other services?

Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the products or services you offer and their prices.

Place: Place refers to the location of your Amazon FBA company. Document your location and mention how the location will impact your success. For example, if you are offering a proprietary product, is your production facility located near an Amazon distribution facility, or near suppliers of the inputs needed to make the product, etc. Discuss how your location might be the ideal location to minimize order fulfillment time.

Promotions: The final part of your marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Digital Advertising
• Partnering with applicable websites
• Social media marketing
• Amazon PPC ads

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Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your business, including managing, tracking, and restocking inventory, and customer service.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sell your 1,000^th product, or when you hope to reach $X in revenue. It could also be when you expect to expand your business to a new product line.
 

Management Team

To demonstrate your Amazon FBA business’ ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in supply chain management or managing Amazon FBA businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing ecommerce shops or successfully running small businesses.
 

Financial Plan

Your financial model should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you sell 1,000 products per week or per month? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your Amazon FBA business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key fixed and variable expenses needed in starting or growing an Amazon FBA business:

• Production facility build-out including design fees, construction, etc.
• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

 

Appendix

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your product line description or your branding portfolio.

Summary

Putting together a business plan for your Amazon FBA business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the Amazon FBA industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful Amazon FBA business.
 

Amazon FBA Business Plan FAQs

 

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