Whatever the entrepreneurial project, writing a business plan is an essential step. Marketplace projects are no exception to the rule. In addition to defining your long-term strategy, the business plan helps increase your chances of obtaining financing. To convince your potential investors and partners of the viability of your project, whether it concerns a B2B, B2C, or C2C marketplace, make sure you take particular care in drafting this document. What are the specificities of a marketplace business plan? What should it contain? Follow the guide!
Business plan marketplace: what are the particularities?
A business plan is a synthetic document describing the financial and commercial strategy chosen to carry out an entrepreneurial project. It must present the potential profitability of the project, with supporting arguments, and detail the manager’s vision, to justify the need for financing. Traditionally, a business plan covers the following aspects:
- The company’s business: who sells what to whom? With what value proposition?
- The management team: how do the skills of each person contribute to the success of the project?
- Market research: demonstrating the business opportunity by defining the target clientele
- The strategy: detail the strategy envisaged to differentiate from the competition and find customers
- The financial plan: list the financial needs and the expected returns on investment
A marketplace business plan differs from a classic business plan in that the project is digital. While for a physical store, location is a key issue, for a marketplace, it is the traffic that must be the focus of attention. Other parameters, such as the expected revenues and the expenses inherent to a marketplace project, also come into play.
Written at the beginning of the project by the management team, the business plan must allow you to convince your interlocutors of the attractiveness of your project, based on turnover forecasts. Do not hesitate to propose different scenarios, to show that you have thought of everything and that your project has potential, whatever the configuration. Also, keep in mind that this document is intended to be read by different profiles, so you must always accompany the figures with context.
Read also: Start-ups, scale-ups: how to raise funds successfully?
Write the business plan of my marketplace in 6 steps
Make your business plan an efficient working tool by respecting a certain formalism. Well beyond representing the first stone to your building, this plan will materialise its framework by formalising your project from the first steps to the objectives to be reached to make it sustainable.
1. Presentation of your marketplace project or executive summary
A little more detailed than your pitch, this presentation nevertheless includes the crucial points that will catch the attention of all your partners and potential investors.
- Who is your marketplace aimed at? Specify if you are exclusively addressing professionals (B2B) if you are an intermediary between professionals and individuals (B2C) or if you are connecting individuals (C2C).
- What does your marketplace sell? Many things can be done via a marketplace. Products or services can be sold, exchanged, rented, etc.
- What technology does your marketplace use? Will you develop your solution, or will you opt for a SaaS solution? What will it look like, and what will be the main features?
- What are your main points of differentiation? You address a niche market, you meet a very specific need, you provide a local or completely new solution, your platform is innovative, etc.
- What is your value proposition? Price is certainly a powerful motivator, but it is not the only criterion: ease of use, ergonomics, vendor selection, security, status, etc.
- Why will your project work? Before unrolling the figures that will convince your partners and potential investors, make them dream a little! This is the time to polish up your pitch.
2. Analysis of your market
Because the margins are lower than in a traditional e-commerce model, the marketplace is a volume market. It is therefore important to ensure not only that the need exists but also that it is large enough to become profitable.
- What does your market look like? Do a market study to estimate the size, trends, average basket, and define buyer’s typology, their expectations, etc.
- Who will sell on your marketplace and under what conditions? What makes a marketplace successful is also the brands that are present on it. Estimate the volume of potential offers and define seller profiles to estimate the negotiation margins, the conditions under which they are willing to sell, and the different distribution methods.
- Who are your competitors? List the marketplaces already present on your market as well as their characteristics, their market share, their positioning, etc. Also list your indirect competitors (substitute products or services, your sellers’ branded sites, other points of sale, etc.) and estimate their weight, their online presence, their traffic, their notoriety, etc.
3. The business model
The business model or financial model is used to explain how your marketplace will be paid. This will vary depending on the type of marketplace and can include different sources or models of remuneration:
- Commissions: Specify on what they will be based: on the transactions made or on the leads (lead fee). Are they fixed or a percentage of the transaction amount? Detail the terms and rates applicable.
- Membership or subscription fees: If you charge for access to your platform, detail the remuneration structure, the frequency of calls for contributions, the amounts, and the various subscriptions available.
- Listing fees: Do you charge for the listing of products or services by sellers on the platform? Specify if you charge per listing or according to the amount of the listing if you make volume discounts, etc.
- Premium services (freemium): You charge for specific services, detail the services concerned, and the basis for calculating prices.
- Advertising and promotions: You offer your sellers to promote themselves on your platform via ads or highlights of their products, detail the basis for calculating these promotions (cost per click, flat rate, etc.).
In addition, to simplify transactions, regardless of your compensation model, it is highly recommended that you rely on a PSP, such as Lemonway, which offers a secure, scalable, and compliant solution.
4. The action plan
In this part of your business plan, you will articulate the detailed data in the first three parts. Your action plan should show where you are now, your strategic goals, milestones, and expected progress.
- Strategic objectives and key indicators: Define your short, medium, and long-term objectives as well as the indicators (KPIs) that will allow you to monitor them.
- Marketing plan: Traffic is the lifeblood of your business. Based on your market research, define the sources of your traffic and the actions you will implement (SEO, SEA, advertising, public relations, etc.) to recruit prospects.
- Marketing Plan: Detail the strategy you will implement to recruit sellers for your platform.
- Development plan: You’re probably already thinking about what’s next, if you have plans to expand your offering, diversify, add features to your platform after launch, detail how these fit into your action plan.
5. Presentation of the team
Who is behind this brilliant idea? The skills and qualifications of the team members will reassure your partners and investors of your ability to lead the project.
- The founding team: Feel free to detail your CVs and specify what role each member will play.
- Partners: If you outsource the creation of the platform and/or its maintenance, your digital marketing, etc. do not hesitate to present your partners
- Hiring: What are the hiring forecasts, what profiles, and for what type of positions?
6. Financial forecast
The ultimate exercise in evaluating the viability of your project and convincing your investors is the financial forecast. It is the translation into figures of everything you have detailed above. It gives an exhaustive vision of the necessary investments, operating costs, and income projections in the short, medium, and long term and generally presents several scenarios to consider the risks linked to the project:
- Your investment requirements, their allocation, and amortisation
- The distribution of your operating expenses
- Your turnover broke down by activity
- Estimating the evolution of the result and calculating the break-even point
- Cash flows
- Your financing plans
Lemonway can help you with all the transactional aspects of your marketplace, so don’t hesitate to contact us.