Coming up with a great idea to begin a startup company is never enough. Turning this idea into a running business is the goal. Some will say that preparing a business plan is a waste of time, but other entrepreneurs who have extensive experience with startups say that a bit of planning could never harm.
According to the University of Oregon Department Economics study, businesses that complete their planning are 50% more likely to survive the initial stage and grow than those without a business plan:
- Growing their business
- Securing a loan
- Acquiring investment capital
Before you start looking for office space and employees or form an LLC, you need to put your plans on paper. This can help you to stay more organized, focused, and be better prepared for fundraising.
Would you like a few tips on how to write a business plan? This article will explain what most important parts it should include and how such planning keeps you focused when you are starting a new business.
What does a typical business plan consist of?
The business plan includes the following elements:
- Executive Summary
- Company Description
- Market Research
- Description of Services
- Management and Operational Structure
- Marketing and Sales Strategy
1) Write an Executive Summary
It is the first part of the business plan for a startup and also one of the most important ones. In this part, you consider problems that your users face, introduce your solution, explain your Unique Value Proposition (UVP), and tell about the company’s objectives.
Below are some of the questions you answer in this part:
- What problems does your target audience experience?
- What are you set to change with your invention and work?
- What makes your software different from other similar services on the market?
2) Tell about Your Company
This part of your startup business plan should include a short company overview. Here you describe the basic company’s information, write your company’s story, tell about your team and team management, describe your monetization strategy, etc. Keeping this section brief and clear is very important.
3) Market Analysis
Deep understanding of the industry and market competition are two key points that help to build a successful startup. In this part, you identify your market segment, analyze your competitors, add market projections and conduct SWOT analysis.
According to the CB Insights’ research about the reasons why startups fail, the most common problem is the lack of market need. Entrepreneurs don’t check if their service has a proven market fit.
4) Services Portfolio
Describing your services in a portfolio provides a better understanding of the needs of your potential clients. It’s about the motivation of your clients to buy your services. The company’s value proposition is what differentiates it from competitors on the market. Another important thing is to outline how and where your services will be developed.
5) Management and Operational Plans
The management and operational plans are developed to explain how the business functions on a continuing basis. The operational plan maps out the day-to-day tasks required to run a business capital, and responsibilities of the management teams, etc.
In addition, the operations plan highlights the tasks assigned to each department within the company, and capital and various responsibilities of the management teams, expense requirements related to the operations of the business.
6) Map out a Financial Plan
Your business plan isn’t complete without the financial forecast. This is definitely the most important part. Here you explain your startup’s costs for the future goals of your company.
The information to include in your financial plan at this point:
1. Startup expenses
2. Beginning balance sheet
3. Month-by-month budget for 1st year
4. Sources and uses of funds
5. Personal financial information
6. Tax returns for the past three years
The first months are the most difficult for a new company. So, it’s a good idea to include more in your forecast than your real numbers.
7) Create Your Marketing Plan
After you accurately evaluate your missions, capital needs, competition, services, management, and operational plans, the next step is to figure out the best marketing and sales channels. Your marketing plan relies on everything else we’ve talked about so far.
Below are some of the questions you need to answer in this part.
- How will you acquire your customers?
- How big will your promotional budget be?
- What type of advertisements or promotions will you use?
- Will you use social media or professional networks?
Launching a startup company is an exciting experience. It’s easy to get so caught up in the moment and forget about everything else. If you want to set up your business for success, the good thing would be to take a step back and plan things out.
The process of writing a business plan will improve your chances of securing an investment and also increase your potential growth rate.
If you’ve never written a business plan, use this article as a guide for what you should include into it. Follow our tips and create your excellent business plan today.