Many entrepreneurs start their businesses without a startup plan. Writing a plan is not too much work, but it can be a crucial step for your company. Businesses with formal and written business plans have higher chances of success.
Writing a business plan can help you to secure funding. It starts with identifying the target customers and knowing their preferences. At the same time, writing a startup plan may be difficult due to a lack of skills and time. So, in this post, we look at ten simple steps to create a winning startup plan.
Understanding a startup business plan
Perhaps you are wondering what a startup business plan is all about. A startup business plan is a document detailing your ideas and ways of launching and managing your venture. A good plan is crucial to the success of your business. It can help to secure startup funding from venture capitalists and other financiers.
When preparing your proposal, know that it will evolve as you continue understanding the market. The best way to start is by creating an outline of the important elements. Consider who you are and why your enterprise exists. Ask yourself how you intend to make money and what your long-term goals are.
A good plan enables you to determine how to measure success. Include everything in an easy-to-read and organized format. You should also highlight your financial projections, marketing strategies, team bios, and so on.
Step 1: Outline your business objective
Avoid being ambiguous when writing business descriptions. Don't just say, 'We are going to sell goods". Instead, state the kind of goods or services you will be offering and the target industry. Describe where your entity will operate from; will you operate online or have a physical location? Highlight the type of company, whether it is regional, local, or international. Make it clear how your entity will solve the customers' problems, and what will be your metrics of success.
Step 2: Create an executive summary outline
After having an idea of your business objectives, write an executive summary. Keep it precise, simple, and straightforward. You can start by writing a short introduction, maybe one sentence. A summary will define the main customers' pain or need and how you intend to solve it.
You can use business plan software to create a detailed business description. However, you need to check some tips on how to edit your document effectively. As a Mac user, you may encounter problems if your account is restrictive. Even with an active subscription, you may not be able to edit documents on Mac, and this can halt the work. These tips will help in fixing the editing problem.
Step 3: Define your target market
It is wrong to target every customer out there. Instead, identifying the target market will help you to determine the most effective marketing channels to reach your audience. This requires conducting market research based on the characteristics of customers. It’s an important step as a lack of a market for your startup will lead to failure.
Taking time to create a detailed plan may enable you to understand your audience, so patience is vital. Start with general assumptions and narrow them down with time. Segment our audience into the following categories:
Your startup plan should reveal how you researched to identify the market. Highlight how you collected data from interviews and surveys. Ensure that you have a clear market niche. A market niche is an ideal group of customers with specialized needs. Remember, your goal is to solve the customers' problems.
Step 4: Describe your company
In your company description, define who you are and what you intend to do in your venture. Give an introduction to the reasons for being in business. Summarize your introspective goals and clarify intangible aspects, including cultural philosophies and values. Mention the following aspects:
Background information of the support team
Sometimes, internal or market changes create a demand for a company to adjust business processes. So do some research and add a few words about “plan B” in case you will need a business process transformation in the future.
Step 5: Analyze the competition
Besides researching the target market, you should conduct a competitive analysis. Use the information to differentiate your brand. Writing a business plan is the initial step before launching a venture. At this stage, nobody knows about your brand.
Duplicating your competitors’ products or services will not guarantee success. It will be difficult for customers to switch to your products if your brand is not unique. Your goal should be to stand out from the crowd. Differentiate your brand based on the quality and price. Conduct competitive analysis simultaneously with identifying the target audience.
Step 6: Create a budget
Budgeting is an important step when creating a startup plan. Have all your figures in order, especially if you are looking to secure startup funding. Estimate the amount of money you need to keep your business running. Your goal should be to avoid running out of funds.
Consider the costs of the basics, such as:
Employee salaries and wages
Property cost (leasing or buying)
If your startup is going to be an all-remote business, make sure you include enough budget for corporate tools. You can research the best software for small business that will help you to optimize your management, marketing and financial efforts from the very beginning.
When creating estimates, try to be as accurate as possible. If you are not sure of something, create a higher estimate. A good budget will help your startup to succeed.
Step 7: Identify financial projections
The issue of financials does not end in budgeting. At the startup stage, you don't have financial statements, balance sheets, income statements, and cash flow statements. Make cash flow projections based on the target market's population.
Outline any expansion strategy in your financial projections. Create projections covering three to five years of the startup and be realistic. Honesty with potential investors and yourself will cover the break-even analysis. What matters is the point at which you start making profits.
Step 8: Define the organizational structure
The organizational structure is the reporting relationships in your startup. This depends on the size and the form of the business. If you expect your venture to have a few employees, then creating an organizational structure should be easy.
Creating a hierarchy before starting clarifies the reporting patterns. It also helps to define the roles of each employee in the organization. You don’t have to be too complex- just have a few layers in the hierarchy.
Step 9: Discuss the marketing plan
Discussing the market plan reveals how to win customers based on market research and competitive analysis. Align your strategy with the financial projections and the budget. When discussing the plan, be well-balanced, versatile, and cost-effective.
Attracting customers is costly, so you need to avoid creating a huge budget for this. The marketing plan may entail launching a website, focusing on customer retention, and being active on social media.
Step 10: Create an appendix for important documents
The last step is to assemble all the official business documents that may supplement other information in the plan. Consider the information that may help investors to conduct due diligence. The documents to include in the appendix include:
Business registration certificates
Deeds and local permits
Certifications that boost your credibility
If you are looking to launch a startup, follow the above steps. Setting yourself up for success entails planning and doing it right. A detailed startup plan will increase the chances of securing funding and improve the growth potential. Conducting market research will enable you to determine the viability of your venture. Whereas business plan development is tedious, it will save you a lot of difficulties down the road.