When you’ve just launched a startup or are working for one, there are a million things to do to get the organization on a sustainable trajectory. Market research, competitor analysis, financial projections, plus more mundane tasks such as finding office space and drawing up remote work policies – it’s all essential for starting a successful business.
The importance of having a startup business plan
Writing a business plan which addresses all of the above tasks might seem like more time and effort than it’s worth for startups already overwhelmed with simply recruiting employees and finding investors. But it pays off.
A survey by Palo Alto Software found that startups that had completed a full business plan saw superior growth and had an easier time securing loans and investment capital than ones that hadn’t. Such improvement is critical in the highly competitive startup space, in which failure is routine. According to the U.S. Bureau of Labor Statistics, only 56% of all small businesses started in the year ending March 2014 had survived until March 2018.
As you think about your startup business plan, it’s important to pay attention to the financial needs of your organization (e.g., how much cash flow it will have to generate to be sustainable), as well as to technical requirements, like what collaboration software employees will benefit from. Let’s look at everything a typical business plan template should include.
1. Executive summary
You’ve heard the term “elevator pitch.” The executive summary of a business plan is sort of like that: It provides a top-level overview of the entire document and is in effect a mini plan.
It should only be 5% to 10% as long as the full plan, be written in short sentences and paragraphs, and briefly cover all the sections in the plan. Its audience will usually be banks and investors deciding whether to extend capital. Since it’s a summary, it will likely be completed only after the details below have been finalized.
2. Mission and objectives
Different types of businesses have different goals, whether that’s pioneering an all-new product or service or breaking into an established market. At this stage, you’ll want to introduce the startup in more detail by describing:
- The organization’s core mission, vision, and goals.
- What will set its offerings apart from what’s already out there.
- What need it will fulfill and the markets it will target.
- Where its operations will be based and which regions it will serve.
- Where it currently stands, i.e what it’s already achieved.
- What will be necessary for sustaining short- and long-term success.
Answering these questions will not only clear things up for would-be investors, but also give you insight into what you’ll need to invest in, like software.
For example, let’s say you determine that you’ll sell to clients across the country, relying heavily on a team of mobile and remote workers. This might be a good sign that it’s prudent to invest in real-time collaboration tools like a video conferencing solution that can provide richer, more lifelike interactions between teams than a simple call or email would allow.
3. Product and service portfolio
Pretty straightforward: Include a full compendium of all of your products and/or services in this part of the startup business plan. Explain how they work, what stages of development they’re at, and how much they might cost. Include any relevant diagrams and supporting materials that flesh things out.
Effective product rundowns make a huge difference in how investors will perceive the value of what you’re offering. Plus, getting them right at this early stage will help you develop clear product content like online descriptions, too. Almost 90% of customers video conferencing solution.
4. Market analysis and planning
This is where things become even more granular. This phase establishes that your business idea is actually viable, via thorough analysis of your startup’s marketing plans, along with its targeted markets, customers, and competitors. How you actually conduct such due diligence will vary depending on your mission, but common action items include:
- Performing SWOT (strengths, weaknesses, opportunities, threats) analysis.
- Determining the total addressable market for the product or service.
- Explaining how the offering will be branded and marketed to customers.
- Describing the demographics and personae of those customers.
- Setting a budget for marketing and advertising.
- Figuring out which sales channels to use.
You should also consider how your customer profiles and marketing plans will influence your technology strategy. If you are a B2B organization selling software, for instance, then holding video conferencing meetings can be a useful way to connect with leads in real time, demo the product with screen sharing, and build the high-quality connections that convert into sales.
5. Operational and financial projections
Your startup business plan must offer clear insight into how the organization will operate and what type of cash flow it can be expected to generate. Pivotal points to cover are:
Operational:
- How much office space will it need, and where.
- Employee locations and headcount.
- The hardware, software, and IT services it will require.
- The structure of its supply chain.
- Current logistics and distribution plans.
- Legal and accounting needs.
Financial:
- Current income and expenses.
- Breakeven analysis, i.e. what must be sold over a given time period to cover the costs of doing business.
- Past financial statements, if available.
- Projections for the next year or multiple years.
- Startup costs.
- Capital needs and loan/funding requests.
There are many ways to reduce your startup’s estimated costs en route to being able to present a more sustainable picture of your operation. Remote work is one good option, as it reduces your need for office space and for expensive travel as well, if real-time collaboration software is in place to seamlessly bring employees together regardless of their physical locations.
6. Management structure
Startup founders often choose to run a somewhat lean operation early on, with only a few employees and minimal overhead. Still, it’s important to detail everyone involved in the company’s operations, including the full executive team, plus any shareholders, consultants, and advisors. That gives investors and partners an idea of who they’ll be interacting with and how much experience they have in the field, which can influence their decision on whether to fund the startup and, if so, at what amount.
Don’t skip making a startup business plan
This business plan example template covers the most common bases. It can literally pay dividends to create a well-structured and detailed startup business plan, since doing so will help convince others to fund your company and ensure you have the resources to start off on the right foot. The time spent creating the plan will more than pay for itself once your company secures funding or a loan.
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