If you’re in the beginning stages of launching a startup, having a business plan on hand can be highly beneficial, as it can determine whether your business will be able to gain success within a competitive business world. According to business advisors, bankers, experienced entrepreneurs and investors, writing a business plan can help your startup stay on track during each stage of development.
Additionally, business plans don’t have to be overly detailed, nor should they be too simple either. For example, cash flow statements and financial numbers don’t have to appear in a business plan. However, the plan should highlight a roadmap of your company’s goals and how you are going to achieve them, where you want your startup to go, and the overall potential and market competition of your company.
In basic terms, a business plan is defined as a written description of your company’s future, and a formal document that outlines a strategic plan for both your short-term and long-term goals. In a business plan, you will have to demonstrate a bright, objective map that you can follow step-by-step while also bringing your business through its development stages. When writing, we recommend beginning basic; the further you go, the more details can be added as you prepare to approach investors for funding.
If you don’t know where to start, this article will explain how to outline a business plan. The article will also discuss the most important sections to include, and a brief description of each section to help you stay organized throughout the writing process, in addition to being a guide for you.
Here are seven basic questions that should be answered within your business plan before officially launching your startup.
1. Describe Your Objectives and Mission
First, your startup’s business plan should convince you as well as others that your business idea isn’t just a dream, but a viable company that can become reality. Naturally, entrepreneurs carry personality traits that are positive, confident, and ambitious. As a result, you need to start planning, setting goals, and above all, knowing your business plan. In relation to this, stating your mission statement should explain a company’s purpose in one simple, compelling sentence. You’ll need to spend a great amount of time researching to determine what your mission will be. This is because investors want to make sure that your business will be profitable. Below are some of the questions you need to answer in a business plan.
- What are you trying to change with your invention and work?
- What makes your company’s product or service different from competitors in the market?
- What do you need to efficiently run your business?
- Who will benefit from your business?
- What are the leverages and tradeoffs you want to give your clients, and under which implications and circumstances?
- What overall challenges are you solving for your clients?
2. Market Analysis
Do you know who exactly your target market is – or generally, the type of people who will purchase your product or service? This is one of the first questions investors will ask when discussing your business plan. Since, the more knowledge you have about your competitive market, the better the results will be. This means that you need to implement proper research, ask industry experts, read industry papers, and financial reports and news; this is so that you can have the best possible base to decide. Some of the things that you need to add in your market analysis are as follows:
- Is there a viable market for the product or service you want to offer?
- Does your ideal customer live in a certain type of area?
- Are you limiting your reach geographically, demographically or in any other way?
- Will only wealthy people be able to afford it?
Once these questions are figured out, you will have a functional market analysis. Writing a market analysis will help you become familiar with all aspects of your market. When defined, your company will then be positioned to capture more market share among others.
3. Explain Your Startup’s Costs
Business plans aren’t officially complete without the financial forecast. Once the market analysis and objectives for your business are defined, the next step you’ll need to implement is to explain your startup’s cost for the future goals of your company. Have you started asking yourself, how much capital would be needed to start a company? You’ll have to be conservative while estimating startup costs because generally, everything will cost more than you would expect.
For any new company, the first months are the most difficult. So being, you should always include more in your forecast than your real numbers. You will need to summarize each statement in a few easy-to-understand sentences, such as projected financial statements that will include income statements, monthly cash flow, balance sheets, and annual cash flow statements in your business plan.
4. Understand the Competition
In the competition section, you need to distinguish your business from its competition, in addition to persuading the readers that your company will be able to compete successfully in the market. This means you need to implement an investigation of your direct and indirect competitors, along with their competitive advantages and how to overcome any entry barriers in your chosen market. This is the best way of understanding your competition. While doing the research, you can also allocate the appropriate price for your business, and preserve your company from dumping tactics with the competitors. You’ll need to answer the following questions before writing the competition section:
- Who is your competition?
- Where are your main competitors located?
- What is their differentiation strategy?
- How much do they charge for a similar product or service?
5. Products and Services Portfolio
The products and services section is an exciting exercise when preparing for your startup’s business plan. In this section, you will define your products and services portfolio in order to understand the needs of your potential clients. Once identified, you’ll need to think about the motivation your client would have when looking to buy your offered products and services. In relation to this, your company’s value proposition is what distinguishes it from competitors in the business world. So being, you’ll have to expand upon your products and services. This includes its features and benefits, competitive advantages, and if marketing a product, how and where your products will be produced.
6. Management and Operational Plans
The management and operational sections of a startup business plan are developed to explain in simple terms just how the business will function on a continuous basis. Specifically, the operations plan will highlight the logistics of the organization. This includes the tasks assigned to each division within the company, as well as the capital and various responsibilities of the management teams, and expense requirements related to the operations of the business.
7. Marketing and Sales Channels
Once your missions, capital needs, competition, products, services, management, and operational plans are objectively evaluated, the next step is to figure out the best marketing and sales channels for your overall business. Your business plan should include one to two pages that encompass your marketing plan in your sales channel strategy.
Today, most business owners do not realize how crucial it is when choosing the right sales channels for their offers. As a result, it is recommended to choose the right sales channels according to your business requirements. The significant difference between choosing among resellers, distributors, and representatives can affect your operational plans, so you will have to make sure to check these regularly in order to avoid finding out when the business is already in trouble.
Under the marketing section, consider the following to include in your business plan:
- How large will your promotional budget be?
- What type of advertisements or promotions will you use?
- Will you create a logo and use it on cards, letterhead, websites, and others?
- How often will you use paid promotions?
- What other non-paid advertisements will you use? For example, will you use social media or professional networks?
By now, you most likely understand the basic concept of why having a business plan is crucial for your startup. Even if your business depends on the people in charge, if you have a well-planned and organized business plan, you will be able to achieve your company’s goals. So, make sure to prepare an amazing business plan and review it thoroughly!