Building A Startup Business Plan
A Plan for a Plan – How to Go About Building Your Startup Business Plan
There are many types of business owners, but they all have one thing in common: they need a business plan to foster success. So, now that you have your business idea in mind it’s time to get to work. We’re going to talk about how to build a business plan, the components, various tools you can use, what to expect when you share the plan with others. We’ll also include some pitfalls to avoid as we walk through this plan for a plan. Successful investors and banks will tell new merchants that for them to invest in their plan, it must address three main success factors.
Products People Want
The use of the word product in this sense could be a product that you sell, or a service that is offered.
Market Knowledge
Even superior products can’t overcome inadequate market understanding. Product market fit.
Management Team
Investors and banks are interested in learning about the people that will run and serve the business.
Here is a checklist of content you should include in the business plan:.
- Include a short Executive Summary.
Often this is the last part of your business plan to write, and it can be the most important. Investors and banks who require a business plan will usually only read the Executive Summary. Kept short to about 2 pages, it should efficiently summarize the main part of your plan, and should specifically address the three key success factors listed above.
- The “story” about your products or services.
Write a short story to start your business plan. Everyone loves a good story, but when you tell your story about your business make sure is complete. It should have 5 parts: define the problem you are solving, that you identify the need being addressed, that you have thoroughly understand the alternative solutions and why they are not as good, that you clearly describe your product or services, and that you conclude your story with the primary benefit.
- Description of your products and/or services.
Now you need to specific the “nuts and bolts” of your plan. Describe or list your products or services. Include what is different about them as compared to the alternative solutions. Try to include one unique differentiation capability that meets the unmet need. Now, to be unique it really needs to be unique; that is, a capability that no other competitor can do to also meet that need for the price. Better yet, if the product has two or more truly unique differentiators, then you probably will have a highly successful business so long as all the other aspects of your business go smoothly. Some differentiations could be: best price, faster service, tastier food, unique décor, specialty item, etc.
- State your marketplace demographics and size.
It is helpful to understand your customers in the marketplace. Some questions to answer could be, are they millennials, do they come from a wealthy community, do they drive, will they come in frequently, are they professionals, etc. Develop a set of personas that could characterize your customer types, and then target each with an offer, or message that would best speak to them.
- Describe of your ideal customer profile.
Describe the ideal customer and expand your profile from there. How many prospective customers is there that fit this profile? Can you get a list of these people, or can you message directly to them on your website?
- Review how you will beat the competition.
Every successful business plan knows their competitors. It would be helpful to list the top few competitors that represent a broad range of competition. For example, if you are a restaurant, identify your top fast food, casual, or formal restaurants that you believe would be in competition to you. Then “get to know” them so that you can identify their weakness.
- Present your strategy to success.
If you know your product or service well, and you have a better understanding of your marketplace, competitors, and type ideal type of customer for you, you should now be able to state your strategy. Having a strategy is important because it can keep you on track, as well as to provide you with feedback if you are making progress in the right direction. A strategy often has 3 steps, such as “Start the business, Establish the Business, Grow the Business.” You may give yourself a few months or a year for each step, but this will help you stay focused on the strategy step you are to better meet expectations, toward keeping your business positive.
- Tell how you will bring your products and/or services to market.
Often called your “go-to-market” plan, you need list a series of steps on how you are going to get the attention of your marketplace. Maybe it a big opening day special, with lots of advertising, or attention in and around your store or restaurant. It could also include social marketing, complemented with a website that includes your story and differentiation. Get attention! Maybe list out your first 90 days and what you can do each day that is different. (See some tools below for more suggestions.)
- Review your operations and expenses.
Every business plan should document two important logistical business functions. First are your operations. This is a description of your key processes, including incorporation, taxes, employee management, privacy, etc. Second are your expenses. How much you are intending to spend on your business? Try to project this out at least a year, perhaps longer if you are seeking investment or a loan.
- State your revenue plan and profitability expectations.
Of course every business is in business to make money. You need a revenue plan projected during the same period as your expense plan. You could “guess” how much you may sell, or you can do a “bottoms-up” plan. The latter is usually more accurate because you start with the number of customers, average buying amount, etc., and then “run the numbers” to get totals for each month for the period you are forecast. They compare your revenue with expenses. This is your Profit & Loss (or P/L) financials.
- Present an overview of the people running the business and why they are qualified.
Lastly, describe the people owning and running the business. List their qualification, and why they will success. This is particularly helpful to investors and banks.
- Close by proposing your investment needs and offer.
Many businesses need financial capital to get started. It can be used to outfit your store, hire and pay staff initially, prepare for your go-to-market activities, and to setup the logistics of your business. You also may need to show a bank or investor how you calculated the investment request from your P/L.
There are many resources available to help you write your business plan. Here are a few to try:
- Getting ideas for Go-to-Market plans:
- Tips on writing successful business plans:
So what can you expect once your plan is finished? If you are trying to raise money, either from a bank or investor, you will likely need to give them a copy of your business plan. Here is what you can expect as you start this process.
Expect to get a lot of questions.
Questions are good. They will be about your product or service, the business differentiation, about your competition, your financials – virtually any part of your business plan is subject to questions. So take note of these questions, because if they are being asked, it means that your business plan should have an answer. It is very rare that you will find success in funding your plan with the first plan you write! Virtually every new business plan will go through an iteration process as you get questions about your plan. Update your plan with answers for every meeting that you have.
Expect that you’ll likely need multiple meetings.
Some new businesses looking for investor monies may go through dozens of investor meetings before it gets funded. One person said that it took over 70 venture capital meetings for their funding. Though venture capital funding may be harder to secure, you do need to set your expectations appropriately. Don’t give up! If you believe in your business, and you continue to iterate on your plan to address the feedback, you will likely succeed.
Yes, nothing comes for free in life. It takes hard work to succeed. Plan your life around this hard work to allocate time, as well as to balance your life with family, and other social activities that we all need. Putting this altogether is very rewarding, and there is nothing like being your own boss!
