Starting a new business doesn’t happen overnight and it requires the completion of many actions before you actually begin doing business. Things like selecting a product or service, deciding on a legal structure for your business, creating a memorable name for your company and more. Before you dive into all these things, you need to write your start-up business plan.
Why do you need a business plan?
Business plans are often required when seeking funding from banks or Angel investors. Even if you aren’t pursuing outside financial support, a business plan is just as critical to the success of your start-up. You wouldn’t start construction on a new house without first obtaining a blueprint from an architect! Your business plan acts as a blueprint for your business and keeps you on track. It:
Allows you to test the feasibility of your business idea by forcing you to think through all aspects of business and its execution.
Highlights potential problems and challenges, helping you be prepared for almost anything.
Aids in the prioritisation of goals and objectives.
Set yourself up for success by writing a business plan. Not sure how to write one? Here’s how.
There are seven steps to take when writing your start-up business plan.
An executive summary
A company description
A description of your products or services
An explanation of your management and operating structure
Your marketing and sales strategy
1. Executive summary
This section is designed to provide readers with an overview of the information included in your business plan. It is often easier to create this section after you’ve completed the other steps, enabling you to highlight the key information from each part of the plan. This portion is typically about a page long and includes a paragraph or two about each of the other elements discussed in this document.
2. Company description
Include detailed information about your company here. Discuss the problems your business solves. Don’t skimp on specifics such as the types of individuals, organizations or other businesses you intend to serve. Here is where you should state your company’s mission. Discuss which business structure you will have such as sole proprietor, general partnership, professional partnership or limited partnership. And be sure to include information about the location(s) of your business as well.
3. Market research
It’s critical to complete an in-depth analysis of market conditions. This information will reveal how successful your business might be. The better you understand your target market, the more likely your company will thrive.
Do plenty of research, ask experts, read industry news, financial reports and resources during this step. You want to confirm there’s a viable market for the product or service you plan to offer. Find out if your ideal potential customer lives in a particular geographic area. And make sure that these prospects will be able to afford your product or service.
During this step, you also want to complete competitive research. Who will your competitors be? Which ones are most successful? What are they doing and why does it work? And, what how can you do it better? Plus, gather information about the competitor’s offering so you’re able to determine how yours is different. Once you’ve completed your market research, summarize your findings in this section of your business plan.
4. Description of products or services
Here you should share details about what you’re selling. Include information like the features and how customers will benefit from each as well as the problems you’ll help them solve. Continue by explaining how your offering answers this need. Finish by discussing the competitive landscape by including how other companies are solving this same problem and what makes your solution different than the others?
5. Management and operational structure
This section explains how your business will function and delineates the logistics of your organization. Include details around which departments will be responsible for what and which position or title is in charge of each of them.
If you’ve already selected some or all of the people who will be in these positions, this is the place to discuss this information. Review their background and why they’ve been selected to fulfil their company function as well as how their experience and education will contribute to the success of the company as a whole. Depending on the designated size and structure of your business, it’s appropriate to include an organizational chart in this section of your business plan as well.
6. Marketing and sales strategies
There are many ways to approach marketing and sales, but you need to start somewhere. Begin by explaining how you plan to attract and retain customers. A description of your expected sales process should also be included here. This portion of your business plan should be one to two pages long.
Without a clearly-defined plan to attract, win and retain business, your company may not grow and thrive. That’s why this information is critically important. One aspect of this involves deciding which channels will work best when promoting your product or service as well as specifying your use of resellers, distributors or sales reps.
Other things to consider when creating a marketing strategy include budget, types of advertisements to use, the balance between paid and unpaid promotions and other marketing elements to be used. These might include social media, content marketing and paid search. Cover as many details as you possibly can. Clarity is your ally and improves your chances of success.
On the sales side share details like how you plan to grow your sales team over time, the exact steps in your sales process, projected average price per sale and more.
Financial details to incorporate in your business plan include information such as start-up costs, financial projections and funding request if pitching an investor.
Start-up costs are things like office space lease, equipment to purchase and other resources needed to launch your business along with conservative estimates. You definitely don’t want to run out of money!
In this section you need to go a step further by detailing financial projections as a justification of your costs. This, and the value of your start-up, are particularly important when requesting funding. Plus, if you’re applying Lean methodology to your start-up you should mention that here as well.
Remember that your business plan is never done. It is a living breathing document that changes and evolves along with your company. Be sure to update it on a regular basis so that it’s always current. This will allow it to be the guide or roadmap that it was designed to be.
Now, it’s time for you to get started on your first business plan. It’s one of the most important processes you’ll go through as you prepare to launch your new business.
When you’re ready to grow your business and you’re uncertain about how to overcome the hurdles you’re encountering, a business incubator may be what you need. Learn more about business incubators and how you can benefit from them.
Developing a product and launching a start-up involves many risks. Reduce these risks by applying Lean methodology to your start-up: it involves working smarter, not harder, as you determine if your product or service is viable to support a sustainable business.