Becoming a successful startup is not an easy job. On the contrary, it’s a difficult road filled with a lot of challenges, trials and errors. In the words of Elon Musk, a member of the PayPal mafia, billionaire and founder of Tesla and SpaceX:
“When something is important enough, you do it even if the odds are not in your favour.”
Having an excellent business plan is how you can tip the odds in your favour. Going through each of the phases of the plan can give you a chance to set your priorities and, at the same time, evaluate the process.
Putting your thoughts on paper is a fantastic chance for you to get a clearer picture of what you want to accomplish and the best way to do that.
The ultimate startup business plan needs to have the following sections:
- Executive summary
- Company description
- Market research
- Products and services
- Marketing plan
- Operational plan
- Operational structure
- Management plan
- Organization plan
- Startup expenses
- Financial plan
- Sales strategy
What you need to keep in mind is that this is a general overview, which includes almost all categories involved in the planning. However, you need to individualise everything according to your own needs.
For example, if you’re launching a new product on the market, it’s crucial for you to do market research, but if you’re upgrading an already existing service, then you need to do a competitor analysis.
Important Notes for the Business Plan
Understanding the process increases your chances for success and, as a startup, you have a responsibility to work out the details more carefully due to the obligations toward the investors.
One of the best approaches for developing a good business plan is to see what your competitors in the industry are doing. You need to identify the ones that already achieved the end goal, and then research the methods they used to get there.
Duplicating their business model, or at least borrowing some parts of it, will help you along the way because you will be working with an established and functioning strategy.
This will also help you find your unique selling point, which will differentiate you from your rivals and make you a brand on the market.
While you’re creating a business plan, you can additionally prepare a SWOT analysis, which will show you the potential risks and weaknesses of your company. Even though it might look that this is not an essential step at the beginning, it might save you many headaches down the line.
Profit and customers (the target market) are the last and most crucial chain of the process. You need to develop a strong marketing strategy that will be precisely directed at the target audience. Moreover, you need to find the channels and the techniques that will promote your startup to the right people and in the proper, most innovative way. Analysing consumer behaviour and studying the data available on the subject is going to help you form the price of the product/service.
Now we can talk numbers. A high-quality business plan:
- Increases your chances of success by 16 percent
- Helps you in the process of raising capital for your startup company (bank loans and investors)
- Higher growth rates down the line
In a recent study published in the Harvard Business Review, the Panel Study of Entrepreneurial Dynamics II found that:
- High-growth-oriented startup entrepreneurs are 7 percent more likely to plan.
- Entrepreneurs seeking external finance are 19 percent more likely to commit their vision to paper.
The main conclusion is that if you want to increase your chances of success, you should write a business plan!