Did you know that entrepreneurs who spend time devising a business plan for a startup have a higher chance of succeeding than those who don’t? There have been a number of researches that illustrate this. Recently, Harvard Business Review also studied the matter. It was found that startups that write formal business plans are 16 percent more likely to achieve their goals than those that don’t plan ahead.
This means if you wish to remain in the industry, you must begin by writing a sound business plan for your company. Now, this is easier said than done. Start. up business plans require a lot of thought. There are various factors you must consider when writing.
Here are the 9 essential factors to consider when devising a business plan for a startup.
Align your startup business plan with your business needs
Some business people make the mistake of treating their startup business plan as a generic document rather than a guide towards achieving their goals. The first thing you must ensure when writing the plan is that it must align with your business needs. Think of what your goals and objectives are as an organization and then plan how you will get there.
Begin by formulating your business purpose. Ask yourself what are you planning for? Make sure the plan you develop is management-oriented. It should act as guidance and point of reference for your organization.
Don’t treat it as an official document that is to be presented to the outside world. Instead, it should cater to your organization’s internal needs.
Make your business plan realistic
It’s very easy to go overboard when you are thinking about the future. Everything seems possible. You feel as if the sky’s the limit. Well, before writing a business plan for your startup, you must accept the realities of your situation. Know your limitations. Understand what you can and cannot achieve.
Writing a business plan that has excellent points and one which showcases a bright future won’t get you anywhere if it can’t be implemented. You won’t get points for making it verbose, perfectly formatted or thoroughly researched. Instead, a good business plan is one which can be applied and achieved.
Therefore, when writing your business plan, make sure it is realistic. Ensure you have the resources to bring the plan to life. If not, then even the best-written plans are of no use to your startup.
Understand your customers
At the core of your company, your product and your service should be your customers. At the end of the day, your goal is to satisfy your customers. They will allow you to achieve your bottom line. Before you begin jotting down your goals, it is essential that you consider your customers.
Learn about your potential customers as much as you can. Ask yourself who you are catering to? What are their demographics? Define their lifestyle. What are their interests and concerns? The better you know your client base, the better grasp you will have about what you must achieve in order to satisfy them.
Clarity about the size and segment of your market will provide you with the information you need to generate revenues and profits in the industry.
You can then write a business plan explaining how your product can compete with other similar products. You can devise the positioning, discount, promotion and pricing structure accordingly. Market research will form a backbone of it all.
Identify your main competitors
You can’t compete in the industry without having information about who you are competing with. Your business plan must identify your significant competitors. Before you jot down your goals, you must first analyze your competing businesses and see how they compare to your startup.
This includes information about their size, financial standing, product portfolio, reputation and overall performance in the industry. You can then benchmark your startup against the top performing rivals.
This way when you write your business plan, you would know what your objective must be if you wish to outperform your competitors. Moreover, once you know the competing products, you will be able to deliver something that is differentiable from others.
Remember, you need a unique selling proposition to mark your position in the industry. Gain insights about other players via a competitor’s analysis.
Don’t forget the risks
Your business plan needs to take into account all the inherent risks that you might face. After all, in the world of businesses, nothing is foolproof. Regardless of what you do, there will be some risk involved in your decision. You must identify all the upcoming threats in your strategy and then create a plan which helps in mitigating these potential risks.
Have a contingency strategy formulated in your business plan in case the associated risks are realized. Make sure your plan is adaptable and flexible enough to combat with the changing environment.
For instance, is your startup equipped to deal with sudden IT or cloud crashes? If you run an E-commerce store, what would you do if your online shop crashes? Are you prepared to deal with the worst-case scenario? Address all such questions in your business plan.
Clarity of responsibility
Chaos is the biggest enemy of success. An organization where you can’t trace down one person who is responsible for a given task is one which is destined to fail. You can’t just expect a number of employees to get the job done unless you have a single person monitoring their actions.
After all, whether it be a startup or a vast enterprise, you have various functions to look into in business. Multiple projects and tasks are being conducted at the same time. Without having one person responsible for every primary task, nothing will get done.
This is something you need to identify in your business plan. Decide on a single person to take charge of important tasks. This way the job or project will be completed on time.
Include a marketing strategy
A business plan is incomplete without a marketing strategy. The plan shouldn’t just specify that you must reach a given target in terms of sales. The plan also needs to ensure that this target is achieved. And a marketing strategy is pivotal for this.
As a startup, you can offer quality products at affordable rates. However, if you don’t market it well, people won’t know about it. Therefore, your business plan must cover the various elements of a marketing strategy. This includes customer segmentation, price, promotion, packaging and branding efforts.
Don’t limit yourself to conventional forms of marketing. We live in a time when digital platforms have allowed businesses to access their target audience in real-time. Devise an appropriate online and traditional marketing strategy.
Include financial projections and cost
Your business plan for a startup must also be financially feasible. As a new business, one of the most significant restrictions you will face is funding and cash flow. Let’s say you come up with the perfect business plan. You assess your organization’s and customers’ needs. You devise the right marketing strategies to raise awareness of the product. However, you don’t have the money to implement any of it. Would the plan be of any use? No!
Therefore, you must consider financial restraints along the way. Project the cost of labor, marketing, production, distribution, sales, etc. See if your plan is feasible for your startup.
You don’t need to include a full audit report in your business plan. Instead, a summary of the projections will be enough to illustrate how much funding will be required to kick start the plan.
Follow up and correct
The world is dynamic. Nothing is static. So, you can’t expect a static plan to be workable for a year. Things will change, and your business plan will need to change with it. Therefore, you must make sure your plan is flexible enough to be changeable when the environment changes.
While you should strive to implement it, you must also remember that the business plan is not set in stone. You must follow up, analyze the environment you are operating in and alter the business plan accordingly.
These 9 elements are the core of writing a successful business plan for a startup. While you might wish to launch your startup company quickly, take a step back and plan things out. Don’t rush.
Do your research. Come up with a sound formal business plan. This way you will know how much investment you will need along the way. You might find the task boring and tedious. However, in the long-run, it will save you from hassles and troubles that might occur otherwise.