Do you have any plans to launch a startup?
Have you given a thought to how to write a business plan for a startup?
I know it’s nerve-wracking but many business advisors, experienced entrepreneurs, and investors agree that you should develop a business plan.
This helps to keep you on track during the first stages of development.
But in the present scenario, in the face of COVID-19 and beyond, even the most stable business plans will need tweaking.
From what I have observed is many small businesses have shut permanently since the pandemic hit earlier in 2020
If you’re among the many entrepreneurs looking to restart, it can be difficult to write a business plan when so many things are still unpredictable.
The great news is this article will explain how to write a business plan for a startup – from the outlines, the important sections, and a brief description of each part to help you stay organized.
So, let’s get started.
What is a Business Plan?
Well, a business plan is a written explanation of your business’s future that outlines a plan for your short-term and long-term goals.
Firstly, your business plan should convey that your idea makes sense as your money, time, and effort are involved.
But, before making any major change to your business plan, take a moment to let things normalize, and spend time on your research.
As per the recent study published by McKinsey, no event since World War II has caused an economic downturn of this magnitude.
So, three themes emerged as successful solutions for this:
- Prioritize people.
- Understand existing trends.
- Create adaptive, long-term solutions.
Primarily these recommendations are aimed at federal government policies but these are also applicable to your business.
So, use these guidelines while writing or updating your business plan during the present scenario.
How to Write a Business Plan for a startup
You have to demonstrate a detailed, objective roadmap that you can follow while developing your business.
Here are seven basic steps that you should include:
1. Define Your Objectives and Mission
This is the first step on how to write a business plan for a startup. In the early stages of COVID-19, it was tempting to focus on firefighting strategies.
However, you need to identify both the mission and objectives for the long-term plays for your brand to stay nimble in a dying market.
Clearly define the short-term and long-term challenges you are facing and how they affect your product and your team and design your plan accordingly.
Also, consider spending twice as much time researching.
This will help to determine your mission because investors want to make sure that your business will turn into a profit.
Below are some questions. Prepare yourself to answer in your business plan.
- How will you bring change with your invention and work?
- How your company’s product or service is different from all the rest in the market?
- What do you need to run your business?
- Who will benefit from your business?
- What are the tradeoffs and leverages you want to give your clients, and under which circumstances and implications?
- How good are you at solving problems for your clients?
2. Focus On Analyzing Market
I suggest that every business plan should include a detailed market analysis.
Pre-pandemic, this was pretty straightforward, but now it’s a little more complicated.
Have you researched the type of people who will buy your product or service?
This is the first question that investors are going to ask about your business plan.
Therefore, do proper research, ask professionals, read industry insights, financial reports, and news updates, so that you can have the best possible information to decide.
Below are some of the things that you need to add to your market analysis task.
- Is the market feasible for the product or service you want to sell?
- Does your target customer reside in a certain type of place?
- Are you filtering your reach demographically, geographically, or in any other way?
- Will only wealthy people be able to afford it?
Mention facts and figures from your incorporated innovations and competitors to showcase your adaptability during a crisis.
3. Explain Financial Forecast
The important thing is your business plan is not complete without the financial forecast.
Potential investors prefer accurate predictions and forecasts for your business.
Do your research and present facts with the current state of the economy.
Always include financial models for future projections.
Moreover, have you ever asked yourself, how much capital do I need to start a company?
Well, you should be conservative while estimating startup costs because everything will cost more than you just expect.
Summarize each statement with projected financial statements, income statements, monthly cash flow, balance sheets, and annual cash flow statements in your business plan.
4. Map the Competition
Focus on distinguishing your venture from the competition, and persuading the readers that your company will be able to compete successfully.
You can’t become a successful entrepreneur if you’re planning to launch a competitor’s idea.
But how will you separate yourself from the crowd?
So, the key to this is price and quality. If your prices are relatively lower, then that can be your niche in the industry. If the quality is superior, then also you are good to go.
Competitive analysis should be conducted simultaneously by identifying your target audience.
For instance, let’s say you’re planning to start a clothing line. Your competitors will depend on your target market.
If you’re planning to sell t-shirts for $50, you won’t be competing with designer brands selling jeans for $550.
Or you can set your price differentiation based on your target market. From there, you will be able to identify your competitors.
5. Create a Portfolio of Products and Services Offered
In my opinion, you need to define your products and services portfolio to understand the needs of your potential clients.
Once you identify them, think about why they would prefer to buy your products or services.
So, the company’s value proposition is what distinguishes it from competitors in the business world.
Walden watches came into existence during the Second World War.
Oscar Walden who was owner and operator of the New York-based Walden International brand saw value in mechanical watches at that time when many others ignored it.
Expand upon your products and services, their features and benefits, competitive advantages, and if marketing a product, how and where your products will be produced.
6. Analyze and Explain Operational Challenges
Plan well on how your business and its workforce will withstand the cyclical nature of economic upheaval.
The operational plan will depict the logistics of the organization such as the tasks assigned to every section, required capital, several other responsibilities of the management, the expense incurred related to the operations of the business.
Prepare for the immediate adjustments or replacements and analyze the impact of the virus on your employees.
Outline your plan properly, bring in the required changes and opportunities that your business landscape offers.
7. Identify and Evaluate Marketing and Sales Channels
In the situation of crises, figure out the best marketing and sales channels.
One to two pages in your business plan should describe your marketing plan along with the required sales channel strategy.
The relative difference between choosing between resellers, distributors, or representatives can change your operational plans.
Do check them regularly, so you can be well prepared if the business falls in trouble.
Always include the following in your business plan, under the marketing division:
- How large will your promotional budget be?
- What kind of promotions and advertisements are you going to use?
- How will you create a logo and use it on a letterhead, cards, websites, or any other medium?
- How often will you use paid promotions?
- What other non-paid advertisements will you use? For instance, will you use professional networks or social media?
Launching a startup company is exciting.
If you want to achieve success, you need to take a step forward and plan things accordingly.
Read, review, and revise. Make sure your business plan is 100% perfect.
In such a crucial time, crises bring collaboration, so communicate with other ventures sharing insights, development and learning.
This will help your new business to cross every mile in the post-pandemic world.
Claire Mark is an investment and strategic planning consultant at Alcor, a global investment bank. She’s best known for her insightful blogs on business growth, startups, small businesses, and investments. Claire also has a good network in the Finance industry, especially the investors’ community. Apart from her work, she loves to bake and go out for gadget-free nature walks.