Yes, you have a great idea. But the best of the best ideas can help you realise your goals only when you execute them in a step by step manner. One of the primary steps in going about executing your project is to prepare a business plan. It is important for you to understand the broader picture and how it will contribute your journey as a startup entrepreneur. It is mandatory to chalk out the details and workings of the business plan for the startup you have in your mind.
Once you reach this point, based on the type of your startup (let’s consider you have just one startup for purpose of ease), which means the industry domain it is in, go about deciding on the target audience, both for the initial stage and at a time when the operations mature. Here, you can also decide how far you intend to go and in what timeframe. The next step is to conduct market research that will give you reliable data that you can use to make future assumptions and plan realistically.
Writing a business plan essentially includes the three C’s – 1) having a concept of what the startup is all about 2) at the very outset, identifying who your customer or client will be 3) Knowing well how the cash flow in your startup will work in real time.
Few reasons why you need to write a business plan
Of course, not all startup have a business plan. In your case, you are edging to star out and you want to get your act right. For example, you are contemplating between startup A and startup B or you might be finding it hard to figure out if you want to start a brick and mortar business or go online from day one.
One of the major reasons why you need to have a well-written business plan is because investors look at business plans to evaluate if a startup is worth funding and to what extent. Also it will help you as an entrepreneur to:
- Plan: Writing down things will give you clarity, understand the scope of your startup and the time, money, resources you will need to spend.
- Evaluate ideas: You could have multiple ideas. A business plan will help you to sort out your thoughts and weigh in which one to bet on.
- Recruit: A business plan is an ideal way to communicate with your new hires and help build confidence during early stages of growth.
- Research: A good business plan will help you in taking up research in the right direction.
- Partnerships/ Collaborations: Having a clear vision about your startup can help you collaborate on equal terms and also helps you figure out if your business is a good fit for the collab.
- Competitions: You will be ready for the many business plan competitions that could throw open new vistas for your fledgling startup.
If you’re looking for a structured way to lay out your thoughts and ideas, and to share those ideas with people who can have a big impact on your success, a business plan is an excellent starting point.
Elements a Good Business Plan Needs to Have
All startups are unique. They might be from the same domain, sell the same product or provide the same service, still, one has to remember that there are few functions that are common irrespective of your USP or the stage of your business.
Let’s check out the elements that are applicable to all startups:
- Have a vision and goal – List out your aspirations and goals, both short-term and long-term
- Describe your startup – This includes your business idea, competitive advantage it would have over others, brief history of your company or startup, milestones and timelines
- Industry analysis – How your startup would fare in terms of the industry it belongs to, industry dynamics, growth elements or threats you foresee in terms of the industry
- Understanding the competitor – Having a clear, unbiased analysis of competitor’s strength and weakness, strategies, barriers for market penetration, making a list of avoidable issues that might crop up
- Team – List out your strengths, team’s skill-sets, organizational charts, skills required to fill the gaps
- Operation plan – Have a clear-cut task delegation structure and capital requirement at different phases
- Marketing plan – Detailed idea of packaging techniques if it is a physical product, modes of communicating with target audience and stakeholders, pricing method
- Finances – Sales forecast, profit-loss statements, projected balance sheet, break-even analysis, business structure, unit metrics
- Contingencies and anticipated risks – Here, one must make a realistic what-if analysis and provisions for the same
- Appendices – This is quite an important element that includes supplementary proofs, documents, marketing materials used, media presence, letters of support.
Next, Format a Business Plan
A business plan can be documented in multiple ways. It can be an excel sheet, word document, a presentation or just what you jot down on a piece of paper. But a widely accepted format is PowerPoint Presentation that is easy to make and access by various stakeholders.
Following are some do’s and don’ts to format a business plan:
- Use simple language that is concise yet clear
- Do away with acronyms and jargon that may not be widely known
- Make use of tables, charts and graphics for better and easy understanding
- Have a consistent font style and size so that they are readable from the back of a medium-sized room
- Make it reader-friendly by segmenting text and using separate slides for different segments
- Use bullet points, stick to phrases instead of sentences
- Take time to make the document or presentation error-free grammatically. Use proper punctuation.