38% of startups fail because they burn through their cash. A smart way to avoid this is to invest time in a solid startup business plan, which outlines a startup’s goals, strategies, and financial projections.
It helps founders structure ideas, secure funding, recruit talent, and keep the business on track. While a business plan is crucial in obtaining outside financing, it is also helpful in preparing the startup for any future challenges.
Yet, many new founders struggle with penning a comprehensive plan. Therefore, this article provides a simple and easy-to-follow business plan template that most startups can use as a basic framework.
The Founder’s Guide to Creating a Rock-Solid Startup Business Plan
An effective startup business plan that covers all the essential elements has 7 segments:
- Summary
- Description of the company
- Market analysis
- Description of product/service
- Marketing plan
- Financial projections
- Appendices
1. Executive Summary: A Brief Overview of Goals and Financial Projections
The executive summary gives a gist of your startup and is the first thing in your business plan. However, it should be written last after you’ve completed the rest of the plan. It should not exceed two pages and have easy language so someone unfamiliar with the startup’s niche can understand it. It includes, in one or two sentences each:
- Your business idea.
- Your target market.
- What problem does your product or service solve for the target audience?
- Company goals.
- Strategies, including your competition and your differentiating factor.
- Financial projections. If the plan is to secure funding, list how much money is needed, how it will be used, and how it will help make the startup profitable.
2. Company Description: What Sets Your Business Apart from the Competition
The company description provides a fundamental overview of the startup, including who you are, what you do, your target market, and what sets you apart from your competitors. This section of the startup business plan must also have information about the following:
- Mission, vision, and goals.
- The legal structure of the business.
- Your business model.
- Background of the core management team, including their skills, qualifications, and competitive advantage.
3. Market Analysis: Understanding the Industry and Target Market
This part provides a sketch of the industry and market in which the startup operates. Conduct thorough market research and SWOT analysis before you write this down, or it can lead to unrealistic projections and strategies. Include the following:
- The total size and projected growth of the industry.
- Your target market: who are they, and what’s their size?
- Trends in both the industry and your market.
- What are the barriers to entry?
- Competitor analysis: what other products or services does the target group use to solve problems?
4. Products and Services: Detailed Description of What Your Startup Offers
In this part of the startup business plan, give an expansive and detailed description of the product or service and how it benefits customers. Besides explaining the product or service, including information on:
- Special benefits and unique features
- Limits and liabilities
- The production and delivery line.
- Plans for intellectual property like a patent or copyright filing.
- How will it be priced?
5. Marketing and Sales: A Plan for Acquiring Customers
In this section of the startup business plan, offer an itemised plan for reaching and acquiring customers. Elaborate on the 4 Ps: Product, Price, Promotion and Place by incorporating your:
- Pricing and sales strategy. For example, a SaaS product can offer a free trial, "freemium," or paid plans.
- Positioning and niche of the product.
- Marketing and promotional strategies: includes associated expenses.
- Distribution channel assessment: where will you sell the product/service?
6. Financial Projections: Projected Income and Expenses, Cash Flow, and Raising Capital
The last portion of the startup business plan demonstrates the company’s ability to generate revenue and achieve profitability. Investors will pore through this in detail, so include a conservative and realistic estimate of:
- Cash-flow statements.
- Projected income and expenses.
- How do you plan to raise and use capital?
7. Appendix: Supporting Materials for the Business Plan
The business plan's appendix has additional information to support the rest of the document and paints a fuller picture. Although optional, it can have the product's technical specification, market research studies, resume of the core team, patent documents, or product samples.
Insider Tips on Writing a Startup Business Plan
- It should not be too complex or lengthy. Keep it concise instead of providing too much information.
- Forgo jargon or technical language; it can deter potential partners and investors. Use approachable language.
- Don’t include sweeping statements with no data to back up the claim. Investors and partners look for realistic financial estimates and fact-supported and research-driven assumptions.
- Keep refining the business plan. Update it regularly, revise it to match market changes, and tailor the details and language for the intended audience.
- Get someone else to proofread it to catch errors and inaccuracies.
The Takeaway
Launching a startup means learning a plethora of skills. It’s a founder fact, and writing a perfect business plan is one of them. This vital step provides a proven framework for founders to start from and communicates the vision and goals to potential investors, lenders, or partners.
Scalix is an integrated founders' platform by LetsVenture where we partner with you in your journey from startup to scale, offering business-building blocks like capital, community and convenience. Our personalised inputs can make you prepare your first business plan quickly and efficiently while ensuring it is impactful.
Reach out to us to know more!
