How To Write A Business Plan For Your Startup
By Darrell Jones
OK, you have the killer idea for a business. And you have the unbridled passion. Now all you need to get the wheels in full motion is a business plan. You’ll use this business plan to keep you on track, share your vision and get others on board. But where do you to start?
Whether you’re going to write a business plan yourself, or looking to hire business plan experts who can help you draft the plan, here are some things to keep in mind.
1. Keep it simple (especially if you’re in the early stages).
If you’re just getting started, there’s no need to get overly elaborate with your initial business plan. The simple fact is, you’ll probably reiterate many times on this business plan as you move from the “idea” stage to a full-on business.
Later down the road when you’re looking for investors, you can always add more complexity and more sophisticated accounting. This first step is simply an opportunity keep your eye on overall goals. It’s the base you’ll use, which you’ll revise as you move down the road to success and see potholes along the way that you might not have accounted for.
2. Begin with a one-line Mission Statement or Vision Statement.
This is essentially your “elevator pitch,” boiling down your startup’s story to its essence. Your Mission Statement or Vision Statement should speak to why your business exists. It will quickly answer who your customers are and how they will be better-off thanks to your startup. Here is a hypothetical example of a Mission Statement:
Become the state of California’s number one farm-to-table iPhone mobile application, allowing shoppers to quickly and easily locate farmers markets nearby which offer fresh organic produce.
You can also, if warranted, replace you Mission Statement with a Vision Statement (which offers a more philanthropic view of your startup). Here is an example:
Our vision is to help health-conscious shoppers in California to effortlessly find nearby farmers markets which offer fresh organic produce.
3. Identify a problem in the market you’re entering.
Next explain the major pain points your customers are feeling. Continuing the hypothetical scenario above, points to make might be: 1. Major “chain” grocery stores have limited options for people who want to eat healthy. 2. No centralized location for details on local farmer’s markets. 3. No ability to contact and interact with individual vendors at farmers markets. 4. No way to pay farmers market vendors with a credit card.
4. Summarize your solution to the problems.
Be specific. Resuming the farmer’s market theme for one last time, you might explain:
Our mobile application for iPhone users will give users real-time access to detailed information on farmer’s markets throughout California. Users can see dates and times, map their direction to markets and vendor’s booths, communicate with vendors through texts and even pay for purchases using a credit card stored on our secure site.
5. Define your customer and market size.
Offer a brief description of the target market you’re going after. This includes not only physical attributes such as gender and age, but a psychological snapshot as well (why they’re ready for your startup). Naturally, include numbers too. If there are 38 million people in California, determine how many would realistically use your farmer’s market finding app.
6. Outline your competition.
Discuss who is now in the space you hope to occupy, and what are their strengths and weaknesses. You may want to mention barriers to entering the space for others, such as their not wanting to lose focus on current customers.
7. Detail your product or service.
Now it’s time to get more precise. You’ve already written about your offering at a higher level as you summarized your solution to the problem, but now talk specifics. Include intellectual property you’ll bring to the table, features, functionality and such.
8. Give a framework of your business model.
This can be difficult for a startup just getting started to estimate, but it’s a necessary step. This especially true when you’re looking for investors. Take a stab at the financial now and you can revise and update as you get closer to funding opportunities. Things to include are:
1. Price of your product or service
2. Revenue streams
3. Distribution channels
4. Customer relationships
5. Partner networks
6. Franchise opportunities
7. Whatever helps explain how you’ll make money…
9. Show how your team will be built.
Outline the skills you have, mentioning your core competencies and major strengths. Do the same for other key team members on board.
Also provide details on how your product or service will come to fruition in the early stages. Will you be hiring full-time staffers in some position, or will you hire online freelance teams to tackle projects. For more details on this decision, view a related article on Which Jobs are Right For Freelancers.
With this section complete, your business plan will lead in nicely to the next section: Your Financials.
10. Describe your Financials.
Again, this section will more than likely be altered over time, but get some numbers on paper to define your current economic situation. Here are some information to include:
1. Profit & Loss Statement
This outlines you budget over the next year. Include hard costs, such as rent and salaries. Then show the money you have coming in. Hopefully the two reveal that you’ll be able to stay well financed in the coming months.
2. Cash flow.
This defines where your income is coming. If you’ll have sales coming in right away, great. Document the projected sales. If not, outline your other sources of income – from your own personal investments in the company to loans from others or however you’ll be generating income.
That’s it for now. Remember, make it short and sweet with just enough information to explain your vision and keep everyone marching in the same direction. But don’t make it so detailed that in three months when you do a 180° you’ll kick yourself for putting so much time and effort in the business plan.
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