Crafting a business plan is hard and feels fruitless when most business leaders and bank managers aren’t even reading it fully.
Are business plans still necessary then?
What are the steps and sections I need to follow?
I’ve heard there are different types of business plans. Which do I need?
What‘s the best business plan format to attract investors to fund my startup?
I got you.
This is your no-nonsense guide to writing your startup business plan.
What is a startup business plan?
A full startup business plan goes beyond a simple elevator pitch. This (still) necessary document is a brief outline of your master plan for success as a founder.
Your business plan shows stakeholders (that you will eventually be talking to) that you are organized, researched, and ready to bring your idea to life.
Compared to other business models, a startup company runs the biggest risk of not having a business plan.
Startups are highly risky. For you, and for those who partner, fund, and lend to you.
Poor planning leads to poor execution and a lot of wasted work (not to mention failure).
In the early startup process, you absolutely need a solid business plan to attract the eye of early investors, apply for loans and gain approval from lenders (as applicable based on your funding needs), and get other approvals for licensing and partnerships down the line.
Your business plan helps you run your business. It is your early roadmap to chart your course in terms of decision-making. Your “yes” and “no” at any decision-making “crossroads” should be in line with the vision, mission, and strategies you thoughtfully crafted in your business plan.
Your business plan even goes so far as to be a foundational document for planning out the hiring of your first employees and contractors.
Essentially, your business plan is a master document to sell your vision and purpose to the rest of the world.
What are the 3 main purposes of a business plan?
There are three specific purposes of your business plan. These are key to note before you write a single word.
1. Determine your strategy for growth.
2. Determine the amount you need to fundraise and your timeline.
3. Position yourself to earn angel and venture capital (VC) funding.
What are the four types of business plans?
Traditional Business Plan: This can be up to 40-pages. This is the default business plan for providing a full overview to investors, banks, and key stakeholders with all required documentation. (I include all the sections required and 10 steps to writing this below.)
Business Model Canvas: This is a one-page visual representation of the way you form customer relationships, market your business and actually make money. This plan is ideal for sharing with company leadership and your management team to easily get everyone on the same page. This also allows you to easily view and pinpoint main ideas.
Business Pitch: While this sounds like the infamous Silicon Valley presentation, this is simply about forming an elevator pitch. You note your problem, solution, business model, target market, team’s background, and call to action. This all happens in 60 seconds or less. This is key to have hammered out before your full, in-depth business plan construction. With this, you can network and share your idea early on.
One-Page Business Plan: This is a lean startup business plan approach. A one-pager provides a few concise sentences to provide insight into the following areas: problem, solutions, business model, target customer, strategy for marketing, competitive advantage, and monthly projections and funding requirements. This format works best to create your business plan if you don’t need investments or loans immediately.
What do I need to include in a startup business plan?
For a business plan that effectively fulfills the needs of investors in early fundraising, there are several key components that need to be included. These components are formatted as the ‘traditional business plan’.
There are typically seven parts to a startup business plan:
- Executive Summary
- Company Description
- Market Analysis
- Organization and Management
- Strategy and Implementation
- Financial Plan and Projections
What are the 10 steps to writing a business plan?
1. Create your cover page, including your NDA (you need to protect your intellectual property here), and include a table of contents.
2. Write your company summary. This will include your location, ownership details, key differentiator (what makes you competitive), and your company history.
3. Detail your products and services. Connect this section into your business model and detail how you actually make money from your signature offer(s). You should aim to give insight into your future features or products.
4. Layout your market and industry analysis. This will dig deeper into the data that notes your ideal customers (or current customers). Second, dive into your industry overview and potential for growth, and the competitors you face.
5. Your management and organization summary is critical. Oftentimes, this is the most important section to investors. In this section, you share your ownership details and why you will move the needle to make a successful business. If you have co-founders, business partners, or early hires, note their highly relevant experience and accomplishments.
6. Note your strategy and implementation plan here. This is where you will get detailed on your marketing strategy. You’ll break down your target customer segments, your marketing budget, your SWOT analysis, and customer experience so far.
7. Include the graphs, charts, and information that shows your financial projections and plan. This will include a profit and loss statement and projected cash flow for the first few years of business.
8. Attach an appendix to include other necessary documents. This can include key IP documents such as trademarks, patents, and copyrights. You can also include organizational charts, resumes, job descriptions, research and case studies, marketing materials, and/or images of the product or service.
9. You’ll now write your executive summary. (Notice from the section layout above that this part is at the forefront of your business plan, but needs to be done last.) This section is pulling together the details of your entire business plan within 2 pages.
10. Review your business plan with other team leaders, cofounders, and advisors. Your business plan is the future of your company; Be sure to get extra sets of trusted eyes on your plan for constructive feedback (not just head nodding).
What’s the best business plan template for startups?
As mentioned above, there are four distinct business plan types. (You can go read that section to get an understanding of each.)
Depending on your startup needs, there are going to be specific templates that work best for you.
To meet the requirements and details necessary for funding and stakeholders, the traditional business plan format is suggested.
Where can I find a free business plan template?
I got you.
Here are several incredible business plan templates and examples. These are based on the four major formats for your startup needs:
Final Tips for Your Business Plan
With the full overview, I want to leave you with some additional tips to help you along the way.
- Make time to revisit your business every quarter. Your business evolves and changes. As you innovate, your business plan will need edits to reflect your growth and pivots.
- Don’t overcomplicate. Focus on including the points that are most necessary. Omit filler language.
- Be diligent and realistic in goals. First, you need goals (otherwise you’re at risk of sounding fluffy and unfocused). Second, your goals need to be attainable.
- Get clear on your weaknesses. These aspects become the friction to gaining traction and success. How do you offset your weaknesses with someone else’s strengths? Can you enroll those key people onto your team to help you? How can you work this into your business plan?
- Understand your plan is not going to be perfect. Focus on the substance, not the form. Clearly communicate on your unique value proposition as a company. What opportunity is there for your solution to succeed? How are you are powerfully situated to solve a problem (not seek them out)?
The rest will follow, my founder friend. If you have questions feel free to contact me.