Creating a successful startup business plan
Do you dream of starting your own business? To make that dream a reality, you’ll need to put together a solid business plan. A startup business plan serves as a road map for entrepreneurs, and a good one keeps you focused on important goals and helps you stay on message as you talk with potential investors, business partners, employees, and customers.
Here are a few ideas to keep in mind as you formulate a business plan for your next venture.
Know your audience
The best way to determine the length and format of your business plan is to think about your target audience. “Business plan styles range from informal, back-of-the-envelope sketches to two-page, near-term road maps to 30-page plans with illustrations and exhibits,” says business plan expert Hal Shelton.
While most startup business plans generally follow the same format, keep your audience in mind. For example, if your plan is seeking a loan from a bank or the SBA, it may be different than one written for an angel investor, says entrepreneur consultant Karen Southall Watts. Alternatively, you may find that a simple one-page document makes more sense, especially if you’re not looking for outside funding or partners. The Small Business Administration offers examples of business plans you can use.
Ask your target audience (banker, investor, teacher, potential partner) if they have a business plan example or format they prefer. If so, be sure to follow it carefully, Watts says.
Do your research
Market research should be part of your startup business strategy. Talk to potential customers to understand your niche in the marketplace, recommends Silvia Mah, founder of Hera Labs, an accelerator for female business owners. “Knowing your competition is incredibly important to your business plan as it allows you to address details of product development, future milestones, holes in the market, and it gives you an idea of your business’s growth potential.”
Define your customer as clearly as possible, Watts says. Social media is a great way to examine potential customers and competitors and get a handle on the market as a whole, she says. “Your plan must convey an understanding of who your ideal customer is and how you intend to make money. Without these elements the plan is incomplete,” Watts says.
What’s in a startup business plan?
In terms of format, “business plans start with an executive summary and end with the financial statements,” Shelton says. In between, the document should address your plans and expectations for marketing and sales, operations, staffing, and so on.
Other important topics to address include:
- Goals for sales, market share, revenue, and profit, and why they’re attainable.
- A plan for reaching those goals and data to back up your plan.
- Background information about the organization and your team — this may include board members and advisors, potential or actual employees, etc.
- Your financing needs based on facts and realistic expectations of profit.
- Finally, include your exit strategy — your plan for selling your ownership in the company. This helps you forecast your funding needs and provides clarity as you identify strategic partners and targeted exit companies, says Mah.
Forcing yourself to assemble a thorough, detailed, and well-researched business plan can help you have a much stronger grasp on the market and the strategy needed to be successful in it.
Revise your plan regularly
While a “final” version of your plan may go to your loan officer, keep in mind that a business plan for startups is a living document. “Tweaking and pivoting a business idea is a continual and iterative process,” Mah says. Talk with customers about their interactions with your business and its products or services.
Watts recommends revisiting the plan at least once every six months or more often if your business hinges on new or changing technology. Mah recommends going back to “examine your executive summary and ask if it still defines what you’re doing, how you’re doing it and for whom. If not, dig deeper. Revise and regroup and move forward with the next phase of your business.”
Your business plan and recruiting
A good startup business plan can help you determine your hiring needs, and smart hiring can help you achieve your business goals. Whether you’re recruiting your first employee or you need to add to your existing team, sign up for Monster Hiring Solutions where you’ll receive expert recruiting advice and the latest hiring trends.