Starting up a new business is every entrepreneur’s dream, but more than 50% of small businesses fail in their first year. So, how can you ensure that your startup will thrive?
A clear, well-defined and realistic business plan is one of the most important components for any new startup, establishing a solid foundation for enduring success.
What is a business plan?
A business plan is a documented strategy that outlines a business’s objectives and how it intends to achieve them. It is used to secure funding from investors and forecast future demands and needs of the business.
Why does your startup need a business plan?
These are the four main reasons why a business plan is crucial to the success of your startup.
1. It helps you to communicate your brand to stakeholders
Your business plan contains all the features, benefits and goals of your new company in one place. It will tell stakeholders what you’re about, what you want to achieve and how you plan to attain your objectives, which is an important part of obtaining stakeholder buy-in.
2. It allows you to take a holistic view of your business
When you’re deeply involved with getting your business off the ground, it can be hard to see it from all angles. Preparing a business plan will ensure you don’t miss any of the key elements required to ensure its success.
3. It can help you identify potential threats and opportunities
Every business faces threats and opportunities: a business plan will help you identify and examine them, and plan for all eventualities.
4. It helps you to measure your performance
A good business plan provides a detailed roadmap for achieving your goals. As your business develops, you will amend your business plan to incorporate the milestones that you have achieved so far.
What should you include in your business plan?
Business plans usually follow a standard structure, which takes the reader through everything they need to know about the business’s current position, what it hopes to achieve, and the market in which it is operating. These are the main elements that you need to include in a comprehensive business plan.
- Title and subtitle. This will make it clear that the document is a business plan and can use a short sentence to grab the reader’s attention and introduce the business.
- Executive summary. This is a very short introduction that gives a brief overview of what the business plan contains. This may be the only section that stakeholders read, so it should be clear, concise, engaging and powerful.
- Description of your company. This section provides top-line information on the company, including the business name, its core values, and a brief history.
- Why someone should invest. Business plans are usually designed to encourage someone to do something – either invest or get involved in some other way. This early section will explain to a potential investor exactly why they should be interested in your business.
- Analysis of competitors. Unless you’re offering a brand-new product in a brand-new market, there will be plenty of competitors. In this section, you should discuss where your business will fit in the market, outline potential threats from competitors and explain why your business is offering something new.
- Who is your target market? In this section, you should talk about who your ideal customer is in detail, considering the demographics, geographics and psychographics of your target market.
- Your marketing plan. Your marketing plan will set out how you plan to reach out to your ideal customers, which could be through social media, paid advertising, events, etc.
- Financial summary. This section will obviously be key for potential investors. You should include detailed information on all aspects of your finances, including expenses, debts, profits, revenue, investments, etc.
- Information about your team. This part of your business plan should introduce the talent behind your business, detailing which team member is responsible for each of your goals.
- What funding do you need? Finally, you need to make it clear what you’re asking the person reading the business plan for, whether it’s investment or other types of support or involvement.
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