The difference between a great idea and a great idea accompanied with a business plan is the difference between success and failure. All too often, talented entrepreneurs launch their enterprises without having a startup business plan.
It is especially important to have a comprehensive and well-thought-out business plan to be positioned in a highly competitive industry. By putting your thoughts on paper, it will help you significantly to stay organized and focused.
What's more, you have a much better chance of raising capital for your startup company if you have a business plan to show. In fact, you will probably receive little or no funding from banks or investors if you don't have a business plan.
4 Reasons You Need a Startup Business Plan
1. Gain Understanding of Your Target Market
An essential component of your startup business plan is market analysis. As you delve into your market analysis, you will define your target market and competitors as well as identify the correct industry for your type of startup business. In the course of writing your business plan, you will become intimately acquainted with the potential customers you will target in your advertising and marketing. You will record in your business plan market trends or factors having to do with your competitors and note how this may affect your business. You should examine these market trends and the nuances of your competitors so you can effectively reach out to your target market.
2. Gain Greater Clarity
When you have a business plan, you enjoy the advantage of being thoroughly knowledgeable about your business and your business objective. In your business plan, you need to define your goals.
Establishing specific targets for your sales volumes or profit margins will clarify your position in the marketplace. You will also be able to effectively gauge the success of your sales and marketing campaigns.
3. Focus on High ROI Strategies
Any funding you have is precious, and that is why you need to ensure every initiative and purchase of infrastructure comes with a cost-benefit analysis. It is important to evaluate the return on investment, or ROI, of everything that involves money expenditures.
With a clear startup business plan in place, the strategies with the maximum ROI become crystal clear. You will know how to prioritize your activities and spend your time and money on aspects of your business that will bring the highest returns.
4. Capture Attention of More Investors
It can be daunting and challenging to gain the attention and capture the interest of venture capitalists and angel investors, let alone have them decide to give you funding for your new startup business.
All investors care about is earning a positive return on their investment. You will have a major advantage when you can provide your potential investor with a business plan. It enables you to create an identity that is designed to succeed. Your business becomes a more attractive prospect in the eyes of your investors with a business plan.
7 Steps to Creating a Startup Business Plan
1. Clarify Your Vision & Mission Statements
One of the activities you will be immersed in as you set out to write your startup business plan is fully understanding your company and knowing its reason for existence. One way you do so is by crafting a vision statement and then a mission statement that outlines how your business will execute your vision.
Your vision, mission, and values will help you define the purpose of your startup, and you can develop your unique selling proposition from that information. Knowing the core essence of your company will enable you to determine how you will make money. You should also be able to forecast approximately how fast your business will grow.
2. Write Your Startup Business Summary
You may be able to boil down your business summary to a short paragraph or even one sentence. You have the opportunity to create with your summary the ideal elevator pitch that captures the attention of potential financial backers or partners.
Your company summary should serve as the perfect lead-in to your more detailed business plan. It is important that this summary distills, in an appealing manner, the essence of your business or why it exists in the marketplace.
3. Identify Startup Partnerships and Resources
Perhaps the most vital and precious aspect of your startup business is capital. It is what you need most in order to successfully launch and then advance your business in the marketplace. Securing the necessary capital can happen in a few different ways.
As you think about sources of funding for your startup company, consider grants for startups, startup loans, startup accelerators, and startup investors.
4. Identify Your Startup's Target Market
As you launch your startup company, you will discover that your products or services won't appeal to everyone amidst the clatter for customers. So, you need to clearly define and know how to pursue the ideal target market for your startup business products or services.
The way to carry out the process of finding your target market is to conduct market research. This may be the most important task associated with preparing to launch your startup company. Base your target market on the following categories:
5. Analyze Your Competitors
As you write your startup business plan, consider the sober reality that no one knows about your business or your products or services. And you won't be successful if you simply mimic your competitors.
You need to determine your brand differentiation points, essentially proclaiming to the world how you stand out from the competition. You want to clearly identify how you will separate your startup from other businesses that look like you. You might choose to focus on price and quality in your differentiation strategy. Advertise that you have superior quality products or lower-priced services, for example.
After you figure out who your competitors are, it will be much easier to project to consumers the selling points that make your startup unique.
6. Establish a Workable Budget
When you put together your business plan, you will want to make sure your numbers make sense and align according to your startup's vision and mission statements. You will need to determine how much money your startup will need to launch and stay operational. Too many startups fail because they don't properly gauge and forecast their expenditures.
You constantly need to make sure your revenue exceeds expenditures as you gradually build your profit margin. Your startup will be on track for success only by having a workable and flexible budget in place by launch time.
7. Identify Your Startup's Goals and Financial Projections
Staying on the financial front, while you won't immediately have income statements, balance sheets, or cash flow reports, you can still make fiscal projections. You will want to base these projections on the size of your target market that you believe you can exploit.
The financial projections should address your startup business's first three to five years. They need to be achievable. It is helpful to consider that your startup may not be profitable for the first year or two. Initially, lack of a profit is nothing to be concerned about as long as you plan and budget accordingly.
Rent Our Private Offices at Burbity Workspaces
At Burbity Workspaces, you can enjoy the privacy of your own furnished office that includes a lockable office door, 24/7 access, and mail service.
We offer offices, desks, and team suites so your business can thrive and reach its full potential. Take advantage of our convenient services and resources with our Spokane workspaces that also offer a community to support and help you succeed.
Our professional working spaces will help enable you to optimally perform your job functions and have all the necessary materials and resources at your disposal.