How to Build the Winning Business Plan for Your Startup?
Should you really give a damn about the business plan when starting a business?
This is precisely the question you should be asking yourself when starting a business and here’s why…
After 22 years of active participation in the global business arena and the business degree to go along with it, if you ask me today what does the winning business plan look like and how to build one for your startup, my answer might surprise you…so be prepared.
I take it, you’re probably reading this because you’re planning to start a business or may have already done so and need to figure out what to do next. Whatever the case may be, by the time you are done reading this blog post, you’ll definitely know everything you need to know about the business plan and how to go about building the business plan that’s right for your business.
I remember just how worked up I was about building the ‘professional business plan’ back in 2000 when I was preparing to launch my first online business…I was completely consumed by it, it was my main obsession.
Although by that time I’ve had few years of professional experience and business degree, I’ve never before written the business plan, so I was naturally overwhelmed and super stressed, if I’m completely honest.
Long story short, I’ve put in a great deal of research and hard work to get it done and I can tell you, I’ve built an exceptional business plan, which in hindsight was an overkill but hey, I didn’t know any better.
Fast forward 18 years and today my business plans look completely different from that one…still exceptional but much more relevant, sensible and optimal…built for purpose, each time.
As part of my entrepreneur coaching and tutoring program, I write quite a bit of business plans on annual basis in tandem with aspiring entrepreneurs and startup founders. All of my business plans follow the same order which is as follows: why, who, what, how, where and when.
Yes, you read it right – that’s all there is to it.
If you are a startup founder or an aspiring entrepreneur who plans to start a business, you better be able to answer the foregoing questions and do so at length, with much detail otherwise, do yourself a favor and don’t bother starting a business, for you’ll fail and no ‘business consultant’ or professional business plan will help you…you’re doomed.
Now, let’s explore each question in more detail…
To me, this is the most important question that you as an entrepreneur or a startup founder must ask yourself, for the answer to this question will be the first indication as to whether you’re likely to succeed or fall flat on your face.
Make no mistake, starting and running a business is extremely difficult, challenging and lonely endeavor. Furthermore, when you first start your business, the statistics and odds are against you so be mentally prepared. It’s no secret that businesses fail for many reasons but the most common one is the absence of big and meaningful why.
You see when the going gets tough and tough it’ll get more often than you think, the only thing that can possibly give you the strength or the staying power you’ll need to weather the storm and get through it is your big and meaningful why. This should ideally be something close to your heart…something you’re extremely passionate about and are willing to do whatever it takes to have or do.
Clearly, this one is no brainer for every business that every existed did so because of its clients and ability to fulfill their needs, wants and desires. Your business is no different, you’ve got to have or rather identify your target audience and clearly define them. Conduct a thorough research and become intimately familiar with their pains, needs, wants and desires. This is imperative so don’t slack off, instead put your best foot forward.
To help you with this important exercise, I strongly urge you to employ the buyer personas which in essence means that you’ll create fictitious characters (representatives of your target audience) which you’ll then describe in detail and at length e.g. demographics, behaviors, drivers, goals etc.
Why is this so important?
Because the more intimate your understanding of your target audience, the better prepared you’ll be to attract, convert, nurture and retain your target audience, which brings us to the next question…
Now that you have your big why and know who your target audience are, you must have or build products/services which your target audience will perceived as extremely valuable and worth having or consuming. In other words, you or your business must be able to address your target audience pains, needs, wants and desires, ideally better than anyone else or at least great majority of your competitors.
Don’t ever try to appeal to masses or be many things to many people for you’ll fail. You’ve got to focus and go deep rather than wide – you may have an opportunity to go wider at a later stage of your business but in the initial phase, it’s depth and expertise in a fewer disciplines that you’ve got to make your topmost priority.
Remember, you’ve got to earn your prospects and clients trust before you can build a truly recognizable and reputable brand. This takes time and great deal of hard and systematic work. In addition to being professional, ethical, quality mindful, client centric and market driven, ALWAYS CREATE VALUE in a true sense of the word and you’ll do great.
The best of products or services means little to nothing if they can’t be delivered seamlessly into the hands of those (your target audience) they’ve been built for in the first place. As you can probably see, the how is super-duper important aspect of your business plan and go-to-market (GTM) strategy.
“Build it and they will come” is the mother of all myths and you better believe it. Because of it, make sure you think long and hard about your ‘how’ beforehand. Think of the best ways to let your target audience know of your existence and products or services you have to offer to them.
One way to raise awareness of your business and products/services is to leverage the power of social media and of course the search engines e.g. Google, Bing, Yahoo etc. via search engine optimization (SEO). No matter what line of business you’re in, be it brick and mortar or an online, you must never ignore the power of the internet.
To truly understand just how to go about it, I recommend you read How to Grow Your Business with right Traction Channels, as it’s most certainly going to help you with your how and far beyond….it will teach you how to promote your business, drive more quality, targeted traffic and finally convert your prospects into paying clients.
This one should be fairly straightforward if you’ve already done your due diligence and defined the ‘who’. Essentially, the objective is to alway go to and be present where your target audience attention is. Armed with intelligence you’ve gathered on your target audience, you shouldn’t have troubles in crafting your ‘where’. Again, refer to How to Grow Your Business with right Traction Channels for more in depth pointers of how to structure this part of your business plan.
Timing can be and often times is very important when launching the business or a new product/service. With that said, you have to evaluate various internal and external factors pertinent to your business before launching it.
For example, avoid launching your ‘ski resort holiday getaway’ business in the scorching summer heat, likewise, don’t launch your online business before you’ve already establishes your social media hubs and have built a solid digital footprint with substantial following. The idea is to align internal factors which you can control for the most part with external factors which are often out of your control.
With that, you’ve pretty much covered all of the essential elements of a business plan and can simply translate them into a word document and call it the Business Plan.
Without knowing, by following the aforementioned process and formalizing the business plan, you’ve not only built the roadmap that will guide you throughout your entrepreneurial journey but have also proven to yourself that you are worthy of a praise and external investment, should you ever need it along the way.
Don’t bother approaching Angel investors or VCs without the business plan and in depth understanding of your business model, market, competitive analysis and financials. This is the bare minimum if you’re to stand a chance of raising external funds from Angels or VCs.
In a nutshell, here’s the outline of your business plan….
Executive summary is a must have introductory section of your business plan. It’s a concise overview of your business and should be written eloquently and to the point.
Executive summary section of the business plan serves two purposes; first, it keeps you and your co-founders driven, focused and aligned on all of deliverables, and second, it provides investors with enough information to decide whether your startup is of interest to them and worth reading further or not. Many Angels or VCs never get passed the executive summary so make it captivating and promising.
General Company Description
This section should be light and provide general company information e.g. overview, mission, vision etc.
Products and Services (WHAT?)
You may have already guessed it…this is your ‘what’ section wherein you’ll articulate your services, products along with unique selling proposition (USP) if any, keeping in mind to always create and emphasize VALUE ADD in everything you do. Spend some time on this section and let it speaks volume about your business.
Clearly, you won’t go into business without performing a thorough analysis of your competitive landscape. This section if done the right way could be a big plus in the eyes of Angels and VCs as it would give them added level of confidence that you and your team have done your due diligence and know exactly who are you up agains and what you ought to do to compete and win.
Go-To-Market (GTM) Marketing Plan (How?)
Yes, this is your ‘how’ which we’ve already talked about. Make this section sexy and let it stand out. Put in a great deal of effort into it to make it bulletproof if at all possible for what good is your startup if you ain’t got the winning GTM?
Management and Organization
This section is all about you, your co-founders – if any – and your team, of course. While I don’t have any doubt that you know yourself and your partners/team, remember that your potential investors don’t know the first thing about your or your founding team.
Therefore, this section in reality is meant to provide investors more insight into your founding and management team. Remember, investors don’t invest in ideas but founding teams.
Startup Expenses and Capitalization
As a startup founder one thing you ought to know in your sleep is your numbers. This section is not only important and essential for you as it gives you insight into your financials e.g. CAPEX, OPEX etc. but is also absolutely must have if you’re to ever raise external funds from Angels or VC.
Without going deep into this section, you’ll have to prepare your financials statements including the 1. Balance Sheet (assets, liabilities and net worth), 2. Income Statement (revenue and expenses) and 3. Cash Flow (cash inflows/outflows).
Closely related to startup expenses and capitalization section, financial plan must include your sales forecast, revenue generation and expenses along with breakeven and ROI analysis.
This is where you include any supporting documents, tables, charts etc. used in your business plan.
Wrapping it up
Business plan while necessary when starting a business, doesn’t have to be burdensome or a lot of hard work. Instead, treat it as a depository of your due diligence, wherein you drop all the important information and findings you come across during your research.
From there on you simply structure all of it in a manner demonstrated herein and before you know it, building the winning business plan for your business will be a whole lot of fun.
Author: Dzenan Skulj, a Co-Founder and CEO at Parttimerz. He’s a serial entrepreneur and student of life. Utterly passionate about and strong proponent of entrepreneurship, startups, freelancing and self-development, which he regularly blogs about on his personal blog dzenanskulj.com. Dzenan also actively mentors entrepreneurs on their entrepreneurial journey.