Every company needs a business plan, but if you are working on a startup, you already know that your business plan is doubly important, both to give the company direction and to attract investors or secure financing to help your company make it to the starting gate. Because your startup business plan is so very important, it’s essential that your business plan be the best it can possibly be. But how do you write a compelling business plan geared for a startup? We have some tips and tricks that will give you an edge in creating a business plan that will get the job done right.
Identify a Clear Objective
You probably knew before you started reading this that you needed a business plan, but were you aware of what that business plan’s purpose should be? Every business plan needs to be tailored to a specific purpose and to meet particular needs. You may need differently targeted plans for investors, internal audiences, and other stakeholders. Be sure you know why you are writing this plan and who the audience will be for the plan.
Similarly, you need to be able to explain to your audience what the purpose of your startup is going to be. Your underlying objective might be “to make money,” but that can’t be why your company exists. Instead, you need to identify who you are, when you plan to launch your business, how your business will function (not just what it will do but where and how it will do it), and your vision for the future.
By making your objectives clear, you will be able to better target the other sections of the business plan to fully address how your plans will meet your objectives.
Identify a Clear Target Market
If you ask many startups who their customers will be, a surprising number will say “everyone.” However, very few products are as likely to be bought by 6-month-old infants and 99-year-old retirees. “Everyone” isn’t an option, so you need to identify the specific demographic you hope to reach and how you plan to let them know about your product or service. The target market can make or break a company. You might have the greatest idea in the world for the best way to make spinach-flavored toothpaste, but if there is no one in the country interested in buying it, your company will fail. You need to conduct market research to ensure that there will be people interested in your idea and willing to buy into it.
Target markets tend to be defined by four factors: geographic, demographic, psychographic, and behavioral. To identify these, consider aspects of your ideal customer, such as age, gender, income level, ethnicity, and location. This will help you create a map for who will buy your product or use your service and how you can reach them with targeted marketing.
Research Your Competition
You might feel confident from the get-go that your idea will take the world by storm, but that doesn’t mean that your target market will immediately recognize this. If you are selling your product for $199 and another company has a remarkably similar product for $49, you will get trounced unless you can explain and justify the price difference. You have to be aware of what the competition is doing and—just as importantly—understand how your customers will perceive the competition. You might think your product is obviously better than any other, but if your customers can’t tell the difference, they will perceive them as being the same. By understanding the competition and how your potential customers will perceive the differences between you and your competition, you can help to enhance your chances of success. Differentiation is essential, and to play up differences, you need to know what the other guy is up to at all times.
Organize and Define Your Organizational Chart
During the startup phase, it can seem like it doesn’t really matter who is reporting to whom, especially if you are a small company making decisions by consensus. But as you grow, so too will the need for individuals to be responsible for discreet areas of the business. Working out an organizational chart and clearly defining responsibilities early on will avoid massive problems and internal rivalries down the road.
With these tips in mind, you should be on track to develop a useful business plan that can set the stage for a successful startup.