Ideas are infinite, and everyone, at some point, has come up with a business plan with the potential of being successful. However, not all startups grow to become a known brand, no matter how great the business idea is.
71% of most startups fail in the first ten years, and failure begins from the planning stage. What takes a business from point A to point B starts with having a comprehensive and workable business plan and execution.
Having a business plan is beyond putting pen to paper and jotting down ideas. It is a formal written document containing business goals, the method of achieving those goals, and the time frame to bring it to fruition.
It lays out a roadmap for anyone to see the vision of the startup’s aim and image from a marketing, financial, and operational standpoint. Therefore, preparing a solid business plan is crucial and advantageous before launching a startup, and these seven tips would be helpful to you.
Tip 1: Choose your Investment Audience
Most startups get their funding externally, from loans or grants, or internally from colleagues or friends turned investors. Therefore, it is vital to identify who your business plan is tailored to.
After choosing who your audience is, get to know them, understand their expectations, and find ways to stand out. Note that a plan that works for a banker would not work for a venture capitalist, nor will it work for an NGO giving grants.
Carry out extensive research on what the people you hope to impress with your plan look out for, and add them to your presentation. Know the issues to emphasize and the one to deemphasize. For example:
- When dealing with active venture capitalists, emphasize a compelling, concise summary and explanation of the fundamental business concepts. Minimize time, and if you have a management team, highlight their backgrounds.
- Bankers are more concerned about numbers and figures; thus, focus on your financial strength than exciting concepts and impressive resumes.
- Grant givers or angel investors may not have time to go through an extensive business plan, emphasize the basics, and be as brief as possible.
Choosing and knowing your investment audience would help you present only the relevant information. It would save time and prevent the communication of unnecessary facts.
Tip 2: Have a Clear Vision
Vision is vital when creating a business plan. It is the light that shows the way to what your startup is about. A clear vision helps those who come across your business plan know what your startup aims to achieve and what it would be in the coming years. It projects the image of your business and helps you propel it in the right direction.
Tip 3: Document Why Your Idea Will Work
For every business idea you have for your startup, know that several people have at some point come up with the same idea, and where some of them failed, others succeeded. Also, know that you’re not the first in that field, and others have been there ahead of you.
Thus, document why your idea will work distinct from others. Let your investors know what makes your startup different from the others that failed and why you believe yours would succeed. Show why some of the known variables won’t affect your business and give a detailed plan on how you intend to overcome them and make them better.
Tip 4: Be Realistic with Available Resources and Time
Resources and time are two things that are regularly misused and wrongly appropriated. Even if you have enough cash reserve for your startup, have a detailed plan and accountability structure for every penny spent.
Do the same with time; have periodic goals showing your starting point, review, and when you expect to make a turnover on your investment. Always assume things will take longer, and the resources might not be enough. Also, being realistic gives your business plan credibility.
Tip 5: Backup Every Claim
You must back up every claim in your business plan with proof. For example, if you are into an online sports gaming business like csgobetting and want to take the industry in one year, you must show why you believe you can achieve that within that time frame.
Stating you have the best product or something the market has not seen before is not enough. Like the expression putting your mouth where your money is, you must show facts that support your claim. In summary:
- Support all claims and assumptions
- Add facts and figures to the means of achieving your goals
- Minimize the use of “Fluff” or empty words without backings
Tip 6: Be Conservative with Financial Estimates
Sometimes it’s indeed good to go big or go home, but don’t use this ideology when making a business plan. Startups are full of steps, periodic projections, and estimated profit and loss, so be conservative with your financial estimates.
Bank investors expect you to deliver when you say you will; therefore, you must give figures you can backup. Even if you are confident you can capture half of the market in one year, it’s better to make it seem longer, as it’s better to under-promise and over-deliver than the reverse.
Tip 7: Be Clear on the Role and Payout Options for Investors
If your startup needs investors, your business plan must have a detailed description of their role and payout option. Depending on the industry your investors belong to, they may want a return on their investment within months or years.
Some might want to get involved in the business’ day-to-day activities, while others want a silent role. Be clear that you are ready and willing to discuss these two topics with them and develop a plan that works for you and them.
Review your Plan
The seven tips discussed are vital for creating a business plan before launching your startup, but you can improve on them with regular reviews. No matter how waterproof your plan is, you must check it step by step and at different stages.
A review also helps you include new facts that might arise during the business plan preparation and ensures you cross every “T” and dot every “I.” Furthermore, when making a business plan, don’t add:
- Form over substance
- Empty unbackable claims; if there are no facts to support it, leave it.
- Rumors about the competition
- Superlative and strong adjectives
- Long documents
- Overestimated financial projections
- Overly optimistic time frame
Be professional, focused, and goal-oriented with your business plan. Finally, have a strong management team, be logical, and have a good understanding of the market and your competitors.