Startup business is hard work, requires a lot of determination and only pays off in the long run. Customers may ‘like’ your product but they usually pay for their ‘needs’. Do your thorough research before divulging into starting a new business.
If you have landed on this blog post, either you have a startup or are planning to launch one. In any case, a business plan is crucial as this helps you and all stakeholders to be on the same page and align business goals.
A business plan is a blueprint or can say a roadmap which describes the purpose of the company, structure, product and services, financial plan and the market analysis with penetration rate.
Technology startups business plan is helpful in testing the viability of your new product, fundraising, business loan, and more. Whatever your objective is, we are detailing all the important details which you should not-miss in the business plan.
A step-by-step guide
Step 1 Executive summary
An executive summary is a quick overview of what your company/product/service does and what’s unique selling proposition. It sums up all of the business plan and serves as an introduction part. A well-documented summary shows clearly what your startup is all about and how it will capitalize on its resources in years to come.
Executive summary is where you have to hook the reader either the investor, the partner or your employees because from there they will decide whether they will read the whole document or not.
Let’s list down all of the important parts of the executive summary so that you get to know ‘how to write an executive summary for a business plan?’
|What not-to-miss in executive summary of a startup business plan
||An idea centered around your product/ service and is considered a starting point for current and future entrepreneurs. It should include details about your product, the characteristics it has, and how it’s solving the customer problem. Cost calculation for product development and monetization strategies are also part of this section
||Narrate a complete market overview and showcase the type, age group and size of market you are targeting. Not more than a paragraph.
||Every business has competitors and your startup would also have some. Do list them down and describe how your product stands out
||For clear understanding, prepare financial projections in the form of a chart for like 1 year, 2 years. At least add 3 years of projections.
|Returns and exit plans
||Share exit plans so that investors could trust more.
||Do share details of your team members and the experience they have. Investors like to see who will be working on the idea.
||3-4 lines / short paragraph
||Do mention if there are any partners involved in your startup. This adds credibility.
|Total length / read
||2 pages, 7 minutes read
Do’s and don’ts of executive summary
-Sell your business in the opening paragraph
-Give synopsis of every part of the business plan
-Write executive summary at the end of the plan
-Keep the summary short and to-the-point, not more than 2 pages
-Don’t write for yourself instead for your readers
-Use an engaging tone
-Don’t use unrealistic information, investors are usually experienced and sense the hype
-Don’t forget to proof-read
Step 2 – Market size and opportunity
Market size is the total number of likely buyers of your product or service from a given market. Whenever you prepare a market analysis with size, you focus on your target customers.
This helps investors to think of the profit a product would make thus helping them make a decision on whether they should invest or not.
Let’s estimate market size by following these steps.
|Estimate market size for your business plan
|Set your target audience
||Determine who your target customers are. Prepare profiles of your targeted customers with age group, gender, location, occupation, income, problem etc.
|Determine the number of target customers
||Use stats from industry databases like Statista etc. this helps in quantifying your target market.
||Penetration rate for products solving mission-critical general problems have high penetration rates whereas products with specialized purpose have low penetration rate
|Market volume and value
||Multiple your number of target customers with penetration rate for market volume.
For market value, multiple market volume with average value.
|Apply market data
||Calculate best-case and worst case possibilities. Monitor accuracy of your initial assumptions here.
|Length / read
||1-2 pages, 5 minutes read
Do’s and don’ts of market size estimation
-Defining target audience is crucial either use top-down or bottom down approach.
-Generalized sizing won’t reap much hopeful results.
-Don’t just evaluate best-case scenarios.
-Do monitor initial assumptions and keep on testing.
Step 3 – Company structure, goals, history, location
A business mission statement is part of your ‘company description’. Experts recommend updating company descriptions with time as the company grows. Primarily a company description in the business plan includes business name, goals, competitive edge, target market, location, mission statement, products, structure and team.
|Company description in a business plan
|Business name and location
||State registered business name, and all off-shore and on-shore locations
||Company hierarchy, partners, management team, employees
||It should tell what company wants to achieve and values a company hold.
|Unique selling point
||Share your competitive advantage
|Objective and goals
||What are your plans of growth in future
||When was your company established and what are the milestones
|Length / read
||1-2 pages, 7-8 minutes read
Do’s and don’ts of company description in a business plan
-To the point and brief
-Don’t lie, tell the exact hierarchy a company has.
-Your competitive edge or advantage should be convincing
-Do include achievements over the period of time in the company’s history.
Step 4 – Product / Service description
This part of the business plan shares your product details such as cost, features, distribution, target market, competition, production concerns and unique market gaps.
Product description isn’t just mentioning the product features but also to highlight compelling features not elsewhere in the market like high quality or economical price range etc. Even a simplest product has something unique to offer. Do you know mass popularity and exclusive distribution are also considered under strengths of the product?
||Do mention what problem your product is solving via features, sizes, configurations, colors or any powerful selling feature.
||Position your product as value-for-money but not cheap or low cost.
Do offer more and more payment options, this helps customers buy easily.
||Mention locations or if the product is available online too.
||Sophisticated products like software/electronic devices should mention the support team if any.
||Do mention shipping/ on-site service information
||Add popular endorsements if you have any.
|Length / read
||2 pages, 7 minutes read
Do’s and don’ts of product description
-Do miss out on your powerful features.
-Reviews and endorsements add credibility, do add if you have.
-Don’t use jargon or manipulate features. Avoid repetition.
-Do position your product differently. Use product pictures/videos.
Step 5 – Financial plan, revenue streams, projections
A business plan can never be devoid of financial plan. It tells your company budget (have or required), and sales goals (showcasing numbers).
Finances are the most challenging part for entrepreneurs. This is because they don’t have cash flow reports, balance sheets or stable income for making future projections
|Business models tell the way a company will generate revenue.
There could be multiple revenue streams for a single product
||A spreadsheet showing sales over the course of 3 years.
||Product expansion plan, future store openings etc.
||A successful finances depiction always entails the exit plan keeping future foresight.
||Who will be spending on human resources? Your company, or a partner.
|Length / read
||1 page, 3 minutes read
Do’s and don’ts of financial plan
-We recommend using the bottom down approach for exact narration of profitable numbers.
-Don’t add unrealistic figures if you are not confident.
-Do mention revenue forecasting for at least 3 years.
-Make sure planned revenue exceeds company expenses.
Free business plan templates
Template 1 (Download in PDF)
Template 2 (Download in PDF)
An elaborative business plan highlights business opportunities and chances of covering the current market gaps and how soon the product will penetrate. The process of writing a business plan is long and sometimes tiring, however every startup should go through it.
Ideally, after completing a compact and detailed business plan, you should go for an MVP (minimum viable product). Are you already building your product’s MVP and looking for a development service? Tell us your requirements and we will share estimates with you.