You’ve got the idea of the century, and you set up a meeting with a small group of potential investors. You have everything planned: the branding, how the website will work, and how it will change the world. Shortly after your pitch, one of the investors asks you, “What’s your competitive analysis of other businesses in this industry?”
You don’t have an answer, and now you don’t have funding.
Ideas aren’t enough to get your startup off the ground. You need a plan and proof that your business has a strong chance of being successful and is worth investing in. That’s why a well-researched business plan is so important.
Here’s everything you need to know about writing a business plan for a startup.
What is a Startup Business Plan?
A startup business plan is a written explanation of your business idea. It explains how the business will operate, and summarizes how the business will succeed. This includes mission statements, goals, target audience, and financial planning.
It acts as a proof of concept for investors and helps you define key aspects of your business.
As an entrepreneur, you can easily get discouraged or misled. There’s a lot of information out there on how to successfully start your own business.
Our entrepreneur intro course will teach you everything you need to know about turning your idea into a thriving business, including:
Creating a business plan
Getting finance for your business
Hiring and training employees
Make sure you’re learning from the best by taking courses with the Regional Economic Development Center (REDC) at Yavapai College.
Why Startups Need a Business Plan
Creating a business plan is helpful in more ways than one. Before you get your business off the ground, you need to give your idea legs to stand on.
Here are some reasons why startups need a business plan.
Solidifies What Your Startup is About
Writing a business plan helps clarify and organize your startup's goals.
Think of it like creating a sculpture; there’s art within, but right now it’s a formless blob of clay. A plan helps you realize your vision.
Helps Your Startup Get Funding
Leading a business to success requires a lot of forethought.
Investors want assurance that you know what you’re doing. When you have a well-researched, well-written business plan, investors and lenders will be more likely to fund your business.
Keeps Your Startup on Track
A good business plan will be helpful even after you cut the ribbon.
Starting strong with a solid mission statement and goals will give you an actionable foundation. Use this time to pave a path toward success for your startup. Your plan will keep you accountable and organized as your business grows.
What To Know Before Writing Your Startup Business Plan
Before you start writing a plan, gather as much information as possible. During this research phase, you may find your business idea either isn’t easily attainable, or that there is potential. Either way, the more thorough your research, the better your plan.
Market research mixes economic trends and consumer behavior, and it answers 2 questions:
Will your startup be economically viable?
Will consumers buy in?
Marketing research will inform most of your business plan and will help you:
Find your target market
Make better marketing decisions
Know if the product will sell
Identify untapped opportunity
Find niches you could fill
Identify key competitors
A lot can go into market research. The amount of effort you put into this step will depend on the scale of your startup. For example, you won’t need to research competitors across the country if you’re starting a local catering business.
If you’re a business located in Yavapai County, AZ, take advantage of our data and analytics resources to help you make an informed decision. Take a look today and see what opportunities are waiting.
Writing a Business Plan For Your Startup
Bring your startup to life by clearly outlining it. Most write their plan in an e-document that can be easily, and neatly, presented to investors.
Writing a business plan doesn’t have to be complicated. Use headings to make your document more readable, and if you can explain yourself in one sentence, do it. Use concise writing when drafting your business plan. You may also want to consider designing some visualizations.
Here are some topics you need to include in your business plan.
Mission statements are quick snippets that describe important values and big-picture goals of an organization.
To write the mission statement of your startup, boil down what your business is all about. It should be simple, concise, and memorable.
Read these example mission statements and get inspired:
Google: To organize the world's information and make it universally accessible and useful.
REI: To awaken a lifelong love of the outdoors, for all.
Crocs: To provide profound comfort, fun, and innovation in all the shoe models we produce.
Your executive summary is a quick overview of everything you’ll be covering. It’s there to give readers a quick understanding of what they’re about to read.
Like the mission statement, it should be concise. However, you’ll want to make sure it mentions everything covered in the document at a high level.
Using what you learned during market research, explain who your target audience is. Your customers are your way of making money, and investors will want to know who they are.
Write a description of who your customer base will be. This can include:
Marketing and Sales Strategy
Knowing your audience is one thing, but knowing how to reach them is another. How do you plan to communicate with your audience and in what ways can you do it better than competitors?
Outline how you plan to reach your audience. This should include things like:
If you want a more thorough description, include the 7 P’s of marketing into your business plan:
Over time, these strategies will have to adapt to incoming trends. However, starting with a strong marketing strategy will jumpstart your business.
Startup Goals and Plans to Achieve Them
Next, write about the goals of your startup. What are the milestones your business intends to achieve? How are you going to keep track of your progress? Where do you see the business in 5 years?
You can use the research you did to inform this subject as well. Look at the trends and make your case for why your startup is a worthwhile investment.
38% of startups end operations because they run out of cash. To give yourself the best chance of avoiding this fate, you need to have a clear vision of how much money is needed to open and sustain the business.
Consumers are notoriously unpredictable and irrational. Even after all your market analysis and audience research, your well-informed prediction might not come true.
How your business handles its money is important for keeping operations running smoothly. Consider your company’s genuine needs before spending investor money on items like company cars and lavish dinner meetings.
Write your financial plans into your business plans so you’ll have guideposts for how to spend. Your investors will appreciate this, and your business will be better for it.
If financial planning is not your natural talent, consider taking an online course. The REDC at YC offers many finance courses, but if you’re looking to launch your own business, Finance 101 for Entrepreneurs and Budgets and Financial Reports are a great place to start.
Jumpstart Your Business
Creating a business plan is only one part of starting your business. It takes networking, finding investors or lenders, and finding a quality team. To help businesses thrive through this process, we offer many networking and training opportunities.
Our business services are here for all local businesses—current and future. Get your startup heading towards success today.