It’s the most exciting part of entrepreneurship to want to create something great, but almost no startups survive if you don’t have some very disciplined groundwork. Of all the initial steps involved in launching a starup, developing a powerful business plan is arguably the most important one. The plan will serve as a roadmap for the growth and success of your company, and also to solicit investment and loans, while also providing everyone involved with a clear focus. To create a winning startup business plan, the plan must be easy to understand, realistic and forward-thinking.

What is a business plan?

In simple terms, a business plan is a document that describes your business idea, goals, objectives, strategies, market positioning, potential profitability and company structure. It is the ultimate document detailing what your start up will do, how you will make a profit and capture market share.

Why start ups need business plan?

Most of the start ups fail because they are inadequately prepared when launching themselves into the market. A business plan will help reduce this risk by ensuring that potential challenges in business are identified from the start. You will be forced to research the market thoroughly, to understand customers better and to determine realistic costs involved in starting up your business; in turn helping to convince investors and lenders of your capability to be successful.

Key components of a winning start up business plan

Executive Summary

Although this is typically written last, the executive summary will appear first. This is a summary of the entire business plan where you will touch upon your company mission, its product or service, target market and the growth prospects of the start up. Since investors often review this section first it is imperative that the summary is concise and compelling.

Business Description

The description gives more detail to the business idea. Include here the name of your start up, industry, business model and problem your product or service will solve. What is unique about your business and why should customers chose you over your competition?

Market Research

Knowing the market place you are entering is critical. This section includes defining the target customer in terms of their age, location, interest and purchasing behaviour among other things. Study the competition by analysing the pros and cons of your competitors. The market trend and opportunities need to support the demand for your product or service. For example, a new online clothing shop needs to know where the potential buyers shop online, trends in fashion and pricing of other clothing suppliers.

Products or Service

In-depth detail of what you are offering customers must be provided here. Include details such as features and pricing, what problem your product or service will solve and how it will add value to the lives of customers. The section should briefly mention future products or services that will be introduced as your company expands.

Marketing and Sales Strategy

An outstanding product or service would be worthless if nobody knew about it! Your plan needs to include how you are going to lure customers and persuade them to become repeat buyers. Use social media, search engine optimization, email marketing, joint ventures or partnerships with existing companies, and pay-per-click advertising as some examples. The strategy must address how customers will buy products from you whether through online, brick and mortar or B2B sales. Trace customer’s entire experience from first contact to purchase.

Operational Plan

The daily operational aspect of the start up needs to be clarified. The plan should describe the premises, suppliers, technology and equipment requirements, as well as how you plan to hire and utilize employees. Online based businesses would describe the internet site, logistics, customer service strategy. An operational plan will help to instill confidence that your start up will be easy to run.

Management Team

Introducing the founder or founders along with key team members of the start up is very important. Highlight relevant skills, expertise, and responsibility. Investors will invest in a start up primarily based on the people behind it and with the right team there is always credibility behind it. If key members lack specific expertise they need, they should be identified and plans to address them through external advice (consultants, advisors).

Financial Plan

The financial plan is probably the most crucial part of the start up business plan. It includes a detailed calculation of the start up cost and expected monthly running cost, pricing strategy, projected revenue and profit. If asking for an investment, the amount required along with allocation should be clearly mentioned. Realistic, market research-backed financial estimations are crucial. Unrealistic expectations are detrimental.

Tips for writing a winning business plan:

• Use clear language while maintaining a professional approach
• Be clear and frank about your business risks and potential pitfalls
• Use tables and charts to support the financial information
• Review the business plan regularly as the business grows and evolves
• Try to find solutions instead of simply the problem that needs solving
• Tailor the plan for a specific target, whether investor or lender

Common mistakes to avoid

Many start up founders often overdo it with an overly long and rambling business plan that lack clarity and depth, or make the error of neglecting the market research or inclusion of the impossible in terms of finance. There is nothing worse than submitting a generic business plan that is unoriginal or doesn’t reflect the business itself accurately.

Final thought

Developing a successful start up business plan takes quite a bit of thought and research, but the results that you receive in return will pay dividends. The business plan will help to set the direction of the company, reduce risks and assure investors that you have planned well and that your start up has a clear roadmap ahead. In the end, it is a strategy, not just a document.