Many people dream of setting up their own business. However, these people often fail at the execution because they don’t properly plan for their startups. Some of the most common reasons for startup failure include lack of market need, a wrong product, and ineffective marketing. By using a free business plan template and developing it in detail before you take any significant steps, you can focus on the right areas and identify any flaws before you make an investment. Developing a business plan also gives you the chance to get feedback on it and make use of some much-needed advice. In fact, business owners who develop formal business plans increase their chances of success by 16 percent.
So, now that you understand the importance of business plans, here’s how you can develop one for your startup:
Define your company’s objective
Your company’s description needs to be spot on. Instead of being vague, you need to have a clear business objective and thoroughly define the products and services you’ll be offering in your chosen industry. Apart from your offerings, you also need to determine your business model. The business model covers whether you’ll be operating online or through a brick-or-mortar store and working internationally, locally, or regionally.
Your business objective should highlight your competitive advantage and focus on what sets your startup apart. A business objective not only makes things clear for your target audience, but it also makes your direction clear to you.
Identify your target market
No business can ever offer a universal product and every offering needs to be promoted to a target audience.
To identify your target market, you need to do some research to define your ideal customer. Failing to identify your target audience will push your investment down the drain.
To figure out your business’ target audience, you should start off with a broad category and segment it accordingly. Geographic factors such as where your audience lives and demographic factors, such as age, income level, and gender can help you narrow down the market. You can also consider behavioral attributes, such as what these people spend on and where their interests lie.
Evaluate your competitors
Just as knowing who you’re selling to is essential, so is knowing who you’re competing with. It’s vital to know your competition and figure out how your business will differentiate itself from them.
Brand differentiation mainly occurs on two fronts: price and quality. There are niche markets for every price range and quality. A brand such as Levi’s would never compete with a designer brand like Gucci due to its extremely different price points.
You need to capitalize on your competitive advantage and give your target audience a reason to switch from your competitors. Your competition needs to be researched on extensively and must be included in your business plan.
Knowing your budget and having your financials in order is a vital part of starting a business. Having a detailed budget is even more critical when you’re planning on pitching your startup to investors.
For starters, you have to know how much you’ll need to get your business up and running and help it stay operational. Many startups fail because they run out of funds, which can always be prevented if you plan accordingly.
There are many costs you should cover in the budget section, including the property costs, payroll, legal fees, insurance, equipment, and inventory costs. You should also include some buffer cash apart from your budget for unforeseen circumstances.
Define your organizational and financial goals
While it’s natural not to have any financial records, such as balance sheets, income statements, and cash flow reports before your business is operational, you can still make projected statements. These projected statements can be based on the percentage of the target market you believe is penetrable.
Apart from financial statements, this section should also include any plans to expand. These projects should ideally cover a five-year plan and shouldn’t be unreasonable. Many startups aren’t profitable during their first few years and aim to breakeven.
Set up your marketing plan
Marketing plans are dependent on all the other sections covered in business plans. Attracting your target audience doesn’t come cheap, and you need to have multiple marketing strategies in place to create a top-notch marketing plan.
For starters, your marketing strategy should include the following basics:
- A website
- Active social media profiles
- Developing customer loyalty programs
- Building an extensive email list
- Creating a blog for your startup
These basics need to be developed simultaneously, even before your website is up and running. Your marketing strategy should be in place so you can test it out before everything gains speed.
It’s also a good idea to base your marketing strategy on data insights for a more targeted approach. One way to do this is by integrating Looker. Looker is used by many companies, such as Sony, Spotify, and Lyft, and provides every department with valuable insights. By choosing to integrate MongoDB Looker, the latter of which is known for its automatic and easily-scaled data clusters, you can create a data powerhouse.
Define the organizational structure
You should also cover your startup’s organizational structure. This section should be easy if you’re starting with a small business that’s just going to include you, your partner(s) and a handful of employees.
However, even if you start small, you may have plans to scale the business, which is why it’s essential to determine the hierarchy early on, so the responsibilities and people can be assigned. This part is necessary to define who has a say in decision-making and who’s in charge of what.
Setting up your startup will undeniably be one of the most exciting times of your life. This excitement can often lead to hasty decisions, so it’s essential to slow down and plan everything.
Business plans doesn’t need to be too detailed; it just needs to cover what’s important. Remember, this plan could go to potential investors so it should be clearly written and free from any grammatical errors. The process of writing business plans involves extensive research, which, at some point, could even make you realize your venture isn’t a good idea.
This guide will help you out with the different sections you need to cover in your business plan. Taking out time to plan and organize initially will definitely help you and your business succeed.
Have you ever written a business plan for your startup? Let us know in the comments below!