How to write a business plan for startup

Writing a startup business plan is the process of crafting a business plan for a startup business. It is the first step towards the success of becoming a thriving startup. The process of writing a startup business plan starts with defining the values, mission and vision of the startup.

Starting a new business venture is an exciting journey. At the heart of every  successful startup, lies a well crafted startup business plan. A start up business plan guides in launching the business as well as making its vision clear.

As an entrepreneur, you can hire a business plan consultant to write your startup business plan and bring your startup idea to life. A startup business plan is similar to other types of business plans as it uses the  structure that is common in business plans.

What is a startup business plan?

A startup business plan is a strategic document for new businesses where goals and objectives and details of  the steps to start the enterprise are written. Its primary purpose is to put forth the steps required to get the business up and running. 

Such steps include acquiring permits and licenses, setting up an office, purchasing equipment as well as hiring and managing staff. A business can adjust a startup plan as it grows and when needed hence they serve as initial plans.

A start up business plan will include company description, product and service description, make up of management, responsibilities of the management team, market analysis, competitive analysis, financial analysis and fund usage plan.

What is a lean startup business plan?

A lean startup business plan is a simplified plan with little writing and formatting including only key points. Each business plan component is divided into individual boxes with brief notes that can be updated or revised.

A lean startup business plan can be used by a company to give a quick explanation about its business where it doesn’t have a lot of information to give yet. Sections in a lean start up business plan include value proposition, business model, strategy and tactics.

The advantages of using a lean startup business plan include focusing on main drivers for your business strategy, it’s easy to read and understand, it is created within a short time, there is flexibility to update it as well as it gives a visual representation of the model of your business.

What is a lean startup business plan?

Writing a lean startup business plan starts with a brief description of your business. In one sentence, outline what your business does and your unique value proposition. Secondly, specify the problem that you want to resolve for your customers using a few bullet points.

The third step is to define your target market and competition. Create a short list of your competitors. Have a bulleted list of tactics you will use as your marketing strategy. Then evaluate your finances and determine the resources that you need.

Writing a business plan for a startup in 11 steps 

There are 11 steps of writing a business plan for a startup. These include defining the values, mission and vision of the startup, company description, company market and industrial analysis, products and service description as well as describing your sales and marketing plan.

Other steps include market segmentation, analyzing your competition, describing strategic partnerships and resources for your startup, outlining management and organization structure, creating a financial plan and outlining your executive summary.

1. Define the values, mission and vision of the startup 

Understanding the startup itself is the first step to writing a startup business plan. A startup’s mission statement helps define its reason for existing. It can be written as a short paragraph or a simple sentence. 

The vision is to ensure that the startup has clear objectives. It answers the question of what the business would like to accomplish both in the short term and long term. Vision statement helps the business to maintain its focus on goals.

Values define what the business believes in. They define how the business is expected to relate with suppliers, customers and other stakeholders. The Value system helps shape the perception of customers and set standards of holding the business accountable. 

2. Give company description

Company description is answering the questions of who you are and what you do. The description includes information of what makes your startup business stand out. Company description should also include a brief history about your business.

In the description, give details such as your registered business name, address and location, structure and its current ownership. Explain also your business model and introduce key members of your management team. Give your professional background as well as that of your team to paint an image of the people who will be managing the business. 

3. Market and industry analysis

Market and industry analysis is a critical starting point for startups since it is the point where they identify the size of the problem that they want to solve. According to data by the World Bank 34% of startups fail because of their product not being fit for the market. Choosing the right market is important for business success. Startups should not rush to set a business without knowing their target market and the solution they will offer.

Each product or service that a business offers has pacific requirements to be market fit. Ensure that there is a clear market niche that your startup business can help solve. Market analysis ensures that you conduct thorough research on industry trends and competitors.

4. Give products and services description

Products and services is a discussion of the features of your products and services, such as prices, size, quality, dimensions, and prices. If your business has various products, give more  general information on each. Highlight the features, benefits and competitive advantages of your products and services to make them unique in the market. 

Explain how your products and services help solve the needs and problems of customers. Include also your revenue model indicating how these products and services will help make money. You could also share testimonials or success stories to show that your products work.

5. Describe your sales and Marketing plan

Marketing and sales plan is the startup’s strategy of capturing the attention of potential customers and making them continually buy and consume the products and services. Effective marketing and sales strategy is crucial for a startup’s growth since it helps to predict the future. A sales and marketing plan explains how you will attract and retain customers. 

When developing your marketing plan, you start by outlining what your marketing approach will be. A marketing plan contains your target audience, distribution channels, promotional activities and future strategies. 

You will also include your pricing plan, what types of activities you will take as well as types of partnerships to get into to make your startup a success. Marketing plans bring customers to your doorstep while sales plans help you close the deals with your customers. 

6. Market Segmentation

Market segmentation is dividing your target market into manageable groups. After ensuring that your product is fit for the market, you then perform a customer segmentation. It gives you a holistic view of your customer since you have divided them into smaller groups. Market segmentation should be specific and clear and describe the demographics characteristics of your customers.

Market segmentation will give information of where your customers live, their age range, gender and level of education. You will also get to know where they work, how much they earn, how they spend their free time, their shopping habits and their beliefs as well as opinions. It becomes easier for a startup to approach segmented customers since you are almost sure they need your product or service. .

7. Analyze your competition

Analyzing your competition means you study your competitors to understand their strengths and weaknesses so that you may capitalize on your startup’s strengths and opportunities. One of startup’s major growth challenges is competition. When starting out, there are always bigger, more established competitors with more resources than you have. You should learn a lot about your competitors and see where you stand in comparison to them.

Look for ways that differentiate you from competitors and make your business stand out. You need to know what your competitor offers, how they offer it and how successful they are. This is because you are competing for market share. 

You can identify gaps in your marketing, sales and entire business strategies by measuring the successes and failures of your competitors. Addressing the gaps gives you competitive advantage.

8. Describe strategic partnerships and resources for your startup

Strategic partnerships and resources are the strengths that you intend to use to make your start up more outstanding. As a startup it is essential to have solid financial projections to show investors that you have potential for success. It is for this reason that it is crucial for startups to develop resources and partnership as part of business planning.

Ways to establish partnerships and resources include publications, seminars, trade organizations, business incubators, networking with investors and industry associations. This step also involves determining how much funding your startup requires.

9. Outline management and organizational structure

Management and organizational structure of a startup is the outline of the team that will be in charge of daily operations through specific responsibilities. Your management team is one of your most significant assets as a startup. It is important for a startup business plan to outline the management and organizational structure of the business. 

The Structure should showcase the skills, strengths and expertise of the management team. Highlighting team members and their qualifications presents  the strength of your management team and their capability to execute  the business plan. You should also include the hierarchy of your organization structure.

If you have mentors and advisors, mention them. Investors want to know that they are investing in a team that will propel business success and also navigate the challenges ahead.

10. Create a financial plan

A financial plan refers to how a startup will acquire money for its operations, spend the available money, and generate income from its operations. A financial plan is essential towards the success of a startup business. When creating a financial plan, you can start by forecasting profits for the first three years. Identify expected cash flow and have a balance sheet.

You estimate sales and profits based on industry data, marketing strategies and research. Include also the best case and worst case scenarios of your financial goals and how you plan to achieve them. Update your financial plan regularly as your startup grows.

11. Outline your executive Summary

The executive summary in a startup is an overview of your business plan as it covers brief details of every section of the business plan. It should be interesting enough to make an emotional connection with the reader. Define your main objective.When writing your executive summary, start by outlining your value proposition. 

The summary should be a simple and precise overview of your business concept that addresses your target customer’s pain point and how you plan to address it. Outline your main goals to support your value proposition which should be aligned and consistent. 

Why are business plans important for a startup?

A startup business plan is important because it keeps you organized, focused and on track. The main importance of a startup business plan is to help you secure funding from potential investors. Funding could be in the form of loans or as investment capital.

Startups business plans help make your vision clearer, helps in understanding your industry, market and competition and  assists in validation of your business idea. It guides in launching the business and helps in identifying unseen business challenges.

In addition, a startup business plan guides on the people needed for the startup to grow, assists in setting realistic goals and objectives. It also attracts investors to obtain funding.

1. Helps to make Your Vision clearer

A startup business plan helps you clearly articulate the goals and vision of your business. You get a better understanding of what you want to achieve and how you are going to achieve it. The process of writing a startup business plan entails defining your vision and goals.

Putting goals on paper helps you gain clarity. You are even able to set better objectives. Without a startup business plan, objectives become arbitrary. A business plan for your startup gives you insights into how your strategy is coming together over time.

2. Helps in understanding Your Industry, Market, and Competition

The process of writing a business plan gives you an opportunity to gain knowledge about the strengths, weaknesses, opportunities and threats of your business. Through conducting industry,market and competitive analysis, you learn a lot. 

You then understand the market that you are entering, customer preferences and trends as well as understanding your competition. You also get to know of external  forces within your industry such as the regulatory environment.

3. Assists in validation of your Business Idea

A startup business plan helps you assess the feasibility of your business idea. According to research, only about half of startups survive into their fifth year. You are able to be guided through the process of starting your business venture.

A startup business plan helps you identify red flags in advance hence you are able to conduct a reality check on your business idea. You can be able to make an informed decision of whether to move on with your idea or stop when you have a realistic view of it.

4. Guides in launching the business

A business plan provides direction as you navigate the many tasks involved in starting a business. Writing a startup business plan ensures that you have thought through all of the considerations and requirements.

You are able to set objectives and goals. You also keep track of all the tasks associated with starting your business and operating it. For example business registration, obtaining  licenses and permits.

5. Helps to identify the unseen challenges for the startup

In their initial stages, startups often face unforeseen challenges. A business plan for a startup can help mitigate issues by identifying potential weaknesses. A  business plan can identify areas that can be improved through technology.

For example, it can help distinguish tasks suited for automation from those that need human intervention. You can then eliminate unnecessary errors that are time wasting and focus on other business operations. 

6. Guides on the people needed for the startup to grow

As you start a business, there may be tasks that require specialized skills and expertise that you may not possess. For example matters relating to law, creating financial reports, financial forecasting and developing a website. 

A startup business plan will guide you on how to begin sourcing for employees, contractors, advisors or companies with the skills and abilities that you require. A compelling startup business plan also helps you attract top talent in your industry.

7. Helps in defining the startup milestones

Clear and well defined milestones in a startup business plan helps your team know what is expected of them. Milestones help you implement your business plan by making it become real with specific and measurable tasks.

Milestones in a startup business plan helps you track progress hence keeping your business on course, encourage accountability by keeping everyone focused and responsible and help you identify improvement areas during review.

8. Assists to set realistic goals and objectives

A startup business plan ensures that you are intentional about writing goals and objectives for your business. It provides direction for your team because you are able to set specific, measurable, realistic and achievable goals for the startup.

Setting goals facilitates accountability towards your long term vision. It is an incentive for you to question business assumptions hence view your business from a realistic point of view. For example an assumption that your sales will grow by double the current rate in the next year.

9. Helps Attract Investors and Obtain Financing

A startup business plan is important in attracting investors to secure funding. Lenders will want to see a business plan so as to assess whether your business idea will be a good investment or not. 

A well written business plan for a startup helps potential investors to evaluate the opportunities and risks of funding your business. It showcases the startup’s potential for growth and strategies put in place to propel success.

Can a startup write a small business plan?

Yes. A startup can write a small business plan which is a simplified type of a business plan. Startups will use a simple business plan which has a simple structure to outline their goals  and objectives. Additionally,  a small business plan helps a startup attract investors for funding. Potential lenders will be able to quickly read through it and obtain key information regarding the startup. A small business plan can be custom made  for the startup according to its needs. A  small business plan has components relevant to a startup such as the executive summary,company description, products and service description, management structure, marketing plan as well as a financial plan.

Can you hire a business plan consultant to write startup business plans?

Yes, you can hire a business plan consultant to write a startup business plan for you. Business plan consultants can be found online whereby a startup business plan can be written for you and delivered remotely. Professional business plan writers have the experience and expertise in writing well-researched and unique startup business plans. They will help you develop a clear roadmap for your startup. In addition, having your startup business plan written by a business plan consultant enhances the credibility and professionalism of your business.

How is a startup business plan similar to other types of business plans?

Types of business plans include strategic, internal, marketing, immigration, international and SBA business plan, business plan for grants and partnership business plan. A startup business plan is similar to other types of business plans in terms of structure. It borrows the common structure of other types of business plans. The common structure  of a business plan includes the executive summary, company description, market analysis, product and services, marketing and sales plan as well as financial plan. Also, there is close resemblance in how you write a comprehensive business plan and how you write a startup business plan.