6 Must-Have areas in business plan for startup

Business plan for startup: No matter what stage your business is in, the business plan is one of the most important assets. Looking back at my startup fundraising days – I can recall the number of times investors asked us multiple questions on it. Considering that it is the best asset you have as an entrepreneur, it makes sense to have this finalised as much as possible. However, you need to be careful that the plan alone will not take up all your time since you also need to work on execution.
As a founder, your biggest asset is your business plan for startup.

Business plan for startup

It’s very helpful to follow a common standard of the business plan to ensure that it is in line with investor expectations. It must have succinct and specific information about the following segments:

• What is your service/Product – Gap in the market?
• Market, Niche
• Your USP – Unique Selling Point, what makes you special?
• Competitor analysis and route to market
• Assets – People, technology or product
• Financial Projections, pointers about return on investment

A business plan for startup goes through multiple iterations. Most of the venture capital and investment presentation experiences have taught me to keep the business plan size to about 20-25 pages. I had more content but found it more successful to cut it down to a reasonable size. In addition, it is common practice to ask for a business 1 pager which is an executive summary having the same details as above. You can use any of the standard templates to cut down your work on worrying about the framework (Source- Business templates recommended by Inc)

Opportunity – Product, Market fit, What are you trying to solve?

Your first section of the business plan is the product. Before diving straight into what your product does (Arguably the most common mistakes entrepreneurs do because they’re passionate about what they’ve built) – start with the basics. For an investor, the opportunity is more important than your product. The product takes a secondary role from an investor’s point of view.

In this section of your business plan for startup, talk about the following things:

• What is the opportunity in the market – this section need not be commercial, just about the problem you’re trying to solve
• Why are you doing this – your motivation, what drives you
• How are you best placed to do this – previous experience, transferrable skills, network etc

Make sure that you address the above questions in your business plan to catch succinctly capture what you’re trying to do. If you can, please get straight to the point and keep it specific. I’ve been in a few startup accelerators where they train you to keep it fluffy and exciting. But an investor is interested in the commercial value your business can provide them as an investment. Don’t waste a lot of time in making the plan sound exciting – the facts will do this job.

Market and its Niche in defining business plan for startup

An opportunity in the business plan for startup goes hand in hand with the market size. An investor will expect you to perform a market analysis to understand the size of the market. It makes no sense to have a spectacular product that can serve only a handful of people. Most startup investors are interested in scalable entrepreneurship. You can find plenty of research material online.

Make sure that you provide the source of your market data. You don’t always have to pay for these reports, sometimes you can get brilliant stats for free in newspaper articles, surveys etc. The macro market view paints a picture for your investor about the market you’re trying to capture. Once you have the macro market – say for instance the cybersecurity market, you’ll be expected to explain your niche. A niche in this sector would be Ransomware/ preventing phishing etc. If you can provide stats for this – it can act as proof of the diligence you’ve performed on your business plan.

Key points to remember in writing about the market and niche

• Provide stats – numbers, % etc are highly valuable to paint the right picture
• If you don’t have the exact numbers, find comparable industry stats. They can help to create a value perception for the investor
• Don’t forget your niche – it is the specific segment you’re operating within

USP – Unique Selling Point

USP – Unique Selling Point of your product/service tells an investor how you are different. No one is interested in a business plan which is similar to your competitor or thousands of others in the market. One of the unwritten rules of a startup is its attractiveness because of its uniqueness. An investor will be interested to know why you are different. Everyone knows that startups operate in uncertain areas. No one will expect you to have all the answers.

At the same time, none of the investors wants you to be a business that is a replica of something else in the market. A unique selling point is indicative of what makes you special. Don’t fall into the trap of saying that your customer service will be special.

A unique selling point is something that cannot be easily copied. For instance, if you have a patent or unique product which will take a newcomer lots of time to develop – then your USP will have value.

4. Competitor Analysis and Route to Market

Every business has a competitor. As a startup, your business plan must cover your competitors and identify where you stand in the matrix. The most common way of representing your competitors is the market segmentation matrix. The matrix clearly indicates where you stand concerning the competitors. It not only provides an investor with the overall business view but the market snapshot as well.

Your business idea might sound unique, but a business with no competitors will attract very little interest. If not in direct markets, you will be able to find the competitors in related segments. Make sure that your business plan for startup will cover this.

5. Team, Product and your current progress

A business plan for startup expects you to write about your strengths. Most times this is reflected in the team you have. It not only shows how serious you are about the business but also indicates that you’ve managed to sell your vision to some other fascinating people as well. It is harder to be an individual entrepreneur, sometimes the investor world respects businesses with co-founders since it indicates slightly higher stability and your ability to work with others.

Talk about the team, product development so far. Focus on your MVP – Minimum Viable Product and market response. The market response indicates to the investor about validation of your product and its potential. If you have any customer surveys, initial sign up, customers etc they are very powerful ways of demonstrating that your business idea has potential. A paying customer often makes a huge impact on your potential investor.

6. Pricing, Route to Market and Financial Projections

The last piece in the business plan for startup is your financial projections, i.e. how will you grow? I talked about the famous exponential curve for a startup that attracts the most investors. The last segment of your business plan for startup is dedicated to proposed growth.

Surely, projections are a conjecture. Even with that knowledge, an investor is interested in knowing about your thoughts on growth. Make sure that you talk about your pricing, costs and route to market in this section. Also, indicate very clearly what their funding is going to do in your business. It must have a clear trajectory of investment and show growth scale quickly. Most startup plans show a dip for the first 2-3 years followed by exponential growth.

Don’t forget to indicate the cause for your exponential growth. It can be changed in the market or product enhancements that mature at that stage. Ultimately an investor wants to know what your business plan will offer them in return.

Summary: Business plan for startup

In summary, a business plan for startup is a clear indicator of your idea, preparedness and readiness of the market. Your job is to convince the investor, recruitments and everyone in the world including yourself that the business idea has potential. The plan will challenge you in numerous ways when you populate each of these segments. However, don’t give up that easily.

These are very good challenges and help you develop a strategy for your business. Most investors appreciate this approach and will want to help. Your mentors, initial investors will add a huge value in taking the business plan further.

Hope you found the article valuable, please let me know if you have any questions.