Launching a new business is an exciting time. You’re eager to move things forward and begin building your dream.
However, in developing the perfect startup business plan, there are four keys you must follow.
Below you’ll learn those 4 keys and the 10 elements you must include in a winning startup business plan.
BONUS Alert: at the bottom of this article, you will find a free business plan template you can download and complete.
1. Market Viability
The first key to successfully launching a new business is to make sure you have a viable market. A viable market means that the market size is big enough to support your company, and ideally is growing in size. Conversely, if your market is too small, then you can’t succeed.
Let’s use an example. Let’s say that I want to offer pet cleaning services in my town and research shows there are only 18 people in my town who own pets. In this case, even if I get 100% of the market to use my services, and the average person spends $100 a month, this business could never generate more than $1,800 a month in revenue, and doesn’t have much growth opportunity. As such, this is not a viable market (unless I’m satisfied with a business generating $1800/month in sales).
Because this is so important to the success of your business, be sure to thoroughly conduct market research to prove your market’s viability.
2. Action Plan
The second key to successfully launching a new business is to document your action plan. To do this, write down the precise accomplishments you hope to achieve:
- Monthly for the next six months
- Quarterly for the following two quarters, and then
- Annually for the following two years
For example, you may write that in the current month, you will create your website. Next month you conduct market research to determine underlying customer needs. The month after that you will hire your first employee. The following month you will start advertising your business. Then the following quarter you will make 100 phone calls per day to gain your first three customers.
By specifying precisely what you need to accomplish during each time period, you gain a better understanding of how your business should progress and the time and/or funding requirements of each activity. Equally, if not, more importantly, it forces you to set precise goals. The goals keep you focused and help you avoid being distracted by other opportunities and mundane tasks.
Most entrepreneurs severely underestimate the amount of time and number of steps required to launch a business. By creating a detailed action plan month-by-month, particularly for the first six months, that lays out your plan, you will gain a better understanding of what’s required of you, and ultimately be much more successful.
3. Customer Traction
The next key to successfully launching a new business is to gain customer traction quickly.
“Customer traction” is when customers test and/or buy your product or service. The earlier the traction you can get, the more successful you will be in launching your business.
Importantly, this involves getting your product or service into the hands of prospective customers as quickly as possible. A lot of times we refer to this initial product as the MVP or Minimum Viable Product. Your MVP is not the perfect, completed product that you ultimately envision, but it is a product that has enough functionality that customers can use it.
Importantly, by getting your MVP in the hands of customers, you can learn what they like about it, what they don’t like, and if they might eventually buy it. This customer feedback is critical to launching a successful business.
You will get feedback with regards to price ranges customers might pay. You’ll learn the features they want and don’t want. This feedback tells you if you have a viable opportunity, that is if customers buy your product or service from you.
Note that in certain cases, it’s hard to gain customer traction in the earliest stages of a business. For example, when launching a restaurant, it’s hard to gain full customer traction or feedback until you’ve built out your restaurant, staffed it, and so on.
But still, there are creative ways to gain customer traction and feedback. For instance, perhaps you could set up a booth at a local festival, offer food and speak to customers. Figure out a way that gets your offering to customers quickly, as the feedback is often priceless.
4. Business Plan
To reiterate, there are three keys to successfully launching a new business.
- Make sure you have a viable market
- Document your action plan
- Gain customer traction as quickly as possible
Once you’ve completed these steps, be sure to include them in your business plan. By detailing your market size and viability, your action plan, and the feedback and traction you’ve gain from customers, and combining this with other key information such as your marketing plan and financial model, you are on pace to create a business plan that investors and lenders will find irresistible.
Your startup business plan needs to include 10 sections as follows:
1. Executive Summary: This section sums up your entire plan and gives the reader a quick overview of what your company does and why it will be successful.
2. Company Analysis: provides an overview of your company’s status. Are you newly conceived? Have you been around for years? Are you incorporated? Where?
3. Industry Analysis: details your precise industry, its size, and trends that are shaping it.
4. Customer Analysis: discusses the key customer segment(s) you serve. Answer questions such as: What are their demographics (e.g., age, income, or industry and function if B2B)? What are their psychographics (e.g., what websites do they frequent)?
5. Competitive Analysis: shows your direct (similar offering to similar customers) and indirect competitors (similar offering to different customers OR different, but related offering to similar customers) and their strengths and weaknesses.
6. Marketing Plan: details your products/services you offer, your pricing strategy, your channel strategy (e.g., sell via a website, via partners, via wholesalers, etc.), and your promotions strategy.
7. Operations Plan: shows your short-term and long-term growth strategy and processes.
8. Management Team: includes your biography and biographies of other team members.
9. Financial Plan: provides an overview of your Income Statement, Balance Sheet and Cash Flow Statement, and discusses financing requirements.
10. Appendix: includes any supporting information such as your full financial projections (Income Statement, Balance Sheet and Cash Flow Statement) and other key information such as patents, lease agreements, etc.
Startup Business Plan Infographic
Below is an infographic of this article for quick reference.
In thinking about your startup business plan and successful launch, we put together the slide presentation below to give you inspiration from 2015’s Most Succesful Start-ups: