There are a few key building blocks to ready your business for investment, and more broadly ready yourself to succeed in your venture. Three key pieces of the puzzle are a great pitch, an exit strategy and a business plan. We’ve talked about the importance of having a business plan in what angel investors look for in startups – it’s a clear way of showcasing traction and interest in your idea early on, as well as the potential to scale up.
A business plan can help an investor understand your idea, and one that includes market research, forecasts and profit figures can help make your pitch really land with an investor in front of you. Not only that, a business plan is incredibly useful for other parts of your business, and putting one together will help you understand your plans, organise your thinking and help you make better decisions to succeed. Win-win right?!
So, what do you include in a business plan for a startup? We cover the key features of a good business plan and some things to consider when putting yours together.
A business plan enables you to be sure, the idea you had on a run 2 years ago can, in fact, be turned into a viable business – and the company objectives help outline what your business is hoping to achieve in a succinct sentence or two. Your objective / mission is the first thing investors will see, and something you should be always working to so consider some questions when putting it together:
- What problem will you be solving for your customers?
- What makes your idea different?
- What do you need to run your business?
- Who will benefit from your business?
As essential as your idea, is the knowledge of who will actually be buying your idea – it’s the first thing an investor will ask (or expect in your pitch) and where they will see opportunity for growth and getting their investment back. Doing your research on the market will not only please your investors but help you identify where to market, who to aim to attract and enable you to succeed.
With market analysis you should be able to identify your potential customer base, who they are, where they’re located and potentially located for future expansion, why they want to buy your product and how much they are willing to spend on it.
You can find out the answer to these questions by conducting desk research, field research (such as focus groups and surveys), and once you have the details it will help you paint a picture of your market potential, and how much of the market you could potentially capture.
This section links nicely with your market analysis as you will have identified your competitors during this part. Now it’s time to dig a little deeper into your competitors to identify their potential threats, to show how you stand out from them and how your business will be able to compete successfully.
This exercise will enable you to pick out your USPs, and lead you to structure your marketing to encourage customers to move from them to you. A SWOT analysis will be sufficient to gather enough information about key competitors.
This is your opportunity to analyse how much money you will actually need to set up and run your company and check your plan is financially viable. It will ensure you don’t overspend on unnecessary things, but also be realistic in the true cost of building a business from scratch – everything will cost more than you first think and there are always hidden costs and this will help you weed them out.
The financials help show an investor your projections for turning a profit, and scaling. In this section you will include, costs and projected sales. Ensure you include money so you can survive while you get off the ground, and don’t throw everything including the kitchen sink in, as with everything in business, there are big risks involved.
Marketing and Sales Plan
This is an essential and challenging final piece of the puzzle. There’s not point in having everything in place without an idea of how to put to market so think about the following when building your plan:
- What are your sales channels?
- How much marketing budget will you have? This will link to how much you are expecting to sell, your market size and competitors.
- How will your market your product / offer? Think advertising, social media and content marketing, collaborations etc.
- What collateral will you need?
- Who will be conducting the marketing?
- What is your sales forecast?
Writing a business plan is an essential step when you start a new business. It can give you the bigger picture of what you are trying to achieve, and enable better decision making and save time and stress down the road. Your business plan is a living document that can be reworked as your business develops, but having it there from the beginning will go some way to supporting your success.