Do you have that great idea that you would love to transform into a successful startup? Well, you have come to the right place! Let me assure you that starting up a startup is not for the faint-hearted, it is fun while it could scary too. I have found out that one of the most significant elements or aspects of a successful new venture is a good business plan. Today, let’s explore the wonderful and fascinating world of business plans. Well, get ready because I will take you through 12 steps to writing a business plan that will turn your entrepreneurial aspirations into a solid plan.
But before I go any further, let me share some facts and figures you might find interesting. You might be taken aback knowing that the Small Business Administration (SBA) has estimated that about 20% of start-up businesses can shut down in their first year of operation. Now don’t get too scared – I am here to ensure that you do not become one of those statistics. Well, do you know what the key factor in achieving business success is? The answer is a well-formulated business plan and we provide some help on that account below.
How business plan can help to grow your business?
Now that we have laid out the steps, it is important to briefly explain why you need a business plan in the first place. Consider it as the compass for your business – it will assist you in avoiding dead ends in the world of startups. Here is the importance of business plan for a start up:
- Ticket to funding: People investing are always looking for a plan or guidelines. Indeed, in the recent years, more than 80% of funded Indian startups claimed to have well-developed business plans.
- Clarify your vision: Ever felt like you are losing your way when you are trying to explain your business idea to your audience? Writing a business plan is beneficial ensuring that you express your vision in the best way possible.
- Keeps you on track: It is similar to a report card in the overall performance of your business. One key aspect of project management is that it assists you in tracking the overall accomplishment and independence of adjustments when necessary.
Well, without further ado, allow me to present the 12 steps on how to write a business plan.
12 steps to writing a business plan
Step 1: Craft Your Executive Summary
The first step among the 12 steps to writing a business plan is to craft your executive summary. The executive summary is very essential because sometimes, it is the initial and sometimes the only impression that investors get. Ideally, it should be a short, meaningful piece of writing ranging from half a page to one or two pages.
- Business Concept: Provide a brief description of the nature of the business of your corporation. For example, if you are starting a sustainable fashion brand, you might write: In the current development, your company has been established as an online store selling fashionable kinds of clothes made from recycled materials that are affordable to millennials.
- Financial Highlights: Make sure that you incorporate certain allowable expected figures. For instance: Your project aims to generate first-year sales of $500,000 and reach $2,000,000 by the third year of operation with a net margin of 15% in the fifth year of business.
- Unique Selling Proposition: Emphasize your uniqueness and why you are well suited for the job. Example: Different from most fashion brands, the overall process of your brand is carbon-neutral, and it targets the 73% of millennials who are ready to spend more on sustainable goods (Nielsen, 2023).
Pro Tip: When writing the executive summary for Ola Cabs their vision of being an affordable transportation network in urban centers probably played a big role in their ability to attract the early funding needed to become a multi-billion dollar company.
Step 2: Paint Your Company Picture
This section gives further details about your business than is given in the summary section.
- Business Description: Elaborate on how your business works and who it caters to. You can mention something like ”Our product specializes in the sale of apparel from 100% recycled materials and our target market is the young, trendy, and cosmopolitan customers between the ages of 18 and 35 years old”.
- Problem-Solving: State your purpose and make sure that your audience will fully understand the problem you are solving. Fast fashion accounts for 10% of global carbon emissions; your brand aspires to lessen this figure, yet address – and fuel – consumers’ desire for inexpensive, trendy garments.
- Company Structure: The company’s legal structure and ownership are best described as follows: This is a private limited company, 60 % of the stocks are owned by the founders while 40% is owned by future investors and employee stake.”
Step 3: Become a Market Research Maestro
Good market research helps show investors that you know your business environment and your audience. Provide pieces of evidence from the analysis of the data that are available to substantiate the assertions made.
Market size: According to an article published in Kings Research, the global sustainable fashion market size was valued at USD 7,070.6 million in 2023 and is projected to reach USD 13,513.9 million by 2031, growing at a CAGR of 8.58% from 2024 to 2031.
Customer Id: The ideal customer should be defined using demographics, psychographics, and behavior. In this case, your company must aim at conveying an environmentally friendly message to the urban millennials (25-40 years old) with a median income of $ 60,000 who consciously make an effort to purchase sustainable products.
On this basis, assess first and second-tier competitors. Much like Patagonia and Reformation dominate the niche market for sustainable clothing; let your brand address the middle-ground section of the market, with slightly lesser price tags but no compromise on sustainability.
Please remember that at the time an Indian startup ecosystem is expected to reach $100 billion by 2025, which reveals that the country offers a huge market and a lot of opportunities for startups.
Step 4: Structure Your Dream Team
This is the area where a startup can either make or break – depending on the strength of the team. I have heard many investors state that they invest in people, not the idea. Outline your company’s hierarchy. However, as an entrepreneurial and innovative company, you must maintain a flat organizational structure to allow for fast decision-making. For example: The team consists of the CEO with 10 years in Experience of fashion retailing, the CTO with a Sustainable Manufacturing background, and the CMO with prior D2C marketing success. In addition, the Head of Design was previously employed at reputed firms so they have prior experience in designing sustainably.
Just like the organization structure of Zomato which developed rationalized job descriptions for growth, tech, and operations made it easier for them to spread to different countries.
Step 5: Boast About Your Ultimate Selling Proposition
This is where you go beyond features and into the benefits, differentiating your product or service from others. Emphasize your uniqueness.
You need to understand how your product or service is and create a clear communication of what your product/service can do that your competitors cannot. For example: “We have got a patent pending for the recycling mechanism which helps to recycle the plastic waste and produce fabric from it.”
Step 6: Identify Your Marketing Takeover Map
The 6th step of 12 steps to writing a business plan and indeed a crucial one is identifying your market takeover outline. Your marketing and sales plan demonstrates how you will market and sell your product.
- Marketing Strategies: Describe how you intend to target your customers. Here, a clothing brand will tap into influencer collaborations and select micro-influencers that are knowledgeable in the topic with higher engagement levels in the space.
- Sales Process: Explain how you will turn this concern into business.
- Pricing Plan: Price your products correctly; be prepared to explain your pricing strategy. Just like ”Some of our products will cost about 15-20% more than the fast fashion products, however, making a shift to sustainable products will be affordable with us.”
Regarding the marketing approach, Paytm initially focused on establishing trust by providing people with cashback to use their application. With these objectives, they had amassed more than 333 million users by the year 2021. This approach can be highly beneficial.
Step 7: Show Me the Money (Request)
When it comes to funding, one should be very clear about the exact requirements. It is important to state your requirements clearly to the extent you require. Explain how the money will be utilized in detail. For example, 40% to fund inventory growth, 30% for advertising and promotion, 20% to invest in developing technology, and 10% for the recruitment of senior staff.
It is necessary to lay out the detailed timeline and strategy of how it will be possible to spend this funding within the next 1.5 years in order to reach the proposed goals of entering three new markets and tripling your product assortment.
Step 8: Crunch Those Numbers
Budgetary planning helps investors to understand possible investment returns.
- Income Statements: Balance your revenues and expenses forecasts.
- Cash Flow Projections: Map in and out how cash will flow into and out of the business.
- Balance Sheets: Include a balance sheet at a specified date to let the reader have an idea of your financial status.
It is also important to keep things modest by avoiding over-optimistic assumptions. High expectations are never useful because people who are most often overzealous end up compromising the credibility of their forecast.
Step 9: Beef up Your Appendix
The appendix should include additional materials that reinforce your plan and give it authenticity.
- Resumes: Provide detailed and updated CVs of professionals in the key positions.
- Product Photos: Use current products or samples of products that have not yet been put into production.
- Legal Documents: It qualifies that documents such as patents, trademarks, or key contracts be included as part of the book value.
For technology-based startups, a product demonstration could be effective. It is probably not a mere coincidence that when Flipkart was being formed, the company’s founders must have considered including the demonstration of the company’s online book-ordering system as this must have easily made the investors understand the value of e-commerce in India.
Step 10: Address the Risks
The main benefit of considering possible difficulties is that doing so demonstrates to investors that you are well informed and do not shy away from potential issues. Identify possible factors that can hinder discretionary spending. Some of the threats include supply chain disruptions, competition from key sustainable fashion rivals, and unfavorable economic factors. For instance: to manage supply chain risks, in my organization, I am building supply chain partnerships and acquiring inventory management systems.
Step 11: Map Your Implementation Plan
This section brings into perspective how your plan can be implemented.
- Detailed Roadmap: Subdivide the goals into particular step by step procedures. For instance: Finalizing product designs and production – months 1-3; starting the marketing campaign and opening an online store – months 4-6.
- Milestones and Timelines: Define goals appropriately with clear measures that can be attained in a given period.
- Assigned Responsibilities: It is important to establish hierarchies and who is to be held accountable for which task. For instance, our CMO is in charge of overseeing the execution of the marketing campaign, and our COO is responsible for managing the supply chain improvement process.
Step 12: Seek the skill of revising while justifying the steps of writing a business plan
The last and 12th step to writing a business plan is to revise. Your business plan should be relevant and grow along with your business.
- Regular Review: Schedule a time for when you should review and update your plan. Business planning: The firm will provide a quarterly business plan review and an annual business plan update.
- Adapt to Market Changes: Be ready to keep up with change and accommodate it. For example: When COVID-19 came, many businesses had to adapt their products to include face masks, which they now sell and contribute to a hefty percentage of their total sales.
- Seize New Opportunities: Be ready for changes and diversifications. As customers suggested, we are planning to offer some of our top selling products in a subscription mode.
By following these 12 steps to writing a business plan and reviewing the plan on a regular basis, you will establish a sound framework for your business’ success. However, you must remember that a good business plan does not just forecast the future but rather creates a roadmap that could be adapted as you need to in managing your evolving business.
Implementation of Business Plan
Deciding on a business plan needs discipline, concentration, and also periodic check and balance. But you might think about how to implement business plan? You can follow these steps for the proper implementation of a business plan:
- Start Small: Aim at reaching specific objectives that serve as steps towards the accomplishment of long-term goals.
- Monitor Progress: Always check your progress against the set plan and correct the gaps that are present.
- Stay Spirited: Be flexible and prepared for the scenario when the market turns different or you find some new opportunities.
Is It Mandatory to Have a Business Plan?
Having a business plan is not legally compulsory but it is highly advisable anyway, especially when the entrepreneur is planning to source for funds or when the goal of the business is to grow big. In the case of self-funded start-ups, business planning is a useful tool to navigate through the existing realities and plan prospective actions.
Potential Disadvantages of Free Business Plan Generators
There is a variety of online free business plan generators that allow you to start with a business plan, however, they most often are not as specific as to meet the needs of certain sector types or to solve definite problems.
Startup business plan templates
Image Source: Smarsheet.com
Generally, these templates provide basic models that do not encompass the intricacies of your business model. It is always advisable to seek help from a professional business consultant because they are in a position to offer you unique solutions to the issues affecting your business exclusively.
Conclusion:
We are indeed at a stage where we can now almost sum up the entire picture with some assurance. Never forget that business plans and the 12 steps to writing a business plan are not about checklists but about the living document that outlines the execution plan of the start-up.
As you embark on this exciting journey, keep the words of Reid Hoffman in mind: It is said by Rear Admiral US Navy that, “An entrepreneur is someone who jumps off a cliff and builds a plane on the way down.” With the above-mentioned 12-step plan, you are not merely constructing a plane, but a state of art jet!
Well, future business tycoon, are you geared up to write your successful startup story with my startup business plan guide? Let me remind you that every successful business was born with a strategy. So here is your chance to write the history, or rewrite it as you wish.