21 Jan Total Startupper: Your Guide to Business Plans for Start-Ups
One of the first rungs on the ladder to building a successful startup is being equipped with a comprehensive business plan. It’s a powerful, active document guiding entrepreneurs by outlining the micro and macro details needed for them, and potential investors, to understand the fundamentals of their business. A business plan provides crucial information outlining the scope of operations and “describes the ultimate objectives of a business, with resources, methods and timelines of achieving those goals”, says Elana Siew of Mentors, who specializes in enabling businesses to achieve performance excellence.
Startups have potential to grow exponentially, but in order to steer the business in the right direction and before writing a plan, you have to identify the nature of what you’re building and whether or not it’s aligned with your lifestyle. Being realistic about the kind of kind of business you’re creating doesn’t mean you’re limiting entrepreneurial growth or income margins, but rather ensuring that in the long run it’s financially and practically viable. During initial phases, startups require an extensive amount of energy and because passion goes hand in hand with planning, it’s best to build something you genuinely care about that is in agreement with your life vision.
Once you know your business fills a gap in the market, Mornay Vivier, the managing director of MetaPerformance, advises every potential entrepreneur to begin by defining the operation’s purpose, vision and mission. Outlining your a startup’s purpose clarifies “its reason for existence and drives all subsequent actions and behaviours,” he says, “while the vision declares a company’s intention and how it finds fulfillment by stating what it’s aiming to achieve. It should address the needs of the employees and society”.
Expanding on this is your mission statement that Mornay says should be “timeless, corresponds to your inner passion” and combine business with purpose. Although these philosophical questions are less finite in nature, being able to answer them succinctly means creating a goal-orientated enterprise that in turn creates value and becomes a key motivating force to attracting suitable employees and generating beneficial business exchanges.
Depending on the complexity of the business, a plan can range in length from 15 – 100 pages but must always be to the point without fancy jargon and able to persuade potential stakeholders to invest. Therefore, be sure set aside enough time to conduct sufficient market research to improve your understanding of potential external and internal factors that could contribute towards your business’ productivity. Putting together large amounts of research isn’t a fly-by-night activity, but once complete should be user friendly and easy to understand.
Primarily, a business plan should be written “for those who implement it and is a step-by-step guide with defined responsibilities and measurable targets”, says Elana. A sound plan should be structured in such a way that updating information is easy and doesn’t require drawing up an entirely new document. Although there’s no cut and paste template, there are general prerequisites that it should cover, such as your business concept, marketing research, strategies and financial logistics.
Broadly speaking, outlining your business concept is essentially creating an executive summary that describes: your start-up’s mission statement, what your business sells and how it fills a gap in the market, a list of key personnel, its structure, contact and location details. You should also include any major achievements and details on how you aim to make your business a success. This is the first part of your plan, so the reader must get a strong sense of what your startup is about before moving onto the nitty-gritty logistical elements. The aim of an executive summary is to introduce the basics of your business and provide a clear sense or purpose. The “more specific you are, the clearer it reads”, advises Elana.
The next section should include a marketing and operations plan. It’s here that you demonstrate you’re serious about your undertakings and reveal how you plan to turn your ideas into reality. This component brings together all your market research and reveals who your target market is, how your strategies will sustain a competitive advantage over other businesses and provide solutions for potential challenges. Following this should be a detailed breakdown of your management plan, HR processes and timeline of when you’re expecting to achieve particular milestones.
The last part of the document is the financial plan which incorporates the start-up’s “projected profit and loss, balance sheet, cash flow statement and a break-even analysis”, says Mornay. It’s easy to get bogged down by heavy data so use graphs and charts to display a clean set of realistic financials. Remember, a business plan is constantly referred to, so clarity of content is equally as important as presentation and where possible, data should be formatted in a way that’s easy on the eye and entices people to read it.
Like a GPS, because a business plan acts as guide to determine a start-up’s parameters and where it’s heading, it requires frequent updating. If there’s a change in management, a new financial period or it no longer reflects reality then you should immediately revise initial proposals. Once written, consult it regularly to check you’re on track and assess where operational improvements can be made. Elana notably suggests that because it’s being used by you, “the most critical component of the business plan is that you’re convinced you can actually implement it and make a success of the business”.
Read what 3 serial entrepreneurs with burgeoning local businesses had to say on what it takes to start a business.
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