29 Jan What to Include in a Business Plan to Secure Startup Funding
Few terms prompt fully grown men and women to moan “Awwww, do I have to?” like “business plan.”
Short answer: No. You’re an adult, even if you’re doing an impression of a 7 year old. Nobody’s going to make you write a business plan.
Slightly wordier answer: Yeah, you really should. It forces you to think things through and focus, set concrete goals and devise actionable steps to meet them, augment the conceptual with tangible details, and do important research. And most sources of startup funding will want to read it.
You’re much better off having a solid business plan in hand before you approach the bank, venture capitalists, your rich uncle, angel investors, grant-granting organizations, your irkingly successful high-school ex, or anyone else about startup funding.
Most business plans should be customized a bit to fit your ideas and needs. For example, you may or may not include a Funding Request section or an Appendix, or you might separate Competitive Analysis or Target Market from Market Analysis into more detailed individual sections.
That said, at minimum, these elements should be included in business plans:
Nothing like starting off under pressure; this is the most important part of your business plan. It leads, but it’s often easiest to write last, so you can distill all the other information down. But, while it summarizes you, your team, and your concept, it’s no mere recap of everything that follows. Include what makes your business unique and likely to succeed, your mission, your vision for the company’s future, and what you’re seeking in the way of startup funding or other assistance.
It sounds self-explanatory, but don’t short this section. It should cover specific details about your business, but it should also describe your industry in a larger context. What’s happening, what’s the outlook, what are the key innovations and concerns at the moment, who’s being served, and how will you fit in and stand out?
This can end up a big, unwieldy section, which is why some people break it up. Specifically and narrowly identify your target market, quantify them, explain their relevant habits, and address how you meet an existing need of theirs. Name competitors, point out their strengths and weaknesses, define their market share, and include your projections for gaining market share. Bring up barriers of entry into the marketplace and your solutions, too.
Obviously, you need more than a great idea to make money. You also need great ideas for selling your great idea. How will your brand penetrate the market and reach your target consumers? Will you have a sales team or marketing department and how will it operate? How are you budgeting for marketing efforts? It’s common to fill this section up with broad, vague notions and intentions and generalities, but that’s a huge mistake. Be specific; this isn’t the place to skimp on actionable particulars.
Product or Service Description
Presumably, you’ll be selling something. Go into detail about what that is exactly. Talk about past, current, and future research and development activities, as well as development and production processes and requirements. Mention any intellectual property claims or concerns. Explain the major overhead considerations associated with development, production, and distribution.
Management and Organizational Plans
To get your hands on startup funding, lenders and investors want to see provisions for the logistics and other nitty gritty of day-to-day business. Identify ownership and the board of directors if applicable, your organization’s legal status, and your organizational structure and management team. Define each department and member’s primary responsibilities. Outline the qualifications of yourself and other head personnel.
Established businesses have more to do here, covering their past finances, but when you’re seeking startup funding, it’s all about showing financial viability. Discuss your operational expenses and budgets, along with your projected income broken down monthly or quarterly for the first year, quarterly for the second year, and yearly for the remainder of the first five years.