Whether it’s to guide the growth of your business or to secure investment, having a solid business plan is a vital tool for startup founders.
The main goal of your business plan is to explain fundamentally what you want your business to accomplish and how you intend to do it.
Throughout your startup journey and beyond, your business plan will help you navigate what you need to do and when in order for your enterprise to succeed. So, it’s important that you really hit the nail on the head.
In fact, Pensionbee founder Romina Savova believes a sound business plan is the best way to prepare your startup for seed funding and other subsequent funding rounds.
So, what should your business plan include? In this article, we’ll discuss all the sections you’ll need to cover all bases.
Your executive summary should explain succinctly what your business does, essentially covering the same ground as an elevator pitch.
Although your executive summary comes first in your business plan, it’s a good idea to write it last. This is because within your executive summary, you will also briefly summarise the other sections of your business plan.
In short, your executive summary should cover the following:
- Your business proposition
- Your mission statement
- The key people involved in your business
- The progress you’ve made to date (traction)
- How you will generate an income and profit
- An outline of your competitive advantages against other businesses in the market
- How you will market to your customers
- Financial projections (and requirements, if asking for investment)
Your company description section should highlight the most important information about your business. What problems does it solve? Who are its customers? What’s your vision?
You should also cover why you are the right person or team to take on this idea. Having a team of experts, for example, will set you apart from your competition.
You should also use this section to cover off your objectives. These can include both financial and non-financial goals, and can be split into short, medium and long-term ambitions.
Remember that all goals should be SMART (specific, measurable, achievable, relevant and time-bound). For example:
- Increase site visits to our website by 50% by the end of Q4
- Secure five new Tier 1 clients by the end of Q2
- Grow our team by two team members by the end of the financial year
Market and opportunity analysis
It’s important for you to have an understanding of your industry’s market and target audience – this is how you can establish what you can provide that others currently aren’t.
This section is particularly important if you’re securing seed funding, as investors want to make sure that any businesses they work with have their best shot at success.
“We want to make sure we have businesses that can grow and become 10x or 100x of what they are,” said Darren Westlake, previous judge from The Pitch.
Research market trends and conduct a SWOT analysis to determine any opportunities that you can take advantage of.
Make sure you include detail: find three or four competitors and include a short description of each, and how you’re providing something different from them.
Also, be concise about your market size – if you sell sustainable clothing, don’t refer to the entire clothing industry as your market. Instead, find research that focuses more on your specific target audience.
Within this section you can also provide proof that you’ve tested your business idea. This can be done by asking your target audience, assessing the competition or assessing customer demand.
“We went and spoke to some local clubs we knew really well and said, could we try it? It was about seeing how it would work, whether it was a good idea and if it could be monetised,” said Ben, co-founder of YesRef.
The service or product line
Concisely explain what your business sells or what service you offer, placing focus on how it benefits your customers and/or what issue you’re tackling.
Other points you may want to cover in this section include:
- The product life cycle
- Any copyright or patent plans
- Explain any research and development you have done (or are planning on doing)
Sales and marketing
Every business will need to market their product or service in order to reach their customers. In this section, you will need to cover how exactly you plan on doing that.
Put your customers at the forefront of your mind: what’s the best way to target them in particular? For example, if you’re targeting teenagers directly, social media will probably be a better bet than networking events.
Potential sales and marketing channels include:
- Social media – don’t forget to specify which platforms!
- Email marketing
- Content marketing, such as articles
- Networking and attending relevant events
- Cold calling
Make sure you backup your plans with some evidence as to why they are the best methods. You should also specify how much time and money you plan to invest on your marketing and sales, which will crop up again in your financial plan section.
Organisation and management plan
As the title suggests, this is where you cover how you will operate and manage the business.
Start by breaking down the important members of your business and what their responsibilities are, emphasising why their experience makes them the right people to do the job.
You should also describe the structure of your enterprise. In other words, whether you’re a sole trader, partnership, limited liability partnership or limited company.
Many startups use their business plan primarily to request investor funding. If this is also the case for you, then you will need to include a section outlining your funding requirements.
You need to make it clear and simple to the investor how much money you want and over what period of time. This means that they will have a solid idea of your expectations, helping to avoid confusion at a later date.
In return, you’ll also need to break down what you will use the funding for – investors will want to know where their money is going. For instance, will you spend it on marketing? Or will you use it to buy the equipment you need?
Financial plan and projections
Your penultimate section should cover your finances and projections. If you’re also asking for funding, include how this will come into play in your business’s finances.
Areas you may need to cover include:
- Raw materials
- Staff wages
Whilst you can display your costs as a simple list, it’s a much better idea to present the information in a cash flow and profit and forecast. This will help you seem more professional and assure investors that you won’t be a risky investment.
Want to learn how to create your own cash flow forecast? Check out our article on preparing a cash flow forecast that investors will love.
Finally, input any supporting documents into an appendix at the end of your business plan – particularly those that have been requested by an investor.
These can include additional information about your products, financial history, legal documents, licences and other materials.
Want to get your business in front of potential investors? Over the years, The Pitch has helped founders raise tens of millions in investment.
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