A business plan is a document that acts as the foundation of your business. Any venture that takes the amount of planning, coordination, funding and persistence that starting a business requires will need set guidelines for the owners to lean on in each step of their journey. Having a business plan will be essential when you need to obtain funding or plan to bring on a new business partner. There may not be a single tried-and-true format for business plans, but picking the right format which meets the scale of your business will be essential. With the nature of startups, you’ll want to make your plan is thorough but flexible enough that you can adapt to a shifting business environment and economy.
Here are the key elements you’ll need to consider:
Map out your key partnerships
Very few businesses can “operate in a silo”. Chances are your business is going to rely on suppliers, contractors, vendors or manufacturers.
What is your ‘business offering’?
Define the actual goods or services that your business will supply to customers. This can be the most critical part of a business plan. As part of defining your business offering, you will need to write your value proposition. A value proposition is a description of how your service will help a customer and how you differentiate yourself from your competition. This will include elements that define what your customer can expect with pricing, efficiency and experience.
Who is your customer?
Though it may seem counterproductive to limit your reach, creating a niche and clearly identified ‘ideal customer’ will allow a startup business to concentrate limited resources more effectively. Beyond who your customer is - where is your customer? Deciding what channel your business is going to leverage to reach your customer will be equally important, as this will help you define whether your business needs to invest in an online presence, brick-and-mortar commercial space or heavy marketing efforts.
What are your operating costs and how do you make money?
Businesses cost money to run (even dropshipping), and the age-old adage “it takes money to make money” wasn’t invented because it’s a clever play on words. Operating costs are how much it will cost to produce your product then take it to the market. This part of a business plan needs to consider production, marketing, rent, salaries, travel and utilities.
Your business will operate off of one of two cost structures: Cost-driven or Value-driven. A cost-driven product is going to deliver your customer a product at a reduced cost (ex. Affordable supermarket). A value-driven product is going to deliver your customer with something that holds value when buying it (ex. unique, high-quality produce).
From each customer segment your business has, you will need to generate revenue. To have the slightest consideration for a funding request, a business plan needs to have defined revenue streams. These can vary greatly for small businesses. Is your business selling a subscription service (cable tv), or are you going to charge a usage fee (bike rentals)?
Building out a business plan for a startup is not something that can be bypassed if you expect your venture to become profitable. Putting time and effort into a well thought out plan will set you up to find the best lenders and partners. At Prior Business Consulting, we have a team of experts that understand what it takes to create the ideal business plan for a startup. Call us today to learn how we can help you lay the foundation for your next big idea!