What should be included in a Startup Venture business plan?
The business plan is a detailed roadmap for your business. It is a non-static, living, breathing document that should be updated regularly to reflect the course and strategy of the business. The B Plan provides context and gives a holistic view of the entire activity. It is as much a planning tool for the entrepreneur as it is a tool for interacting with outside parties.
The business plan will generally contain a detailed explanation of the product, service, or concept, the market, the organizational and management plan, the management team, financial position, financial projections for 3-5 years out, a marketing plan, and any other elements that would serve to adequately explain your business.
Below we provide an overview of the business plan that we will explain in more detail in subsequent posts.
Overview of the Business Plan
There is no single model for a business plan. In truth, the true value of the business plan is to the entrepreneur. It allows for constant reflection on the big picture; which can become obfuscated in the daily grind of building the business.
A good business plan does not happen over night. As previously stated above, this is a living, breathing document that should provide a guiding light for the business. As the business grows and develops, so should the business plan. Having all of the components of your business in one place will allow you to make assessments about the process of building the business and ascertain the overall value proposition. Continue to re-think your concepts, assumptions, projections, etc. It will only help to solidify your business going forward.
Business Plan Components
The Table of Contents – This should include the major sections of the business plan. The key is that (like a resume) you want all of the components to fit in an organized manner on one page. I use the resume analogy because the table of contents is a snapshot, outline of the business plan. A well-planned table of contents goes a long way in showing the depth and development of the business components.
The Executive Summary – This section summarizes the entirety of the business plan. It should possess the same voice or the same tone as the body of the business plan. Often this is the most text or writing that an investor will be willing to read.
A General Description of Your Product, Service, Idea or Concept – The General description of the product service or idea should encapsulate the first 20 seconds of your elevator pitch. As with any good plan, the strength of the plan depends entirely on how well the planner understands the initial concept.
A Detailed Analysis of the Value Aspect of the Products and Services – While you value that your product service or idea will create should be intuitive, this section of the business plan should articulate it very well. Remember, at this point all we know is what the product service or idea is. In some cases a single product, service, or idea could be complex and have multiple value propositions that are not apparent from a general understanding of the concept. Regardless, this is the section where you can describe what will be the overall value proposition for customers.
A Market Analysis and Approach to Reach Customers – Now we move to the planning portion of the business plan. This section should outline your market analysis. This section is very broad. You can and generally should spend a lot of time developing this section. It includes the factors that helped you to decide to push forward with this venture (mark size, segments, pricing, demand, etc) and it will contain the portion that shows you will be able to compete (SWOT analysis, Porter’s Five, or other strategic market analysis). This section will contain as much information about how you will remain competitive in the existing market as it will the attributes of the market you are entering.
A Description of How Your Business Will Carryon On Activity or Operations – This section will explain how the business will function. What type of operations will your business undertake to deliver value to the customer. You should be detailed about your production efforts and requirements, inputs, outputs, logistics, suppliers, etc. This is the “how to” section of the business plan that will explain how you are going to do what it is you do.
A Plan for how the Company will be Organized and the Management Structure – One of the main concerns for business owners, partners, etc., is “how will the business be structures?” In this section you need to explain: how the different functions of the business will be organized. Will there be different teams or groups that carry on certain functions? You will need to explain anything that involves the owners, directors, and officers, including: who will be involved in the business; what role they will play; their responsibility; their authority; the ownership rights, etc.
A Description of the Financial Position of the Business – In a startup business, this will generally be a rudimentary balance sheet. If you are already generating revenue, then you will likely include a current cash flow statement to give a picture of who much money is flowing as part of current operations.
Startup Expenses and Capitalization – This section will include funds and assets already used to capitalize the business, as well as the projected needs of the business. In the event you are using the plan as a tool for acquiring outside equity (Angel Investment or Venture Capital) you will need to show the proposed ownership breakdown at anticipated capital investment rounds. Investors will be concerned about how you are going to use their money and what their return on revenue will be. This will necessarily include the projected ownership interest of all involved parties at different points in the life of the business.
The Financial Plan – This portion lays out the anticipated financial projections of the business moving forward. Like the section above, the financials will lay out the period use of cash and assets to generate revenue. Early in the business the financials will be very speculative and tenuous. A good practice is to prepare a worst case, conservative, and optimistic set of financials. You will continue to update these plans with every significant financial move you undertake as the business develops.
The Appendices – While the Financial plan is often the very last thing in the business plan, you need to append other documents for reference. I caution against appending too many things that detract from the planning function of the overall business plan.
Conclusion – This post is intended to give you an overview of the important components of the business plan. In subsequent posts we will elaborate on each individual section to aid you in your business planning process. This will include information on how to tailor the document to the specific purpose for which you are using the business plan.