A business without a plan is like a ship without a rudder – ultimately it will run around aimlessly without clear direction. Writing a business plan for your startup or new business will also help focus your thoughts, and those of your team, towards the goals that your new enterprise needs to achieve.

The first step towards writing your plan, whether it be for an existing enterprise or a new startup, is to do your homework. What you need to identify first is the one critical thing that makes your product or service stand out from all the rest. This is called your key competitive advantage

You will need to identify the need that you fill, and see how people have been filling it before your product was available. This is an easier task if your product hasn’t yet hit the market, but is still challenging as you will have to prove its potential worth to your prospective investors.

Verify your assumptions by doing a comprehensive competitive analysis in Excel format that lists every possible solution, its pluses and minuses, and its cost.  You will need to do a lot of research to complete this step, but don’t rush it as it is creating vital information that will determine the direction of your company.

Next, you will have to size your market.  The total number of people already filling the identified need in one way or another is called the “Market TAM” or “Total Available Market”.  This is usually identified both in units, and in dollars (or in other relevant currency).  The segment of this that your product can address is called the

Market SAM& or Served Available Market&. This is usually determined by first segmenting your market – slicing it up into smaller areas that have one thing in common, and determining where you play.

Segmenting your market and choosing key segments to target is extremely important, as no one can be all things to all people. This is an often overlooked part of business plan development, and marketing in general. Markets can be segmented by demographics, geography, features needed, and specific application or any combination thereof.

Now, write a brief introduction that can also serve as your Executive Summary if saved in a separate file. Be sure to set up your template such that it has standard disclaimers for investors inside the cover page, and confidential markings either as a watermark or on the bottom of each page.

Your introduction should have the following headings:  Overview, Company History,  Product and Competitive Advantage, Market Summary, Team Overview, Investment Objectives, Company Objectives and Exit Strategy.   If you plan to have this section also double as your Executive Summary, keep it to two pages in length even if you have to play with the margins a bit.

The next major section should be entitled The Market – and should start with a brief overview, then have detailed sections where you showcase the market SAM and TAM, list key market drivers – forces that will help propel the uptake of your product, present your competitive analysis along with a discussion of how you will handle competition, and a small section detailing the future of the market with projections. Market projections can be purchased from a reputable analyst such as Gartner Dataquest or Ovum, or gleaned from press releases on the web if you are operating on a shoestring.

The next section should be dedicated to your products or services and your roadmap, which is a blueprint of how you are going to keep ahead of the competition and create new and interesting offerings for your customers. You should detail any patents you have in this section, as well as any key intellectual property you own.  Be careful and don’t give away too much – it is well known that despite confidentially agreements and warnings, many business plans end up in the wrong hands.

The next section is your operations section – here you list your headquarters (or your web host if you don’t have a brick-and-mortar building), your current and future organizational charts, key operational costs and considerations, any manufacturing plans you may have, and any cost containment processes you have put in place.  This is a very important section, as this shows HOW you will get from point A to point B in your business.

Next is the Go-to-Market plan. Here you describe how you will sell your product or service, your sales and marketing channels, your Marcom plan, and your target customer base as well as any customers you have in the pipeline.  If you show a full sales pipeline, it is also a good idea to list a probability of closure, as you will be measured by your investors on how well you achieve these targets.  If you are a later stage startup, you may also want to show a realistic forecast here. If you are early stage, you will have to create sales projections which are riskier and known to be less accurate.

Finally you are at the “meat and potatoes” section of your plan: the financials. You will need to take the sales projections you have created above as well as your headcount plan and create a projected Balance Sheet, Cash Flow statement (be sure to include your investment objectives in here as positive cash flow), and P&L.  These take considerable time, so if you don’t have experience working with financial sheets, it may be a good idea to hire someone else to do them.

Tie everything together in a nice summary statement showing why your business makes a great investment!

It is important to keep this document brief and to-the-point as today’s investors are very busy and don’t want to read a book. If you deem extra information necessary, add Appendices at the end.  These Appendices can (and probably should) include full resumes of the key team members, any comparables that are already listed on a stock exchange, and any detailed drawings or engineering specs you may think will help your case (once again, use your judgment here with proprietary and sensitive information).

Once your business plan is complete, it will serve as the guiding light to you and your new business, and should showcase it to your prospective investors.

3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."