To find investors, it is important for tech startups to conduct detailed research on the chosen niche. You need to understand how deep it is, what is the size of the market, and what are the financial prospects. It is necessary to determine the size of the target audience and to what extent potential competing companies are able to satisfy the needs of the consumer. An important factor will be the determination of the prospects and existing trends in a particular segment of the economy where the company is going to operate. In this article, we will consider the importance of a tech startup business plan.
The role of a business plan in the launching of a startup
No startup launches without a business plan. The preparation of this document is the most important stage in the development of the project, on which its success often depends.
Business planning is necessary to:
- Explore the market. This stage includes an analysis of supply and demand, the study of the target audience, and its consumer activity.
- Make a financial plan. It includes all financial calculations: how much money is needed for the development of the project, advertising, its launch, and subsequent promotion, how quickly it will pay for itself, and whether it will pay off at all.
- Define marketing strategy. It should be defined in what ways will the product or service be promoted, and how much money will be needed for advertising.
- Assess the risks. There is no way to develop a project without risks, all risks must be mentioned in the business plan.
- Develop a step-by-step action plan - from product creation to market launch.
Startup business plan structure
Any business plan consists of sections that comprehensively characterize the business idea, and describe its relevance, demand, profitability, and other important points. Sometimes subsections are added if necessary. But the document always has a clear structure.
This is a superficial description of the project, without details. The purpose of this paragraph is to attract the attention of the investor. This is usually a short description of the idea. A resume rarely takes more than two pages of a document.
- a brief description of the company - when it was registered, what it does;
- information about the founders - their education, business experience;
- a brief description of the business idea, its relevance, and markets.
All these points are mentioned superficially, without exact calculations - they will be in the following sections.
The perfect resume is written:
- in an accessible language - so that each investor understands what is at stake;
- lively, without water and unnecessary digressions - so that it is easy to read;
- intriguing – for the investor to continue to study the document.
2. Description of the project, goals.
This point is one of the key ones. It describes the business idea in detail and defines the goals.
The section describes the following data:
- the relevance of the idea;
- the ways it can outperform its competitors
- the consumers;
- the objective of the project;
- the demand;
- the reaction of the market.
3. Marketing strategy.
To launch a startup and successfully implement it, you need a powerful marketing campaign.
This section details:
- what advertising channels will be used;
- what segments of the audience the advertisement is intended for;
- how much money is needed to implement an advertising campaign;
- the predicted result from advertising is the number of sales, attracted customers, and audience coverage.
4. Description of goods and services.
The product or service is described in detail. It is indicated what problems or tasks the new product solves, and how it is better than the competitor's product.
If a company has several products or services, a price list is compiled. The cost of goods and services is indicated.
5. Sales market
This section describes the target audience and its individual segments. The emphasis is on the channels through which the product will reach the consumer.
It is indicated:
- where the products will be sold - in the local market, throughout the country, abroad;
- through which channels - independent sales, work with transport companies, wholesalers, and individual stores.
The market analysis includes the study of competitors if there are any.
This analysis allows the entrepreneur to understand how difficult it will be to promote the business, what place in the market his products will take, how the market will react, and how to outperform competitors.
7. Production plan.
This section describes what raw materials and equipment are needed to realize the idea. Everything is specified down to the smallest detail. This is important to make calculations and find out how much money you need to invest in the production of goods and define monthly expenses.
8. Organizational plan.
- The organizational plan involves such important moments as:
- Legal section. How will a business be registered - a legal entity or registration of the status of an individual entrepreneur. It describes why this registration method was chosen.
- Distribution of the roles of co-founders. If the project has several authors, the business plan notes who will be responsible for what.
- Employees. How many employees are planned, and what they will do.
- The way of receiving payment. How customers will pay for a product or service - bank payments, online payment systems, cash.
Calendar planning. All stages of the startup implementation are signed - when and what will be done.
9. Financial plan.
This plan includes all calculations related to the business.
It consists of several subsections:
- initial investment;
- current expenses - how much you need to spend monthly;
- expected profit;
- payback periods.
10. Risk assessment.
There is no way to eliminate risks and it must be mentioned.
The section consists of three items:
- External factors. A natural disaster, an increase in the activity of competitors, the global financial crisis, changes in legislation, and other circumstances that are beyond the control of the entrepreneur.
- Internal factors. Erroneous calculations, improperly established production, illiterate advertising campaign, low qualification of employees.
- Risk insurance. To minimize the risks, the mechanisms of insurance of business, life and health of employees, and company property are described. “Backup” options are being considered in case force majeure circumstances arise. For example, if one supplier has failed to meet its obligations, there must be another one to turn to.
To organize a startup, a unique idea is not enough. It is important to correctly draw up a business plan and act on it. This will help to minimize risks and properly organize the business. The Inoxoft company writes business plans for tech startups to help them achieve excellence with their product/service and succeed. Explore the software development services provided by the company and benefit from the quality end results.