How to Write a Business Plan for an Early Stage Startup?
Writing a business plan is definitely one of the main pain points for many startup founders, especially at the early stage. And this is not surprising: it is quite a challenge to establish a solid business plan, when there is very approximate understanding of marketing strategy, no real prove of the business model and no numbers or statistics to make financial forecasts (as it is usually demanded for 3-5 years). That's a headache, no one will doubt!
Every month InnMind team receives tons of requests from startup founders to help them in writing a business plan. They ask us advice about what template it is better to use, what items should be underlined as priority, which chapters must be included and which may be omitted in the business plan for a startup. And in most cases we say: hey guys, listen, there are tons of useful materials on this issue, great advices, books and articles on how to write business plan, just take your time to do some Internet search and find the most relevant and useful of them!
But... the number of questions and requests never decreases. For those who don’t want to waste time for searching for relevant information through Internet we prepared this definitive guide on how to write a business plan for a startup.
"Should I write a detailed and solid business plan?"
I would rather say - NO, you shouldn’t. Why should you mark tons of pages, pretending to have a business plan for a startup which is similar to the one for multinational corporations? It’s ridiculous and obviously will be a waste of your time.
Business plan for a startup doesn’t have to be ideal, solid and comprehensive document. It has to explain clearly your idea, value proposition and business model - that’s it. In other words, business plan for startup includes your vision of your business goals and opportunities, combining risks & challenges, and the ways how to achieve the former and overcome the later.
Here is a great insight from serial entrepreneur and investor Patrick Hull, who answered this question in his post 5 Tips for a Great Business Plan in Forbes:
I once wrote an entire business plan with a business partner on paper towels. We recognized an opportunity, but had to write it down and test the idea to make sure it would work (we didn’t have any paper handy, although that didn’t stop us). The plan was just for us, but we still had to see if the vision, the financials, and the strategy were sound. We created that company and it went on to gross millions of dollars a month. In other words, your business plan doesn’t have to be some manicured document in order to make it successful.
"What to start my business plan with?"
Sit down with your partners and team, have a drink, hold a brainstorming session and answer the following questions:
- What is my business about?
- What value does it bring to the customers? Why would customers buy my product or service?
- Are there competitors in my niche? What are their strong and weak points? Why would I be better?
- What is my potential market size?
- What goals do I want to reach and how?
- What do I need to execute your plan?
After answering these questions to yourself, start simply putting them on paper.
For the beginners it would be also useful to learn some basis. Chris Bowles(@chrisbowlesinc) in his blog made a very good presentation - Business Plan Writing: 4 Lesson Guide To Business Plans - which covers all the basic points of the business plan. What I like here is the creative way in which Chris delivers information: you don't need to read a book on how to write a business plan, it's enough just to view the short presentation where author visualised all the basic aspects of business plan writing.
"Are there any business plan templates or useful software?"
Sure, you can find plenty of them just googling. Let me mention some of the most interesting
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