Guide to Making Tech Startup Business Plan Effectively

A startup comes into action when a young and passionate entrepreneur thinks about an idea to start a small business. Technology startups are changing the face of the startup ecosystem and our lives along with it. Many tech entrepreneurs use technology to ease our daily life and contribute to the world's well-being.

Technology startups empowering their products with modern-age technologies like AI, BigData Science, IoT, VR, Robotics, and others create a considerable impact. Many investors have a bird's eye view of the tech industry for investing in novel ideas that intend to simplify lives.

In the startup world, things are evolving very fast, so is presenting your startup idea to investors. Although documenting detailed startup business plans on papers got traditional. Still, many business experts agree that establishing your strategic plan, proper execution, and implementation steps is the safest way to start.

Drafting an IT startup business plan is more complex than bringing raw ideas to the table. A business plan gives an overview of the vision and mission, critical problems and solutions, product or services offerings, market analysis and marketing plan, team management, financial analysis and projections, and implementation in the target market.

Why is it essential to create an IT startup business plan?

A well-written business plan is a significant step to be aware of what's coming five years down the line. It provides clarity about your entrepreneurial journey from the beginning.?

One of the surveys by Palo Alto reports that people who create business plans are twice as likely to succeed than people who don't. It is essential to explain the importance of your business plan, why it is relevant, and why it is workable.

How to start writing a business plan for a tech company?

Writing a business plan is like focusing on your company's short-term and long-term goals, available and required resources, techniques, and forecasting. Here’s how to get started.

Executive Summary

Foremost and basic outline of tech startup business plans start with summarizing the business idea, objectives, team, product and service, IT development procedures, and funding requirements. It gives an insight into a new business before setting it up. Primarily, entrepreneurs write business plans to attract investors but writing them with good intentions can help them and teams.

Things to cover in the executive summary:

• What is your business idea?
• What are the short-term and long-term objectives?
• How will it solve the problem of your target audience?
• Who is going to buy your product/service?
• Why is your tech startup idea feasible?
• Core tech team members
• Marketing plan
• Financial projections
• Investments you are seeking to run your tech startup business?

For an informative and captivative executive summary, you have to be as precise as possible. It is a quick overview of your tech business idea. The investors would often ask for an executive summary of a tech business plan to decide if they would spend time studying your whole project. Also, it would be best to answer all the mentioned questions briefly in the summary since you'll cover them in detail later in the document.

Business Idea?

The beginning of the entrepreneurial journey is the conception of an idea that drives you to set up a firm, an idea about what products and services you would like to offer this world to solve their existing problem that remains untouched by other tech giants. This section presents information about your product and services.

Determining the vision under the business idea section is essential as investors are interested both in business ideas and the future of your tech startup. Under this head, you need to compress all your achievable goals and growth potential of your tech business in just One Statement.

Problems and solutions

Nowadays, technology has the power to evolve our lives overnight. Mention what existing problem your tech startup intends to solve and how your product/service offerings solve the mentioned issues.

Writing a tech startup business plan is mostly the art of defining the concerned problem and presenting your startup idea as a solution.

Product and services

You need to mention all the essential features, benefits, and pricing of your product. For desirable results, should customize products and services as per the requirement of the target audience and their specific problems. This section helps explain what technology product you are developing and what precisely the market demands for your IT startup business plan.

Focus on developing a prototype or minimum viable product. Creating a prototype of your product will save you from wasting your limited resources on your uncertain future. Preparing at least one version of your product before getting to the final version makes it easier to sell your vision to investors.

You need to write your Minimum Viable Product (MVP), mentioning the final reports of 'Beta' testing the good and unique about the product.

Team Structure and Company Overview?

One trend in the startup world is that investors like to invest in co-founders rather than companies by identifying their confidence, experience, and passion.

Writing introductions of founders or co-founders and core team members in the business plan includes mentioning roles and responsibilities, previous work experience, and the qualities that make tech startups unique. In a tech startup, CTO and engineers play a significant role in developing software, IT solutions, or any tech product or service they will offer their users.

Writing everything in detail about the management section will give you a clear understanding of the core team members in your company and their respective responsibilities, comprehension of their weaknesses and strengths, and how to make best out of the skills that your top management possesses. The legal framework of your company gives an idea about the ownerships, shareholding and determines how your startup operates.

Marketing Plan

Determining a marketing plan showcases the company's competitive advantages and identifies potential marketing opportunities. This business plan section also helps determine the target audience and frame a workable marketing strategy.

It also demonstrates the calculation of the marketing budget and how you will strategize your marketing campaign. At this stage, it's vital to decide if your marketing campaign needs a total budget or target, what series or operations are performing to bring out the best of your product and service, etc.

Three important pointers for a tech startup business plan under marketing:

a. Market Segment Analysis

Analyzing the target audience is essential in constructing any marketing plan. So, you must determine the age-group of customers your campaign is targeting, their income, education, and location. Also, highlight how you are you going to capture new customers or target existing users.

In this section, describe your audience's interests and pain points. Explain methods of conducting surveys or approaching agencies to understand audience perception better.

Moreover, you need to categorize your target market clearly into TAM, SAM, and SOM.

• TAM (Total addressable market) defines the group of people you want to reach.
• SAM (Segmented addressable market) determines the market segment you want to target with time and budget constraints.
• SOM (Share of the market) explains the percentage of the total market you can capture through your sales and marketing activities.

b. Competitors Analysis

It is fair to clearly understand how you are better than your competitors and your competitive edge. This column provides a summary of your direct and indirect target audience.

Even if entrepreneurs think that the technology they have erupted will disrupt the tech startup world with no competition, they haven't examined the market and competitors well.

In this section, share the reports of conducting competitive analysis to learn more about your competitors, including the list of current rivals, detailed information about them, and how you have categorized them.

c. Swot Analysis

The last step in the marketing section in writing any tech startup business plan is the SWOT analysis. Swot is a matrix explaining strengths, weaknesses, opportunities, and threats.

• Strengths include your exclusive features and aspects that help you stand out from the competition.
• Weakness means your weak sides and flaws that may slow you down in a competitive race.
• Opportunities are the levers that'll help you in business development.
• Threats are external threats that may impact your startup yet don't depend on your decisions.

7. Financial Projections

Any business plan is workable if you have a calculated estimation in your mind and on paper. Financial projections inform investors about business feasibility, equity sharing ratio, and returns.

There are reasons why it is essential to focus on detailed financial projections:

• To anticipate the sales, revenues, and expenses of your business.
• To calculate the cash burn rate before the cash flow becomes profitable.
• Explanatory financial assumptions should cover price per product, employee salaries and welfare expenses, asset depreciation, margin percentage, and the cost of developing tech products and services.
• To show the current investment and the desirable rounds of investments.
• To determine how much time you need to make this business profitable.

Sales Forecast - Explaining this section is essential for achieving your objectives in a startup business plan.

Cash flow statement - Evaluate the money going out and coming in.

Balance sheet - This part illustrates the capital already invested, assets(if any purchased or owned by founders), liabilities (taken any bank loan, loan from family members, or any individual).

Break-even analysis- Explaining this point will clarify when your venture will start making profits. The break-even point is when your business expenses will equal its income and, eventually, how the income graph grows to make profits.

Revenue Forecast - After predicting product sales, estimating cash flows, and preparing a balance sheet, you need to summarize the project's gross and net revenue.

In a nutshell, you have to be optimistic but realistic while making financial projections for your tech startup business plan. Your economic forecast should be viable based on accurate market facts, running economy, per capita income of your target audience, and actual inflow of funds into the business.

8. Execution Plan?

Execution is where the pedal hits the metal in a tech business plan. This part of the business plan measures specified tasks to determine whether performance is accurate or not. Execution details will help you run daily operations smoothly and outline precisely what needs to be done and when. Describing the execution section will answer 'how to' for each venture function.

Final Thoughts

A business plan helps elaborate every function with its respective goals. Firstly, it helps you know your company's strengths and weaknesses, the expected market penetration, and current and future finances. Secondly, the business plan is the primary step to convince investors about your product and the growth prospect it holds. Also ensuring them that their funding will not be wasted. Documenting your business plan allows you, your team, and investors to see how your business will operate and flourish.

The basis of writing a good business plan is good research. Before you launch your tech product or pitch your tech startup plan to investors, make sure you are well informed about the technology innovation, product/ services development process, competitors, and marketing and financial concepts.

Review your tech startup business thoroughly by yourself, your team, and industry experts. Keep learning from the feedback and revise your plan until you believe it is foolproof.