How to write a Business Plan? Part 2

How to write a Business Plan? Part 2

Last week I wrote an article on the value of Business Plan. As I already indicated, this week, I am giving below some process roadmap for developing a business plan for a startup.?

Business Plan is easy to write when the business is matured, relatively stable. It is not easy to write a business plan for a startup. But, if one makes a sincere effort, it is possible to develop a business plan, iteratively which can eventually become very valuable. The first business plan will give you a foundation for your future plans as you will have a reference document to start with.?

The content of a business plan includes the following topics.?

1. Executive Summary

2. Company Description

3. Market Analysis

4. Product or Service:?

5. Marketing and Sales Strategy

6. Organizational Structure and Management

7. Product Development and Operations?

8. Financial Projections

9. Risk Assessment

10. Appendix

Now let us discuss how we can start the process.

How to approach writing a business plan as a project?

Business Plan writing process is similar to writing a research document. One has to start with collecting as much data as possible. To collect data, it would help list the various sub headings of the business plan. Any research, one can go to published data and competitor’s analysis, industry analysis. Government websites, trade bodies websites, competitors websites, research reports, and exhibitions and trade associations can be rich sources of information. In addition to this Export / Import statistics published by various agencies including those published by other countries can be very useful.?

One trick is to use Google Topic alert service to get regular updates on the various new articles that appear about the topics relevant to your business. Subscribing to good newsletters can also provide you with lots of insights about the current changes in the industries.?

As you accumulate the research data, you should also start writing on the specific headings. Only when you attempt to write, will you start having clarity on the available information and the additional information that is required. You have to view the business plan not just as a document to convince your investors and other stakeholders. But you, the first person of this business to get more deeper understanding of your business.?

As you go through the process of writing a business plan, you will have more questions and many of those assumptions may require validation. This is a good process as eventually you will have to face the reality. Wherever you do not have enough information, you can keep your mind open to explore more.?

The knowledge that you gain out of this business plan writing process will impact the way you approach your product, services, market and organization.?

A startup business plan typically includes the following key sections:

1. Executive Summary: This section provides an overview of your business idea, its unique value proposition, target market, and key goals. It should be concise but compelling to grab the reader's attention.

Most founders will find this section to be easy. As they may have all the required data and information. But the key is in Executive Summary, you should be able to capture the key value proposition very clearly so that your plan gains the required attention. Remember, if the Executive Summary is not compelling, many readers may not go past this section.?

2. Company Description: Here, you provide detailed information about your startup, including its legal structure, mission statement, vision, and core values. Describe the problem you aim to solve and how your solution will address it.

This section is also not very complicated as you have most of the information which is unambiguous and often drawn from legal documents.?

But the Vision and Mission statements will have to be carefully crafted. The Vision and Mission statement often clearly articulates concisely the scale that the founder is imagining.

Particularly, the investors who look for growth of the company, this simple sentence can mean so much. One has to be creative in crafting this sentence to bring out the future vividly with metaphors.??

3. Market Analysis: Conduct a thorough analysis of your target market, including its size, growth potential, and trends. Identify your target customers, their needs, and preferences. Analyze your competition and outline your competitive advantage.

Analyzing the market size for a product that doesn't currently exist in the market can be challenging, but it's not impossible. Here are some steps you can take to estimate the potential market size:

• Define your target customer: Clearly identify the specific target audience for your product. Understand their demographics, characteristics, and needs. This will help you narrow down your market analysis and estimate the potential customer base.

• Identify analogous markets: Look for existing markets that are similar or related to your product idea. Analyze the size and growth of these markets to get a sense of the potential demand for your product. Consider the adoption rate of similar innovations in those markets.

• Conduct primary research: Conduct surveys, interviews, or focus groups with potential customers to gather insights. Ask questions about their needs, preferences, and willingness to pay for a product like yours. Use this information to estimate the potential market size and demand.

• Analyze industry reports and trends: Look for industry reports, market research studies, and trends analysis that may provide relevant data. These reports often include market size estimates, growth rates, and other valuable information that can be used as a reference point.

• Evaluate market indicators: Analyze indicators such as population size, demographics, economic factors, and technological trends. These factors can give you a sense of the market's potential size and growth prospects.

• Analyze competition: Identify indirect competitors or alternative solutions that your target customers might currently use. Analyze the market size and market share of these competitors to estimate the potential demand for your product.

• Consider market segmentation: Break down your potential market into segments based on relevant factors like geography, age, income level, or behavior. Analyze the size of each segment and assess its potential to gauge the overall market size.

• Use bottom-up and top-down approaches: Bottom-up approach involves estimating the potential market size by multiplying the number of potential customers by the average revenue per customer. Top-down approach involves using industry data or macroeconomic factors to estimate the total market size and then applying a market share assumption.

Remember that estimating the market size for a non-existing product involves some level of uncertainty. It's important to be transparent about the assumptions and limitations of your analysis. Gathering as much data as possible and using a combination of different methods can help you arrive at a reasonable estimate.

In addition to estimating the market size, it is also important to consider the growth potential of the market. Is the market growing or shrinking? What are the factors that are driving growth or decline? The growth potential of the market will affect your business's ability to generate revenue and profit.

Each of these headlines require more detailed discussion, hence, I am splitting the articles into a few articles.?

In the next week, article we will learn about the following topics

4. Product or Service:?

5. Marketing and Sales Strategy:?

6. Organizational Structure and Management:?

7. Product Development and Operations:?

8. Financial Projections:?

9. Risk Assessment:?

10. Appendix:?

A startup business plan is a written document that outlines your ideas and strategies for launching, managing, and eventually exiting your new venture. It is a roadmap for your business and should be used as a tool to guide your decisions and actions.

Please share your feedback and see next week with the remaining topics.