Writing a business plan makes your tech startup 16% more likely to be successful, according to studies. It is also estimated that over 70% of fast growing companies have detailed business plans. This is not surprising, especially considering that this powerful document can help you with everything:
- Data-driven decision making
- Create action plans, with goals and milestones
- Testing the viability of new ideas
- Bring new ideas to the table
In short, a well-designed business plan can be a very effective management tool that will allow you to track your progress and earn more money for your business.
Writing a business plan for your tech startup seems like an easy task.
All you have to do is create a detailed document outlining your business goals and the process to achieve them, right?
Unfortunately, it is not that simple to create a compelling and very specific tech startup business plan.
You need the right approach and the ability to put the essentials together – one of which is a summary.
It is the first and arguably the most important element of this structure.
It’s a short, clear and concise document that communicates everything about your business.
The document must be able to stand on its own.
Here are some tips for a well-written executive summary:
- Use strong, positive language.
- Include your mission statement in a short paragraph.
- Include general company information (date your company was founded, names and roles of founders, office locations, number of employees, etc.)
- Include a brief description of your products or services and your target customers.
If your goal is to secure funding, include your funding goals and any financial information on past loans or banks / lenders you’ve worked with etc.
Add visual elements such as charts and graphs relating to business growth or milestones.
Pro tip: If you can’t create the graphics yourself, you can hire a freelance writer to do it for you..
The process for writing an abstract is the same whether your business offers simple e-learning software or complex technology.
2. Company presentation
Many people confuse the business overview with the summary. Just as much confuse a business proposal with a business plan.
However, there are distinct differences between the two.
The Business Overview provides a more detailed, high-level view of how your tech business is structured and what you do.
Here are some tips to help you write a good startup outline:
- Describe the specialty of your business, as well as the technology behind it
- Explain the nature of the market and the industry
- Describe the legal structure of your tech company
- Provide the ownership structure of your business
- Show the value you offer and highlight the opportunity in the market
Preply, a company that offers a language learning app, has a detailed company overview that describes each of the above criteria.
You can do a quick search online to find other companies with well-crafted overviews as a way to inspire your own.
3. Market research
No matter how good your startup is, you should always conduct market research in order to gather information about your target customers, as well as your competition.
There are two steps to achieve this:
Step 1: Identify your target market
No matter how good your product or service is, without a viable market, your new tech startup will be doomed to failure.
In fact, this is one of the main reasons why the majority of startups fail, as evidenced by the graph below:
The business can use a survey tool like this to conduct surveys of its potential customers, and once it gets a clear picture of its Total Addressable Market (TAM), it can then nestle in to find a more targeted (and therefore more engaged, and a higher conversion).
For your own market research, you can further segment your audience based on the following factors:
- Demographic: What is the age range of your target audience? Kind?
- Geographical: Where do your prospects live? Country? City?
- Customer behavior: What are their buying habits? Which retail stores or brands do they prefer
- Content Preferences: What blogs, websites or news sources do they like?
Suppose you offer a CRM with a predictive dialer. You may find from your research that your target audience is made up of male marketers between the ages of 35 and 45 who are largely based in the United States.
You could then do more research to find out their buying behavior traits to better meet their needs.
Step 2: Perform a competitive analysis
Your next step is to do a thorough analysis of your competition. This will help you find the main differentiators between you and your rivals.
You can do this by asking yourself these questions:
- Why should someone choose my product or service?
- Why are people buying the product already in the market?
- How can I improve existing solutions currently on the market?
Thinking about your main competitors, their weaknesses and strengths, will help you identify new opportunities for innovation. Ultimately, this will help your business connect better with customers.
This is especially important for people in super competitive spaces, such as the VPN software niche or the landing page software niche – two of the more competitive software niches.
4. Marketing and sales plan
Now comes your marketing plan.
Here you have to mention the strategies that you intend to use for marketing and sales in your business.
This includes sales channels and marketing activities.
Your marketing channels are the ones you use to promote your business and your product.
Sales channels, on the other hand, are the mediums that allow your customers to purchase your products or services.
You should include at least one direct sales channel, such as an eCommerce store, and explain it in your business plan.
Marketing activities should detail how you intend to acquire leads and customers for your business.
For example, if your business offers a podcast hosting platform, at a basic level you could include:
- Launch of a corporate website
- Develop a strategy to generate traffic, for example from search engine optimization (SEO)
- Creating a paid traffic strategy, such as PPC for immediate online exposure
- Develop distribution partnerships
- Build a list of email subscribers
This section of your tech startup business plan should consider a variety of factors, including your goals, budget, and market risks.
Pro tip: Besides including charts and tables in your business plan, you can use animation software to create eye-catching images.
If you are unaware of these things, it is important that you get expert sales advice from professionals who can help you develop a solid marketing plan.
This brings us to our final secret to a solid tech startup business plan.
5. Financial projections
The last section of a good tech startup business plan should include relevant details about your budget and your business’ sales goals.
This can be quite difficult for new entrepreneurs.
For example, let’s say you just created a WordPress guest blog plugin that you want to offer to the world.
But how do you make financial projections when you don’t have a stable income, let alone balance sheets or cash reports on which to base your projections.
That said, it’s still possible to create a detailed financial plan if you’ve done proper market research because you can make educated projections.
Here are some details to include in your business plan:
- Income stream: Describe how your business will generate its income
- Major expenses: Itemize the high costs you anticipate for the coming year
- Salary requirements: Note if you are still priming or if you and the partners are taking salaries, in which case note how much.
- Financial milestones: Communicate your expansion strategy and consider future store openings or hires that will impact your books.
Keep in mind that the majority of startups are unprofitable in the first year.
Your financial projections must therefore maintain a long-term vision of success while keeping your ambitions honest and realistic.
This will help you produce a more accurate business case.
These are the 5 basic building blocks you need to build a structure that has been proven to be the most effective in creating a strong tech startup business plan.
Follow the steps above to develop an elaborate business plan that will help propel your new business to success.
To you. Do you think these tips will help you write a tech startup business plan like a pro? Share your opinion in the comments below!