By Rachelle Hare, Senior Commercial Lawyer and Business Adviser, Owner of Blaze Business & Legal, 19 November 2023. Rachelle has been advising startups both legally and commercially for over 23 years.
Chapter 2 of the Ultimate Guide to Startup Funding
Introduction
If you’re starting a business, you need a Business Plan. Simple. This document helps you place in writing your goals and objectives for the business and makes sure that you’ve thought through many of the key issues. Including funding sources and cash flow. Your Business Plan is often needed for many situations as you proceed on your business journey, including taking out a commercial lease for your business premises.
If your startup requires funding, your Business Plan immediately becomes an essential document. Funding providers In the world of startup funding will insist on reviewing your Business Plan to make sure your startup concept is viable and well-considered. This document therefore serves as the foundation upon which your entire funding strategy is built. And it teaches you how to craft a winning Business Plan.
In this chapter, we explore the importance of crafting a winning Business Plan and provide you with some suggestions on how to create one that contains the necessary information and captures the attention of potential investors or lenders.
The Importance of a Well-Structured Business Plan
In many contexts, your Business Plan will be seen as the core document for your startup. It not only outlines your vision, but it also presents a structured approach to, and planned steps towards, achieving your business goals.
And it allows you to convey your vision to stakeholders, particularly if you’re seeking startup funding.
Here’s why a well-structured Business Plan is important for your business:
- Sets out your Business Vision – A Business Plan clarifies your business’s purpose, goals, and objectives. It provides a clear roadmap for where your startup is headed.
- Allows you to share your Business Vision – Because your business roadmap (your Business Plan) is written down, you are able to share your vision with others (including potential startup funders).
- Strategic Planning – Your Business Plan outlines your business’s strategic direction, helping you make informed decisions about business establishment, market entry, product development, and resource allocation.
- Market Validation – A well-crafted Business Plan demonstrates that you’ve done your homework. It includes market analysis, competitive research, and a deep understanding of your target audience, proving the viability of your idea.
- Financial Projections – A good Business Plan will include your financial projections. In addition to being your own roadmap towards getting your business started, this financial data will help startup funders gauge the potential return on their investment or loan. Accurate financial projections are crucial for building trust with investors, showing a positive return on investment (ROI) and demonstrating capacity to repay any loans.
- Risk Mitigation – Startup funders appreciate a Business Plan that addresses potential risks and provides strategies for mitigating them. This shows that you’ve thought critically about potential challenges, and that you and your business are viable recipients of any startup funding.
And don’t discount the clarity that drafting a Business Plan gives to you, as founder of your startup business.
Essential Elements of a Business Plan
A comprehensive Business Plan should include the following essential components:
1. Executive Summary
- A concise overview of the entire business plan.
- Includes the business’s mission statement, key highlights, goals, and a summary of the opportunity.
2. Business Description
- Detailed information about the business, its history, and its mission and vision.
- Description of the industry and market in which the business operates.
3. Market Analysis
- Examination of the target market, including size, demographics, trends, and growth potential.
- Analysis of competitors, their strengths, weaknesses, and market positioning.
4. Competitive Analysis
- In-depth assessment of the competitive landscape.
- Identification of direct and indirect competitors, their products or services, and market share.
5. Business Structure and Organisation
- Description of the business’s legal structure (e.g. sole trader, proprietary limited company, company trustee + trust, partnership, joint venture).
- Overview of the leadership and management teams, their roles, and qualifications.
6. Product or Service Offering
- Detailed explanation of the products or services offered.
- Discussion of unique features, benefits, and value proposition.
7. Marketing and Sales Strategy
- Description of marketing and sales tactics to reach and engage the target audience.
- Sales channels, pricing strategy, and promotional efforts.
8. Funding Requirements
- If seeking funding, specify the amount needed and how it will be used.
- Specify the type(s) of funding that will be sought.
- Explanation of how the funding will benefit the business.
9. Financial Projections
- Financial statements, including income statements, balance sheets, and cash flow forecasts.
- Breakdown of revenue projections, expenses, and profit margins.
10. Funding Use
- Detailed breakdown of how the requested funding will be allocated.
- Explanation of how each allocation will contribute to business growth.
11. SWOT Analysis
- Evaluation of the business’s strengths, weaknesses, opportunities, and threats.
- Identification of strategies to leverage strengths and address weaknesses.
12. Marketing Plan
- Detailed marketing strategy, including target audience, marketing channels, and campaigns.
- Budget for marketing activities and expected ROI.
13. Sales Strategy
- Description of the sales process, sales team structure, and sales goals.
- Sales forecasts and strategies for achieving sales targets.
14. Operations Plan
- Outline of the day-to-day operations of the business.
- Information on suppliers, inventory management, production processes, and facilities.
15. Milestones and Timelines
- Key milestones and timelines for achieving business goals.
- Defines measurable objectives and sets a timeline for their accomplishment.
16. Risk Analysis
- Identification of potential risks and challenges that could impact the business.
- Strategies for risk mitigation and contingency plans.
17. Exit Strategy
- Explanation of how and when the business owner plans to exit the business.
- Potential exit scenarios, such as sale, merger, closing, or succession plan (eg bring on an employee).
18. Appendix
- Additional documents and information that support the business plan.
- May include resumes of key team members, market research data, legal documents, and more.
19. Financial Appendix
- Supplementary financial documents, such as historical financial statements, tax returns, and financial projections.
- Details on assumptions used in financial forecasts.
Each of these components plays a crucial role in creating a well-rounded and informative Business Plan. Tailor the content to your specific business and objectives, and ensure that your plan is clear, well-researched, and compelling to potential investors or stakeholders.
TIP: Make sure your Business Plan is self-contained, so you can read it in 3 years, or someone else can read it now, and understand everything they need to know from within the document itself (with no assumed knowledge about yourself or the business required).
5 Detailed Tips to Draft a Fantastic Business Plan
Check out our article giving you five tips to help you draft a fantastic Business Plan.
Business Plan vs Marketing Plan – What’s the difference?
Read our article about the differences between a Business Plan and a Marketing Plan.
Hint: The Business Plan is more important earlier in the startup process, and may contain elements of the Marketing Plan, ie how will the business be marketed. A comprehensive Marketing Plan is more important for an established business that relies heavily on (and wishes to optimise) its marketing processes and procedures.
Have you completed your Startup Planning?
By now, you should have completed all the planning for your startup. The questions above are a good guide for many of the things you need to think about.
If you’re still not confident on what your business will be doing, what it will be selling, who it will be selling to, and how it will be getting its funding, you should really do some more planning before you begin to draft your Business Plan.
Creating a Compelling Business Plan – Step-by-Step Guide
Now, let’s consider the practical steps you’ll need to take to create a Business Plan that sets you on the path to securing funding:
Step 1: Begin with a Business Plan Outline
Start by outlining your Business Plan. Create a structure that includes the following key sections:
- Executive Summary – A concise overview of your business, highlighting its unique value proposition and the opportunity it addresses.
- Company Description – Detailed information about your startup, including its history, mission, vision, and legal structure.
- SWOT Analysis – Strengths, Weaknesses, Opportunities, Threats of your startup business.
- Market Analysis – A thorough analysis of your target market, including market size, trends, and customer demographics.
- Competitive Analysis – Examination of your competitors, their strengths, weaknesses, and your competitive advantage.
- Product or Service Details – In-depth information about your product or service, its features, benefits, and how it meets customer needs.
- Marketing and Sales Strategy – Your plan for reaching and acquiring customers, including marketing channels and sales tactics.
- Management Team – Profiles of your team members, highlighting their skills and experience.
- Financial Projections – Detailed financial forecasts, including income statements, balance sheets, and cash flow statements.
- Funding Request – If applicable, specify the amount of funding you’re seeking and how you intend to use it.
- Appendix – Any additional information, such as resumes, market research data, or product prototypes.
HINT: We know not everyone loves drafting, and the thought of having to write a document to put all the above information in can be terrifying for some founders. So we’ve created our own Business Plan Template, that you can use as the starting point for your Business Plan. Rachelle used it for all her businesses on startup (and yes, she has a few) – she couldn’t even say how much time it saved her!
Step 2: Research Industry Trends and Target Market Demographics
Before you dive into crafting the content of your business plan, invest time in thorough research. This involves understanding industry trends, identifying your target market demographics, and conducting competitive analysis.
HINT: Don’t know your industry or industries? Then you need to spend more time in planning your startup.
Here’s how to go about it:
- Industry Trends: Research current industry trends and developments. Stay up-to-date with news, reports, and market analysis relevant to your sector.
- Target Market Demographics: Create detailed customer profiles based on demographics, psychographics, and behaviors. Understand your ideal customers’ needs, pain points, and preferences. Obviously, if you already have customers or clients, it can be easier – just ask them!
- Competitive Analysis: Analyse your competitors’ strengths and weaknesses. Identify gaps in the market that your startup can fill.
HINT: Think of it this way… Where are you going to point your startup, and will that give it the best chance of success?
Step 3: Identify Key Competitors and Differentiators
In your Business Plan, it’s crucial to highlight your competitive advantage. Here’s how to identify your key competitors and differentiate your startup:
- Competitor Identification – List your main competitors, both direct and indirect. Include information about their market share, products or services, and customer base. “Ideation” basically means “thinking about them”.
- Differentiation Strategy – Clearly define what sets your startup apart. Highlight your unique value proposition and explain why customers should choose your product or service over competitors.
- Market Positioning – Describe how you plan to position your startup in the market. Are you offering premium quality, lower prices, or a unique customer experience?
Action Items
By this stage, you should have:
- A well-structured Business Plan outline.
HINT: Start with our template and save yourself a stack of work!
- Detailed research on industry trends, target market demographics, and competitive analysis.
- Identified your key competitors and developed a clear differentiation strategy.
Now, you’re ready to start drafting your Business Plan. Remember to keep it concise, focusing on key points and actionable information.
Tips for Crafting Your Business Plan
As you begin writing your Business Plan, keep these practical tips in mind:
- Conciseness – Keep your plan concise and focused. Investors appreciate clarity and brevity.
- Seek Feedback – Don’t hesitate to seek feedback from mentors, advisors, or other entrepreneurs. They can provide valuable insights and suggestions for improvement.
- Visuals – Incorporate visuals like charts and graphs to make complex information more digestible.
- Realistic Projections – Ensure that your financial projections are realistic and based on sound assumptions. Overly optimistic projections can erode trust.
- Seek Ongoing Advice – Make sure you involve your Business Advisers, as they will be able to help you fill out much of the commercial, operational, financial and legal matters you need to capture in your Business Plan.
Conclusion
Now you’ve got the information you need – and the template itself – to begin crafting your winning Business Plan. So get to it, and we wish you the best of success!
Remember, your Business Plan is not a static document. It should evolve and adapt as your startup progresses.
What’s next?
In the upcoming chapters, we’ll continue to explore various aspects of securing funding, from exploring startup financing options to attracting angel investors and considering into venture capital funding. Each step will bring you closer to realising your entrepreneurial dreams and securing the capital needed to turn your vision into reality.
Up next, Chapter 3: Exploring Startup Funding Options.
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About the Author
Rachelle Hare – Managing Director and Principal Practitioner of Blaze Business & Legal
Rachelle Hare
Rachelle Hare is a highly experienced Construction Lawyer and Contract Lawyer, with over 23 years of experience in Tier 1 and Tier 2 Construction Firms, Top Tier Private Practice and Government.With 23+ years of experience as a Senior Lawyer, Strategic Contracting Adviser and Management Consultant in Construction Law, Contracts, Major Projects, Commercial Advisory, Compliance, Procurement, Contract Management and Risk Management, Rachelle has the rare skills to offer you seamless business advice and legal advice to help support your organisation.
As well as a Lawyer and Business Adviser, Rachelle has also acted as a Strategic Procurement Adviser, Compliance Manager, Strategic Risk Adviser and Commercial Manager.Rachelle owns Blaze Business & Legal, a combined Commercial Law Firm and Business Advisory Firm located in Brisbane, Queensland, Australia. Blaze Business & Legal assists a broad range of clients in the Construction Industry and related industries, and advises owners, contractors, subcontractors, NFPs and other organisations on a broad range of Construction Law, Commercial Law, Business Advisory and Management Consulting issues in Brisbane, Queensland and around Australia. Rachelle also owns Blaze Professional Learning, where she offers practical contracting skills, hands-on experience in drafting and working with contracts, and industry insights to help Professionals upskill and advance their careers with real-world skills.
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