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How to Write a Business Plan for a Startup in 2021 [With Templates]

Updated 18 Aug 2021

Published 26 Nov 2020

15 Min

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Every startup is born from an idea. If you’re reading this article, chances are you already have one and are ready to act. The first thing to do in that case would be to form a startup business plan. This can help you organize your thoughts and even find the right people to work with.

It’s a proven fact that a business plan raises startup success chances by 16%. Besides, 71% of fast-developing companies have a detailed business plan.

The business plan can bring many benefits to startups:

  • It helps with decision-making
  • Tests the viability of an idea
  • Creates an action plan
  • Brings new ideas to the table

Keep in mind that you should stick to a certain structure while developing your startup business plan to receive these benefits. It must include the following sections:

  • Executive summary
  • Company description
  • Marketing plan
  • Financial projections
  • Team structure

“How to write a startup business plan” is a common question, and many entrepreneurs are looking for an answer. In this post, we’ll reveal all that comes to writing a business plan, cover each section in detail, disclose some tips, and attach several templates that’ll help you make a business plan for a startup.

Executive Summary

This section sums up the entire business plan and works as an introduction. A well-written executive summary grabs readers’ attention and quickly shows what your startup is all about before diving into details.

The executive summary should include the following sections:

Business overview

Familiarize readers with your startup, what you’re planning to do, and what you have to offer. Keep this section short. One to three sentences will be enough.

Target market

This paragraph should clearly describe the market your startup is aiming at. To make this section useful, include a detailed market overview and customer problems you want to solve with your product. At this stage, you must show the value you want to bring to the market.

Competition

Every business has competitors, and your startup won’t be an exception. Describe your potential competitors and features that’ll make your startup stand out. Describe what you’re going to oppose to competitors: price, quality, service format, or something else.

Finances

Highlight your startup's aspirations and specific milestones. For greater clarity, use charts and consider the financial projections for different periods (half a year, a year, two years). Include sales, profit, and ROI in the charts to make this paragraph clear for future investors.

Team

This paragraph is dedicated to a team since investors want to understand who’s working on the idea and why they should cooperate with you. Briefly describe all your team members and their experience. If the team lacks certain specialists, mention this and specify options for filling in the missing gaps. If your startup has partners, it’s also worth mentioning.

Funds

This is the final part that helps inform future investors about how much money you need to breathe life into your idea. Investors should know this aspect in advance, so it’s a good idea to add it to the executive summary.

6 Tips to Write an A+ Executive Summary

We’ve gathered several tips that’ll help you write the executive summary and make no mistakes.

Tip #1. Write it last

As executive summaries outline the whole business plan, it’d be wise to write it last. Finish your research for all startup business plan sections, and then draw up the executive summary.

Tip #2. Capture readers’ attention

The main goal of an executive summary is to highlight important details about the startup. Still, it’s important not to add redundant details about the idea. The executive summary must build genuine interest and excitement.

Tip #3. Keep it structured

A well-defined structure will help an executive summary to convey your ideas. Otherwise, the executive summary may turn out to be unclear.

Consider including a brief yet informative introduction, main body, and conclusion. This structure would provide for key takeaways of your business plan.

Tip #4. Mention exit strategy

An exit strategy is an important part for investors. It can be an acquisition by another company after running technical due diligence, share selling, or employee buyout.

Tip #5. Use facts

Your main goal is to convince investors to invest money in your startup. So be persuasive using facts, not just words. Your startup goals, experience, and market perspectives will have more power if they’ll be fact-driven. For example, you can add market valuation and your projected share in that market.

Tip #6. Avoid cliches

There are several pitfalls that may drag all your executive summary down. For example, don’t mention the team’s passion and enthusiasm. Investors already know it. They’ve seen hundreds of passionate startups before. Another cliche is telling that your startup is mindblowing, game-changing, next Instagram, or something like this. Instead, show them facts and let investors say that for you.

Company Description

Company description is an important part of a startup business plan as it reveals its history, goals, team structure, and much more. Still, it’s usually the shortest section of the business plan.

Company history

This section depends on which stage your company is at the moment. If you’re an existing company and looking for funding for a new project, it’d be good to give investors some backstory about your business. Consider telling them how and when the company was founded, what products you’ve worked on before, and briefly describe them.

If you’re a young startup, you may want to attract attention and funds but don't have a rich backstory yet. This section can tell who stands behind the startup and how founders came up with it.

Location

Briefly describe where your business is located, including a physical address. If there’s none, provide investors with a description of your future location. Whether you buy an office or rent one, and for how long you'll be using it as your business location. If you have a home office, mention this aspect as well.

Type of business

This part tells about your industry. This section can be short but not too brief. Don’t roll out one sentence like: “We’re going to sell stuff.” Specify your type of business: service, travel, or healthcare. Also, end this section with the industry description.

Management and employees

This is an opportunity to show the team to investors. Mention all employees and management staff, describe each employee’s roles, skills, experience, and success stories. Besides, don’t forget to add details about yourself as an opening.

If you’ve certain gaps in the team, describe them, and provide investors with the plan of how you’re going to fill them.

Legal structure and ownership

This information is important for investors since you’ll have different taxation depending on the legal structure. Describe whether you’re an LLC, C-Corp, S-Corp, Sole proprietor, or in partnership. Don’t forget to mention who owns the company and what technical co-founder equity.

Company’s mission and principles

Be creative when writing this section. Come up with one or two sentences that perfectly describes your company’s goals and principles.

Marketing Plan

This plan is an important part of business planning for startups. A marketing plan is a representation of the startup’s competitive advantage and marketing goals. It helps identify a specific niche to fit in and work out a suitable business strategy. The marketing plan section can be split into three parts:

  • Target audience analysis
  • Competitor analysis
  • SWOT analysis

Target Audience Analysis

Customers are everything for businesses. First off, you need to define who you’re going to sell your services. Start with simple things and gradually step closer to complex ones.

To begin with, you can make a broad assumption of your target audience using these criteria:

  • Gender
  • Age
  • Location
  • Education
  • Income
  • Ethnicity

For example, your startup is an online shop selling car parts, and you’re aiming to launch it on the West Coast, US. After brainstorming, your approximate target audience may look like this:

  • Males
  • Ages 16 - 60
  • Residing in Los Angeles, CA
  • Secondary education
  • With an income of $60,000 - $75,000
  • Ordinary drivers, service stations workers

After figuring out general traits, it’s time to dig deeper into the analysis. There are several ways to do it.

Conduct surveys

Based on your audience’s assumptions, you can gather focus groups and run surveys. They can be done online and in person. These surveys will help you learn more details and identify certain patterns that can help you deliver a better service for your customers.

Analyze competitor’s audience

Competitors already meet customers’ needs, and your task is to identify their audience and understand what makes them use their product or service.

To pull this off efficiently, study competitors’ marketing channels. Visit their websites, social media, subscribe to the newsletter. These actions will help you identify the customers’ pain points.

Create a buyer persona

A buying persona is a research-based buyer profile that’s designed for marketing needs. The main goal of the buyer persona is to describe the perfect customer: how they spend free time and what challenges they face, and how they make decisions.

This is the final step of the target audience analysis, and Buyer Persona is based on the research results from previous steps.

There are many tools to make a Buyer Persona for a startup. We personally recommend the Make My Persona tool from HubSpot.

Competitor Analysis

Competitor research is vital for a startup’s success. It lets you better understand the target market, discover competitors, their strategies, services, and much more.

There are three steps of competitor analysis that you should stick to.

Step #1. Find competitors

This is where the analysis starts. Begin with simple queries in Google search. Make a list of your competitors that are close to your industry and idea. Then, conduct in-depth research. Check their social media content, news mentions, customer reviews, and so on.

Step #2. Examine them

It’s time to dig deeper. But keep in mind that you may need special tools like Ahrefs or SimilarWeb.

Carefully examine the following criteria:

  • Pricing. Check out how much they ask for their services. It’ll help you come up with the pricing borders for your product. But keep in mind that you’re not forced to put the price lower than your competitors to succeed in the competition.
  • Organic traffic. Find out how many visitors they get from the Google search. These indexes will show competitors’ popularity. You can use tools like Ahrefs, SimilarWeb, and Alexa.
  • Social media mentions. It’s another way to research competitors’ activity and find out what customers think about them. You can check engagement ratings, follower demographics, keywords used, social shares, and much more with tools like Followerwonk, Social Searcher, and Sprout Social.
  • Time on the market. To discover whether you’re going to compete with a big player or a brand new business you need to find out the time on the market. You can check the domain registration date, server statistics, and contact information with the WHOis.net service.

Step #3. Categorize them

When you find out everything about your competitors, you still need to keep an eye on them and track their moves. It’s vital to stay informed.

The next step would be to split competitors into three categories based on their “danger level”:

  • Primary competitors. These are the main rivals that focus on the same target audience as you.
  • Secondary competitors. These competitors can offer high or low-level versions of your services to the target audience that differs from yours.
  • Tertiary competitors. This category includes companies that are indirectly related to yours.

SWOT Analysis

It’s the final step of the section.

SWOT is an abbreviation of Strengths, Weaknesses, Opportunities, and Threats:

Strengths

These are your strengths, killing features, and features that’ll help to stand out from the competition.

Weaknesses

These are your weak sides and flaws that may slow you down in a competitive race.

Opportunities

These are the levers that’ll help you in business development.

Threats

These are external threats that may impact your startup, yet don’t depend on the decisions you make.

Entrepreneurs use the SWOT matrix to gather all the points on one sheet. We recommend using the template down below to make your SWOT analysis quick and efficient.

SWOT analysis template

SWOT analysis template

Financial Plan

No investor will give you a dollar without a detailed financial plan. In plain language, it’s a forecast of future revenue and expenses of your startup. A financial plan is also a significant part of strategic planning that helps transform vague goals into defined milestones. As a result, a financial plan is vital for every business plan for a startup business.

Consider including the following sections to your plan:

Balance sheet

This section shows your current financial resources. If you’re looking for funds and have no resources, a balance sheet is a great way to project your future financial status and build your development goals using this information.

Expense projections

To make your project more transparent to investors, you must plan your future expenses, which are divided into fixed and recurring costs. Roughly speaking, you have to predict how much it’ll cost you to implement the idea and what money will be spent on.

Income projections

This section presents the number of sales and outlines the future profit of the project. First, you must forecast the sales of your product. After that, using the sales forecast, you need to predict the potential profit for your startup.

Cash flow projections

The last section of the financial plan is devoted to the cash flow projections. Put simply, it’s a breakdown of all the money that’ll go in and out of business. It lets you see the balance of your business at every development stage.

It includes all the profits and spendings of the business. Based on it, the balance of the remaining cash is calculated for a specific period (month, quarter, half-year, year).

Tips to Make a Financial Plan

Creating a financial plan can be quite challenging but vital for any business plan for a startup company. To simplify this process, we’ve collected three handy tips that’ll help you create a financial plan.

Keep your financial plan in line with the business plan

Since the financial plan is a part of your business plan, it can’t differ from your general ideas and goals. All your verbal intentions described in other sections should be supported by the figures in your financial projections. For example, if you plan to release your product in the third quarter of 2021, your financial plan must include the costs of marketing, logistics, and other expenses for this period of time.

Your financial assumptions must be clear

Even though numbers accuracy in the financial plan is important, most investors are interested in slightly different things. They want to see the overall cash flow and your clear understanding of the projections you demonstrate. You must show to them your knowledge of a startup’s financial management.

Be ready to provide enough material to confirm your financial assumptions. Collect all historical financial information, annual financial statements (if any), accurate competitor analysis, market analysis, and more.

Be optimistic yet realistic

Even something as serious as a financial plan needs a bit of optimism. However, don’t go too far with it; otherwise, you’ll look as a dreamer in the investors’ eyes. It’s important to keep the balance between the precision of the facts and the desire to show investors an economically attractive project.

Use templates

Many entrepreneurs don’t know where to start drawing up a financial plan and how to present it. Don’t hesitate to use ready-made templates that are fully packed with all the necessary sheets and columns. Our personal recommendation is a handy and detailed financial plan template from 150 Startups.

Financial plan for a startup template

Financial plan template

Team Structure

This is the last section of the business plan, and it serves to familiarize investors with the hierarchy of your startup team.

Include the following points to this section:

Management Team

List each key management employee in your startup and briefly describe their background. Try to connect their skills with what they’re doing in your startup.

For example, if your VP of Sales has previously worked for a company that raised sales from 5 million to 10 million, this would be a great addition to show the expertise and importance of this person in the team. You’ll also show investors that you’ve gathered a powerful team that they can trust with their money.

Management Team Gaps

If the management team lacks certain specialists, you should mention it. This is a normal situation when startups don’t have a complete management team when writing a startup business plan.

In that case, you must provide investors with a plan for filling those gaps. Make a checklist of missing employees and write down the precise requirements for future candidates, such as experience in the required field, responsibilities, and more.

For example, if you want to find a CTO for a startup, you can say that the perfect candidate must have 10+ years of experience, top-notch knowledge of modern technologies, and extensive skills to effectively manage the team and develop the product.

Board Members

The Board of Directors or the Board of Advisory should also be considered in the plan. The Board of Directors is a paid group of people who help you effectively manage your company. Even though it’s very rare for startups to have a Board of Directors, you can identify this in the team structure and refer this aspect to the gaps to fill.

Wrapping Up

We’ve covered all the stages of creating a startup business plan. This is a long and complex process that almost every startup should go through. You can use ready-made templates, but there’s no one-size-fits-all template that suits every business.

On our behalf, we can personally recommend a fairly flexible sample business plan for a startup company from Shopify that most closely matches the points we described above.

Business plan for startup template

Business plan template

Frequently Asked Questions

Business plan can help you organize your thoughts, ideas, and even find the right people to work with.

It’s a proven fact that a business plan raises startup success chances by 16%. Besides, 71% of fast-developing companies have a detailed business plan.

Even though making a business plan is a long and complex process, almost every startup should go through it.

To make a proper business plan for startup you should stick to a certain structure. This structure fully explains what your startup is about, how you are going to implement it and what resources you need for this. Every business plan must have these sections:

  • Executive summary
  • Company description
  • Marketing plan
  • Financial projections
  • Team structure

The numbers are very different, as, for one startup, a week will be enough, and a month will not be enough for another. The time to create a business plan depends on many factors. The startup's idea greatly influences this aspect. The amount of research you will carry out to get a clearer picture of the market you will enter depends on your idea.

Also, the more team you have, the longer you will be describing all its members and all managers.

Besides, the creation of a business part may take some time if you have no experience.

However, there are many templates that you can customize for your startup and thereby significantly speed up the creation of a business plan.

Your startup business must have these sections:

  • Executive summary. This section sums up the entire business plan and works as an introduction.
  • Company description. This part reveals history, goals, team structure, and other details about your company.
  • Marketing plan. A marketing plan is a representation of the startup’s competitive advantage and marketing goals.
  • Financial projections. In plain language, it’s a forecast of future revenue and expenses of your startup.
  • Team structure. This section serves to familiarize investors with the hierarchy of your startup team.

Even though real companies don't share their business plans since it can give an advantage to competitors, there is a website where you can find several business plans of real companies. Just visit SmartBusinessPlan and discover real-life business plan examples.

  • Step 1. First of all find a flexible template to jot down your business plan.
  • Step 2. Write company description.
  • Step 3. Define your goals, make a market research and jot down it's results in marketing plan.
  • Step 4. Write financial plan.
  • Step 5. Write your management team structure.
  • Step 6. Sum previous section in executive summary.
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Comments

5 comments
VD
Victoria Diaz
21.12.2020 at 07:18

Nice piece of information. You've nailed its explanation. Besides, these templates that you've attached are really great. I think that they will suit perfectly for new startups.

GO
Gelske Offermans
21.01.2021 at 08:50

Good article. Found it interesting.

LP
Lina Petit
26.03.2021 at 05:23

Great job, very useful!

OT
Oscar Turner
01.04.2021 at 09:18

Thanks for the article! I'm an entrepreneur, and I've been stuck in this business plan stage. It's hard for newcomers to gather all their thoughts in one plan. But you've explained it perfectly!

SU
Shukure usmail
11.05.2021 at 08:52

Thank you for helping

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