Whether you're looking to raise capital, hire senior management, or sign high-value deals, you need people to take you and your startup seriously.
It's easy to get carried away thinking that everyone understands your startup's ambitions as well as you do, but in reality this often isn't the case. What potential stakeholders will want to see from your startup is a solid business plan.
What goes into a business plan?
A business plan is a top-level document that summarises the most important things to know about your startup. It'll typically cover things like:
- Product-Market Fit
What actually is your product, and how does it address an issue that consumers struggle with?
- Financial Forecasts
This section should help stakeholders understand the future financials of your company. It should contain revenue projections, cashflow models, and more.
- Marketing Plan
How you plan to go about acquiring customers for your product, and what your growth projections are.
- Organisational Structure
Who you have in your team, and how you plan to expand that as your grow.
These are just examples of a few key areas that most startup business plans focus on. Depending on the nature of your startup, there are plenty of other areas that could be valuable to include.
If you're at the stage where you're considering writing a startup business plan, then it's likely you'll have an understanding of your product-market fit.
With that in mind, let's look at the latter three, and drill a bit deeper into what each of these sections requires.
How do you make a financial forecast for your startup?
If your startup is in its early days, you can relax knowing that investors won't necessarily be looking for complete and total rigour in your financials. That said, they will want to understand the answers to a couple of key financial questions as they relate to your startup.
Some of these are:
- Historical Financials
If your company has already been trading, and begun to generate revenue, investors will want to see details on this; What are your monthly sales? How much recurring revenue do you have? What's your profit margin been to date?
- Revenue Projections
How is your revenue projected to grow over the next 12, 24 et cetera months? Investors are only interested in investing capital into growing companies, so being able to demonstrate (and justify) your revenue projections is key.
- Cashflow Modelling
An impressive revenue projection is great, but if you don't have the cashflow to sustain it then it means nothing. A good cashflow projection should show how you anticipate your cash levels to vary over the coming years, and demonstrate how funding would affect this.
The financial section of a startup's business plan is often the hardest to get right, but it's vital to investors taking your startup seriously. Because of it's importance, it can often be worth seeking out expert advice to get your financial section up to scratch.
How do you make a marketing plan for your startup?
For most startups, your marketing plan and your financial plan should be inextricably linked. Your marketing is what drives customer growth, and so is a key factor in building your revenue projections.
Because of this, and the importance of marketing to your revenue projections, getting your marketing plan right is another vital part of producing your startup's business plan.
Some of the key factors that you should consider covering in your marketing plan are:
- Your Channel Mix
What channels are you going to use to grow your startup's customer base? Are you going to have a referral scheme, focus on growing through social media, or do you think there's potential to grow via paid advertising?
- The Costs Involved
If you're looking to grow your startup via paid methods, such as paid ads or through partnerships, how much is this going to cost? This data should ideally be tied to volume estimates in order to produce efficiency metrics, such as CPA (cost per acquisition) or ROI (return on investment).
- Your Growth Funnel
You can't just state that you're going to get 100 customers next month, you have to explain how you're going to get them. This is essentially what a funnel does, it breaks down every stage of the customer journey, and estimates the number of people that'll reach that stage based on expected conversion rates.
These three points above are some areas that marketing plans tend to focus on, but they're by no means exhaustive.
Just how in-depth you go in the marketing section of your startup's business plan should really depend on how reliant your startup is on marketing.
If your startup is a D2C brand that'll live or die by it's marketing, then this section could easily come to dominate your business plan. If you're a B2B SaaS tool, then marketing can play a much smaller part in your business plan.
If you want to save time, it's worth looking at the templates that Causal has which can help you build your marketing plan. For example, if you're looking to grow your startup via paid ads, this performance marketing model can help you build out the marketing section of your business plan.
How do you map out an organisational structure for your startup?
Investors want to know who they're working with, and that extends beyond the founders.
Investors are keen to understand not just what staff you have in place, and what they'll be focusing on, but also how this is likely to change over time.
Do you want to use their investment to build out your product team? Are you going to hire a growth marketer? Or are you going to keep the team as lean as possible for the near-term?
This section of your business plan should help to answer these sorts of questions.
Tying into financials
One of the reasons that it's important to explain your team, and your hiring plans, is that they have a large impact on your expenses.
This is particularly true if your startup has a low marginal cost per user, like most SaaS companies do. If your startup falls into this category, then your main expense could end up being salaries.
In order to get your financials right, it's therefore important to map out just how you expect your team to grow over time. To help, we've actually build a template to help you map out the financial impact of growing your team.
Putting this all together
As we've seen above, there are a number of different areas that investors will want insight into, and that your startup's business plan should cover.
Building all of these out from scratch can take up a lot of time, and chances are that you've got bigger tasks on your list.
To help speed up the process of putting your business plan together, we compiled the Causal Startup Suite. It's a collection of free templates to help you understand and explain your startup's forecasts to external stakeholders.
What is Causal?
Causal is a browser-based modelling tool that helps you build financial models with ease. All of your Causal models are interactive, meaning that viewers can tweak your assumptions, and can be shared effortlessly.
It's completely free to get started, and there's a range of financial integrations and templates which you can take advantage of, so you can spend less time modelling and more time growing your startup.