Secrets To A Solid Tech Startup Business Plan
This is not surprising, especially when you consider that this powerful document can help you with everything from:
- Data-driven decision-making
- Creating action plans, with goals and milestones
- Testing the viability of new ideas
- Bringing new ideas to the table
In short, a well-crafted business plan can be a very effective management tool that will allow you to keep track of your progress and make more money for your business.
To help in that regard, read on to discover the secrets to a solid tech startup business plan to ensure your growth and expansion.
1. Executive Summary
Writing a business plan for your tech startup sounds like an easy task.
All you have to do is create a detailed document outlining your business objectives and the process for achieving them, right?
Unfortunately, it’s not that simple to create a persuasive tech startup business plan that is highly accurate.
You need the right approach and the ability to put together the essential elements – one of which is an executive summary.
This is the first and arguably the most important element in that structure.
It’s a short, clear, and concise document that communicates everything about your business.
The document should be able to stand on its own.
Here are some tips for a well-crafted executive summary:
- Use strong, positive language.
- Include your mission statement in one short paragraph.
- Include general company information (when your business was formed, names and roles of founders, office locations, number of employees, etc.)
- Include a brief description of your products or services and your target customer base.
If your goal is to get funding, include your funding goals and any financial information about previous loans or the banks/lenders you’ve worked with, etc.
Add visual highlights such as charts and graphs pertaining to business growth or key milestones.
Pro Tip: If you can’t create the graphics yourself, you can hire a freelancer to do it for you.
The process for writing an executive summary is the same whether your company offers simple e-learning software or complex technology.
2. Company Overview
A lot of people mistake the company overview for the executive summary. Just as many mistake a business proposal for a business plan.
However, there are distinct differences between the two.
The company overview offers a more detailed, top-level view of your tech business structure and what you do.
Here are some tips to help you draft a great startup overview:
- Describe what your company specializes in, as well as the technology behind it
- Explain the nature of the marketplace and industry
- Outline your tech business’s legal structure
- 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 outlines each of the criteria above.
3. Market Research
Regardless of how great you think your startup will be, you still need to conduct market research in order to gather information about your target customers, as well as your competitors.
There are two steps to achieving this:
Step #1: Identifying Your Target Market
It won’t matter how great your product or service is, without a viable market for it, 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:
For example, after conducting market research, a marketing tech company that allows corporations to host virtual events might discover that there is a distinct need for their product among large organizations.
The company might use a survey maker like this one to conduct surveys of their prospective customers, and once they get a clear picture of their total addressable market (TAM), they can then niche down to find a more targeted (and therefore more engaged, and higher converting) audience.
For your own market research, you can further segment your audience by the following factors:
- Demographic: What is your target audience’s age group? Gender?
- Geographic: 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?
Say you offer a CRM with predictive dialer. You might discover from your research that your target audience consists of 35 to 45-year-old male marketers who are largely based in the US.
You could then do further research to discover their purchasing behavioral traits so you can better speak to their needs.
Step #2: Performing Competitor Analysis
Your next step is to conduct a thorough analysis of your competitors. This will help you find the key differentiators between you and your rivals.
You can do that by asking yourself these questions:
- Why should someone choose my product or service?
- Why do people buy the product already in the market?
- How can I improve on existing solutions currently in 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 better connect with customers.
This is particularly important for people in super competitive spaces, such as the VPN software niche, or the landing page software niche – two of the most competitive software niches.
4. Marketing and Sales Plan
Now comes your marketing plan.
Here, you need to mention the strategies you intend to use for marketing and sales in your business.
This includes sales channels and marketing activities.
Your marketing channels are those you use to promote your business and product.
Sales channels, on the other hand, are the mediums that allow your customers to buy your products or services.
You must include at least one direct sales channel, such as an eCommerce store, and explain it within your business plan.
You can emulate the examples of eCommerce stores like 3Wishes that are already successful. But even better, you can look at what your direct competitors are doing as a way to brainstorm ideas for your own strategy.
Marketing activities should detail how you intend to acquire leads and customers for your business.
For example, if your company offered a podcast hosting platform, at a base level, you might include:
- Launching a company website
- Developing a strategy to generate traffic, e.g. from search engine optimization (SEO)
- Creating a paid traffic strategy, such as PPC for immediate online exposure
- Developing channel partnerships
- Building an email subscriber list
This section of your tech startup business plan needs to account for various factors, including your goals, budget, and risks in the market.
Pro Tip: In addition to including graphs and charts on your business plan, you can use animation software to create eye-catching imagery.
If you’re not knowledgeable about these things, it’s important you get sales expert advice from professionals who can help you develop a strong 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 company sales goals.
This can be quite challenging for new entrepreneurs.
For example, say you’ve just created a WordPress guest blogging plugin that you’re eager to offer to the world.
But, how do you come up with financial projections when you have no stable income, let alone balance sheets or cash flow reports on which to base your projections.
Having said that, creating a detailed financial plan is still possible if you’ve done proper market research because you can make educated projections.
Here are some details to include in your business plan:
- Revenue Streams: Outline how your company will generate its income
- Major Expenses: Detail any high costs that you anticipate in the year ahead
- Salary Demands: Note whether you are still bootstrapping, or if you and the partners are taking salaries, in which case make a note of how much.
- Financial Milestones: Communicate your expansion strategy and factor in future store openings or hires that will have an impact on your books.
Keep in mind that the majority of startups are not profitable in the first year.
So your financial projections need to maintain a longer-term view for success while keeping your ambitions honest and realistic.
This will help you produce a break-even analysis that is more accurate.
These are the 5 core components you need to build a structure that has been proven to be the most effective in creating a solid tech startup business plan.
Follow the steps above to craft an elaborate business plan that will help propel your new company to success.
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