Key attributes of your plan differ depending on your target audience
Determining the length and format of your plan starts by defining your target audience. Target audiences can typically be broken down into one of four segments. Each segment has some unique aspects that you should consider when developing your plan.
- Partners - Keep it short and remain focused on the value key partners will receive from partnering with your business. Long-term financials, operating plans, and even marketing plans to a lesser degree are not as important in this scenario.
- Internal Team - Focus on the mission and vision that you’ll use to build the culture. Details around how you’ll grow and operate are important but keep it simple as much of this will change as the business evolves and not every internal team member understands that.
- Investors - Growth, growth, growth. Investors will focus on problem, solution, market and growth (just in case you missed it the first 3 times). They also invest in people as much as the solution so showing off your team will go a long way toward bringing home the bacon.
- Lenders - Plans for lending tend to run the longest as breadth and depth are important. You’ll end up covering every aspect of your business in a lender plan but the most important aspect is showing how you’ll be financially viable in order to repay the loan on the terms you are requesting (or that are being offered).
No matter who your audience is, you still have to cover the basics
Covering the basics for your startup business plan can mean different things to different people. To keep it simple, think of the basics in terms of what a pitch deck may look like. Here is a quick outline to get your juices flowing.
- Problem - You should make sure that the problem you are solving is clearly articulated somewhere in your plan.
- Solution - Articulate the solution you’ve crafted for the problem your product and/or service solves.
- Market - The market for your solution needs to be clearly defined. Here is where you define the market size as well as the customer.
- How it Works - The solution you presented earlier in your plan is generally a high level snapshot. Here is where you really dive into the nitty gritty for those who need it. Those who don’t will most likely just glance over this section.
- Competition - Competition comes in the form of direct and indirect. Get creative with the indirect competition since this is where new market entrants tend to emerge, blindsiding more established providers.
- How You Make Money - Making money is the primary reason why businesses are started and it is the only way you achieve longevity. Spend a lot of time here and don’t take the approach that money will eventually follow users - that’s so 1990s.
- The Team - Businesses are run by people therefore talking about the team behind the business is critical.
- Traction - Traction is the most critical component of the plan. Traction will be important to each and every one of your target audience members. Traction comes in all shapes and forms including new partnerships, revenue growth, new customer growth, press and media coverage, and many others. Don’t overlook anything that shows momentum.
- The Ask - You are putting a plan together for a reason and that reason should be clearly stated.
Make sure you do your research, don’t guess
Make sure that your plan contains facts. It is imperative that you are able to back up the facts with multiple sources. Key areas where startups often skimp on the facts and guess include:
- Market Size - quantify your market using more than one source.
- Competition - don’t guess on who your competition is or even worse state that there isn’t any.
- Cost of Goods - every product or service has a cost, make sure you know the cost of production and what that looks like as you scale.
Plans constantly evolve
Don't let your plan (and your business) get stagnant -- you’ll hear this again and again but don’t ever forget it. Businesses evolve over time and your plan should never remain stagnant. It is perfectly OK to contradict an earlier belief or plan as you move your business forward because you will constantly learn new things that you didn’t know at the time of your last plan iteration. This was articulated very well by Donald Rumsfeld so it feels appropriate to end with his quote.
There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.
- Donald Rumsfeld