If you are starting a technology company, it is likely that you will require a business plan at some point to provide banks or potential investors. The experts at Pro Business Plans have extensive experience working with tech startups to create professional plans for investment and strategy. This article provides information on what is included in a tech startup business plan and how it is commonly structured.
Tech Startup Business Plan
Tech Startup Business Plan
There are several things to consider when starting a technology company. Among the most important include the structure of the business model, followed up with a concise go-to-market strategy, and a conservative financial model. These elements will provide reviewers with a complete picture of what you have done, where you are, and the potential that you may have. The structure of a technology company can vary considerably depending upon if it is hardware provider, or software provider and whether or not it is in the retail or enterprise market. Nonetheless, each component of the plain has been explained below.
The business model for a tech startup business plan should be focused on communicating three main points. First, how your business uniquely solves a pressing consumer or enterprise issue that someone is willing to pay for. Second, how your business outperforms the existing substitutes in a way that will entice people to switch, or change their existing habits. Third, how you can generate a profit from the value you create. Many business models fail because they violate one of these three main points, so it is important to demonstrate your solution to these within the business model.
The value proposition for a business model communicates what the customer receives in return for what they are paying. This can either be a novel solution to a need previously unaddressed in the market, or a more optimal solution delivered relative to other competing firms. The overall value proposition is the main driver and determinant for success in any tech startup, without the creation of value, you will simply not sustain a customer base.
The operations section of a tech startup business plan draws upon how you intend to generate and profit from the value that you create. This may mean how many programmers you need, where they will be based, and the amount of time spent on research & development rather than sales & marketing. The operations are not as important as the value proposition, but it should justify how you can generate a profit and the cost of operating does not exceed the revenue forecast .
The marketing section of a tech startup business plan generally depends on the target segment and approach to market. A marketing plan that is for enterprise software can be substantially different than one for the consumer market, and even more so for the elderly consumer market rather than the pre-teen segment. Therefore, we have covered only a high level overview of what a good marketing section would include and how it would be structured in a way to demonstrate you have a robust plan moving forward that is both feasible and promising.
There is a somewhat ambiguous term being used in the marketing world, business development. Such a term encapsulates both direct sales, as well as the formation of strategic partnerships, both which apply to the enterprise and consumer technology market. At the enterprise level, it may mean making outbound sales calls to prospective clients, or forming strategic partnership and affiliate arrangements in the consumer software market.
The promotional segment of a marketing plan may combine direct marketing such as mailings, pay-per-click, and social media advertisements or mass advertising and public relations. The latter may be much more expensive, but advantageous for companies seeking to make a splash in the market or have a very widely applicable audience. For instance, Uber may advertise at bus stops where every passerby is a prospective consumer. A technology startup that sells helicopter bookings, rather, would have poor targeting.
The financial forecasts for a tech startup business plan can be difficult to determine at times. Some companies may be pre-revenue and only have done some research regarding their prospective customers’ willingness to pay. Others may even already have revenue, but it is not sufficient to form projections in the same fashion as for instance, a manufacturer of a staple commodity in a stable country. Therefore, some set of assumptions must be formed that are both reasonable and conservative in order to be taken seriously.
The revenue projections for a tech startup are largely driven by the set of assumptions determined about the overall industry growth, your potential customer acquisition rate, and the amount received from customers. Some tech startups, unfortunately, are built around short run trends. A classic example is the plethora of applications that emerged after Angry Birds was removed from the app store, a game that had temporarily established a market void, any investor with a long-term view would steer clear of. Therefore, the assumptions are designed to build a logical and conservative case for the industry and your company specifically.
The budget forecast section of a tech startup business plan should be carefully created based on the amount that you will need for the current funding round. This means acquiring quotes from service providers, understanding the assets that you will need, as well as the labor you will require in order to generate the revenue you project. It is possible to analyze comparable budgets of other companies and provide a holistic figure, but for internal purposes, it is important to understand whether you will need ten-thousand dollars to finish the product or one million dollars are still required for development to go-to-market.
What is Included in Our Custom Tech Startup Business Plan?
- Marketing Plan
- SWOT Analysis
- Competitive Analysis
- Profitability Analysis
- Personnel Plan
- Organizational Chart
- Company Valuation
- Executive Summary
- Company Description
- Keys to Success
- Three Year Objectives
- Product or Service Description
- Market Research
- Fundraising Support
- 12 Month & 3 Year Profit & Loss
- 3 Year Balance Sheet
- 12 Month & 3 Year Sales Forecast
- 12 Month & 3 Year Cash Flows
- Break-Even Analysis
- Financial Ratio Analysis
- Management Team