A technology startup business plan is a stepping stone that turns your ideas into a successful business. Unfortunately, many entrepreneurs and startups overlook the significance of business plans. If you are looking to start a technology startup with high earning potential, then creating a business plan is the way to go.
A well-written business plan enables you to look beyond boundaries, layout goals, track the progress (as you begin to grow) and gather all required resources from funding to equipment. And, when you choose to go without preparation and proper business plan, then you are paving the way to disappointment.
What is the Technology Startup Business Plan?
Technology startups business plan is a well-written document that describes your business and its objectives, strategies, and goal. The business plan also contains a target market with the roadmap showcasing how a company will achieve its million-dollar company goal.
Your business plan helps you work smarter, stay prepared for roadblocks, and stay motivated.
In short, a tech startup business plan lets your investors and bankers know what you want to do and how you plan to do it.
Do You Need a Business Plan for your Tech Startup?
Our simple and straightforward answer is “YES.” But, let us add some different perspectives.
We write business plans to;
- Authenticate ideas and articulate the vision for the business
- Roadmap and solutions to solve the key challenges
- Prepare a compelling pitch deck for investors
Now, if you can do without the above two of the three points, we think that you may not need to prepare a business plan —just a one-page business plan can be enough to put through your perspective. You can start with an investor pitch deck along with your business prototype. However, if you are not prepared with the first two points, you need a business plan.
Going without a business plan can put your entire business idea in jeopardy. In fact, the top five reasons why startups fail are;
- No market need
- Cash crunch
- Poor team
- Cost issues
The data is based on a survey conducted by CB Insights. The survey stated that 70% of tech startup companies fail, citing the top 20 reasons behind the failure. Let’s take a look at the image below;
However, another survey published on Entrepreneur stated that the key reasons why startups fail are;
- Redirection of focus/Lack of focus
- Loss of passion, commitment, and motivation
- Overconfidence, resulting in an unwillingness to listen
- Surrounded by the wrong company (people)
- Mentorship issues
- Lack of knowledge (in relevant field)
- Sudden rise (Earning too much money too soon)
Professor Shikhar Ghosh, a senior lecturer at Harvard Business School, said, “failure is the norm.” He said very few companies, especially startups, successfully achieve what they project.
According to Ghosh, the prime reason why startups fail is that investors and startups do not heed to “look before they leap.” Even if they have a plan, they just move ahead without realizing that the project’s base assumption could be wrong. He firmly believes that startups should create the future with their customers, not predict the future.
Know more: I Have an Idea for an App, What’s Next?
Things to Consider before Drafting a Business Plan?
Are you all set to create a technology startup business plan? Wait. You have something crucial to do before you move to the planning part. Let’s ask some of the fundamental questions yourself. Such as;
- What do you want to do?
- How will you do it?
- When will you do it?
- Who will do it?
These questions will help you get some ideas to create an effective business plan for your technology startup and turn your ideas into executable action. At the same time, when you plan your business, it will help you narrow down the gap between where you are and where you want to reach —your ultimate goal.
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How to Create a Technology Startup Business Plan?
Now that you understand what a technology startup business plan is and why we need to create it, it is time to know how a business plan is created and its principal elements.
An executive summary is the most critical element of a startup business plan. The summary creates the first impression, and if it is not captivating, then your entire business plan is a waste of time and resources.
It must let readers (readers can be your investors, partners, bankers, and employees) know what you want. In the executive summary, state what you are asking. Keep your statement precise, businesslike, and comprehensive with a clear goal. It should not be more than half a page.
But, do not make it a rule.
It (the executive summary) could be longer if it involves complex use of funds; it should still not be more than one page. Provide a synopsis of your tech startups business within the space. The key elements of the executive summary should be;
- Concept of your business
- Highlight financial features
- State financial requirements
- Provide relevant information
- Include achievements
Company summary begins with the short but precise detail of the industry, which lets investors and other key partners know the current outlook and future possibilities. The company summary is seen as an elevator pitch that captures the imagination of investors and bankers.
It should be a detailed description of your company with a captivating title. For example, the title must include the summary of your company, and that should consist of;
“….IS A….WHO SELLS…. TO….WHO NEED….BUT DON’T GET IT FROM…. .”
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“Your company name” is a “mention the type of business” who sells “name products/services/solutions” to “customer type & location” who need “name the problems that you wish to solve” but don’t get it from “your competitors.”
When you keep this example in mind, you can correctly create a summary of your business that narrates what your company is about and what problems your company will solve. Write your strengths that will enable you to serve your customers and clinch business success. Mention if you have an expert in your team, or is there something else that will drive success?
Market Strategies/Market Analysis
Having a great business idea and running a successful business are two different stories. Your idea may be dear to you but may not be apparent to others. It may not grab the attention of others as much as it holds yours.
But how would you know whether your idea is good or not? The answer is “through market research and analysis.” Even if you know the industry, you need to know all aspects of it. Being an entrepreneur or startup, you need to know your target market; it’s essential.
Research your market: Know your audience, explore competitors, and know what makes them successful. Market research will help you create your market strategies for your technology startup. When your target market is defined, you can position your company, set pricing, and know potential growth hack. Competitor analysis is an important task that lets you know your competitors’ strengths and weaknesses within your market niche.
Show product research: There’s a need to precisely describe how you conducted your research. You can include face-to-face conversations with potential customers, asking problems they have. Make sure the answers are not ushered; they must be honest responses and how they want solutions.
The more you know, the better prepared you are: When you know your competitors’ strengths and weaknesses, you get distinct advantages. For example, you will come up with well-defined strategies, like develop a barrier to prevent competition and exploit weaknesses within the product development cycle.
Description of Products/Services
Describe what you offer and how it will serve the needs of your target market. Begin with what people need and how your product will serve that need. It will be easy for you to prove that people will pay for your product.
Describe the products’ lifecycle and how it will persuade customers to buy it for money. If your business is about service, then describe why your target market will subscribe to your services. Jot down the plans for your intellectual property, be it copyright, patent files, or anything alike. Showcase research and development if you are doing anything, such as building any website, exploring any business software’s potentials, or making any web or mobile app business plan.
Management & Operational Structure
No doubt, the business idea you have is solely yours, but you need people to make it a successful business. Who are those people with what role? That you have to mention in your tech startup business plan, showcasing your team’s strength and experiences in the particular field. It will help investors and bankers decide if your business idea is achievable or not.
A team usually consists of several experts with different skill sets, having an excellent inter-connection. For example, if you have a development team, it will include developers, designers, testers, project managers, etc. Describe each one of your team member’s merits and how they will add value to your proposed business plan.
Precisely show the organizational structure of your venture. Initially, you can showcase your key partners and staff (if you have) in the chart. It will be better to showcase your organizational structure using graphics to help investors and bankers understand the distribution of power and command chain.
Take a look at an example of an organizational structure graph. You can create something like that;
Showcasing the hierarchy will end the debate on whether who will do what and with what accountability.
Marketing and Sales plan
Unless you come up with well-researched marketing strategies and sales plan, you cannot assure your investors and bankers of your tech startup success. What are your marketing strategies? Answer this question precisely. Clearly state your marketing plan in this section. The strategy should clearly show how you plan to attract and retain customers.
Mention the marketing channels you plan to promote your product and woo customers. What are your strategies for specific marketing channels, and how will it benefit your technology startup?
Avoid showing one-way to approach a marketing strategy as there is no such way. Evolving marketing strategies will fit into the rising needs of your target market. Your marketing strategies should also have key points regarding conversion strategies.
Take time while writing this section, as this section is going to be very important. Spell out the investment required for the particular business over the next five years.
How much funding you need to run your tech startup business. In one para, you can also state how you will use those funding.
You can also specify if you need debt funding or equity for your technology startup, though you need to mention your plan on how you pay off the debts.
Financial projection refers to the estimate of future economic outcomes for your tech startup. It is the most critical part to convince your angel investors and lenders. And hence, it should be convincing enough to show the stability of your business. It will help investors understand if the money they invest will be paid off.
If your technology startup business is already functional, then attach balance sheets, income statements, cash flow statements, or anything in this regard. These documents will help you convince the lenders.
Besides, you can attach business forecasts, the data which you have gathered during market research. Show future financial outlook in monthly and quarterly financial projections. With the help of graphs and charts, make the financial projections easy and comprehensive.
Last but not the least, this section of your tech startup business plan should include all additional documents that you want to add to support your idea. The records and documents you add here will give a feel for your products, services, marketing, and more.
The documents like credit histories, CVs (of your staff/employees), business documents, research reports (Market analysis, strategies, etc.), products’ photos, permits, licenses, and others can increase the integrity of your business plan.
These top elements can add to make a perfect business plan, though more components can be added based on your business requirement.
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Find the best Technology Startup Business Plan Template
Creating a business plan for a technology startup from scratch is not easy; you need to go through some examples, templates, and samples to make it easy. You can find these resources from many websites to build the best plan for your business. We rounded up some of the top websites to get business plan ideas from while also explaining the one which we found it resourceful. Let’s explore;
Business Plan Template by Score
Even though you can download plenty of business plan templates from various free and paid resources, finding the right one will help you save your time and finish your plan in time. Most of the business plans for the startup we went through were outstanding but paid, however, we found a template by Score which is free and effective. it appears to be good for most tech startup business plans.
Score is an American based nonprofit website which is dedicated to support startups and entrepreneurs kickstart their businesses and achieve success. The template by score is available in PDF and Word doc format. You will find a whopping 150 generic questions to customize for most types of businesses, be it a plan for your tech startup or others. You can choose plenty of others from the resources given below.
We understand that creating a business plan is not easy. It is going to be a complex and arduous task to do. But, when you begin by breaking it down into steps, it will be easy for you to make the best tech startup business plan. If you still find it difficult to draft, we can help you keep the hassle out.
Our team of experts will guide you the best way to draft your business plan. At the same time, we are also a tech savvy company, offering a wide range of web and mobile applications for startups and entrepreneurs around the world. We also offer on demand app solutions for startups, which we can deliver in the next 48 hours. Our products can help you streamline your business and start earning as early as possible. Let’s connect for further details.