The business world is becoming more competitive every day. A lot of people come up with an idea of some new startup. It can be a new device, an online marketplace platform or services that will make the life of others easier. When thinking about starting a business, you must be sure that your idea is amazing and it will work perfectly well. And it’s right, you need to be excited about what you are going to do. But turning your dream into a profitable business is an absolutely different story. In this stage, you need to spend some time to write down all possible details that will help your business succeed and be interesting for future investors. You need some ground, so you need a good IT startup business plan!
Composing a business plan isn’t so simple, as here you need to find a balance between including all possible small details you have in your mind and a structural draft of your main development stages. Whether you are going to find an investor or trying to start your business using your own resources, you need to write down your thoughts on paper. This will help you feel prepared and more focused.
Types of internet startups and why some of them fail
According to the Startup Genome Report covering premature scaling based on data from 3200+ high growth technology startups, we can name several types of internet startups and why some of them fail. Do you know what type your startup is referred to?
The types are created by defining a spectrum of 100% marketing to 100% sales:
- The Automator (focus on quick execution and often automate a manual process)
- The Social Transformer (product-centric and rely on early monetization typically through subscriptions in smaller markets)
- The Challenger (highly dependent on a small number of deals)
The startup lifecycle is made of 6 stages of development, where each stage is made up of levels of substages. In this way, we have a tree structure that allows us to watch the progress at each stage. Also, don’t forget that you can be absolutely independent if instead of crowdfunding or asking the investor for help you will choose the bootstrapping way for your startup.
Strategies for the startup bootstrapping
The truth is that most startups never receive any sort of significant outside investment. But should it prevent you from creating your own startup? Definitely no. You can use your own resources. For this, you can use the bootstrapping – the process of building a hugely successful company by funding it entirely through the use of your own resources. First of all, bootstrapping is the opposite of creating a business by accepting significant funding from venture capitalists and/or Angel investors. That means “no help” to be expected, you should rely only on yourself. In most cases bootstrapping consists of:
- personal income and savings
- ‘sweat equity’
- lowest possible operating costs
- fast inventory turnaround
- (and sometimes) a cash-only approach to selling
Actually, Facebook, MailChimp, HP, Microsoft, and Apple were bootstrapped.
Read about bootstrapping pros and cons and 4 crucial strategies you can use to create the next bootstrapped high-growth startup.
Preparing a business plan
Figuring out how do you want to find resources for your business, go and write all questions that you can be asked by potential investors. If you are going to use your own resources, you can share this plan with your team to help you get feedback.
We recommend you to make a plan that will have such elements:
- a summary of your project
- objectives and mission of the company
- research of the market niche and competitors
- description of your target customers
- description of the services
- operational and management plan
- sales and marketing channels
- startup resources, costs, and financials
But remember that your business plan shouldn’t be just formally written. You are composing it for yourself as well. Thoroughly writing out your summary leads to your startup progress and gives you a much clear understanding of your business idea. The statistics show that companies with solid business plans have more high rates than those without a plan. Let’s see how it is better to present the elements mentioned above and what you need to know to get started.
1. Composing a summary of your project
That’s one of the main things that will determine the success of your project. So, spend some time to compose it in such a way, so you will be 100% sure when presenting it to the investors. That could be one compelling sentence or three paragraphs (no more) that summarize all aspects of your idea. It should have all possible answers for the questions like:
- How will your startup change people’s lives?
- How it is different from all the other services in the market?
- Who and how will benefit from your startup?
- What is the problem you are solving?
- What is the future of your company?
2. Writing down objectives and mission of the company
If we consider the company’s mission in the widest sense, then it can be defined as the meaning of the existence of your business. The mission contains the fundamental goal of the company and plays the most significant role in strategic management. First of all, describe the values of the company that will help you to achieve your main goal. Our recommendation is to find a quiet place where no one can distract you from your thoughts, get rid of all unnecessary thoughts and focus only on the company’s mission. You may need a couple of days for that.
The famous examples of the company’s missions are:
“Bring inspiration and innovation to every athlete in the world.” – Nike
“Be our customers’ favorite place and way to eat and drink.” – McDonald’s
“Be a company that inspires and fulfills your curiosity. Our unlimited passion for technology, content, and services and relentless pursuit of innovation drives us to deliver ground-breaking new excitement and entertainment in ways that only Sony can” – Sony Corporation
“To attract and attain customers with high-valued products and services and the most satisfying ownership experience in America.” – Toyota
3. Research of the market niche and competitors
If you are implementing this research by yourself here are the main pieces of advice:
- Look from the customer’s point of view. Try to research the services market through the eyes of his client.
- Estimate the number of potential customers. There are many ways to collect such information.
- Analyze the advertising situation.
- Analyze the product presence on the Internet.
- Estimate the size of the market for similar products or services, if this market is growing, static or declining.
- Research the obstacles for entering the market or expanding activities within it.
4. Description of your target customers
Before defining your target customers, you need to conduct market research. It’s useful to learn this information beforehand. With the help of full-fledged market research, including surveys, interviews and direct interaction with a potential audience, you can get valuable information. Some marketing research can be done with minimal investments. For example, you can implement a polling mechanism on a landing page and ask visitors what they like or dislike on the page. The information you get from visitors is priceless. With the help of surveys, you can interact not only with your customers but also with random visitors. You can use such resources as Reddit and Quora to gather some useful information.
Writing a portrait of your potential client start with things like age, gender, income level, ethnicity, location. By the end of the research, you will have a clear understanding of how your average client should look like and where you can find him/her.
At the end of the day, you have to understand the basic user needs.
5. Description of the services
You need to create a clear services portfolio to understand the needs of your customers. Think about why they want to use your services and why they will choose exactly your product. Expand upon your services, including such details as
- the places where your products will be produced.
6. Operational and management plan
The operational and management plans are written to show how the business works on a continuing basis. They describe the logistics of the company such as assigned tasks to each team within the company, and other various responsibilities of the management teams, as well as expense requirements needed for the operations of the product.
7. Sales and marketing channels
That’s a very important section that sometimes some entrepreneurs neglect. But choosing the right sales and marketing channels result in a great part of the success of product promotion.
Here are the main questions you need to take into account while describing this section:
- How big is your promotional budget?
- What type of promotions will you use?
- What will be your logo idea and where will you use it?
- How often it’s better to use paid promotions?
- What other advertisements will you use?
- Will you use social media for promotions?
8. Startup resources, costs, and financials
The main rule:
“At the prototype stage, money should be spent on a product, not on marketing”.
There are two approaches on how to spend money at the prototype stage:
• create it completely free, investing maximum effort and minimum funds;
• create it as quickly as possible by investing money within the selected budget and maximum effort. You can try to attract third parties for a nominal salary if the product develops and you get the first round of investment.
The experience shows that in the final result the financial costs will be twice as expensive and the income will be less than three times. As a rule, no financial model can withstand such pressure, so the only way is to convince yourself and a potential investor that the company will be very careful with money.
The best way to save resources in that case – is hiring a dedicated team of software development professionals, who will meet all the requirements, deadlines, guarantee the quality of your product and provide further support. Sometimes, smart investment can save future incomes. By the way, those software development teams will decide better what technologies to use. And you can keep being busy about what’s matter to your business but not technical details. For example, did you know how Ruby on Rails is beneficial for fintech startups?
Recommendations that help to present your plan to investors
Understanding the reasons why investors can refuse to invest in your business will help to avoid some mistakes in the early stages of your startup development and while writing your business plan. So, here we collected some of the main mistakes and made a list of the recommendations for you:
- Professional investors are looking for big ideas, so don’t waste your time on small things.
- Don’t make your business plan and summary too long and boring.
- Think about all the possible questions the investors could ask.
- You need to show that you know what direction you move very well.
- Choose the best management team.
- Research the competition market and show how good you are aware of the market situation.
- Your financial strategies should be as realistic as possible.
- Convince that there is a great need for your product on your own example. Be that first interested customer yourself!
- You should know how and where to find potential clients.
- Create the best possible working prototype of the product or the video that summarizes it.
MVP as a real-world simulation for your product
There are two great advantages that the concept of an MVP (minimum viable product) can give to your idea validation:
- Understanding what users need
- Using a minimum of engineering days for validation
By creating an MVP you can validate your idea by building the most basic set of features to turn your idea into a working product. MVP allows you to test how your product works as quickly and cheaply as possible. In order to start a great company quickly and efficiently, you probably need to prove your idea and build an MVP. But remember that the more you distract, the more you are spending extra time and money on a product that nobody wants. Write down all your ideas and consider building them into a release based on feedback. Or, contact custom software development company, so professionals can do that for you.
Here in Syndicode, we create a wide range of software development services for different business needs. We can provide high-level UX design, frontend, and backend development for your MVP. Moreover, we will help you with defining the most important features for your minimum viable product and decide on the optimal technology stack. All of these are the parts of MVP professional development provided in Syndicode. Go to our portfolio page to see our level and approach and find out why Syndicode can be considered as an MVP development agency.
Sndicode’s contribution to startup development
Syndicode is happy that we had a chance to contribute to some startups as well, such as
- Medbelle – the best-rated medical provider in the UK, a startup that revolutionized the way patients interact with the healthcare system by providing a highly personal experience from start to finish. Last year it won AO Foundation’s Pitch & Preach startup competition.
- Movinga is European house removals and relocation platform Syndicode helped to develop and improve in 2016. Last year this revolutionary service was included in TOP-10 Most Innovative Startups of Germany in 2018!
- Fuzu – the online marketplace that gives people access to knowledge and makes them easily apply to their dream job. It was included in TOP-10 tech startups in East Africa.
We also support different startup conferences. Our advice is to visit as many conferences as you can to improve your skills and find more cool programs to follow up. Or find an investor! If you run a startup and looking for some investors, there’s a chance you can still join Startup Battles in LA this year!
If you already have a business plan and considering the possibility of software outsourcing, Ukraine can be a great choice in terms of software quality and the costs involved. And Syndicode will help you to be ahead of the pack! You can also wonder why to hire Ukrainian software developers? But that’s another big topic we are suggesting you study.
If you run the business, you should know that you should constantly move and be aware of the new technologies to gain more customers and profits.
Hire Syndicode to implement all the innovations to grow your business!