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What Today’s Startups Need to Open Their Doors
Making the decision to open a business is the first step, but comes with plenty of strategic planning prior to even opening.
In addition to basic technical assets like unified software, enhanced online security measures, and a reliable cloud syslog service, your new entity won’t be able to operate without proper registration, a budget, a business plan, and other key components of a successful startup. Here is a look at what you’ll need to begin operating:
A Detailed Business Plan
Management textbooks rightly say that the single more important document for a new company is the business plan. If you did things correctly when writing it, the plan would serve you well for years to come. Most entrepreneurs grudgingly write it for the sole purpose of obtaining a loan. That’s a valid reason, but there’s a lot more to the typical business plan than that.
If you were lucky enough to get financing on the basis of your business plan, then it probably passes muster on the financial level, at least in the eyes of lenders. Now is the time to check and see whether or not your plan is complete. If it’s not, take the time to flesh it out. You’ll thank yourself later. There are seven pieces to a worthy business plan. It’s okay if yours have more, but make sure it, at minimum, contains the following seven items:
- An Executive Summary – name and location of the company, your products, and mission are the three basic components of this first section. Most owners include a few sentences about why they wrote the plan, whether it was to attract investors, satisfy a bank’s loan requirements, or to use as a guide for growth.
- A Succinct Company Description – what, exactly, do you do, and how do you do it? Describe your company in two or three sentences. This is a business plan version of the elevator pitch.
- A Thorough Market Analysis – dig in and study the market as thoroughly as you can. If you aren’t sure how to complete this section of the plan, it’s okay to hire someone to do the job for you. Unless you created a brand-new market, this work has been done before, so you might want to subcontract this piece of the plan.
- A Full List of the Products and Services You Offer – this is the easiest part of plan-making. Be microscopically specific about every service and product you offer. Include data about customer benefits the products offer and whether or not you hold any patents, have inventory, or use vendors for parts.
- A Comprehensive Marketing and Sales Strategy – your lender probably looked at this section just to see if you had a written strategy, but bankers aren’t usually qualified to pass judgment on what is or is not a solid marketing plan. Spend time working on this section even if it’s just been a month or two since the first go-round. Crunch numbers and make realistic assumptions when building a sales strategy.
- A-List of All Team Members with Bios – this section needs not to be super-detailed, but remember to provide pertinent data about anyone on the formal team or anyone who advised you as you were starting up. Include short bios of the key management team and list their prior experience if it relates to what your company is now doing.
- Detailed Financial Projections and Plans – your lender used this part to decide whether to fund you, but make sure that all the necessary items are in place. Make a month-by-month financial projection for at least three years based on realistic market data. Include any historical data you have if you’ve been in operation for a while.
Unless you’re a tax and accounting whiz or have one on your staff, hire a reliable local accounting service. Make price comparisons, and don’t assume that CPA firms are the best. Many stand-alone accounting services specialize in payroll, taxation, and other core financial functions you must stay on top of.
Financial Resources Until Profits Materialize
Unless you have solid credit and were able to get financing upfront, don’t expect to open your doors until you have enough cash to sustain at least six months of full-time operations. Don’t count on a single dollar of profit until it arrives. Accounts receivable are not real money, nor are patents, promises, vehicles, contracts, or wishes. Cold, hard cash in the bank is what you’ll likely have to live on until profits come in.
A Marketing Strategy Plan
Your business plan ad marketing strategy plan will have some of the basics for this task but expect to spend a lot of time brainstorming about cold-call campaigns, buying prospect lists, sending out direct mail pieces, and more.