Introduction

What is a business plan?

A business plan is a living document that maps out the details of your business. It covers what
your business will sell, how it will be structured, what the market looks like, how you plan to sell
your product or service, what funding you'll need, what your financial projections are, and which
permits, leases, and other documentation will be required.

How to Make a Business Plan?

● Narrow down what makes you different.
● Keep it short.
● You can (and should) change it as you go.

Narrow down what makes you different.

Before you start whipping up a business plan, think carefully about what makes your business unique
first. If you're planning to start a new athletic clothing business, for example, then you'll need to
differentiate yourself from the numerous other athletic clothing brands out there.

You're not just selling your product or service -- you're selling a combination of product, value,
and brand experience. Think through these big questions and outline them before you dive in to
the nitty-gritty of your business plan research.

● Keep it short:

Business plans are more short and concise nowadays than they used to be. While it might be
tempting to include all the results of your market research, flesh out every single product you
plan to sell, and outline exactly what your website will look like, that's actually not helpful in the
format of a business plan.

Know these details and keep them elsewhere, but exclude everything but the meat and potatoes
from the business plan itself. Your business plan shouldn't just be a quick(ish) read -- it should
be easy to skim, too.

3. You can (and should) change it as you go:

Keep in mind that your business plan is a living, breathing document. That means you can update
your business plan as things change. For example, you might want to update it a year or two
down the road if you're about to apply for a new round of funding.

How to Write a Business Plan?

● Analyze your market's conditions.
● Explain your product and/or service.
● Outline all operations & management roles.
● Design a marketing & sales strategy.
● Detail a financial plan with business costs, funding, and revenue projections.

● Analyze your market's conditions:

One of the first questions to ask yourself when you're testing your business idea is whether it has
a place in the market. The market will ultimately dictate how successful your business will be.
What's your target market, and why would they be interested in buying from you?

Get specific here. For example, if you're selling bedding, you can't just include everyone who
sleeps in a bed in your target market. You need to target a smaller group of customers first, like
teenagers from middle-income families.

From there, you might answer questions like: How many teenagers from middle-income families
are currently in your country? What bedding do they typically need? Is the market growing or
stagnant?

Include both an analysis of research that others have done, as well as primary research that
you've collected yourself -- whether by customer surveys, interviews, or other methods.

This is also where you'll include a competitive analysis. In our example, we'd be answering the
question: how many other bedding companies already have a share of the market, and who are
they?

Outline the strengths and weaknesses of your potential competitors, as well as strategies that will
give you a competitive advantage.

● Explain your product and/or service​:

Here's where you can go into detail about what you're selling and how it benefits your customers.
If you aren't able to articulate how you'll help your customers, then your business idea may not
be a good one.

Start by describing the problem you're solving. Then, go into how you plan to solve it and where
your product or service fits into the mix. Finally, talk about the competitive landscape: What
other companies are providing solutions to this particular problem, and what sets your solution
apart from theirs?

Example of a "Products and Services"

AMT provides both computer products and services to make them useful to small business. We
are especially focused on providing network systems and services to small and medium business.
The systems include both PC-based LAN systems and minicomputer server-based systems. Our
services include design and installation of network systems, training, and support.
● Outline all operations & management roles:

Use this section to outline your business' unique organization and management structure
(keeping in mind that you may change it later). Who will be responsible for what? How will
tasks and responsibilities be assigned to each person or each team?

Includes brief bios of each team member and highlight any relevant experience and education to
help make the case for why they're the right person for the job. If you haven't hired people for the
planned roles yet, that's OK -- just make sure you identify those gaps and explain what the
people in those roles will be responsible for.

Example of a "Personnel Plan" section of the Operations & Management:

The labor force for DIY Wash N' Fix will be small. It will consist of a part-time general manager
to handle inter-business relationships and corporate responsibilities. In addition, DIY Wash N'
Fix will employ three certified mechanics/managers; their duties will consist of the day-to-day
operation of the firm. These duties fall into two categories: managerial and operational.
Managerial tasks include: scheduling, inventory control and basic bookkeeping. Safety,
regulatory issues, customer service and repair advice are the operational tasks they will be
responsible for.
● Design a marketing & sales strategy:

This is where you can plan out your comprehensive marketing and sales strategies that'll cover
how you actually plan to sell your product. Before you work on your marketing and sales plan,
you'll need to have your market analysis completely fleshed out, and choose your target buyer
personas, i.e., your ideal customers.

Example of a "Marketing Plan":

The Skate Zone plans to be the first amateur inline hockey facility in Miami, Florida. Due to the
overwhelming growth of inline hockey throughout the United States, the company's promotional
plans are open to various media and a range of marketing communications.​

● Detail a financial plan with business costs, funding, and revenue

projections:

Finally, outline your financial model in detail, including your start-up cost, financial projections,
and a funding request if you're pitching to investors.

Your start-up cost refers to the resources you'll need to get your business started -- and an
estimate of how much each of those resources will cost. Are you leasing an office space? Do you
need a computer? A phone? List out these needs and how much they'll cost, and be honest and
conservative in your estimates. The last thing you want to do is run out of money.
Once you've outlined your costs, you'll need to justify them by detailing your financial projections. This is
especially important if you're looking for funding for your business. Make sure your financial model is
100% accurate for the best chance of convincing investors and​ ​loan sources​ to support your business.

Making Your Business Legal

Once the business plan is in place, you get to move on to the even less romantic part -- the
paperwork and legal activities. This includes things like determining the legal structure of your
business, nailing down your business name, registering with the government, and -- depending
on your business structure and industry -- getting a tax code, a business license, and/or a seller's
permit.

Furthermore, businesses are regulated on the federal, the state, and sometimes even local level.
It's important to check what's required on all three of those levels. When you register your
business with the government, be sure you're covering registration on all the levels required for
your business' location. Your business won't be a legal entity without checking these boxes, so
stay on top of it.

Business Legal Structure

The 4 most common business structures are:

1. Sole proprietorship: Example: Freelance graphic design..

● What it is:​ A sole proprietorship is a business that's owned and run by one person, where
the government makes no legal distinction between the person who owns the business and the
business itself. It's the simplest way to operate the business. You don't have to name your
business anything other than your own, personal name, but if you want to, you can give it its own
distinctive name by registering what's called a Doing Business Name (DBA). (We'll get back to
that in the "How to Register a Business Name" section.)
● Pros:​ It's easy and inexpensive to create a sole proprietorship because there's only one
owner, and that owner has complete control over all business decisions. Tax preparation is also
pretty simple since a sole proprietorship is not taxed separately from its owner.
● Cons:​ It can be dramatically more difficult to raise money and get investors or loans
because there's no legal structure that promises repayment if the business fails. Also, since the
owner and the business are legally the same, the owner is personally liable for all the debts and
obligations of the business.
● How taxes work: ​The individual proprietor owns and manages the business and is
responsible for all transactions, including debts and liabilities. Income and losses are taxed on the
individual's personal income tax return at ordinary rates. In addition, you are also subject to
payroll taxes, or self-employment taxes, on the money you earn.
2. Partnership: Example: Multiple doctors maintaining separate practices in the same
building.
● What it is:​ A partnership is a single business where two or more people share ownership,
and each owner contributes to all aspects of the business as well as shares in the profits and
losses of the business.
● Pros:​ It's generally pretty easy to form a business partnership, and it doesn't tend to be
super expensive, either. Having two or more people equally invested in the business' success
allows you to pool resources. It also means you have access to more than one person's skill set
and expertise.
● Cons:​ Just like a sole proprietor, partners have full, shared liability if the business goes
south. That also means that partners aren't just liable for their own actions, but also the actions of
their partner(s). There is a variant on partnerships called a limited liability partnership, or LLP,
that protects against that -- which is how most law firms are organized, for example. Finally,
when more than one person is involved in decisions, there's room for disagreement -- which
means it's important to have an explicit agreement over how the obligations and earnings will be
split, especially if/when things go wrong.
● How taxes work:​ To form a partnership, you have to register your business with your
state, a process generally done through your Secretary of State's office.
3. Limited liability company (LLC): Example: A small design firm.
● What it is:​ LLCs are a type of business structure that's more complex than sole
proprietorships and partnerships, but less complex than corporations. They are called
"pass-through entities" because they're not subject to a separate level of tax. Most states don't
restrict ownership on LLCs, and so members can include individuals, corporations, and even
other LLCs and foreign entities. Most states also permit "single-member" LLCs, those having
only one owner.
● Pros:​ As the name suggests, owners of an LLC have limited liability, meaning that they
personally are not responsible for any financial or legal faults of the business. This reduction in
risk is what makes an LLC a very popular business structure.
● Cons:​ LLCs are often more complex than sole proprietorships or partnerships, which
means higher initial costs, and certain venture capital funds are hesitant to invest in LLCs
because of tax considerations and the aforementioned complexity. That being said, they're
simpler to operate than a corporation because they aren't subject to as many formalities.
● How taxes work:​ LLCs have the benefit of a "flow-through" tax treatment, meaning that
the owners – not the LLC – are the ones who are taxed. Having only one level of tax imposed
makes taxes easier.
4. Corporation: Example: Microsoft, Coca-Cola, Toyota Motor, and almost all well known
businesses.
● What it is:​ A legal entity that is separate and distinct from its owners, and has most of the
rights and responsibilities that an individual possesses (to enter into contracts, loan and borrow
money, sue and be sued, hire employees, own assets, and pay taxes.) It's more complex than the
other business structures, and it's generally suggested for larger, established companies with
multiple employees.
● Pros:​ They make seeking venture financing easy. They also provide the best protection
for personal assets, as the founders, directors, and stockholders are (usually) not liable for the
company's debts and obligations – only the money and resources they've personally invested.
● Cons:​ Because they're much more complex than other business structures, they can have
costly administrative fees, and more complicated tax and legal requirements.
● How taxes work:​ Corporations are required to pay federal, state, and in some cases, local
taxes. There are two different types of corporations: "C corporations" and "S corporations." C
corporations are subject to double taxation – so any profit a C corporation makes is taxed to the
corporation when earned, and then is taxed to the shareholders when distributed as dividends.

The corporation does not get a tax deduction when it distributes dividends to shareholders.
Shareholders cannot deduct any loss of the corporation, but they are also not responsible directly
for taxes on their earnings – just on the dividends they give to shareholders.

​Background and literature review:

There's not a single definition of a “startup” , there's a number of them .

Startups: company initiated by individual founders and co-founders to reach a scalable business
model.
According to ​Merriam _Wehster most famous dictionary , startup is “ the act or an instance of
setting in operation or motion . The American heritage dictionary suggests that “ it's a business
or undertaking that has recently begun operation .
Another research paper suggested that a startup is simply a newly born companies struggle for
existence.
● Startup theories:
Startups are rarely considered as the main focus of theories in
Different domains. However, there are some theories which could be implicitly considered
as “startup theories” ​they are categorized in three main areas (i) organization (ii) management
and (iii) entrepreneurship

● Organization theories facing on startups:

Van de Ven et al. (1984) were among the first schools who considered three main approaches
toward studying startup creation, they considered entrepreneurial, organizational, and ecological
approach; and argued that prior research had only examined one of these three approaches,
without considering the others. As they pointed out:
“The organizational approach argues the conditions under which an organization is planned and
the process followed in its initial development have important consequences on its structure and
performance in later life”
Yet, organization theories are silent on the issue of organizational evolution, or more
specifically on startup evolution (Salamzadeh, 2015a). However, there is limited research
which investigates the startup phase(e.g. See Boekerb&Wiltbank, 2005). Moreover, most of
the existing theories and perspectives in organization science are defined to answer
organizational questions. Among these theories, the following are more relevant in
studying startups: organizational ecology theory (e.g. see, Scholz&Reydon, 2009),
organizational configurations (e.g. See, Miller, 1990), contingency theory (e.g. See, Tosi &
Slocum, 1984), resource dependence theory (e.g. See, Davis & Cobb, 2010), uncertainty theory
(Kamps&Pólos, 1999), etc.Among the existing theories, Gartner (1985) and Katz and Gartner
(1988) are more specifically related to this category .

● Management theories focusing on startups:

According to its general definition (getting things done through the other people, or coordinating
the efforts of people toward common goals), management is about people (Hofstede, 1999).
On the other hand, management theories are either “perspectives” or “descriptions of the
relationships among organizational characteristics” (Dean & Bowen, 1994). Thus,
according to this view, while management theories have less to do with startups in an
organizational sense;they have more to do with those entities as individuals/teams that coordinate
their efforts toward some common goals.

Moreover, management theorists and scholars are becoming more interested in studying
startups (Davila et al., 2003). Some of the main management theories which used in
startup research are as follows: strategic management (e.g. See, Pettigrew et al., 2001),
small business governance (e.g. see, Ritchie & Richardson, 2000), human resource management
(e.g. See, Miles & Rosenberg, 1983), team management (e.g. See, Kaiser & Muller, 2013),
complexity theory (e.g. See & LAN, 2006), etc. However these theories are loosely
connected to startup research and are mostly considering startups as their samples or cases.

● Entrepreneurship theories focusing on startups:

In Van de Ven et al.’s (1984) view, “the entrepreneurial approach argues the
characteristics of the founder and promoter of a new organization”. Although this view holds a
basic presumption regarding the existing theories, it lacks enough entrepreneurial focus on
the phenomenon in question, i.e. Startups. Although the founder is important, there are
several issues to be discussed, described, and explained by entrepreneurship theories on
startups. As Salamzadeh (2015b) argues, entrepreneurship theories on startups fall into two
categories: (i) macro level theories (e.g. see, Schumpeter's theory (Schumpeter, 1934),
population ecology (Hannan and Freeman, 1977)), and (ii) micro and meso level theories
(see e.g. Vesper, 1990; Lim et al., 2008; Bhaves, 1994; Veciana, 1988; Deakins and
Whittam, 2000; Nunez, 2007; Serarols, 2008; Samuelsson and Davidson, 2009)
This category of theories is more focused on startups. This might be due to several reasons. First,
entrepreneurship deals with idea, creativity, innovation, new product or service development,
opportunity, and the like. Thus, entrepreneurship theories are more prone to be considered in the
early stages of any business or organization. These concepts are integral parts of a startup
(Radovic-Markovic&Salamzadeh, 2012). Second, going beyond entrepreneurship theories,
theories of organization and management will emerge, which deal with managing people and
organizations (Van de Ven et al., 1984).Third, startups are about turning ideas into
businesses which is a critical point in entrepreneurship studies such as new venture creation,
value creation, and opportunity recognition, evaluation and exploitation .
● The lifecycle of startups:
However, startups are diversified and complex in nature, these entities have their
lifecycle. Hopefully, research on startups’ lifecycle is well-developed in last few years
Salamzadeh, 2015a,b). Since the sequence of activities and stages might vary among different
startups, .

● Bootstrapping stage
In this very early stage, the entrepreneur himself/herself initiates a set of activities to turn his/her
idea into a profitable business. However, he/she considers a higher risk or even uncertainty level,
continues working on the new venture idea, makes a team, uses personal funds, and asks
family members and friends for their investment in the idea. Bootstrapping, which is
sometimes defined as highly creative ways of acquiring the use of resources without
borrowing(Freear et al., 2002),is considered to be one of the areas of entrepreneurship research
that most need to be addressed (Ebben & Johnson, 2006). The purpose of this stage is to
position the venture for growth by demonstrating product feasibility, cash
management capability, team building and management, and customer acceptance
(Brush et. al., 2006). Moreover, angel investors are more likely to invest in this stage. In sum,
as Harrison et al. (2004) argue: “bootstrapping is a way of life in entrepreneurial companies”.
This argument reveals the reason why most of the theories of startups are borrowed from
entrepreneurship theories (see, Entrepreneurship theories focusing on startups).
● Seed stage:
After the bootstrapping stage, the founder enters into a new stage, which is the seed
stage 1. This stage is characterized by team work, prototype development, entry into
market, valuation of the venture, seeking for support mechanisms such as accelerators and
incubators, and average investments to grow the startup. Frankly speaking, for most
startups the seed stage is a mess and is construed as highly uncertain (Salamzadeh, 2015
a). The seed stage is characterized by the initial capital that is used to do product and/or
service (Manchanda&Muralidharan, 2014). Thus, founder seeks for support mechanisms
such as accelerators, incubators, small business development centers, and hatcheries to
accelerate the process. A great number of startups fail in this stage. Since they could not
find support mechanisms and in best case they would turn to a low profit company with a low
rate of success. On the other hand, those who succeed in receiving support would have a
higher chance of becoming profitable companies. It goes without saying that valuation is
normally done at the end of this stage.
● Creation stage:
Creation stage occurs when the company sells its products, enters into market, and hires first
employees (Salamzadeh, 2015). Some scholars believe that entrepreneurship stops when
the creation stage is ended (Ogorelc, 1999). This supports the argument that most of the
theories which cover startups are borrowed from entrepreneurship theories and not management
and organization theories (see Entrepreneurship theories focusing on startups). At the end
of this stage, organization/firm is formed and corporate finance is considered as the main
choice for financing the firm. Venture capitals could facilitate the creation stage, by funding
the venture.
​Problems and solutions:

● Money:
Yes, you need money. Unless you’re remarkably lucky and the cash flows in straight away from
sales or investors, you will be in trouble. Cash flow issues will hit you hard, either delaying the
roll-out of products, hiring key staff, or fitting out new offices.

● NEGLECTING MARKETING/SALES
Some startups encounter problems because they haven’t put enough resources into marketing and
sales. Sometimes they ignore them completely and put their faith in word of mouth, or if they’re
a SaaS that sales will grow organically online and sales and marketing aren’t needed.

It’s a false economy to put your faith in customers discovering you unless you make a concerted
effort to grow them with a properly structured plan to promote your startup. It’s money well
spent​.

● LACK OF PLANNING
It’s amazing how many startups falter because they forgot to plan. Or perhaps they did, but just
never covered all the bases. Key areas like sales, development, staffing, skills shortage and
funding should be part of your business plan or be flexible enough to cope if events take an
unexpected turn.
Contingency planning is vital, but so is a proper business plan. If your plan is all optimism, and
fails to allow for surprises – and you can bet your life they’re just around the corner – then
you’re heading for big trouble. Get the details right, no matter how small.

● FINDING THE RIGHT PEOPLE

Certain skills are crucial not only for your business to survive, but also to grow. Knowing the
exact skills needed – and how to get those essential people – may determine how well your
startup thrives. Delays in finding the right personnel will not only eat up valuable time but also
lead to severe bottlenecks, perhaps delay the rollout of new products or services. These are
delays no startup can afford.

You may also have hired the wrong people, and their deficiencies may be more apparent as a
startup grows, especially if they are in the wrong roles. This happens when a startup expands and
the cracks suddenly appear. However, as John Laven, CEO of Currency Cloud, wrote, finding
the right people can also eat up valuable time that could be spent on other areas of the business.

● TIME MANAGEMENT
There’s never enough time. There are a million and one decisions to be made and, last time I
looked, there are only 24 hours in a day. So, start by eliminating or minimizing distractions –
anything that gets in the way of running your business.

Prioritize decision-making. Ask yourself what is important and what can be postponed until
tomorrow? What is stopping your company growing? Deal with those answers today.

● WEAK COFOUNDERS
Hard to believe, but your co-founders may be part of your startup’s woes, says Roy Hodges,
deputy editor of The Startupmag.com. They may have helped develop a great product, but lack
the skills needed to help run the business. Startups may need new executives to spread the
workload. Failure to recognize the problem may exacerbate your woes.

● SCALING UP
Lucky you. Your products or services are experiencing phenomenal growth – and also causing
you lots of headaches. It’s not just a question of adding a few extra employees: they must be in
the right areas – perhaps HR (you suddenly have a lot more staff), administration, payroll,
support, perhaps even developers.

You may also need a larger office space, or to set up offices in other cities or abroad. Such is the
price of success. If you have a plan and the cash to fund all this, great. If not, then prepare for a
painful process.
● UNWILLINGNESS TO PUSH YOURSELF BEYOND THE COMFORT
ZONE
The founder or CEO may think he/she has all the answers, but do you really have what it takes to
think – and act – outside your comfort zone? Ask yourself how much can you push yourself: Can
you make a convincing pitch to potential investors when you need funding?

The ‘build it and they will come’ approach doesn’t always work, so are you prepared to put in
the hard yards to make your startup thrive?

● COMPETITORS
No one ever said it was going to be easy, and despite your product or services being great, it’s a
crowded marketplace. New rivals may have altered the playing pitch, so having the right
strategy, or being able to think on your feet quickly and adapting to the new reality will define
your success – or failure.

● LACK OF MENTOR
You may have a great product/idea, but lack the necessary guidance, market experience, and
knowledge to move a stage further. That’s where a mentor comes in, with the wisdom and
confidence to help you clear those roadblocks that are holding your startup back. Mentors can
also help you strategize better.

According to Rhett Morris of Endeavor Insights, whose firm conducted a major study of New
York tech firms last year, 33% of founders who are mentored by successful entrepreneurs went
on to become top performers. Having somebody you can lean on when major decisions have to
be made, or startups need a sounding board, is very useful.

● POOR MANAGEMENT
One thing startups can’t afford is ineffective management. A team that worked well in the initial
stages, may find itself exposed as the startup expands, or is tested by everything from poor sales
or market conditions. Procrastinating won’t help. The issue needs to be tackled urgently or the
result will prove very damaging.

Solution :
● List your problems.
● Pick one.
● .Fix the right problem.
● Diagnose before solving.
● Get the expertise you need.
● Make the solution stick.

​Conclusion and Refrences:

Your business plan is the essential foundation of your business. Learning how to write a business
in practical, efficient and compelling manner is among the most important things you can do
when starting up your business.

Your business plan functions to assist you in operating your business. It creates the rules,
guidelines and distant protocols needed to outline business activity; internal and external
environment factors; owner, management and employee duties and responsibilities and so much
more.

Assisting you in navigating the many key elements of your business, the plan that you create is a
document full of research, careful consideration and data collection. This ultimately produces an
assemblage of information that conveys present position of your company and how you intend to
create optimal personality of your company in future. The importance of having a business plan
in place is paramount and can not be underscored enough. It not only helps you run your
business, but it is essential road map or blue point that you and your workforce will follow for
years to come as you work to stake your claim in your respective industry and the market place
at large.

A well-crafted businesses plan will not only guide you though each stage of beginning your
business but will also assist you in managing each aspect of your operations resulting in reliable
and continual growth. It goes without saying that a business plan is very foundation of your
company and its entrepreneurial endeavours. However, as mentioned earlier, a business plan that
you craft is akin to the motor that powers a machine in the case of your business, it is the
machine, and your business plan is motor, powering you to a new and exciting horizons full of
blooming success and countless accomplishments.

As the owner and founder of your business, you are at the forefront, the helm. Captaining your
whistle, you can use your expertly written business plan to steer your way to uncharted territories
full of achievement, success and so much more.

● References:
https://www.upwork.com/hiring/for-clients/11-challenges-startups-face/sol

Salamzadeh, Aidinand Kawamorita Kesim,Hiroko, (2015). Startup Companies: Life Cycle and
Challenges. Proceedings of the International Conference on Employment, Education and
Entrepreneurship (EEE), Belgrade, Serbia. Robe med, Natalie (16 December 2013). "​ What Is A
Startup?"​. ​Forbes.​ Retrieved 30 April 2016.
https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan

http://www.bplans.com/

● Stephen D,H Tsai , Tzu-tang Lan.(2006) develomneta of startup buniness - A complexity

theory prespective .​ Retrived from
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