Blog articles

20 April 2023

How to Startup: The Businessplan


by German Design Museum Foundation

If you want to start a business, you need to have a plan. The more thought-out and the more detailed your start-up planning is, the greater are the chances that your project will bring the hoped-for success. A comprehensive business plan helps you to consider all key points of your start-up.

Only once you have drafted a business plan will you see if your business idea is viable and if you can make a living from it.

In addition, it serves as a draft proposal for convincing banks, public funders, financers, suppliers and customers that your planned business will earn enough in sales to repay the borrowed money. This also applies to crowd financing. If you are planning to get financing via the online community, they must be able to instantly understand and like your project.

What's more: if you have planned your start-up carefully, you can also continue the planning, react to changes, and adjust your business model to new conditions.

The German Federal Ministry for Economic Affairs and Climate Action offers a range of helpful tools for founders (in Germany) for drafting business plans. In addition, also some of the industry and professional associations provide helpful information for the development of a business plan or business model.

Put concisely: Scope and form of a business plan

A good business plan is:

  • meaningful: contains all important information a financer would expect;
  • structured clearly: divided into different sections (see Overview: contents);
  • easy to understand: should be written in a language even laypeople can understand;
  • succinct: should not be longer than about 30 pages including annex;
  • easy to read;
  • visually appealing: the outer appearance is neat and professional;
  • worth protecting: you can put the "Confidential" or "Copyright" note on each page and a reference to your rights on the cover sheet.

What a business plan should definitely include:

  • Management summary
  • Business idea
  • Service range
  • Market analysis
  • Communication and marketing strategy
  • Business organisation
  • Financing plan including calculation

Contents of the business plan

1. Cover sheet and table of contents

For the first visual impression, you need a cover sheet with contact details in your business plan. The first page after the cover sheet should be the table of contents. A list with the headings of the key sections is sufficient.

2. Management summary

A brief written description of the project should be written under this keyword, which should then be firmed up in the further points of the plan. People on the outside should get an understanding of your project in no time. Therefore, the business objective, the business purpose, the defined target group, and the business location among other points should be described in brief words. It is also advisable to specify the expected financing requirement and the legal form of the business. It should also become clear from the project description why the start-up idea has a chance to succeed.

3. Qualification of the start-up founder

One very decisive factor of success in starting up a business is the qualification of the start-up founder. You should consider critically if you have the required prerequisites in terms of both personal qualifications as well as commercial, industry-specific and business aspects.

The founder's business management qualification will also be reviewed if the plan involves taking out loans (including public funding). The business plan should therefore contain the founder's brief resumé, relevant certificates, special qualifications, and his or her personal financial situation.

4. Business idea

The following information about the business idea should be put in writing:

  • Vision (describes where you want to be in the long term)
  • What is the purpose of your business? Describe exactly what you intend to do in the next three to five years, and (why, where and how) as well as what you want to accomplish. (Business objectives)
  • What makes your business idea special? What is the unique selling proposition (USP)?
  • What are the business principles?

A mission statement is a short message that explains the business purpose and primary driver. Many businesses publish their mission statements on their websites, so their customers can read them.

What does a mission statement include?

While a business mission statement features unique information about its practices and products, most statements include the following three elements:

Goal: The core of the mission statement is a goal, like empowering creative female business owners.

Audience: People who might interact with the business, including potential customers, investors and the general public.

Method: The means by which the business achieves its goal, like using innovative technology.

5. Product/service range

You explain in this section what product or service you are marketing and what benefits your target group gains from this. The following questions can help explain.

What are my products?

  • What product/service do you want to make or sell?
  • What makes your offer special? What is the need that is satisfied? What are the core competencies?
  • Development status of your product/service?
  • What prerequisites must still be covered before the start?

What is the customer benefit?

  • What is the problem your idea solves for the customer?
  • Which products and services comprise the offer in specific?
  • What is the price, distribution and service policy?

The following questions can help in the review:

1) Price
What price strategy do you pursue and why (high price, low price)?
What price do you want to offer for your product/service?
What is the calculation underlying this price?

2) Sales
What sales volumes are you aiming for and in what time frames?
What are your target regions?
Which distribution partners do you want to involve?
What are the costs arising for distribution?
What distribution policy do you want to practice?

3) Advertising
How will your customers hear about your product/service?
What advertising campaigns are you planning?

6. Market and competition analysis

The analysis of the market and its continuous update is indispensable not only for the founding of the start-up but also for sustaining and making an existing business successful. The required measures in the founding of a business should consider the actual conditions of the relevant market. As a professional analysis is probably too expensive for most start-up founders, you should initially conduct your own research for the first market analysis.

As a first step, you should analyse the structure of the market based on observation (communication with customers, attendance of events, advanced training, etc.)

Gather market data and then work out these topics: target group, competition, business location. The following analyses can be made:

Target group analysis
Precise knowledge of your customers is very important (e.g. for the choice of business location or the kind of advertising measures). After you have segmented your market, the size of the target segments must be measured, i.e. you identify demand/quantity of what a certain target group buys within a given period of time.

  • Who are your customers? Where are your customers?
  • What needs/problems do your customers have? What benefits does your offer have for potential customers?
  • What makes up the individual customer segments (e.g. age, gender, income, occupation, consumption patterns, private or business customers)?

After segmenting your market, you need to measure the size of the target segments. This involves identifying the demand for your product or service within each segment, including the quantity purchased by a certain target group within a given period of time and under certain sales conditions.

  • Do you already have reference customers? If yes, who are they?
  • What is the short- and long-term sales potential?

Competition analysis
The analysis of the pre-existing market should not be forgotten. Ask yourself the following questions:

  • Who are your competitors?
  • What strengths and weaknesses do you have compared to the competitors' offer?
  • And could new competitors get interested in your market?

Location analysis
Differentiate between hard and soft location factors. Hard location factors (e.g. transport connections, job market, structural condition of the business building) can be expressed in data and numbers, and have a measurable influence on the business activity. Soft location factors (e.g. residential environment, recreational value, reputation of the municipality) in contrast are difficult to measure and usually tend to have less influence on the concrete business activity. However, they can play an important role in the motivation to work and the availability of workers.

  • Where do you offer your product or service range?
  • Why have you decided for this location?
  • What drawbacks does the location have?
  • How can you compensate these disadvantages?
  • How will the location develop in the future?

Environmental analysis
The scope of the environmental analysis examines factors, which might feasibly have future effects on the business and possibly harbour opportunities and risks.

SWOT analysis (strength, weaknesses, opportunities and threats)
The SWOT analysis describes the key facts of the actual state and puts the resulting conclusions in context with each other.

Describe the strengths and weaknesses of your idea and your personal situation.

  • What are the positive aspects or factors in support of your idea and start-up founding (e.g. existing contacts, special purchasing conditions)?
  • What are the negative aspects or potential obstacles that need to be overcome, and how do you plan to do so (e.g. no business management know-how, missing infrastructure)?

Describe the opportunities and risks existing in your market.

  • What are the existing market opportunities for your project (e.g. quick market entry, innovative product idea)?
  • What risks are associated with the founding (e.g. large number of competitors, difficult to achieve customer loyalty)?

7. Business strategy

Based on the subjects elaborated so far, such as vision, market, target customers, competitive advantages, etc., you are able to phrase a clear strategy and present it with measurable goals. Based on your strategy and goals, it is now important to develop a detailed work plan.

8. Communication & marketing

Marketing is understood to mean the alignment of the activities of a business on markets or customers. The needs of customers should therefore be at the centre in your business thought. Review critically if your start-up is also marketable.

9. Business organisation

Concerning the structure of the future business, the following information should be documented:

Personnel planning and management

  • Who is (are) the founder(s)?
  • What is your motivation to become self-employed?
  • What are your qualifications, professional experience and if applicable, what permits do you hold?
  • Who assumes what tasks at the business?

Include an organisational chart with all required positions and then briefly describe all key roles, the people and their experience.

You can also discuss here which legal form you have chosen.

10. Financing plan

A reliable financing plan is the backbone of the business plan. How much in funds is available and how much capital is required is to be listed here in detail. Furthermore, all costs are to be itemised and a liquidity forecast to be provided. Founders should pay special attention to the profitability and investment planning: this is not only interesting to potential financers but also important to the founders themselves in order to review the economic development of the business. The numbers assessed here are the basis for a successful financing and therefore crucial in developing a secure business start-up.
It is also always important how your own income is calculated and presented here. The planning period should cover three to five years.

11. Annex/documents


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