How To Write A Persuasive Tech Startup Business Plan

Tapan Patel

Oct 08, 2020 | 10 min read

Tech Startup Business Plan

Your startup idea is the vehicle you wish to ride on and a well-crafted business plan is its steering. A business plan is a detailed document that outlines what your business objectives are and how you are going to achieve those. As simple as it may sound, writing a business plan for your tech startup isn’t easy. However, if done with the right approach, you can ensure greater accuracy in your plan. So to help you get started, here are the essential elements of writing an accurate tech startup business plan.

Essential Steps To Writing A Detailed Business Plan For Your Tech Startup

Components of a tech startup business plan

How do you write a business plan for a tech company?

Most commonly, entrepreneurs write a business plan so as to attract investors for their startup. Thousands of startups are competing to raise funds, hundreds fail on a regular basis. Thus, if you want to stand out to investors, or if you want to avoid shutting down your business, understand how to write a business plan for your tech startup.

The basic structure of a tech startup business plan has a bearing on how well it is perceived by the investors. If your business plan is coherent and includes important sections in the right order, it is considered to be a good business plan.,

To convince investors of your business viability, you need to include the following main components of a tech startup business plan.

1. Executive Summary

executive summary is a short document

Your startup’s executive summary is its first impression. Thus, the most important part of a tech startup business plan is the executive summary.

This section is where you introduce your business plan. It’s a quick overview of the identity of your business as well as what products or services it will sell.

Most often, the investors only ask for a startup’s executive summary to decide if they want to spend time studying your plan. Therefore, you must say the most you can in this section. However, don’t forget that this is only a summary. So be as concise as possible.

How to write an executive summary for your tech startup business plan?

To ensure you include all the relevant details while also staying precise, answer the following questions in 2-3 sentences while writing your executive summary:

  • What product or service your business is going to sell?
  • What problem is your startup going to address?
  • How does your product/service provide a solution to the problem mentioned in the previous step?
  • Who is going to buy your product/service?
  • Why is your startup idea viable? Does it outperform the competitors?
  • What are your goals and objectives both in the short term and long run? How do you estimate your business to grow over the next few years?
  • How do you plan to achieve those goals, what is your budgeted expenditure and projected income?
  • What is your funding requirement?

2. Business Opportunity

Business Opportunity Statement

Image credits: IBM

Let’s hope the executive summary of your business plan interests your investors or stakeholders. Now they would want to know whether it’s all words or your business actually has the potential to make it big in the real world. This second chapter of how to write a tech startup plan is all about convincing your investors of the opportunity your tech startup has in the market.

To do so, you will need to present all the relevant information along with accurately estimated numbers.

What do you need to know to verify your business will succeed? The major assumptions are that your product/service has a market and that it will be bought by people. However, under these two broad assumptions, there are many underlying aspects that you need to know in order to validate your startup idea.

Aspects to cover in the Opportunity section of your tech startup business plan

Your tech startup aims to solve a problem that exists

In this section, mention what problem you intend to solve and how your offering will help the users solve the problem. Be as clear and concise as possible while writing both the problem and the solution.

The art of how to write a tech startup business plan is mostly the art of defining the concerned problem and presenting your startup idea as a solution.

Your tech startup has a fair share of the relevant market to target

Mention the industry your business will fall into and specify the segment of the market you will be targeting. Moreover, you need to clearly categorize your target market into TAM, SAM, and SOM.

  • TAM stands for Total Addressable Market and refers to the group of people you want to reach.
  • SAM stands for Segmented Addressable Market and refers to the segment you plan to target with time and budget constraints,
  • SOM stands for Share Of the market and refers to the number you will actually be able to reach through your sales and marketing activities.

The stakeholders will be interested in the current and the projected growth of your market segments. So do include the necessary data for the same.

Your tech startup understands who will buy its product/service offering

Like any other business, your startup must understand its potential customers so that it can sell its products/services to them. Present a buyer persona of your ideal customer in this section. Define your customer with respect to demographic details like gender, age group, location, marital status, etc.

You need to show that your buyers not only want your offering but they will also pay for it. So it’s important to mention their income levels, spending habits, preferences, etc.

Your tech startup knows its competitors and is sure to outperform them

Conduct a thorough competitor analysis of both your direct and indirect customers. Provide a brief summary of the same in this section. This will enable you to showcase how you are better than your competitors and how you will attract and retain customers amid the current and future competition.

The vision of your tech startup

Lastly, with all the above insights, you should be able to tell achievable goals and growth potential of your business. Investors are interested in the future of your startup so mention your vision in your tech startup business plan.

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3. Your Offering - Product/Service

your offering product or services

As the name suggests, this section is for you to describe your market offering in detail. You don’t need to get into the technical details much. Aim to describe your product/service from the business point of view, using simple words.

The way you should write this section of your tech startup business plan depends on the type of your offering.

  • Suppose your startup idea is to improve an offering already existent in the market. In that case, your goal is to showcase how your product differs from and outperforms your competitors.
  • If your startup is about a breakthrough idea, it implies you will need to create a new market. In that case, you will describe how your offering will lead to the creation of a new set of users.

Key questions to address while describing your offering in a tech startup business plan

  • Is your offering the first of its kind? If yes, does a market for the same exist?
  • What are the processes and the timeline for developing your product or making your service available?
  • Do you have any direct competitors? How will you be better than them?
  • What will you do to beat your indirect competitors and create new demand for your offering?
  • How much operational cost will developing and maintaining services cost you? What will be the profit margin?
  • Are there any third parties involved in developing your offering? How dependent is your business on these relationships? Will you be able to continue your operations if they stop offering their services to you?
  • What is the roadmap you will follow to build your product/service?

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4. Team Structure and Company Overview

Org chart for tech startups

You must have read about some of the smallest startups successfully raising funds. These stories indicate that investors aren’t looking for a large, detailed management structure. They are looking for great teams, the ones who they can trust.

Thus, this section of how to write a tech startup business plan concerns how well you have assimilated a team. Provide a brief bio of each key team member with their relevant experiences and skillset. These details help your potential investor confirm whether the team has the requisite expertise to execute the business plan well.

Things to keep in mind while writing about your team in a tech startup business plan

  • A common mistake many startups make is they give C-level designations to founders in their business plan. Don’t do this unless these members will actually hold these positions once your business starts growing. Instead, keep the designations open for people with the right skill set to fill in.
  • Present the name of each team member with detailed information about their job roles and responsibilities. Nobody should become a CEO or CMO just because they founded a business.
  • Present a carefully drawn organizational structure for your startup in the coming phases. This structure should show that you understand what kind of expertise your business will need in order to grow.

As far as the company overview is concerned, you don’t need to write much about it. Since your startup has just taken off, you won’t have a company history or milestones per se. A simple mission and vision statement along with details pertaining to the intellectual property of your startup will suffice.

5. Marketing and Sales Plan

Marketing Strategy

Planning your product, teams and all is okay. But what if your target audience doesn’t know you exist?

This is why your tech startup business plan needs to include a solid marketing and sales plan.

Key components of the marketing and sales plan of your tech startup business plan

  • Talk about how you will brand your offering. Will it be a premium brand for higher-income groups or a more accessible brand? Do you want to be known for your innovative products, highly credible services, or efficient customer support?
  • Based on your brand positioning, mention the pricing plans and models for your tech startup.
  • Determine how you will reach your target audience. List the marketing channels you will use and also present a budget for each channel. Moreover, mention the kind and frequency of activity you will carry out and the results you expect of them.
  • Specify the sales channels your startups will invest in. Will you sell your product/service through your dedicated website only or you will sign up for market spaces too? Also, mention the costs associated with each sales channel and the revenue you expect out of them.

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6. Operational Plans

Operational Plan

Learning to write your operational plans is integral not only for how to write your tech startup business plan but also to keep running your business in general.

It takes a lot of tiny tasks working collectively to ensure that your business maintains profitability. Your operational plan should include planning for each requirement, ranging from staffing to legal needs.

Key questions to address while writing an operational plan for your tech startup

  • What facilities and equipment do you need to run the business?
  • What is your staffing requirement in the initial stages? How will it change once the business grows?
  • Do you need a research and development department as a part of our routine operations?
  • Where will you operate from? What kind of premise you will need to start out and how will the needs change later on?
  • What are the legal requirements to start a tech business? Do you need a legal team for routine operations? Does your business have any insurance needs?
  • What will be your initial operation cost and how will it change over time?
  • What are the risks that may hinder your operations? How much do you need to reserve for a contingency plan to overcome those risks?

7. Financial Plan

Financial Plan

The answer to whether your tech startup is viable lies in its financial plan. The goal of a financial plan for any business is to ensure that you make a profit at the end of the day.

Considering the requirements mentioned above, your (projected) financial statements will tell you whether you will make a profit. If you can’t, then you need to change your budgets and keep trying again until your balance sheet shows profits.

Key components of a tech startup financial plan

Since you are only starting out, the following components will have estimated numbers. This projection is instrumental in adjusting your costs and pricing so as to enable profit-making after the launch.

Sales forecast
This statement shows the forecast for sales from each market segment. Ideally, you should write monthly forecasts for the first year and annual forecasts for the next 4 years.

Profit and loss statement
You will record your estimated costs and incomes in this statement. You may or may not show a net profit at the end of every month but do aim to break even as soon as you can.

Balance Sheet
Your startup’s balance sheet will show your assets and liabilities, both currently owned and projected, over a period of time.

Cash flow statement
Unlike the profit and loss statement, the cash flow statement is not considered with expenses or incomes. It merely shows when cash will likely flow out of the business and when it will flow in. Regular cash flow is necessary to keep your tech startup afloat.

Break-even analysis
Break-even analysis will tell your stakeholders when they can expect the business to start making profits. It will show at what point the business expenses will equal its income and eventually, how income will consistently keep growing to make profits.

Write Your Tech Startup Business Plan Like A Pro!

The foundation of good writing is good research, particularly in the case of writing a business plan. Before you begin the task, make sure you are well versed in all the technical and financial concepts involved in the plan.

Start by identifying your goals. Arrive at a number for short term and long term profits. Then, work your way backward and figure out what you need to do to achieve that number.

Review your tech startup business plan thoroughly. After your team has done that once, get it reviewed from experts who have aced business plan writing in the past. Keep learning from the feedback and keep revising your plan until you believe your plan is foolproof.

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