A startup business plan helps turn an idea into a viable company. Startups face different challenges from established businesses. They have limited resources and uncertain demand and need to adapt quickly. A rigid, traditional plan won’t cut it.
In this article, you’ll learn the six steps to creating a startup business plan that keeps you focused while allowing you room to grow. You’ll also discover common business plan mistakes and learn how to avoid them.
Traditional vs. lean startup business plans
Traditional business plans are thorough documents that detail long-term strategy. Typically, these comprehensive plans cover:
Detailed financial projections for three to five years
Financial statements (like profit and loss statements, balance sheets and cash flow statements)
A comprehensive company description, extensive market research and competitive analysis
Business structure, organizational structure and management team details
Comprehensive marketing strategy and sales strategy for different customer segments
Operational plans with minute logistical details
Potential risk assessments, contingency plans and an exit strategy
An executive summary for C-level, department heads and potential investors
Traditional business plans assume a stable environment where you can accurately predict future operations. For most startup business owners, this approach is impractical.
Startups operate in unpredictable environments where markets and customer needs change quickly. Lean startup business plans don’t try to predict the future. Instead, they focus on testing hypotheses and adapting quickly.
Here are the main differences between the two types of business plans:
Traditional business plan | Lean startup business plan |
Extensive, usually 20 to 30+ pages, including appendices | Concise, sometimes as few as one or two pages, though they can be anywhere up to 10 |
Focused on comprehensive strategy and detailed documentation | Focused on core strategy, key metrics and essential forecasts |
Updated infrequently (annually or as needed) | Updated regularly (weekly or monthly) |
Intended to secure funding and provide a comprehensive business roadmap | Intended to validate the market and uncover what works |
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How to write a business plan for a startup: step-by-step guide
A startup business plan template helps you progress without getting overwhelmed. The following steps (including a startup business plan example to illustrate each) will help you turn your vision into a clear, structured document to guide your new business.
Step 1: Define your value proposition
A value proposition starts with deeply understanding a specific customer pain point, which requires thorough research to identify real business needs backed by concrete data. Here are some options for gathering that data:
Conduct interviews with your ideal customer. Ask open-ended questions about their current processes and frustrations.
Analyze support forum discussions. Pay attention to recurring complaints and the type of language they use.
Read competitor reviews. Pay particular attention to negative reviews to discover customers’ needs that aren’t currently being met.
Examine market research reports. Learn about broader market trends and emerging challenges.
Survey potential users. Use multiple-choice and open-ended questions to get the best customer insights.
Look for specific, quantifiable problems. Say your startup is a patient scheduling tool for small healthcare clinics. Instead of saying, “Healthcare clinics need better scheduling”, find clear data. For example, “independent clinics lose an average of 12 hours per week managing patient appointments manually”.
Your value proposition should address this problem and summarize the biggest benefit customers will get by choosing you. Craft a value proposition using this formula:
[Product/Service] helps [target customer] solve [specific problem] by [unique solution/approach]
For example, our patient scheduling tool’s value proposition might be: “We help small healthcare clinics save 12 hours per week by automating appointment scheduling with an AI-powered booking platform”.
Value proposition vs. mission statement
A value proposition outlines your company’s unique benefit. A mission statement highlights your company’s broader purpose and long-term goals.
For startups, the value proposition is more important. It shows why customers will choose your product, making it crucial for driving early growth.
Step 2: Size your market and estimate your market share
Once you have a clear value proposition, the next step is to determine the opportunity size. Understanding your market size helps you validate demand and set realistic growth targets.
For a startup business plan, focus on quick, data-driven estimates. Avoid exhaustive market research. The goal is to validate your business idea, not create a perfect market analysis.
Use free resources to gather market insights on your ideal customers:
The Small Business Administration (SBA) website provides detailed breakdowns of small business populations. Its guides include business sizes, industries and regional concentrations.
Industry association reports offer market research like average spending data and benchmark reports.
Trade publication research sections offer expert insights, emerging trends and overviews of the competition.
The Bureau of Labor Statistics provides employment data and industry growth trends in specific sectors.
The US Census Bureau’s Economic Census shows you the number of businesses in specific sectors and an estimate of their revenue.
Let’s revisit our sample business plan for a startup company. Say the patient scheduling tool provider’s research reveals that there about 200,000 independent clinics operate in the US. With the healthcare industry experiencing steady annual growth and clinics increasingly adopting digital tools, the market presents a strong opportunity.
With that information, the company estimates that 20% of these clinics may adopt new scheduling software soon. This calculation makes its target market size about 40,000 potential customers (20% of 200,000). There’s also room for expansion as the industry grows and more clinics go digital.
Step 3: Map your competition
Understanding your competition helps you refine your unique advantage and your offering. Start by identifying both direct and indirect competitors:
Direct competitors | These companies provide a similar solution to the same problem for the same customer segment. For our appointment scheduling tool, this could be a clinic management platform with an appointment scheduling feature. |
Indirect competitors | These companies offer a solution that addresses the same problem for the same customer segment, but in a different way. In our example, this could be a virtual receptionist service for the healthcare industry. |
List both types of competitors in a spreadsheet and create two columns for each:
Key differences. Analyze and list what makes your competitors’ solutions stand out. What are their strengths and weaknesses? How does their product differ from yours when it comes to features, pricing and customer experience?
Your competitive advantage. Based on your competitor analysis, highlight what makes your product unique. Explain why customers should choose it over others. This could be anything from offering a simpler user interface to having more advanced features or focusing on a specific niche.
Step 4: Structure your revenue model
Understanding how your offering delivers value to your target customers will help you determine your ideal revenue model. For instance:
Does your product provide ongoing value, like software? Then, a subscription business model with recurring revenue might be ideal.
Is your product more transactional, like a physical product or a one-time service? Then, a one-time sale or pay-per-use model may make more sense.
To determine pricing, use your competitor research to understand typical price ranges for your type of business. Then, assess factors like:
How much it costs to produce or deliver your product. Look at fixed and variable costs like server hosting or staff training. Your pricing needs to cover costs while also allowing for profitability.
Your solution’s perceived value. Customers may pay more if your solution solves a big problem or works better than others. Interview your ideal customers to get their perspective.
How much potential customers are likely to spend on a solution like yours. You can do this by running customer surveys with your target market. You could also run a pricing page test, like this one from market research platform Wynter, where your ideal customers answer specific questions about your pricing page.
You can test different pricing structures in the early stages of your business.
Consider offering discounts for early adopters. You could also offer free trials or limited-time promotions. Then, see how your target audience responds.
This flexibility allows you to fine-tune your financial plan based on real customer feedback.
Step 5: Plan your first 90 days
The first three months are crucial for building momentum and validating your business. Create a structured 90-day plan with clear, achievable milestones. Focus on activities that validate your idea and generate early momentum, such as:
Launch a minimum viable product (MVP) | Develop a basic version of your product that solves your primary customer problem |
Secure early customers or beta testers |
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Raise initial funding if needed |
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Understanding your resource constraints helps you allocate your limited resources more effectively. While working through the plan:
List the specific skills required to develop your MVP. Identify any gaps between your current team members’ capabilities and what you’ll need. Consider whether you’ll need extra hires or could pursue strategic partnerships.
Calculate your monthly expenses. Include development costs, market research costs, software subscriptions and potential contractor fees.
Determine how long your current funding will last. Identify potential sources for additional capital or alternative lenders or investors.
Stay flexible and view these 90 days as a learning opportunity. Each milestone should provide insights. Use these insights to refine your product, understand your target market and build momentum. The goal is progress, not perfection.
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Step 6: Track your progress with Pipedrive
Having a system to track your progress toward your lean business plan helps you keep sight of your goals and the impact of any changes. For startups, sales metrics are the ultimate validation of your business strategy.
Pipedrive allows you to track how effectively you’re turning potential customers into actual sales. For example, track your lead conversion rates. Identify which small business marketing strategies or sales approaches are most successful.
If some lead sources have a low conversion, review your value proposition. You may need to refine your target audience and update your marketing plan.
The pipeline view shows you how potential customers move through your sales process. Check where deals progress smoothly or get stuck to identify bottlenecks in your sales approach.
If deals consistently get stuck at certain stages, it could mean a few things. Perhaps your pricing strategy doesn’t match customer expectations, or your sales approach isn’t effective for your target market.
To understand why deals aren’t closing, survey leads who didn’t convert. You can also revisit your competitor research to look for successful sales approaches in your industry.
Common startup business plan pitfalls to avoid
Many entrepreneurs derail their startup dreams by creating business plans that look impressive on paper but fail in the real world. Here are some common new business mistakes and how to avoid them.
Overcomplicated plan
A 50-page document might seem thorough. Yet, for a fast-moving startup, it will quickly become obsolete. If you get too caught up in the plan, you risk delaying the real work of testing and refining your business.
Instead, treat your business plan as a flexible, working document. Focus on the core steps outlined and update the plan as you learn and grow. Quickly responding to changing information will give you a strong basis to validate your idea and guide your startup’s strategy.
Unrealistic projections
Potential investors and stakeholders can easily spot overly optimistic revenue. Every startup business plan involves some level of assumption. However, those assumptions should be grounded in real data. This data can be from market research, competitor benchmarks or early customer feedback.
Overly optimistic revenue or growth estimates can set unrealistic expectations. These expectations lead to poor decision-making and disillusioned stakeholders.
Poor implementation planning
A great lean business plan means nothing if you don’t put it to use. The key is to break down your business plan into specific, achievable milestones.
Use frameworks like OKRs (Objectives and Key Results) or SMART goals. These tools provide clear direction and keep your team focused.
Final thoughts
Follow this startup business plan template to avoid getting stuck in endless documentation and ensure your first 90 days are a powerful learning experience. You’ll learn to validate your business quickly, adapt to market feedback and make data-driven decisions.
Ready to turn your startup business plan into action? Try Pipedrive’s CRM free for 14 days to track leads, streamline your sales process and gain strategic insights for your new business.
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