3 Signs of a Good Business Plan for Startups

3 Signs of a Good Business Plan for Startups

Having a good business plan increases your chances of success. A good business plan acts as a guideline for all stakeholders, including top-level management and the people involved in the day-to-day operation of the business. The business plan also serves as a way to determine whether the business is feasible based on many factors.


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For startups, having a good business plan is even more important. With the market being highly competitive, there is a need for startups to remain lean and flexible. A business plan is also needed for attracting investors and growing the company further. Creating a sound business plan is a challenge, but these three signs will tell you that you have a good business plan for your startup.

Well-Defined Business

Your business plan should begin with a clear definition or overview of the business itself. What are you trying to achieve by starting the business? What are the objectives to aim for? What are the important values you should incorporate into the business?

This part is called an executive summary. While it is tempting to explain a lot about the business and what it is trying to achieve, your executive summary must not be longer than two pages. It should include important details, but only the details that add value to the summary of your business.

You can further define the business by defining the market opportunities. Who are your target consumers? Is the market growing at a healthy rate? Include results of market research and other supporting facts to back up your claims. Don’t forget to review your competitors and other challenges as well.

The Business Model

The second sign of a good business plan is a clear business model. Having a great product idea or concept is not enough, especially in today’s market. You also need a solid business model to profit from the product idea. Now is the perfect time to look into the different revenue streams you can generate.

To get a clear picture of how profitable the startup can be, you also need to list business expenses. Knowing your cost structure lets you plan ahead and be that much better in keeping the startup lean and healthy. Since we’re talking about a business plan, listing known suppliers and solutions to possible problems is highly recommended.

Cash Flow

Revenue streams and potential profit aside are great, but a startup cannot be truly healthy without a healthy cash flow. There is no point in having a lot of receivables when you have mounting unpaid bills due to a bad, unhealthy cash flow.

If your startup is new, focus more on receivables and payables. Do a quarterly comparison and you’ll be able to see how well the startup is doing in general. Plan for better cash flow, not for profit. As mentioned before, profit doesn’t always translate to having enough cash to cover your expenses when they are due.

These are the three signs of a good business plan. When you include these three elements and cover all the basics, you know you have a good business plan that you can rely on as a guideline for growth.