Maybe not all the technical procedures are necessary for a start-up, at least not in such a professional and technical way. However, most of the concepts behind business management are, at a lower scale, not only highly recommendable but, in most of the cases, crucial for the success of any start up.
The needs of consultancy and software of support will depend on different variables such as the grade of the strategy development, the complexity of the business, the industry and market segment and whether there is a business plan or not, the type of products, the available data, etc..
A business plan for a start-up might have some differences compared to another one from a consolidated company. In general terms, the “Business Plan” process should include the following items as described in the “business plan” paragraph.
- Business summary: Business opportunity, the company, market segments, needs to be covered, the product concept.
- Executive summary: Main business aspects. The opportunity. Business model. What's different. Entrepreneurial team. Financial resources...
- Business presentation:Background, reasons of interest. Concept and business model. Mission and corporate objectives. Strategy and advantage. Entrepreneurial team.
- Environment analysis:General environment. Specific environment or industrial sector.
- Market analysis: Market characteristics. Market trends. Size and forecasted growth.
- Marketing plan: Segmentation strategy and key factors. Positioning strategy. Marketing mix. Product and price policy. Communication and sales policy. Budget.
- Operating plan:Technical viability. Process identification. Subcontracting. Location, infrastructures. Layout. Resources...and more.
- Human resources plan: Organizational structure. Functions description. HHRR policy. Governance structures.
- Finance plan: Financial hypothesis. Profit & Loss forecast. Balance Sheet forecast. Cash Flow forecast. Project financing. Financial viability.
- Legal and technological aspects: Technological and legal aspects. Technological protection.
- Strategy development: Main growth strategies, Balanced scorecard: Objectives, strategies, initiatives, action plans, milestones.
As a new business, one of the most important difficulties every start-up faces is the lack of historical data. Nevertheless, the need of business planning in a professional way, not only for internal management use in order to have bigger chances of success, but also for external use in front of minority shareholders or banks when searching for financing becomes a fundamental aspect.
The lack of historical data adds a plus on the needs for financial planning, project planning and later revision (plan, do, check, act), all with the aim to outline a business plan and adjust objectives, strategies, programs, action plans and initiatives as soon as variances are detected.
Our expertise shows us the need to provide the best possible sales forecast and a strong financial planning with emphasis on sensitive and scenario analysis.
It is also possible that, due to the lack of historical data and a proper and powerful ERP, the financial planning needs to include business planning at product level.
Specific difficulties associated to start-ups.
1 – The lack of strategic analysis: Company and strategic process basic orientation. Missing a SWOT diagnosis of opportunities, threats, strengths and weaknesses.
2.- The lack of strategy development: Comparative strategy analysis missing, functional strategies and action programs are not linked to main strategy.
Incorrect sales budget
3.- The lack of strategy review process: Important to realign current strategy and action plans with objectives.
4 - Missing or poor Business Plan: The lack of a marketing analysis, a poor marketing plan, the incorrect sales budget, miscalculations during when calculating the operating plan, not defining the correct job profile for each vacancy or a poor calculated financial plan are some of the most common mistakes that start-ups do when creating their business plan.
5 – The inexistence of production planning: Products behind schedule, etc. A realistic and agreed production planning and, in general terms, any project planning is a key factor for business success.
6.- Financing: One of the key and most difficult factors to solve is to get the necessary financing, either to cover expected negative cash flow at the beginning of the business project, to finance the capital budget or to invest in Net Working Capital (NWC).
Beyond considerations of why is recommendable, until some extend, to get external funding due to financial leverage, the start-ups normally lack or internal funds coming from social capital or retained earnings.
It is then crucial to properly show the company’s business plan to external investors in order to get external financing. In order to do that, two factors are crucial:
- Professionalism in management: Who is behind that project?. What’s the management team and key partners?...
- Credibility in economic and financial figures.