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Business Plan for a Startup

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Creating a business plan before you start a new business or non-profit will enhance the odds that the startup will succeed. To receive tax-exempt status from the IRS part of the application requires business plan elements.


[edit] Business Failure Rate

The failure rate of new businesses is high. US Census data tracked new businesses and found that after one year 25% had failed and by year ten 71% had failed. [1]

[edit] Reasons for a Business Plan

  • Thorough Review - The journey of creating a startup business plan is as important as the final document itself. The business plan process will force an objective, thorough and critical examination of the full list of requirements to create, finance and launch a new business. It’s a learning experience.
  • Funding - Investors and lenders will require a business plan. It demonstrates a formal level of seriousness. It will answer many of the questions investors and lenders will ask.
  • Operational Guide - A business plan will act as an operational guide, blueprint and roadmap as a startup business goes through all the stressful, distracting and hectic phases of launch and growth. It's a fallback to help keep focus on what the original plan was as competition and unforseen events throw the new business off balance.
  • Scenario Planning - The reasons for business planning are the same as why all sports team practice before competing with other teams. While it is just practice and the real game will be against a competitor and new things will happen in the game, the discipline of practice allows the sports team to prepare for multiple scenarios and be ready for unknown challenges. It's a way of practicing for the future.
  • Alignment – A business plan and its components can be utilized to get everyone on the same page, understand the vision, mission and strategy of the company including investors, lenders, managers and employees.
  • Focus – It will help answer many key questions and focus the business
  • “What business are we in?”
  • “What is our secret sauce?”
  • “Who are our key competitors and what makes us different?”
  • “What is our strategy and our differentiator?”

[edit] Creating a Startup Business Plan

A startup business plan process differs from an ongoing business updating its business plan. There is no exising company, management, customers, data etc. to analyze and learn from as a baseline.

There are many different tools and processes for creating a startup business plan and some are free. While they sound and look different the key and core elements are all similar. They key is doing a business plan, not which tool or process is used.

[edit] Related Best Practices

[edit] Resources

Examples of free online business planning resources:

Examples of business websites that provide business planning tools are:


"How to write a great business plan", by William A. Sahlman, Harvard Business School Press, 2008

[edit] Notes

  1. “Startup Business Failure Rate by Industry” – Statistic Brain.”
Statistic Brain Research, July 27, 2013;

[edit] Author

The author of this article is Terry Gardiner.

Terry Gardiner is the founder and President of Silver Lining Seafoods and NorQuest Seafoods - a medium size Alaska seafood processing companies; and currently Board member of the Anvil Corporation, an employee owned company specializing in oil and gas engineering.

His co-operative experiences include member director of the Commercial Fishermen Co-operative association; creation of legislation for the Alaska Commercial Fishing and Agriculture Bank; and advisor to the US Dept of Health and Social Services for the state Health CO-OPs.

Terry served ten years as a member of the Alaska House of Representatives -several legislative committee chairmanships, Speaker of the House, Chairman of the Alaska Criminal Code Commission and board member on various state and federal boards and commissions.

His non-profit experiences include National Policy Director for the Small Business Majority in Washington DC; working with the Herndon Alliance and ForTerra.

Terry authored the leadership book, "Six-Word Lessons to Build Effective Leaders: 100 Lessons to Equip Your People to Create Winning Organizations".

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