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Differences Between a Startup Business Plan and Traditional Business Plan.

Everything related to start-up and traditional business is different. For a traditional business, there are already loyal customers and business models have been optimized and have historical profits.

However, for a start-up business, many Business Analysts claimed that management tends to be focussed on developing a vision for their proposed company, constructing strategies needed to reach their vision and identifying benchmarks to ensure good financial health.

However, the business structure for a start-up and traditional business is somewhat similar. A start-up business plan differs from a traditional business plan for several reasons.

 

Start-up Business Plan has no track record

When a professional business writer attempts to draft financial projections, the best starting point is to review historical numbers from the company related to Revenue and Expenses. From this review, a growth rate is defined and that way the business writer can predict future sales. This leads to a sound foundation of a business plan.

In contrast, a startup business plan has no records and historical data available. This leads to constructing a growth rate and revenue model for the business. Different assumptions have to be made for revenue and expenses. As a result, business writers need to build a complete structure of the business with a financial section.

When preparing a business plan for a start-up the financial section should include a detailed list of assumptions. Some of these assumptions may include growth rate, churn rate, expenses, industry averages and trends and overall economic condition of the location.

With assumptions, readers of the business plan will have a better understanding of the foundation of business and financial statements. This will add additional creditability on the whole

There is no proven model for a star-up

Ask from any settled business owner about his operations. These questions will receive a long and lengthy explanation about the policies and processes of the company’s business and procedures. Furthermore, the business owner will provide the same description of their business model.

However, if you ask a startup business with the same questions to describe his future operations, the owner will offer a slightly different version of the business model. The main reason for this fluctuation is that there is no proven model for a start-up business. Without a proven model, setting on a firm description of business operations may be difficult. As a result, the business model section of a startup business plan is needed to be written differently as compared to the traditional business plan.

Startup businesses have increased risk.

Any business inherent risk. Businesses often face the risk related to the declining economy, changing customer needs, competitive market prices, etc.

However, start-ups businesses face additional risks because of management inexperience, location risks, and no brand recognition.

Established organizations often do not need to discuss business risks since the most type of risk is similarly faced by all industry competitors. Furthermore, if the company is making a profit, then it has inherently already identified and mitigated the different types of industry risk.

In the case of start-ups, businesses need to specifically discuss strategies that may be used to combat potential risks and operations.

Startup business plan summary

Start-up business faces a lot of challenges when attempting to enter the market. However, specific steps may be taken to improve the chances of gaining market share and company success. In our opinion. Using a start-up business plan structure, as compared to a traditional structure, maybe the single most important action a potential business owner may take.  A startup business plan structure can help start-up business owners clearly explain the vision of the company, address potential risk factors and improve the credibility of their financial statements.

 

We have helped many start-up businesses for the preparation of Business Plan, Financial Modelling and online consultation. Book a free appointment today with just a single click

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