The aim of technical start-ups is to improve existing solutions to everyday problems or to find new solutions for them. This includes digital and physical products or a hybrid solution. Of the innovative start-ups in the last 10 years, 30.5% develop information and communication technologies, followed by medical and health care with 10.6%, followed by food and consumer goods with 9.8%. The following article explains what should be considered when creating a business plan for tech start-ups.
process of product creation
The development of technical products goes through different phases . After identifying and defining problems, solutions are generated and developed. In doing so, the feasibility must be checked and evaluated as to whether the business idea or concept can also be implemented.
It is also important to comprehensively analyze the market, its demand and requirements . This includes the identification and research of target groups and legal guidelines of the industry. It is necessary to clarify how communication, distribution and sales channels are described in order to reach the respective target group. In the development phase, for example, product dummies and prototypes are created in order to be able to demonstrate and test the feasibility or viability of your own product.
Product improvement is an iterative process. This is where business founders should ask themselves: What can be improved in order to increase customer benefit and the value proposition? A well-known procedure is the PDCA cycle (Plan-Do-Check-Act). The most important prerequisite for the market success of a product is the USP (Unique Selling Point). An often quoted saying from sales says “The customer does not buy products, but solutions”.
Business plan: objective, goal-oriented, understandable
Another basic building block is the creation of a business plan. Because a business plan serves to validate the business idea, provides orientation and structure for achieving the goals and shows gaps and potential for improvement. When describing the business concept, it is important to keep it as brief as possible and as detailed as necessary. A business plan usually has a length of 25-30 pages. Non-specialist readers must be able to understand all of the content. Every entrepreneur is of course convinced of his own business idea. However, this motivation must be put in writing in an objective and factual manner, without presenting oneself as arrogant. Depending on the reader of the business plan, founders must observe different guidelines and criteria for the business plan content.
Many start-ups plan their finances and profits without correctly assessing the market and the market entry barriers, underfinancing areas such as sales and marketing or neglecting to plan reserves to cushion risks.
To prevent this from happening, founders should create a financial plan. This is an essential part of the business plan, which shows the business model feasibility. Here it is important to present the calculations used in the creation of the business plan not only in the short term but also in the medium and long term , but at least for three financial years.
Financing: potential and opportunities
In the case of technical start-ups, the amount of investment can be very large depending on the scope of innovation and the project . Examples include the purchase of machines and devices, materials, software and services, digital or physical prototypes and certifications. The high costs can rarely only be covered by your own savings, which is why other sources of financing are very often used, including:
- government funding
- business angels
- venture capital
- Business start-up loan
The planning and implementation of financing rounds with business angels or venture capital institutions often takes six months or more. This requires additional resources, patience and nerves. The earlier a round of financing is used, the higher the risk for the investor and the more shares in the company foundation are given up at an early stage. The sale of shares should definitely be accompanied by a specialist lawyer , because mistakes are often made when concluding the contract. The right of external parties to have a say can lead to conflicts of interest, dissatisfaction and unrest on the part of the founder or the founding team.
Many entrepreneurs underestimate the opportunities offered by public funding programs . It also happens that they are deterred by the variety and lack of transparency of the funding. Writing an application for this is often bureaucratic and very time-consuming. Funding programs still give founders a lot of advantages: you don’t give up any shares, the company development remains self-determined and often it’s money that you don’t have to pay back, at least in part.
The content of a grant application
In funding programs, the focus is on technical skills, degree of innovation, scalability, development status and planning including milestones, financial Planning and corporate organization. During the application process, the required content is specified and described. It is still difficult to master all these disciplines and demands yourself. Not every founder or every founding team has all the skills to write a business plan of scope, content and level of detail. Therefore, the support of start-up consultants is often called upon The expenses for this are manageable, because there are consulting grants in every federal state that cover up to 90% of the costs.