Power Of Planning
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Power of planning
Startup companies are not only driven by an idea. There are other factors which play a critical role in the destiny of the company. The company needs a focused top team which needs to do precise planning to get to the first hurdle in the journey of success. i.e.: Raising funds The most basic ingredient required is a detailed financial and operational plan. This plan will serve as a navigational map for the company's initial journey which will be challenged by uncertainty and roadblocks. Why are financial or operational plans required?
1.Burn rate vs. growth
ď‚— A startup with a financial plan can exactly calculate the extent of burn and correlate
that with the opportunities of growth that it offers. ď‚— It could be the increase in the number of active users (or clients) or gross merchandise value or total number of users or total value of goods sold all of these metrics are financially determined in numbers. Any investor who is scrutinizing the company should be able to see where the company is placed financially and what its future potential for success is
2.Many rounds of raising finance
ď‚— A financial plan will also allow a startup to determine the number of rounds of
finance that it will require. ď‚— It will set targets for fund raising and chart out a growth path. It will also detail out the issuance of fresh shares and share capital expansion of a company which will finally enable more investors to come into the company.
3.Risk assessment
ď‚— Even early investors are cautious of risk. If they are not cautious and willing to take
risks, they would want to know how much they are risking by investing in a startup. ď‚— A startup should invest enough resources into assessing the risks that it is taking including IPR risk, market risk, technology risk and operational risk. ď‚— A startup with an operational plan that clearly defines risk and is taking enough measures to minimize it has the potential to become a large organization in the future.
4.Revenues OR profits OR cash
The success of a startup is not only about fund raising. It is also about the funds that
is earning through its business. The ability of a startup to have liquid cash and be able to pay off its investors is the one that can manage its working capital cycles by forging deals with suppliers and service providers. An operationally strong startup always has a strong plan and a focused team to ensure that it is earning as much as it is investing in its own future.
5.Strategy & competition
Many startups have aggressive expansion plans by entering new markets. However,
they should be supported by a dedicated team in place to ensure that this process runs smoothly. It should also measure the extent and strength of competition to make sure that the company is able to fight competition and emerge successful. A detailed operational plan will ensure that these growth measures are successfully implemented as per targets. The targets also need to be reviewed constantly to measure the growth that a startup is experiencing. It can also fine tune the strategy and business model of a company and ensure that it becomes valuable to the investor and itself.
THANK YOU
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