Key Steps for Entrepreneurs: From Business Plan to Risk Management

In our prior blog post, we reviewed How To Become and Entrepreneur. Specifically, we covered:

✅ Why become an entrepreneur
✅ How to develop the right mindset
✅ How to choose the right idea
✅ Taking the first steps towards an MVP

Now, it’s time for real talk—the stuff that investors, partners, and even your mom (if she’s lending you money) will ask about. We're diving into business planning, market fit, risk assessment, and all the money jargon that matters when launching and scaling a business.

This is, of course, if you decide to go down the fundraising route. Many successful entrepreneurs bootstrap their businesses instead of raising capital. Either way, a solid plan is crucial.

So, let’s put on our Scrooge McDuck hats and dive into the depths of the money pool! 💰🦆

1. What must an entrepreneur assume when starting a business?

Starting a business is exciting but full of uncertainties. Before diving in, every entrepreneur must assume key realities to set the right expectations and develop the correct entrepreneurial mindset. Whether you’re launching a startup or a small business, here are the fundamental assumptions you need to make:

🔑 Key Assumptions Every Entrepreneur Must Make

✅ Failure is part of the journey – 90% of startups don’t survive long-term, so resilience is key.
✅ It will take longer than expected – Growth isn’t overnight; building a business requires patience.
✅ Financial risk is unavoidable – You may need to invest personal savings before making profits.
✅ Market demand can change – Validating your idea and adapting to customer needs is essential.
✅ You can’t do it alone – Success depends on networking, mentorship, and hiring the right team.

By embracing these assumptions, you’ll be better prepared to navigate challenges, adapt to market conditions, and build a thriving business. 🚀

2. How do I build a business plan?

"To create a plan that positions you for success, start by thoroughly researching your market, target audience, and competitors. Be sure to include essential elements such as budgeting, marketing strategies, and an analysis of potential risks. A well-crafted and comprehensive business plan provides a clear roadmap and lays the groundwork for achieving your goals". (Ketie Zhang from Ketie Story).

A business plan is your roadmap to success. Even if you’re not planning to pitch investors, having a structured plan helps you stay on track and avoid burning cash on things that don’t work.

Here’s what a solid business plan should include:

✔ Budget 💸
✔ Addressable market (TAM, SAM, SOM) & Target Audience 🎯
✔ Competitor analysis 🏆
✔ Sales Channels 🚀
✔ Marketing Channels 📢

Let’s break these down.

Budgeting: Show Me the Money

You need to know your numbers. Your budget should cover:

🔹 Startup costs (Website, product development, team salaries)
🔹 Fixed vs. variable costs (Rent, marketing, inventory, subscriptions)
🔹 Runway (How many months can you survive before making a profit?)

💡 Example: Jeff Bezos started Amazon in his garage, but his business plan included early profitability projections and an initial focus on books before expanding. That discipline helped Amazon scale.

Budgeting involves building a financial business plan and model, so you will need to put on your accountant glasses to crunch some numbers.

Addressable Market: TAM, SAM, SOM Explained

Before you even start calculating your addressable market, one key step to take is define your Ideal Customer Profile (ICP). Following HubSpot's words, an ideal customer profile (ICP), commonly referred to as an ideal buyer profile, defines the perfect customer for what your organization solves for. This is a fictitious company or user that has all of the qualities that would make them the best fit for the solutions or product you provide.

Once you know who your ICP is, it's time to calculate your Addressable Market. There are 3 key terms that come to play, and no, they are not your childhood's playground friends: TAM, SAM & SOM.

🤑 TAM = Total Addressable Market (Or Total Available Market)—This represents the revenue opportunity that a company has if it has a full 100% of the market share, with no competition. E.g.: you have a service for hospitals, your TAM would be all hospitals in the US or globally even.

💰SAM = Serviceable Addressable Market—This represents the “slice” of the TAM “pie” that can be served by a company’s products and services. The subset that your product is most specialized for, represents the real market potential. E.g: of all the hospitals that you could potentially target, you consider your product to be more specific for private hospitals and for the US market, given regulations.

💸 SOM = Serviceable Obtainable Market—This represents the actual amount of the market that you could actually convert. Unless you're a monopoly, you most likely can’t capture 100% of your serviceable addressable market! E.g.: what % of your SAM do you believe you could actually capture?

📖 Further reading: Antler's description of TAM, SAM, SOM:

Competitor Analysis: Who Are You Up Against?

You don’t need to reinvent the wheel—but you do need to differentiate yourself.

• Who are your competitors? (Direct and indirect)
• What makes them successful?
• Where do they fall short?

There are different methodologies for Competitor Analysis, including SWOT Analysis, Porter’s Five Forces, Growth-Share Matrix, Perceptual Mapping, and Strategic Group Analysis. All are good and useful in their own way. A combination of all of them is what will give you the broader view on where you stand in the competitor landscape.

💡 Example: When Netflix entered the streaming market, it didn’t just compete with Blockbuster—it completely changed the game. They studied Blockbuster’s weaknesses (late fees, limited inventory) and built a better model (subscription, unlimited content).

PS: don't be disappointed if you discover your market has competition. Competition is actually a very healthy indicator that there is interest in the market.

Sales Channels: How Will You Sell?

Where will customers buy from you? Your options:

🔹 Direct sales – Selling directly via your website or store.
🔹 Marketplaces – Amazon, Etsy, Shopify.
🔹 B2B partnerships – Selling to other businesses instead of individuals.
🔹 Retail distribution – Getting your product in physical stores.

💡 Example: Apple originally sold only through direct retail but later expanded into authorized resellers and online stores.

When starting your company, don't go wild thinking you will need to hire a Sales Team so be able to sell your product to others. When you are getting yourself off the ground and until you make, even your first $1M ARR, you as founder need to lead the sells. Founder-led sales will help you fully understand whether your users actually want and like the product, and allow you to iterate even faster.

Marketing Channels: Getting Customers to Notice You

Even the best product won’t sell itself. You need marketing!

🔹 SEO & Content Marketing – Blog posts, YouTube, podcasts (💡 Example: HubSpot mastered SEO).
🔹 Social Media Marketing – Instagram, LinkedIn, TikTok.
🔹 Paid Ads – Google Ads, Facebook Ads.
🔹 Referral & Influencer Marketing – Word-of-mouth is powerful.

Which channel you choose will really depend on your ICP. Gen Z B2C products will mostly resonate on Social Media (Tik Tok), via paid ads and maybe influencer marketing; whereas standard B2B SaaS will most likely use of SEO, Google ads and maybe B2B referrals. That0s why having your ICP very clear at the very beginning will be fundamental in establishing your sales and marketing channels appropriately.

In summary, "A business plan isn't merely numbers on paper—it's a dynamic strategy. It should emphasize market demand, scalability, and differentiation from competitors. Most importantly, I prioritize having a clear revenue model from day one." (Kevin from Alloy)

📖 Further reading: 5 Critical Factors that Explain Amazon's Success

3. What must an entrepreneur do after creating a business plan?

Now that you are done with your initial business plan it's time to go beyond by:

• Analyzing all possible outcomes and managing risk
• Analyzing the financial feasibility and break even goals, and finally
• Hiring!

3.1 Assessment & Scenario Planning: Expect the Unexpected

As shared by our friend Benjamin at Electricity Monster, "a business plan isn’t a script; it’s a map, and maps need updates."

When launching a startup, uncertainty is the only certainty. From economic downturns to shifting customer preferences, unexpected challenges can arise at any moment. That’s why risk assessment and scenario planning are critical to ensuring your business survives—and thrives—no matter what comes your way.

What Are the Biggest Risks for Startups?

📉 Financial Risks – Running out of money before reaching profitability.
🚀 Market Risks – Customers not adopting your product as expected.
⚠️ Operational Risks – Supply chain failures, production delays, or legal issues.
👥 Team Risks – Hiring the wrong people or losing key talent.

💡 Example: Airbnb faced a major market risk when COVID-19 brought global travel to a halt. Instead of shutting down, they quickly pivoted to focus on local stays, helping them stay afloat and later thrive.

How to Plan for the Worst (While Aiming for the Best) - What is one way for an entrepreneur to decrease risk?

• Multi-scenario planning: Ask yourself, What happens if my revenue drops by 50%? What if competition increases?
• Cash flow management: Always have 6-12 months of runway in case of downturns.
• Diversify revenue streams: Relying on a single product or customer base can be risky.
• Legal protections: Have solid contracts and liability insurance in place.

📖 Further reading: What Kinds of Risks Should You Take?

3.2 Building Your Financial Model

A strategic business plan is just one side of the coin—now, you need to ensure your financial model makes sense. A solid financial model helps you understand how much money you need, when you’ll break even, and how to sustain growth.

🔹 How to Build a Financial Model for a Startup

✅ Start with Key Revenue Streams – Identify how your business will make money (subscriptions, product sales, services, partnerships).

✅ Project Expenses Accurately – Factor in fixed costs (rent, salaries, software) and variable costs (marketing, production, logistics).

✅ Calculate Your Burn Rate & Runway – Your burn rate is how much cash you spend monthly. Ensure you have at least 6-12 months of runway before running out of money.

✅ Determine Your Break-Even Point – This is when your revenue covers your expenses. A simple formula:
📊 Break-even point = Fixed Costs ÷ (Price per Unit - Variable Cost per Unit)

✅ Stress Test with Different Scenarios – Create best-case, realistic, and worst-case financial projections. If revenue drops 30%, do you still survive?

💡 Example: Uber initially operated at a loss but had a model that predicted when and how they would scale to profitability through ride volume and pricing adjustments.

3.3 Hiring Your First Team

Hiring is one of the most important (and hardest) steps for any startup. Your first employees will shape your company culture, determine execution speed, and ultimately influence your success or failure.

🎯 Who Should You Hire First?

• Co-founder (if you don’t have one already) – The Steve Wozniak to your Steve Jobs. A great co-founder balances your skills (e.g., if you’re great at sales, find someone strong in operations or tech).
• Core team members – Start lean: hire generalists who can wear multiple hats instead of specialists too early. E.g: someone to cover all digital marketing, or who can do both Sales automation and Marketing
• Key external roles – If you can’t afford full-time hires, consider freelancers or part-time consultants.

🔍 Where to Find Great Talent?

• Startup communities & networking events – Smaller events offer better connections than big conferences.
• Online founder-matching platforms – Sites like CoFoundersLab or YC’s co-founder network can help.
• LinkedIn & Twitter – Search for people posting about your industry and engage in conversations.
• Friends & family referrals – The trust factor is strong here.

"Promote your friends and family to promote job openings in your company, and be the first to do so. this is one way to pique people's interest the fact that they have been your friends or acquaintances for a while already means you can reliably find them, hence it would take less time and effort to hire a candidate. can give your business an edge when searching for the best employees." (Patrick from Max Cash)

📖 Further reading: How to Find a Co-Founder – Y Combinator

Conclusion: what's next?

You now have the blueprint for a strong business foundation! ✅

Next up: The VC Shark 🦈💰 – We’ll dive into fundraising, venture capital, and how to pitch like a pro.