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How to Write a Financial Plan for a Blockchain Start-Up?

20 January 2022 13:30, UTC
Jessica Fender

Blockchain is one of the most enticing pieces of technology to ever grace the start-up market. It enables CEOs and up-and-coming entrepreneurs to develop their business ideas more sustainably and systematically.

While the technology began its life as a means to index and track cryptocurrencies, it has since evolved and found its place in industries like healthcare, IT, and banking. To develop a start-up based on blockchain properly, you should write a detailed financial plan beforehand.

With such a plan in hand, managing your income and maximizing your revenue will become that much more viable. Let’s discuss financial plans for blockchain start-ups and their benefits.

Blockchain Start-Up Financial Plan Basics

Why should you write a financial plan for your blockchain start-up before starting active development on your business? According to Fortunly, only 50% of companies with staff make it through their first five years, with 42% failing because their product/service is unnecessary on the market.

Blockchain technology will indeed allow you to develop your business ideas more carefully and keep an eye on your generated data to manage it better. But, developing a sustainable business model beyond that is also essential for your start-up’s survivability.

Here’s why you should write a financial plan regardless of which industry or niche you aim to fill with your start-up:

  • Set objective long-term business development goals early on
  • Set performance metrics and standards to follow from day one
  • Enable your staff to notice tangible quarterly and yearly growth
  • Gain insight into which investments and business decisions are viable or not
  • Mitigate potential financial risks and control your start-up’s cash flow better

Tips to Write a Financial Plan for a Blockchain Start-Up

Outline your Initial Investment Costs

Starting any kind of business will require you to manage your finances from the get-go as efficiently as possible. It’s why your financial plan should start with an outline of all initial investment costs related to the start-up. These costs typically consist of:

  • Business registration fees
  • Business hardware/software costs
  • Day-to-day operational costs
  • Initial business advertisement

While you cannot calculate each financial cost for your initial start-up investment, you can create an outline and modify it as you go.

List your Start-Up Upkeep Costs

As a start-up, you will inevitably start hiring staff to run your business operations and develop blockchain-related projects. Having staff in your start-up will also cost money, so you should think about their salaries, taxes for having employees, as well as office space rent.

Monthly utility costs and office supply management should also be on your agenda at this point. While not the most glamorous part of running a blockchain start-up, these costs need to be managed accordingly.

Define your Earnings Business Model

Once you’ve outlined your expenses as well as you can, you should approach developing your earnings business model. How exactly will your start-up generate income and remain sustainable? Blockchain start-ups can offer a variety of services depending on the industry they operate in.

Whatever your product is, you should outline its pricing model, earnings forecast, as well as expected profit margins for the first year. You can get a rough idea of how sustainable your start-up will be by researching existing blockchain start-ups and their publicly-available information.

Develop your Unique Selling Proposition (USP)

Before you start exploring how to finance your start-up, you should take some time to develop several unique selling points (USP). USPs are used to entice investors and partners into trusting you with their resources in exchange for certain benefits. Start by reviewing your product/service and think of its features and benefits. In this part of your financial plan writing, you need to think like a salesperson who will pitch their start-up to others.

Explore Start-Up Capital Options

After you’ve created a sustainable business model for your blockchain start-up, you can start exploring your capital options. Most start-ups don’t rely on personal funds to start and look for investment partners or bank programs.

You can look for angel investors, visit local banks and present your start-up to them, or rely on personal savings for a few months. Partnering with investors who share your passion for blockchain is also a great idea. Do in-depth research into how you can finance your start-up before you commit to registering a business.

Wrapping Up

When you have a financial plan for your blockchain start-up in hand, marketing its value proposition to potential investors and clients will be that much easier. You will know exactly how much you can invest into marketing, how much to set aside for upkeep and taxation, and how to maximize your profit margins.

This would be nigh impossible without carefully outlining your finances beforehand, meaning that writing a financial plan is essential for long-term business sustainability. Combined with the power of blockchain technology, your start-up will have much better odds of continuing its organic growth year after year.

Author’s bio

Jessica Fender is a professional marketer and a content writer. If you ever wondered, "I wish someone would write my essay for me", she is one of those professional academic level writers that will save you time and your degree. She enjoys the beach, martial arts, and literature.

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