There are 33.2 million small businesses in America. Do you own one of them?
If not—but you’re thinking about it—you need a solid business plan before doing anything else.
And if you’ve already launched and are ready to scale, guess what—you need a plan, too!
Either way, you’ve probably got a good idea of where you want your business to go. You just need a roadmap to get you there as fast and pain-free as possible. That’s what a good business plan does for you.
And after helping 14,000+ small businesses, we at Ruby can tell you that the lack of such a plan is one of the main reasons why a staggering 90% of new startups are failing. It’s exciting to think of launching or expanding a business endeavor, but many impatient entrepreneurs simply throw money and enthusiasm at the issue. They don’t take the time to lay the necessary groundwork.
As a result, they eventually run into costly snags. Maybe they didn’t do enough market research ahead of time. Maybe they bit off more than they could chew and don’t have enough trained staff. Maybe they have a great product or service but do not know how to advertise it. The list of possible problems is endless.
Yet virtually all of the problems have been encountered by an equally endless number of businesses before them! In other words, business owners can avoid most issues by paying attention to lessons learned and developing a roadmap to success and growth.
There’s no ready-made, one-size-fits-all plan out there that speaks to your specific needs. But there are plenty of templates and pointers you can review for reference and inspiration. Here are some basics to help you get started!
1. What is a business plan?
“A business plan is a document that defines in detail a company’s objectives and how it plans to achieve its goals,” Investopedia explains. It’s used as an internal guide for owners and management, as well as a tool to attract investors and demonstrate viability to lenders.
The key components of this roadmap are:
Executive summary, which describes the business, explains its mission, and offers details about key members and activities.
Description of products or services section, which lists particulars of what’s being sold, how it was developed and is produced (if applicable), what technologies are used, and what benefits it offers buyers. You can also list any patents involved.
Market analysis, which reports your research findings about existing competition, how your business differentiates itself from the pack, and the projected consumer demand for what you’re selling.
Marketing strategy, which outlines the precise means and methods you’ll use to find and entice buyers.
Financial planning and budget, which lays out ALL projected costs, earnings, working capital, and other financial figures.
Chron lists six distinct types of business plans to select from:
- Start-up — for completely new businesses
- Internal — to “target a specific audience within the business,” such as your marketing team
- Strategic — for upper management to lay out high-level goals and how to reach them
- Feasibility — to assess consumer interest and profitability
- Operations — to identify specific operational delegations of responsibility, goals, and deadlines
- Growth — to describe the precise strategy of how a business intends to scale and attract investors
2. Why do you need a business plan?
Importance of having a clear vision and strategy
Establishing a vision for your business gives you a clear goal for where you want to go and the impact you want to have. Having a strategic plan helps you get there, so you can make that impact!
Without a vision and strategic plan, your business can quickly lose focus, lose track, and get lost on its path toward success.
Benefits of a business plan for securing funding and investors
Would you loan thousands of dollars to someone you didn’t know? Or who didn’t seem to have a plan to pay it back?
Investors and lenders need reassurance that the money they’re handing out will find its way back to them, preferably with interest or profits. They may accept a certain amount of risk, but not much. A strong business plan will help alleviate any reluctance.
Role of a business plan in managing and tracking progress
As mentioned, a business plan can be used both internally and externally. Internally, it’s a fantastic tool for ensuring your business is running the way you initially intended.
It can also serve as a sort of checklist, which comes in handy because what gets tracked gets done!
3. How to get started with a business plan
Best practices for conducting market research and analyzing competition
“It takes money to make money.” Consider investing in a firm that can conduct diligent market research for your business plan.
Can’t you do this yourself? Yes, but you may not have the time and energy to learn how to conduct the research, then actually do the research. Don’t underestimate the importance of deep market research and competitor analysis, because it can make or break your business. In fact, it can inform your decision of whether to even move forward or not.
Check out Communications For Research’s What to Look For When Hiring a Market Research Firm to learn more!
Guidelines for writing a business plan, including structure and content
There are numerous templates available online, but we suggest only using them for inspiration for layout and structure.
A business plan is not a cut-and-paste document. It can’t be superficial, bland, or filled with fluff. It requires considerable thought, attention, and enthusiasm grounded in reality. Avoid bloviation or unsupported claims.
The content should focus on authenticity versus just trying to write something that sounds professional but has no true substance. If the substance is there—the team bios show business acumen and competence within the industry, the product or service concept makes sense, there’s evidence of a sufficient and sustainable market, and the financial numbers all indicate viability and long-term profitability—then the plan should work!
Tips for different industries
Your business plan will likely fall into one of the above-mentioned categories, i.e., start-up, internal, strategic, feasibility, operations, or growth. So, you’ll need to write it accordingly. But plans should also be customized to fit the specific industry the business falls under.
For instance, a law firm would have a very different plan than an eCommerce business selling t-shirts. But one thing all businesses have in common is, they need someone to manage calls and website engagements!
Some businesses underestimate the importance of these critical tasks, which are the key to winning and keeping customers in today’s era of sky-high customer service expectations! But the cost of a full-time receptionist or chat agent can chew into your budget fast.
That’s why we started Ruby, to offer virtual receptionist services to businesses of all sizes and specialties! Our virtual receptionists are available 24/7, 365 days a year, integrate seamlessly with your team, and are highly trained in providing exceptional customer service experiences—at a fraction of the cost of a full-time employee.
If you’re just getting started on your growth journey, check out Ruby’s Small business snippets series for more quick insights on all the basics you need to know—then, make sure to sign up for more advanced tips coming soon in Season 2!