business planning step by step

How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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How to Write a Business Plan: Beginner’s Guide (& Templates)

Written by: Chloe West

Thinking about starting a business? One of the first steps you’ll need to take is to write a business plan. A business plan can help guide you through your financial planning, marketing strategy, unique selling point and more.

Making sure you start your new business off on the right foot is key, and we’re here to help. We’ve put together this guide to help you write your first business plan. Or, you can skip the guide and dive right into a business plan template .

Ready to get started?

Here’s a short selection of 8 easy-to-edit business plan templates you can edit, share and download with Visme. View more templates below:

8-Step Process for Writing a Business Plan

What is a business plan, why is a business plan important, step #1: write your executive summary, step #2: put together your company description, step #3: conduct your market analysis, step #4: research your competition, step #5: outline your products or services, step #6: summarize your financial plan, step #7: determine your marketing strategy, step #8: showcase your organizational chart, 14 business plan templates to help you get started.

A business plan is a document that helps potential new business owners flesh out their business idea and put together a bird’s eye view of their business. Writing a business plan is an essential step in any startup’s ideation process.

Business plans help determine demographics, market analysis, competitive analysis, financial projections, new products or services, and so much more.

Each of these bits of information are important to have on hand when you’re trying to start a business or pitching investors for funds.

Here’s an example of a business plan that you can customize to incorporate your own business information.

We’re going to walk you through some of the most important parts of your business plan as well as how to write your own business plan in 8 easy steps.

If you’re in the beginning stages of starting a business , you might be wondering if it’s really worth your time to write out your business plan. 

We’re here to tell you that it is.

A business plan is important for a number of reasons, but mostly because it helps to set you up for success right from the start.

Here are four reasons to prove to you why you need to start your business off on the right foot with a plan.

Reason #1: Set Realistic Goals and Milestones

Putting together a business plan helps you to set your objectives for growth and make realistic goals while you begin your business. 

By laying out each of the steps you need to take in order to build a successful business, you’re able to be more reasonable about what your timeline is for achieving everything as well as what your financial projections are.

The best way to set goals is using the SMART goals guidelines, outlined below.

Reason #2: Grow Your Business Faster

Having a business plan helps you be more organized and strategic, improving the overall performance of your business as you start out. In fact, one study found that businesses with a plan grow 30% faster than businesses that don’t.

Doesn’t that sound reason enough alone to start out your business venture with a solidified plan? We thought so too, but we’ve still got two more reasons.

Reason #3: Minimize Risk

Starting a new business is uncharted territory. However, when you start with a roadmap for your journey, it makes it easier to see success and minimize the risks that come with startups.

Minimize risk and maximize profitability by documenting the most important parts of your business planning.

Reason #4: Secure Funding

And finally, our last reason that business plans are so important is that if you plan to pitch investors for funding for your new venture, they’re almost always going to want to see a detailed business plan before deciding whether or not to invest.

You can easily create your business plan and investor pitch deck right here with Visme. Just sign up for a free account below to get started. 

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The executive summary is a brief overview of your entire business plan, giving anyone who reads through your document a quick understanding of what they’re going to learn about your business idea.

However, you need to remember that some of the people who are going to read your business plan don’t want to or have time to read the entire thing. So your executive summary needs to incorporate all of the most important aspects of your plan.

Here’s an example of an executive summary from a business plan template you can customize and turn into your own.

Your executive summary should include:

• Key objective(s)
• Market research
• Competitor information
• Products/services
• Value proposition
• Overview of your financial plan
• How you’re going to actually start your business

One thing to note is that you should actually write your executive summary after the rest of your business plan so that you can properly summarize everything you’ve already created.

So at this point, simply leave a page blank for your executive summary so you can come back to it at the end of your business plan.

The next step is to write out a full description of your business and its core offerings. This section of your business plan should include your mission statement and objectives, along with your company history or overview.

In this section, you may also briefly describe your business formation details from a legal perspective.

Mission Statement

Don’t spend too much time trying to craft this. Your mission statement is a simple “why” you started this business. What are you trying to achieve? Or what does your business solve?

This can be anything from one single quote or a paragraph, but it doesn’t need to be much longer than that. In fact, this could be very similar to your value proposition.

What are your goals? What do you plan to achieve in the first 90 days or one year of your business? What kind of impact do you hope to make on the market?

These are all good points to include in your objectives section so anyone reading your business plan knows upfront what you hope to achieve.

History or Overview

If you’re not launching a brand new business or if you’ve previously worked on another iteration of this business, let potential investors know the history of your company.

If not, simply provide an overview of your business, sharing what it does or what it will do.

Your third step is to conduct a market analysis so you know how your business will fit into its target market. This page in your business plan is simply meant to summarize your findings. Most of your time should be spent actually doing the research.

Your market analysis needs to look at things like:

• Market size, and if it’s grown in recent years or shrinking
• The segment of the market you plan to target
• Demographics and behavior of your target audience
• The demand for your product or service
• Your competitive advantage or differentiation strategy
• The average price of your product or service

Put together a summary of your market analysis and industry research in a 1-2 page format, like we see below.

Your next step is to conduct a competitive analysis. While you likely touched on this briefly during your market analysis, now is the time to do a deep dive so that you have a good grasp on what your competitors are doing and how they are generating customers.

Start by creating a profile of all your existing competitors, or at the very least, your closest competitors – the ones who are offering very similar products or services to you, or are in a similar vicinity (if you’re opening a brick and mortar store).

Focus on their strengths and what they’re doing really well so that you can emulate their best qualities in your own way. Then, look at their weaknesses and what your business can do better.

Take note of their current marketing strategy, including the outlets you see a presence, whether it’s on social media, you hear a radio ad, you see a TV ad, etc. You won’t always find all of their marketing channels, but see what you can find online and on their website.

After this, take a minute to identify potential competitors based on markets you might try out in the future, products or services you plan to add to your offerings, and more.

Then put together a page or two in your business plan that highlights your competitive advantage and how you’ll be successful breaking into the market.

Step five is to dedicate a page to the products or services that your business plans to offer.

Put together a quick list and explanation of what each of the initial product or service offerings will be, but steer clear of industry jargon or buzzwords. This should be written in plain language so anyone reading has a full understanding of what your business will do.

You can have a simple list like we see in the sample page above, or you can dive a little deeper. Depending on your type of business, it might be a good idea to provide additional information about what each product or service entails.

The next step is to work on the financial data of your new business. What will your overhead be? How will your business make money? What are your estimated expenses and profits over the first few months to a year? The expenses should cover all the spending whether they are recurring costs or just one-time LLC filing fees .

There is so much that goes into your financial plan for a new business, so this is going to take some time to compile. Especially because this section of your business plan helps potential cofounders or investors understand if the idea is even viable.

Your financial plan should include at least five major sections:

• Sales Forecast: The first thing you want to include is a forecast or financial projection of how much you think your business can sell over the next year or so. Break this down into the different products, services or facets of your business.
• Balance Sheet: This section is essentially a statement of your company’s financial position. It includes existing assets, liabilities and equity to demonstrate the company’s overall financial health.
• Income Statement: Also known as a profit and loss statement (P&L), this covers your projected expenses and revenue, showcasing whether your business will be profitable or not.
• Operating Budget: A detailed outline of your business’s income and expenses. This should showcase that your business is bringing in more than it’s spending.
• Cash Flow Statements: This tracks how much cash your business has at any given point, regardless of whether customers or clients have paid their bills or have 30-60+ days to do so.

While these are the most common financial statements, you may discover that there are other sections that you want to include or that lenders may want to see from you.

You can automate the process of looking through your documents with an OCR API , which will collect the data from all your financial statements and invoices.

The next step is coming up with a successful marketing plan so that you can actually get the word out about your business. 

Throughout your business plan, you’ve already researched your competitors and your target market, both of which are major components of a good marketing strategy. You need to know who you’re marketing to, and you want to do it better than your competition.

On this page or throughout this section of your business plan, you need to focus on your chosen marketing channels and the types of marketing content you plan to create.

Start by taking a look at the channels that your competitors are on and make sure you have a good understanding of the demographics of each channel as well. You don’t want to waste time on a marketing channel that your target audience doesn’t use.

Then, create a list of each of your planned marketing avenues. It might look something like:

• Social media ( Facebook, Instagram, Pinterest)
• Email newsletter
• Digital ads

Depending on the type of business you’re starting, this list could change quite a bit — and that’s okay. There is no one-size-fits-all marketing strategy, and you need to find the one that brings in the highest number of potential customers.

Your last section will be all about your leadership and management team members. Showcasing that you have a solid team right from the start can make potential investors feel better about funding your venture.

You can easily put together an organizational chart like the one below, with the founder/CEO at the top and each of your team leaders underneath alongside the department they’re in charge of.

Simply add an organizational chart like this as a page into your overall business plan and make sure it matches the rest of your design to create a cohesive document.

If you want to create a good business plan that sets your new business up for success and attracts new investors, it’s a good idea to start with a template. 

We’ve got 14 options below from a variety of different industries for you to choose from. You can customize every aspect of each template to fit your business branding and design preferences.

Template #1: Photography Business Plan Template

This feminine and minimalistic business plan template is perfect for getting started with any kind of creative business. Utilize this template to help outline the step-by-step process of getting your new business idea up and running.

Template #2: Real Estate Business Plan Template

Looking for a more modern business plan design? This template is perfect for plainly laying out each of your business plans in an easy-to-understand format. Adjust the red accents with your business’s colors to personalize this template.

Template #3: Nonprofit Business Plan Template

Creating a business and marketing plan for your nonprofit is still an essential step when you’re just starting out. You need to get the word out to increase donations and awareness for your cause.

Template #4: Restaurant Business Plan Template

If your business plan needs to rely heavily on showcasing photos of your products (like food), this template is perfect for you. Get potential investors salivating at the sight of your business plan, and they’re sure to provide the capital you need.

Template #5: Fashion Business Plan Template

Serifs are in. Utilize this template with stunning serif as all the headers to create a contemporary and trendy business plan design that fits your business. Adjust the colors to match your brand and easily input your own content.

Template #6: Daycare Business Plan Template

Creating a more kid-friendly or playful business? This business plan template has bold colors and design elements that will perfectly represent your business and its mission. 

Use the pages you need, and remove any that you don’t. You can also duplicate pages and move the elements around to add even more content to your business plan.

Template #7: Consulting Business Plan Template

This classic business plan template is perfect for a consulting business that wants to use a stunning visual design to talk about its services.

Template #8: Coffee Shop Business Plan Template

Customize this coffee shop business plan template to match your own business idea. Adjust the colors to fit your brand or industry, replace photos with your own photography or stock photos that represent your business, and insert your own logo, fonts and colors throughout.

Template #9: SaaS Business Plan Template

A SaaS or service-based company also needs a solid business plan that lays out its financials, list of services, target market and more. This template is the perfect starting point.

Template #10: Small Business Plan Template

Every startup or small business needs to start out with a strong business plan in order to start off on the right foot and set yourself up for success. This template is an excellent starting point for any small business.

Template #11: Ecommerce Business Plan Template

An ecommerce business plan is ideal for planning out your pricing strategy of all of your online products, as well as the site you plan to use for setting up your store, whether WordPress, Shopify, Wix or something else.

Template #12: Startup Business Plan Template

Customize this template and make it your own! Edit and Download  

This is another generic business plan template for any type of startup to customize. Switch out the content, fonts and colors to match your startup branding and increase brand equity.

Template #13: One-Page Business Plan Template

Want just a quick business plan to get your idea going before you bite the bullet and map out your entire plan? This one-page template is perfect for those just starting to flesh out a new business idea.

Template #14: Salon Business Plan Template

This salon business plan template is easy on the design and utilizes a light color scheme to put more focus on the actual content. You can use the design as is or keep it as a basis for your own design elements.

Create Your Own Business Plan Today

Ready to write your business plan? Once you’ve created all of the most important sections, get started with a business plan template to really wow your investors and organize your startup plan.

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About the Author

Chloe West is the content marketing manager at Visme. Her experience in digital marketing includes everything from social media, blogging, email marketing to graphic design, strategy creation and implementation, and more. During her spare time, she enjoys exploring her home city of Charleston with her son.

How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

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How To Write a Business Plan

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Starting a business is a wild ride, and a solid business plan can be the key to keeping you on track. A business plan is essentially a roadmap for your business — outlining your goals, strategies, market analysis and financial projections. Not only will it guide your decision-making, a business plan can help you secure funding with a loan or from investors .

Writing a business plan can seem like a huge task, but taking it one step at a time can break the plan down into manageable milestones. Here is our step-by-step guide on how to write a business plan.

Table of contents

• Write your executive summary
• Do your market research homework
• Set your business goals and objectives
• Plan your business strategy
• Describe your product or service
• Crunch the numbers
• Finalize your business plan

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Step 1: Write your executive summary

Though this will be the first page of your business plan , we recommend you actually write the executive summary last. That’s because an executive summary highlights what’s to come in the business plan but in a more condensed fashion.

An executive summary gives stakeholders who are reading your business plan the key points quickly without having to comb through pages and pages. Be sure to cover each successive point in a concise manner, and include as much data as necessary to support your claims.

You’ll cover other things too, but answer these basic questions in your executive summary:

• Idea: What’s your business concept? What problem does your business solve? What are your business goals?
• Product: What’s your product/service and how is it different?
• Market: Who’s your audience? How will you reach customers?
• Finance: How much will your idea cost? And if you’re seeking funding, how much money do you need? How much do you expect to earn? If you’ve already started, where is your revenue at now?

Step 2: Do your market research homework

The next step in writing a business plan is to conduct market research . This involves gathering information about your target market (or customer persona), your competition, and the industry as a whole. You can use a variety of research methods such as surveys, focus groups, and online research to gather this information. Your method may be formal or more casual, just make sure that you’re getting good data back.

This research will help you to understand the needs of your target market and the potential demand for your product or service—essential aspects of starting and growing a successful business.

Step 3: Set your business goals and objectives

Once you’ve completed your market research, you can begin to define your business goals and objectives. What is the problem you want to solve? What’s your vision for the future? Where do you want to be in a year from now?

Use this step to decide what you want to achieve with your business, both in the short and long term. Try to set SMART goals—specific, measurable, achievable, relevant, and time-bound benchmarks—that will help you to stay focused and motivated as you build your business.

Step 4: Plan your business strategy

Your business strategy is how you plan to reach your goals and objectives. This includes details on positioning your product or service, marketing and sales strategies, operational plans, and the organizational structure of your small business.

Make sure to include key roles and responsibilities for each team member if you’re in a business entity with multiple people.

Step 5: Describe your product or service

In this section, get into the nitty-gritty of your product or service. Go into depth regarding the features, benefits, target market, and any patents or proprietary tech you have. Make sure to paint a clear picture of what sets your product apart from the competition—and don’t forget to highlight any customer benefits.

Step 6: Crunch the numbers

Financial analysis is an essential part of your business plan. If you’re already in business that includes your profit and loss statement , cash flow statement and balance sheet .

These financial projections will give investors and lenders an understanding of the financial health of your business and the potential return on investment.

You may want to work with a financial professional to ensure your financial projections are realistic and accurate.

Step 7: Finalize your business plan

Once you’ve completed everything, it's time to finalize your business plan. This involves reviewing and editing your plan to ensure that it is clear, concise, and easy to understand.

You should also have someone else review your plan to get a fresh perspective and identify any areas that may need improvement. You could even work with a free SCORE mentor on your business plan or use a SCORE business plan template for more detailed guidance.

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The takeaway

Writing a business plan is an essential process for any forward-thinking entrepreneur or business owner. A business plan requires a lot of up-front research, planning, and attention to detail, but it’s worthwhile. Creating a comprehensive business plan can help you achieve your business goals and secure the funding you need.

Related content

• 5 Best Business Plan Software and Tools in 2023 for Your Small Business
• How to Get a Business License: What You Need to Know
• What Is a Cash Flow Statement?

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How to Write a Detailed Business Plan, Step-by-Step (Free Templates)

Posted november 14, 2022 by noah parsons.

Writing a business plan is one of the most valuable things you can do for your business. Study after study proves that business planning significantly improves your chances of success by up to 30 percent . That’s because the planning process helps you think about all aspects of your business and how your business will operate and grow.

In fact, writing a business plan is one of the only free things you can do to greatly impact the success and growth of your business. Ready to write your own detailed business plan? Here’s everything you need ( along with a free template ) to create your plan.

Before you write a detailed business plan, start with a one-page business plan

Despite the benefit of planning, it’s easy to procrastinate writing a business plan. Most people would prefer to work hands-on in their business rather than think about business strategy. That’s why, to make things easier, we recommend you start with a simpler and shorter one-page business plan .

With a one-page plan, there’s no need to go into a lot of details or dive deep into financial projections—you just write down the fundamentals of your business and how it works. A one-page plan should cover:

• Value proposition
• Market need
• Your solution

Competition

Target market.

• Sales and marketing
• Budget and sales goals
• Team summary
• Key partners
• Funding needs

A one-page business plan is a great jumping-off point in the planning process. It’ll give you an overview of your business and help you quickly refine your ideas.

If you’re ready to work on your one-page plan, check out our guide to writing a one-page business plan . It has detailed instructions, examples, and even a free downloadable template .

When do you need a more detailed business plan?

A one-page plan doesn’t always capture all the information that you need, however. If that’s the case, then it may be time to expand into a more detailed business plan.

There are several reasons for putting together a detailed business plan:

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

Flesh out the details 

A one-page business plan is just a summary of your business. If you want to document additional details such as market research, marketing and sales strategies, or product direction—you should expand your plan into a longer, more detailed plan. 

Build a more detailed financial forecast

A one-page plan only includes a summary of your financial projections. A detailed plan includes a full financial forecast, including a profit and loss statement , balance sheet , and cash flow forecast —one of the most important forecasts for any business.

Be prepared for lenders and investors

While investors might not ask to actually read your business plan, they will certainly ask detailed questions about your business. Planning is the only way to be well-prepared for these investor meetings.

Selling your business

If you’re selling your business, a detailed business plan presentation will be part of your sales kit. Potential buyers will want to know the details of how your business works, from marketing details to your product roadmap.

How to write a detailed business plan

When you do need to write a detailed business plan, focus on the parts most important to you and your business. If you plan on distributing your plan to outsiders, you should complete every section. But, if your plan is just for internal use, focus on the areas that will help you right now.

For example, if you’re struggling with marketing, spend time working on your target market section and marketing strategy and skip the sections covering the company organization.

Let’s go step-by-step through the sections you should include in your business plan:

1. Executive summary

Yes, the executive summary comes first in your plan, but you should write it last, once you know all the details of your business plan. It is truly just a summary of all the details in your plan, so be careful not to be too repetitive—just summarize and try to keep it to one or two pages at most. If you’ve already put together a one-page business plan, you can use that here instead of writing a new executive summary.

Your executive summary should be able to stand alone as a document because it’s often useful to share just the summary with potential investors. When they’re ready for more detail, they’ll ask for the full business plan.

For existing businesses, write the executive summary for your audience—whether it’s investors, business partners, or employees. Think about what your audience will want to know and just hit the highlights.

The key parts of your plan that you’ll want to highlight in your executive summary are:

• Your opportunity: This is a summary of what your business does, what problem it solves, and who your customers are. This is where you want readers to get excited about your business
• Your team: For investors, your business’s team is often even more important than what the business is. Briefly highlight why your team is uniquely qualified to build the business and make it successful.
• Financials: What are the highlights of your financial forecast ? Summarize your sales goals , when you plan to be profitable, and how much money you need to get your business off the ground.

2. Opportunity

The “opportunity” section of your business plan is all about the products and services that you are creating. The goal is to explain why your business is exciting and the problems that it solves for people. You’ll want to cover:

Mission statement

A mission statement is a short summary of your overall goals. It’s a short summary of how you hope to improve customers’ lives with your products and services. It’s a summary of the aspirations of your business and the guiding north star for you and your team. 

Problem & solution

Most successful businesses solve a problem for their customers. Their products and services make people’s lives easier or fill an unmet need in the marketplace. In this section, you’ll want to explain the problem that you solve, whom you solve it for, and what your solution is. This is where you go in-depth to describe what you do and how you improve the lives of your customers.

In the previous section, you summarized your target customer. Now you’ll want to describe them in much greater detail. You’ll want to cover things like your target market’s demographics (age, gender, location, etc.) and psychographics (hobbies and other behaviors). Ideally, you can also estimate the size of your target market so you know how many potential customers you might have.

Every business has competition , so don’t leave this section out. You’ll need to explain what other companies are doing to serve your customers or if your customers have other options for solving the problem you are solving. Explain how your approach is different and better than your competitors, whether it’s better features, better pricing, or a better location. Explain why a customer would come to you instead of going to another company. 

3. Execution

This section of your business plan dives into how you’re going to accomplish your goals. While the Opportunity section discussed what you’re doing, you now need to explain the specifics of how you’re going to do it.

Marketing & sales

What marketing tactics do you plan to use to get the word out about your business? You’ll want to explain how you get customers to your door and what the sales process looks like. For businesses that have a sales force, explain how the sales team gets leads and what the process is like for closing a sale.

Depending on the type of business that you are starting, the operations section needs to be customized to meet your needs. If you are building a mail-order business you’ll want to cover how you source your products and how fulfillment will work .

If you’re building a manufacturing business, explain the manufacturing process and the facilities you need to use. This is where you’ll talk about how your business “works,” meaning, you should explain what day-to-day functions and processes are needed to make your business successful.

Milestones & metrics

Until now, your business plan has mostly discussed what you’re doing and how you’re going to do it. The milestones and metrics section is all about timing. Your plan should highlight key dates and goals that you intend to hit. You don’t need extensive project planning in this section, just key milestones that you want to hit and when you plan to hit them. You should also discuss key metrics: the numbers you will track to determine your success.

Use the Company section of your business plan to explain the overall structure of your business and the team behind it.

Organizational structure

Describe your location, facilities, and anything else about your physical location that is relevant to your business. You’ll also want to explain the legal structure of your business—are you an S-corp, C-corp, or an LLC? What does company ownership look like?

Arguably one of the most important parts of your plan when seeking investment is the “Team” section. This should explain who you are and who else is helping you run the business. Focus on experience and qualifications for building the type of business that you want to build. 

It’s OK if you don’t have a complete team yet. Just highlight the key roles that you need to fill and the type of person you hope to hire for each role.

5. Financial plan and projections

Your business plan has now covered the “what”, the “how”, and the “when” for your business. Now it’s time to talk about money. What revenue do you plan on bringing in and when? What kind of expenses will you have?

Financial Forecasts

Your sales forecast should cover at least the first 12 months of your business and ideally contain educated guesses at the following two years in annual totals. Some investors and lenders might want to see a five-year forecast, but three years is usually enough.

You’ll want to cover sales, expenses, personnel costs, asset purchases, and more. You’ll end up with three key financial statements: An Income Statement (also called Profit and Loss), a Cash Flow Statement , and a Balance Sheet .

If you’re raising money for your business, the Financing section is where you describe how much you need. Whether you’re getting loans or investments, you should highlight what you need, and when you need it. Ideally, you’ll also want to summarize the specific ways that you’ll use the cash once you have it in hand.

6. Appendix 

The final section of your business plan is the appendix. Include detailed financial forecasts here as well as any other key documentation for your business. If you have product schematics, patent information, or any other details that aren’t appropriate for the main body of the plan but need to be included for reference.

Download a business plan template

Are you ready to write your business plan? Get started by downloading our free business plan template . With that, you will be well on your way to a better business strategy, with all of the necessary information expected in a more detailed plan.

If you want to elevate your ability to build a healthy, growing business, you may want to consider LivePlan.

It’s a product that makes planning easy and features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results.

Using your plan to grow your business

Your business plan isn’t just a document to attract investors or close a bank loan. It’s a tool that helps you better manage and grow your business. And you’ll get the most value from your business plan if you use it as part of a growth planning process . 

With growth planning, you’ll easily create and execute your plan, track performance, identify opportunities and issues, and consistently revise your strategy. It’s a flexible process that encourages you to build a plan that fits your needs.  So, whether you stick with a one-page plan or expand into a more detailed business plan—you’ll be ready to start growth planning. 

Ready to try it for yourself? Learn how LivePlan can help you use this modern business planning method to write your plan and consistently grow your business.

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How to Write a Business Plan, Step by Step

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What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

Step-by-Step Guide to Writing a Simple Business Plan

By Joe Weller | October 11, 2021

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A business plan is the cornerstone of any successful company, regardless of size or industry. This step-by-step guide provides information on writing a business plan for organizations at any stage, complete with free templates and expert advice. 

Included on this page, you’ll find a step-by-step guide to writing a business plan and a chart to identify which type of business plan you should write . Plus, find information on how a business plan can help grow a business and expert tips on writing one .

What Is a Business Plan?

A business plan is a document that communicates a company’s goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered.

A business plan can highlight varying time periods, depending on the stage of your company and its goals. That said, a typical business plan will include the following benchmarks:

• Product goals and deadlines for each month
• Monthly financials for the first two years
• Profit and loss statements for the first three to five years
• Balance sheet projections for the first three to five years

Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.

While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors. In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.

For more information, visit our comprehensive guide to writing a strategic plan or download free strategic plan templates . This page focuses on for-profit business plans, but you can read our article with nonprofit business plan templates .

Business Plan Steps

The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:

• Executive summary
• Description of business
• Market analysis
• Competitive analysis
• Description of organizational management
• Description of product or services
• Marketing plan
• Sales strategy
• Funding details (or request for funding)
• Financial projections

If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference. For an in-depth description of each step listed above, read “ How to Write a Business Plan Step by Step ” below.

Broadly speaking, your audience includes anyone with a vested interest in your organization. They can include potential and existing investors, as well as customers, internal team members, suppliers, and vendors.

Do I Need a Simple or Detailed Plan?

Your business’s stage and intended audience dictates the level of detail your plan needs. Corporations require a thorough business plan — up to 100 pages. Small businesses or startups should have a concise plan focusing on financials and strategy.

How to Choose the Right Plan for Your Business

In order to identify which type of business plan you need to create, ask: “What do we want the plan to do?” Identify function first, and form will follow.

Use the chart below as a guide for what type of business plan to create:

Is the Order of Your Business Plan Important?

There is no set order for a business plan, with the exception of the executive summary, which should always come first. Beyond that, simply ensure that you organize the plan in a way that makes sense and flows naturally.

The Difference Between Traditional and Lean Business Plans

A traditional business plan follows the standard structure — because these plans encourage detail, they tend to require more work upfront and can run dozens of pages. A Lean business plan is less common and focuses on summarizing critical points for each section. These plans take much less work and typically run one page in length.

In general, you should use a traditional model for a legacy company, a large company, or any business that does not adhere to Lean (or another Agile method ). Use Lean if you expect the company to pivot quickly or if you already employ a Lean strategy with other business operations. Additionally, a Lean business plan can suffice if the document is for internal use only. Stick to a traditional version for investors, as they may be more sensitive to sudden changes or a high degree of built-in flexibility in the plan.

How to Write a Business Plan Step by Step

Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.

Step 1: Executive Summary

The executive summary will always be the first section of your business plan. The goal is to answer the following questions:

• What is the vision and mission of the company?
• What are the company’s short- and long-term goals?

See our  roundup of executive summary examples and templates for samples. Read our executive summary guide to learn more about writing one.

Step 2: Description of Business

The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:

• What business are we in?
• What does our business do?

Step 3: Market Analysis

In this section, provide evidence that you have surveyed and understand the current marketplace, and that your product or service satisfies a niche in the market. To do so, answer these questions:

• Who is our customer? 
• What does that customer value?

Step 4: Competitive Analysis

In many cases, a business plan proposes not a brand-new (or even market-disrupting) venture, but a more competitive version — whether via features, pricing, integrations, etc. — than what is currently available. In this section, answer the following questions to show that your product or service stands to outpace competitors:

• Who is the competition? 
• What do they do best? 
• What is our unique value proposition?

Step 5: Description of Organizational Management

In this section, write an overview of the team members and other key personnel who are integral to success. List roles and responsibilities, and if possible, note the hierarchy or team structure.

Step 6: Description of Products or Services

In this section, clearly define your product or service, as well as all the effort and resources that go into producing it. The strength of your product largely defines the success of your business, so it’s imperative that you take time to test and refine the product before launching into marketing, sales, or funding details.

Questions to answer in this section are as follows:

• What is the product or service?
• How do we produce it, and what resources are necessary for production?

Step 7: Marketing Plan

In this section, define the marketing strategy for your product or service. This doesn’t need to be as fleshed out as a full marketing plan , but it should answer basic questions, such as the following:

• Who is the target market (if different from existing customer base)?
• What channels will you use to reach your target market?
• What resources does your marketing strategy require, and do you have access to them?
• If possible, do you have a rough estimate of timeline and budget?
• How will you measure success?

Step 8: Sales Plan

Write an overview of the sales strategy, including the priorities of each cycle, steps to achieve these goals, and metrics for success. For the purposes of a business plan, this section does not need to be a comprehensive, in-depth sales plan , but can simply outline the high-level objectives and strategies of your sales efforts. 

Start by answering the following questions:

• What is the sales strategy?
• What are the tools and tactics you will use to achieve your goals?
• What are the potential obstacles, and how will you overcome them?
• What is the timeline for sales and turning a profit?
• What are the metrics of success?

Step 9: Funding Details (or Request for Funding)

This section is one of the most critical parts of your business plan, particularly if you are sharing it with investors. You do not need to provide a full financial plan, but you should be able to answer the following questions:

• How much capital do you currently have? How much capital do you need?
• How will you grow the team (onboarding, team structure, training and development)?
• What are your physical needs and constraints (space, equipment, etc.)?

Step 10: Financial Projections

Apart from the fundraising analysis, investors like to see thought-out financial projections for the future. As discussed earlier, depending on the scope and stage of your business, this could be anywhere from one to five years. 

While these projections won’t be exact — and will need to be somewhat flexible — you should be able to gauge the following:

• How and when will the company first generate a profit?
• How will the company maintain profit thereafter?

Business Plan Template

Download Business Plan Template

Microsoft Excel | Smartsheet

This basic business plan template has space for all the traditional elements: an executive summary, product or service details, target audience, marketing and sales strategies, etc. In the finances sections, input your baseline numbers, and the template will automatically calculate projections for sales forecasting, financial statements, and more.

For templates tailored to more specific needs, visit this business plan template roundup or download a fill-in-the-blank business plan template to make things easy. 

If you are looking for a particular template by file type, visit our pages dedicated exclusively to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates.

How to Write a Simple Business Plan

A simple business plan is a streamlined, lightweight version of the large, traditional model. As opposed to a one-page business plan , which communicates high-level information for quick overviews (such as a stakeholder presentation), a simple business plan can exceed one page.

Below are the steps for creating a generic simple business plan, which are reflected in the template below .

• Write the Executive Summary This section is the same as in the traditional business plan — simply offer an overview of what’s in the business plan, the prospect or core offering, and the short- and long-term goals of the company. 
• Add a Company Overview Document the larger company mission and vision. 
• Provide the Problem and Solution In straightforward terms, define the problem you are attempting to solve with your product or service and how your company will attempt to do it. Think of this section as the gap in the market you are attempting to close.
• Identify the Target Market Who is your company (and its products or services) attempting to reach? If possible, briefly define your buyer personas .
• Write About the Competition In this section, demonstrate your knowledge of the market by listing the current competitors and outlining your competitive advantage.
• Describe Your Product or Service Offerings Get down to brass tacks and define your product or service. What exactly are you selling?
• Outline Your Marketing Tactics Without getting into too much detail, describe your planned marketing initiatives.
• Add a Timeline and the Metrics You Will Use to Measure Success Offer a rough timeline, including milestones and key performance indicators (KPIs) that you will use to measure your progress.
• Include Your Financial Forecasts Write an overview of your financial plan that demonstrates you have done your research and adequate modeling. You can also list key assumptions that go into this forecasting. 
• Identify Your Financing Needs This section is where you will make your funding request. Based on everything in the business plan, list your proposed sources of funding, as well as how you will use it.

Simple Business Plan Template

Download Simple Business Plan Template

Microsoft Excel |  Microsoft Word | Adobe PDF  | Smartsheet

Use this simple business plan template to outline each aspect of your organization, including information about financing and opportunities to seek out further funding. This template is completely customizable to fit the needs of any business, whether it’s a startup or large company.

Read our article offering free simple business plan templates or free 30-60-90-day business plan templates to find more tailored options. You can also explore our collection of one page business templates . 

How to Write a Business Plan for a Lean Startup

A Lean startup business plan is a more Agile approach to a traditional version. The plan focuses more on activities, processes, and relationships (and maintains flexibility in all aspects), rather than on concrete deliverables and timelines.

While there is some overlap between a traditional and a Lean business plan, you can write a Lean plan by following the steps below:

• Add Your Value Proposition Take a streamlined approach to describing your product or service. What is the unique value your startup aims to deliver to customers? Make sure the team is aligned on the core offering and that you can state it in clear, simple language.
• List Your Key Partners List any other businesses you will work with to realize your vision, including external vendors, suppliers, and partners. This section demonstrates that you have thoughtfully considered the resources you can provide internally, identified areas for external assistance, and conducted research to find alternatives.
• Note the Key Activities Describe the key activities of your business, including sourcing, production, marketing, distribution channels, and customer relationships.
• Include Your Key Resources List the critical resources — including personnel, equipment, space, and intellectual property — that will enable you to deliver your unique value.
• Identify Your Customer Relationships and Channels In this section, document how you will reach and build relationships with customers. Provide a high-level map of the customer experience from start to finish, including the spaces in which you will interact with the customer (online, retail, etc.). 
• Detail Your Marketing Channels Describe the marketing methods and communication platforms you will use to identify and nurture your relationships with customers. These could be email, advertising, social media, etc.
• Explain the Cost Structure This section is especially necessary in the early stages of a business. Will you prioritize maximizing value or keeping costs low? List the foundational startup costs and how you will move toward profit over time.
• Share Your Revenue Streams Over time, how will the company make money? Include both the direct product or service purchase, as well as secondary sources of revenue, such as subscriptions, selling advertising space, fundraising, etc.

Lean Business Plan Template for Startups

Download Lean Business Plan Template for Startups

Microsoft Word | Adobe PDF

Startup leaders can use this Lean business plan template to relay the most critical information from a traditional plan. You’ll find all the sections listed above, including spaces for industry and product overviews, cost structure and sources of revenue, and key metrics, and a timeline. The template is completely customizable, so you can edit it to suit the objectives of your Lean startups.

See our wide variety of  startup business plan templates for more options.

How to Write a Business Plan for a Loan

A business plan for a loan, often called a loan proposal , includes many of the same aspects of a traditional business plan, as well as additional financial documents, such as a credit history, a loan request, and a loan repayment plan.

In addition, you may be asked to include personal and business financial statements, a form of collateral, and equity investment information.

Download free financial templates to support your business plan.

Tips for Writing a Business Plan

Outside of including all the key details in your business plan, you have several options to elevate the document for the highest chance of winning funding and other resources. Follow these tips from experts:.

• Keep It Simple: Avner Brodsky , the Co-Founder and CEO of Lezgo Limited, an online marketing company, uses the acronym KISS (keep it short and simple) as a variation on this idea. “The business plan is not a college thesis,” he says. “Just focus on providing the essential information.”
• Do Adequate Research: Michael Dean, the Co-Founder of Pool Research , encourages business leaders to “invest time in research, both internal and external (market, finance, legal etc.). Avoid being overly ambitious or presumptive. Instead, keep everything objective, balanced, and accurate.” Your plan needs to stand on its own, and you must have the data to back up any claims or forecasting you make. As Brodsky explains, “Your business needs to be grounded on the realities of the market in your chosen location. Get the most recent data from authoritative sources so that the figures are vetted by experts and are reliable.”
• Set Clear Goals: Make sure your plan includes clear, time-based goals. “Short-term goals are key to momentum growth and are especially important to identify for new businesses,” advises Dean.
• Know (and Address) Your Weaknesses: “This awareness sets you up to overcome your weak points much quicker than waiting for them to arise,” shares Dean. Brodsky recommends performing a full SWOT analysis to identify your weaknesses, too. “Your business will fare better with self-knowledge, which will help you better define the mission of your business, as well as the strategies you will choose to achieve your objectives,” he adds.
• Seek Peer or Mentor Review: “Ask for feedback on your drafts and for areas to improve,” advises Brodsky. “When your mind is filled with dreams for your business, sometimes it is an outsider who can tell you what you’re missing and will save your business from being a product of whimsy.”

Outside of these more practical tips, the language you use is also important and may make or break your business plan.

Shaun Heng, VP of Operations at Coin Market Cap , gives the following advice on the writing, “Your business plan is your sales pitch to an investor. And as with any sales pitch, you need to strike the right tone and hit a few emotional chords. This is a little tricky in a business plan, because you also need to be formal and matter-of-fact. But you can still impress by weaving in descriptive language and saying things in a more elegant way.

“A great way to do this is by expanding your vocabulary, avoiding word repetition, and using business language. Instead of saying that something ‘will bring in as many customers as possible,’ try saying ‘will garner the largest possible market segment.’ Elevate your writing with precise descriptive words and you'll impress even the busiest investor.”

Additionally, Dean recommends that you “stay consistent and concise by keeping your tone and style steady throughout, and your language clear and precise. Include only what is 100 percent necessary.”

Resources for Writing a Business Plan

While a template provides a great outline of what to include in a business plan, a live document or more robust program can provide additional functionality, visibility, and real-time updates. The U.S. Small Business Association also curates resources for writing a business plan.

Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.

How a Business Plan Helps to Grow Your Business

A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships. 

Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.

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How to Write a Business Plan (Plus Examples & Templates)

May 24, 2021

Have you ever wondered how to write a business plan step by step? Mike Andes, told us: 

This guide will help you write a business plan to impress investors.

Throughout this process, we’ll get information from Mike Andes, who started Augusta Lawn Care Services when he was 12 and turned it into a franchise with over 90 locations. He has gone on to help others learn how to write business plans and start businesses.  He knows a thing or two about writing  business plans!

We’ll start by discussing the definition of a business plan. Then we’ll discuss how to come up with the idea, how to do the market research, and then the important elements in the business plan format. Keep reading to start your journey!

What Is a Business Plan?

A business plan is simply a road map of what you are trying to achieve with your business and how you will go about achieving it. It should cover all elements of your business including: 

• Finding customers
• Plans for developing a team
•  Competition
• Legal structures
• Key milestones you are pursuing

If you aren’t quite ready to create a business plan, consider starting by reading our business startup guide .

Get a Business Idea

Before you can write a business plan, you have to have a business idea. You may see a problem that needs to be solved and have an idea how to solve it, or you might start by evaluating your interests and skills. 

Mike told us, “The three things I suggest asking yourself when thinking about starting a business are:

• What am I good at?
• What would I enjoy doing?
• What can I get paid for?”

If all three of these questions don’t lead to at least one common answer, it will probably be a much harder road to success. Either there is not much market for it, you won’t be good at it, or you won’t enjoy doing it. 

As Mike told us, “There’s enough stress starting and running a business that if you don’t like it or aren’t good at it, it’s hard to succeed.”

If you’d like to hear more about Mike’s approach to starting a business, check out our YouTube video

Conduct Market Analysis

Market analysis is focused on establishing if there is a target market for your products and services, how large the target market is, and identifying the demographics of people or businesses that would be interested in the product or service. The goal here is to establish how much money your business concept can make.

Product and Service Demand

A search engine is your best friend when trying to figure out if there is demand for your products and services. Personally, I love using presearch.org because it lets you directly search on a ton of different platforms including Google, Youtube, Twitter, and more. Check out the screenshot for the full list of search options.

With quick web searches, you can find out how many competitors you have, look through their reviews, and see if there are common complaints about the competitors. Bad reviews are a great place to find opportunities to offer better products or services. 

If there are no similar products or services, you may have stumbled upon something new, or there may just be no demand for it. To find out, go talk to your most honest friend about the idea and see what they think. If they tell you it’s dumb or stare at you vacantly, there’s probably no market for it.

You can also conduct a survey through social media to get public opinion on your idea. Using Facebook Business Manager , you could get a feel for who would be interested in your product or service.

 I ran a quick test of how many people between 18-65  you could reach in the U.S. during a week. It returned an estimated 700-2,000 for the total number of leads, which is enough to do a fairly accurate statistical analysis.

Identify Demographics of Target Market

Depending on what type of business you want to run, your target market will be different. The narrower the demographic, the fewer potential customers you’ll have. If you did a survey, you’ll be able to use that data to help define your target audience. Some considerations you’ll want to consider are:

• Other Interests
• Marital Status
• Do they have kids?

Once you have this information, it can help you narrow down your options for location and help define your marketing further. One resource that Mike recommended using is the Census Bureau’s Quick Facts Map . He told us,  

“It helps you quickly evaluate what the best areas are for your business to be located.”

How to Write a Business Plan

Now that you’ve developed your idea a little and established there is a market for it, you can begin writing a business plan. Getting started is easier with the business plan template we created for you to download. I strongly recommend using it as it is updated to make it easier to create an action plan. 

Each of the following should be a section of your business plan:

• Business Plan Cover Page
• Table of Contents
• Executive Summary
• Company Description
• Description of Products and Services

SWOT Analysis

• Competitor Data
• Competitive Analysis
• Marketing Expenses Strategy 

Pricing Strategy

• Distribution Channel Assessment
• Operational Plan
• Management and Organizational Strategy
• Financial Statements and/or Financial Projections

We’ll look into each of these. Don’t forget to download our free business plan template (mentioned just above) so you can follow along as we go. 

How to Write a Business Plan Step 1. Create a Cover Page

The first thing investors will see is the cover page for your business plan. Make sure it looks professional. A great cover page shows that you think about first impressions.

A good business plan should have the following elements on a cover page:

• Professionally designed logo
• Company name
• Mission or Vision Statement
• Contact Info

Basically, think of a cover page for your business plan like a giant business card. It is meant to capture people’s attention but be quickly processed.

How to Write a Business Plan Step 2. Create a Table of Contents

Most people are busy enough that they don’t have a lot of time. Providing a table of contents makes it easy for them to find the pages of your plan that are meaningful to them.

A table of contents will be immediately after the cover page, but you can include it after the executive summary. Including the table of contents immediately after the executive summary will help investors know what section of your business plan they want to review more thoroughly.

Check out Canva’s article about creating a  table of contents . It has a ton of great information about creating easy access to each section of your business plan. Just remember that you’ll want to use different strategies for digital and hard copy business plans.

How to Write a Business Plan Step 3. Write an Executive Summary

An executive summary is where your business plan should catch the readers interest.  It doesn’t need to be long, but should be quick and easy to read.

Mike told us,

How long should an executive summary bein an informal business plan?

For casual use, an executive summary should be similar to an elevator pitch, no more than 150-160 words, just enough to get them interested and wanting more. Indeed has a great article on elevator pitches .  This can also be used for the content of emails to get readers’ attention.

It consists of three basic parts:

• An introduction to you and your business.
• What your business is about.
• A call to action

Example of an informal executive summary 

One of the best elevator pitches I’ve used is:

So far that pitch has achieved a 100% success rate in getting partnerships for the business.

What should I include in an executive summary for investors?

Investors are going to need a more detailed executive summary if you want to secure financing or sell equity. The executive summary should be a brief overview of your entire business plan and include:

• Introduction of yourself and company.
• An origin story (Recognition of a problem and how you came to solution)
• An introduction to your products or services.
• Your unique value proposition. Make sure to include intellectual property.
• Where you are in the business life cycle
• Request and why you need it.

Successful business plan examples

The owner of Urbanity told us he spent 2 months writing a 75-page business plan and received a $250,000 loan from the bank when he was 23. Make your business plan as detailed as possible when looking for financing. We’ve provided a template to help you prepare the portions of a business plan that banks expect.

Here’s the interview with the owner of Urbanity:

When to write an executive summary?

Even though the summary is near the beginning of a business plan, you should write it after you complete the rest of a business plan. You can’t talk about revenue, profits, and expected expenditures if you haven’t done the market research and created a financial plan.

What mistakes do people make when writing an executive summary?

Business owners commonly go into too much detail about the following items in an executive summary:

• Marketing and sales processes
• Financial statements
• Organizational structure
• Market analysis

These are things that people will want to know later, but they don’t hook the reader. They won’t spark interest in your small business, but they’ll close the deal.

How to Write a Business Plan Step 4. Company Description

Every business plan should include a company description. A great business plan will include the following elements while describing the company:

• Mission statement
• Philosophy and vision
• Company goals

Target market

• Legal structure

Let’s take a look at what each section includes in a good business plan.

Mission Statement

A mission statement is a brief explanation of why you started the company and what the company’s main focus is. It should be no more than one or two sentences. Check out HubSpot’s article 27 Inspiring Mission Statement for a great read on informative and inspiring mission and vision statements. 

Company Philosophy and Vision

The company philosophy is what drives your company. You’ll normally hear them called core values.  These are the building blocks that make your company different. You want to communicate your values to customers, business owners, and investors as often as possible to build a company culture, but make sure to back them up.

What makes your company different?

Each company is different. Your new business should rise above the standard company lines of honesty, integrity, fun, innovation, and community when communicating your business values. The standard answers are corporate jargon and lack authenticity. 

Examples of core values

One of my clients decided to add a core values page to their website. As a tech company they emphasized the values:

•  Prioritize communication.
•  Never stop learning.
•  Be transparent.
•  Start small and grow incrementally.

These values communicate how the owner and the rest of the company operate. They also show a value proposition and competitive advantage because they specifically focus on delivering business value from the start. These values also genuinely show what the company is about and customers recognize the sincerity. Indeed has a great blog about how to identify your core values .

What is a vision statement?

A vision statement communicate the long lasting change a business pursues. The vision helps investors and customers understand what your company is trying to accomplish. The vision statement goes beyond a mission statement to provide something meaningful to the community, customer’s lives, or even the world.

Example vision statements

The Alzheimer’s Association is a great example of a vision statement:

A world without Alzheimer’s Disease and other dementia.

It clearly tells how they want to change the world. A world without Alzheimers might be unachievable, but that means they always have room for improvement.

Business Goals

You have to measure success against goals for a business plan to be meaningful. A business plan helps guide a company similar to how your GPS provides a road map to your favorite travel destination. A goal to make as much money as possible is not inspirational and sounds greedy.

Sure, business owners want to increase their profits and improve customer service, but they need to present an overview of what they consider success. The goals should help everyone prioritize their work.

How far in advance should a business plan?

Business planning should be done at least one year in advance, but many banks and investors prefer three to five year business plans. Longer plans show investors that the management team  understands the market and knows the business is operating in a constantly shifting market. In addition, a plan helps businesses to adjust to changes because they have already considered how to handle them.

Example of great business goals

My all time-favorite long-term company goals are included in Tesla’s Master Plan, Part Deux . These goals were written in 2016 and drive the company’s decisions through 2026. They are the reason that investors are so forgiving when Elon Musk continually fails to meet his quarterly and annual goals.

If the progress aligns with the business plan investors are likely to continue to believe in the company. Just make sure the goals are reasonable or you’ll be discredited (unless you’re Elon Musk).

You did target market research before creating a business plan. Now it’s time to add it to the plan so others understand what your ideal customer looks like. As a new business owner, you may not be considered an expert in your field yet, so document everything. Make sure the references you use are from respectable sources. 

Use information from the specific lender when you are applying for lending. Most lenders provide industry research reports and using their data can strengthen the position of your business plan.

A small business plan should include a section on the external environment. Understanding the industry is crucial because we don’t plan a business in a vacuum. Make sure to research the industry trends, competitors, and forecasts. I personally prefer IBIS World for my business research. Make sure to answer questions like:

• What is the industry outlook long-term and short-term?
• How will your business take advantage of projected industry changes and trends?
• What might happen to your competitors and how will your business successfully compete?

Industry resources

Some helpful resources to help you establish more about your industry are:

• Trade Associations
• Federal Reserve
• Bureau of Labor Statistics

Legal Structure

There are five basic types of legal structures that most people will utilize:

• Sole proprietorships
• Limited Liability Companies (LLC)

Partnerships

Corporations.

• Franchises.

Each business structure has their pros and cons. An LLC is the most common legal structure due to its protection of personal assets and ease of setting up. Make sure to specify how ownership is divided and what roles each owner plays when you have more than one business owner.

You’ll have to decide which structure is best for you, but we’ve gathered information on each to make it easier.

Sole Proprietorship

A sole proprietorship is the easiest legal structure to set up but doesn’t protect the owner’s personal assets from legal issues. That means if something goes wrong, you could lose both your company and your home.

To start a sole proprietorship, fill out a special tax form called a  Schedule C . Sole proprietors can also join the American Independent Business Alliance .

Limited Liability Company (LLC)

An LLC is the most common business structure used in the United States because an LLC protects the owner’s personal assets. It’s similar to partnerships and corporations, but can be a single-member LLC in most states. An LLC requires a document called an operating agreement.

Each state has different requirements. Here’s a link to find your state’s requirements . Delaware and Nevada are common states to file an LLC because they are really business-friendly. Here’s a blog on the top 10 states to get an LLC.

Partnerships are typically for legal firms. If you choose to use a partnership choose a Limited Liability Partnership. Alternatively, you can just use an LLC.

Corporations are typically for massive organizations. Corporations have taxes on both corporate and income tax so unless you plan on selling stock, you are better off considering an LLC with S-Corp status . Investopedia has good information corporations here .

There are several opportunities to purchase successful franchises. TopFranchise.com has a list of companies in a variety of industries that offer franchise opportunities. This makes it where an entrepreneur can benefit from the reputation of an established business that has already worked out many of the kinks of starting from scratch.

How to Write a Business Plan Step 5. Products and Services

This section of the business plan should focus on what you sell, how you source it, and how you sell it. You should include:

• Unique features that differentiate your business products from competitors
• Intellectual property
• Your supply chain
• Cost and pricing structure 

Questions to answer about your products and services

Mike gave us a list  of the most important questions to answer about your product and services:

• How will you be selling the product? (in person, ecommerce, wholesale, direct to consumer)?
• How do you let them know they need a product?
• How do you communicate the message?
• How will you do transactions?
• How much will you be selling it for?
• How many do you think you’ll sell and why?

Make sure to use the worksheet on our business plan template .

How to Write a Business Plan Step 6. Sales and Marketing Plan

The marketing and sales plan is focused on the strategy to bring awareness to your company and guides how you will get the product to the consumer.  It should contain the following sections:

SWOT Analysis stands for strengths, weaknesses, opportunities, and threats. Not only do you want to identify them, but you also want to document how the business plans to deal with them.

Business owners need to do a thorough job documenting how their service or product stacks up against the competition.

If proper research isn’t done, investors will be able to tell that the owner hasn’t researched the competition and is less likely to believe that the team can protect its service from threats by the more well-established competition. This is one of the most common parts of a presentation that trips up business owners presenting on Shark Tank .

SWOT Examples

Examples of strengths and weaknesses could be things like the lack of cash flow, intellectual property ownership, high costs of suppliers, and customers’ expectations on shipping times.

Opportunities could be ways to capitalize on your strengths or improve your weaknesses, but may also be gaps in the industry. This includes:

• Adding offerings that fit with your current small business
• Increase sales to current customers
• Reducing costs through bulk ordering
• Finding ways to reduce inventory
•  And other areas you can improve

Threats will normally come from outside of the company but could also be things like losing a key member of the team. Threats normally come from competition, regulations, taxes, and unforeseen events.

The management team should use the SWOT analysis to guide other areas of business planning, but it absolutely has to be done before a business owner starts marketing. 

Include Competitor Data in Your Business Plan

When you plan a business, taking into consideration the strengths and weaknesses of the competition is key to navigating the field. Providing an overview of your competition and where they are headed shows that you are invested in understanding the industry.

For smaller businesses, you’ll want to search both the company and the owners names to see what they are working on. For publicly held corporations, you can find their quarterly and annual reports on the SEC website .

What another business plans to do can impact your business. Make sure to include things that might make it attractive for bigger companies to outsource to a small business.

Marketing Strategy

The marketing and sales part of business plans should be focused on how you are going to make potential customers aware of your business and then sell to them.

If you haven’t already included it, Mike recommends:

“They’ll want to know about Demographics, ages, and wealth of your target market.”

Make sure to include the Total addressable market .  The term refers to the value if you captured 100% of the market.

Advertising Strategy

You’ll explain what formats of advertising you’ll be using. Some possibilities are:

• Online: Facebook and Google are the big names to work with here.
• Print : Print can be used to reach broad groups or targeted markets. Check out this for tips .
• Radio : iHeartMedia is one of the best ways to advertise on the radio
• Cable television : High priced, hard to measure ROI, but here’s an explanation of the process
• Billboards: Attracting customers with billboards can be beneficial in high traffic areas.

You’ll want to define how you’ll be using each including frequency, duration, and cost. If you have the materials already created, including pictures or links to the marketing to show creative assets.

Mike told us “Most businesses are marketing digitally now due to Covid, but that’s not always the right answer.”

Make sure the marketing strategy will help team members or external marketing agencies stay within the brand guidelines .

This section of a business plan should be focused on pricing. There are a ton of pricing strategies that may work for different business plans. Which one will work for you depends on what kind of a business you run.

Some common pricing strategies are:

• Value-based pricing – Commonly used with home buying and selling or other products that are status symbols.
• Skimming pricing – Commonly seen in video game consoles, price starts off high to recoup expenses quickly, then reduces over time.
• Competition-based pricing – Pricing based on competitors’ pricing is commonly seen at gas stations.
• Freemium services –  Commonly used for software, where there is a free plan, then purchase options for more functionality.

HubSpot has a great calculator and blog on pricing strategies.

Beyond explaining what strategy your business plans to use, you should include references for how you came to this pricing strategy and how it will impact your cash flow.

Distribution Plan

This part of a business plan is focused on how the product or service is going to go through the supply chain. These may include multiple divisions or multiple companies. Make sure to include any parts of the workflow that are automated so investors can see where cost savings are expected and when.

Supply Chain Examples

For instance, lawn care companies  would need to cover aspects such as:

• Suppliers for lawn care equipment and tools
• Any chemicals or treatments needed
• Repair parts for sprinkler systems
• Vehicles to transport equipment and employees
• Insurance to protect the company vehicles and people.

Examples of Supply Chains

These are fairly flat supply chains compared to something like a clothing designer where the clothes would go through multiple vendors. A clothing company might have the following supply chain:

• Raw materials
• Shipping of raw materials
• Converting of raw materials to thread
• Shipping thread to produce garments
• Garment producer
• Shipping to company
• Company storage
• Shipping to retail stores

There have been advances such as print on demand that eliminate many of these steps. If you are designing completely custom clothing, all of this would need to be planned to keep from having business disruptions.

The main thing to include in the business plan is the list of suppliers, the path the supply chain follows, the time from order to the customer’s home, and the costs associated with each step of the process.

According to BizPlanReview , a business plan without this information is likely to get rejected because they have failed to research the key elements necessary to make sales to the customer.

How to Write a Business Plan Step 7. Company Organization and Operational Plan

This part of the business plan is focused on how the business model will function while serving customers.  The business plan should provide an overview of  how the team will manage the following aspects:

Quality Control

• Legal environment

Let’s look at each for some insight.

Production has already been discussed in previous sections so I won’t go into it much. When writing a business plan for investors, try to avoid repetition as it creates a more simple business plan.

If the organizational plan will be used by the team as an overview of how to perform the best services for the customer, then redundancy makes more sense as it communicates what is important to the business.

Quality control policies help to keep the team focused on how to verify that the company adheres to the business plan and meets or exceeds customer expectations.

Quality control can be anything from a standard that says “all labels on shirts can be no more than 1/16″ off center” to a defined checklist of steps that should be performed and filled out for every customer.

There are a variety of organizations that help define quality control including:

• International Organization for Standardization – Quality standards for energy, technology, food, production environments, and cybersecurity
• AICPA – Standard defined for accounting.
• The Joint Commission – Healthcare
• ASHRAE – HVAC best practices

You can find lists of the organizations that contribute most to the government regulation of industries on Open Secrets . Research what the leaders in your field are doing. Follow their example and implement it in your quality control plan.

For location, you should use information from the market research to establish where the location will be. Make sure to include the following in the location documentation.

• The size of your location
• The type of building (retail, industrial, commercial, etc.)
• Zoning restrictions – Urban Wire has a good map on how zoning works in each state
• Accessibility – Does it meet ADA requirements?
• Costs including rent, maintenance, utilities, insurance and any buildout or remodeling costs
• Utilities – b.e.f. has a good energy calculator .

Legal Environment

The legal requirement section is focused on defining how to meet the legal requirements for your industry. A good business plan should include all of the following:

• Any licenses and/or permits that are needed and whether you’ve obtained them
• Any trademarks, copyrights, or patents that you have or are in the process of applying for
• The insurance coverage your business requires and how much it costs
• Any environmental, health, or workplace regulations affecting your business
• Any special regulations affecting your industry
• Bonding requirements, if applicable

Your local SBA office can help you establish requirements in your area. I strongly recommend using them. They are a great resource.

Your business plan should include a plan for company organization and hiring. While you may be the only person with the company right now, down the road you’ll need more people. Make sure to consider and document the answers to the following questions:

• What is the current leadership structure and what will it look like in the future?
• What types of employees will you have? Are there any licensing or educational requirements?
• How many employees will you need?
• Will you ever hire freelancers or independent contractors?
• What is each position’s job description?
• What is the pay structure (hourly, salaried, base plus commission, etc.)?
• How do you plan to find qualified employees and contractors?

One of the most crucial parts of a business plan is the organizational chart. This simply shows the positions the company will need, who is in charge of them and the relationship of each of them. It will look similar to this:

Our small business plan template has a much more in-depth organizational chart you can edit to include when you include the organizational chart in your business plan.

How to Write a Business Plan Step 8. Financial Statements 

No business plan is complete without financial statements or financial projections. The business plan format will be different based on whether you are writing a business plan to expand a business or a startup business plan. Let’s dig deeper into each.

Provide All Financial Income from an Existing Business

An existing business should use their past financial documents including the income statement, balance sheet, and cash flow statement to find trends to estimate the next 3-5 years.

You can create easy trendlines in excel to predict future revenue, profit and loss, cash flow, and other changes in year-over-year performance. This will show your expected performance assuming business continues as normal.

If you are seeking an investment, then the business is probably not going to continue as normal. Depending on the financial plan and the purpose of getting financing, adjustments may be needed to the following:

• Higher Revenue if expanding business
• Lower Cost of Goods Sold if purchasing inventory with bulk discounts
• Adding interest if utilizing financing (not equity deal)
• Changes in expenses
• Addition of financing information to the cash flow statement
• Changes in Earnings per Share on the balance sheet

Financial modeling is a challenging subject, but there are plenty of low-cost courses on the subject. If you need help planning your business financial documentation take some time to watch some of them.

Make it a point to document how you calculated all the changes to the income statement, balance sheet, and cash flow statement in your business plan so that key team members or investors can verify your research.

Financial Projections For A Startup Business Plan

Unlike an existing business, a startup doesn’t have previous success to model its future performance. In this scenario, you need to focus on how to make a business plan realistic through the use of industry research and averages.

Mike gave the following advice in his interview:

Financial Forecasting Mistakes

One of the things a lot of inexperienced people use is the argument, “If I get one percent of the market, it is worth $100 million.” If you use this, investors are likely to file the document under bad business plan examples.

Let’s use custom t-shirts as an example.

Credence Research estimated in 2018 there were 11,334,800,000 custom t-shirts sold for a total of $206.12 Billion, with a 6% compound annual growth rate.

With that data,  you can calculate that the industry will grow to $270 Billion in 2023 and that the average shirt sold creates $18.18 in revenue.

Combine that with an IBIS World estimate of 11,094 custom screen printers and that means even if you become an average seller, you’ll get .009% of the market.

Here’s a table for easier viewing of that information.

The point here is to make sure your business proposal examples make sense.

You’ll need to know industry averages such as cost of customer acquisition, revenue per customer, the average cost of goods sold, and admin costs to be able to create accurate estimates.

Our simple business plan templates walk you through most of these processes. If you follow them you’ll have a good idea of how to write a business proposal.

How to Write a Business Plan Step 9. Business Plan Example of Funding Requests

What is a business plan without a plan on how to obtain funding?

The Small Business Administration has an example for a pizza restaurant that theoretically needed nearly $20k to make it through their first month.

In our video, How to Start a $500K/Year T-Shirt Business (Pt. 1 ), Sanford Booth told us he needed about $200,000 to start his franchise and broke even after 4 months.

Freshbooks estimates it takes on average 2-3 years for a business to be profitable, which means the fictitious pizza company from the SBA could need up to $330k to make it through that time and still pay their bills for their home and pizza shop.

Not every business needs that much to start, but realistically it’s a good idea to assume that you need a fairly large cushion.

Ways to get funding for a small business

There are a variety of ways to cover this. the most common are:

• Bootstrapping – Using your savings without external funding.
• Taking out debt – loans, credit cards
• Equity, Seed Funding – Ownership of a percentage of the company in exchange for current funds
• Crowdsourcing – Promising a good for funding to create the product

Keep reading for more tips on how to write a business plan.

How funding will be used

When asking for business financing make sure to include:

• How much to get started?
• What is the minimum viable product and how soon can you make money?
• How will the money be spent?

Mike emphasized two aspects that should be included in every plan, 

How to Write a Business Plan Resources

Here are some links to a business plan sample and business plan outline. 

• Sample plan

It’s also helpful to follow some of the leading influencers in the business plan writing community. Here’s a list:

• Wise Plans –  Shares a lot of information on starting businesses and is a business plan writing company.
• Optimus Business Plans –  Another business plan writing company.
• Venture Capital – A venture capital thread that can help give you ideas.

How to Write a Business Plan: What’s Next?

We hope this guide about how to write a simple business plan step by step has been helpful. We’ve covered:

• The definition of a business plan
• Coming up with a business idea
• Performing market research
• The critical components of a business plan
• An example business plan

In addition, we provided you with a simple business plan template to assist you in the process of writing your startup business plan. The startup business plan template also includes a business model template that will be the key to your success.

Don’t forget to check out the rest of our business hub .

Have you written a business plan before? How did it impact your ability to achieve your goals?

80% of businesses fail... Learn how not to.

Learn from business failures and successes in 5 min or less. The stories, frameworks, and tactics that will make you a 10x better founder.

Brandon Boushy

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17 Boring Businesses That Make Big Money (2024)

Get ready for the most boring blog you’ve ever read! In just a few minutes’ time, you’ll know a lot more about 17 boring businesses that could bring in serious revenue.

In this post, we’ll discuss an array of boring business ideas and explain how to start or buy them. We’ll also provide some general tips on what to look for when investing in boring businesses.

By the time you finish reading, you’ll know which boring business is right for you, and how to make it profitable.

[su_note note_color="#dbeafc"] Click on any of the boring links below for more information on the “boring business” model, or just continue reading.

What are boring businesses?

Best boring businesses to buy, how to buy a boring business, property management businesses, more boring business ideas, ‘mirror, mirror on the wall, what’s the most boring business of them all’.

• Start your own business [/su_note]

The term “boring business” has become popular because of Codie Sanchez , the owner of the business education service Contrarian Thinking . A major part of her wealth-building strategy is buying boring businesses.

A boring business is defined by four characteristics. It is:

• Stale: There is little to no disruptive innovation opportunity in the business model, which means you can implement best practices and let the business run with minimal participation.
• Old: An old business is at least five years old. The older the small business is, the more likely it is to remain successful.
• Weak: Industries with less competition or lots of dissatisfied customers tend to find it easier to stand out from the pack by simply improving customer service.
• Simple: You want a small business model that is easy to understand, doesn’t require research and development costs, and has clear opportunities to improve service or technology to improve profit margins.

You might hear this boring business framework called SOWS for short.

The industries in this list aren’t the sexiest, but they offer essential services and make a steady income with recurring revenue. Steady income means there aren’t huge fluctuations in cash flow; recurring revenue is achieved by having customers return regularly.

Many have low startup costs and can serve as passive income streams.

The boring business ideas below can help you hit the ground running as a business owner.

• Laundromats
• Vending machines
• Rental properties
• Home maintenance
• Office supplies
• Bookkeeping
•  Storage units
•  Landscaping
•  Shipping centers
•  Ice vending
•  Renting your car
•  Pre-made meals
•  Petsitting
•  Waste removal

Keep reading to get the low-down on each boring business.

#1. Laundromats

• Average Annual Revenue: $311,220 • Average Profit Margins: 22.10% • Startup Cost: $100K-$3.5M • Time to Revenue: 6-18 months • Annual Market Growth Rate: -0.1% • Best For: Customer service pros with high attention to detail

Laundromats have recurring revenue and provide a valuable service for the 16% of American households that do not have washers and dryers in their homes.

These small businesses provide a steady income because Americans do an average of eight loads of laundry per week, and laundromats charge $2 to $4 per load .

Laundromats in zip codes below the poverty line will normally have the most profit potential. Cities like New York City, Chicago, and Los Angeles have higher percentages of people without laundry machines in their homes.

#2. Car washes

• Average Annual Revenue: $73,100 • Average Profit Margins: 16.10% • Startup Cost: $500+ • Time to Revenue: 3+ months • Annual Market Growth Rate: 1% • Best For: Car enthusiasts and detail-oriented entrepreneurs

A car wash is another boring business with heavy cash flow.

With a quick online search, you can find lots of car washes for sale. Sometimes, you can find them for as low as the cost of the land. From there, you can increase cash flow with simple fixes like adding automation, cashless payments, or even leasing extra space to other businesses.

You’ll also be able to use the land to secure capital through small business loans and grow your business empire faster.

#3. Vending machines

• Average Annual Revenue: $182,100 • Average Profit Margins: 4.30% • Startup Cost: $2K-$10K • Time to Revenue: 3+ months • Annual Market Growth Rate: 0.5% • Best For: Organized entrepreneurs who like driving, people who want a semi-passive business

Automated vending appears to have a small growth rate and average profit margins. Meanwhile, it’s one of those business opportunities that combines low startup costs and good cash flow, and it gets more profitable as you add more machines to a route.

Just ask vending machine business owner Adam Hill, who makes $700K per year working just two days per week.

Did you enjoy the video? Check out our vending machine business course .

• Average Annual Revenue: $182,100 • Average Profit Margins: 4.30% • Startup Cost: $2K-$10K • Time to Revenue: 3+ months • Annual Market Growth Rate: 0.50% • Best For: Organized entrepreneurs who like driving, people who want a semi-passive business

Another boring business you can start is placing ATMs in other small businesses. Many businesses need ATMs but don’t want to manage them. You’ll make $2 to $5 per transaction, and potentially even more in high-demand areas, like Vegas casinos.

You can manage the services or turn the revenue into 100% passive income by using services like ATM Together , which help (or completely) set up your business.

There are even specialized ATMs like Bitcoin ATMs or Coinstar .

#5. Franchises

• Average Annual Revenue: $621,212 • Average Profit Margins: Varies by industry • Startup Cost: $1K-$3.5M • Time to Revenue: 3-18 months • Annual Market Growth Rate: Varies by industry • Best For: People who want to skip the trial-and-error phase of small businesses

Companies in several industries offer franchising opportunities, making it easy to start making money as a business owner.

Over 10% of companies are a franchise, and franchises account for 3% of GDP. The McDonald’s down the street, for instance, is likely a franchise, meaning it’s owned and run by an independent franchisee with the company’s permission.

Franchises are boring businesses because the business model's success has already been proven and you can use existing intellectual property and processes in day-to-day operations to make a great living.

If you’re ready to buy a small business, check out our blog on the best franchises to own .

#6. Rental properties

• Average Annual Revenue: $27,375 per home • Average Profit Margins: -11% to +10% • Startup Cost: $60K+ • Time to Revenue: 3-12 months • Annual Market Growth Rate: Fluctuates with tourism and value compared to hotels • Best For: Recognized real estate professionals or service business owners

Real estate ownership is the number one driver of wealth for most American households. In fact, second homes contribute to wealth creation in 4% to 6% of the population. That makes rental properties a great way to earn more money and develop a steady stream of recurring revenue.

Two particularly successful rental property management strategies include opening Airbnb rentals and buying and leasing quadplexes.

Find out how to turn real estate rentals into a $3M per year business below:

#7. Home maintenance services

• Average Annual Revenue: $204,700 • Average Profit Margins: 5.40% • Startup Cost: $500-$5K • Time to Revenue: 3+ months • Annual Market Growth Rate: 0.7% • Best For: Construction and repair pros, creative problem solvers, outgoing and hands-on entrepreneurs

Providing home maintenance can be a very consistent way to earn money because you’re providing an essential service. It’s also one of the few small businesses in the construction industry that doesn’t require a contractor's license.

Learn how to start a home maintenance service company from a handyman making $250K per year with just two trucks.

#8. Office supplies

• Average Annual Revenue: $1.94M • Average Profit Margins: .9% • Startup Cost: $100-$5K • Time to Revenue: 1-3 months • Annual Market Growth Rate: -2.3% • Best For: SEO experts and people who are great at finding low-competition keywords

The office supply industry can be risky to invest money in because there is declining demand for many of the products they offer. But there are plenty of ways to get customers, especially if you run an online business.

You can make a steady stream from eCommerce if you offer business supplies with a dropshipping business model. If you have a physical location, you can include services-based offerings, like graphic design, printing, and shipping.

#9. Bookkeeping

• Average Annual Revenue: $1.57M • Average Profit Margins: 18% • Startup Cost: $500-$5K • Time to Revenue: 1-3 months (not including time training as a CPA) • Annual Market Growth Rate: 1.7% • Best For: CPAs, finance experts, entrepreneurs with strong math skills

One of the most boring businesses you can conceive of is an accounting or bookkeeping business.

There’s a high demand for these services because 33 million small businesses and 124 million U.S. households need tax advice and other services. You can increase your success by specializing in niche areas, like eCommerce accounting.

Of course, accountants and bookkeepers require specialized education.

#10. Storage units

• Average Annual Revenue: $135,882 • Average Profit Margins: 66.5% • Startup Cost: $100K-$10 million • Time to Revenue: 6-18 months • Annual Market Growth Rate : -1.8% • Best For: Commercial landowners, remote workers, and people who like having spare time during their day job

When you invest in storage space, most of the cost will be the purchase of the building and any upgrades you do. Many businesses in this industry can be turned into almost entirely passive income sources by adding keypads, automated locks, and online booking.

#11. Landscaping companies

• Average Annual Revenue: $272,790 • Average Profit Margins: 8.7% • Startup Cost: $1K-$100K • Time to Revenue: 1-3 months • Annual Market Growth Rate: 8.1% • Best For: Gardeners, landscape designers, people who love hands-on, outdoor work

There’s constant demand in this growing market, and there’s also great opportunity.

Most landscaping companies lose 8% to 10% of their customers each year, and their biggest challenge is when people aren’t happy with their services. That makes the industry ripe for businesses that focus on offering clients great customer service. If you can automate the business processes, your revenue could increase even more.

Mike Andes started in landscaping services when he was just a teenager, and today, he’s sold over 133 Augusta Lawn Care Services franchises and has expanded into real estate. Check out our playlist of interviews with Mike Andes below:

#12. Cleaning companies

• Average Annual Revenue: $755,180 ($62K for solo) • Average Profit Margins: 10.8% • Startup Cost: $1K+ • Time to Revenue: 1-18 months • Annual Market Growth Rate: 5.1% • Best For: Friendly professionals with an attention to detail

This boring business idea is in high demand. You can clean homes on a one-time or routine basis, and people pay good money for it.

Before you invest in a cleaning business, review our resources for cleaning businesses that we created with Chris Mondragon. He’s a featured speaker at housecleaning conventions and runs a multi-million-dollar house and Airbnb cleaning service.

We even have a cleaning business course that promises to help you earn $10K and comes with a 90-day refund policy.

#13. Parking lots

• Average Annual Revenue: $1.47M • Average Profit Margins: 5% to 10% • Startup Cost: $100K-$3.5M • Time to Revenue: 6-18 months • Annual Market Growth Rate: 4.3% • Best For: Landowners in high-traffic areas

Owning parking lots is perfect for people who want to run an automated business or sit outside all day at work.

Many businesses in this industry have lots of land in high-demand areas, like downtown in major cities. They charge by the hour and make money accepting cash and credit cards, so no one is required to be on site.

Parking lot owners commonly have relationships with the local government so law enforcement tickets people who don’t pay to use their parking spaces.

#14. Dry cleaning

• Average Annual Revenue: $265,808 • Average Profit Margins: 22.10% • Startup Cost: $100K-$3.M • Time to Revenue: 6-18 months • Annual Market Growth Rate: -6.7% • Best For: Customer service pros with high attention to detail

Dry cleaning can be decent money, but the industry is in decline with the rise of work-from-home jobs. That just means you have opportunities to buy businesses at a discount.

Many of the dry cleaners for sale online are asking for less than two times the annual cash flow. If you buy them using seller financing with 20% of the money down, you could buy a dry cleaner for as little as $20K now and pay it off over time.

For more on seller financing, check out our guide to buying businesses with little to no money .

You may have difficulty getting loans from traditional lenders when considering this investment because of the industry decline.

#15. Pre-made meals

• Average Annual Revenue: $25.4M • Average Profit Margins: 1%-10% • Startup Cost: $1K+ • Time to Revenue: 1-18 months • Annual Market Growth Rate: 7% • Best For: People who love cooking

Providing customers with pre-proportioned meals is boring because it consists of primarily repetitive tasks and has a low profit margin.

A small business in this industry makes money by cooking food in bulk and breaking it into individual meals. Its clients are mostly busy professionals who want to eat healthier and don’t have time to do their own meal prep.

People can pay by the meal and may get a discount if they return the reusable packaging.

#16. Pet sitting

• Average Annual Revenue: $73,533 • Average Profit Margins: 11.5% • Startup Cost: $1K-$100K • Time to Revenue: 3+ months • Annual Market Growth Rate: 1.1% • Best For: Pet lovers and experts, salon and grooming professionals, empathetic and detail-oriented entrepreneurs with strong customer service skills

Pet sitting and grooming companies are boring business ideas that can make decent profits. They aren’t high-growth and are labor-intensive, but you get to play with cute dogs and kitties.

Martin Burt and his wife explain how to start a pet sitting business in our definitive guide. We have information on pet boarding , too.

#17. Waste management

• Average Annual Revenue: $8.72M • Average Profit Margins: 7.29% • Startup Cost: $1K+ • Time to Revenue: 3-18 months • Annual Market Growth Rate: 1.9% • Best For: Customer service pros with high attention to detail

Waste management companies remove junk from sites and take it to the dump. Society’s reliance on them is here to stay.

When you buy a waste removal business, you’ll want one with employees already if you’d like it to be a passive income source. Otherwise, you’ll have to work in the business until the hiring systems, insurance, and payroll are in place.

Learn how Kyle Landwehr started his junk hauling business and turned it into a $3 million per year business.

Next, let’s look at how to buy a business with little money and convert it into a steady stream of revenue.

You can buy many small businesses with less capital than it takes to start a new business, but you’ll need to go through a defined process before you invest. We suggest the following process for buying businesses:

• Work with business brokers.
• Identify your goals.
• Find the right business for sale.
• Value the business.
• Negotiate the deal.
• Close the deal and transition into ownership.

You’ll specifically want to master securing seller financing to achieve the most success when pursuing boring businesses for sale. Again, you can learn about the process in our blog about how to buy a business without money .

Now let’s look at a list of property management businesses that can help you make a great living.

Real estate and property management businesses are boring businesses that lots of people look to for investment opportunities. Whether you’re just getting started in the real estate investment world or have years in the space, you can make a great living.

You’ll earn cash flow, at least, but you may also earn additional funds from appreciation of assets when you sell them. Check out the list of real estate businesses I love:

• Airbnb rentals
• Apartment buildings
• Mailbox centers
• Mobile home parks
• Property management and repair companies
• Rental arbitrage
• Storage space rentals
• Tiny home rentals

The best thing about these boring businesses is you can manage your entire investment portfolio from a single platform and website, which makes it easier to manage multiple businesses as the demand grows.

Want more bloody boring business ideas?

Check out the list of 99 more boring businesses below!

Now you have plenty of boring businesses to consider buying or starting up. They span several industries and skill sets. You might want to start with a business that costs less and build up to more expensive ones as you develop wealth.

The Boring Company is the most boring business in all the world. Seriously! 

Maybe not the take on “boring” you expected, but Elon Musk started The Boring Company because he was tired of dealing with traffic.

The Boring Company uses boring machines called Prufrocks to bore tunnels at a rate of one mile per week, but they aim to eventually bore seven times faster than that. The tunnels are used to transport passengers around the Las Vegas Convention Center and to Resorts World in Tesla vehicles. There are other tunnels in the works.

Start your own business

The world is full of opportunities with lots of demand and not a lot of competition. It’s up to you to find the boring businesses that work for your portfolio.

What boring businesses do you find the most appealing for your investment strategy?

How to Start an Advertising Agency (and Make $500K/Year)

One of the hottest industries to start a business in is the tech industry—more specifically social media marketing.

We're going to walk you through the process of how to start an advertising agency so you can begin your path to success in digital marketing.

We talked to Jason Yormark, founder and Chief Social Officer of Socialistics , about how he started his company and has 4x the revenue since starting it 2.5 years ago.

He started off with Microsoft then started blogging during a year layoff before getting hired back.

He started the Socialistics advertising agency as a side project but has grown it to managing $2-5K social media marketing campaigns for 15 clients, including Habitat for Humanity and the U.S. Air Force .

We'll give you everything you need to know when starting an advertising agency, including an overview of the industry, developing the business concept, getting all the licensing/business requirements, commonly asked questions about advertising and marketing, strategies for launching, and business operations. 

Throughout, we'll provide input from Jason and myself on what we have found that works and doesn't work. Keep reading to find out more.

Advertising Industry Overview

Business owners in all industries need marketing. Most small businesses don't have the time and knowledge to run their own ad campaigns, so there's a ton of opportunity for starting a new business in marketing or advertising.

Let's start by discussing the state of the industry. Because of the global pandemic, marketing spending dropped to $1.28 Trillion in 2020 according to PQ media . Jason experienced a drop in revenue which he attributes to:

I saw similar results in my marketing and blogging business from February through September of last year and then spending started ramping up again.

This year I've been getting approximately 3x the requests of previous years, which I attribute to my business maturing, combined with more business confidence.

Despite a drop in overall spending, according to Beroe Inc , global digital marketing was between $330-340 billion in 2020 and grew almost 13% over 2019.

Meanwhile, spending on legacy advertising formats like TV, billboards, and radio declined by 30%.

According to Safe Frog Marketing Group (through Hubspot), nearly 2/3 of companies hire an advertising agency or freelancer to manage part of their digital marketing needs. 

Combine this with the number of marketing companies staying the same ,and spending on advertising expected to increase by 8-15% according to Forbes , this is the perfect time for starting an advertising agency.

One of the opportunities Jason told us about in digital advertising is the ability to attract potential clients with reduced retainers. Here's what he had to say,

Major Advertising Agencies and Other Competitors

Globally, the 50 largest marketing/advertising agencies make over $460 million in revenue or more. The top ad agency, Accenture Interactive made over $4.4 Billion in 2018. Wow! They are killing it! If you want to see the full list check out this article by Agency Spotter.

According to IBIS World , there are 5,585 digital advertising agencies in the United States, so there is a ton of competition, but plenty of revenue to start your own agency and work for your ideal client.

I did a little estimation of what the average marketing agency makes based on these numbers, and it's around $20 million.

Granted, some aren't going to be anywhere near this, but even if you are making $75,000+ working from home as a one-man company, that's not bad money.

Currently 2 years in, I make enough working part-time to pay the bills without stressing. It's not nearly what Jason estimated:

Inspiration for Starting an Advertising Agency

The first step when you want to start an ad agency is to conduct research to determine what is right for you. Your marketing company should be focused on satisfying your potential client's marketing needs while utilizing your current skill base. 

You may want to start a marketing company focused on a specific niche, such as Business to Business (B2B) or Business to Customer (B2C), a general marketing company, or you may want to start a digital marketing firm focused primarily on a specific social media network like Facebook.

You aren’t limited to just one type, but this decision will impact how to start a media company. This decision will drive every move going forward.

Some of the common types of marketing companies are:

• Social Media Marketing - Focused on marketing through social media 
• Email Marketing - Email-based marketing
• Brand Management - Building a brand through a variety of techniques
• Content Management - Managing the flow of content
• Copywriting - Writing about products, services, tutorials, or website wording
• Product Marketing - Focused on analyzing interest in a product then selling the product
• Marketing Analysis - Analyzing how to improve through meeting market demand
• Growth Marketing - Focused on increasing the market share through marketing
• PR/Communications - Communicating with external stakeholders
• Event Marketing - Marketing events like concerts or business conferences
• SEO/SEM - Improving organic search results or paid search results
• E-Commerce - Marketing products sold online

The Muse has a great article that describes what each type of marketing is like.

Socialistics focuses on social media marketing for B2B primarily. Jason told us,

Marketing is focused on helping people or companies become aware of a product or service and helping them move from unaware, to aware, to researching the offering, and finally to purchase.

Each business has a different model for accomplishing this. We'll show you some of the ways to achieve this.

Keep reading for different types of marketing agencies.

Name Your Marketing Company

I can't stress enough the importance of the name you choose when starting a marketing company. It will communicate what the company is all about. Keep reading for ideas about how to name your startup marketing agency.

Does the name explain the business?

Socialistics' name is a bit of a challenge for me to picture what it does. The name is unique, but here's how I break it down:

Social - " of or relating to human society , the interaction of the individual and the group, or the welfare of human beings as members of society" - Merriam-Webster Dictionary

-istics- "of, relating to, or characteristic of" -  Merriam-Webster Dictionary

It took me a minute to wrap my mind around the name to realize it meant relating to social media. I wonder whether Jason was going for something that made people think more about what it does.

He could be taking the exact opposite strategy of what I'd normally suggest, which could potentially offer similar results.

I tend to prefer including words like Marketing, Advertising, or something to identify what your company actually does, which can make it easier for people to think of it when they are looking for help.

Is it easy to spell?

Make sure your business name is easy to remember when using a search engine. A crazy name like Onomatopoeia Tees makes searching for your business difficult because it's hard to spell.

Because people tend to type fast, it can be helpful to register domain names for common misspellings of your business name and forward them to your website to make it easier for customers to find you.

Including your state, county, or city identifies you as a local business. For example, Sin City Modeling Agency would obviously be focused on models in Las Vegas.

I would typically discourage this for a marketing company unless you are specifically trying to narrow your business model to serve clients in the local area.

There is too much remote work available to limit yourself from the start. Later it might make sense, but in the beginning, it can be hard to get that first big client.

Does your name fit your branding? Some business owners focus on visual ideas for a logo before a name. Fortunately, Socialistics logo spells out what they do for people. Take a look:

As you can see, it has their name and "a social media agency."

The "S" in the logo also hints at one of the advantages of social media marketing: the fact that internet marketing offers a closed-loop marketing strategy, while other forms of advertising do not.

Overall, I like it. It tells what the company does, suggests differentiation to those who know about the industry, and also could have ties to their belief in community service because what we put out into the world comes back to us.

Register a .com

Find a name for which the .com domain is available. It's the most recognizable. You can conduct a search by clicking here . The longer you can purchase it for, the better. This helps communicate that you are in it for the long haul.

Some great places to buy a domain include:

• Google Domains
• Your Web Builder
• Unstoppable Domains   - only use if you are familiar with blockchain technology

Test Your Name!

See how people like it. Check Google Trends. Read articles like Five Tools for Naming a Business.

Make sure to check what happens if people shorten it. You wouldn't want to name a business Sensational Product Advertising & Marketing because people might shorten it to SPAM, and that goes right to junk mail.

Once you're satisfied with the name, register your business name with the government so you can protect someone else from getting it.

Write a Business Plan for Your Ad Agency

You need a business plan to help define the advertising agency's objectives and strategy.

A business plan for your advertising agency guides decision-making, helps financiers consider whether to provide startup costs, and gives you something to show businesses who could be potential partners or clients. 

A business plan should answer the following questions:

• What was your inspiration for starting an advertising agency?
• What problem are you solving for clients?
• What is the market opportunity? Who are your clients? What types of businesses need your services?
• What is different about your advertising agency? Why should other businesses believe you will be successful?
• What progress has your agency made so far?
• What startup costs have you already incurred by starting an agency?
• What do you need funding for? What are the costs associated with incremental sales?

A creative business plan goes a long way. It needs to be inspiring, informative, and factual. There are a ton of businesses in constantly changing environments, so you need to stand out to a potential client.

A business plan that is constantly evolving helps you keep your business plan in line with where the business is and where you want it to go. We've compiled some resources to help you build an awesome business plan.

We've gathered templates to help you develop your business plan. Here are some of the best:

• One-page business plan
• U.S. Small Business Administration (SBA) Business Guide
• State-specific templates
• Business Plan Template for a Startup Business

It gets better! Here's some free and low-cost education on business plans:

• How to Write a  Business Plan
• SCORE's free business plans and startup assistance resources
• The Complete Business Plan Course (Includes 50 Templates)

How to Start an Online Advertising Agency

Most types of businesses have similar processes that have to be performed.

Whether you want to know how to start a digital marketing agency or how to start a social media marketing agency, there are related expenses that will be incurred. Every agency will need to:

• Legally establish the advertising agency
• Obtain necessary licenses and tax requirements
• Obtain funding
• Establish a location
• Create a website
• Create social media profiles
• Have a tech stack that simplifies the operations of your small business

We'll give you tips and information on how to get the most of your digital marketing company in each of these areas.

Legally Establish the Advertisement Agency

You've developed a plan and created a name for your advertising agency. It's time to create the legal structure.

For best results, hire legal representation that has experience starting advertising agencies, like an attorney, accountant, or tax specialist.

It will simplify the process so you can get clients, build a team, and run creative campaigns.

There are five basic types of legal structures that most people will utilize: sole proprietorships, Limited Liability Corporations (LLC), Partnerships, Corporations, and Franchises.

Each has its pros and cons. You'll have to decide which is best for you, but we've gathered information on each to make it easier.

A sole proprietorship is the easiest way to start a digital ad company, but the structure doesn't protect the owner's personal assets from legal issues. That means if something goes wrong, you could lose both your agency and your home.

This structure is the least difficult to set up, but I'd recommend agencies getting professional liability insurance and cybersecurity insurance because you'll be a potential entry point to clients' systems.

If your website, email, or other services get hacked, it could be detrimental to more than just your agency: it could cause client lawsuits.

To start a sole proprietorship, fill out a special tax form called a  Schedule C . Sole proprietors can also join the American Independent Business Alliance .

Limited Liability Corporation (LLC)

An LLC is the most common business structure used in the United States because an LLC protects the owner's personal assets.

It's similar to partnerships and corporations, but can be a single-member LLC in most states. An LLC requires a document called an operating agreement.

Each state has different requirements. Here’s a link to find your state's requirements . Delaware and Nevada are common states to file an LLC because they are really business-friendly. Here's a blog on the top 10 states to get an LLC.

Partnerships and Corporations

Partnerships and corporations are typically for massive organizations or legal firms.

Unless there is a specific reason you need a partnership, it is better to do a multi-person LLC. Investopedia has good information about partnerships and corporations here .

There are several opportunities to purchase successful franchises. TopFranchise.com has a list of 10 advertising companies that you can start as a franchise.

This makes it where an entrepreneur can benefit from the reputation of an established clothing printer that has already worked out many of the kinks of starting from scratch.

Check out our BigFrog videos to learn more about franchise benefits. They are a t-shirt printing company, but they still have great advice on the business model.

Obtain Necessary Licenses

Each location has different licenses, permits, or tax forms required. Use the SBA License and Permits page to find requirements for your locations. Some locations have very confusing regulations.

If you don't work with a legal representative, make sure to talk to the employees who work in the licensing and tax offices. They can give you advice on which licenses you actually need.

Make it a point to follow the laws. I once met a person who failed to follow the proper regulations, and it cost her a substantial fine and nearly 100 hours of community service per month.

Obtain Funding

Ad Agency startup costs can be achieved for under $1,000. You basically need some space in your home, a website, social media, and some time.

If you are going to rent an office space or run a ton of paid ad campaigns, the cost goes dramatically up.

That's not really necessary unless you are starting a franchise or have a local team that needs a space to all work together. When it's just you, an advertising agency can be started for less than a few hundred per month.

If you do need to obtain external funding, other options include:

• Loan from family or friends
• Business partner(s)
• Government programs

The SBA offers free courses on financing options and funding programs . For info on using personal funds to start a business, check out this article from The Hartford.

Alternative sources of funding include:

• Crowdfunding  
• Credit cards
• Home equity loan
• Rollover for business startups (ROBS)

Establish a Location

For most small business owners, an advertising agency can be a home-based business until you've reached profitability. Many will meet a client at a local coffee shop.

If you feel you need a more professional location to book the job, I'd recommend looking into office-sharing services like WeWork . They let you share space with others, reducing the expenses of having an office.

Some things to consider if you go other routes are:

• How many people will be on my team?
• How many people will come to a client meeting?
• How can I display my campaigns?
• Does space encourage the exchange of ideas?
• How quickly is the company growing?
• Will we have a sales team to answer client calls?
• Are we 24/7 because we offer services across the world?

Contact a local commercial real estate agent to assist you in the search. You can search for them by your area here.

Create a Website

A website is critical to a marketing company. It's often the first thing people see, and if the job isn't done right, why should they trust you to do their advertising right?

From a marketing perspective, your website needs to show you get results. But what does that mean?

Some things I look for when I search for businesses include:

• Do they come up when I search them? With Target, Yes they do.
• Does it show Wikipedia or Google My Business information in the search? If not, make sure you fix that.
• When I click on the link, how fast does it load? I want instantaneous on desktop or less than 3 seconds if over cell phone data. Any less, and you are losing customers. Google has extensive data on what is expected to rank high in search.
• Now that I'm on the site, does it look professional? If not, I'm probably going to run unless I can tell they use it for experimentation.

Building a great website is so important. Fortunately, there's a lot of things that make it easy. Using web builders has never been easier. They have tons of plugins and drag-and-drop functionality. I'd recommend the following:

• Easiest to use: Wix
• Best features: Wordpress
• Other Options: Great List

Add the list of website builders into the article. Get affiliate links from Serge.

Alternatively, you can hire a web developer, but they'll probably charge you up to $25k to do the same setup you would anyways. They just accomplish it quicker because they know what they are doing.

Create Social Media Profiles

I'd recommend having all possible social media profiles because you never know where you'll find a client. For B2B, the best is LinkedIn , but I'd also make sure you are on:

• YouTube - Best for Video 
• Instagram - Best for products and other marketing that uses pictures
• Facebook - Best for B2C marketing
• Twitter - Financial markets, political, and crypto are big industries on Twitter
• TikTok - Short fun videos primarily targeted to ages 30 and under

You can start with one and focus on it or try them all and narrow them down based on the results. Hootsuite has some good information on best practices . You'll need to keep up to date on these if you are starting an advertising agency.

Have a tech stack that simplifies the operations of your advertising agency

Every advertising agency will need a tech stack to make running the business easier.

I'm not going to go into great detail on each of them as they all have great educational resources available that I suggest you utilize as you'll be using them a lot. Here's the list of some I love:

• HootSuite or other social media management tools that put all your social accounts in one place and let you manage it from their dashboard.
• Google Workspace for email, spreadsheets, presentations, and cloud storage.
• Integrated accounting software that connects to your bank and allows automation so you only have to set a rule once. PC Mag has a great article about various options.
• Customer Relationship Management (CRM) software to keep all your information in one place. Agencies have a ton of content they handle for a lot of clients. Being able to keep track of it in one place is crucial for the success of the business.
• Content Management Software (CMS) is used for storing, labeling, and sorting content. A CMS may be part of a CRM, or it may have to be integrated, but easy access to files is critical to assist clients.
• Analytics Software will be needed and attached to all web assets so you can track how you are performing . This will be true for both the advertising agency and your clients. You can't improve results if you aren't measuring them.

These are the bare minimum I would suggest before starting an advertising agency.

Business Expansion

Now that you have everything you need to start an advertising agency, it's time to find clients and expand the business.

Marketing and Advertising Strategy for an Advertising Agency

Finding clients can be done in a variety of ways. Agencies can use their personal network, the same ad strategies you plan to use for clients, conventions, and other techniques. The biggest thing is to be sincere.

Jason told us about how he managed to land the Air Force and Habitat for Humanity. He told us,

In other words, always be ready to listen because that might be enough to land a client.

Here's what he had to say about Habitat for Humanity:

[su_youtube url="https://www.youtube.com/watch?v=kb1czTEK8f8 "]

In that scenario, he had to do lots of follow up and be patient. When clients say "no," they mean they aren't ready yet.

Potential Partnerships and Collaborations for an Advertising Agency

Partnerships and collaboration for an advertising agency may come from selling other tech that they find useful, being listed in blogs and reviews, or through fields like photographers, graphic designers, and developers.

Another source of partnerships is non-profit institutions. As Jason pointed out:

[su_quote]Habitat for Humanity wasn't so much about the money as the message it sends about our business and our values.[/su_quote]

If you can get a client that people know and share their values, it makes expansion so much easier.

Contact List Building for an Advertising Agency

Every person you come in contact with is a referral. Anything you do you should be trying to get followers, likes, and people signing up for your email list.

This makes a huge difference. You can then share more content with them to help them get closer to becoming a client. Even if they don't own a business one day, they might soon.

Some useful tools include:

• Hubspot - Free email marketing tools, including forms, databases, analytics, and templates
• MailChimp   - Similar to Hubspot’s marketing services but started as an email marketing company.
• SendGrid   - Most of my software development clients prefer SendGrid. It’s more tech-heavy though

Advertising Agency Daily Operations

An advertising agency makes its money from retainers and is mostly a time-intensive business.

The reason digital marketers use scheduling tools for as much of their work as possible is they need someone to be available when their clients need them.

People tend to use Facebook at specific times every day. If no one is available to respond to comments because they are working on something else, that is going to harm the advertising agency's clients.

If you are unable to satisfy your clients' needs, they'll go somewhere else.

Jason focuses on "service over revenue growth" because the revenue growth will come with time.

As long as they retain the customers they have, they know they'll have around $40k/month coming in consistently while managing 15 clients.

Remote Workforce in Advertising Agencies

Jason was concerned that his team being spread across the world would hurt him.

The idea that your team couldn't be all together was something he viewed as a challenge at first, but now he views it as one of the main sales points.  He told us:

There are a ton of great resources to be able to utilize the global workforce. Companies like Upwork are a great place to start. You can find reviews of other places to find marketing freelancers in this blog .

Top Advertising/Marketing Influencers

• Neil Patel - He’s marketed everything and has over 2 million followers across all channels. His blog gets over 4 million views per month.
• Matt Bailey   - Over 20 years in Marketing and author of Internet Marketing: An Hour a Day (2011)
• Gary Vaynerchuk   - Over 30 Million followers across his platforms. 

Starting an ad agency can be a highly rewarding career. We used insights from Jason Yormark and myself to help you get an inside look at what life in the marketing business is like.

We provided you with the knowledge and resources to learn about the industry and name your company.

You have tons of resources to get the business up and running, ideas on where to find clients, and ways to operate the business.

Now it's up to you. Will you be the world's next great advertising agency?

How to Start a Trucking Business and Earn $100K/Month (2024)

How to Start a Trucking Company in 7 Steps

Want to get into one of the fastest-growing industries in the country? The trucking business isn’t known for its high profits, but that changes when you start hauling 80,000 pounds per truck. That’s right! We’ll learn how to start a trucking business with expert advice from a trucking company.

Mikael Sant, the founder of Sant Lines, is ahead of the game. He started Sant Lines in May of 2021 at the age of 19. The trucking company made over $159,000 in revenue in the first six months. That’s more than many owner-operators make in a year. He has grown to four trucks, expects to have 100 in seven years, and is working to be a dominant force in the industry.

We’ve outlined the process to start a trucking company in just 7 steps. Click any of the links below to jump ahead.

[su_note note_color="#dbeafc"]

Step 1. Know the Trucking Business

Step 2. starting a trucking company business plan, step 3. secure startup funding, step 4. is a trucking business hard to start, step 5. get customers, step 6. manage your trucking business finances, step 7. trucking companies need admins, how to start a trucking business frequently asked questions, so what’s the best trucking business to start, quick warning.

Before you even consider operating a trucking company, you should:

• Get a DMV printout: If you have a DUI, vehicular manslaughter, or other charges, you will not be able to get a job or insurance.
• Have no convictions for drugs, felonies, violent crimes, or fraud: It will be difficult or impossible to qualify for a job, insurance, or getting an authority.
• Check insurance price: . Mikael spends $45,000 per year for his insurance because he is a new CDL driver.
• Understand Finances: Every load you accept will have costs that impact it. Real simply, if you can’t multiply and calculate percentages, you are likely to struggle immensely. You need to be able to calculate the costs based on mileage and the weight of load. To make good money, you’ll need each load to be at least three times the cost.

How to Start a Trucking Business Case Study: Sant Lines

Mikael is a serial entrepreneur. He owns:

• Sant Logistics & Freight LLC
• Rettig & Sant LLC
• Squeaky Clean Pressure Washing & Paint LLC 
• VESTALO LLC

Check out our interview with him below:

[su_youtube url="https://youtu.be/-8TnsjDRXUE"]

You can write your own success story in trucking by following Mikael's advice with these seven steps.

Most of us are familiar with trucking on some level, whether it's seeing big rigs on the road or utilizing local moving companies. Behind the products we receive from those giant trucks, plenty of government regulations ensure every trucking company delivers products safely.

If you haven’t worked in a trucking company, it’s important to get some industry experience and specific licenses. You might want to work with a moving company to learn about the industry.

How do truckers make money?

Very simply, truckers make money based on miles and weight as they transport products. A trucking company operates under one of four main NAICS codes:

• 48412 Long Distance Trucking
• 48411 Local Freight Trucking
• 48422 Local Specialized Freight Trucking
• 49222 Courier and Local Deliver Services

Trucking businesses charge different amounts based on what they are hauling and where they are hauling it. I combined the IBIS World statistics for the four sectors and found that the industry makes $557.2 billion in annual revenue and $33.2 billion in profit. Check out the rest of my findings below:

How much can you make owning your own trucking company?

The average trucking company has over $410K in revenue. Specialized freight makes the most at over $860K, while the others earn far less. If you plan to start a trucking company, it’s reasonable to assume you will make no more than the following amounts during each of the first few years.

• Long Distance Freight : $461K
• Couriers : $364K
• Local Freight : $282K

Learn more on our podcast where we discuss trucking with Mikael. 

In the podcast, Mikael explains how he built his company from the ground up, including startup costs, and how he's adapted to new systems as his company has grown. Plus, he talks about some surprising obstacles he's had to overcome to keep the company running. 

Is owning a trucking business profitable?

Yes, owning a trucking company can be highly profitable. The average trucker makes around $54K per year in wages and another $6,000 in profits, assuming they meet industry averages.

Mikael currently makes over $135K per year. He only drives in case of emergencies and pays his drivers to do most of the driving. So it can be highly profitable to start a trucking company without driving consistently.

New trucking businesses

More and more truckers choose to go out on their own once they have gotten some experience. In fact, owner-operators have the highest rate of solo entrepreneurs in the United States. 

That’s because they can make a great living. Assuming the 4.2% rent is helping pay off their homes, that means the average business owner is paying off around $17,000 of their mortgage as a business expense.

Follow Commercial Truck Regulations

When you start a trucking company, it is important to understand you are entering one of the most regulated industries in the United States. If you provide long haul services, you’ll need to register with multiple agencies including:

• Department of Transportation
• Department of Labor
• State Agencies (in every state you operate in)

Mikael told us:

[su_quote]For e very state you have to be 18 to get a CDL, and 21 to get cross-state licenses. [/su_quote]

He also told us:

[su_quote] I focus mostly on running the business, but there are times when I have to drive too. It cost $4,500 to get my CDL. [/su_quote]

All of these costs add up, of course. Let's have a look at the hard numbers so there are no surprises when you start to pay your startup expenses.

How much does it cost to start a trucking business?

You’ll want at least $50K-$60K to start a trucking company. Mikael explained the startup costs for a trucking company, which include the following:

• Truck : $32,000 (10 years or newer)
• Refurbished Trailer : $9,500 (currently worth $30K)
• Repairs : $6,000
• Fuel : $2,000 (first week)
• Insurance : $4,500 (down payment and first month)
• Permit : $950 per truck
• IFTA : $2,800 to get cross-country license plates
• Total : $57,750

The good news is:

[su_quote] We made our money back in the first three months and have been profitable since. [/su_quote]

How to start a trucking company with no money

Yes, many major transportation businesses offer company drivers the ability to transition to owner-operators after working with them for a certain amount of time. They do this by setting up brokerages, leasing companies, and load boards.

The leasing company leases the owner-operator a truck in exchange for the truck company owner committing to a multi-year contract with them. At the end of the contract, you have your own trucking company and truck owned outright.

We’ll discuss the leases more in later sections, but first let's check out more resources to learn how to start a trucking company.

More resources for trucking businesses

There are industry organizations that you’ll want to follow to stay up to date on the trucking industry. These are some of the biggest in the U.S.

• American Trucking Association (ATA) : The ATA is the largest group that collects industry data, lobbies for the industry, and provides info for trucking companies, moving companies, suppliers, and companies that need shipping.
• Transport Topics : This group publishes a variety of information about the industry including a Top 100 For-Hire list. FYI you need to make $244 million or more to be in the top 100.
• US Environmental Protection Agency (EPA) : The EPA is tasked with regulating environmental concerns. Remember to pay attention to their rules involving trucking and agriculture because most trucking companies will be impacted.
• US Energy Information Administration (EIA) : Be sure to pay attention to the transportation reports from the EIA if you haul oil and refined products.
• America's Independent Truckers' Association Inc. (AITA) : Larry Daniel started AITA in 1997 to give independent truckers the same purchasing power as major conglomerates. It’s $10 per year for membership or $180 for fleets. If you find better discounts anywhere, they ask you to gather as much information as possible and send it to them so they can secure the same deal for all.

As the saying goes, if you fail to plan, you plan to fail. You need a solid business plan. Trucking company business operations comply with numerous regulatory agencies. Your truck company business plan should address all aspects of the business that are essential to your success.

The business plan dictates the plan of action. Once you have some knowledge and experience in the trucking industry, writing your new trucking company’s business plan is the next logical step.

Your business plan is your venture’s founding document, and it will be the reference point for all business decisions moving forward. You want to put time and effort into composing the business plan because a well-written one will help improve the probability of business success.

Luckily, there are great resources for entrepreneurs who are writing their own business plans. Check out our business plan template and watch our interview with Mike Andes below.

[su_youtube url="https://youtu.be/Seac5PbUZXk"]

The Small Business Association (SBA) is part of the federal government and provides a step-by-step guide to writing your business plan.

Truckstop.com also has a guide to writing a business plan for trucking companies.

Keep reading to learn how to identify the target market for your own trucking company.

Identify the target market

Your target market will mostly be businesses when you open your new trucking company. Depending on the type of truck, you might want to build relationships with different kinds of businesses. Some businesses that consistently need truckers include:

• Distributors
• Car manufacturers
• Agricultural businesses
• Marijuana growing facilities
• Moving companies
• Car dealerships

You’ll want to build relationships with load boards and brokers like datboard and truckstop.com , but Mikael also wins a lot of business with word of mouth recommendations. You’ll probably also want to consider seasonal fluctuations. Mikael told us:

[su_quote] Everything is good during winter. $75K monthly and summers around $125K. Potato season is July to November, but our best run on a per-mile basis was Oregon to Phoenix. It totaled $6 a mile or around $9,000. [/su_quote]

It can be hard to describe your market accurately, but it’s a critical assessment to make. Market research firms gather data that are good for validating your original research. It’s worth considering hiring one if you aren’t confident in your research methods.

You can find a guide to market research for new businesses at Entrepreneur, and Joe Gardiner, CEO of VentureDevs , has a complete guide to market research at Forbes .

Define your business structure

Because of the investment, you’ll probably start a trucking business as a Limited Liability Company (LLC). A trucking LLC filing as an S-Corporation is the prevailing business structure when someone starts a trucking company. 

Limited Liability Companies can opt for the business entity to be treated as an S-Corp for tax purposes. You just have to file an 1120-S with the Internal Revenue Service.

A successful trucking company will find this business entity and tax structure beneficial because they will be able to:

• Pay themselves a salary.
• Receive various personal liability protections.
• Separate business and personal assets.
• Save money on taxable income over $200,000.

Running your business in this method provides a good balance of liability protection and business structure if you choose to grow beyond a solo entrepreneur. Almost every successful trucking business will use either this structure or a C-Corporation.

You might want to hire a law firm to form your corporation because it’s easier to head off any problems as the business is formed rather than to go back and change your founding documents or business protocols once issues arise.

Check out our business hub for more in-depth information on business licenses and entities. Alternatively, review the Small Business Administration startup guide for more information.

Choose your trucking business name

Your trucking name can reflect your geographic origins, or it can be more abstract, or even the name of the founder. Sant Lines uses Mikael’s last name.

Choosing your trucking name is an important consideration that can affect both the present and future of your business.

For example, naming your company the Trucking Business of North Carolina may attract customers in your home state that want to do business with local trucking companies, but it might hinder your expansion outside of your state.

For some help with choosing a name for your business, check out our guide and business name generator . Alternatively, Forbes has a guide, as does The Balance.  

Once you’ve determined your trucking name, run searches at your Secretary of State’s website and get a domain name from sites like GoDaddy or NameCheap .

Address start-up and operations costs

Your plan should outline the source(s) of your capital plus how and when investors will be paid back. Outline your operational costs carefully. For a trucking company, there are three main sources of operations costs:

1. Purchases

The primary costs associated with trucking are purchases including gas, maintenance, and repairs. These will be nearly ⅓ of your business expenses, so make sure to calculate them effectively. That means if you are doing long haul trucking, you should assume $153,667 of purchases per truck each year.

Your wages and any employee wages will be up to 29% of the revenue. That means you should assume you’ll be paying up to $133,690 if you are making the average amount for a long haul trucker. On average wages are around $55,000 per year across the industry.

3. Miscellaneous

The third largest expense relates to other costs like technology, miscellaneous business expenses, and taxes. These account for approximately 25% of revenue. I have created an automated 10 year calculator that estimates the revenue, expenses, and profits when considering the compound annual growth rate (CAGR) and how many trucks you want to add each year. Feel free to download it and try it out.

How much does a trucking owner make?

An owner-operator will normally pay themselves a salary plus profits paid out as either a dividend or return of capital. If you run as a sole operator, you need to make sure you set your pay correctly. There are a few ways you might fall under on the Bureau of Labor Statistics site :

• Heavy Truck Driver : $51,790
• Operations Manager : $106,630
• Top Executives : $109,880
• Chief Executives : $198,610

In addition, an average trucking company would offer around $20,000–30,000 in profits which can be treated as dividends. If you pay yourself less than the $106K salary, which I suspect most would for the first few years, do not give yourself more than a $30K dividend check unless you want to risk an audit.

(I’m not a tax attorney, but I know enough that you don’t want to deal with IRS audits. If you make enough to pay yourself $200K, it is the safest bet.)

Consult a corporate attorney to get legal advice.

Once you’ve put together a plan, it’s time to start considering how to secure startup funding. As Mikael stated, you’ll need around $50K to $60K just to make it through the first couple of months. If you factor in the first year, you’ll need almost $300K, and to make it through the first five years you can expect to need over $2 million. These numbers do not include wages or depreciation (because depreciation is not a hard cost).

Most business owners start their trucking company with personal savings or by borrowing from friends and family, but you can also qualify for equipment financing and other loans that use the truck to back the loan. We suggest reaching out to National Business Capital first because they offer flexible financing options and work with you to find the best loan for your business from over 75 lenders.

Crowdfunding

If your business will serve a particular community or industry, you might be able to use crowdfunding to get the startup costs. Of course, you’ll normally have to offer them something like discounted pricing or a free local delivery depending on how much they contribute. 

Kickstarter is a popular site for business funding. If you’d like to learn more about the Kickstarter process, check out our interview with Pooch Selfie’s founder .

Major fleet owner-operator lease programs

While talking with one of my relatives about how to get into the trucking industry, he advised going through one of the major fleets to get financing. The way they work is they basically finance the truck in exchange for a contract of five years. After those five years, you own the truck. 

He warned that you need to be cautious with these, however. Some of the fleets are a bit shady. If you are making less than $400 per day, they aren’t doing right by you. In addition, after five years you should absolutely own the vehicle. Make sure to read the contract carefully.

I asked about the best ones. He specifically mentioned:

• Knight Transportation (From Arizona)
• Werner Enterprises (Based in Nebraska)
• Schneider (Based in Wisconsin)

A trucking business isn’t hard to start, but you will have some unique requirements that most business owners do not. 

First, you’ll need to get your commercial driver’s license (CDL). You’ll also need to perform the following tasks when you start a trucking company:

• Get your CDL.
• Get a truck and trailer.
• Submit IFTA Form 290.
• Apply for insurance.
• Register with the federal Department of Transportation (DOT).
• Join the International Fuel Tax Alliance.
• Get an IRP plate.
• Let’s look at the considerations.

Get Your Commercial Driver's License

To drive a semi-truck, you’ll need a commercial driver's license. Each state has different requirements, but most consist of the following: 

• Be of good health based on hearing and response times, but there are other reasons you might not qualify.
• Pass background and driver safety checks.
• Get your state CDL manual from the Department of Motor Vehicles. Some states use alternate names .
• Take a commercial permit knowledge test.
• Go to a third-party commercial driving school. The manual should list licensed schools.
• Take the driver test.

[su_quote] I don’t normally drive, but you’ll want to have the license in case one of your drivers calls out. [/su_quote]

He suggested JJ Keller for the school.

Next, you’ll want to apply for insurance because many of the following steps require it.

Buy A Truck

• Age : Under 10 years old
• Mileage : Under 750,000 miles
• Brands : Kenworth, Volvo, Peterbilt, Freightliner, Western Star
• Features : Sleeper included for long haul trips
• Market Price : Should be market price or slightly below to get the best value

He told us:

[su_quote] I try to stay between [the] $50 to $70 thousand range for used trucks that have between 450K miles to 650K miles. [/su_quote]

He also suggested bringing someone with you that can check the engine and transmission. They will be able to provide reasonable estimates for the cost of repairs and help you negotiate the price.

Types of Trucks

Trucks in the United States are rated by the gross vehicle weight rating (GVWR). The GVWR is a rating that manufacturers use to specify the maximum weight that a vehicle can operate safely. This weight includes the truck, trailer, gas, occupants, and freight. There are eight basic levels including: 

• Passenger vehicles (light duty) : Classes 1, 2a, and 2b have a GVWR of under 10,000 pounds. These also include popular trucks and SUVs like the Ford F150 and some box trucks.
• Medium duty vehicles : These go in Classes 3-6, which are below the 26,000 pound GVWR. Common vehicles in this class include Ford F350 to F650, Silverado 3500 to 6500, and Ram 3500 to 5500. A box truck company will fall in this category as well as some smaller semi-trucks with sleepers.
• Heavy duty trucks: Class 7 is 26,001 to 33,000 pounds, and Class 8 is over 33,000 pounds. These are the big boys, and they require a CDL.

The federal government requires heavy-duty trucks to have a commercial driver's license, but each state has its own policies. California requires any vehicle over 6,000 pounds and 3 axles to have a CDL.

Tow trucks and other vehicles may also require CDLs. To learn more about tow truck driving, check out our interview with K.O. Towing below:

[su_youtube url="https://youtu.be/pk4B1Q28SCs"]

Types of Trailers

There are a ton of different trailers you can use for trucking. It just depends on what you need to carry. Some of the most common are:

• Dry Van Trailers: Standard trailers are 53 feet long and around 45,000 pounds maximum weight.
• Standard Flatbed Trailers: These trailers are great for products that don’t need to be protected from the elements.
• Refrigerated Trailers (Reefers): If you transport food, you’ll need temperature control with a max weight of 42,000–45,000 pounds. 
• Drop-Deck, Step-Deck Trailers : These are similar to flatbeds but prevent height problems, and are up to 53 feet long.
• Double Drop, Lowboy Trailers : Double Drops are higher at the front and the back and carry 40K–80K pounds.
• Hotshot Trailers : This low-lying flatbed is 30–40 feet long, but only carries 16,500 pounds and is usable with Class 3 to 6 trucks.
• Conestoga Trailers : If you need a flatbed with a sliding tarp cover, use a Conestoga trailer.
• Curtainside Trailers : Need a dry-van with a solid front, top, and back, but tarp curtain sides to make it easier to load from the side? Curtain Trailers are the answer.
• Extendable Drop-Deck Trailers : These drop decks are built for lengths longer than 53 feet.
• Removable Gooseneck (RGN) Trailers : Use these to drive vehicles onto the trailer.
• Extendable RGN Trailers : These RGN trailers extend based on the length of your load.

Watch the video below to learn more about these trailers:

[su_youtube url="https://youtu.be/fkNaIQOEd34"]

They don’t mention tankers in the video. You can transport hazardous waste or oil products, but those will require specialized licensing and knowledge. You are better off getting some miles on the road before you start hauling these products.

When first starting, you’ll probably only be able to choose one type of trailer. I’d probably go with a reefer or drop deck as they will offer you the most versatility. That sounds consistent with what Mikael told us:

[su_quote]I offer 4 main services:

• Refrigeration and frozen food (best in summer and fall)
• Flatbed for construction (springtime does best)
• Power only: Amazon is the biggest customer I have just 'cause of their volume
• Towing: I’ve delivered as far as Nevada[/su_quote]

Fill out Form 2290

You’ll need to pay your heavy use taxes to the IRS before you can start driving. You’ll use Form 2290 and either apply for an exemption or pay up to $504.17 (subject to increase). You won’t be able to get your authority or IRP License without proof.

Get your trucking insurance

You’ll need active insurance coverage including public liability insurance. The requirements vary based on state and federal laws, but you will need at least $750,000 of Bodily Injury (BI) and Property Damage (PD) liability insurance coverage. If you will be transporting hazardous materials, the requirement is $5 million.

The ATA has an agreement with Sentry as a preferred insurance provider. Most major insurers also have a commercial truck insurance product, or you can also find specialized truck insurance from companies like Owner Operator Direct .

Become a trucking authority

To run an interstate (operating across state lines) business in the U.S. transportation industry, you will need to get licensed as an operating authority with the Federal Motor Carrier Safety Administration ( FMCSA ). To apply, you’ll need to:

• Get your Department of Transportation (DOT) number here .
• Get the proper insurance .
• Apply for the Operating Authorities you wish to qualify under. There are multiple types .
• Pay $300 fee per Operating Authority.

When you perform these steps you will have a temporary operating authority for your self-owned trucking company. The DOT has to perform an audit before you have a permanent operating authority. These are not actually permanent, however, as they will take it away if you do not operate under the laws.

Join International Fuel Tax Association (IFTA)

You’ll want to join the International Fuel Tax Association. It was created under the International Fuel Tax Agreement to simplify the payment of fuel taxes in the continental United States, Alaska, and Canadian provinces.

Truckers are required to pay fuel tax based on the percentage of miles they drive in each state. To simplify the administrative costs, each jurisdiction handles its own member applications, tax returns, and audits. Read up on how it works on the IFTACH website .

You’ll need to apply at your local office and pay a fee which will provide you with two decals to prove your membership.

You can get more details on the IFTA website . 

You’ll need to file a tax return every year for your gas tax. Fortunately, you just file with your state and they’ll distribute it accordingly. You’ll need to track your miles and time in each state to pay the appropriate taxes whether you bought gas in that state or not. You can use a log book or an electronic log (elog). I talked to a relative that is a truck driver and he warned:

[su_quote] Be careful with elogs. When GPS goes down, and it frequently does, they may not log the miles. In addition, when they get hacked you have to get a new one. 16,000 drivers recently got warnings to get a new log or stop driving because of a hack of a provider. If you use them, also keep a manual log. [/su_quote]

Get an IRP plate

You’ll need an International Registration Plan (IRP) before you start a trucking company. An IRP is a plate that allows you to get plates that work in all states. You’ll want to go to the appropriate licensing office in your state to get these. You can find each state in the FMCSA list of providers .

Some states also require additional permits to operate within them. Mikael told us: 

[su_quote] Oregon requires a permit if you operate within the state but are from out of state. [/su_quote]

Allow a DOT Trucking company audit

When you start a trucking company, the DOT will conduct an audit during the first year to verify that:

• You are keeping proper records.
• You have a drug and alcohol testing program.
• All insurance is up to date.
• Periodic inspections are performed and documented.
• No major infractions incur.

You can learn more at FMCSA . If you do not pass this audit, your business will not get permanent authority to operate.

Keep reading for tips on how a successful trucking company gets customers.

With all the regulatory compliance that starting a trucking involves, it’s easy to lose sight of the end goal of any business: attracting and retaining new customers.

Getting customers for your new trucking business isn’t that hard these days. There is a huge shortage of drivers, and you just have to get your name out there.

Mikael had a ton to say about finding customers. He told us: 

[su_quote] My number one niche is reefer. Customers are everywhere. [/su_quote]

Create your brand

One of the best ways to attract new customers is by creating a memorable brand image through an effective branding campaign. 

Branding is the process through which a company’s mission, values, and image enters the public consciousness. 

Get a good logo

Successful branding begins with a good logo that represents the company effectively and in a simple, easily memorable manner.

Getting the logo right is an important step toward corporate success, and if you are not a natural artist or computer graphics expert, plenty of firms offer logo design for reasonable rates. It’s a worthy investment of resources toward a bright future for your new trucking business.

Advertise your brand on social media

Successful advertising happens in both traditional and social media. Mikael told us:

[su_quote] I advertise on Facebook, Instagram, and TikTok. [/su_quote]

He went on to explain that he does short videos to help people understand the industry better. He even hires new drivers through the videos. He had four interviews from a single TikTok video.

Determine your competitive advantage

Branding and advertising can all be for naught if your company’s competitive advantage is not clearly defined. A competitive advantage is a unique service, perk, or reward that differentiates your business from others. 

The trucking business is a very competitive industry with some large players that have thousands of trucks in their fleet and nearly half a million competitors. Some ways to differentiate your trucking company might be:

• Subscription-based models : Charge customers monthly for a guaranteed number of miles or pounds. Mikael has several customers that have a consistent pickup day and time. He’s able to reduce the administrative time and cost for them because they just routinely send their order.
• Service-based models : Guarantee on-time pickup and delivery (better follow through).
• Pricing: Offer premium service or discount service. For instance, you might give someone a discount if they have a delivery that you can just add onto your current load.
• Be more open : Mikael told us that different industries pay better at different times of the year. Share how you calculate pricing so people can create their own estimate and request a pickup.

Don’t neglect traditional marketing

Mikael reminded us that traditional marketing strategies like business cards and networking are really beneficial in the trucking industry. He told us that the trucking industry is in demand by most companies.

[su_quote] It’s always nice to know someone with a truck when you need to move. [/su_quote]

Always be prepared; you never know where you’ll find customers.

Links to resources about business marketing

There are a couple of excellent articles that focus specifically on getting customers. Forbes offers ten ways to get customers to your new small business, and Inc. offers the same, with a focus on also increasing your sales.

Mikael runs multiple businesses so he had a lot to say about how to manage a trucking business (or any business for that matter). Some of the advice he gave us included:

• Get a business bank account with a credit union.
• Make sure you have at least a personal credit score of 680. 
• Be sure to have at least $10K down payment if you’re financing the business.
• Always have money for incidentals. (His company had 2 flat tires in a week and 16 repairs in a month.)
• Use Quickbooks and hire a bookkeeper. 

He told us: 

[su_quote] My brother does the bookkeeping. [/su_quote]

He went on to explain how they try to grow. He explained:

[su_quote] I try to hit $10K per month per truck. I calculate earnings by the week, then try to hit  the median + 30%. Effectively, I’m trying to increase by 30% each week. [/su_quote]

Trucking companies have a lot of administrative work they have to do. If you’re a solo entrepreneur, you’ll be doing it yourself, or you can hire people to help you. A lot of truckers hire their wives to do the dispatch. This can be a good or bad thing. Make sure she understands what she’s doing.

The main administrative work is typically done by dispatchers. A dispatcher will normally make between $30,000 and $75,000 per year and have job responsibilities including:

• Providing estimates to customers
• Preparing dispatch documents
• Planning and adjusting routes
• Scheduling driver pickup and delivery times
• Communicating with customers about delivery or pickup times, freight limitations, and special requests
• Creating bills and invoices
• Maintaining call records, delivery and pickup times, driver routes, and route changes
• Updating drivers on transportation regulations and laws
• Reviewing drivers’ logs and comparing them to quoted arrival times.
• Logging shipping schedules 
• Monitoring truck repairs
• Scheduling maintenance
• Managing complaints

You can outsource your dispatch to a company like Cameron .

You’ll probably need some software to manage this so let’s look at some of the software Mikael suggests.

Mikael suggested the following software:

• Motive : This software is a combination of risk management, security, and customer relationship tools. When used with the video cam, it is also good for an educational tool.
• DAT board : Use this to find a load that you can use to improve your returns by running a fuller truck and getting loads for the return home.

We’ll answer some of the most frequently asked questions on how to start a trucking company in this section so you are better prepared for your own trucking business.

How to start a trucking business with one truck

You can either start your own trucking company as an owner-operator or pay someone else to drive the truck. You’ll want to: 

• Learn more about how to start a truck business.
• Write a business plan about how to start your own trucking company.
• Secure the funds for starting a trucking business.
• Go to a private truck driving school.
• Go through the entire regulatory process. We explain it more if you go to Step 4 in the blog.
• Find customers.
• Manage your company.
• Hire administrative help.
• Pay your taxes.

How to start a trucking business owner-operator

An owner-operator will be required to perform all parts of a successful business. You’ll need to:

• Get all business license requirements.
• Comply with government regulations.
• Maintain business insurance.
• Establish contracts.
• Manage cash flow and fuel costs.
• Haul loads.
• File IFTA’s quarterly tax returns.
• Maintain new or used trucks.

We created an owner-operator startup checklist for those who want more information on how to start a owner-operator trucking business. Download it below.

How to start a box truck business

Starting a box truck business is a little bit easier than other trucking companies. You’ll want to:

• Check if you need a CDL in your state and surrounding states. Get it if you need it.
• Start your LLC or Corporation.
• Get your state and local business licenses.
• Get a business bank account.
• Get your commercial driving and business insurance.
• Transport loads.
• Manage the finances.

Be sure to glance back at the steps included in this article if you have questions about these tasks.

Most box trucking companies are not required to have the following:

• International Registration Plan plates
• International Fuel Tax Agreement decals
• DOT registration
• Unified Carrier Registration

How to start a trucking brokerage business

A truck broker or freight broker is a company that has relationships with suppliers and transportation companies. They manage a load board and help both parties meet their unique business needs. They may be large businesses that also participate in hauling loads, or they may be strictly middlemen.

To start this type of company, you will need to follow the 7 steps outlined above, including:

• Understand how to start a trucking business.
• Write a business plan.
• Secure funding.
• Go through the legal proceeding requirements.
• Get customers.
• Manage your trucking finances.
• Handle administration. This section will be particularly important to a broker.

Read the whole blog for more information on how to start trucking business brokerages.

How to start a trucking business without driving

There are a few ways to start a trucking business without driving. Some of the trucking businesses that don’t require you to drive include:

• Freight factoring company : Provide loans on invoices for a percentage of the load.
• Freight brokerage : Develop relationships with shippers and truckers and play the middleman. You still need all the requirements of a trucking company, though.
• Process Agent: A process agent is a company that has a person and office in every state. They are necessary under the Unified Carrier Registration. You can find a full list on the FMCSA.
• Trucking Software Provider : If you think you can find ways to help truckers simplify reporting, financial projections, taxation methods, or other essential parts of their job, you might have a great opportunity because the industry is in constant flux.
• Hire drivers with CDLs: You can start a trucking business without a CDL, but you’ll have to pay truckers to haul the loads for you. Mikael operates in this manner but still has his CDL just in case something happens.

Who are good trucking influencers to follow on social media?

Checking out what other companies are doing can be really beneficial. Part Catalog has a great list of trucking influencers. We included two with the highest engagement and Mikael Sant’s links.

• Alex the Trucking Guy: YouTube /  Instagram
• Big Rig Barbie: YouTube /  Instagram
• Mikael Sant: TikTok /  Podcast

Starting a trucking company requires complying with a lot of regulations, a lot of administrative functions, and a lot of patience and determination to build a company that makes more than $75K per month. It’s achievable, though.

Just make sure it works with your life. While long-haul trucking is more profitable, you might want to start locally if you have a family you want to see every night.

Given the amount of regulation, starting a truck company might not be the first business you start unless you’re already driving and want to go independent. You can definitely build a successful career in trucking, but it’s a long haul.

For those who successfully scale the formidable barriers to entry, the financial rewards can be great. But the majority of trucking owners love the freedom of the open road and are typically mom-and-pop shops.

Do you have experience running a trucking business? What do you love about it? What would you change? With what other businesses do you get to explore the world as you work?

nice work https://binarychemist.com/

My Name is PRETTY NGOMANE. A south African female. Aspiring to do farming. And finding a home away from home for the differently abled persons in their daily needs.

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How to write a business plan in 12 steps (2024 edition)

Updated 18 April 2024 • 12 min read

This guide breaks down how to write a business plan, step-by-step, detailing what your document needs to include and what you need to think about to make your business plan as persuasive as possible.

What is a business plan?

A business plan is an essential document that can provide immense value for new and existing companies of all sizes. It is an overview that includes an outline of your business, its key objectives and plan for achieving important goals.

This information can be used to communicate strategic actions to internal teams and also attract interest from potential partners and investors . However, writing a business plan can be a lengthy and involved process. For many, using a business plan template can be a good way to get started.

For best results, you’ll need to do a lot of thinking and planning before you start writing your business plan. This way you have all the information and resources you need at your fingertips and won’t be under time pressure to come up with something at the last minute. After all, a well-thought-out business plan can help you avoid generic information and set your company up for success.

Download your free business plan template .

Why write a business plan?

Writing your business plan helps to get your strategy nailed down and onto the page. A plan that stays in your head is probably going to be full of unrealistic assumptions and biases, whereas a strategically thought-out and organised approach forces you to notice your blind spots and find a way forward.

If you’re looking for financing, a bank or investor needs to be persuaded by your business proposal and the opportunity to work with you. Therefore, a well-written business plan can help provide potential financial partners with the confidence that your business can become profitable. Your business plan gives them a comprehensive view of all aspects of your business and details your strategy for achieving your goals.

What are the main sections of a business plan?

Whatever your line of work, your business plan will generally need to provide the following:

An executive summary

A business overview

The market opportunity

Your products/services

How to write a business plan

Make sure you cover each of the following steps when preparing your document:

1. Write an executive summary

This section of your business plan should be 1–2 pages in length and enables potential financiers or partners to get an overview of what your business does and – most importantly — what the opportunity is for them. If they’re interested in the opportunity, they’ll conduct their own due diligence - and this will start with going through your business plan and financials.

It’s a good idea to write your executive summary last, when you’ve clarified your thinking around every section of the document. As an overview section, you don’t want to add any new content that isn’t in your business plan. Aim to keep this summary succinct and engaging by using simple, plain language, as this is much more persuasive than complicated or academic wording.

Use sub-headings and bullet points to help your most important information stand out, especially as busy executives may simply scan your executive summary and use this to decide whether they want to find out more.

What to include in an executive summary?

Make sure you include details on:

What your business does

What the opportunity is

What your unique selling points / differentiators are

How much funding you’re looking for

What the funding will be used for

How you'll succeed

Remember, you’re providing the big picture overview of your business - the detail is in the rest of the document and in the appendices.

2. Write your business overview

This section of your business plan needs to be more than just a list of what your business does. Its purpose is to excite those you’re hoping will work with you or help to fund your business.

Information to address includes:

What's the purpose of your business?

What problem does your business’ product or service solve?

What niche could it fill?

What’s different about your offering?

How are you better than anyone else at what you do?

Consider what your customer value proposition is by deciding what you want to achieve and what your number 1 benefit is for your customer.

3. Identify your USP

Think about what your unique selling points (USP) or differentiators are, and what proof-points you can provide to back them up.

For example, you can use terms like “market-leading” but if you don’t provide any evidence to back up your claims, your reader will take them with a big pinch of salt!

You should certainly reference any awards or endorsements that position you as the best person to provide your product or service, as well as any client testimonials. Make sure you include any education or experience that makes you an expert in your field as well.

4. Describe the market opportunity

Show you understand your industry, market and where you fit in it. While no-one can predict the future, offer up where you think the opportunity is for your business and make sales projections based on that. 

For example, imagine your business is selling personalised cookies - there's little competition in your area and you see your market opportunity to create designs for all calendar and holiday events. You expect to increase sales by 30% in one year and 50% in three years, driven primarily by word-of-mouth referrals.

Make sure you also consider macro trends that may create opportunities for you, such as social, environmental, or technological changes that may affect buying behaviour.

5. Include a SWOT analysis

Whatever your business strengths or opportunities, they’ll always be known and unknown weaknesses and threats; there’s no such thing as certainty in business or in life!

However, you can demonstrate that you’ve examined your business through different lenses and have a thorough understanding of it by doing a SWOT (strengths, weaknesses, opportunities, threats) analysis.

Don’t worry about drawing attention to your business’ shortcomings - every opportunity has them and it’ll give investors and partners confidence in you that you won't bury your head in the sand. Naturally, it's important that you specify what you’re going to do to address these weaknesses and counter these threats.

Here are some areas you can think about to get started: reputation, technology, location, experience, staff, overheads, competition, suppliers and price.

6. Present a competitor analysis

Let’s face it, no matter what industry you’re in, or what you’re selling, there’s going to be other businesses offering the same thing. But instead of worrying about the competition, use this as a positive opportunity to up your game and work out the unique advantages you have that will keep you competitive.

Identify your top 3 competitors and analyse what they're doing well and where they’re coming up short. Try to be as objective as possible and identify how to differentiate yourself from them.

You should also look into who the industry leaders are and what the benchmarks are for your industry so that you can set yourself targets for continuous improvement.

7. Create a customer persona

A customer persona is a fictional person who represents your company's ideal customer. Naturally, the persona can be based on a real person - the more you get to know your ideal customer, the more targeted and successful your marketing efforts will be.

To create a customer persona, you need to conduct research into your ideal customer’s age, sex, income, employment, daily activities, interests and hobbies. If you’re feeling unsure about your customer persona, you may need to give your ideal customer further thought and download the customer persona template to get started.

8. Write your marketing strategy

When you’ve created your customer persona, you need to work out how you’re going to reach them. Do they hang out on social media apps, like Facebook, Instagram, Pinterest, Twitter or LinkedIn? Or are they more used to local, traditional marketing like free local papers or high foot traffic areas?

Once you’ve figured where your audience is likely to hang out, you can outline your strategies for promoting and advertising your products or services in the next 12 months.

Make a list of the marketing channels you’ll use to achieve your advertising strategy and be sure to include your budget. How much can you set aside for advertising? And where are you most likely to see a return on your efforts? Paid ads on Facebook? Half or full paid spreads in an industry magazine? Or even a direct mail out? 

For more structured help around this, check out free course: Business 101 | Get social with your business on Facebook . 

9. Design your customer retention strategy

Business success relies heavily on the relationship you’re able to build with your customers. What techniques will you use to keep them coming back? Consider the following:

What can your business do to increase the number of repeat customers? 

Does your business have a referral or loyalty program? 

Do you have a post-purchase follow up in place?

Will you use surveys to track customer satisfaction?

What ways can you continue delivering outstanding service?

Is there a way to continue educating and adding value to your customers?

10. Present your financials

Most people who are looking at investing their time and/or money in your business will want to see your financial statements - your performance to date and your projections over the short and medium term. They'll also want to know how much you’ve received in funding to date and what these other sources of funding are - including your own investment.

Current finances

You need to show how your business has performed financially over the last year, highlighting metrics such as positive cashflow , net profit and assets.

Financial forecasts

You should also provide a balance forecast projecting total assets, total liabilities and net assets over 1, 2 and 3 years, and a profit and loss forecast for the same periods detailing gross profit /net sales, total expenses and net profit/loss. Finally, you should also provide a cash flow forecast month by month over the next year.

It’s also a good idea to speak to an expert like an accountant or bookkeeper about your finances and get advice on how best to present them in this all-important section of your business plan.

11. Detail how much funding is needed

Naturally, you also need to be very clear about how much money you’re looking for and what you plan to do with it. If you’re looking for a loan , you need to detail what it’s for, over what period it’ll be repaid, and what collateral you have to secure it.

12. Propose an exit strategy

Any financial stakeholder in your business will want a return on investment. If you’re pursuing this type of funding, you should include some detail on your proposed exit strategy . For example, do you want to sell the company at some point or go public?

Similarly, you should outline your succession plan so the business can continue to operate if you decide to step away from it. Likewise, you need a plan for what happens if the business loses money and can’t sustain itself. Documenting this means that everyone is on the same page and potential investors have this information upfront.

Frequently asked questions about writing a business plan:

When to write a business plan.

Typically, entrepreneurs write their business plans within the first year of operations. A business plan is a tool that helps business owners refine their strategy, attract partners and financiers, and grow their business.

If a business plan is written too soon, it may lack the substance that comes with time in the market. However, it’s important to note that a business plan isn't a static document - it can and should change as the business evolves.

How long should your business plan be?

There are no hard and fast rules around how long your business plan should be - it just needs to include all the relevant information. Aim for clear, concise sections and build a business plan that is as easy to read and navigate as possible.

Using a business plan template can help you make sure you have everything covered off, while also having a document that looks as professional as possible. Make sure you run a spelling and grammar check too - any sloppy errors can undermine your credibility.

What’s a business plan on a page?

It’s important to write your business plan as it helps to embed your strategy - as well as communicate what you’re about to potential partners or investors. When you have a comprehensive business plan you can easily adapt it to suit different audiences. For example, a full business plan is essential for raising capital but a business plan on a page may be enough for potential partners or employees.

What do venture capitalists look for in a business plan?

Venture capitalists invest money into businesses with the goal of achieving a return on their investment within the short to medium term. As a result, they’re looking for an attractive market opportunity, a clear point of differentiation, a strong management team, a proven track record, solid financials and, importantly, an exit opportunity.

Where to go for help or more information?

There are many great resources out there to help you fine-tune your business strategy and write your business plan. The Australian Government has a comprehensive website dedicated to supporting businesses at all stages of their journey.

You can also get help from Business Enterprise Centres , business advisors, accountants and fellow business owners. MYOB also has a list of business advisors who can give you feedback on your business plan, so your venture has the very best chance of success. 

Related Guides

How to get a business loan arrow right, how to find investors: a guide for startups arrow right, business models: definitions, types and key components arrow right.

Small Business Trends

How to create a business plan: examples & free template.

This guide has been designed to help you create a winning plan that stands out in the ever-evolving marketplace. U sing real-world examples and a free downloadable template, it will walk you through each step of the process.

Table of Contents

How to Write a Business Plan

Executive summary.

The Executive Summary serves as the gateway to your business plan, offering a snapshot of your venture’s core aspects. This section should captivate and inform, succinctly summarizing the essence of your plan.

Example: EcoTech is a technology company specializing in eco-friendly and sustainable products designed to reduce energy consumption and minimize waste. Our mission is to create innovative solutions that contribute to a cleaner, greener environment.

Overview and Business Objectives

This part of the plan demonstrates to investors and stakeholders your vision for growth and the practical steps you’ll take to get there.

Company Description

Include information about the company’s founders, their expertise, and why they are suited to lead the business to success. This section should paint a vivid picture of your business, its values, and its place in the industry.

Define Your Target Market

Example: Our target market comprises environmentally conscious consumers and businesses looking for innovative solutions to reduce their carbon footprint. Our ideal customers are those who prioritize sustainability and are willing to invest in eco-friendly products.

Market Analysis

Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.

SWOT Analysis

Competitive analysis.

In this section, you’ll analyze your competitors in-depth, examining their products, services, market positioning, and pricing strategies. Understanding your competition allows you to identify gaps in the market and tailor your offerings to outperform them.

Organization and Management Team

Example: EcoTech’s organizational structure comprises the following key roles: CEO, CTO, CFO, Sales Director, Marketing Director, and R&D Manager. Our management team has extensive experience in technology, sustainability, and business development, ensuring that we are well-equipped to execute our business plan successfully.

Products and Services Offered

Marketing and sales strategy.

Describe the nature of your advertising campaigns and promotional activities, explaining how they will capture the attention of your target audience and convey the value of your products or services. Outline your sales strategy, including your sales process, team structure, and sales targets.

Logistics and Operations Plan

Inventory control is another crucial aspect, where you explain strategies for inventory management to ensure efficiency and reduce wastage. The section should also describe your production processes, emphasizing scalability and adaptability to meet changing market demands.

Financial Projections Plan

In the Financial Projections Plan, lay out a clear and realistic financial future for your business. This should include detailed projections for revenue, costs, and profitability over the next three to five years.

Income Statement

The income statement , also known as the profit and loss statement, provides a summary of your company’s revenues and expenses over a specified period. It helps you track your business’s financial performance and identify trends, ensuring you stay on track to achieve your financial goals.

Cash Flow Statement

Tips on Writing a Business Plan

3. Set realistic goals: Your business plan should outline achievable objectives that are specific, measurable, attainable, relevant, and time-bound (SMART). Setting realistic goals demonstrates your understanding of the market and increases the likelihood of success.

FREE Business Plan Template

To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.

What is a Business Plan?

Why you should write a business plan, what are the different types of business plans.

In today’s fast-paced business world, having a well-structured roadmap is more important than ever. A traditional business plan provides a comprehensive overview of your company’s goals and strategies, helping you make informed decisions and achieve long-term success. There are various types of business plans, each designed to suit different needs and purposes. Let’s explore the main types:

Using Business Plan Software

Enloop is a robust business plan software that automatically generates a tailored plan based on your inputs. It provides industry-specific templates, financial forecasting, and a unique performance score that updates as you make changes to your plan. Enloop also offers a free version, making it accessible for businesses on a budget.

Business Plan FAQs

What is a good business plan, what are the 3 main purposes of a business plan, can i write a business plan by myself.

We also have examples for specific industries, including a using food truck business plan , salon business plan , farm business plan , daycare business plan , and restaurant business plan .

Is it possible to create a one-page business plan?

How long should a business plan be, what is a business plan outline, what are the 5 most common business plan mistakes, what questions should be asked in a business plan.

A business plan should address questions such as: What problem does the business solve? Who is the specific target market ? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?

What’s the difference between a business plan and a strategic plan?

How is business planning for a nonprofit different.

How to Write the Perfect Business Plan: 10 Essential Steps

Whether you’re starting a new small business or are already years into operating one, a business plan is one of the best ways to clarify your long-term vision. Follow our step-by-step guide to writing a highly effective business plan.

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hether you’re starting a new small business or are already years into operating one, a business plan is one of the best ways to clarify your long-term vision. While every business plan is different, there are several key elements to consider that will benefit you in the long run. 

Follow our step-by-step guide to writing a highly effective business plan. 

What is a business plan?

A business plan is a document that outlines your business goals and how you plan to achieve them. Ideally, this will become your roadmap for marketing, sales, finance, and growth. 

In other words, a business plan is...

• An explanation of your overall vision.
• A valuable tool to plan and track your business fundamentals.
• An overview of your path to profitability, which can help get funding for your company.

Do You Need A Business Plan?

While it’s not a requirement, having a business plan is strongly recommended. In a recent QuickBooks survey , nearly 70% of current business owners recommended writing a business plan.

Creating a business plan is especially useful in the following scenarios:

• Applying for business loans
• Seeking additional rounds of funding or investors 
• Growing your employee headcount  
• Attracting top-level management candidates 
• Looking for opportunities to scale your business

10 Steps To Creating A Comprehensive Business Plan

While not every business plan is the same, there are a few key steps you should take to create an effective and comprehensive document:

1. Create an executive summary

Think of an executive summary as your company's elevator pitch in written form. It should be 1 to 2 pages in length and summarize important information about your company and goals. If you are pitching your business plan to get funding, you should ensure your executive summary appeals to investors.

What should you include in an executive summary?

• An overview of your business
• Your company mission statement
• A concise description of products or services offered
• A description of your target market and customer demographics
• A brief analysis of your competition
• Financial projections and funding requirements
• Information about your management team
• Future plans and growth opportunities
• An overall summary of your business plan

2. Write your company description

Your company description is a more detailed and comprehensive explanation of your business. It should provide a thorough overview of your company, including your company history, your mission, your objectives, and your vision. A company description should help the reader understand the context and background of the business, as well as the key factors that contribute to its success.

What should you include in your company description?

• Official company name 
• Type of business structure
• Physical address(es)
• Company history and background information
• Mission statement and core values
• Management team members and their qualifications
• Products and services offered
• Target market and customer segmentation
• Marketing and sales strategy
• Goals (both short- and long-term)
• Vision statement

Novo Note : The company description is your chance to expound on the pain points your company solves. It should also give a reader an accurate impression of who you are. 

3. Conduct and outline market analysis

This is one of the most important steps in building a business plan. Here, you will assess the size and dynamics of the market your business operates in.

How to conduct a market analysis

Market analyses include both quantitative and qualitative data. You may want to conduct surveys or lean on existing industry research to gather this information. You’ll want to answer:

• What is the size of the market?
• How much revenue does your industry generate?
• What trends are impacting this industry?
• Where are opportunities for innovation?
• What are the most well-known companies in the industry? What tactics do they use to sell to customers? How do they price their offering?
• Where are there gaps in the market? 
• What are your customer demographics? What problems do they have that need solving? What are their values, desires, and purchasing habits?
• What barriers to entry, if any, exist? These could include startup costs, legal requirements, environmental conditions that impact consumer behavior, and market saturation.

What is your target market?

In this section, you will specify the customer segment(s) you’re targeting . You can divide customers into small segments organized by age, location, income, and lifestyle. The goal is to describe what type of consumer will be most interested in your offering.

Novo Note : Regardless of your company’s size, understanding the trends and opportunities within your target market enables you to build a more effective marketing plan to distinguish yourself from the marketplace and grow your business. This analysis might also help you find potential customers or new products you could offer. 

4. Analyze your competitors

After conducting a market analysis, you need to do a deep dive into your competitors. Look at how the competition is succeeding or failing and how each competitor has positioned itself. For example, you might want to evaluate your competitors’ brand, pricing, and distribution strategies. 

How to conduct a competitive analysis

You’ll want to research your competitors and ask the following questions:

• What are their strengths?
• What are their weaknesses?
• What are their customer reviews like?
• How do they price their offering(s)?
• What are their value propositions?
• What marketing and sales channels do they leverage?
• How are they growing and evolving?

Novo Note : After you develop a strong understanding of the competitive landscape, consider how your business is unique. Solidifying your competitive advantage can help you appeal to your target audience.  

5. Describe your products or services

This is your chance to go into more detail about the products and services you offer! Use this opportunity to note where your offering or service differs from others in the industry. Highlight the standout features of your product, your company’s unique ability to solve customer problems, and your product roadmap.

What to include:

• Your product catalog
• Key differentiating features
• Information about the production process
• The resources required for production
• Plans for future product releases

6. Define your marketing and sales strategy

Your marketing plan describes your strategy for connecting with your target market and generating leads. It doesn't need to be full-fledged at this point, but it should answer who you're trying to sell to and how you plan to target them. Investors also want to know how you plan on selling your brand and breaking into the market, so make sure to consider their perspective as you develop your marketing strategy.

• Your sales and marketing budget
• Your key sales and marketing objectives
• Details about your sales process and sales goals
• Platforms or strategies you’ll employ to reach your target audience
• PR initiatives, content ideas, and social media strategies

7. Gather your business financials and outline financial projections

Your financials section lays out your company's past and current performance. You can also include a roadmap that dives into financial projections for your business. Aim to include projections for the next five years at a minimum.

• Income statements
• Cash flow statements
• Balance sheets
• Explanation of any significant changes

Novo Note : Novo offers integrations with accounting software like Quickbooks and Xero , allowing you to seamlessly access all your financial information within your business checking account .

8. Describe your organization

Your business plan should also include an organizational chart that maps your company’s structure. 

What to include :

• Company’s management structure
• Other key personnel, along with their roles and responsibilities
• Expertise of your team (feature any specialists or experts)

Novo Note : This is also a good place to explain the legal structure of your company — for example, if you are an LLC , a corporation, or a sole proprietorship . 

9. Outline your funding requests

If you’re looking for business funding, include an outline of any funding requests and requirements.

• Why you are requesting funding
• What the funding will be used for specifically
• Desired terms and conditions of funding
• The length of time over which the funding will be used
• Type of funding required (for example, debt or equity)

Novo Note : Propose a five-year funding plan, and aim to be as detailed as possible about how you will utilize the funds to grow your business. 

10. Create an appendix

The last section, the appendix, includes supporting documents and additional information not listed elsewhere in your business plan. Not all of these items are necessary to include, so you’ll need to evaluate which are most relevant to your business. You might also want to include a table of contents to help keep the appendix organized.

Items to consider including:

• Bank statements
• Business credit history
• Legal documents
• Letters of reference

Sample Business Plans

Need an example to help you through the process? Check out the Small Business Administration’s downloadable examples or this even more in-depth one from Harvard Business School.

Tips For Creating A Great Business Plan

Here are some of our favorite tips for creating the most effective and efficient business plan:

• Keep it short and sweet : You want to be sure people will actually read your business plan, so stay on topic and to the point.
• Make it digestible : No need to use the fanciest terminology or draft up the most complex graphs. Keep wording and ideas simple and straightforward — it’s the most impactful way to get your information across.
• Triple-check your work : There’s nothing worse than noticing a grammar, spelling, or mathematical error when you’re presenting your vision. So proofread… and then proofread again!
• Start early : It’s never too late to write a business plan, but the earlier you do it, the stronger your strategy for growth and expansion will be from the start.
• Reference credible sources : If you are going to reference third-party research in your business plan, lean on sources that are widely recognized as authorities. Try tapping into trade associations and government resources, like U.S. Census data or data from the Bureau of Labor Statistics.
• Set yourself apart : Wherever you can, explain why your product or service stands out and how it can solve a problem.
• Be objective : Avoid the instinct to only showcase the good. Stakeholders and investors want to know that you are realistic and have a contingency plan if you hit a bump in the road.

Updating Your Business Plan

As with most situations in business (and life), things change! So don’t think that your business plan has to be set in stone after you create it. Instead, you should plan to return to it once a year and make updates.

Be sure to do the following when you review and update your business plan:

• Analyze your progress: Review your original business plan and compare it to your actual financial data. Are you moving in the right direction, or do you need to reevaluate your strategy?
• Consider whether your product offerings need to be adjusted: For example, decide if you want to diversify your product offerings or scale back and focus on a singular product. 
• Reassess your overall goals: Perhaps your sales goals have changed with your new marketing strategy. Or maybe your customer’s needs have changed. In any case, be flexible where needed. 

We know there’s a lot that goes into creating a business plan, but it’s worth it. There’s no one-size-fits-all formula for developing a business plan, but our steps outlined above will put you on the right track for developing a comprehensive, investor-friendly document.

Take time to review your business plan annually and make changes as your needs and goals change.

Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.

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The Business Planning Process: 6 Steps To Creating a New Plan

In this article, we will define and explain the basic business planning process to help your business move in the right direction.

What is Business Planning?

Business planning is the process whereby an organization’s leaders figure out the best roadmap for growth and document their plan for success.

The business planning process includes diagnosing the company’s internal strengths and weaknesses, improving its efficiency, working out how it will compete against rival firms in the future, and setting milestones for progress so they can be measured.

The process includes writing a new business plan. What is a business plan? It is a written document that provides an outline and resources needed to achieve success. Whether you are writing your plan from scratch, from a simple business plan template , or working with an experienced business plan consultant or writer, business planning for startups, small businesses, and existing companies is the same.

Finish Your Business Plan Today!

The best business planning process is to use our business plan template to streamline the creation of your plan: Download Growthink’s Ultimate Business Plan Template and finish your business plan & financial model in hours.

The Better Business Planning Process

The business plan process includes 6 steps as follows:

• Do Your Research
• Calculate Your Financial Forecast
• Draft Your Plan
• Revise & Proofread
• Nail the Business Plan Presentation

We’ve provided more detail for each of these key business plan steps below.

1. Do Your Research

Conduct detailed research into the industry, target market, existing customer base,  competitors, and costs of the business begins the process. Consider each new step a new project that requires project planning and execution. You may ask yourself the following questions:

• What are your business goals?
• What is the current state of your business?
• What are the current industry trends?
• What is your competition doing?

There are a variety of resources needed, ranging from databases and articles to direct interviews with other entrepreneurs, potential customers, or industry experts. The information gathered during this process should be documented and organized carefully, including the source as there is a need to cite sources within your business plan.

You may also want to complete a SWOT Analysis for your own business to identify your strengths, weaknesses, opportunities, and potential risks as this will help you develop your strategies to highlight your competitive advantage.

2. Strategize

Now, you will use the research to determine the best strategy for your business. You may choose to develop new strategies or refine existing strategies that have demonstrated success in the industry. Pulling the best practices of the industry provides a foundation, but then you should expand on the different activities that focus on your competitive advantage.

This step of the planning process may include formulating a vision for the company’s future, which can be done by conducting intensive customer interviews and understanding their motivations for purchasing goods and services of interest. Dig deeper into decisions on an appropriate marketing plan, operational processes to execute your plan, and human resources required for the first five years of the company’s life.

3. Calculate Your Financial Forecast

All of the activities you choose for your strategy come at some cost and, hopefully, lead to some revenues. Sketch out the financial situation by looking at whether you can expect revenues to cover all costs and leave room for profit in the long run.

Begin to insert your financial assumptions and startup costs into a financial model which can produce a first-year cash flow statement for you, giving you the best sense of the cash you will need on hand to fund your early operations.

A full set of financial statements provides the details about the company’s operations and performance, including its expenses and profits by accounting period (quarterly or year-to-date). Financial statements also provide a snapshot of the company’s current financial position, including its assets and liabilities.

This is one of the most valued aspects of any business plan as it provides a straightforward summary of what a company does with its money, or how it grows from initial investment to become profitable.

4. Draft Your Plan

With financials more or less settled and a strategy decided, it is time to draft through the narrative of each component of your business plan . With the background work you have completed, the drafting itself should be a relatively painless process.

If you have trouble writing convincing prose, this is a time to seek the help of an experienced business plan writer who can put together the plan from this point.

5. Revise & Proofread

Revisit the entire plan to look for any ideas or wording that may be confusing, redundant, or irrelevant to the points you are making within the plan. You may want to work with other management team members in your business who are familiar with the company’s operations or marketing plan in order to fine-tune the plan.

Finally, proofread thoroughly for spelling, grammar, and formatting, enlisting the help of others to act as additional sets of eyes. You may begin to experience burnout from working on the plan for so long and have a need to set it aside for a bit to look at it again with fresh eyes.

6. Nail the Business Plan Presentation

The presentation of the business plan should succinctly highlight the key points outlined above and include additional material that would be helpful to potential investors such as financial information, resumes of key employees, or samples of marketing materials. It can also be beneficial to provide a report on past sales or financial performance and what the business has done to bring it back into positive territory.

Business Planning Process Conclusion

Every entrepreneur dreams of the day their business becomes wildly successful.

But what does that really mean? How do you know whether your idea is worth pursuing?

And how do you stay motivated when things are not going as planned? The answers to these questions can be found in your business plan. This document helps entrepreneurs make better decisions and avoid common pitfalls along the way. ​

Business plans are dynamic documents that can be revised and presented to different audiences throughout the course of a company’s life. For example, a business may have one plan for its initial investment proposal, another which focuses more on milestones and objectives for the first several years in existence, and yet one more which is used specifically when raising funds.

Business plans are a critical first step for any company looking to attract investors or receive grant money, as they allow a new organization to better convey its potential and business goals to those able to provide financial resources.

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Start » startup, writing a business plan here’s how to do it, step by step.

At the foundation of every strong business is a solid business plan. Looking to develop a business plan for your new venture? Here’s what to include in each step.

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At the foundation of every strong business is a solid business plan. A business plan outlines important information regarding a company’s operations and goals, and serves as a blueprint for how to achieve those goals. This document not only helps entrepreneurs think through and research their venture thoroughly, it also demonstrates to investors the viability of the business idea.

If you’re looking to develop a business plan for your new venture, it’s important to include all the necessary information. Here are the nine sections to include in a strong business plan, step by step.

1. Executive summary.

Your business plan should begin with an executive summary, which outlines what your company is about and why it will succeed. This section includes your mission statement, a brief description of the product or service you are offering, a summary of your plans and basic logistical details about your team.

2. Company description.

Your company description should further detail the logistics of your business, such as its registered name, address and key people involved. Here, you should also provide specific information about your product or service, including who your business serves and what problem you solve for that population.

3. Market analysis.

Conducting thorough market research can help you understand the nature of your industry, as well as how to stand out from competitors. Include a summary of your research findings in this section. Consider any trends or themes that emerge, what other successful businesses in the field are doing (or failing to do) and how your business can do better.

[Read: How to Conduct a Market Analysis ]

4. Organization and management.

This section should include your business’s legal structure — for example, whether you are incorporating as an S or C corporation, forming a partnership or operating as an LLC or sole proprietor. Provide pertinent information on your leadership team and other key employees, including each relevant individual’s percent of ownership and extent of involvement.

Describe how you will attract and retain your customer base, including what makes you stand out from competitors, and detail the actual sales process.

5. Products/services.

Your product or service is the crux of your business idea, so you’ll want to ensure you make a strong case for it being on the market. Use this section to elaborate on your product or service throughout its life cycle, including how it works, who it serves, what it costs and why it is better than the competition. If you have any pending or current intellectual property, include this information here. You can also detail any research and development for your product or service in this section.

6. Marketing and sales.

In this section, you should explain what your marketing and sales strategies are, and how you will execute them. (Note that these strategies will likely evolve over time, and you can always make adjustments as needed.) Describe how you will attract and retain your customer base, including what makes you stand out from competitors, and detail the actual sales process.

[Read: 5 KPIs to Measure Your Business’s Marketing Success ]

7. Funding request.

If you’re seeking funding, this section is critical for investors to understand the level of funding you need. Specify what type of funding you need (debt or equity) and how much, as well as how that capital will be used. You should also include information on any future financial plans, such as selling your business or paying off debts.

8. Financial projections.

The goal of your financial projections section is to show that your business is viable and worth the investment. Offer a financial forecast for the next five years, using information from current or projected income statements, balance sheets and cash flow statements to support it. Graphs and charts can be an especially helpful tool in visualizing your business’s finances.

9. Appendix.

Finally, use the appendix for any information that could not fit or did not apply to other sections of the document. Information such as employee resumes, permits, credit history and receipts are often included in this section. If you have a long appendix, consider adding a table of contents to make it easier for the reader.

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How to create a business plan: a step-by-step guide.

From entrepreneurs with the seed of a great idea to established companies, every business needs a business plan.

But what is a business plan exactly? Is it worth the time and effort to write one?

Let’s take a look at why your organization needs this business roadmap and how it can set you up for long-term success.

What Is a Business Plan?

The easy answer, of course, is right there in the name—it’s a plan for your business. It serves as a guide for how you manage your organization.

Considered a basic business principle for startups, business plans are helpful for all kinds of companies.

For example, a plan for a startup might be a simple one or two-page document, sometimes referred to as a lean plan. It lays out only the essential information, immediate milestones the firm wants to reach and how to secure funding to meet those goals.

For a larger or established company, the plan might be more comprehensive in a traditional format . It typically includes areas such as financial data, a marketing overview and future plans for each department in the organization.

In either case, the intent is to provide a map for your business. You want to answer questions like how the business works, what your goals are and how your team will reach them.

Business plans can be internal or external, meaning it is used as a guide to get your team on the same page or an overview for those with whom you do business or to pitch to those who want to invest in your ideas.

Why Do You Need a Business Plan?

As with the plan itself, the need and purpose for one vary between businesses.

Let’s take a look at two scenarios, involving ownership of rental property.

1. Growing Business

Imagine you own and rent a handful of condominium properties. You have plans to acquire more and turn it from a hobby to a full-time pursuit. This means a lot is going on in the early stages of your organization’s development. A business plan breaks down the moving pieces into more manageable portions.

For your growing real estate portfolio, those pieces include acquisition and capital improvement costs. Also important are income projections and growth or financial benchmarks. Plus, many tasks exist with finding a property, securing loans and closing deals.

One of the central uses of most startup business plans is for raising investment funds . A business plan conveys what the new company needs and convinces others to help fund its growth. For banks, lenders or investors, the business plan shows them the who, what and how of the business operations. Then it communicates why the new business is a solid investment.

2. Established Firm

A second scenario involves an already established real estate firm. You own several different types of properties and rent and manage them with an in-house team.

A business plan for an existing company takes on a much different purpose than for the startup.

Even if profitable, your company still needs a pathway to future growth. You need strategies for responding to a changing market or tracking current projects. You also want to establish goals or metrics to define your success.

An established owner might use a business plan to determine what it takes to move into a new market. You might tweak that same plan in response to new competition entering the market.

For firms currently on solid footing, the business plan helps assess where they stand. It can then detail their next steps for achieving further success and how to accomplish more, faster.

Updating Your Plan

After writing a plan, one of the key questions becomes how often do you update it. The answer is—it depends.

There are times when you might need a “one-off” version. For instance, those that are provided to a specific shareholder or future partner.

In other cases, you may develop a plan for the fiscal year 2020. Then that plan will serve as the basis for your 2021 plan, then the 2022 plan and so on.

You should approach your plan as a living, breathing document. Create a master business plan, one kept up to date based on your company’s activity. You can then tailor that plan to a specific request or need without having to recreate it from scratch.

Elements of a Business Plan

Contrary to popular belief, business plans don’t need to be thousand-page documents. The critical factor is that they meet the needs of your business.

Business plans themselves come in various forms. As we noted, startups might use a one-page document to ask for initial funding. A legacy company might use a 10-page analysis to showcase its financial health.

Both could even be for the same audience , such as a financial institution. Or it could be used for customers or suppliers. Whoever it’s directed toward, the narrative of the plan serves the company that is creating it.

Despite a difference in style or purpose, every business plan includes a handful of central elements.

View these as your jumping-off point when writing the first draft of your plan. Hone in on the information that’s important to your organization to create a plan that reflects your company’s needs.

Executive Summary

The one universal aspect for every plan is the inclusion of an executive summary . This is your plan’s introduction to the reader, so be sure it’s well-constructed.

The key to your executive summary is providing meaningful, relevant information in a brief description. Your main points should cover:

• Why your company’s expertise provides the best solution in your particular field.
• Why your specific area of focus is a favorable market in which to take part.
• Why your firm is best positioned to meet the market’s needs in this area.

To stand out, allow your introduction to mirror your firm’s culture and voice. If you produce and sell skateboards, let your passion for those unique boards shine through in the summary. If your organization is a financial services company, your summary should reflect a firm grasp of investment trends and customer needs.

To captivate your audience, both internal and external, start out with a compelling summary.

Company Overview

This second section in a business plan is straightforward and includes the background and history of your organization. Keep your firm’s bio short and to the point. Summarize your location(s), history, significant accomplishments and ownership or legal data.

If your group has a mission statement , include it in this section as well.

Some internal plans often leave out the company bio. Write one anyway. It’s good practice to convey your organization’s story. Plus, if you have it written, it’s ready to go should you ever need to publicly share it.

Product or Service Information

In this section, you’ll detail what your company does. This includes the goods you produce and sell or the services you provide. Make this section effective by capturing the following:

• How your solution is a benefit to customers.
• How you produce that solution, such as the lifecycle of product production or philosophy and method behind a service.
• Is your solution proprietary? Does it feature copyrights or patents?
• What is your company’s market advantage in what you do?

With product details, it’s best to paint a picture of the marketplace then detail how your business is positioned as a leader in that specific market.

Marketing or Sales Plan

Within your business plan, it’s not necessary to drill down into the finer details of every area. This is most true with your marketing or sales strategy. You don’t have to list every advertising source, but you should convey a grasp of your target demographics and how to reach them. You can include key points such as:

• How you price your offerings.
• How you promote and generate interest and sales from new customers.
• How you will keep those customers.

While product data shows your current market position, marketing data focus on your tactics to keep and grow that market share .

For potential investors to know whether or not to invest, they need to know financial information. While the level of financial detail varies based on the audience’s need, the best financial plans feature the following:

• Financial forecast—this varies with industry but should include at least a five-year forecast.
• Income statement.
• Balance sheet.
• Cash flow statement.
• Capital expense expectations.
• Financials show both the current monetary health of your firm and what your future success may look like.

If you’ve got a lot of good data, don’t hold it back. This is especially true if the plan is to attract investors. The more comprehensive your financial data, the better.

Organizational Team

Your team summary is an extension of your company bio. The goal is to clearly define your company’s hierarchy and the key players at the top. This induces any influential department heads or partnerships you’ve built.

You also want to identify the principles that govern your company’s management style. Company culture is an underrated aspect of today’s business climate. Placing importance on it in your business plan will set yours apart from those that don’t. This is also a good spot to detail any personnel plans or challenges to consider.

Additional Elements

Depending on the purpose of the business plan or its intended audience, there are two other sections worth noting.

In creating a comprehensive plan, you may need to include supporting documentation. The appendix helps organize requested materials or information that did not fit within your primary plan. These inclusions may consist of the following:

• Contracts or legal documents.
• References.
• Permits or licenses.
• Product specs or images.
• Organizational charts.
• Detailed financial reports.

Funding Request

For startups, or even established firms, seeking investment, you’ll want to include a dedicated section that outlines the request . You should specify the type of funding you need, how you’ll apply the funds and over what timeframe. It also helps to include a note on the financial endgame for your organization.

Final Thoughts

Whether for securing funding or getting your established team on the same page, business plans are invaluable for providing a pathway to success.

Develop a plan that best serves your company and its future growth. Keep it up to date and focused on the elements vital to your success, including where you’ve been, where you want to go and how you plan to get there.

A great business plan doesn’t need to be expertly written to be effective. It should, however, be written so you can expertly execute it.

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Kacey Spencer

Kacey Spencer (B.S. ’12, MBA ’20) previously served as development coordinator for Cornerstone University’s WCSG Radio. She also served as an enrollment counselor for Cornerstone University’s Professional & Graduate Studies division. She graduated in 2012 with a bachelor’s in business management. She enjoys cooking, reading, event planning and being outside in nature.

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Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on January 15, 2022 Updated on April 11, 2024

Owning a successful business is one of the most rewarding things you can do with your life. It’s empowering and liberating, and allows you to produce something of value and build a legacy — all while making good money! 

You’ll be in control, answering to no one but your customers, working when you want, creating jobs, and making a living. And who knows how big your business could become. Bill Gates started tinkering with computers in his garage, and today Microsoft is worth $310 billion. Sam Walton started out with a little five-and-dime store in Bentonville, Arkansas, and today Walmart is worth $145 billion. 

Do you have what it takes to be the next Sam Walton or Bill Gates? Being a successful entrepreneur is not easy. To achieve your dreams, you’ll have to eat, breathe, and sleep your business. Your road to entrepreneurial independence begins with learning. This step-by-step guide will provide the foundation of information that you need to put you and your new business on the path to success. 

Key Small Business Statistics, Trends and Predictions

The Small Business Administration (SBA) defines small businesses as having less than $40 million in annual revenue or fewer than 1500 employees.(( https://www.census.gov/library/stories/2021/01/what-is-a-small-business.html )) For example, a roofing contractor is a small business if its annual revenue is $16.5 million, while an asphalt manufacturier with 2,000 employees is a medium-sized business, not a small business. The SBA also provides a detailed list of size standards for various types of business.(( https://www.ecfr.gov/current/title-13/chapter-I/part-121#121.201 ))

The US is home to nearly 32 million small businesses, representing 99.9% of all businesses in the country and nearly two-thirds (65%) of the jobs.(( https://cdn.advocacy.sba.gov/wp-content/uploads/2020/11/05122043/Small-Business-FAQ-2020.pdf )) Small businesses are the foundation and drivers of the $20-trillion US economy, the world’s largest. The three largest industries that dominate the pool of small businesses are real estate, retail, and manufacturing.

But one in five businesses fail within their first year, and only half survive for five years.(( https://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm )) After 10 years only about a third of small businesses are still going. The main reasons these businesses fail are:

• Lack of funding
• Poor management
• Weak business model
• Ineffective marketing

But don’t let this discourage you, because these hurdes can be overcome if you educate yourself thoroughly before starting your business. Of course, some things you will learn as you go, but the more you know going in, the more mistakes you’ll avoid. 

Among the most profitable types of small businesses are:

• Accounting and bookkeeping
• Real estate and leasing
• Property management
• Property appraisal
• Legal services
• Healthcare services
• Coaching (for example: life , health or financial coaching ) and consulting
• Warehousing and storage

However, it might be better to look for opportunities in fastgrowing industries:

• Residential remodeling
• Home healthcare
• Wedding-related businesses (for example: wedding rental , wedding venue or wedding planning )
• Online learning
• Food delivery
• Virtual fitness
• Online writing and editing  
• Cybersecurity

Despite the pandemic-driven lockdowns, or perhaps because of them, the number of startups increased nearly 25% in 2020.(( https://www.uschamber.com/on-demand/economy/how-the-small-business-sector-has-grown-throughout-the-pandemic )) As people lost their jobs and found themselves stuck at home, they decided to embrace their entrepreneurial streak and capitalize on the available opportunities. Now, analysts expect some 17 million new businesses will launch in 2022, and the trend is likely to continue for some time.(( https://quickbooks.intuit.com/r/inspiration/new-business-insights-dec-2021/ )) 

Trends to watch when considering starting a business include:

• Ecommerce has exploded in recent years, so there’s a lot of opportunity online 
• Fitness apps are expected to grow by more than 300% by 2026(( https://www.marketdataforecast.com/market-reports/fitness-app-market ))
• Green companies with eco-friendly products and services will also do well 
• Technology that enables and improves remote work will expand
• Custom, personalized products are in greater demand of late 
• Freelancers and gig workers are expected to dominate new businesses
• Social media is now a sales channel, expanding opportunities for businesses

It’s also important to be aware of the challenges small business owners face. Lack of funds is often a problem, so strong financial management is crucial. Business owners should be careful to avoid investing too much in inventory and loading themselves down without access to adequate cash. At the same time, it’s also wise to not try to grow too fast when you might not have the capital to manage that growth.

Other challenges include:

• Finding good employees is a constant challenge. High employee turnover can erode performance and productivity. 
• Having an appealing and popular online presence is difficult considering the stiff competition. 
• Time can be an issue for entrepreneurs since they often have to wear many hats and put out many fires.
• Keeping up with licensing and permits and other government regulations can be challenging. It’s often advisable to have professional help to stay in compliance.
• Economic fluctuations are something that can’t be controlled, but affect many industries.
• Business owners need to expect the unexpected, particularly in light of the pandemic struggles everyone has faced. It’s important to have contingency plans for when disaster strikes.
• It’s helpful to have a diverse customer base and not sell just to one group or demographic. Because if that group switches to a competitor, you’ll be in real trouble.

Finally, it is critical that you examine and consider relevant market forecasts. As a business owner, you’ll need to have a long-term strategy and be aware of coming economic changes and turmoil. Some key predictions to pay attention to include:

• Consumers are demanding better quality and better service. It’s important to have a unique idea and execute it precisely — and keep customer demand in mind.
• Engaging content and marketing is key to success. When you create content for your website or within your marketing, it must be appealing and intriguing to your target market. 
• Telecommuting and remote work is increasingly popular, so be wise about the space you’ll need for your business, and whether you need an office at all. 
• Personalization in marketing is important. Consumer demands are higher, and they want to be communicated with as individuals, not a group.
• Touchless payments and tech shopping options are here to stay.
• Visual content in marketing (photo and video) is overtaking written content.
• Adaptability is critical to overcoming unexpected hurdles.
• Digital communication is becoming more common than in-person communication, both employee to employee, and business to customer. Strong written communication skills will become even more important.

Step 1: Choose a Business Idea

Choosing a business idea is the first step. You may have several ideas already that you can choose from, or you may not have gotten that far.

If you’re starting from scratch, there are many ways to generate business ideas:

• Look for a problem that needs to be solved in the market. 
• Follow your passion. What do you love, or what are you good at that could become a business? Focus on your skills, experience, and something that you’re passionate about, such as a hobby. What business suits your personality, plans, preferences?
• Look for market gaps. For example, maybe your area needs a cool third-wave coffee shop or a reliable electrician.  
• Online businesses have seen huge growth in recent years, as have home-based businesses. Maybe building a strong e-commerce site from home could be your route to success. 
• Brainstorm. Go to a high-traffic spot — maybe a popular cafe or a mall — and be observant. Watch what people wear, do, buy, and where they go to spend their money. Many great businesses started out as “napkin ideas”.

Once you have a few ideas in mind, you’ll need to do some homework to decide if your ideas are feasible based on your situation and what you want to achieve. Here are some things to consider when choosing a business idea:

• Investment required –  How much will you need to start the business?  Do you have access to funds?
• Time needed to build the business –  How long will it take for you to actually start selling and making money?
• Industry trends (growing, stable or declining) –   If the industry is declining, is it really a good idea to enter the market?
• Revenue potential –  How much do you realistically think you can sell?
• Profit potential –   How much will you make after expenses?
• Time required & lifestyle factors –   Having your own business is hard work. Consider how it’s going to affect your daily life.

Market research 

It’s very important to do some market research via market research tools for a new business. Google your industry to see if it’s growing or declining, which segments are doing best and likeliest customer groups. 

The best market research, however, is direct market research. Ask people what they think of your idea, whether they would buy from you, and for how much. You can ask people you know, or conduct focus groups, bringing potential customers together online and asking for their feedback.

You can also test the market by offering an early version of your product to see if people will actually buy it.

How much does it cost to start a business? 

According to the SBA, the average startup costs about $3,000 to get up and running. Startup costs can vary greatly, however, based on the type of business. Before you take the leap, it’s wise to consider all costs, including licenses and permits, building a website, insurance, marketing, and producing your product or service. 

How much can you earn from a business?

The average salary for a small business owner is about $65,000. This is not the same as profit, however. Your salary is an expense of the business that is paid from profits. Your profit is what is left after you deduct expenses from revenue. Your company may have a profit even after your salary is paid.

What barriers to entry are there?

Every sector and segment presents barriers to entry. Your type of business may face high startup costs, significant knowledge and training requirements, or a highly competitive marketplace. It’s important to be aware of these barriers, and prepare for them, before you start your business. 

Step 2: Choose Your Business Location

Many businesses can be run from home, particularly online businesses. This helps keep costs low and boosts your profit margin. 

If you’re starting a business that needs a storefront or production facility, consider what you need for that location to be successful, such as easy access and adequate parking. If you will have a retail store, it’s preferable to be in an area with a lot of foot traffic and little direct competition. 

Many businesses, particularly online businesses, are not location-dependent. You can run an ecommerce business, for example, from anywhere and reach a global audience. This is true for any business that is conducted only online.

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office or production facility. Find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

To find out the requirements for starting a business in your state, choose your state from the list below. You will find all the specifics and information you need and other resources you need to start a business in your state.

Choose state

• Connecticut
• Massachusetts
• Mississippi
• New Hampshire
• North Carolina
• North Dakota
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• West Virginia

Step 3: Hone Your Idea

Now that you know what’s involved in starting a business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Why? Identify an opportunity

Research similar businesses in your area to examine their products or services, price points, customer reviews, and what sells best. You’re looking for a market gap to fill. For instance, if you want to open a restaurant, maybe the local market is missing a vegan restaurant. 

You might consider targeting a niche market by specializing in a certain aspect of your industry. This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

You’ll need to make a list of all the products and services you will offer. Maybe you have one product idea, but you could also offer related products. For example, if you’re going to open a bookstore, you could also offer literary-related T-shirts, mugs, and gifts. 

How much should you charge for products or services?

You’ll need to research the market to see what prices are for similar products and services. You want to be competitive, and there are a few different pricing strategies you could use. 

If you choose to be a value-based brand, like Walmart, your prices should be slightly lower than the competition. If you choose to position your company as a high-quality luxury label, your prices will likely be a little higher than your competitors.  

Of course, you need to make sure your prices are high enough to make a profit. Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price point. Remember, the price you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market depends on your products and services – who is most likely to buy what you’re offering. You may have a product that will appeal to young women, in which case you can find them on sites like Instagram and TikTok. Alternatively, maybe your customers will be business owners, so you’ll want to market to them on business-related sites like LinkedIn.

Step 4: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “meats” for a butcher, boosts SEO
• Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator . Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

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Step 5: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary : Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview : Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services : Describe your offerings in detail.
• Market Analysis : Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis .
• Competitive Analysis : Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing : Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team : Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan : Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan : Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix : Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider finding and hiring a business plan specialist to create a top-notch business plan for you.

Step 6: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to your type of business. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose an LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your Articles of Organization and be on hand to answer any questions you might have. 

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2023

Step 7: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 8: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Step 9: Apply for Licenses/Permits

Starting a business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level licenses and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 10: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 11: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 12: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

New businesses need to have the right tools and software in place to help them manage their operations effectively.

One of the most important tools for a new business is an inventory management system, which allows them to track their inventory levels, monitor sales, and reorder products when necessary.

Another essential tool is a customer relationship management (CRM) system, which helps businesses manage their interactions with customers and prospects, and track sales leads.

Other useful software for new businesses might include payroll software, project management tools, and marketing automation software. By investing in the right tools and software, new businesses can streamline their operations, save time and money, and ultimately increase their chances of success.

You may be able to find industry-specific software that you can use to manage your business. 

• Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like  WordPress ,  Wix , or  Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google.

Online Marketing

Some of your business will come from the casual passerby or online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases. 
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers. 

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include: 

• Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as buy today and get 20% off. 
• Signage – Put up eye-catching signage at your store and website 
• Flyering – Distribute flyers in your neighborhood and at industry events 
• In-Person Sales – Offer your product or service at local markets, trade shows 
• Sponsor events – You can pay to be a sponsor at events that are relevant to your target market
• Post a video – Post a video about your product or service. Use humor and maybe it will go viral!
• Limited edition – Offer a one-time version of your product or service.
• Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal. 
• Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
• Seek out referrals – Offer incentives to generate customer referrals to new clients. 
• Press releases – Do press releases about new products, sales, etc.
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Pay – per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
• Influencer marketing – Pay people with large followings to promote your product or service. You can find micro-influencers with smaller followings and lower rates.
• Make a podcast – This allows you to make a personal connection with your customers
• Do a webinar – Share your product or service expertise online with a video seminar
• Offer a free download – Offer something of value to download from your website to capture emails.
• Case studies – Post case studies about how your product or service helped a customer
• Create infographics – Post infographics and include them in your content

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a business similar to yours, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in your industry for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in your product or service. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business. 

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your product or service meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” 

Step 13: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a business would include:

• General Manager – scheduling, staff management, accounting
• Marketing Lead – SEO strategies, social media, other marketing
• Salesperson – direct sales of products or services
• Customer Service Rep – service customers by phone or in person

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

• Start Making Money!

Starting a new business is one of the most exciting things you can do in your lifetime. It can seem daunting, but these simple steps can help guide you on your path. The rewards of entrepreneurship are potentially endless, including the cash you put in your pocket. 

Beyond the money, though, you’ll be building something of value and establishing a legacy. Small businesses are the backbone of the US  economy, and your business will contribute to national growth and create jobs while providing a product or service people need. Now that you’ve done your due diligence, you’re ready to start your adventure as a small business owner – and maybe a big business owner someday!

You can’t start a business without funds, but many businesses, particularly online businesses, can be started for as little as $2,000. There are also many funding options that can help you get started, such as SBA loans and crowdfunding.

Yes, it is hard work! Successful business owners eat, breathe, and sleep their business, but the rewards outweigh the challenges. You’ll be in control of your own destiny and your income potential is unlimited! You’ll also be making a valuable contribution to the economy as a small business owner.

Online businesses that you can start from home are usually the least expensive and easiest to get into. Besides online businesses, a cleaning business or a photography business would be easy and inexpensive to start. Starting any business, however, has challenges, so you need to start with knowledge to be successful. 

Kids as young as 7 or 8 can start businesses just like adults, but should probably have some adult assistance to make sure the business is compliant with laws and regulations. Kids should feel empowered to start businesses and understand the exciting opportunities that entrepreneurship offers.

No business completely runs itself, but some can become well-oiled machines that run smoothly without much effort. Examples of businesses that are not very labor-intensive would include a rental property business or a solar farm .

The short answer to the question is no, you don’t have to form a limited liability company (LLC) to start a business. You can form another type of business entity, such as a corporation, or run your business as a sole proprietorship. However, LLC offers more benefits compared to other business structures.

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• Choose a Business Idea
• Choose Your Business Location
• Hone Your Idea
• Brainstorm a Business Name
• Create a Business Plan
• Register Your Business
• Register for Taxes
• Fund your Business
• Apply for Licenses/Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team

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Why you need a business plan

Use our business plan tool, download a detailed business plan template, tips to help you write your business plan.

Whether you've just started out or have been running your business for years, business planning can be the key to your success. Having a business plan:

• helps you to prioritise – it gives your business direction, defines your objectives, maps out how you'll achieve your goals and helps you to manage possible bumps in the road
• gives you control over your business – the planning process helps you learn about the different things that could affect your success. If you're already in business, it helps you to step back and look at what's working and what you can improve on
• helps you seek finance – if you're seeking finance for your business, you'll need to show banks and investors why they should invest in your business.

It will help you to develop a shorter business plan to:

• evaluate a new business idea
• set some goals for the year ahead
• keep your business on track.

Use this template if you are seeking finance for your business or want to include more detail in your business plan.

Business plan template

1. Determine what your plan is for

Does your business plan have more than one purpose? Will you use it internally, or will you share it externally, for example with potential investors or banks?

Deciding what the purpose is, can help you develop your plan for the right audience. If the plan has been developed for third parties, you will need to determine what they’ll be most interested in.

2. Prepare your finances

Use our detailed business plan template if you are seeking finance.

Lenders and investors will want to know if your finances are in order and your business is in a strong financial position. They'll want to know how much money you currently have, how much money you need and how much you expect to make in the near future. While a bit of extra funding will help you ensure you’re covered for unexpected costs, be realistic and avoid asking for more than you need.

If you're starting out and don't have financial information yet, our template provides resources to help you get your finances ready.

3. Write your summary last

Summarise the main points of your business plan using as few words as possible. You want to get to the point but not overlook important facts. This is your opportunity to sell yourself, but don't overdo it. The summary should include details about your business, market, goals and what makes you different from other businesses.

4. Get help

Don't leave your business plan to the last minute. It takes time, research and careful preparation to develop an effective business plan.

If you aren't confident in completing the plan yourself, consider getting a professional to look over it and provide advice.

There are a number of government services available to help you plan, start or grow your business. These services can provide general advice, workshops, seminars and networking events, and can even match you with a mentor or business coach.

Get expert help from a business adviser in your area .

5. Review your plan regularly

As your business changes, your plan will need to change to ensure your business is still heading in the right direction. Having your plan up-to-date can keep you focused on where you are heading.

It's a good idea to keep a record of each version of your business plan.

6. Protect your plan

Having an understanding with third parties when distributing a plan could be enough protection for some businesses. But if you have innovative business practices, products or services, you may want people to sign a confidentiality agreement to protect your innovations.

It may also be a good idea to include some words in your plan asking the reader not to disclose the details of your plan.

Start writing and developing your marketing strategy.

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Written by Jesse Sumrak | November 21, 2023

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Building anything from scratch is a worthwhile challenge.

Baking bread, assembling a bookcase, shaping your career, forming a family—all start with next-to-nothing and end in marvelous works of art. It’s not easy to create something from scratch, but it’s oh-so rewarding.

Building a business is no different. You start with diddly-squat, throw in a bit of hard work and ingenuity, and bring a life-changing idea to existence.

But, where do you begin?

Ah, that’s a good question. Fortunately, you’ve come to the right place. Our CEO, Nathan Chan, built Foundr from the ground up 10 years ago, so we know a little something-something about building a successful startup with nothing but a seed of an idea and perspiration.

Below, we’ll walk you step by step through how to start a business from scratch. While it’s possible just to wing it and stumble upon success, we believe following a proven roadmap will lead to better odds of triumph—there’s a reason 90% of startups fail .

You won’t be part of that statistic, though, because you’re going to do things the right way. And we’re going to help.

How to Start a Business from Scratch: 10-Step Process

10 steps might sound like a bit much to learn how to start a business from scratch but bear with us. You’ll already know some of this information, and other parts will be brand-new. Feel free to skip around or take it step by step.

We link out to other robust pieces of content (blog posts, videos, and podcasts) to help you learn and absorb everything you need to know to get started. Consider this the go-to resource center for starting your business—we’ll direct you to every tool, lesson, and best practice you need, regardless of where you are in the process.

Use the table of contents below to jump to the right resources faster. Plus, bookmark this article so you can find what you need (when you need it) every step of the way.

Table of Contents

1. Find a Need

2. validate your idea, 3. identify your target market, 4. build your audience, 5. launch an mvp, 6. create a business plan, 7. secure your business and brand, 8. market your products, 9. sell like a boss, 10. scale efficiently.

AI Tools to Start a Business

How to Start a Business From Scratch FAQ

Most businesses fail because they start with a product, service, or brilliant idea. Scratch that and take a step back.

Forget about any innovative solutions or game-changing notions. First, you need to find a problem. It could be your problem, a neighbor’s problem, or a near-and-dear community’s problem. Find it.

Try out these 4 strategies to find inspiration for your business idea:

• Write Down Your Current Problems and Interests: What issues and concerns keep you up at night? What would you pay good money to have someone else fix for you?
• Check Out Product Review Blogs: Have you noticed an under-performing product with potential? What are customers complaining (and praising) about the product? Could you create something better?
• Explore Niche Communities on Reddit: Reddit is a gold mine of customer research. Browse around niche subreddits to see what’s generating hype. Notice any trends?
• Browse Consumer Marketplaces: Best-selling products on Amazon , Etsy, and eBay made it to the top spot for a reason. Analyze what they’re doing right, identify gaps, and see where you might fit in.

These are all just starting points. You’ll still need to validate these ideas to ensure they solve problems for a larger customer base and that they’re willing to pay for a solution. Once you’ve zeroed in on the problem, start brainstorming a product or service that solves it.

Here are a few characteristics of product ideas (that don’t suck) :

• Provides a Strong USP: Your product’s unique selling proposition (USP) makes it stand apart from the competition.
• Delivers Profit Potential: A product idea isn’t good if it can’t be scaled for profit. Think about pricing, expenses, supply and demand, and your audience to determine your product’s long-term profitability.
• Makes Customers Pay: Not every seemingly good idea is worth paying for—Snapchat Spectacles, anyone?
• Satisfies Demand: Some problems aren’t worth solving.
• Doesn’t Confuse Customers: If you can’t explain it to your mom in 60 seconds, it probably needs to go back to the drawing board.

Now that you have a solid business idea, it’s time to justify it. You’re going to be spending a lot of time, money, and energy on your business—it’s best to ensure it has a chance from the get-go before you invest too many resources.

Fortunately, validation isn’t too tricky. The hardest part is listening to feedback and analyzing your business idea objectively. Do that, and you’ll be fine.

Use the following methods to validate your idea. You don’t need to use all of them. Find one that works best for you, your industry, and your situation:

• Foundr’s 3-Step Validation Process: First, launch a survey to your target audience to ask them a few questions. Second, analyze the responses and look for trends and pain points. Lastly, pre-sell your product or service at a discounted rate to see if customers will put their money where their mouth is.
• Smoke Test: We use this method to validate all our online course ideas. Set up a landing page and drive traffic (using social media, email marketing, and pay-per-click (PPC) advertisements). You don’t even need a completed product yet—just market your idea and see how many people click the big red “Buy Now” button.
• Harry’s Consumer Research: Jeff Raider and Andy Katz-Mayfield used insights research, focus groups, customer surveys, dummy brands, and live testing to validate Harry’s razors.
• Digital Tools: While these tools are used to validate blog post ideas, they can also substantiate your business. Post ideas on Quora, Instagram, TikTok, and Reddit to see if there’s an appetite. If no one is interested in an idea, there’ll probably be crickets when you launch the actual product, too.

Your target market is the lifeblood of your business. You can’t succeed if you don’t come to know every teeny-tiny aspect of their wants, needs, fears, desires, problems, and aspirations.

How do they spend their day? Do they have kids? Are they lactose intolerant? Do they ride a bike or drive a car to work?

Use our Guide to Defining Your Target Market to help establish your audience and learn more about them. Here’s the TLDR:

• Start Specific, Then Broaden: Instead of starting broad with “Who is my target market,” begin narrow with “Who will be drawn to this product or service?”
• Analyze the Overall Market: Identify what’s trending and what might hurt or help your business. Other market factors will impact your target market, so it’s best to get ahead of the curve.
• Reference Your Competitors: Who are your competitors targeting? How do they approach their marketing? Have they left out any key niches?
• Use Your Social Media Data: Social media platforms (for better or worse) already collect tons of data about your followers. Reference this data to learn about their demographics and psychographics.

Once you’ve narrowed down your target market, it’s time to do additional segmentation. For example, if your audience is male soccer players, you’ll want to break that group down into smaller subsections. You might have:

• Recreational male soccer players
• High school male soccer players
• Competitive male soccer players
• Male soccer players who watch more than they play
• Male soccer players who coach

Your target market isn’t one homogenous blob. These segmented groups would likely respond to different marketing and sales approaches. The further you segment your audience, the more equipped you’ll be to create personalized messaging.

OK, now you have a validated idea and a framed portrait of your target market—that’s a great start! Next, you need to begin building an audience.

Your audience comprises social media followers, email subscribers, podcast listeners, phone numbers, blog readers, and interested shoppers—basically, anyone familiar with your brand that’s primed and ready to convert when your product launches.

Let’s start with building brand awareness. 8 Foolproof Strategies to Increase Brand Awareness walks you through plenty of budget-friendly ways to make your brand recognizable. Here are a few highlights:

• Tell a Story: People don’t remember products—they remember stories. Make your brand larger than life by making it about more than just money, products, and features.
• Solve a Problem: Solutions market themselves better than products. Your customer should be daydreaming about how your brand could improve their lives.
• Win the Right Keywords: Make your brand show up wherever your audience spends their digital time.

Check out the following guides for more channel-specific audience building:

• Build an Email List From the Ground Up (The Right Way)
• 16 Ways to Find (and Win) Your Dream Customers
• Facebook Ad Targeting: Find Customers Like a Marketing Eagle Eye
• How to Get More Views on YouTube
• Build a Podcast Audience

Time to make your idea a reality. Instead of spending months or years polishing the perfect product, launch fast and light with a minimum viable product (MVP) .

An MVP is the most basic version of your product that a customer can use. Take Facebook, for example. Facebook’s MVP was the original dumbed-down version that didn’t have a marketplace, groups, video, stories, gaming, or news—it was just a rudimentary social media network with friends and updates (imagine that).

Here are 3 ways to launch better MVPs :

• Shift to an MLP Mindset: MLP stands for minimum loveable product. Don’t just launch a product that works—launch something your customers love.
• Go Live with a Soft Launch: You don’t need a press release and fireworks when you first roll out your product. Keep things light and casual at first.
• Test Your Ideas First: Your MVP isn’t the validation. You should have already validated your idea before producing the product .

Writing a business plan might feel old-school and outdated, but it has a few data-backed benefits for businesses , including:

• Higher average annual growth
• Greater chances of success
• Improved business performance

Get out a pencil and some notepad and get to work. A business plan will keep you on track and ensure you’re headed in the right direction. It outlines your processes, goals, budgets, market research, financing strategy, and more.

Include these 6 essential elements in your business plan :

• Executive Summary: Summarizes your entire plan in a concise one-pager.
• Business Overview: Outlines the business details: structure, ownership, location, products, and mission statement.
• Products and Services: Breaks down your solutions in minute detail.
• Market Analysis: Describes the state of the market and key opportunities (and threats).
• Competitive Analysis: Analyzes competitors’ strengths and weaknesses.
• Financial Strategy: Explains projected revenue, expenses, profits (or losses), and financing strategies.

Now that you have a product MVP, business plan, and target audience, you need to make your business official. The first step is to create a brand around your idea. A brand includes the name, logo, website, and social imagery, but it’s a continual practice you’ll need to focus on as much as product development, finding customers, and leading your team.

Here’s a list of brand-building guides to get you started:

• Coming up with a Business Name That Shines
• How to Choose the Right Color for Your Logo: The Ultimate Cheat Sheet
• What’s the Best Website Builder for Small Business?
• How to Set Up a Website in Less than 60 Minutes
• 3 Small Business Branding Tips to Rise Above the Competition
• 8 Foolproof Strategies to Increase Brand Awareness 

Making your business secure is more than buying a website URL and securing social handles (which are important). It’s about legally securing the necessary information to ensure your idea, logo, and name aren’t stolen. Plus, filing the correct tax information (depending on your business origin) can protect you from legal actions or owing on taxes.

Here’s a list of things you need to do to secure your business legally and make it official:

• Register your business with the state
• Get a tax ID number
• Create a business bank account
• Official licenses or certifications (if necessary)
• Obtain business insurance (if necessary)

At foundr, we always suggest consulting a tax professional in regard to registering your business.

Finally, we’ve made it to the marketing portion. For many entrepreneurs, this is the best part—and it’s a heck of a lot better than the next stage: selling.

Marketing includes the strategies and tactics ( not the same, by the way ) you use to get your brand in front of potential buyers. It includes elements like content marketing, advertising, social media marketing, video marketing, and ecommerce marketing.

Before you get too into the weeds, take a step back and approach your marketing strategy step by step with our guide: How to Create a Marketing Plan (Outline + Examples) . It’ll help you focus and ensure your strategy is cohesive and goal-driven.

Once you’ve identified the channels you want to use, check out the following guides and interviews to put your plan into action:

• Content Marketing: The Ultimate Content Marketing Strategy for Startups
• Social Media Marketing: Increase Social Media Reach
• Video Marketing: 5 Steps to a Successful YouTube Marketing Strategy
• Ecommerce Marketing: How to Start an Ecommerce Business
• Affiliate Marketing: Ultimate Guide to Affiliate Marketing
• Influencer Marketing: Influencer Marketing 101
• Podcast Marketing: Podcast Marketing Guide

Sales. Would-be entrepreneurs, don’t panic. You can do this.

Validating your idea, finding your niche, producing your product, and building brand awareness means nothing in the end if you can’t make money. Fortunately, selling your product doesn’t have to feel like an awkward encounter with a door-to-door solar panel representative.

Don’t worry—we hate cringe-worthy sales tactics, too. Check out these resources to help you monetize everything from your email list to your Instagram following (without selling your soul):

• How to Write a Sales Email That Converts
• 5 Best Sales Funnel Software Tools to Power Your Business
• How to Get B2B Leads for Your Online Business
• Need Shopify Help? Here Are 5 Ways to Increase Your Shopify Sales
• How to Create a Video Sales Letter (Tips and Tricks from a 7-Figure Copywriter)
• 12 Upselling Tips and Best Practices to Boost Your Sales

Once you’ve started making money, it’s time to scale your business. Scale looks different for everyone based on their goals, expectations, and bandwidth.

Scale for one entrepreneur could be launching new products, while scale for another might be reducing costs and maximizing profits for existing goods.

Remember why you wanted to start your business from scratch. Did you want to make more money, or did you want more free time? Did you want to control your career, or did you want to help your community with a problem?

At Foundr, we’re all about empowering would-be-business owners with scalable strategies. Here’s how our interviewees and students scaled their businesses:

• GrubHub Founder Mike Evans is Back to Fix the Home Repair Industry
• How Jessica Sepel Built JSHealth’s Women-Run Brand 
• How Zeb Evans Built ClickUp from Life-Threatening Moments 
• Why Kendra Scott Risked Everything on the Customer Experience
• How April Scott Started a Luxury Sleepwear Brand From Scratch
• How Samantha Brett Built Naked Sundays into Australia’s #1 SPF Skincare Brand

Use AI Tools to Help Start Your Business

AI tools give your startup the advantage it needs to compete with the big dogs. It’s no longer a nice-to-have—it’s a necessity in today’s fast-paced and technology-driven business world.

These AI tools can streamline various aspects of launching and managing a startup, from ideation and market research to branding and customer engagement. Below, we’ll show you some of our favorite AI tools for starting and growing your business.

1. Ideating

• GravityWrite : Assists in brainstorming and ideation processes, providing creative suggestions and inspiration.
• Copy.ai : Utilizes AI to generate high-quality copy for various purposes, ideal for marketing, product descriptions, and more.
• Spin Rewriter : An AI-powered tool that rephrases existing content to enhance readability and uniqueness.
• Claude : Offers sophisticated editing and language enhancement features to refine your written content.
• ChatGPT : Provides versatile assistance in editing and improving text, from emails to business proposals.

3. Graphic Design

• Color Mind : AI tool for color scheme generation, perfect for branding and web design.
• Looka : Combines AI with design principles to create professional logos and brand assets.
• Booth AI : Offers automated photo editing and enhancement, suitable for product images and marketing materials.

4. Video/Audio

• Runway ML : An AI platform for video editing and motion graphics, simplifying complex video production tasks and letting you create video from text.
• Descript : Provides audio and video editing capabilities using AI, with features like auto transcription.
• Dall-e : AI tool for generating custom, high-quality images and artwork, useful for video thumbnails and visual content.

5. Ecommerce and Marketing

• Short Script : Assists in creating concise, compelling scripts for marketing and promotional videos.
• Rizz : An AI-driven tool for optimizing marketing strategies and customer engagement.
• Printful : Integrates AI in print-on-demand services, aiding in product customization and ecommerce operations.

6. Business Assistants

• Browse AI : Automates web data extraction and analysis, useful for market research and competitor analysis.
• Mem : AI-powered memory tool that helps organize and recall important business information.
• Rapidely : A versatile AI assistant designed to streamline various business operations, including scheduling and task management.

How to Start a Business from Scratch FAQ

How much of my business should i be involved in.

It's easy to get caught micro-managing every nitty-gritty component of your business, but you have bigger fish to fry. Outsource your trivial to-do list (invoicing, calendaring, procurement, and the like) to a full-time hire or a freelancer.

What's the best time to start a business from scratch?

There's no perfect time to start a business from scratch. The important thing is to start and stay persistent through all the steps.

Should I start my business alone?

Nobody truly starts a business alone. You need a support system to help you along your entrepreneurship journey, even if that's a friend, spouse, or parent. Many of the iconic businesses you know today began with a cohort of co-founders, but having one is not necessary. What is essential are trusted people around you to help bring your vision to life.

Exclusive Training to Help Launch Your Business

Congratulations! If you follow the 10-step process above, you’ll start a business from scratch that’s ready to join the 10% of startups that don’t fail.

Don’t worry—we’re still here to help. We won’t throw you into the deep end and expect you to figure everything out on your own.

That’s why we built foundr+, an all-access pass of training courses that will teach you everything you need to start and grow your business—whether you need to finance your startup, grow your Instagram following, or launch a profitable ecommerce store.

About Jesse Sumrak

Jesse Sumrak is a writing zealot focused on creating killer content. He’s spent almost a decade writing about startup, marketing, and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped business. A writer by day and a peak bagger by night (and early early morning), you can usually find Jesse preparing for the apocalypse on a precipitous peak somewhere in the Rocky Mountains of Colorado.

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How Much Does it Cost to Start a Business?

8 min. read

Updated April 25, 2024

What will it cost to start your business? This is a key question for anyone thinking about starting out on their own. You’ll want to spend some time figuring this out so you know how much money you need to raise and whether you can afford to get your business off the ground.

Most importantly, you’ll want to figure out how much cash you’re going to need in the bank to keep your business afloat as you grow your sales during the early days of your business. 

Typical startup costs can vary depending on whether you’re operating a  brick-and-mortar store, online store, or service operation . However, a common theme is that launching a successful business requires preparation.

And while you may not know exactly what those expenses will be, you can and should begin researching and estimating what it will cost to start your business.

• How to determine your startup costs

Like when developing your  business plan , or  forecasting  your initial sales, it’s a mixture of  market research ,  testing , and informed guessing. Looking at your competitors is a good starting point. Once you feel your initial estimates are in the ballpark, you can start to get more specific by making these three simple lists.

1. Startup expenses

These are expenses that happen before you launch and start bringing in any revenue. Here are some examples:

• Permits and Licenses: Every business needs a license to operate, just like a driver needs one to drive. Costs vary depending on industry and location.
• Legal Fees: Getting your business structure set up (sole proprietorship, LLC, etc.) might involve consulting a lawyer and at least will involve the basic business formation fees.
• Insurance: Accidents happen, and insurance protects your business from unforeseen bumps.
• Marketing and Branding: The ways to spread the word about your product or service. They could involve creating a website, creating business cards, or promoting social media.
• Office Supplies : Pens, paperclips, that all-important stapler – the essentials to keep your business humming.
• Rent/Lease: If you need to rent space for your business before you start selling, include those expenses in your list as well.

2. Startup assets

Next, calculate the total you need to spend on assets to get your business off the ground. Assets are larger purchases that have long-term value. They’re typically significant items that you could resell later if you needed or wanted to.

Here are a few examples:

• Equipment:  Think ovens for a bakery, cameras for a photography business, or computers for a tech startup.
• Inventory:  If you’re selling products, you’ll need to stock up before opening your doors (or your online store).
• Furniture and Decorations:  Desks, chairs, that comfy couch in the waiting room – creating a functional and inviting workspace might involve some upfront investment.
• Vehicles: If your business requires a vehicle to deliver your product or service, be sure to account for that purchase here.

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Why separate assets and expenses?

There’s a reason that you should separate costs into assets and expenses. Expenses are deductible against income, so they reduce taxable income. Assets, on the other hand, are not deductible against income.

By initially separating the two, you potentially save yourself money on taxes. Additionally, by accurately accounting for expenses, you can avoid overstating your assets on the balance sheet. While typically having more assets is a better look, having assets that are useless or unfounded only bloats your books and potentially makes them inaccurate. 

Listing these out separately is good practice when  starting a business  and leads into the final piece to consider when determining startup costs. 

3. Operating Expenses

Finally, figure out what it’s going to cost to keep your doors open until sales can cover expenses. Create a list that estimates monthly expenses, such as:

• Payroll (including your own salary)
• Marketing and advertising
• Loan payments
• Insurance premiums
• Office supplies
• Professional services
• Travel costs
• Shipping and distribution

Then, based on your revenue forecasts , calculate how many months it will take before your sales can cover all those monthly expenses. Multiply that number of months by your monthly operating expenses to determine how much you’re going to need to cover operating expenses as your business starts.

This number is often called “ cash runway ” and is a critical number – you need enough cash to fund those early red ink months. This number is how much cash you need to have in your checking account when you open your doors for business.

Calculating how much startup cash you need

To figure out how much money you need to start your business, add the asset purchases, startup expenses, and operating expenses over your cash runway period. This is your total startup costs, and it’s better to overestimate than underestimate these costs.

It often makes sense to invest the time to build a slightly more detailed starting costs calculation. Assuming you start making some sales and those sales grow over time, your revenue will be able to help pay for some of your operating expenses. Ideally, your sales contribute more and more over time until you become profitable.

To do a more detailed calculation, you’ll want to invest the time in a detailed financial forecast where you can experiment with different scenarios. If you do this, you’ll be able to see how much it will cost to start your business with different revenue growth rates. You’ll also be able to experiment with different funding scenarios and what your business would look like with different types of loans.

• Funding Starting Costs

You can cover starting costs on your own, or through a combination of loans and investments.

Many entrepreneurs decide they want to raise more cash than they need so they’ll have money left over for contingencies. While that makes good sense when you can do it, it is difficult to explain that to investors. Outside investors don’t want to give you more money than you need, because it’s their money.

You may see experts who recommend having anywhere from six months to a year’s worth of expenses covered, with your starting cash. That’s nice in concept and would be great for peace of mind, but it’s rarely practical. And it interferes with your estimates and dilutes their value.

Of course, startup financing isn’t technically part of the starting costs estimate. But in the real world, to get started, you need to estimate the starting costs and determine what startup financing will be necessary to cover them. The type of financing you pursue may alter your startup or ongoing costs in a given period, so it’s important to consider this upfront.

Here are common financing options to consider:

• Investment : What you or someone else puts into the company. It ends up as paid-in capital in the  balance sheet . This is the classic concept of business investment, taking ownership in a company, risking money in the hope of gaining money later.
• Accounts payable : Debts that are outstanding or need to be paid after a certain time according to your balance sheet. Generally, this means credit-card debt. This number becomes the starting balance of your balance sheet.
• Current borrowing : Standard debt, borrowing from banks,  Small Business Administration , or other current borrowing.
• Other current liabilities : Additional liabilities that don’t have interest charges. This is where you put loans from founders, family members, or friends. We aren’t recommending interest-free loans for financing, by the way, but when they happen, this is where they go.
• Long-term liabilities : Long-term debt or long-term loans.
• Other considerations for estimating startup costs

Pre-launch versus normal operations

With our definition of starting costs, the launch date is the defining point. Rent and payroll expenses before launch are considered startup expenses. The same expenses after launch are considered operating or ongoing expenses.

Many companies also incur some payroll expenses before launch because they need to hire people to train before launch, develop their website, stock shelves, and so forth.

Further Reading: How to calculate the hourly cost of an employee

The same defining point affects assets as well. For example, amounts in inventory purchased before launch and available at launch are included in starting assets. Inventory purchased after launch will affect  cash flow , and the balance sheet; but isn’t considered part of the starting costs.

So, be sure to accurately define the cutoff for startup costs and operating expenses. Again, by outlining everything within specific categories, this transition should be simple and easy to keep track of.

Your launch month will likely be the start of your business’s fiscal year

The establishment of a standard fiscal year plays a role in your analysis. U.S. tax code allows most businesses to manage taxes based on a fiscal year, which can be any series of 12 months, not necessarily January through December.

It can be convenient to establish the fiscal year as starting the same month that the business launches. In this case, the startup costs and startup funding match the fiscal year—and they happen in the time before the launch and beginning of the first operational fiscal year. The pre-launch transactions are reported as a separate tax year, even if they occur in just a few months, or even one month. So the last month of the pre-launch period is also the last month of the fiscal year.

• Aim for long-term success by estimating startup costs

Make sure you’ve considered every aspect of your business and included related costs. You’ll have a better chance at securing loans, attracting investors, estimating profits, and understanding the cash runway of your business.

The more accurately you layout startup costs and make adjustments as you incur them, the more accurate vision you’ll have for the immediate future of your business. 

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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To help companies large and small get more out of their business processes, this comprehensive guide to BPM explains what it is, its benefits, the challenges it poses and best practices for using it effectively. You'll also find examples of business process automation and process improvement projects, an overview of the latest BPM tools and insight on what the future of BPM might look like. Throughout the guide, there are hyperlinks to related articles that cover these topics in more depth, so be sure to click on them for additional expert advice. The links also connect readers to detailed definitions of important concepts in BPM, such as business process mapping, Business Process Model and Notation (BPMN) and workflow management.

How to develop a business process in 8 steps, well-designed business processes help organizations achieve their goals faster, but they require planning and effort. follow these steps to develop processes that deliver value..

• Ronald Schmelzer, Cognilytica
• Kathleen Walch, Cognilytica

Business processes are core to organizations. They represent the tasks, activities and overall flow of work that achieves the business's core mission and objectives.

Well-defined and documented business processes help organizations achieve their goals faster, lower costs, reduce errors and free up more time for employees to focus on higher-value tasks. Implementing defined business processes not only helps streamline and optimize an organization's operations but also sets the foundation for continuous process improvement and efficiency.

Developing a business process requires planning

Creating a high-quality, valuable business process takes time and effort to plan, develop and implement. Setting the structured sequences of activities, tasks, actions and steps performed by team members of successful business processes can be challenging.

The steps are generally followed in a specific order to achieve consistent and desired outcomes. Each task in a business process is then broken down into smaller subprocesses and tasks, defined for their operation and flow, and documented.

This article is part of

What is business process management? A guide to BPM

• Which also includes:
• How AI is radically changing business process management
• 10 trends shaping the future of BPM in 2024
• 12 top business process management tools for 2024

Business processes also vary in duration, complexity and number of steps depending on the nature of the task. Fundamentally, a business process is supposed to represent a core operation for the business to accomplish a specific outcome. There are two ways to determine the steps in a business process. You can start from how the process currently works ("as is") or how you want the process to work ("should be"). For an as-is process, the steps focus on identifying how the process works currently as well as the tasks and steps currently employed. For a should-be process, the steps focus on identifying what the tasks need to be in the process and how they will be coordinated to achieve an outcome.

To have an effective business process, organizations need to identify which tasks are the most important for the desired outcome, ensuring accountability, streamlining communication channels and setting standards for how the business performs its activities.

In addition, business processes are never a "set it and forget it" project, so it's important for managers involved in process management to understand that iteration of the process is also very important. Core business processes that add value to the organization require continuous process improvement , documentation, testing and evaluation.

Here are eight basic steps to developing a business process.

1. Review the current business process

It's helpful to start by reviewing what you are currently doing in your business process. Look for redundancies and low-value activities. Bring in stakeholders and other key people running the day to day of the process to evaluate what is working and what can be improved. Make sure to also factor in what work and tasks stakeholders actually enjoy doing and what they would like to see automated, changed or eliminated.

2. Start by defining the goals of the business process

When creating business processes, it's important to do so with the end in mind. Organizations need to figure out what the goals are for a specific business process , and then work their way from the goals to the subprocesses and tasks. It's important to focus on efficiency, ROI, performance improvement and timesaving measures at this stage. Set clear, measurable goals for the process. You'll want to include the specific and time-sensitive goals your stakeholders want to see come out of the process, such as "double sales in two years."

3. List activities and look for inefficiencies and places to automate

The tasks in a process can be performed in a variety of ways: by internal workers; by external, outsourced workers ; by machines; or by a combination of workflow automation and human effort. Organizations that map their processes have an opportunity to identify where and how to automate, optimize and improve current processes.

Start by listing out all current and potential activities of a process. Listing out each activity's tasks will help with future task prioritization of process steps. Consider relationships between activities, causes and effects of activities, and points where each activity fits into the process. Then figure out which activities can be automated, optimized, streamlined or eliminated. Business process automation technologies provide a way to increase efficiency in processes with repetitive tasks.

4. Develop a process map

After figuring out all the required activities in a process, you'll next want to map out your process in a sequential, easy-to-understand manner. Start with the first step needed in your process and plan out how best to arrive at your desired result. Determine where handoffs between departments occur, which processes need to happen sequentially and which can run in parallel. Come up with a timeline, and determine the costs for each task and the process as a whole.

Business process modeling approaches provide a useful method to help stakeholders see the process in a visual manner, which can further help you spot redundancies, bottlenecks and other issues you might have missed when defining the process. Approaches such as using a flow chart or other visual methods can provide an easy way to understand the progression of necessary actions to reach a specific outcome.

5. Assign process tasks and management

Once a process has been defined and mapped, you'll want to assign each team member or department to specific activities and tasks. Some of these assignments will be obvious and easy to do. But other tasks might require more thought to determine the most optimal person or department responsible.

Assign managers for these tasks for supervision and ownership, including supervision over any tasks determined to be automated. Just because it's not being done by a human doesn't mean it can run on its own without any human in the loop. Make sure to clearly state expectations and timelines for tasks, get involvement and input from managers in this process, and continue to track and measure goals.

6. Test and implement the process

Process definition and operation requires an interactive process that needs to be measured constantly. As a result, to ensure continuous success, make sure to test the process before fully implementing the process or subprocesses and tasks. Proper testing will help you spot bugs, identify discrepancies and mistakes, and find any issues or oversights in your process definition.

Testing each step in the process before deploying at scale is critically important to give managers and stakeholders a chance to practice the new process in full. Once you have done thorough quality assurance testing and fixed any issues or problems, you are ready to widely implement your defined business process.

7. Measure business value

A good business process delivers value. Creating and testing the tasks and activities of a process are important. But without creating ways to measure success, you can quickly find yourself involved in inefficient, ineffective, or unnecessary tasks and processes.

Use the process goals you set out in planning and measure how well your new business process is meeting them. The use of process management tools and solutions can help you and your managers track process performance, process mapping and execution progress; assist with future iterations; and determine if your goals are being met.

8. Gather feedback for continuous process improvement

The key to continuously well-performing processes goes beyond simply measuring and testing to getting end-user feedback and finding opportunities for continued improvement. Gather feedback from your stakeholders on how the new process is working for them. Check on those value measures set at the beginning to see if your new process is an improvement and driving success. By continuously monitoring your process performance, you can continually improve, optimize and streamline your process .

Be successful by taking a multistep approach to business processes

Mapping out your business processes from start to finish, with business goals uppermost in mind, and monitoring them after they are implemented takes effort and time. Fortunately, there are well-established methods to identify the key steps to ensure business processes function effectively and return the desired returns. There are also an increasing number of business process management tools, some powered by AI, that can identify and optimize business processes. Using the steps above as a guide can ensure your organization's product or service continues delivering high-quality value to customers and stakeholders.

Top business process management challenges and how to fix them

Business process management benefits, advantages

Top trends shaping the future of BPM

Business process management certifications

Dig Deeper on IT applications, infrastructure and operations

How to lead a digital transformation: 10 key steps

workflow management

How to improve and optimize a business process, step by step

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How To Start a Dropshipping Business: A Detailed Step-by-Step Guide (2024)

Starting a dropshipping business is an excellent way to dip your toes into the world of entrepreneurship . It allows you to sell products without needing to stock inventory or make upfront payments. And with dedication and hard work, this business model can lead to a steady income over time.

This complete dropshipping guide details essential business and financial steps to consider. Some steps are necessary from the beginning, while others are beneficial. Considering them early on will save you time and headaches down the road.

What is a dropshipping business?

Dropshipping is a business structure that allows you to operate your store without holding any inventory. Once you’ve made a sale, your supplier will ship the products from their warehouse directly to your customer’s doorstep. This eliminates the hassle of storing, packaging, and shipping products yourself.

How does the dropshipping business model work?

Dropshipping is an order fulfillment model that enables online stores to sell products to consumers without holding any inventory. When a customer buys a product from their catalog, a third-party supplier ships it directly to them.

The selling process involves setting a retail price higher than the wholesale price you pay the supplier, with the difference being your profit. There’s no need to handle products directly or invest in inventory.

To start selling, you only need to set up an account with a supplier.

To find suppliers for your dropshipping business, you have three main options:

• Supplier databases. Platforms like Alibaba or AliExpress enable you to find a diverse array of suppliers.
• Integrated supplier directories. Tools such as DSers directly integrate with your store’s back end, simplifying the process of browsing and selecting suppliers.
• Print-on-demand services. Services like Printify give you access to a network of print-on-demand suppliers who can customize products with your designs upon order.

The simplest dropshipping method for Shopify store owners is using DSers. It lets you find and add millions of AliExpress products to your store with one click.

In dropshipping, your tasks include developing your website and brand, selecting and promoting your products, handling shipping costs, and setting prices that ensure profitability.

What are the advantages of dropshipping?

A dropshipping business is a profitable business model where you only pay for the products that you sell. This means you’re not burdened with the cost of creating products or carrying inventory. As such, the startup costs of running a dropshipping store are quite low compared to those that come with operating a standard ecommerce business.

In this business model, you also avoid the costs of maintaining unsold inventory and employing staff for packaging and shipping products. While it will require daily work when it comes to processing orders, most of the order processing steps are automated and only require the click of a button. The dropshipping business opportunities are endless—you just need to take the first step.

How to start a dropshipping business: The 8-step dropshipping business plan

1. choose a dropshipping business idea.

The first step in launching a dropshipping business is comprehensive market research. It’s akin to evaluating different aspects like location, competition, and market trends when opening a retail store. Your aim should be to explore a niche that not only interests you but also holds profitability potential.

Products catering to specific niches often attract a dedicated and passionate customer base. As such, it’s easier to sell them and generate higher profit margins for your dropshipping business.

Examples of niche dropshipping products include:

• Handcrafted leather wallets for minimalist enthusiasts
• Organic skin care products for eco-conscious consumers
• Customized meal prep containers for health-conscious individuals
• Sustainable fashion accessories for trendsetting shoppers

By focusing on niche and trending items, you can catch the eye of potential customers and gain momentum without facing off against larger, more established ecommerce brands.

There are a few tools and tactics you can use to validate your dropshipping business ideas:

• Google Trends . Google Trends is a valuable tool for learning about product trends. It provides insights into whether an item is trending upward or downward over time, as well as the seasons when it tends to be most popular. Although you don’t see the search volume for a specific term, you get enough data to conduct keyword analysis and assess the product’s popularity in search.
• DSers order volume. DSers lets you search for products based on order volume. A higher order volume indicates a stronger demand and potential success for your business idea.
• Keywords Everywhere . Keywords Everywhere reveals monthly search counts and competition level for your products. This data helps you understand your dropshipping idea’s popularity and can spark ideas for future products.

2. Do competitor research

Once you have decided what to sell, you now need to educate yourself on who your competitors are, what they sell, and how they sell their products. Market research is an essential part of this step, and there are many ways to do it.

• Run a Google search. Search engines are a clear starting point for mapping out your competition. Enter key terms related to your niche to see who you’re up against. For example, if you’re selling eco-friendly water bottles, enter terms like “sustainable water bottles” into Google. Examine the companies that appear in the search results and study how they promote their products. If targeting a specific geographical area, utilize tools such as Ahrefs or Semrush to get keyword data related to those regions.
• Browse social media. Look for Facebook ads related to what you sell and note the top brands. See how they talk to customers, how they design their pages, and how much people interact with them. You might even follow them to keep up with their posts. Use what you learn to make your business more visible and improve your approach to social media marketing.
• Use competitor spy tools. Online tools like Similarweb are invaluable for tracking your competitors’ online presence. Use them to get a detailed snapshot of competitor website information, including their visitor counts, main traffic sources, social media engagement, and main competitors. This information can help you strategize and position your business more effectively.

Study your main competitors thoroughly: website, pricing, marketing strategies, product details, and reputation. Organize this research in a spreadsheet for quick reference when deciding on your store’s strategy.

3. Find a dropshipping supplier

Suppliers are the backbone of a successful dropshipping business. They ensure the store has a steady supply of products, handle shipping directly to customers, and maintain the quality and availability of merchandise.

Ecommerce platforms like Shopify make it easy to find dropshipping suppliers . Once you’ve created an online store, install the DSers app to find potential suppliers for your business.

DSers is a marketplace for dropshipping suppliers to showcase their products. It features a wide range of items, including toys, electronics, and women’s apparel. You can add any product to your store with one click and benefit from automated order forwarding to suppliers. Best of all, getting started is completely free.

The DSers app connects to AliExpress to give you easy access to a wide range of products for your store. On the DSers product page, you can find detailed information on product quality and shipping times, or learn more about a supplier.

Clicking on a supplier’s link redirects you to their AliExpress page. There, you can find customer reviews and their top-selling items.

On the DSers suppliers page, remember to select products with ePacket shipping if your supplier is based in China.

ePacket is an efficient and affordable shipping method from China to countries like the US, the UK, and Canada. Instead of waiting months, your customers can receive their packages in up to two weeks, for just a few dollars.

4. Set up your dropshipping store 

There are a few components to building a dropshipping business store the right way:

Domain name

Your domain name is especially important if you’re building a long-term brand. You can use a free business name generator to simplify the process. Always opt for a .com domain , regardless of your niche. If you want your niche to be a keyword in your new domain, make sure it’s broad—like “beauty,” “jewelry,” or “fashion”—rather than specific. This way, you won’t need to change your domain name down the road.

Ecommerce platform

Shopify is the most comprehensive ecommerce platform on the market. With new features, tools, resources, and apps being added regularly, you’ll find it easy to run a business on the platform. Plus, Shopify connects with print-on-demand services, should you choose to diversify your dropshipping approach

As a Shopify user, you get access to free themes . One of these is Minimal Motion . It offers a clean and user-friendly interface, perfect for those just starting out with store design. As your store begins to generate revenue, consider upgrading to a premium theme to further improve your store’s appearance.

Dropshipping app

To manage your inventory and place orders efficiently, you’ll need a reliable dropshipping app. DSers is a solid choice that allows you to explore products in a variety of popular niches. When starting out, it’s advisable to focus on 10 to 25 products, as writing descriptions for a larger inventory can become overwhelming. If you have questions or need guidance, you can turn to the DSers blog, its social media pages, or Shopify’s own support line.

5. Decide on a business structure

If you’re dedicated to your project, consider creating an official business entity. Though we aren’t legal advisers and cannot give legal guidance, we can outline three common types of business structures for you:

Sole proprietorship

This is the simplest form of business structure, but it lacks personal liability protection. If your business is sued, your personal assets could also be at risk. The filing requirements are minimal, and you just include your business’s income on your personal tax returns. There are no additional state or federal business filings required.

Limited liability company (LLC)

Most dropshipping companies prefer forming an LLC. This structure better protects your personal assets by recognizing your business as a separate legal entity. Although the liability protection isn’t perfect, it’s stronger than that of a sole proprietorship. You’ll need to meet more filing requirements and pay both incorporation and ongoing fees.

Related:   Sole proprietorship vs. LLC: A Breakdown

C corporation

Most major corporations are established as C corporations, which offer the greatest liability protection when set up correctly. However, they are more expensive to start and C corps face double taxation, where the business’s income is taxed at both the corporate level and again as it is distributed to shareholders.

You’ll want to consult with a lawyer before making any incorporation decisions. These professionals know the ins and outs of each structure and can help you choose the ideal one for your dropshipping business.

Request an EIN number

You’ll need an employer identification number (EIN) number, which the IRS requires every business to have one. It works like a Social Security number, but for your business. You need it to file taxes, sign up for wholesale dropshipping accounts, open a bank account, and do other business tasks.

The good news is, getting an EIN number is simple and doesn’t cost anything. You can apply for it online .

6. Market your dropshipping business

You’ve selected your products and set up your store. The next step is to market your dropshipping business.

This is a crucial component of any dropshipping business plan. For those just starting out and likely on a tight budget, it’s worth noting that effective marketing doesn’t have to be expensive. Here are some methods to explore:

Facebook and Google ads

Facebook ads tap into the impulse to buy, are scalable, and can highlight your products well. Google Shopping Ads allow targeting of long-tail keywords to attract ready-to-purchase shoppers. You can test both platforms to see which advertising method leads to better results for your business.

Influencer marketing

If you’re just starting and have a tight budget, influencer marketing is a cost-effective way to reach your audience. People often trust influencers more than traditional ads. Instead of paying influencers a fixed amount, consider a deal where they earn for every sale they bring. This method is more affordable for you and rewarding for them.

Content creation

To keep visitors coming to your store, start creating content. Launch a blog focused on your niche. Aim to both entertain and educate your audience. Other options include making YouTube videos, creating infographics, or starting a podcast to raise awareness of your brand.

Community engagement

Join groups passionate about your niche. Start discussions with potential customers on Reddit, Facebook groups, or forums. Focus on being helpful, not just selling. This approach builds trust and makes people more likely to buy from your brand.

Email marketing

Email marketing is a powerful tool for building long-lasting relationships with customers and driving repeat purchases. Consider sending personalized content, such as product recommendations, promotional offers, and informative newsletters, to increase engagement and boost sales.Shopify Inbox is available at no cost for managing these communications in your Shopify store.

7. Streamline your finances

Starting your own dropshipping business comes with a crucial financial management step: separating personal and business finances. Mixing these can lead to confusion, complicate accounting, risk personal assets, and attract IRS scrutiny during audits.

Creating distinct accounts for your business is the best practice. This includes:

Business checking account

This account should handle all your business transactions. All business income goes in, and expenses come out, streamlining your accounting processes.

Business credit card

Opt for a credit card dedicated to business expenses, especially useful for buying dropshipping inventory. Choosing a rewards card can earn you significant benefits from frequent supplier purchases.

Sales tax collection

You need to collect sales tax if your state requires it and you sell to someone in your state. For sales outside your state, current laws may exempt you from collection, but keep an eye on potential legal changes.

If collecting sales tax is necessary, register with your state’s department of commerce as an online retailer to understand your obligations.

Local business licenses

Many places require a business license, which might vary for home-based businesses . Research your local requirements to ensure compliance.

Incorporating outside the United States

For international merchants aiming to enter the US market, setting up a business in the United States is possible but requires understanding and fulfilling specific legal requirements. This might involve traveling to the US, partnering with someone in the country, or hiring an agency to manage the setup.

8. Test and optimize

Once you’ve spent time building your website, brand, and marketing, you can start to analyze the results of your hard work. You may find that certain marketing activities are hugely successful, while others not as much. You can also compare your prices to that of your competition and see if you could make things more competitive.

You can use tools like Google Search Console or Google Analytics to evaluate your online traffic and make sure it’s increasing, not decreasing. If you’re using third-party tools for email marketing or social media reporting, set up weekly or monthly automatic reports to remind you to analyze this information regularly. Even a quick snapshot of data from a tool can be enough to decide if a campaign is working or not.

Overall, the most important part of a successful online ecommerce store is to test and optimize. This ensures that your website will not fall behind best practices and keeps you ahead of your competitors.

Where to find dropshipping businesses for sale?

If you don’t want to build a Shopify dropshipping business from scratch, you can easily find a dropshipping business for sale on Flippa .

Flippa is a marketplace of websites for both people looking to invest in a fully functioning business and those who want to skip the building phase and start directly with marketing. Flippa has a great collection of online stores, including dropshipping ecommerce businesses, of varying price ranges and niches that you can choose from depending on your budget and interests.

So, if you’re looking for a dropshipping business for sale, Flippa has got you covered.

Factors to consider when buying a dropshipping store

When choosing to buy a store, take into account the cost, the design, the age of the website, how much money it has made, the popularity of the niche, penalizations, and the type of business.

Type of business

If you plan on buying a dropshipping business, you need to select the ecommerce filter on Flippa. Other options may require you to buy and hold inventory, which can cost more money over the long term, especially in unsold inventory.

Do you have a budget that covers not just the cost of a premade store but also allows for its growth? If so, you need to work out what your budget looks like. What price are you willing to pay for a business? Is there room to negotiate a better deal?

Does the store look like it was designed by a professional or by a new entrepreneur who’s looking to make a quick sale? If the store design looks professional, clean, and easy to navigate, it may be worth pursuing.

Age of website

On Flippa, you can choose an ecommerce business based on its age. An older website will typically have a better chance of ranking online than a newer one.

Sometimes you’ll see that a store made a lot of money. However, a question you need to ask is, “How much money was it making at its peak, and how much is it making now?” This will help you understand if the dropshipping business is growing or dying.

Niche popularity

You probably don’t want to be selling fidget spinners anymore, or any trending product. However, if a store is within an evergreen niche and sells trending products , it could work out well. Broad topics (beauty) tend to perform better than stores focused on a specific type of product (makeup brushes).

Penalizations

Before buying a dropshipping business, you need to double check that the website hasn’t been penalized (removed from Google’s search index). You can use a tool like Is My Website Penalized to determine if a website has been penalized by Google. If a store has been penalized it may be harder for you to rank in search engines. You also want to ask, “Were any of the business’s Facebook ads banned?”

Getting started with dropshipping

Whether you’re new or seasoned in business, dropshipping with Shopify is your low-risk gateway to online sales. Sign up, choose your plan, add DSers, and select your niche products. Customize, import, and sell—your ecommerce journey begins now.

How to start dropshipping FAQ

What are the benefits of starting a dropshipping business.

• Easy to start
• Wide selection of items to sell
• Flexible location
• Highly scalable

How do I start a dropshipping business?

• Choose a dropshipping business idea.
• Research your competitors.
• Find a reliable dropshipping supplier.
• Establish your online store.
• Market your dropshipping business.
• Assess and optimize your store.

Do I need to incorporate a dropshipping business?

Incorporating a dropshipping business has clear benefits. It separates your personal and business finances, protecting your money if the business runs into debt. Additionally, incorporating gets you an employer identification number (EIN), which makes it easier to file and pay sales tax. So if you’re planning for long-term success, think about incorporating. It’s a good way to manage your finances and taxes.

Is dropshipping really profitable?

Dropshipping can be a highly lucrative business, as it allows you to avoid the substantial overhead associated with traditional wholesaling. You bypass the costs of bulk purchases, storage, and shipping logistics—and can earn a good profit margin with the right suppliers.

Many dropshippers earn up to $50,000 per year as a side hustle. To hit such figures, you’ll need to pick the right suppliers and build a strong brand.

Keep in mind that dropshipping can be highly competitive. Because the barrier to entry is low, you may encounter numerous brands offering similar products at competitive prices.

Is dropshipping worth it?

The value of dropshipping depends on the time and money you invest in it. If you dedicate time to growing your online business, you are more likely to reap the rewards. Setting up a dropshipping business involves multiple steps: You need to set up a store, import products, decide on your pricing strategy, and start selling. All of this requires effort and commitment for your business to be successful.

Want to learn more?

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