revenue example business plan

You’ll also learn the financial benefits investors can reap from putting money into your venture rather than trying to sell them on how great your product or service is.

This business plan guide focuses less on the individual parts of a business plan, and more on the overarching goal of writing one. For that reason, it’s one of my favorites to supplement any template you choose to use. Harvard Business Review’s guide is instrumental for both new and seasoned business owners.

7. HubSpot’s Complete Guide to Starting a Business

23 of My Favorite Free Marketing Newsletters

The 8 Best Free Flowchart Templates [+ Examples]

What is a Business Plan? Definition, Tips, and Templates

7 Gantt Chart Examples You'll Want to Copy [+ 5 Steps to Make One]

How to Write an Executive Summary Execs Can't Ignore [+ 5 Top Examples]

20 Free & Paid Small Business Tools for Any Budget

Maximizing Your Social Media Strategy: The Top Aggregator Tools to Use

The Content Aggregator Guide for 2024

16 Best Screen Recorders to Use for Collaboration

2 Essential Templates For Starting Your Business

Marketing software that helps you drive revenue, save time and resources, and measure and optimize your investments — all on one easy-to-use platform

Revenue Models: 17 Types, Examples & Template [2023]

Revenue Models

How does (or will ) your business make money? It sounds almost too simple to ask, but having a clear understanding of your business' revenue model can be one of the most important ways to focus on key activities--and actually move the needles you care about most.

For indie businesses, settling on the right revenue model type rarely happens on first attempt. Instead, it's common to bounce around from subscriptions to digital products, membership communities and affiliate offerings until something finally *clicks* for you and your business.

This revenue models list component and template is intended to help you sort, consider and rank a list of common revenue models. In future, I'll be linking this table to related marketing channels, real data from other indie businesses and related templates--for now, let's take a quick look at the revenue models listed.

17 Common Revenue Model Examples

• Subscription
• Licensing (Digital Prod.)
• Advertising
• Affiliate Commission
• Project-Based Services
• Retainer-Based Services
• Tickets, Events, Workshops
• Manufacture (D2C)
• Library Access
• Community Access
• Marketplace

1. Subscription

The most common revenue model for SaaS and membership-based businesses. Customers pay a recurring fee, typically on a monthly or yearly basis, in exchange for access to your product or service.

Pros of subscription model

• Recurring revenue is more predictable and can be helpful in forecasting
• Can be a great way to build long-term relationships with customers
• Customers who are paying on a recurring basis are typically more engaged and have a higher lifetime value

Cons of subscription model:

• Can be difficult to acquire customers who are willing to pay a recurring fee
• Can be difficult to increase prices without losing customers
• There is always the risk of churn (customers cancelling their subscription)

The markup revenue model is most common in retail and ecommerce businesses, where goods are bought at wholesale prices and then sold to customers at a higher price.

Pros of markup model:

• Can be easier to get started since you don't need to develop a unique product or service
• There is less risk involved since you're not investing in developing or producing a good or service
• Can be easier to scale since you can simply buy more inventory as needed

Cons of markup model:

• Can be difficult to compete on price alone
• You may need to invest in marketing and branding to differentiate your business
• There can be slim margins if you're not careful with your pricing

3. Licensing (Digital Prod.)

The licensing revenue model is most common for digital products, where customers pay a one-time fee for access to your product.

Pros of licensing model:

• Can be a great way to generate one-time revenue from customers
• Customers who pays for a license typically have a higher perceived value of your product
• Can be easier to scale since you're not selling a physical good or service

Cons of licensing model:

• Can be difficult to acquire customers who are willing to pay a one-time fee
• There is always the risk of piracy (customers sharing your product without paying)
• Can be difficult to upsell customers or generate recurring revenue

4. Advertising

The advertising revenue model is most common for online businesses, where businesses sell advertising space on their website or in their email newsletter.

Pros of advertising model:

• Can be a great way to generate revenue from customers who are not ready to buy your product or service
• Advertising can be a complementary revenue stream to other revenue models

Cons of advertising model:

• Advertising can be disruptive to the user experience
• Advertising rates can fluctuate based on market conditions
• You may need to invest in marketing and branding to attract advertisers

5. Donation

The donation revenue model is most common for non-profit organizations, where customers donate money to support the cause or organization.

Pros of donation model:

• Can be a great way to generate revenue from customers who are passionate about your cause
• Donations are typically tax-deductible for the donor
• There is less pressure to generate revenue since donations are not expected to be recurring

Cons of donation model:

• Can be difficult to acquire customers who are willing to donate money
• May need to invest in marketing and branding to attract donors
• Donations can fluctuate based on economic conditions

6. Affiliate commission

The affiliate commission revenue model is another common for online businesses, where businesses pay a commission to affiliates for referring customers.

Pros of affiliate commission model:

• Can be a great way to generate revenue from customers who are already interested in your content
• Affiliates can provide valuable marketing and promotion for your business
• Can be easier to scale since you're not producing all the products you sell

Cons of affiliate commission model:

• Not always easy to find good affiliate programs
• You may need to invest in marketing and branding to attract affiliates, as well as readers
• Commissions can vary based on affiliate performance

7. Sponsors

The sponsorship revenue model is becoming increasingly common for online creators.

Pros of sponsorship model:

• Can be a great way to generate revenue from businesses or individuals who support your cause
• Sponsors typically have a high perceived value of your organization

Cons of sponsorship model:

• Can be difficult to acquire sponsors who are willing to pay
• May need to invest in marketing and branding to attract sponsors
• Sponsorship can fluctuate based on economic conditions

8. Data Sales

The data sales revenue model is most common for online businesses, where businesses sell data that they have collected.

Pros of data sales model:

• Scale advantages
• Data can be a valuable commodity for businesses

Cons of data sales model:

• Difficult to acquire unique data sets
• Longer sales cycle
• Data rates can fluctuate based on market conditions

9. Project-Based Services

The project-based services revenue model is most common for businesses that provide consulting or other services.

Pros of project-based services model:

• Can be a great way to generate revenue from customers who need your services
• Projects can be customized to the customer's needs

Cons of project-based services model:

• Very hands-on
• Need to keep your pipeline filled
• Projects can fluctuate based on economic conditions

10. Retainer-based services

The retainer-based services revenue model is most common recurring stream for businesses that provide consulting or other services.

Pros of retainer-based services model:

• Can be a good way to introduce recurring revenue to a services business
• Customers typically pay upfront for your services

Cons of retainer-based services model:

• Need to find a service that's profitable on retainer;
• Reducing churn;
• Pricing your retainer.

11. Tickets, Events, Workshops

The ticketing revenue model is most common for businesses that host events or workshops.

Pros of ticketing model:

• Can be a great way to generate revenue from customers who are interested in your event
• Tickets can be sold in advance of the event
• Virtual events and workshops can be easier to scale since you're not selling a physical good or service

Cons of ticketing model:

• Need to consistently market events
• Margins need to be high for it to be sustainable
• Often need to pay staff to help facilitate event

12. Royalties

The royalty revenue model is most common for businesses that sell digital content, such as books, music, or software.

Pros of royalty model:

• Royalties can be collected on a per-sale or per-use basis
• Highly asynchronous

Cons of royalty model:

• Can be difficult to track sales and commissions
• Typically low % commission
• Royalties can be volatile from year to year

13. Manufacture (D2C)

The manufacture model, going direct to customer, is probably the most familiar. You make a product and then sell it to the customer, whether that’s through your own store, a third-party retailer, or some other means.

Pros of Manufacture (D2C)

• You have complete control over your product
• You can build your own brand
• You can reach customers directly

Cons of Manufacture (D2C)

• It can be expensive to get started
• You have to invest in marketing and branding
• You have to manage inventory and shipping

14. Library Access

The library access model is common for businesses that offer digital content, such as books, music, or software. Customers can access your content through a subscription or pay-per-use basis.

Pros of Library Access

• Can reach a wide audience of potential customers
• Can generate revenue from customers who are interested in your content

Cons of Library Access

• Possibility of duplicating digital content without license
• Retaining users after they pay for first access
• Offering a unique library

15. Rent/Lease

The rent/lease revenue model is common for businesses that offer physical goods, such as equipment or vehicles. Customers can rent or lease your products on a short-term basis.

Pros of Rent/Lease

• Can generate revenue from customers who need your equipment
• Can be quite 'Passive' income
• Scalable if margins and demand are high enough

Cons of Rent/Lease

• High expenses upfront
• Potential damages costs

16. Community Access

The community access revenue model is common for businesses that offer physical goods or services. Customers can access your product or service through a subscription or pay-per-use basis.

Pros of Community Access

• Compounding as the community grows
• Plenty of online community software and tech popping up

Cons of Community Access

• Difficult to upgrade to a 'paid tier'
• Community moderation can be time-consuming
• Sustaining high community engagement

17. Marketplace

The marketplace revenue model is common for businesses that offer a platform for other businesses to sell their products or services. Customers can access the marketplace through a subscription or pay-per-use basis.

Pros of Marketplace

• Buyers will typically bring their own customers
• Can generate revenue from both sides of the market: buyers and sellers
• Don't need to produce your own products (beyond the marketplace itself)

Cons of Marketplace

• Quality control can be difficult
• Chicken-egg problem: getting your very first buyers and sellers
• Settling disputes and investing in customer support

Choosing A Revenue Model For Your Business

This Notion template database also includes some properties to help you understand more about the various revenue models listed, and how they compare with one another on a few important factors. These are:

• Volume needed;
• Typical Margins;
• Capital needed upfront;
• Relationship to customer (direct or indirect);
• Scalability;
• Revenue model examples; and

Volume Needed

The volume needed property gives an indication (on a scale from 'Very Low' to 'Very High') of how many customers are typically needed for this type of revenue model to work. For example, a subscription revenue model that charges $1.99/month will need a Very High volume of customers in order for the model to work; whereas a high-ticket services business may only need 1 or 2 big clients per year.

Typical Margins

The typical margins property is there to help you understand how profitable this revenue model can be, given the right circumstances, per sale or customer. For example, a business selling digital products will typically have very high margins (if they are priced correctly), whereas a business that relies on advertising as its primary revenue source may have lower margins.

Capital Needed Upfront

The capital needed upfront column describes (loosely) of how much money you will need to spend in order to get the business up-and-running. For example, a subscription business can be started with very little capital as there are no inventory or product development costs; whereas a manufacturing business may need a lot of money to get started as there are significant inventory and product development costs.

Relationship to Customer (Direct or Indirect)

The relationship to customer property gives an indication of whether the revenue model is direct, indirect or two-sided (e.g. marketplaces). A direct revenue model is one where you have a direct relationship with the customer; whereas an indirect revenue model is one where you do not have a direct relationship with the customer.

For example, a subscription business has a direct relationship with the customer as they are paying the business directly for a product/service; whereas an advertising-based revenue model has an indirect relationship with the customer as they are paying the advertiser, not the business.

Scalability

The scalability property gives an indication of how easy it is to scale this type of revenue model. A scalable revenue model is one that can grow without a significant increase in costs; whereas a non-scalable business is one that has fixed costs which limit its growth.

For example, a subscription business is usually more scalable than a manufacturing business as there are no inventory or product development costs; whereas a business that relies on a small number of high-value clients is usually less scalable as it is difficult for you to service more such clients with the same number of hours in a day.

Revenue Model Examples

This column provides an example of a real business that is deploying this revenue model. I've tried to select primarily indie businesses, however this isn't the case for all of the businesses listed (where I couldn't find an indie business, I chose something that may be relevant or a company that I just generally like).

It's also worth noting that many of the businesses listed under a certain revenue model type employ multiple revenue models, alongside the stream that they're listed under. This is quite common for indie businesses (to have multiple revenue streams) and can be a good hedge against any single revenue stream going dry.

As you look through the list of possible revenue models, you can give each a ranking and sort the list based on those that are best suited.  

Getting Started

Duplicate this template into your own Notion workspace, and start ranking the various revenue models as they suit your own business, today.

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Revenue Plan

Introduction.

A revenue plan is a multi-step process that helps align business strategy and operations to measurable revenue goals. When done correctly, Revenue Planning provides focus, accountability, and predictability, empowering businesses to maximize opportunities while avoiding threats.

Whether you’re a small startup or an established enterprise, revenue is the lifeblood of any business. While sales and growth are essential, having a clear strategic plan for generating sustainable revenue is key to long-term success.

In this blog post, we will explore what exactly a revenue growth plan entails, why it is so vital, and what benefits it provides. We will also outline the seven-step process for developing an effective plan for your unique business needs.

I hope that after reading this, you gain a clear understanding and framework to start developing your custom revenue plan to guide critical decisions and fuel business growth for years to come.

What is Revenue Planning?

Revenue planning refers to the process of predicting and managing a company’s expected income and is an essential aspect of any company’s growth and successful business strategy.

With an effective plan, companies can identify key areas where they can improve productivity and increase revenue, allowing them to make better-informed decisions about their future growth.

By analyzing past and current trends, companies can create revenue plans that help them reach their financial goals and maximize their profitability. With the right tools and approaches, planning can help businesses stay ahead of the curve and achieve long-term success and sustainability.

What’s the Importance of Revenue Planning?

Revenue planning is crucial to any business’s overall success and growth. It entails creating a plan that maps out how the company plans to generate revenue over a specified period.

With a revenue plan in place, businesses can make informed decisions about allocating resources, setting budgets, and identifying potential revenue streams.

By forecasting sales and identifying trends , organizations can strategize effectively and adjust their tactics based on what is working and what isn’t.

That’s why planning is vital for companies, as it allows them to navigate the unpredictable waters of the business world while remaining focused on generating consistent revenue and achieving long-term success.

Benefits of Revenue Planning

Better future plans.

Revenue planning refers to the process of forecasting and setting targets for income generation. When done correctly, it plays an integral role in shaping the future of any business.

Planning allows organizations to concrete their goals and aspirations, which helps them focus their efforts in specific areas.

Moreover, a well-crafted plan enables marketing and sales teams to have a common vision, which increases their efficiency and effectiveness in converting leads to clients.

With a well-established revenue plan, businesses can prioritize their efforts and resources toward their key objectives, achieving better profitability without sacrificing growth. Revenue planning is a critical tool for any company seeking to build a sustainable and prosperous future.

Accurately Assessing Business Needs

Revenue planning is crucial for any business that wishes to assess its commercial needs accurately.

In particular, a plan is essential as it provides sales teams with the necessary resources to drive revenue growth. An effective plan should consider market trends, competitive analysis, and customer behaviors.

By incorporating these elements into a revenue plan, businesses can accurately forecast their financial needs and tailor their sales strategies to meet their revenue goals.

The benefits of planning also extend beyond financial forecasting, as it can create a more cohesive team and improve communication across departments.

Ultimately, revenue planning is not just a means of generating more sales but a tool for broader organizational improvement.

Risk Mitigation

Creating a revenue planning strategy that includes a comprehensive plan can be incredibly beneficial for any organization.

Not only does it ensure that each member of your sales team is on the same page regarding goals and objectives, but it also serves as a powerful tool for mitigating risk. By analyzing past trends and current market conditions, businesses can make informed decisions and predict future revenue growth.

Additionally, planning helps identify potential threats or weaknesses in the sales process, allowing for proactive measures to be taken before these issues cause significant harm to the company’s bottom line.

A strong plan ensures that each team member has the resources and knowledge needed to navigate any roadblocks or challenges that may arise successfully. In summary, revenue planning and a strong plan serve as crucial risk mitigation strategies for businesses looking to safeguard their financial stability.

Lower Inventory

Revenue planning can bring a host of benefits to a business. One significant advantage of it is that it can help lower inventory.

With a plan in place, companies can better anticipate demand, avoid ordering excess stock, and improve cash flow.

This means that businesses can maintain optimal inventory levels, avoid unnecessary storage costs, and free up resources that can be invested elsewhere.

Implementing a planning strategy can help businesses operate more efficiently, reduce waste, and ultimately increase their bottom line.

Accountability

Revenue planning is an essential component of any successful business strategy and can bring a multitude of benefits, including accountability.

By developing a plan, companies can align their sales and marketing efforts, establish measurable goals, and track progress toward achieving them. This ensures that all team members are working towards a common objective and holds everyone accountable for their performance.

Clear targets and regular reporting allow for a deep understanding of how revenue is being generated, which areas of the business are performing well, and where improvements need to be made.

Ultimately, revenue planning provides a foundation for organizations to take ownership of their growth and achieve tremendous success.

Revenue Planning Process in 7 Steps

Get back to basics: review your organizational goals.

Revenue growth is an essential aspect that all organizations strive to achieve. However, with so many tools, strategies, and technologies available today, it’s often easy to get overwhelmed and lose sight of your core values.

That’s where a plan comes in – to help businesses get back to basics and achieve their financial targets smoothly. The strategy helps companies create an effective blueprint for driving revenue growth by focusing on critical organizational goals.

It also sheds light on areas that need improvement, training, or optimization to boost sales and customer satisfaction. With a well-drafted plan, businesses can align their goals with reality and ensure they stay on track to achieve long-term success.

Analyze Performance To Determine Your Revenue Drivers

Analyzing your performance is key when it comes to driving revenue growth for your business. By diving into your sales data, you can better understand what’s working and what’s not.

This information can then be used to determine your revenue drivers or the specific actions that are directly contributing to your revenue growth.

One way to do this is by creating a sales enablement plan to help your team focus on the most important activities that lead to higher revenue.

With this plan in place, you can fine-tune your approach and find new ways to boost your bottom line. So, if you’re serious about growing your business, start by analyzing your performance and identifying your revenue drivers today.

Build A Clear Timeline For Revenue Investment

Revenue growth is crucial to any business, but achieving it can be challenging. To build a clear timeline for revenue investment, businesses must implement a plan.

By creating a well-defined strategy, businesses can equip their teams with the necessary tools and resources to drive revenue growth. An effective plan involves:

• Carefully analyze your target market.
• Developing customer-centric messaging.
• Leveraging suitable channels to communicate this message.

This process takes time, but with patience and persistence, businesses can create a robust sales enablement plan that sets them up for sustained revenue growth. By investing in such a plan, companies can expect steady revenue growth, customer loyalty, and increased market share.

Look Forward To Predict and Mitigate Risk

Investing in revenue is like putting your money into a museum – you want to make sure that every penny is going towards something meaningful.

That’s why having a clear timeline for revenue investment within the revenue planning process is crucial, encompassing everything from budget allocation to sales enablement plans.

Speaking of plans, these need to be given extra focus as they tie directly into how your team will be able to generate revenue.

With a well-crafted plan in place, you’ll be able to give your team the tools and resources they need to drive more sales and increase revenue over time. By mapping out a clear timeline for revenue investment, you can ensure you’re making smart choices that will pay dividends in the long run.

Use Financial Modeling To Assess Revenue Allocation Options

The planning process can often feel like a daunting task, especially when it comes to allocating funds. However, utilizing financial modeling can make this process much smoother and more precise.

By taking into account various factors, such as market trends and customer behavior, financial modeling can help determine the best revenue allocation options. One key area to consider is a plan. This plan can play a crucial role in boosting revenue by providing your teams with the necessary resources to close deals effectively.

By incorporating sales enablement into financial modeling, businesses can improve their revenue allocation strategy and optimize their overall revenue planning process

Plan For Multiple Revenue Scenarios

When it comes to revenue growth, it’s important to have a good understanding of your options for allocating funds. One powerful tool for doing so is financial modeling. By using financial modeling software, you can create detailed projections of potential revenue outcomes under different scenarios.

This is particularly useful when considering options like a plan, which can significantly impact revenue. With a well-crafted financial model, you can analyze the potential returns from different strategies and make an informed decision about how to allocate your resources.

Whether you’re a small startup or a larger enterprise, financial modeling is invaluable for assessing revenue allocation options and driving growth.

Design A Method For Tracking Spending and Revenue Progress

As a savvy business owner, you know that growth is essential for success. However, with uncertain economic times, planning for multiple revenue scenarios is more important than ever. One of the critical factors in achieving this is developing a robust plan.

Such a plan will provide your sales team with the tools, resources, and training they need to sell effectively in any market condition.

With a well-crafted plan, your team will be better equipped to adapt and pivot as needed to achieve revenue growth, whether that growth comes from new markets, expanded offerings, or increased demand within your existing customer base.

So, take the time to establish a comprehensive plan and watch your business thrive, no matter the economic climate.

Ultimately, creating a revenue plan is essential for any business that wants to increase its sustainability and stay ahead of competitors.

Now that you understand how a revenue growth plan can help your company seize opportunities, manage risks, and maximize revenue potential, it’s time to get started crafting a plan of your own.

Be sure to consider stakeholders’ perspectives, current industry trends, internal capabilities, and long-term goals when designing your custom revenue plan.

With the right strategy in place, taking initiative, and persistence, there will be no limit to what you can accomplish.

So, let’s get oriented with the basics and create a plan of action toward success – you never know what will come next when the initiative is centered around growth potential with carefully set measures!

To learn more about building a revenue plan, and other business strategies, contact Strategy Capstone!

Simple Business Plan Template (2024)

Updated: May 4, 2024, 4:37pm

Table of Contents

Why business plans are vital, get your free simple business plan template, how to write an effective business plan in 6 steps, frequently asked questions.

While taking many forms and serving many purposes, they all have one thing in common: business plans help you establish your goals and define the means for achieving them. Our simple business plan template covers everything you need to consider when launching a side gig, solo operation or small business. By following this step-by-step process, you might even uncover a few alternate routes to success.

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Whether you’re a first-time solopreneur or a seasoned business owner, the planning process challenges you to examine the costs and tasks involved in bringing a product or service to market. The process can also help you spot new income opportunities and hone in on the most profitable business models.

Though vital, business planning doesn’t have to be a chore. Business plans for lean startups and solopreneurs can simply outline the business concept, sales proposition, target customers and sketch out a plan of action to bring the product or service to market. However, if you’re seeking startup funding or partnership opportunities, you’ll need a write a business plan that details market research, operating costs and revenue forecasting. Whichever startup category you fall into, if you’re at square one, our simple business plan template will point you down the right path.

Copy our free simple business plan template so you can fill in the blanks as we explore each element of your business plan. Need help getting your ideas flowing? You’ll also find several startup scenario examples below.

Download free template as .docx

Whether you need a quick-launch overview or an in-depth plan for investors, any business plan should cover the six key elements outlined in our free template and explained below. The main difference in starting a small business versus an investor-funded business is the market research and operational and financial details needed to support the concept.

1. Your Mission or Vision

Start by declaring a “dream statement” for your business. You can call this your executive summary, vision statement or mission. Whatever the name, the first part of your business plan summarizes your idea by answering five questions. Keep it brief, such as an elevator pitch. You’ll expand these answers in the following sections of the simple business plan template.

• What does your business do? Are you selling products, services, information or a combination?
• Where does this happen? Will you conduct business online, in-store, via mobile means or in a specific location or environment?
• Who does your business benefit? Who is your target market and ideal customer for your concept?
• Why would potential customers care? What would make your ideal customers take notice of your business?
• How do your products and/or services outshine the competition? What would make your ideal customers choose you over a competitor?

These answers come easily if you have a solid concept for your business, but don’t worry if you get stuck. Use the rest of your plan template to brainstorm ideas and tactics. You’ll quickly find these answers and possibly new directions as you explore your ideas and options.

2. Offer and Value Proposition

This is where you detail your offer, such as selling products, providing services or both, and why anyone would care. That’s the value proposition. Specifically, you’ll expand on your answers to the first and fourth bullets from your mission/vision.

As you complete this section, you might find that exploring value propositions uncovers marketable business opportunities that you hadn’t yet considered. So spend some time brainstorming the possibilities in this section.

For example, a cottage baker startup specializing in gluten-free or keto-friendly products might be a value proposition that certain audiences care deeply about. Plus, you could expand on that value proposition by offering wedding and other special-occasion cakes that incorporate gluten-free, keto-friendly and traditional cake elements that all guests can enjoy.

3. Audience and Ideal Customer

Here is where you explore bullet point number three, who your business will benefit. Identifying your ideal customer and exploring a broader audience for your goods or services is essential in defining your sales and marketing strategies, plus it helps fine-tune what you offer.

There are many ways to research potential audiences, but a shortcut is to simply identify a problem that people have that your product or service can solve. If you start from the position of being a problem solver, it’s easy to define your audience and describe the wants and needs of your ideal customer for marketing efforts.

Using the cottage baker startup example, a problem people might have is finding fresh-baked gluten-free or keto-friendly sweets. Examining the wants and needs of these people might reveal a target audience that is health-conscious or possibly dealing with health issues and willing to spend more for hard-to-find items.

However, it’s essential to have a customer base that can support your business. You can be too specialized. For example, our baker startup can attract a broader audience and boost revenue by offering a wider selection of traditional baked goods alongside its gluten-free and keto-focused specialties.

4. Revenue Streams, Sales Channels and Marketing

Thanks to our internet-driven economy, startups have many revenue opportunities and can connect with target audiences through various channels. Revenue streams and sales channels also serve as marketing vehicles, so you can cover all three in this section.

Revenue Streams

Revenue streams are the many ways you can make money in your business. In your plan template, list how you’ll make money upon launch, plus include ideas for future expansion. The income possibilities just might surprise you.

For example, our cottage baker startup might consider these revenue streams:

• Product sales : Online, pop-up shops , wholesale and (future) in-store sales
• Affiliate income : Monetize blog and social media posts with affiliate links
• Advertising income : Reserve website space for advertising
• E-book sales : (future) Publish recipe e-books targeting gluten-free and keto-friendly dessert niches
• Video income : (future) Monetize a YouTube channel featuring how-to videos for the gluten-free and keto-friendly dessert niches
• Webinars and online classes : (future) Monetize coaching-style webinars and online classes covering specialty baking tips and techniques
• Members-only content : (future) Monetize a members-only section of the website for specialty content to complement webinars and online classes
• Franchise : (future) Monetize a specialty cottage bakery concept and sell to franchise entrepreneurs

Sales Channels

Sales channels put your revenue streams into action. This section also answers the “where will this happen” question in the second bullet of your vision.

The product sales channels for our cottage bakery example can include:

• Mobile point-of-sale (POS) : A mobile platform such as Shopify or Square POS for managing in-person sales at local farmers’ markets, fairs and festivals
• E-commerce platform : An online store such as Shopify, Square or WooCommerce for online retail sales and wholesale sales orders
• Social media channels : Facebook, Instagram and Pinterest shoppable posts and pins for online sales via social media channels
• Brick-and-mortar location : For in-store sales , once the business has grown to a point that it can support a physical location

Channels that support other income streams might include:

• Affiliate income : Blog section on the e-commerce website and affiliate partner accounts
• Advertising income : Reserved advertising spaces on the e-commerce website
• E-book sales : Amazon e-book sales via Amazon Kindle Direct Publishing
• Video income : YouTube channel with ad monetization
• Webinars and online classes : Online class and webinar platforms that support member accounts, recordings and playback
• Members-only content : Password-protected website content using membership apps such as MemberPress

Nowadays, the line between marketing and sales channels is blurred. Social media outlets, e-books, websites, blogs and videos serve as both marketing tools and income opportunities. Since most are free and those with advertising options are extremely economical, these are ideal marketing outlets for lean startups.

However, many businesses still find value in traditional advertising such as local radio, television, direct mail, newspapers and magazines. You can include these advertising costs in your simple business plan template to help build a marketing plan and budget.

5. Structure, Suppliers and Operations

This section of your simple business plan template explores how to structure and operate your business. Details include the type of business organization your startup will take, roles and responsibilities, supplier logistics and day-to-day operations. Also, include any certifications or permits needed to launch your enterprise in this section.

Our cottage baker example might use a structure and startup plan such as this:

• Business structure : Sole proprietorship with a “doing business as” (DBA) .
• Permits and certifications : County-issued food handling permit and state cottage food certification for home-based food production. Option, check into certified commercial kitchen rentals.
• Roles and responsibilities : Solopreneur, all roles and responsibilities with the owner.
• Supply chain : Bulk ingredients and food packaging via Sam’s Club, Costco, Amazon Prime with annual membership costs. Uline for shipping supplies; no membership needed.
• Day-to-day operations : Source ingredients and bake three days per week to fulfill local and online orders. Reserve time for specialty sales, wholesale partner orders and market events as needed. Ship online orders on alternating days. Update website and create marketing and affiliate blog posts on non-shipping days.

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6. Financial Forecasts

Your final task is to list forecasted business startup and ongoing costs and profit projections in your simple business plan template. Thanks to free business tools such as Square and free marketing on social media, lean startups can launch with few upfront costs. In many cases, cost of goods, shipping and packaging, business permits and printing for business cards are your only out-of-pocket expenses.

Cost Forecast

Our cottage baker’s forecasted lean startup costs might include:

Gross Profit Projections

This helps you determine the retail prices and sales volume required to keep your business running and, hopefully, earn income for yourself. Use product research to spot target retail prices for your goods, then subtract your cost of goods, such as hourly rate, raw goods and supplier costs. The total amount is your gross profit per item or service.

Here are some examples of projected gross profits for our cottage baker:

Bottom Line

Putting careful thought and detail in a business plan is always beneficial, but don’t get so bogged down in planning that you never hit the start button to launch your business . Also, remember that business plans aren’t set in stone. Markets, audiences and technologies change, and so will your goals and means of achieving them. Think of your business plan as a living document and regularly revisit, expand and restructure it as market opportunities and business growth demand.

Is there a template for a business plan?

You can copy our free business plan template and fill in the blanks or customize it in Google Docs, Microsoft Word or another word processing app. This free business plan template includes the six key elements that any entrepreneur needs to consider when launching a new business.

What does a simple business plan include?

A simple business plan is a one- to two-page overview covering six key elements that any budding entrepreneur needs to consider when launching a startup. These include your vision or mission, product or service offering, target audience, revenue streams and sales channels, structure and operations, and financial forecasts.

How can I create a free business plan template?

Start with our free business plan template that covers the six essential elements of a startup. Once downloaded, you can edit this document in Google Docs or another word processing app and add new sections or subsections to your plan template to meet your specific business plan needs.

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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Krista Fabregas is a seasoned eCommerce and online content pro sharing more than 20 years of hands-on know-how with those looking to launch and grow tech-forward businesses. Her expertise includes eCommerce startups and growth, SMB operations and logistics, website platforms, payment systems, side-gig and affiliate income, and multichannel marketing. Krista holds a bachelor's degree in English from The University of Texas at Austin and held senior positions at NASA, a Fortune 100 company, and several online startups.

Revenue models: 11 types and how to pick the right one

Finding the right revenue model for your company and products is an incredibly important part of starting and expanding your business. It's a key part of building a brand. Explore popular revenue models and how to choose the right one.

What is a revenue model?

• 11 different types of revenue models

Costs associated with revenue models 

How to choose your revenue model.

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In one of the most famous lines from the 1941 classic Citizen Kane , Mr. Bernstein proclaims: “ It's no trick to make an awful lot of money... if what you want is to do is make a lot of money .” If only that statement were as true as it seemed. It's probably more accurate to say, “There are a lot of ways to make a lot of money.”

That’s particularly true for software businesses, with the rise of the mobile internet stimulating an explosion in the number of viable revenue models. Choosing which revenue model works best for your SaaS business, though, is not easy (even if that's all you want to do is choose a revenue model for your SaaS business). Your choice will help determine your sales strategy , and from there the growth rates, the amount of money you’ll need to invest initially, and the kind of relationship you’re likely to build with your customers. More than that — the choice determines the future of your business. Let’s take a look at some of the most popular revenue models used today — why they’re popular, why they work, and why they will (or won’t) work for you.

A revenue model is the income generating framework that is part of a company’s business model. Common revenue models include subscription, licensing and markup. The revenue model helps businesses determine their revenue generation strategies such as: which revenue source to prioritize, understanding target customers, and how to price their products.

Revenue models often get conflated with revenue streams, probably because each is a single revenue generation source. They are also confused with business models, of which revenue models are a part. Revenue models help business owners determine how to manage their revenue streams and are required to complete a business model.

Without a considered revenue model, your business will incur costs it cannot sustain. With a revenue model, you can set, track, and forecast business growth based on specific customer segments.

11 different types of revenue models 

There is no such thing as a perfect revenue model, but the popularity of some of the methods below suggests that many of them are well-tailored for the current state of the market. Here we’ll walk through each type of revenue model and when they may be most beneficial and applicable.

1. Subscription

The  subscription model  is the “vanilla” SaaS revenue model, not that there’s anything boring about a well-worked subscription plan. Businesses charge a customer every month or year for use of a product or service. All revenue is deferred and then fulfilled in installments. The subscription model is perhaps the most popular among SaaS companies because of its versatility, promise of  recurring revenue , and high value:customer lifetime balance.  Done right it's a one-way-ticket to sustainable growth .

Companies working with recurring revenue models, such as  subscription or licensing , see more value from a customer across a given customer lifetime. Being able to offer a variety of value options means your company can respond to more than one set of customer needs, expanding your appeal. Hubstaff’s subscription plan, seen below, is a classic of the genre:

Hubstaff’s various plans are distinct from one another in price and feature. This flexibility in the subscription model means that tentative or lower-budgeted customers can still get what they need, all the while maintaining visibility of what extra they could get for a few dollars more a month.

The freemium model is often described as a subscription revenue model, but in fact it’s an acquisition model, not a revenue model. Freemium involves giving users free access to an app and then selling subscriptions for a premium tier that includes more features.

Markup is a very common revenue model for buyer companies (i.e., companies that buy the products they sell). It’s as simple as can be: Take the cost of goods you just bought, mark it up X%, and make a profit margin on the original purchase. There are various subgenres of the markup model, including the following:

• Wholesale: Sale of goods or merchandise to retailers, business users, or other wholesalers
• Retail: Identification of demand, and satisfaction of it through a supply chain via a number of possible outlets, including physical and ecommercial ones

Markup is particularly used by mediators like ecommerce marketplaces — Amazon, for example. On average, Amazon charges a seller who uses their site 15% of the sale, plus  FBA fees  (including storage, pick & pack, shipping).

5. Pay-Per-User

One of the most enduring legacies of SaaS in the world of business is the introduction of pay-per-user (PPU). It involves giving a customer potentially unlimited to access to a range of features while charging them only for the services they use. At the dawn of SaaS, as the software required no physical delivery and deployed so quickly and cheaply, PPU appeared to be the most sensible revenue model. However, as natural as it seemed back in the day,  pay-per-user is not popular  anymore. Ascribing value to your product is one of the key considerations of your revenue model, and that includes demonstrating why it’s worth your target customers’ valuable dollars, not just making everything so cheap and easy that they can’t refuse. The issue with PPU, then, is that it’s rarely where value is ascribed to your product. Moreover, PPU kills your Monthly Active User metric. The per-user metric is not the most useful to customers in terms of deriving value — its take-it-or-leave-it approach actively works against your Daily Active Users number, and thus contributes to your churn rate.

6. Donation

As evidenced by the rise and rise of  Kickstarter - and  Patreon -based ventures, altruism is, if unpredictable, a pretty effective revenue model by itself. Relying on the donations of regular users is a common revenue model for nonprofits, online media (i.e., YouTubers) and independent news outlets.

7. Affiliate

What is  affiliate marketing ? This new, popular model works by promoting referral links to relevant products and collecting commission on any subsequent sales of those products. Leverage your product’s synergy with another product in an adjacent space and you both stand to gain. The affiliate model can be as simple as including in an article an outlink to a book or other product mentioned or offering your customers specialized recommendations relative to purchase history (again, Amazon is a master of this art). Some companies, such as Etsy, even have a  specific program  for their affiliates, where other companies can earn a commission on qualifying sales that result from featuring links to Etsy products and services. The affiliate revenue model is increasingly popular, owing to the way it dovetails effectively with other revenue models, particularly ad-based models.

8. Arbitrage

Applicable mainly to sellers or marketplace-oriented companies, the arbitrage revenue model uses the price difference in two different markets of the same good/service to make a profit. You buy in one market (a security/currency/commodity) and simultaneously sell in another market, at a higher price, what you just bought, pocketing the temporary price difference. Arbitrage is popular with  affiliate marketers , as well as with many cryptocurrency firms, SFOX being a prime example.

9. Commission

This transactional revenue model involves a middleman charging commission for each transaction it handles between two parties or for any lead it provides to the other party. It’s particularly popular with online marketplaces and aggregators, as well as businesses like independent music distributors. It’s particularly easy to get up and running with a commission-based business model because you’re working off of existing products. However, unless your field is well-conditioned for a monopoly, and unless your company is (or can become) that monopoly, you’ll find the commission model  very tough to scale .

10. Data Sales

Ever heard the phrase, “If you can’t see how the money’s made, you’re the product”? That’s data-selling in action. Many companies  selling digital goods  and services could not exist without core underlying data assets. In the data sale revenue model, this data is sold directly to a consumer or business customer. While certain companies will use data sale as their primary revenue model, the use of  data sales  to augment another revenue model is virtually ubiquitous. While some are using it as an  entrepreneurial venture , it is also the subject of considerable justified  public concern  and should be handled with care in the event you decide to go with it as your revenue model.

11. Web/Direct Sales

The old-fashioned revenue model made new, web sales and direct sales involve payment for goods or services through a digital medium. Web sales involve a customer finding your product via outbound marketing (or a web search) and can used for software, hardware, and subscription-based offerings. Direct sales revolve around inbound marketing and is good for handling multiple buyers and influencers in big-ticket markets.

A good revenue model is not just about squeezing as much revenue possible out of a sales cycle; it’s also about balancing your ambitions in the market with your resourcing requirements. A startup revenue model may be significantly different than one for an established business because their resources are vastly different. When choosing your model, factoring in costs is paramount to ensure profitability.

Cost of revenue

The first cost you’ll be likely to factor in is your cost of goods — how much it costs to produce the goods or service that you then sell. For hardware, this can comprise testing and manufacture; for software, it’ll include the whole development cycle. Regardless of what you produce, administrative overheads will also apply. You will find cost of goods a considerably less comprehensive metric than cost of revenue, which is the total cost of manufacturing and delivering a product or service to consumers. That includes everything we’ve just covered, plus distribution and marketing costs. Cost of revenue is more often used in SaaS and other service-oriented industries because it makes the many costs incurred outside of production in SaaS easier to track.

Prototyping costs

Prototyping is a fundamental aspect of any production cycle and, unfortunately, is one of the most expensive. While testing prototypes or beta versions of your new product, even the smallest revisions can necessitate costly changes to your production/development process. This usually comprises a base-level cost, plus iteration costs on top of that. When forecasting prototyping costs, it’s wise to plan for several iterations; it’s highly unlikely you’ll get everything right the first time around, especially if your product is innovative or is composed of a number of features.

Equipment costs

One of the beautiful things about being a SaaS company is that there are no production lines to run. Nevertheless, equipment costs still factor into the bottom line. Firmware,  app development tools , server rental, plus any other administrative services bought on subscription (e.g. Slack or Hubstaff) will play a part in your equipment costs, but, generally, equipment costs should be the easiest of all to forecast.

Labor costs

An underpaid workforce is an unhappy workforce (if it’s a workforce at all); wage costs come out of your bottom line. Based on the interaction of salary and commission in your  compensation plan , as well as the type of commission you offer (entirely open-ended or capped? Will there be accelerators/decelerators involved?), you will have to plan for your expenditure on labor costs differently.

Advertising & marketing costs

Your advertising and marketing costs will be determined by the following:

• The size of your respective advertising and marketing teams
• The scale of exposure you’re shooting for
• Your method of approach to advertising and marketing: undefinedundefinedundefined

With all of those options, how could you possibly be expected to choose? The answer is in your product itself.

Know your market

Where are your customers? How are they accessible to you? If your buyer personas are mainly single customers, address subscription options to them that are expertly targeted to their needs and  how your product can fulfill them . On the other hand, if you’re looking to sell to larger companies who need a customized version of your core product, consider a licensing-based option that will allow you to establish a solid, high-return relationship that has the legs to run for the long term. Knowing your market also means knowing your competitors. Before choosing a revenue model, make sure you have a firm grasp of industry benchmarks: Where is the baseline value for equivalent products to yours in the market? Where does your product sit? Interrogate your product honestly. Not only will a frank assessment of your product’s value save you the mistake of pricing your product too high (or too low), but it will also show you how to capitalize on its value and where your developmental compass should be pointed. Consider the strength of your connections with compatible peer companies. For instance, if you’re running time-management software and have connections to a neighboring company selling compatible HR software, reach out to them. A strong network connection can be leveraged with an effective affiliate revenue model–based strategy.

Know your product

Knowing your product is every bit as important as knowing your market, if not more so. Sometimes, the nature of a product dictates the best revenue model for it by itself. If you have a suite of products, is it most sensible to have them as a subscription service or as one-off purchased products? The smart money in this case, for the sake of your growth and daily-user figures, would be on the subscription option. Again, evaluate your product’s performance honestly. How does your product perform compared with its competitors? How wide is your feature array compared with the rest? An awareness of your product enables you to choose a revenue model that hits the value/willingness-to-pay sweet spot. Consider your options further if your product is not a straightforward software proposition. For example, if your product is platform-based, investigate your advertising prospects to capitalize on your traffic buzz, and think laterally to find possible partners for an affiliate strategy that will give your revenue an added kick.

Pitchfork’s affiliate program with makers of craft beer can be seen on the leftmost tab. Music blog platform Pitchfork sussed out that the only thing their readers like more than left-field music is craft beer, so they introduced an affiliate feature with brewer’s outlet October. It’s a smart exhibition of affiliate revenue scoring.

Expect the unexpected

As your product line changes and as your company grows, your initial revenue model may change. You may begin with a subscription revenue model that then assimilates aspects from the affiliate, advertising, and data sales models with time and opportunity. You might start off as a fledgling independent blog on donation with a little bit of advertising, then find yourself with an audience big enough that you can shun the advertisers, install a subscription model, and keep the integrity of your writing safeguarded. Alternatively, you may begin with subscription, see only a fraction of your potential success realized, and move to a licensing revenue model. The important thing is to be willing to shift your revenue model or bring in additional models to complement what you already use, if the situation calls for it.

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Your revenue model is unique

So many revenue sources, so many revenue models, so little time. There are some fundamental differences between revenue models. For instance, if you’re a SaaS company producing your own software product, you’re unlikely to get all that far with an arbitrage model. Likewise, if your product is a medium or if you’re a seller, a subscription-based revenue model won’t do the trick. A product with a high ceiling for potential revenue is not best served by a donation model. Nevertheless, the choice of a main revenue model out of the batch that do work for your product, and how you then combine them with appropriate aspects of other models, is yours, and yours only. Your product and the market should be in mind at all times while you’re settling on, adding to, and refining your model. After that, bringing in the revenue itself should be as easy as  Citizen Kane  said.

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Revenue Strategy: What It Is, Examples, and 7 Strategies for Growth

Clari Staff

Published March 04, 2024

Updated April 09, 2024

Ready to take your revenue to new heights?

Trying to double down on your revenue goals?

Instead of putting in more hours to make it happen, there’s a better solution.

You need to look inward at what matters: your revenue strategy.

You could have the best product in the world. But, if you’re not optimizing your revenue, you will be spinning your wheels for a long time.

Focusing on revenue is the most important part of building a profitable brand.

A revenue strategy is a roadmap you follow to maximize your profit margins from existing customers, generate new leads, and keep expenses low.

In this guide, you’ll learn what a revenue strategy is, why it’s important, the different strategies you can use, and examples of how it works so you can break through your revenue goals.

Table of content:

What is a revenue strategy?

Why is having a revenue strategy important, how do you develop a revenue strategy, 7 revenue strategies to drive growth, 2 revenue strategy examples.

• What revenue strategy performance metrics should you track?

How Clari can kickstart your revenue strategy

If you want to hit your revenue goals, you have to have a proven plan.

This is true in marketing, accounting, sales, customer service, and revenue operations .

A revenue strategy outlines how your business should maximize revenue while keeping costs low. 

It combines a variety of activities designed to increase revenue like:

• Pricing strategies
• Customer success
• Product development

A revenue strategy is about getting more customers to buy your products and having control over the entire revenue process . This means turning prospects into leads, turning leads into customers, and turning customers into lifetime fans.

By implementing short- and long-term goals and mapping out the right tactics, you can drive revenue and reduce expenses to maximize profits.

An effective revenue strategy is every business owner's primary goal.

It’s all about profitability. Unlike revenue operations, you’re not just looking to drive revenue with a “revenue strategy.” Instead, you’re doing two things at once:

• Boosting revenue
• Shrinking costs

This two-pronged approach accelerates your business growth faster than any other strategy.

Why is having a revenue strategy important? Imagine playing a board game to make as much money as possible. You wouldn't just run around doing random things, right? You'd have a plan. 

That's what a revenue strategy is all about. It's your game plan for making more money, saving costs, and keeping your business sustainable in the long run.

Here's why it's so important:

Rely on a data-driven approach to revenue growth

You can’t rely solely on your gut or intuition when making marketing decisions. A sound revenue strategy gives you insights into what’s working and what isn’t. 

For instance, it helps you analyze customer behavior, sales data, and market trends and adjust your strategies accordingly. 

That way, you’re not firing arrows in the dark. You’re making calculated marketing decisions, maximizing your chances of achieving the desired outcomes. 

• Build a sustainable sales pipeline

A solid revenue strategy helps you create a steady flow of sales. 

You can better align your sales efforts by understanding your target audience and defining clear objectives. This leads to a consistent influx of leads, providing stability to your sales pipeline. 

Forecast revenue better

You don’t have historical data, sales projections, and market trends without a revenue strategy.

All that helps you accurately forecast revenue and allocate your resources accordingly. 

Improve cash flow

Another reason you want a comprehensive revenue strategy is because it optimizes your cash flow. No business can survive, let alone thrive, without adequate cash inflow. 

Revenue optimization helps you maximize cash inflows and minimize outflows. 

Maximize profit

Unless you’re a non-profit, the sustainability of your business relies on its profitability. 

Profit maximization becomes much easier with a long-term revenue optimization plan. 

Developing a revenue strategy is like setting up a roadmap for your business’s financial success. It’s about figuring out where you want to go and how you’ll get there. 

To develop an effective revenue strategy, you need to:

• Understand your target customer in depth
• Analyze market trends 

Every business is unique. Your exact action plan while developing a revenue strategy will depend on your situation. 

Here’s a step-by-step revenue strategy to help you move in the right direction. 

Define business goals

The success of your business is dictated by whether or not it’s achieving its long-term goals.

“Long-term” is the keyword here. Focus on the bigger picture when you’re setting a goal for your business. And it doesn’t have to be “revenue growth.”

The goal could be:

• Entering a new market
• Making more repeat customers
• Working on a recurring revenue stream

When you have a clear goal, identifying the exact steps becomes easier. 

Identify target markets

Most brands focus on potential customers when trying to grow their revenue. 

Your past and current customers are just as important, if not more. The key to revenue growth is understanding and meeting their expectations. 

Potential customers

Knowing your potential customers’ demographics isn’t enough. It also involves:

• Evaluating their online behavior through testing
• Collecting first-party data through surveys and interviews

If you’ve already developed your Customer Avatar, you know a lot about your potential customers. 

However, testing is a perfect way to ensure you invest your resources in the right people. 

Current customers

Your existing customers are your most valuable assets. Why? You have a much higher chance of selling to an existing customer than acquiring a new one. 

And let’s not forget this: for most businesses, customer acquisition costs are generally higher than customer retention costs.

So, by focusing on your existing customers, you can improve your revenue growth. Not only that, but you can use them to improve your offerings through direct feedback. And, with word-of-mouth marketing, your happy customers act as your brand ambassadors. 

Delighting your existing customers is a sure-shot way of attracting new ones. So study your current customers and invest in improving their post-sale experiences. 

Past customers

Past customers provide an excellent opportunity for retrospection. You can look at your past failures and successes to inform your future strategies. 

For instance, uncover the reasons why someone stopped buying from you. 

Understanding all three segments of your target market—potential, current, and past customers—will help you make informed marketing and sales decisions. 

Examine current offerings

Examining your current pricing structure is another way to improve your future revenue. 

Use A/B testing to identify the most converting price for a product. This means trying to sell a product at different price points and tracking sales revenue. 

You can do a range of other things to examine your current offerings:

• Identify customers who are willing to pay premium prices for your products
• Find products that are more frequently purchased 
• Evaluate the impact of discounts on your revenue
• Understand your competitors’ pricing strategy

Find new opportunities with your pricing structure

A quick audit will reveal room for improvement even if you think you have a great pricing strategy. 

Here’s what you can do to drive revenue growth by optimizing the pricing structure of your company:

• Implement dynamic pricing based on competitor research and customer behavior
• Generate more sales by offering volume discounts
• Package relevant services at a discounted price
• Make it easy for prospects to contact you if they need a customized plan 

In addition, if a segment of your customers is investing in your product for specific features, offer them as standalone services. 

Set revenue targets

Deciding on an action plan becomes easier when you have a clear goal in sight. But before you start working on your revenue goals, ensuring they’re realistic is crucial. 

Start by reviewing your brand’s past performance to gauge future potential. 

Plus, identify high-impact strategies so that you can focus your resources on them. 

Lastly, identify your key performance indicators (KPIs) and constantly track your progress. 

Common KPIs in SaaS businesses are:

• Cost per acquisition 

Customer lifetime value

• Cost per lead
• Customer retention rate
• Return on ad spend (ROAS) 
• Return on investment (ROI)

Look at these metrics before setting your long-term revenue goals. 

Set expense targets

You want to maximize the gap between the cost of running a business and its revenue. 

Setting expense targets helps you allocate your resources wisely. Start by understanding your costs in various areas of your business. Having a revenue goal will also help you in setting expense targets. 

When you have the right information and a clear goal, set expense targets for specific areas of your business, such as:

• Operational costs
• Marketing expenses
• Research and development

Let's dive into seven proven revenue strategies to make more money, keep costs down, and grow your business. Each of these strategies is a secret weapon you can use to help you win the game of business.

1. Find your top revenue drivers (80/20 rule)

One of the first things you should do is identify your top revenue drivers. 

For example, software companies may use a subscription model (SaaS) or ad revenue from free signups. Let’s say your biggest revenue source is your subscription customers. Find the exact strategies that are driving those conversions. They could be:

• Lead nurturing through email marketing
• Organic social media marketing 
• Search engine ads

Identify your highest-performing acquisition strategy and double down on it. 

2. Improve sales ramp time 

Sales ramp time is required to convert a new sales rep into a high-performing professional who consistently hits sales targets. Reducing the sales ramp time is a powerful way to boost your brand’s revenue growth. 

Minimize your ramp time with the following strategies:

• Streamline your onboarding process
• Let high-performing reps train newbies
• Only hire skilled professionals 
• Offer ongoing support and feedback to new hires

3. Hire strategically

Hiring without considering the long-term picture is a mistake many founders make. You’ll find businesses hiring employees because of a gap to fill. 

What you want to do instead is forecast your future needs first. 

For instance, let’s say you hire two sales reps. And in a few months, your sales team has doubled your revenue. As a result, there is a growing need to hire some customer service reps. 

Strategic hiring helps you invest your resources in the right people at the right time. 

4. Improve CLV with cross-selling and upselling

Customer lifetime value (CLV) is the value (or revenue) each customer brings. You can use cross-selling and upselling to maximize your CLV. 

• Cross-selling is when you promote an additional product after someone makes a purchase. 
• Upselling refers to introducing a higher-priced product right after someone purchases a lower-priced one. 

For instance, let’s say someone is on the basic plan of your SaaS that offers limited automation. You can introduce a higher-tier plan with more automation features. 

5. Explore a partner sales model

Hiring and training sales reps takes time and resources. A partner sales model helps you get quick revenue boosts. 

In it, you work with other businesses and marketers. They promote your product in exchange for a commission or percentage. The downside is that you may earn a little less than usual. But the strategy offers quick results and reduces your sales costs. 

6. Double down on your best customer segments

Think about the type of customers that bring you the most income. 

For instance, you may have different clients, from freelancers to marketing agencies. So, if agencies are your top revenue drivers, double down on this customer segment for a boost in revenue growth. 

7. Focus on customer retention for recurring revenue 

A mistake many businesses make is that they focus most of their resources on acquiring new customers. As a result, their existing customers get ignored. 

The fact of the matter is many startups see better revenue growth by working on customer retention than they do with customer acquisition. 

Now, let's look at two real-life examples of businesses that implemented a revenue strategy successfully:

Service packaging (Marquet Media, LLC)

Packaging your services lets you build more predictable revenue streams. 

Marquet Media, LLC, a PR agency focusing on wellness brands, implemented this revenue strategy. 

First, they analyzed their target market and developed their Ideal Customer Profile (ICP). Next, they understood the audience's main pain points and packaged the services to address them. 

The result?

Marquet Media experienced a 15% increase in annual recurring revenue (ARR).

Service diversification (Corporate Filming)

Diversifying your services is an effective way to stand out in a competitive market. 

Here’s how Corporate Filming used this revenue strategy:

They first discovered the top concerns the target market faces and addressed them. For instance, customers didn’t like the complicated pricing structure. Corporate Filming then came up with simple annual pricing. 

Since implementing this change, Corporate Filming experienced 900% growth in revenue.

What revenue strategy performance metrics should you track? 

To make sure your revenue strategy is working great, you can track some key metrics—think of these as the scoreboard of your business board game. Here’s what you should keep an eye on to ensure you’re hitting your goals:

Total revenue

The most obvious one is your total revenue. Monitor your revenue growth and see if you’re meeting your targets.

Total expenses

Revenue growth is great, but it's useless if it’s not increasing your profit margins. 

Your profit is equal to total expenses minus your revenue. When your expenses are high, the profit drops. 

Optimize your expense strategy and ensure you’re not spending more than you should. 

Return on ad spend

ROAS is usually pretty high when considering the long-term revenue from recurring sales. So, if you’re trying to get new customers through advertisements, setting a low ROAS target is okay.

Regardless of low or high, track this metric to ensure your ads generate enough results for you.

Average profit margin 

Your average profit margin depends on the cost and price required to produce the product. 

Even if you’re getting a high ROAS, it’s no good if your profit margins are too thin. 

Customer lifetime value (CLV) is the average revenue you generate from each customer over their lifetime. It depends on your product’s price and how long an average customer pays for it. 

For instance, if your product costs $30 per month and an average customer uses it for two years, its CLV would be:

$30 x 12 months x 2 years = $720 CLV

Average order value

AOV is the average revenue you generate with a single sale. It usually stays the same unless you introduce a discount. 

An effective way to improve your AOV is by gradually increasing the price. 

Customer acquisition cost

You need to optimize your marketing costs to keep your revenue graph pointing upward. 

By tracking CAC, you’re in a better position to optimize your marketing strategies and focus on what works best. 

When growing your business, having a clear path helps you stay focused and motivated.

When you have a revenue strategy, you can:

• Better utilize your resources
• Forecast revenue
• Optimize your cash flow
• Boost profits

Ready to improve your revenue and maximize profit simply and painlessly?

Clari can help!

Clari is a revenue platform that simplifies and accelerates your revenue growth.

With various built-in revenue management features, you’ll gain valuable business insights that will help you pull the right revenue levers to grow your business.

Sign up for a demo now and see the difference it can make for your business!

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Start your free trial with Shopify today—then use these resources to guide you through every step of the process.

How To Create Financial Projections for Your Business Plan

Building a financial projection as you write out your business plan can help you forecast how much money your business will bring in.

Planning for the future, whether it’s with growth in mind or just staying the course, is central to being a business owner. Part of this planning effort is making financial projections of sales, expenses, and—if all goes well—profits.

Even if your business is a startup that has yet to open its doors, you can still make projections. Here’s how to prepare your business plan financial projections, so your company will thrive.

What are business plan financial projections?

Business plan financial projections are a company’s estimates, or forecasts, of its financial performance at some point in the future. For existing businesses, draw on historical data to detail how your company expects metrics like revenue, expenses, profit, and cash flow to change over time.

Companies can create financial projections for any span of time, but typically they’re for between one and five years. Many companies revisit and amend these projections at least annually. 

Creating financial projections is an important part of building a business plan . That’s because realistic estimates help company leaders set business goals, execute financial decisions, manage cash flow , identify areas for operational improvement, seek funding from investors, and more.

What are financial projections used for? 

Financial forecasting serves as a useful tool for key stakeholders, both within and outside of the business. They often are used for:

Business planning

Accurate financial projections can help a company establish growth targets and other goals . They’re also used to determine whether ideas like a new product line are financially feasible. Future financial estimates are helpful tools for business contingency planning, which involves considering the monetary impact of adverse events and worst-case scenarios. They also provide a benchmark: If revenue is falling short of projections, for example, the company may need changes to keep business operations on track.

Projections may reveal potential problems—say, unexpected operating expenses that exceed cash inflows. A negative cash flow projection may suggest the business needs to secure funding through outside investments or bank loans, increase sales, improve margins, or cut costs.

When potential investors consider putting their money into a venture, they want a return on that investment. Business projections are a key tool they will use to make that decision. The projections can figure in establishing the valuation of your business, equity stakes, plans for an exit, and more. Investors may also use your projections to ensure that the business is meeting goals and benchmarks.

Loans or lines of credit 

Lenders rely on financial projections to determine whether to extend a business loan to your company. They’ll want to see historical financial data like cash flow statements, your balance sheet , and other financial statements—but they’ll also look very closely at your multi-year financial projections. Good candidates can receive higher loan amounts with lower interest rates or more flexible payment plans.

Lenders may also use the estimated value of company assets to determine the collateral to secure the loan. Like investors, lenders typically refer to your projections over time to monitor progress and financial health.

What information is included in financial projections for a business?

Before sitting down to create projections, you’ll need to collect some data. Owners of an existing business can leverage three financial statements they likely already have: a balance sheet, an annual income statement , and a cash flow statement .

A new business, however, won’t have this historical data. So market research is crucial: Review competitors’ pricing strategies, scour research reports and market analysis , and scrutinize any other publicly available data that can help inform your projections. Beginning with conservative estimates and simple calculations can help you get started, and you can always add to the projections over time.

One business’s financial projections may be more detailed than another’s, but the forecasts typically rely on and include the following:

True to its name, a cash flow statement shows the money coming into and going out of the business over time: cash outflows and inflows. Cash flows fall into three main categories:

Income statement

Projected income statements, also known as projected profit and loss statements (P&Ls), forecast the company’s revenue and expenses for a given period.

Generally, this is a table with several line items for each category. Sales projections can include the sales forecast for each individual product or service (many companies break this down by month). Expenses are a similar setup: List your expected costs by category, including recurring expenses such as salaries and rent, as well as variable expenses for raw materials and transportation.

This exercise will also provide you with a net income projection, which is the difference between your revenue and expenses, including any taxes or interest payments. That number is a forecast of your profit or loss, hence why this document is often called a P&L.

Balance sheet

A balance sheet shows a snapshot of your company’s financial position at a specific point in time. Three important elements are included as balance sheet items:

• Assets. Assets are any tangible item of value that the company currently has on hand or will in the future, like cash, inventory, equipment, and accounts receivable. Intangible assets include copyrights, trademarks, patents and other intellectual property .
• Liabilities. Liabilities are anything that the company owes, including taxes, wages, accounts payable, dividends, and unearned revenue, such as customer payments for goods you haven’t yet delivered.
• Shareholder equity. The shareholder equity figure is derived by subtracting total liabilities from total assets. It reflects how much money, or capital, the company would have left over if the business paid all its liabilities at once or liquidated (this figure can be a negative number if liabilities exceed assets). Equity in business is the amount of capital that the owners and any other shareholders have tied up in the company.

They’re called balance sheets because assets always equal liabilities plus shareholder equity. 

5 steps for creating financial projections for your business

• Identify the purpose and timeframe for your projections
• Collect relevant historical financial data and market analysis
• Forecast expenses
• Forecast sales
• Build financial projections

The following five steps can help you break down the process of developing financial projections for your company:

1. Identify the purpose and timeframe for your projections

The details of your projections may vary depending on their purpose. Are they for internal planning, pitching investors, or monitoring performance over time? Setting the time frame—monthly, quarterly, annually, or multi-year—will also inform the rest of the steps.

2. Collect relevant historical financial data and market analysis

If available, gather historical financial statements, including balance sheets, cash flow statements, and annual income statements. New companies without this historical data may have to rely on market research, analyst reports, and industry benchmarks—all things that established companies also should use to support their assumptions.

3. Forecast expenses

Identify future spending based on direct costs of producing your goods and services ( cost of goods sold, or COGS) as well as operating expenses, including any recurring and one-time costs. Factor in expected changes in expenses, because this can evolve based on business growth, time in the market, and the launch of new products.

4. Forecast sales

Project sales for each revenue stream, broken down by month. These projections may be based on historical data or market research, and they should account for anticipated or likely changes in market demand and pricing.

5. Build financial projections

Now that you have projected expenses and revenue, you can plug that information into Shopify’s cash flow calculator and cash flow statement template . This information can also be used to forecast your income statement. In turn, these steps inform your calculations on the balance sheet, on which you’ll also account for any assets and liabilities .

Business plan financial projections FAQ

What are the main components of a financial projection in a business plan.

Generally speaking, most financial forecasts include projections for income, balance sheet, and cash flow.

What’s the difference between financial projection and financial forecast?

These two terms are often used interchangeably. Depending on the context, a financial forecast may refer to a more formal and detailed document—one that might include analysis and context for several financial metrics in a more complex financial model.

Do I need accounting or planning software for financial projections?

Not necessarily. Depending on factors like the age and size of your business, you may be able to prepare financial projections using a simple spreadsheet program. Large complicated businesses, however, usually use accounting software and other types of advanced data-management systems.

What are some limitations of financial projections?

Projections are by nature based on human assumptions and, of course, humans can’t truly predict the future—even with the aid of computers and software programs. Financial projections are, at best, estimates based on the information available at the time—not ironclad guarantees of future performance.

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How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated July 29, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

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• Manage with your business plan

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21 Revenue Strategy Examples to Kickstart Your Revenue Growth

by Elizabeth Harris , on 3/20/18 8:53 AM

Aka: Revenue Strategies - the Foundation for CRO Success  

In a recent confidential interview, a CEO shared his thoughts about the next 12 months:  "We believe we will achieve our revenue and profit goals over the next 12 months with our current resources. We have the right team, the latest software and tools, effective processes, remarkable products & services, strong branding and a unique value proposition." He went on to admit “… but we are not achieving our revenue and profit goals and we are still unsure why.”

The proper revenue strategy aligns marketing, sales, and customer experience teams around a singular goal: drive profitability. Without a strategic roadmap, healthy and sustained growth simply cannot flourish, which is why organizations put so much emphasis on the planning process. In fact, studies reveal that tightly-aligned sales and marketing functions result in an average of 36% higher customer retention rates and 38% higher sales closing rates, than their more loosely aligned counterparts.

Unraveling such a puzzle to understand what is ‘broken’ has us first visiting the revenue strategy. Choosing a revenue strategy impacts all other aspects of planning and whether goals are achieved.

Download this article as a pdf here >

The best revenue strategy requires answers to these essential questions:

Strategy & goals.

1.   What are our overall business goals? 2.   How effective is our current strategy?

3.   Are we profitable, or as profitable as we should be?

4.   How do we define our complete sales process and sales funnel? 5.   How do we define success?

Measure Metrics

6.   How do we measure the effectiveness of our sales process? 7.   How do we measure the effectiveness of each stage of our sales process? 8.   How are sales results measured? 9.   What is our ROI on our marketing efforts? 10. What is the ROI on our sales efforts? 11. What is our current customer acquisition cost (CAC)?

Optimization

12. Are we using and maximizing the resources we have? 13. How do we improve conversion ratios during the sales process?

14. Are there opportunities to lower cost with a more effective strategy?

People Management

15. What management systems are required? 16. How much time is dedicated to sales and sales management by key leaders or managers?

Which Revenue Strategy?

Determining which revenue strategy to pursue is often the most difficult part when planning corporate objectives. The sea of empty space that stares back at executives from a blank whiteboard can deafen strategic brainstorming attempts with its silence.

Knowing which questions to ask and variables to consider is the most effective way to broach the subject of strategic revenue planning. Questions like,

Which sales and marketing opportunities are available to us immediately?”

What are our most valuable assets?”

Are the right people in place to execute our short-term and long-term goals?”

...can get the conversation started.

Once the discussion is underway, the revenue strategies below can inspire your team to find the best growth avenues that utilize your assets and opportunities effectively.

To enable you to meet your organization's revenue/profit goals and offer you starting point with a revenue strategy, here are 21 Revenue Strategies to fill your whiteboard and get you started:

(1)   increasing marketing investments.

Ideal Revenue Strategy for:

Organizations with budget allocation imbalances and those being outpaced by competitors in terms of marketing funding.

Considerations:

• Additional web creative and collateral needs
• Increased lead volume to sales teams

Scaling up marketing investments can generate more leads, which is a direct revenue driver. However, flooding the pipeline with more sales opportunities is only an effective strategy for organizations where the sales staff is prepared to handle this influx, which is why marketing cannot thrive in a vacuum. To be successful, marketing and sales teams need to communicate openly about current undertakings, upcoming plans, and overall objectives.

(2)   Changing Sales Compensation Plans

Organizations with excess sales team capacity or inefficient compensation and bonus plans.

• Added demands on account representatives
• Potential for undesirable revenue outcomes

In instances where leads are plentiful, ineffective compensation plans can stymie growth by failing to encourage sales teams to capitalize all available opportunities. Sales staff that are not motivated with financial, social, and other incentives will underperform, leaving potential revenue on the table. However, some revised compensation plans actually encourage undesirable outcomes like selling higher volumes of shorter contracts, which is why revenue implications must be considered when drafting compensation structures.

(3)   Expanding Brand Awareness

Startups and regionally successful companies.

• Sales pipeline growth implications
• Development of supporting marketing resources
• Ability to control the subsequent brand conversation

The adage that “you can only sell to consumers who know your company exists” still resonates. By focusing on overall branding, organizations can increase brand awareness throughout the market to aid in lead generation. While this is a less immediate strategy than other marketing efforts, it is still directly correlated with increasing revenue.

(4)   Repositioning the Brand

Legacy brands with declining or plateauing growth.

• Marketing channel expansion
• Increasing marketing support needs
• Market research to identify brand differentiation opportunities

In organizations where brand history has a solidified perception, there is a clear opportunity through rebranding to increase future revenue streams. This is especially salient when changes in audience demographics and psychographics necessitate a corresponding transformation by legacy brands to stay relevant.

As an example, fast food companies like Wendy’s and McDonald’s have invested millions in marketing campaigns over the last several years aimed at repositioning their brands as “healthy” and “fresh.” This rebranding tactic is aimed at appealing to modern consumers that have indicated that they value quality ingredients and more varied menu options, as well as convenience.

(5)   Adopting a Premium Pricing Strategy

Organizations with undifferentiated and value-priced offerings.

• Product research to drive innovation
• Demonstrating brand value
• Strategy for re-launching offerings

Providing additional value and raising prices is a strategic move that can positively affect the perception of both an organization and its offerings. Utilizing premium pricing and justifying the increase through supporting marketing and sales support can result in revenue lift. Furthermore, it can increase revenue by without a need to substantially vary offerings.

(6)   Incorporating Discounted Pricing Tactics

Organizations with price-sensitive target audiences.

• Effect on sales compensation plans
• Need for additional marketing collateral
• Alignment with overall revenue goals

Lowering prices can undercut the competition, resulting in a market penetration strategy that drives revenue. However, reducing prices is not the only way to discount products. Organizations can also achieve revenue growth by bundling offerings to provide more value at a discounted rate, offering product rebates, and changing shipping and handling pricing structures. Providing seasonal discounts and purchase timing discounts is another way to incentivize conversions through reduced pricing. Organizations can also pare down existing product functionality to offer more budget-friendly versions of the same products to increase sales across a wider demographic.

(7)   Expanding Distribution Channels

Organizations with consistent revenue and well-executed sales plans. 

• Legal partnership agreement considerations
• Availability of current products and future product capacity
• Need for increased staffing (especially among specialized roles)

Stepping out of existing distribution channels to embrace a new selling strategy is a way to boost revenue from existing products by getting them in front of previously unreached consumers. Selling via retailers, distributors, ecommerce sites, direct mail, and wholesalers encompasses a wide array of potential channels where consumers can shop.

For online businesses, social selling is another possible method to expand distribution channels, by allowing sales of products directly from the social platforms where consumers are already interacting with the brand.

(8)   Developing Cooperative Sales Agreements

Organizations that can leverage strong brand recognition to offer value to potential partners.

• Alignment with the overall organizational mission
• Mutually beneficial reciprocity expectations
• Additional contract and clause requirements

Reciprocal selling agreements are another way to introduce offerings to consumers through another channel. Amazon began using this strategy recently when they acquired Whole Foods as an extension of their Amazon Fresh service to provide quick delivery of groceries to Amazon Prime members in select cities. This type of reciprocity is a victory for both Amazon and Whole Foods, which can increase revenue margins for both brands through cooperation.

(9)   Diversifying Offerings

Organizations with established offerings and well-honed research and development capabilities.

• Assessment of the possibility for sales cannibalization
• Strategic marketing resources to align and promote new offerings
• Understanding of new industry competition variables
• Additional need for experienced sales personnel

Finding lucrative complementary offerings for top-selling products and services can be a shrewd way to encourage revenue growth. Identifying consumers’ needs and filling in the gaps with offerings that help sell main revenue drivers, boosts overall revenue by increasing average customer lifetime value.

(10)  Repositioning Offerings

Organizations with versatile offerings that can fulfill an array of needs or provide flexible solutions for consumers.

• Additional marketing resources
• Ongoing specialized sales training needs
• Audience research to identify product use capabilities

For products and services that can be used by consumers to fulfill multiple needs or use-case scenarios, repositioning offerings to target each of these uses and audiences is a clever way to increase revenue. By targeting specific uses individually, marketing and sales messaging can be customized to address specific needs, wants, and apprehensions. The result is a more effective and adaptable selling strategy.

(11)  Modernizing Legacy Offerings

Brands with stagnant offerings and organizations with an aversion to change.

• Preservation of existing offerings to retain existing customers, where appropriate
• Brand repositioning potential
• Increased marketing collateral demands
• Assessment of channel expansion possibilities
• Potential sales retraining requirements

Replacing or updating traditional products and services is a sound way to use legacy offerings to increase revenue. Using previously successful offerings as the basis to launch a growth strategy provides a revenue safety net to safeguard against possible failures. 

(12)  Securing Recurring Revenue

Organizations with offerings conducive to subscription-based usage.

• Increased payment system demands
• Additional accounts receivable staffing
• Increased focus on customer experience

Creating recurring subscriptions or ongoing contracts is another way to use existing offerings to drive revenue. By taking the onus away from consumers to decide when to purchase again, organizations can both secure future revenue and increase the likelihood of developing brand loyal customers.

(13)  Focusing on Product Penetration

Organizations with brand loyal customers and a breadth of offerings.

• Additional staff needed to solidify customer relationships
• Specialized marketing tactics to engage existing customers

Unlike market penetration, which focuses on selling the same offerings to more consumers, product penetration aims to get existing customers to purchase more of an organization’s offerings. This means providing complementary products and services that customers can subsequently purchase, even after buying items that are not readily consumed. For some organizations this involves expanding offerings, whereas for others it involves engaging in mutually beneficial partnerships. In other instances, it simply requires pivoting an existing marketing strategy to convince consumers that they will benefit from taking advantage of other offerings as well.

(14)  Increasing Customer Retention

Organizations with a sizeable customer base and substantial post-sales support methodology.

• Shifting marketing emphasis from customer acquisition to retention      -  Increased focus on customer experience
• Effect on sales team compensation and performance objectives

Retaining existing customers will always be more cost effective than acquiring new customers, which makes it an obvious revenue growth strategy. However, the nuances involved in achieving this objective require sales, marketing, and customer experience team buy-in. While marketing teams are typically open to changing their strategic focus towards supporting customer retention, sales teams often oppose the proposition due to concerns regarding compensation. Without a change to compensation structure to reward increases in customer lifetime value, sales teams are likely to act independently to protect their own interests. When collaborative buy-in is achieved, customer retention drives immediate revenue growth while simultaneously securing sustainable future growth by developing brand loyalty and advocacy.

(15)  Dominating the Mobile Experience

Organizations with an increasing mobile consumer base or target demographic.

• Technological upgrades needed to establish and maintain the mobile experience
• A complementary tech-savvy focus among employees

Encouraging ecommerce mobile shopping and utilizing app-based experiences are at the heart of a thriving mobile strategy. While some organizations are hesitant to enter the mobile arena due to the complexity of offerings or historically low-tech reputation of their industries, supporting mobile users is essential for growth in today’s economy. However, providing a haphazard mobile experience is often worse than not offering one at all, which means that the right technological savvy and support must comprise an effective mobile strategy.

(16)  Nurturing Brand Advocates

Organizations with brand loyal customers that are willing to engage.

• Implementation of customer rewards programs and incentives
• Engagement tactics that meet customers where they thrive

Fostering brand advocacy is both a revenue strategy and a reputation management strategy. Nurturing customer relationships encourages brand loyalty, increasing revenue figures organically from the brand advocates themselves and their personal networks. Brand advocates are more likely to defend the brand in times of turmoil or crisis, making them an indispensable asset. However, brand advocate creation is not simply achieved through offering purchase incentives and other superficial tokens. It requires the kind of strategic planning that weaves through every customer experience from sales and marketing to technical support and billing. Building brand advocates also involves meeting customers on their own terms – on the platforms and at the moments when they want to engage.

(17)  Developing New Partnerships

Organizations with a collaborative spirit that can benefit from outsourcing functions or capabilities.

• Internal staffing implications
• Availability of complementary organizations willing to engage in partnerships
• Legal considerations for partnership agreements
• Effect on future hiring

Pairing with other organizations expands an organization’s capabilities and sphere of influence without having to invest in additional in-house resources. While many business leaders may cringe at the thought of relinquishing control, the smartest executives understand the value of partnership. Refusing to enter into strategic partnerships can hamstring growth faster than any other mistake, which is why from a growth perspective, the only questions should be when to establish partnerships and with whom.

(18)  Engaging with Industry Influencers

Organizations where well-known personalities can be leveraged to encourage revenue growth.

• Adapting social media efforts
• Risk assessment of aligning with third-party individuals
• Legal considerations of social collaboration

Influencer marketing has been a hot topic in recent years due to its effectiveness in building industry authority and driving revenue. Collaborating with respected industry experts can be an effective way to build brand awareness, acquire new customers, and impress existing customers. However, working with independent third-party individuals also carries some risk, which means that legal implications should be considered before pursuing this strategy, especially in highly-regulated industries.

(19)  Expanding Geographic Reach

Brands with a limited geographic territory and demographic potential to expand.

• Supply chain and logistics considerations
• Additional staffing required at all levels of the business
• Individual market preference variations
• New market barriers to entry

Expanding geographically is one of the simplest and yet most complex ways to grow revenue. This method is easy to conceptualize and difficult to execute properly, which is why organizations undertake such long planning processes before opening additional franchises, distribution centers, warehouses, retail venues, and so on. Considering regional preferences, opportunities, and barriers is a mammoth task that requires the right strategic analysis by highly experienced professionals. The result when expansion is done successfully, however, can be a substantial windfall.

(20)  Offering Additional Payment Options and Terms

Organizations stifled by existing payment options and sales terms.

• Financial feasibility of payment expansion
• Legal considerations of extending payment terms

Opening up payment options and flexibility with payment terms can allow an organization to close additional sales that would otherwise have been unavailable. However, doing so often comes at a cost – either in the form of initial technology investments or the potential for bad debt when terms are not met as planned.

(21)  Eliminating Bad Customer Relationships

Organizations with revenue constriction due to unprofitable or toxic customer relationships.

• Social implications of eliminating customers
• Legal limitations on existing contracts

While it may be a controversial strategy, firing unprofitable customers is another way to improve revenue numbers. By pruning deadweight from the customer base, an organization can more effectively focus resources on profitable customer relationships. In 2007 Sprint famously utilized this strategy to cancel subscriptions for customers that were tying up support channels. They reasoned that they could not properly support more profitable customer contracts due to the burden that “bad customers” were placing on the system. This move came amidst a high customer turnover trend that Sprint was looking to reverse.

The proper revenue strategy aligns marketing, sales, and customer experience teams around a singular goal: drive profitability. Without a strategic roadmap, healthy and sustained growth simply cannot flourish, which is why organizations put so much emphasis on the planning process.

The right strategy will ensure you achieve your revenue and profit goals. It will be a foundation for selecting and developing the right team, the right software and tools, developing effective processes, remarkable products & services. The process begins by creating the right revenue strategies to align and leverage your sales, marketing, and customer experience teams.

If you are in a situation where you have the right people, resources and processes in place and are unsure why you are not achieving your revenue and profit goals, I welcome you to contact me here , or by phone or email.  We can talk about any of the strategies listed above or another that is of interest to you.

As you begin to formulate ideas and a plan, feel free to use our  B2B Business Growth Library .

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How to Build Your Strategic Revenue Plan for 2024

For years, B2B SaaS was the most stable business model of them all, reeling in a steady stream of predictable revenue month after month.

Yet if the past few years have taught us anything, it’s that SaaS revenue isn’t as one-dimensional as we once thought. It’s dependent on a highly dynamic market that can topple even the best-laid financial projections and business plans.

So, what’s the point of even making them?

There’s a simple answer: Without a revenue plan, you have no baseline or map, making it near-impossible to measure your progress — let alone hit the KPIs your leadership team, stakeholders, and Board are counting on you to hit.

But with so many variables at play, building a realistic revenue plan is easier said than done.

We consulted PartnerStack’s CMO, Tyler Calder , to break down the revenue planning process for us. Read on to find out how to hit your revenue goals no matter what the market throws your way.

How to build a solid revenue plan for 2024

When you see leadership teams downloading financial statements and working on complex spreadsheets filled with incoming revenue, it’s easy to feel like revenue planning needs to be an exact science.

But as Calder puts it, “It’s not about getting everything right. It’s about developing a plan that points the team in the right direction.”

Here are six concrete steps to guide revenue teams to success in their financial projections and operational efficiency for the coming year.

Kick off planning early

It’s customary for VC-backed companies to present their plan to the Board in December — and most know Q4 can be some of the busiest months of the year. So, aim to start planning as early as possible. Calder says, “Set the expectation that you’re kicking off the planning process in September to get it on everyone’s radar.”

From there, get a meeting on the calendar to review Board and C-suite-level expectations for revenue growth. “I like to spend October and November negotiating those expectations and nailing down a realistic, overarching revenue goal so we can close out the year with a solid draft of the plan.”

Get everyone involved

Revenue planning is a cross-functional sport that involves buy-in across the board, from sales reps to customer success teams. Without strategic alignment, folks will butt heads all year long. 

Calder’s advice for getting everyone on the same page is simple: Get in a room and get on the same page. “I get asked about alignment a lot, which suggests many people struggle with it. Too often, each department makes decisions and assumptions in a silo, and that leads to gaps that are hard to close.”

Work together to figure out how much revenue each team can commit to driving before diving into the details. It won’t be easy, but getting everyone on the same page is critical to building a sound plan.

See more: OKRs for partnerships and how they create alignment, transparency and impact .

Crunch the numbers

Most startups fail in revenue planning because they use a weighted average based on previous sales performance. That approach can work if you have years of historical data, but most businesses don’t. As Calder says, “If you’re working at a startup where one or two enterprise deals will make or break your quarter, you have to dig in far more than that.”

Each team should:

• Look at the piece of the revenue puzzle they influence
• Forecast what might happen next year
• Assign a probability to that outcome. 

New bookings, expansion, and churn are great places to start.

Net new bookings

Since customer acquisition primarily resides with sales, marketing, and partnerships, all three teams should collaborate on best, achievable, and worst-case scenarios for the number of leads they can generate and convert.

To predict incoming net new revenue, you need to project future demand in your target market. Maybe you’re relying on distribution partners to grow your revenue. How many of those partners do you think will actually meet the revenue goals you’ve set?

Perhaps you’re targeting enterprise customers over SMBs. How confident are you that there’s a market for your products or services at larger companies? Calder recommends using tools like Apollo.io and Zoominfo to find out.

Identifying existing customers who will likely expand their annual recurring revenue falls squarely in the customer success arena. Customer success managers (CSMs) and account managers (AMs) should consider customer sentiment, product usage, and NPS score when making the list and during scenario planning.

As much as we’d love our customers to stay our customers forever, some of them won’t. Like the expansion analysis, CSMs and AMs should pinpoint customers with employee turnover, shifting business strategy, or rocky financials and then estimate best and worst-case scenarios for overall churn.

Reserve room for experimentation

Everyone knows having a diverse financial portfolio is good, and it’s no different in the corporate world. Don’t forget to save some wiggle room in your revenue plan for taking some risks.

Looking at industry trends, is there another direction you could take the business? Perhaps a new product line is in the works, or maybe you want to start a partner program . Include it in your plan — after you do some due diligence.

Calder advises: “Be prepared to explain where the demand is coming from for this revenue stream and how strong it is. Putting a number to it will tell you if it’s worth pursuing.”

Related: Recruit your first 100 revenue-generating partners .

Put it all together

Now that each team has an idea of what could happen, they need to define what should happen. To meet Board expectations, use best, achievable, and worst-case scenarios to solidify a final plan, including:

• Necessary business expenses like new technology or new hires
• Sales rep, partner manager, and CSM/AM quotas
• Marketing budget
• Four to five projects or areas of focus per team per quarter

One last tip before you submit: eliminate the possibility of double-dipping. Calder explains, “It’s very common that the marketing and sales team are counting emerging revenue lines in their revenue number. Remove overlaps that could lead to surprises (and misses) down the line.”

Revisit the plan often

Revenue planning is not a set-and-forget exercise; it’s the precursor to a weekly ritual.

The PartnerStack team meets each week to discuss how each department feels about hitting their revenue goals. Inevitably, some teams will have been too ambitious with their plan, and that’s okay. The point of this meeting isn’t to chastise; it’s to brainstorm ways to get back on track.

If sales representatives don’t think they’ll hit their number that quarter, for example, we ask ourselves what we can do to close open deals:

• Does the account work with any partners who can vouch for us?
• Have we multi-threaded the account?
• Is anyone going on vacation, and do we have a plan for nurturing the account?
• Is our rep onboarding process working? What can we do to improve it?

Above all, be honest in these conversations. “Admitting you’re not going to hit your number is painful. But if you don’t bring it up throughout the quarter, you’re just reserving a massive amount of pain for EOQ.”

If there’s no way you’ll hit your number, set expectations with your Board early and share the concrete steps you’re taking to go above and beyond in the following quarter.

See more: Elevate your GTM game with our partner-led growth kit .

Make 2024 your best revenue year yet

With so many unknowns, it’s tempting to throw your hands in the air and give up on revenue projections. But without a clear revenue plan staring you in the face, you can’t possibly know what good performance looks like, and that’s what we all should be aiming for.

Running through these six tips will not only get your revenue teams rowing in the right direction for the company, it’ll also motivate them to continue doing their best work — every time you revisit your plan is an opportunity to recognize and celebrate their wins.

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Elizabeth Melton

Like many Stanford grads, Liz ventured into tech. She found her place developing content for startups like JumpCloud, Navattic, fabric, and Zapier. Outside of writing, she consumes too many true crime podcasts and hikes all over SoCal.

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Business growth

Business tips

How to build a revenue growth plan that works

A revenue growth plan is an intentionally designed roadmap to increasing revenue. If done well, it's a blueprint to follow, including strategic and tactical elements that can accelerate your company's growth.

To help, here are the phases that I use when advising my clients—and for my own business. These steps have worked for me, and I think they can work for you too.

1. Get clear on your goals

As with any plan, you need to start with goals. The overarching question here is: what do I want to achieve in my business and why? But you'll want to break down that question into a few distinct questions: 

How much revenue do I want to generate in the next year? Next 3 years? 5 years?

How many employees do I want to have in the next year? Next 3 years? 5 years?

The details matter. A "see how it goes" attitude won't be motivating—for you or your employees—and will also make it difficult to understand if and how you're doing against your goals.

2. Assess where your company currently stands

You need to take a good look at your current assets, liabilities, people, and systems to understand what your potential to grow really is. Otherwise, you risk creating an unrealistic growth plan—including strategies that aren't right for your business. I've found that businesses often hyper-inflate what they can do in a short period of time and underestimate what they can do in a long period of time. Really knowing where you stand can help adjust for that.

I once worked with a $48 million company that had been in business for five years, and they had never assessed their position. Not once. In the beginning, they were growing rapidly. Everything was smooth; and then suddenly, they got stuck. 

When we assessed their position, we discovered that 62 percent of their incoming leads were not contacted—and the leads that were being contacted closed 34 percent of the time. You can only imagine the shock and disbelief of the CEO when he realized the number of leads that went dormant (or were simply neglected), not to mention the unrealized value of those leads. Once the initial shock wore off, and with the benefit of the company's current position in mind, this CEO was able to grow his company from $48 million to $110 million over the next 10 years. 

Once you understand what your strengths and weaknesses are, you adjust your revenue growth plan to capitalize on the strengths and improve on the weaknesses. 

3. Decide who owns what

You can't implement a revenue growth strategy on your own, which means you need to be clear on what role everyone will play. So, who should be on your revenue growth plan's team? 

A revenue growth plan takes into account the company's entire customer journey—including marketing, prospecting, customer service, PR, sales, the list goes on. For that reason, I recommend including at least one person from each department or team; that way, nothing slips through the cracks just because of a gap in knowledge.

And while leadership should be involved, many of the best ideas for a revenue growth plan come from those not in leadership positions since those are the people more involved in the day-to-day activities of each department. Including roles like sales representatives and customer service agents can do wonders for making sure you have a realistic plan.

4. Hold weekly planning meetings

Remember the business owner I mentioned who was struggling with managing their company's responsibilities? When I came in, the first thing I did was suggest they hold a weekly planning meeting. At the end of each meeting, they would assign responsibilities to various employees—it was a transparent and consistent process that fostered accountability. And guess what? This company ended up growing by 40 percent over the next 12 months.

Here's a blueprint for a revenue growth meeting that I've found works well:

Take a facet of your proposed revenue growth plan and write it on a whiteboard (in-person or virtual).

Have everyone on the revenue growth team come up with three ideas to achieve that part of the plan. Give people a few minutes of silence to think. 

One by one, allow people to present their ideas (and capture them on the whiteboard).

Have team members vote on the top three and then discuss priority order of implementation. 

Leave time to discuss any mitigating circumstances that could potentially upend that part of the plan. 

Assign tasks based on all of the above, and distribute them in a transparent way for accountability.

5. Reassess and address any constraining factors

The business space today is exceptionally dynamic. Economic conditions are constantly changing, consumer tastes and preferences shift, and products often reach market saturation. If you want your company to excel in this environment, you need to consistently reassess and adjust.

So after you've completed the planning phases but before you launch your revenue growth plan, go back and reassess your business position, just like you did toward the beginning. This review can help you address teething problems in your plan and clear out any potential blind spots.

6. Launch your revenue growth plan

This is where the rubber meets the road. A revenue growth plan without action is simply that—a plan. It won't get you any results.  

It never ceases to amaze me that people go through the process of building a revenue growth plan only to sit on it. A client I worked with had previously completed a revenue growth plan, and it sat dormant for two years because they thought they needed to get everything 100% right. Two years later, they met me and asked me what they should do with it. I reviewed their plan and told them simply to launch it. Things will never be perfect, but they can be successful. And it was successful: in the first week after the launch, they had 36 new sales and no client complaints. 

If you choose to wait for a time when every single thing is just right before launching your plan, you'll likely end up waiting forever. So go ahead and implement your plan, even if it's not perfect. 

The bottom line

A great revenue growth plan doesn't have to be complicated. There isn't a magic hack or silver bullet that will grow your revenue exponentially overnight—or at least I haven't found it yet (let me know if you do). But you need to start somewhere, and a revenue growth plan is a great start.

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Doug C. Brown

Doug C. Brown is the CEO at Business Success Factors, where he advises companies in boosting their sales revenue and having top-performing sales teams.

• Small business

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Free Financial Templates for a Business Plan

By Andy Marker | July 29, 2020

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In this article, we’ve rounded up expert-tested financial templates for your business plan, all of which are free to download in Excel, Google Sheets, and PDF formats.

Included on this page, you’ll find the essential financial statement templates, including income statement templates , cash flow statement templates , and balance sheet templates . Plus, we cover the key elements of the financial section of a business plan .

Financial Plan Templates

Download and prepare these financial plan templates to include in your business plan. Use historical data and future projections to produce an overview of the financial health of your organization to support your business plan and gain buy-in from stakeholders

Business Financial Plan Template

Use this financial plan template to organize and prepare the financial section of your business plan. This customizable template has room to provide a financial overview, any important assumptions, key financial indicators and ratios, a break-even analysis, and pro forma financial statements to share key financial data with potential investors.

Download Financial Plan Template

Word | PDF | Smartsheet

Financial Plan Projections Template for Startups

This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business.

‌ Download Startup Financial Projections Template

Excel | Smartsheet

Income Statement Templates for Business Plan

Also called profit and loss statements , these income statement templates will empower you to make critical business decisions by providing insight into your company, as well as illustrating the projected profitability associated with business activities. The numbers prepared in your income statement directly influence the cash flow and balance sheet forecasts.

Pro Forma Income Statement/Profit and Loss Sample

Use this pro forma income statement template to project income and expenses over a three-year time period. Pro forma income statements consider historical or market analysis data to calculate the estimated sales, cost of sales, profits, and more.

‌ Download Pro Forma Income Statement Sample - Excel

Small Business Profit and Loss Statement

Small businesses can use this simple profit and loss statement template to project income and expenses for a specific time period. Enter expected income, cost of goods sold, and business expenses, and the built-in formulas will automatically calculate the net income.

‌ Download Small Business Profit and Loss Template - Excel

3-Year Income Statement Template

Use this income statement template to calculate and assess the profit and loss generated by your business over three years. This template provides room to enter revenue and expenses associated with operating your business and allows you to track performance over time.

Download 3-Year Income Statement Template

For additional resources, including how to use profit and loss statements, visit “ Download Free Profit and Loss Templates .”

Cash Flow Statement Templates for Business Plan

Use these free cash flow statement templates to convey how efficiently your company manages the inflow and outflow of money. Use a cash flow statement to analyze the availability of liquid assets and your company’s ability to grow and sustain itself long term.

Simple Cash Flow Template

Use this basic cash flow template to compare your business cash flows against different time periods. Enter the beginning balance of cash on hand, and then detail itemized cash receipts, payments, costs of goods sold, and expenses. Once you enter those values, the built-in formulas will calculate total cash payments, net cash change, and the month ending cash position.

Download Simple Cash Flow Template

12-Month Cash Flow Forecast Template

Use this cash flow forecast template, also called a pro forma cash flow template, to track and compare expected and actual cash flow outcomes on a monthly and yearly basis. Enter the cash on hand at the beginning of each month, and then add the cash receipts (from customers, issuance of stock, and other operations). Finally, add the cash paid out (purchases made, wage expenses, and other cash outflow). Once you enter those values, the built-in formulas will calculate your cash position for each month with.

‌ Download 12-Month Cash Flow Forecast

3-Year Cash Flow Statement Template Set

Use this cash flow statement template set to analyze the amount of cash your company has compared to its expenses and liabilities. This template set contains a tab to create a monthly cash flow statement, a yearly cash flow statement, and a three-year cash flow statement to track cash flow for the operating, investing, and financing activities of your business.

Download 3-Year Cash Flow Statement Template

For additional information on managing your cash flow, including how to create a cash flow forecast, visit “ Free Cash Flow Statement Templates .”

Balance Sheet Templates for a Business Plan

Use these free balance sheet templates to convey the financial position of your business during a specific time period to potential investors and stakeholders.

Small Business Pro Forma Balance Sheet

Small businesses can use this pro forma balance sheet template to project account balances for assets, liabilities, and equity for a designated period. Established businesses can use this template (and its built-in formulas) to calculate key financial ratios, including working capital.

Download Pro Forma Balance Sheet Template

Monthly and Quarterly Balance Sheet Template

Use this balance sheet template to evaluate your company’s financial health on a monthly, quarterly, and annual basis. You can also use this template to project your financial position for a specified time in the future. Once you complete the balance sheet, you can compare and analyze your assets, liabilities, and equity on a quarter-over-quarter or year-over-year basis.

Download Monthly/Quarterly Balance Sheet Template - Excel

Yearly Balance Sheet Template

Use this balance sheet template to compare your company’s short and long-term assets, liabilities, and equity year-over-year. This template also provides calculations for common financial ratios with built-in formulas, so you can use it to evaluate account balances annually.

Download Yearly Balance Sheet Template - Excel

For more downloadable resources for a wide range of organizations, visit “ Free Balance Sheet Templates .”

Sales Forecast Templates for Business Plan

Sales projections are a fundamental part of a business plan, and should support all other components of your plan, including your market analysis, product offerings, and marketing plan . Use these sales forecast templates to estimate future sales, and ensure the numbers align with the sales numbers provided in your income statement.

Basic Sales Forecast Sample Template

Use this basic forecast template to project the sales of a specific product. Gather historical and industry sales data to generate monthly and yearly estimates of the number of units sold and the price per unit. Then, the pre-built formulas will calculate percentages automatically. You’ll also find details about which months provide the highest sales percentage, and the percentage change in sales month-over-month. 

Download Basic Sales Forecast Sample Template

12-Month Sales Forecast Template for Multiple Products

Use this sales forecast template to project the future sales of a business across multiple products or services over the course of a year. Enter your estimated monthly sales, and the built-in formulas will calculate annual totals. There is also space to record and track year-over-year sales, so you can pinpoint sales trends.

Download 12-Month Sales Forecasting Template for Multiple Products

3-Year Sales Forecast Template for Multiple Products

Use this sales forecast template to estimate the monthly and yearly sales for multiple products over a three-year period. Enter the monthly units sold, unit costs, and unit price. Once you enter those values, built-in formulas will automatically calculate revenue, margin per unit, and gross profit. This template also provides bar charts and line graphs to visually display sales and gross profit year over year.

Download 3-Year Sales Forecast Template - Excel

For a wider selection of resources to project your sales, visit “ Free Sales Forecasting Templates .”

Break-Even Analysis Template for Business Plan

A break-even analysis will help you ascertain the point at which a business, product, or service will become profitable. This analysis uses a calculation to pinpoint the number of service or unit sales you need to make to cover costs and make a profit.

Break-Even Analysis Template

Use this break-even analysis template to calculate the number of sales needed to become profitable. Enter the product's selling price at the top of the template, and then add the fixed and variable costs. Once you enter those values, the built-in formulas will calculate the total variable cost, the contribution margin, and break-even units and sales values.

Download Break-Even Analysis Template

For additional resources, visit, “ Free Financial Planning Templates .”

Business Budget Templates for Business Plan

These business budget templates will help you track costs (e.g., fixed and variable) and expenses (e.g., one-time and recurring) associated with starting and running a business. Having a detailed budget enables you to make sound strategic decisions, and should align with the expense values listed on your income statement.

Startup Budget Template

Use this startup budget template to track estimated and actual costs and expenses for various business categories, including administrative, marketing, labor, and other office costs. There is also room to provide funding estimates from investors, banks, and other sources to get a detailed view of the resources you need to start and operate your business.

Download Startup Budget Template

Small Business Budget Template

This business budget template is ideal for small businesses that want to record estimated revenue and expenditures on a monthly and yearly basis. This customizable template comes with a tab to list income, expenses, and a cash flow recording to track cash transactions and balances.

Download Small Business Budget Template

Professional Business Budget Template

Established organizations will appreciate this customizable business budget template, which  contains a separate tab to track projected business expenses, actual business expenses, variances, and an expense analysis. Once you enter projected and actual expenses, the built-in formulas will automatically calculate expense variances and populate the included visual charts. 

‌ Download Professional Business Budget Template

For additional resources to plan and track your business costs and expenses, visit “ Free Business Budget Templates for Any Company .”

Other Financial Templates for Business Plan

In this section, you’ll find additional financial templates that you may want to include as part of your larger business plan.

Startup Funding Requirements Template

This simple startup funding requirements template is useful for startups and small businesses that require funding to get business off the ground. The numbers generated in this template should align with those in your financial projections, and should detail the allocation of acquired capital to various startup expenses.

Download Startup Funding Requirements Template - Excel

Personnel Plan Template

Use this customizable personnel plan template to map out the current and future staff needed to get — and keep — the business running. This information belongs in the personnel section of a business plan, and details the job title, amount of pay, and hiring timeline for each position. This template calculates the monthly and yearly expenses associated with each role using built-in formulas. Additionally, you can add an organizational chart to provide a visual overview of the company’s structure. 

Download Personnel Plan Template - Excel

Elements of the Financial Section of a Business Plan

Whether your organization is a startup, a small business, or an enterprise, the financial plan is the cornerstone of any business plan. The financial section should demonstrate the feasibility and profitability of your idea and should support all other aspects of the business plan. 

Below, you’ll find a quick overview of the components of a solid financial plan.

• Financial Overview: This section provides a brief summary of the financial section, and includes key takeaways of the financial statements. If you prefer, you can also add a brief description of each statement in the respective statement’s section.
• Key Assumptions: This component details the basis for your financial projections, including tax and interest rates, economic climate, and other critical, underlying factors.
• Break-Even Analysis: This calculation helps establish the selling price of a product or service, and determines when a product or service should become profitable.
• Pro Forma Income Statement: Also known as a profit and loss statement, this section details the sales, cost of sales, profitability, and other vital financial information to stakeholders.
• Pro Forma Cash Flow Statement: This area outlines the projected cash inflows and outflows the business expects to generate from operating, financing, and investing activities during a specific timeframe.
• Pro Forma Balance Sheet: This document conveys how your business plans to manage assets, including receivables and inventory.
• Key Financial Indicators and Ratios: In this section, highlight key financial indicators and ratios extracted from financial statements that bankers, analysts, and investors can use to evaluate the financial health and position of your business.

Need help putting together the rest of your business plan? Check out our free simple business plan templates to get started. You can learn how to write a successful simple business plan  here . 

Visit this  free non-profit business plan template roundup  or download a  fill-in-the-blank business plan template  to make things easy. If you are looking for a business plan template by file type, visit our pages dedicated specifically to  Microsoft Excel ,  Microsoft Word , and  Adobe PDF  business plan templates. Read our articles offering  startup business plan templates  or  free 30-60-90-day business plan templates  to find more tailored options.

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Revenue Model Types in Software Business: Examples and Model Choice

• 12 min read
• Last updated: 28 Dec, 2022
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Here's our video breakdown of revenue models

For those exploring the world of business strategy planning, we’ll elaborate on the definition of the revenue model, and the correlation between business models and revenue streams. We’ll also analyze different types of revenue models and look at some examples to scrutinize the pros and cons of each approach. Finally, we’ll reflect on how to choose or develop a model for your business.

What is a revenue model?

A revenue model is a plan for earning revenue from a business or project. It explains different mechanisms of revenue generation and its sources. Since selling software products is an online business, a plan for making money from it is also called an eCommerce revenue model. The simplest example of a revenue model is a high-traffic blog that places ads to make money. Web resources that present content, e.g., news (value), to the public will make use of its traffic (audience) to place ads. The ads in turn will generate revenue that a website will use to cover its maintenance costs and staff salaries, leaving the profit. Revenue models are often confused with business models and revenue streams. To avoid any misinterpretations, let’s quickly define these three terms that form a business strategy.

Revenue model vs business model

A business model (BM) is a broad term outlining everything concerning the main aspects of the business, all of which are contained in the answers to the following questions.

• What value will we create?
• How will we deliver it?
• How will we bring in revenue?
• How will we earn profit?

Numerous forms of business models can’t be classified in a single list because each part is highly individual to the industry, type of product/service, audience, or profitability. Business models are often depicted strategically on a business model canvas . This is a compound representation of all the key elements of a BM.

A  business model canvas template by AltexSoft

So the BM describes how a business will work from the standpoint of value generation. Revenue models, on the other hand, are a part of the business model used to describe how the company gets gross sales.

Revenue model vs revenue stream

A revenue model is used to manage a company’s revenue streams, predict income, and modify revenue strategy. The revenue itself is one of the main KPIs for a business. Measuring it annually or quarterly allows you to understand how your business operates in general and whether you should change the way you sell the products or charge for them. But what are revenue streams ? A revenue stream is a single source of revenue that a business has. There can be many of them. Streams are often divided by customer segments that bring revenue via a given method. The two terms – revenue stream and revenue model – are often used interchangeably, since, from a business perspective, the subscription revenue model will have a revenue stream coming from subscriptions. However, models can name multiple streams divided into customer segments, while the principle of revenue generation (subscription) will remain the same.

Revenue model types

Any start-up, tech company, or digital business may combine different revenue models. The revenue model will look different depending on the industry and the product/service type. Here we will pay more attention to the most common revenue models used in the software industry and online business.

Transaction-based revenue model

A transaction-based model is a classic way a business can earn money. The revenue is generated by directly selling an item or a service to a customer. The customer can be another company (B2B) or a consumer (B2C). The price of the product or service constitutes the production costs and margin. By increasing the margin, the business can generate more income from sales. Selling products or services entails using different pricing tactics. While some of them may be considered separate revenue models, these tactics are often used in pairs. Because pricing tactics can be seen as pricing plans in a software business, we can clearly define the following types. Licensing/one-time purchase. This entails selling a software product by license that can be used by a single user or a group of users. The general idea is to offer a product that requires making only one payment for it, e.g., Microsoft Windows, Apache Server, and some video games. Subscription/recurring payment. Unlike licensing, a user receives access to the software by paying a subscription fee on a monthly/annual basis, e.g., Netflix, Spotify, and Adobe products. Pay-per-use. This pricing tactic is mostly used by different cloud-based products and services that charge you for the computing powers/memory/resources/time used. Examples are Amazon Web Services and Google Cloud Platform. Freemium/upselling. Freemium is a type of app monetization in which a user may access the main product for free, but will be charged for additional functions, services, bonuses, plugins, or extensions, e.g., Skype, Evernote, LinkedIn, and many video games. Hybrid pricing. Sometimes pricing plans are a mixture of more than one. So that freemium plan might morph into some form of pay-per-use tiered plan. After passing some limit in computation or resources, a user can be forced to use or offered another type of pricing. Examples are Mailchimp, Amazon Web Services, and SalesForce. Various combinations of pricing tactics can be used simultaneously, which is more often seen in cloud-based products that offer multiple payment options at once. The revenue model in this case remains based on the transaction and purchases made by the customers. The difference in pricing tactics will modify how the revenue is generated and basically depends on the type of product/service you sell. The pros. You have full control over the pricing strategy. The cons. The cons will depend on the industry/product type and pricing tactics, as the model itself imposes a constant generation of sales with the help of advertising and marketing strategies. The only con we might mention here is the financial burden connected with sales you will carry on your own. Transaction-based revenue model examples. Nearly any company that produces and sells its products uses this type of revenue model. Examples are Samsung, Rolls Royce, Nike, Microsoft, Apple, Boeing, and McDonald’s, to name a few.

Advertisement-based revenue model

The advertisement-based revenue model is a plan with which businesses make money by selling ad spaces. It is one of the most standard methods of producing top-line growth, and it’s valid both for online and offline businesses. It’s often used by websites/applications/marketplaces or any other web resource that attracts huge amounts of traffic. The pros. Having a high-traffic resource allows you to monetize the ad space nearly instantly. Often, there is a strong demand for advertising space, especially with organic traffic and platforms with the target audience. The cons. Running advertising campaigns to gain web visibility on various platforms like social networks is a standard marketing activity with targeting instruments more precise than ever. However, advertisements are everywhere, so you might think twice about whether you want to distract a user by placing an ad in your app – even if it is a secondary revenue stream. Ad-based revenue model examples. YouTube, Instagram, Facebook, and Google are just a few prominent examples. All these platforms generate revenue by displaying advertisements to users and charging businesses for exposure. In addition to promotion, these platforms may also generate revenue through other sources, such as premium subscriptions or licensing agreements.

Commission-based revenue models

A commission-based revenue model is one of the most common ways businesses make money today. A commission is a sum of money a retailer adds to the total cost of a product or service. A commission may be charged per marketplace or transaction and can be assigned as a

• flat rate, a fixed sum of money for any type of transaction, e.g., a $450/300/1500 transaction is charged with a $20 commission;
• percent of transaction size, e.g., a $100 transaction is charged with a 10 percent commission – $10; or
• tiered commission, a percent or flat rate that grows based on the transaction volume, e.g., 50,000 transactions are charged a 4 percent commission, 150,000 transactions a 7 percent commission.

Marketplaces and eCommerce platforms, in particular, utilize commissions the most. Another large category includes businesses that connect service providers/renters with consumers. Think of any ride-hailing company, food delivery, online travel agency (OTA) , or alternative accommodation services. The pros. Revenue is easily predictable because of the sheer fee. The cons. There are many problems bound to the concept of a commission, but the major one goes to the scalability of a business that’s attached to a transaction size or volume. In general, dependency on the product supplier’s sales makes generating revenue require upfront investments and competitive superiority. Commission-based revenue model examples. Airbnb is a platform that allows individuals to list and rent their homes or apartments as short-term rentals . It generates revenue by charging a commission on each booking made through its platform. The commission is typically a percentage of the total booking cost and is paid by the host (property owner). Other examples are Booking.com, Uber, Lyft, Ticketmaster, Priceline, and Upwork.

Markup revenue model

Markup is the type of revenue model with which you buy a product at a certain cost and then sell it for a higher price: The difference between the two is your profit margin. This model is often used by wholesale, retail, and service-based businesses. For example, a wholesaler may be a bed bank — a B2B company that purchases rooms from accommodation providers in bulk at a discounted, static price for specific dates, and sells them to OTAs , travel agents, destination management companies, airlines, or tour operators. Pros. Markup revenue models are straightforward, allowing businesses to easily calculate their profit margins on each sale. With this approach, businesses can be flexible with their pricing by adjusting the markup to reflect changes in the cost of goods or changes in market conditions. Cons. While markups provide a great deal of flexibility, some organizations may not have enough resources to manage revenue and apply changes to their markup strategy based on the market state. So they set a uniform markup for all of their products or services. This may lead to prices being too low or too high and businesses may not be able to fully capitalize on the value of certain products. Markup revenue model examples. In addition to bed banks, airline consolidators leverage a markup model to earn revenue: They are brokers that book flight seats in bulk at discount rates and then resell them to travel agencies. Examples are Mondee, Picasso Travel, and Centrav.

Affiliate revenue model

The affiliate model is similar to the commission-based model. The main difference is that, with the affiliate model, you do not sell the product or service on your own platform, but rather redirect the customer to the original provider's platform to make the purchase and earn a commission on any resulting sales. An affiliate model is a contract between a supplier of a product/service and a promoter. A promoter can be another business/media resource/blogger that recommends a supplier’s product. The earnings will come as a percentage of sales or fees for the number of registrations done via referral links. Businesses utilizing the affiliate model include metasearch engines as a unique example. Metasearch tools can be found almost everywhere. Their main difference with retailers is that they don’t sell products directly but offer comparison and search as a value. Advertising and affiliate programs are the main revenue models used to get earnings in this case. The pros. Just like the advertisement-based revenue model, once you have a huge traffic resource, you might apply for an affiliate program to earn money. This will bring you income without any investments because you will basically generate traffic and leads for the affiliate program provider. The cons. Unfortunately, the percentage of affiliate programs promised to the promoter is quite low. Sometimes it fluctuates between 1-2 percent and requires a high volume of sales generated through your links. Affiliate revenue model examples. Blogging and event-promoting platforms like Broadway.com or TheaterMania generate revenue using this model. Among other examples are Amazon affiliate websites, e.g., Cloud Living and ThisIsWhyImBroke.

Interest revenue model

An interest or investment revenue model relates to any type of business that generates revenue in the form of interest on their loans or deposit payments. These are most often banking or electronic wallet companies that work with financial operations. The revenue is generated by making a loan to a customer or by a customer depositing or investing money (or other resources) into the business. At the end of a return period, a percentage of the loan sum will return as revenue. Debit/credit money provided with the bank accounts also relates to this model. That’s just one of the ways financial companies can make money, combining it with transaction fees for using their e-wallet/bank account. The pros. The interest rate provides a clear view of what revenue a business will generate, as the percentage stays unchanged until the return period is over. The cons. The regulations of an interest rate impact both the customer and the business. Sometimes it depends on the economic environment. Think of currency rate changes that influence potential and existing borrowers. Interest revenue model examples. Many banks, credit card companies, and other financial institutions use the interest revenue model. For example, peer-to-peer lending platforms, such as LendingClub and Prosper, generate revenue by charging interest on loans funded by investors.

Donation-based or pay-what-you-want revenue models

This is a revenue model based on investments made by businesses or customers on a voluntary basis. The product or service itself is free to use by default, so that’s the primary value a company brings to the customer. The revenue is generated in the form of donations, or sometimes in the form of “pay-what-you-want.” It’s important to mention that there is a difference between a donation-based business and a charity organization. A donation-based company is still required to pay taxes. The pros. Because of the free access to the product, some companies manage to get increasingly popular, resulting in donations becoming a major part of their revenue. The cons. The model is never used on its own and the revenue generated by it remains a secondary source because of its random/unstable nature. Donation-based revenue model examples. AdBlock generates revenue through donations from users who support the development and maintenance of the software. At the same time, AdBlock offers a premium version of the software for a fee, which includes additional features and support. Among other examples is Wikipedia which relies on donations as a significant source of revenue. Additionally, the platform makes money through grants and partnerships. There are many other revenue models, and a business or project may use more than one revenue model. It is important for businesses and projects to carefully consider their revenue model as it can have a significant impact on the overall success of the venture.

How to choose a revenue model for your business?

Before choosing a revenue model, you need a fully developed business strategy that will include a prepared business model with all its key instances. That means you must take a few steps prior to selecting the revenue model. Define your value proposition. Map out your product strategy by describing what the product is and what value it brings to the customer. Not all products can be sold: Can you recall the last time you upgraded your WinRAR to a full license? Also, you can analyze the future traffic for your app to understand if you can use ads in it. Explore the market state and customer groups. This step is to define your user persona and understand how these users usually buy things. Some markets are inclined to purchase just one product, some are inclined to ignore upgrades or in-app purchases. A good example in this field is the death of music-selling platforms that were totally replaced by subscription-based streaming services like YouTube Music, Apple Music, Spotify, and others. You may also explore the techniques on how to market your product in our dedicated article. Analyze competitors and their products. You’ll need to learn what mechanisms and revenue streams your competitors use and how they manage their costs. This information will probably show you the market’s pitfalls and dead ends. Looking at this simple matrix below, we can analyze the capabilities and needs of your company to help you decide the type of revenue model to use.

How to choose a revenue model framewor k

Depending on your business model, the product or service you’re presenting to the user is a subject of exchange. This is your value proposition on the market, so you are in charge of choosing what you want to get back based on the market factors, target audience, etc. Paid value proposition. In most cases, your value proposition costs money to use. Whether it’s a service or a software product, a customer will need to pay in some form to gain access to your value. Your revenue model in this case will be based on transactions. So develop pricing tactics that will depend on the nature of the product, the type of audience you’re trying to reach, the type of deployment, specifics of product usage, etc. Free-to-use value proposition. If the value proposition doesn’t require money to use or you choose it to be free, then you need a third party to generate revenue for you. This could be anything based on the previously mentioned types, whether it’s ad space, donations, affiliate programs, or reselling. The combination of the two will basically present you with the revenue streams that will focus on each of the customer segments. In the case of the paid value proposition, each pricing plan will be a separate revenue stream.

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Writing a Business Growth Plan

Look ahead and plan for business growth and revenue increases.

Table of Contents

When you run a business, it’s easy to get caught in the moment and focus only on the day in front of you. However, to be truly successful, you must look ahead and plan for growth. Many business owners create a business growth plan to map out the next one or two years and pinpoint how and when revenues will increase. 

We’ll explain more about business growth plans and share strategies for writing a business growth plan that can set you on a path to success. 

What is a business growth plan?

A business growth plan outlines where a company sees itself in the next one to two years. Business owners and leaders apply a growth mindset to create plans for expansion and increased revenues.

Business growth plans should be formatted quarterly. At the end of each quarter, the company can review the business goals it achieved and missed during that period. At this point, management can revise the business growth plan to reflect the current market standing.

What to include in a business growth plan

A business growth plan focuses specifically on expansion and how you’ll achieve it. Creating a useful plan takes time, but keeping your growth efforts on track can pay off substantially.

You should include the following elements in your growth plan:

• A description of expansion opportunities
• Financial goals broken down by quarter and year
• A marketing plan that details how you’ll achieve growth
• A financial plan to determine what capital is accessible during growth
• A breakdown of your company’s staffing needs and responsibilities

How to write a business growth plan

To successfully write a business growth plan, you must do some forward-thinking and research. Here are some key steps to follow when writing your business growth plan.

1. Think ahead.

The future is always unpredictable. However, if you study your target market, your competition and your company’s past growth, you can plan for future expansion. The Small Business Administration (SBA) features a comprehensive guide to writing a business plan for growth.

2. Study other growth plans.

Before you start writing, review models from successful companies.

3. Discover opportunities for growth.

With some homework, you can determine if your expansion opportunities lie in creating new products , adding more services, targeting a new market, opening new business locations or going global, to name a few examples. Once you’ve identified your best options for growth, include them in your plan.

4. Evaluate your team.

Your plan should include an assessment of your employees and a look at staffing requirements to meet your growth objectives. By assessing your own skills and those of your employees, you can determine how much growth can be accomplished with your present team. You’ll also know when to ramp up the hiring process and what skill sets to look for in those new hires.

5. Find the capital.

Include detailed information on how you will fund expansion. Business.gov offers a guide on how to prepare funding requests and how to connect with SBA lenders.

6. Get the word out.

Growing your business requires a targeted marketing effort. Be sure to outline how you will effectively market your business to encourage growth and how your marketing efforts will evolve as you grow.

7. Ask for help.

Advice from other business owners who have enjoyed successful growth can be the ultimate tool in writing your growth plan.

8. Start writing.

Business plan software has streamlined the process of writing growth plans by providing templates you can fill in with information specific to your company and industry. Most software programs are geared toward general business plans; however, you can easily modify them to create a plan that focuses on growth. 

If you don’t have business plan software, don’t worry. You can create a business growth plan using Microsoft Word, Google Docs or a similar tool. For each growth opportunity, create the following sections: 

• What is the opportunity? Is your growth opportunity a new geographic expansion, a new product or a new customer segment? How do you know there’s an opportunity? Include your market research to demonstrate the idea’s viability.
• What factors make this opportunity valuable at this time? For example, your growth opportunity could utilize new technology, take advantage of a strategic partnership or capitalize on a consumer trend.
• What are the risk factors for this opportunity? Identify factors that may make this growth opportunity challenging to execute. For example, challenges may include the state of the overall economy, intense competition or supply chain distribution issues. What is your plan for dealing with these challenges?
• What is your marketing and sales plan? Identify the marketing efforts and sales processes that can help you seize this growth opportunity. Detail the marketing channel you’ll use ( social media marketing , print marketing), your message and promising sales ideas. For example, you could hire sales reps for a new geographic area or set up distribution deals with relevant brick-and-mortar or online retailers .
• What are the costs involved in this growth area? For example, if you add a new product, you may need to buy new manufacturing equipment and raw materials. While marketing costs are a given, remember to include incremental sales costs like commissions. Outline any economies of scale or places where your existing operations make the new growth area less expensive than a stand-alone initiative.
• How will your income, expenses and cash flow look? Project your income and expenses, and prepare a cash flow statement for the new growth area for the next three to five years. Include a break-even analysis, a sales forecast and all projected expenses to see how much the new initiative will add to the bottom line. Include how the new growth area will positively (or negatively) impact existing sales. For example, if you sell bathing suits and you decide to grow by adding cover-ups and sunglasses, you will likely sell more bathing suits. 

After completing this exercise for each growth opportunity:

• Create a summary that accounts for all growth areas for the period.
• Include summarized financial statements to see the entire picture and its impact on the company. 
• Evaluate the financing you’ll need to implement the plan, and include various options and rates. 

Why are business growth plans important?

These are some of the many reasons why business growth plans are essential:

• Market share and penetration: If your market share remains constant in a world where costs consistently increase, you’ll inevitably start recording losses instead of profits. Business growth plans help you avoid this scenario.
• Recouping early losses: Most companies lose far more than they earn in their early years. To recoup these losses, you’ll need to grow your company to a point where it can make enough revenue to pay off your debts.
• Future risk minimization: Growth plans also matter for established businesses. These companies can always stand to make their sales more efficient and become more liquid. Liquidity can come in handy if you need money to cover unexpected problems.
• Appealing to investors: For most businesses, a business growth plan’s primary purpose is to find investors . Investors want to outline your company’s plans to build sales in the coming months.
• Concrete revenue plans: Growth plans are customizable to each business and don’t have to follow a set template. However, all business growth plans must focus heavily on revenue. The plan should answer a simple question: How does your company plan to make money each quarter?

What factors impact business growth?

Consider the following crucial factors that can impact business growth:

• Leadership: To achieve your goals, you must know the ins and outs of your business processes and how external forces impact them. Without this knowledge, you can’t direct and train your team to drive your revenue, and you will experience stagnation instead of growth.
• Management: As a small business owner, you’re innately involved in management – obtaining funding, resources, and physical and digital infrastructure. Ineffective management will impact your ability to perform these duties and could hamstring your growth.
• Customer loyalty: Acquiring new customers can be five times as expensive as retaining current ones, and a 5 percent boost in customer retention can increase profits by 25 percent to 95 percent. These statistics demonstrate that customer loyalty is fundamental to business growth.

What are the four major growth strategies?

There are countless growth strategies for businesses, but only four primary types. With these growth strategies, you can determine how to build on your brand.

• Market strategy: A market strategy refers to how you plan to penetrate your target audience . This strategy isn’t intended for entering a new market or creating new products and services to boost your market share; it’s about leveraging your current offerings. For instance, can you adjust your pricing? Should you launch a new marketing campaign?
• Development strategy: This strategy means looking into ways to break your products and services into a new market. If you can’t find the growth you want in the current market, a goal could be to expand to a new market.
• Product strategy: Also known as “product development,” this strategy focuses on what new products and services you can target to your current market. How can you grow your business without entering new markets? What are your customers asking for?
• Diversification strategy: Diversification means expanding both your products and target markets. This strategy is usually best for smaller companies that have the means to be versatile with the products or services they offer and what new markets they attempt to penetrate.

Max Freedman contributed to this article.

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How to Write the Financial Section of a Business Plan

An outline of your company's growth strategy is essential to a business plan, but it just isn't complete without the numbers to back it up. here's some advice on how to include things like a sales forecast, expense budget, and cash-flow statement..

A business plan is all conceptual until you start filling in the numbers and terms. The sections about your marketing plan and strategy are interesting to read, but they don't mean a thing if you can't justify your business with good figures on the bottom line. You do this in a distinct section of your business plan for financial forecasts and statements. The financial section of a business plan is one of the most essential components of the plan, as you will need it if you have any hope of winning over investors or obtaining a bank loan. Even if you don't need financing, you should compile a financial forecast in order to simply be successful in steering your business. "This is what will tell you whether the business will be viable or whether you are wasting your time and/or money," says Linda Pinson, author of Automate Your Business Plan for Windows  (Out of Your Mind 2008) and Anatomy of a Business Plan (Out of Your Mind 2008), who runs a publishing and software business Out of Your Mind and Into the Marketplace . "In many instances, it will tell you that you should not be going into this business." The following will cover what the financial section of a business plan is, what it should include, and how you should use it to not only win financing but to better manage your business.

Dig Deeper: Generating an Accurate Sales Forecast

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How to Write the Financial Section of a Business Plan: The Purpose of the Financial Section Let's start by explaining what the financial section of a business plan is not. Realize that the financial section is not the same as accounting. Many people get confused about this because the financial projections that you include--profit and loss, balance sheet, and cash flow--look similar to accounting statements your business generates. But accounting looks back in time, starting today and taking a historical view. Business planning or forecasting is a forward-looking view, starting today and going into the future. "You don't do financials in a business plan the same way you calculate the details in your accounting reports," says Tim Berry, president and founder of Palo Alto Software, who blogs at Bplans.com and is writing a book, The Plan-As-You-Go Business Plan. "It's not tax reporting. It's an elaborate educated guess." What this means, says Berry, is that you summarize and aggregate more than you might with accounting, which deals more in detail. "You don't have to imagine all future asset purchases with hypothetical dates and hypothetical depreciation schedules to estimate future depreciation," he says. "You can just guess based on past results. And you don't spend a lot of time on minute details in a financial forecast that depends on an educated guess for sales." The purpose of the financial section of a business plan is two-fold. You're going to need it if you are seeking investment from venture capitalists, angel investors, or even smart family members. They are going to want to see numbers that say your business will grow--and quickly--and that there is an exit strategy for them on the horizon, during which they can make a profit. Any bank or lender will also ask to see these numbers as well to make sure you can repay your loan. But the most important reason to compile this financial forecast is for your own benefit, so you understand how you project your business will do. "This is an ongoing, living document. It should be a guide to running your business," Pinson says. "And at any particular time you feel you need funding or financing, then you are prepared to go with your documents." If there is a rule of thumb when filling in the numbers in the financial section of your business plan, it's this: Be realistic. "There is a tremendous problem with the hockey-stick forecast" that projects growth as steady until it shoots up like the end of a hockey stick, Berry says. "They really aren't credible." Berry, who acts as an angel investor with the Willamette Angel Conference, says that while a startling growth trajectory is something that would-be investors would love to see, it's most often not a believable growth forecast. "Everyone wants to get involved in the next Google or Twitter, but every plan seems to have this hockey stick forecast," he says. "Sales are going along flat, but six months from now there is a huge turn and everything gets amazing, assuming they get the investors' money."  The way you come up a credible financial section for your business plan is to demonstrate that it's realistic. One way, Berry says, is to break the figures into components, by sales channel or target market segment, and provide realistic estimates for sales and revenue. "It's not exactly data, because you're still guessing the future. But if you break the guess into component guesses and look at each one individually, it somehow feels better," Berry says. "Nobody wins by overly optimistic or overly pessimistic forecasts."

Dig Deeper: What Angel Investors Look For

How to Write the Financial Section of a Business Plan: The Components of a Financial Section

A financial forecast isn't necessarily compiled in sequence. And you most likely won't present it in the final document in the same sequence you compile the figures and documents. Berry says that it's typical to start in one place and jump back and forth. For example, what you see in the cash-flow plan might mean going back to change estimates for sales and expenses.  Still, he says that it's easier to explain in sequence, as long as you understand that you don't start at step one and go to step six without looking back--a lot--in between.

• Start with a sales forecast. Set up a spreadsheet projecting your sales over the course of three years. Set up different sections for different lines of sales and columns for every month for the first year and either on a monthly or quarterly basis for the second and third years. "Ideally you want to project in spreadsheet blocks that include one block for unit sales, one block for pricing, a third block that multiplies units times price to calculate sales, a fourth block that has unit costs, and a fifth that multiplies units times unit cost to calculate cost of sales (also called COGS or direct costs)," Berry says. "Why do you want cost of sales in a sales forecast? Because you want to calculate gross margin. Gross margin is sales less cost of sales, and it's a useful number for comparing with different standard industry ratios." If it's a new product or a new line of business, you have to make an educated guess. The best way to do that, Berry says, is to look at past results.
• Create an expenses budget. You're going to need to understand how much it's going to cost you to actually make the sales you have forecast. Berry likes to differentiate between fixed costs (i.e., rent and payroll) and variable costs (i.e., most advertising and promotional expenses), because it's a good thing for a business to know. "Lower fixed costs mean less risk, which might be theoretical in business schools but are very concrete when you have rent and payroll checks to sign," Berry says. "Most of your variable costs are in those direct costs that belong in your sales forecast, but there are also some variable expenses, like ads and rebates and such." Once again, this is a forecast, not accounting, and you're going to have to estimate things like interest and taxes. Berry recommends you go with simple math. He says multiply estimated profits times your best-guess tax percentage rate to estimate taxes. And then multiply your estimated debts balance times an estimated interest rate to estimate interest.
• Develop a cash-flow statement. This is the statement that shows physical dollars moving in and out of the business. "Cash flow is king," Pinson says. You base this partly on your sales forecasts, balance sheet items, and other assumptions. If you are operating an existing business, you should have historical documents, such as profit and loss statements and balance sheets from years past to base these forecasts on. If you are starting a new business and do not have these historical financial statements, you start by projecting a cash-flow statement broken down into 12 months. Pinson says that it's important to understand when compiling this cash-flow projection that you need to choose a realistic ratio for how many of your invoices will be paid in cash, 30 days, 60 days, 90 days and so on. You don't want to be surprised that you only collect 80 percent of your invoices in the first 30 days when you are counting on 100 percent to pay your expenses, she says. Some business planning software programs will have these formulas built in to help you make these projections.
• Income projections. This is your pro forma profit and loss statement, detailing forecasts for your business for the coming three years. Use the numbers that you put in your sales forecast, expense projections, and cash flow statement. "Sales, lest cost of sales, is gross margin," Berry says. "Gross margin, less expenses, interest, and taxes, is net profit."
• Deal with assets and liabilities. You also need a projected balance sheet. You have to deal with assets and liabilities that aren't in the profits and loss statement and project the net worth of your business at the end of the fiscal year. Some of those are obvious and affect you at only the beginning, like startup assets. A lot are not obvious. "Interest is in the profit and loss, but repayment of principle isn't," Berry says. "Taking out a loan, giving out a loan, and inventory show up only in assets--until you pay for them." So the way to compile this is to start with assets, and estimate what you'll have on hand, month by month for cash, accounts receivable (money owed to you), inventory if you have it, and substantial assets like land, buildings, and equipment. Then figure out what you have as liabilities--meaning debts. That's money you owe because you haven't paid bills (which is called accounts payable) and the debts you have because of outstanding loans.
• Breakeven analysis. The breakeven point, Pinson says, is when your business's expenses match your sales or service volume. The three-year income projection will enable you to undertake this analysis. "If your business is viable, at a certain period of time your overall revenue will exceed your overall expenses, including interest." This is an important analysis for potential investors, who want to know that they are investing in a fast-growing business with an exit strategy.

Dig Deeper: How to Price Business Services

How to Write the Financial Section of a Business Plan: How to Use the Financial Section One of the biggest mistakes business people make is to look at their business plan, and particularly the financial section, only once a year. "I like to quote former President Dwight D. Eisenhower," says Berry. "'The plan is useless, but planning is essential.' What people do wrong is focus on the plan, and once the plan is done, it's forgotten. It's really a shame, because they could have used it as a tool for managing the company." In fact, Berry recommends that business executives sit down with the business plan once a month and fill in the actual numbers in the profit and loss statement and compare those numbers with projections. And then use those comparisons to revise projections in the future. Pinson also recommends that you undertake a financial statement analysis to develop a study of relationships and compare items in your financial statements, compare financial statements over time, and even compare your statements to those of other businesses. Part of this is a ratio analysis. She recommends you do some homework and find out some of the prevailing ratios used in your industry for liquidity analysis, profitability analysis, and debt and compare those standard ratios with your own. "This is all for your benefit," she says. "That's what financial statements are for. You should be utilizing your financial statements to measure your business against what you did in prior years or to measure your business against another business like yours."  If you are using your business plan to attract investment or get a loan, you may also include a business financial history as part of the financial section. This is a summary of your business from its start to the present. Sometimes a bank might have a section like this on a loan application. If you are seeking a loan, you may need to add supplementary documents to the financial section, such as the owner's financial statements, listing assets and liabilities. All of the various calculations you need to assemble the financial section of a business plan are a good reason to look for business planning software, so you can have this on your computer and make sure you get this right. Software programs also let you use some of your projections in the financial section to create pie charts or bar graphs that you can use elsewhere in your business plan to highlight your financials, your sales history, or your projected income over three years. "It's a pretty well-known fact that if you are going to seek equity investment from venture capitalists or angel investors," Pinson says, "they do like visuals."

Dig Deeper: How to Protect Your Margins in a Downturn

Related Links: Making It All Add Up: The Financial Section of a Business Plan One of the major benefits of creating a business plan is that it forces entrepreneurs to confront their company's finances squarely. Persuasive Projections You can avoid some of the most common mistakes by following this list of dos and don'ts. Making Your Financials Add Up No business plan is complete until it contains a set of financial projections that are not only inspiring but also logical and defensible. How many years should my financial projections cover for a new business? Some guidelines on what to include. Recommended Resources: Bplans.com More than 100 free sample business plans, plus articles, tips, and tools for developing your plan. Planning, Startups, Stories: Basic Business Numbers An online video in author Tim Berry's blog, outlining what you really need to know about basic business numbers. Out of Your Mind and Into the Marketplace Linda Pinson's business selling books and software for business planning. Palo Alto Software Business-planning tools and information from the maker of the Business Plan Pro software. U.S. Small Business Administration Government-sponsored website aiding small and midsize businesses. Financial Statement Section of a Business Plan for Start-Ups A guide to writing the financial section of a business plan developed by SCORE of northeastern Massachusetts.

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Examples of Business Plans That Drive Success

A robust business plan is more than just a document; it’s a blueprint for success, guiding entrepreneurs through the complexities of building a thriving company. For instance, the early business plan of Starbucks outlined a strategy for turning a local coffee shop into a national phenomenon through an aggressive expansion and unique customer experience, which became key drivers of their widespread success. Similarly, Google’s initial business plan focused on improving the speed and accuracy of search results, emphasizing a user-friendly interface and algorithmic innovations, which helped them dominate the internet search industry.

These examples highlight the critical role a well-constructed business plan plays in setting the stage for a company’s success. A successful business plan not only details what the company plans to do but also articulates how it plans to outperform competitors by addressing a specific market need in a unique way. By studying such successful business plans, new entrepreneurs can learn how to craft plans that attract investors, guide internal operations, and achieve sustainable growth, turning visionary ideas into profitable realities.

The Importance of a Well-Structured Business Plan

The cornerstone of any successful business journey is often a comprehensive and well-structured business plan. Whether you are an entrepreneur seeking funding , an investor evaluating opportunities, or a finance professional advising clients, the importance of a meticulously crafted business plan cannot be overstated. A robust business plan not only acts as a roadmap for growth and sustainability but also fosters confidence among stakeholders, thereby driving success. In this article, we will delve deep into various examples of business plans that have led to flourishing enterprises, aiming to provide you with a collection of insightful templates and strategies.

A solid business plan plays several key roles in driving business success:

• Acts as a roadmap for growth and sustainability
• Fosters stakeholder confidence
• Serves as a basis for capital allocation decisions

The roles outlined above are critical in shaping the direction and viability of any business. Acting as a detailed strategic document, a business plan underpins sustainable growth, instills confidence among investors and stakeholders, and guides sound investment decisions.

Key Components of a Business Plan

To build an effective business plan, several components must be carefully structured. These components form the backbone of the plan, each contributing to its overall strength and functionality.

Strategic Goal Setting

Strategic goals provide clarity and focus, driving the business towards its long-term vision. Setting specific, measurable, achievable, relevant, and time-bound ( SMART ) goals ensures that each step taken is aligned with the overall objectives of the enterprise.

Market Analysis

Understanding the market landscape is crucial. Comprehensive market analysis offers insights into customer needs, competitor actions, and industry trends. This information is indispensable for positioning the business strategically and identifying competitive advantages.

Budget Planning

Effective budget planning entails creating a detailed financial blueprint that forecasts revenue, expenses, and profitability. It is essential for ensuring the sustainable financial health of the business, guiding operational decisions, and managing resources efficiently.

Feasibility Studies

Feasibility studies assess the practicality and potential success of a business idea. By evaluating market demand, economic factors, and operational challenges, these studies help in making informed decisions and mitigating risks.

Practical Examples of Business Plans

To illustrate how these components come together to form a robust business plan, let us explore a few real-world examples:

These examples illustrate how integrating strategic goal setting, market analysis, budget planning, and feasibility studies can lead to tangible business successes. By leveraging these elements, entrepreneurs and finance professionals alike can construct business plans that not only map out the path to success but also adapt flexibly to changing market conditions.

Understanding the importance of these components and seeing their application in real-world scenarios can significantly enhance your ability to create effective business plans. Let’s embark on this journey to understanding why a concrete business plan is indispensable and how real-world examples can guide you toward achieving your business objectives.

Creating a Business Plan for a Tech Startup

Creating a business plan for a tech startup involves addressing unique challenges and leveraging specific opportunities within the technology sector. A well-rounded business plan typically includes key components such as the executive summary, market analysis, marketing strategy, and financial plan. This was excellently demonstrated by TechInspire, a hypothetical startup focused on an innovative Software as a Service platform. Below, we provide a comprehensive breakdown of their approach.

Key Components

Executive summary.

TechInspire’s mission is to streamline project management for small to medium-sized enterprises through their Software as a Service product, aiming to offer a more efficient and effective tool tailored to this market segment’s needs.

A thorough analysis identified a growing demand for cloud-based solutions, with projections showing a 20% annual market growth rate, highlighting a rife opportunity for expansion and dominance.

Marketing Strategy

The strategy emphasized a multifaceted approach including digital marketing, partnerships with industry influencers, and a freemium pricing model designed to attract initial users and build a strong customer base swiftly.

Financial Plan

The financial plan outlined critical financial metrics such as break-even analysis, projected cash flow, and detailed funding requirements essential for scaling operations effectively and sustainably.

Key Data Points

To provide a quick snapshot of the most critical information in TechInspire’s business plan, refer to the table below, which outlines key data points like market growth rate and projected cash flow.

This table highlights the actionable insights derived from the market analysis and financial projections, giving potential investors a clear picture of TechInspire’s financial health and growth prospects. By ensuring that critical data points are easily accessible, TechInspire enhances the business plan’s readability and impact.

Challenges and Unique Solutions

Tech startups face numerous challenges, but TechInspire’s business plan takes specific strategies to overcome these obstacles. Here is a breakdown of common challenges and TechInspire’s approach to addressing them:

• Technical Development: In the highly competitive tech sector, staying ahead with cutting-edge technology is crucial.
• Market Penetration: Gaining initial user traction can be difficult amidst numerous competing solutions.
• Resource Management: Efficiently managing limited resources to maximize growth and scalability.

TechInspire addresses these challenges with the following strategies:

• Investing in continuous development and hiring top-tier talent to maintain a technological edge.
• Implementing a freemium pricing model to attract users and build a community base quickly.
• Focusing on strategic partnerships and digital marketing to increase visibility and customer acquisition.

By understanding the specific challenges faced by tech startups and developing targeted solutions, TechInspire’s business plan demonstrates foresight and strategic planning. This ensures a more resilient and adaptive business model capable of navigating the dynamic tech landscape successfully.

The Importance of a Well-Developed Business Plan in the Retail Clothing Industry

In the competitive world of retail clothing, having a well-developed business plan is not just beneficial but essential. It can be the strategic difference between thriving in a crowded market and being forced to close shop. Consider the fictional case of FashionForward, a retail clothing store that meticulously crafted a detailed business plan to steer its operations and growth strategy toward success.

Key Components of FashionForward’s Business Plan

Each component of a business plan plays a crucial role in ensuring the smooth functioning and strategic direction of the business. Below are the key sections of FashionForward’s plan, each introduced with a brief explanation.

FashionForward strives to become a leading brand in the retail sector by focusing on trendy, affordable, and eco-friendly clothing options that appeal to a growing segment of environmentally-conscious consumers.

The market analysis section includes

• Identification of target demographics
• In-depth competitor analysis
• Assessment of market trends, particularly the shift toward sustainable fashion

Understanding these elements helps FashionForward position itself appropriately and strategize its market entry effectively.

Operational Plan

The operational plan covers the nuts and bolts of running the business, including:

• Selected store locations
• Advanced inventory management system
• Strong relationships with suppliers
• Clear staffing requirements

These details ensure that operations run smoothly and efficiently, providing a seamless experience for customers.

Financial Projections

The financial projections provide a blueprint for potential profitability and include:

• Startup costs
• Sales forecasts
• Profit margins
• Break-even analysis

These projections are vital for attracting potential investors by demonstrating the financial viability of the business.

Comparing Industry Trends with FashionForward’s Market Positioning

FashionForward’s business plan also considers industry trends to ensure it remains competitive. The table below compares key industry trends with FashionForward’s market positioning and projected financial data.

By aligning its strategies with these industry trends, FashionForward is better positioned to capture market share and achieve long-term growth. Investors will be more inclined to fund a business that is responsive to current market conditions and consumer needs.

By thoroughly addressing each of these components, FashionForward’s business plan provides a robust foundation for not only launching but also sustaining and growing the business in a competitive retail market. The detailed planning in each component assures stakeholders of the business’s potential for success and profitability.

Consulting Firms and the Importance of Business Plans

Consulting firms rely heavily on their business plans to strategize growth and establish credibility. Consider Strategic Solutions, a mock consulting firm specializing in financial advisory services. Their business plan illustrates a well-rounded approach to capturing market share and delivering value to clients by offering unique services and differentiating themselves from competitors.

Key Components and Strategic Objectives

The following table outlines the key components of Strategic Solutions’ business plan and illustrates how each element supports the firm’s overarching strategic objectives.

Each component of the business plan plays a pivotal role in ensuring that Strategic Solutions remains competitive in the financial advisory market. From the executive summary that sets the tone and credibility of the firm to the detailed financial plan that maps out future profitability, every facet is geared towards reinforcing the firm’s strategic objectives.

Key Tactics for Market Share and Brand Authority

In addition to a well-structured business plan, Strategic Solutions employs various tactics to capture market share and establish brand authority. The following bullet points outline these key tactics:

• Customized Service Packages: Tailoring services to meet the specific needs of mid-sized companies.
• Thought Leadership: Publishing white papers and conducting webinars to establish expertise in financial advisory services.
• Client Testimonials and Case Studies: Showcasing successful projects and satisfied clients to build trust and credibility.
• Partnerships and Alliances: Forming strategic alliances with other firms to expand service offerings and market reach.
• Digital Marketing Campaigns: Leveraging SEO, content marketing, and social media to enhance online presence and attract new clients.

These tactics allow Strategic Solutions to differentiate themselves in the competitive consulting landscape. By focusing on customized service packages and thought leadership, the firm attracts and retains high-value clients. Additionally, client testimonials and strategic partnerships further bolster their market position, while digital marketing campaigns ensure a broad reach and sustained online visibility.

Well-Structured Business Plans: The Foundation of Success

Well-structured business plans are fundamental to the success of any enterprise. By taking inspiration from diverse examples, whether it’s for a tech startup, a retail clothing business, or a consulting firm, entrepreneurs can glean valuable insights into effectively presenting their vision, strategies, and financial forecasts. Each element, from the executive summary to the financial plan, plays a crucial role in addressing stakeholder concerns and steering the business toward its goals. Below, we summarize the key takeaways from each example discussed in the article.

Key Takeaways from Business Plan Examples

Drawing from various business plan examples, here are the essential elements that contribute to a successful business plan:

• Executive Summary: Offers a concise overview of the business, including its mission, vision, and objectives. It should capture the reader’s interest and provide a snapshot of the overall plan.
• Market Analysis: Analyzes the target market, industry trends, and competitive landscape. Essential for demonstrating the demand for the product or service and how the business will meet this demand.
• Marketing Strategy: Details the methods for reaching and attracting customers, including advertising, sales tactics, and promotional activities. It should outline how the business will build its brand and gain market share.
• Financial Plan: Includes detailed financial projections, such as income statements, cash flow statements, and balance sheets. This section should justify financial needs and illustrate the potential for profitability and growth.

Understanding these key elements are critical for anyone involved in business planning. The executive summary sets the stage and draws in stakeholders, while the market analysis provides the necessary context and justification for the venture. The marketing strategy outlines how the business will penetrate its market, and the financial plan offers concrete evidence of financial viability. Together, these components form a comprehensive picture that can persuade investors, guide strategic decisions, and keep the business on course for success.

The Elements of a Successful Business Plan

Here is a table summarizing the vital elements that ensure a business plan is robust and impactful:

This table serves as a quick reference to the vital elements of a well-structured business plan. Each component plays an irreplaceable role in painting a complete picture of the business’s pathway to success. By paying close attention to these elements, entrepreneurs, investors, and financial professionals can ensure their business planning is comprehensive and impactful.

Final Thoughts

In conclusion, whether you are an aspiring entrepreneur, a seasoned investor, or a financial professional, understanding these examples of business plans can significantly bolster your planning process and pave the way for success. The relevance of structured plans in achieving business success cannot be overstated, as they provide a clear, detailed roadmap for navigating the complexities of business growth and development. A meticulously crafted business plan helps address stakeholder concerns and equips your enterprise with a guide to steer it toward its goals effectively.

What is the Significance of an Executive Summary in a Business Plan?

The executive summary is a pivotal section of your business plan, offering a brief yet comprehensive overview of your proposed venture. It encapsulates key elements like the business concept, market potential, financial highlights, and strategic goals. This section is particularly crucial because it usually is the first part that potential investors and stakeholders read, setting the tone for the entire document.

**Key Points to Include in an Executive Summary:**

• Business Concept: What your business does, its mission, and its vision.
• Market Potential: The size and characteristics of your target market.
• Financial Highlights: Summary of projections, including revenue and profit forecasts.
• Strategic Goals: Short-term and long-term objectives.

These key points serve as a snapshot that should entice potential investors and stakeholders to read further into your business plan. By clearly summarizing your business idea and its merits, you provide a compelling reason for readers to continue exploring the finer details.

How Detailed Should the Market Analysis Be in a Business Plan?

A well-executed market analysis is a cornerstone of a robust business plan. This section should demonstrate your deep understanding of the industry landscape, target market, and competitive environment. It is advisable to be as detailed and data-driven as possible.

**Elements to Include in Market Analysis:**

• Market Size: Quantitative data on your market’s size and potential.
• Growth Trends: Historical data and future projections for the market.
• Customer Segments: Detailed description of the primary customer groups.
• Competitor Analysis: Insights into key competitors, their strengths, and weaknesses.

An in-depth market analysis not only underscores your business’s growth potential but also builds confidence among stakeholders and investors. It shows that you have conducted rigorous research and are prepared to navigate the complexities of the market.

What Financial Projections are Essential in a Business Plan?

Financial projections are essential to providing an objective view of your business’s financial viability. This section should include comprehensive projections for income statements, cash flow statements, and balance sheets over a minimum period of three to five years.

**Essential Financial Projections:**

• Income Statements: Expected revenue, costs, and profits over the defined period.
• Cash Flow Statements: Forecasts of cash inflows and outflows.
• Balance Sheets: Snapshot of your business’s financial position at specific points in time.

Providing detailed financial projections allows potential investors to gauge the financial health of your business. Including the assumptions behind your projections—such as revenue growth rates, expense margins, and capital requirements—adds another layer of transparency and reliability.

Can a Business Plan Evolve Over Time?

Yes, a business plan is inherently a dynamic document that must evolve. Regular reviews and updates ensure that the plan remains aligned with current market conditions, business performance, and strategic goals.

**Reasons to Update Your Business Plan:**

• Market Changes: Adapt to new trends, technologies, or regulations.
• Business Performance: Modify based on actual performance versus projections.
• Strategy Adjustments: Realign objectives and strategies as needed.

A living business plan offers the flexibility to pivot or scale according to emerging opportunities and challenges. Consistent updates make sure your business stays on the right path toward achieving its goals.

Is Professional Help Necessary to Create a Business Plan?

Although you can create a business plan independently, seeking professional assistance can add substantial value. Experts in financial modeling, business consultancy, and market analysis bring specialized skills that can enhance both the credibility and depth of your plan.

**Advantages of Professional Help:**

• Expertise: Specialized knowledge to cover essential elements comprehensively.
• Credibility: A polished, expert-reviewed plan enhances investor confidence.
• Strategic Insights: Objective perspectives to guide your business strategy.

Engaging professionals not only elevates the quality of your business plan but also significantly increases its chances of attracting investors and guiding effective strategic decisions.

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How to: build an effective revenue plan to achieve your business goals.

We got hold of ACME’s revenue plan and the step-by-step process of how they built it. Apply the framework to build your own revenue plan.

Introduction

Step 1: identify your revenue goal, step 2: analyze past performance to define benchmarks, step 3: apply benchmarks to your revenue target, step 4: allocate your resources, step 5: build a ramp-up plan, leverage ai for watertight revenue operating plans, table of contents.

Selling and marketing are harder than ever. Old-school tactics are pushing modern buyers away, leaving revenue teams frustrated, inefficient, and unable to compete. In No Forms. No Spam. No Cold Calls , Latané Conant delivers the recipe for scalable, repeatable, data-driven sales and marketing strategies that work today.

In this How-To, we provide a practical, tactical dive into some of the strategies outlined in Chapter 4. 

In her book No Forms. No Spam. No Cold Calls , 6sense CMO Latané Conant outlines her vision for a revolution in sales and marketing. But revolutions aren’t achieved without strong planning and the willingness to adapt. And few things require better planning — and a willingness to adapt — than a company’s revenue plan.

A revenue plan is a framework for how a company expects to make money. A great revenue plan starts with and responds to data.

As Conant writes, “I like to call it a revenue operating model (rather than a revenue model), because this isn’t a set-it-and-forget-it endeavor. What you’re creating is a living, breathing plan. You make assumptions and you operate against those assumptions. So as you learn more and assumptions change, your plan has to adapt accordingly.”

This process begins with a hard look at past performance. Don’t worry if you can’t immediately fill in every metric we’ll soon be discussing. You may have gaps that will need to be filled in with best guesses or industry benchmarks.

The goal is to create a starting point — and this How-To can help.

Meet ‘ACME Corp.’

To properly illustrate how you might apply these insights to your own business, we’ll periodically shine a spotlight on the activities of “ACME Corp.”, a fictitious company that’s presently creating its own revenue operating model.

Since ACME exists solely as an example for our story, it doesn’t much matter what industry ACME is in, or what industries it serves, or how many people it employs. Its purpose is to simply illustrate how choices can affect its pipeline targets and revenue growth. (Put another way: It’s all about the money, honey.)

Five Steps to Creating a Revenue Plan

Sales processes differ from company to company, as do revenue models. For our purposes, ACME’s revenue operating model is based on  an account-based sales funnel . However, the principles we’ll see ACME use can apply to any company’s plan.

We’ve divided this process into five key stages; we’ll provide how-to steps to take for each stage, They are:

• Identify your revenue goal
• Analyze past performance to define benchmarks
• Apply benchmarks to your revenue target
• Allocate your resources
• Build a ramp-up plan

Our entire process starts off with a deceptively simple question: What’s your revenue goal? It might be based on:

• A percentage increase of last year’s performance
• Hitting a revenue number you define, such as $100M in annual recurring revenue (ARR), or
• Achieving a revenue goal defined by your CEO and board

In any case, unless you’re a brand-new company, your revenue goal is your target end-of-year ARR, minus existing customer revenue and pipeline.

Example: How ACME Determines Its Revenue Goal

As we mentioned earlier, we’ll turn our attention to the fictitious ACME Corp. to highlight how a company like yours might approach its revenue operating plan.

In the case of ACME’s revenue goal, the company’s CEO wants to increase its revenue by over 50% this year … so she sets a goal of $25 million net-new ARR for the year.

With the revenue goal set, ACME’s revenue leaders must determine whether they can realistically hit it with their existing resources. (More on this later.)

This means the next step in the process is looking back at its historical sales performance.

The basis of any revenue plan is to:

• Know the revenue number you need to hit
• Determine what you need to achieve at each stage of the buying journey to get there

Thanks to Step 1, you have your organization’s revenue goal. To understand what you need to achieve at each stage of the buying journey, you need benchmarks around likely performance. This should be based on your historical data, or if you don’t have any — external benchmarking .

If you’re using historical performance, to ensure your metrics are meaningful, you should analyze data that spans your typical sales cycle. This could range from three months for transactional deals, and up to 18 months for long deals.

Your team should be interrogating the data to discover key benchmarks for sales cycles, conversion rates , and average deal sizes. To give you an idea of how to approach this task, let’s see how ACME Corp. is doing it.

How ACME Defined Its Benchmarks

As we learned above, ACME has its revenue goal of $25 million net-new ARR. However, it still needs benchmarks around each stage of the buying journey to map out how the revenue team can achieve that.

ACME assesses historical data that spans its average deal cycle of six months, looking back to analyze past sales cycles, conversion rates, and average deal sizes to create metrics for each stage of their buying journey.

Account-Based Buying Journey Stages

By looking at the typical account-based buying journey, you can define the stages where you’ll need metrics to benchmark your performance. Here are the  account-based metrics  your team can review historical data for:

• Number of accounts in the Target Account List (TAL)
• Number of accounts in TAL that are in-market
• What % of accounts reached by marketing engaged with ads or content?
• What % reached the Awareness & Consideration stage?
• What % became a SQL or 6QA (aka a  6sense-Qualified Account )
• What % accepted a meeting with a BDR?
• What % booked a meeting with an account executive?
• What % became qualified pipeline?
• What % signed a deal?
• Average deal size
• Time between each stage (and overall sales cycle)

As we’ll see in the next step, you don’t need metrics for every single stage … but the more benchmarks you have, the more accurate your revenue operating plan will be.

Knowing your sales cycle, deal size, and average conversion rate from engaged accounts enables you to start making predictions and a basic plan. Say, for example, your:

• Average deal size is $200,000
• Conversion rate from engaged account to customer is 10%
• Sales cycle is six months

Since 1-in-10 engaged accounts are expected to sign a deal, we can assume that an engaged account has an average value of $20,000 in six months.

But you can go beyond these basic benchmarks to dive deeper and look at what numbers to expect at each stage of the buying journey . Here’s how ACME did it.

How ACME Applied Its Data to Plot a Plan

Once ACME uncovered the historic data for conversion at each buying stage, it became a math exercise to determine how many accounts ACME needed at each buying stage in order to achieve its revenue goal of $25 million.

Analysis of ACME’s past data revealed:

• It had been effectively reaching 80% of its In-Market Ideal Customer Profiles  (IICP) with marketing messages
• Of those, 30% began conducting serious research
• Of those, 15% became a 6sense Qualified Account (6QA) / sales qualified lead
• Of those, 75% booked a BDR meeting
• Of those, 40% booked a meeting with an AE
• Of those, 75% began exploring the solution, validation, and negotiating
• Of those, 50% signed a deal

ACME’s Past Performance

With its IICP of 75,000 accounts, that came to 303.75 deals — or roughly $15.2 million in revenue. That’s about $10 million short of ACME’s new revenue goal.

So how could the company hit $25 million? Its leaders ran the math in reverse to see what it would take.

Calculating ACME’s New Targets

Without making any changes or improvements to its marketing and sales process, ACME needed the equivalent of roughly 123,000 in-market accounts, 4,430 6QAs, or 3,330 BDR meetings to hit its new revenue goal. 

With an understanding of these numbers, ACME’s next step was working out whether it had the resources to handle the volume.

While it’s a mistake to forget seasonality and assume a linear progression of revenue generation throughout the year, dividing planned activities by days, weeks, or months helps to generate a ballpark figure for resource allocation.

You can map your targets against your current resources to better understand how far current team sizes and budget will get you towards your revenue goal.  

Mapping ACME’s Resource Allocation

As seen in the chart above, to hit its $25 million goal, ACME must book 3,333 BDR meetings. The team mapped this against approximately 260 business days in a year (in the U.S.) to reveal a target of almost 13 meetings a day. 

ACME then examined past BDR performance and workload to assess whether its current headcount of two full-time BDRs could handle the volume, or if it was time to grow the team. ACME applied the same logic across its revenue team to estimate headcount. Could three AEs cover five initial calls a day, plus many follow-up conversations with buyers? 

Increasing the revenue target by 66% was always going to require investment. But by breaking down the numbers and understanding how quickly engaged prospects convert into qualified sales opportunities, ACME could start to map out how much of an investment it needed to make in people, and where to make it. 

Calculating Required Marketing Budget 

Alongside headcount, your marketing team should look at how much budget you used to reach your previous goals. You can then divide your budget by a key measurement metric, e.g. a 6QA or SQL, to understand your marketing spend to reach this goal. 

This is an important step to tie marketing back to revenue and helps you project future outputs in light of targets or budgetary changes. Here’s how it looked for ACME.

ACME’s Marketing Performance

With last year’s budget of $1 million, Acme’s marketing team generated 2,700 6QAs (or alternately, SQLs). To get the cost per 6QA, they divided the budget by the number of 6QAs generated, equalling $370. (6QA could be replaced by another metric of choice, using the same formula.)

So what would happen as ACME attempted to ramp up its revenue? To plan for this year’s budget, ACME multiplied the cost per 6QA by the new target of 4,432, giving a proposed budget of close to $1,640,000.  

By also examining the cost per channel from last year, ACME’s CMO then mapped out the budget by channel to assess whether they had the resources to hit the new targets.

The resource allocation exercise unsurprisingly showed ACME would need more investment to hit its higher targets, so the revenue team set about building a ramp-up plan to reach its new goals.

Before investing heavily in new headcount and huge budgets, you must ensure you’re getting the most from your current investment. Efficient growth doesn’t come solely from increased demand. It comes from increasing conversion rates, too. 

The law of diminishing returns means bettering conversion metrics at any stage in the funnel drives out-sized growth vs increasing activities. 

How ACME Plans to Ramp Up 

For example, looking at ACME’s past performance, a 1% increase in conversion between the Awareness and Consideration stage to 6QA would mean 180 more 6QAs. Following the metrics further down the funnel, that meant 20 more deals, and $1 million more revenue. Not bad at all.

So ACME’s revenue leaders went back further, to the very top of the cascade of their conversion percentages, and the total number of in-market accounts they were attempting to reach. 

The team agreed to tighten their targeting to IICPs — which means going after accounts that are ready to buy and therefore most likely to close first. 

Using this targeted approach, ACME can increase conversion at every stage of the funnel, driving efficient growth. By honing its focus on the accounts most likely to purchase, ACME has improved its chances of winning deals more efficiently.

As revenues lift and more resources free-up for growth, ACME can look to widen its Target Account List (TAL), which will add more IICP prospects to its funnel … and bring in more opportunities for additional sales reps to work. 

By combining this more targeted approach with an increase in activities, ACME expects to smash its revenue goal. 

Following this How-To guide and ACME’s lead gives you a framework for your own revenue operating plan. But it’s by no means perfect — this plan is susceptible to human error, diminishing returns, seasonality, and threats.

To build a watertight plan, companies are turning to AI to help identify the best accounts, and accounts that are in-market. The AI does the hard work for you, gathering data from across business units to get a complete picture. 

This robust data can then be effortlessly combined with past and present performance, alongside trends, seasonality, and threats to create real-time forecasts that can accurately predict future pipeline and inform your revenue operating plan. 

Learn More in Our ‘No Forms. No Spam. No Cold Calls’ Resource Center

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• Business Planning

Business Plan Financial Projections

Written by Dave Lavinsky

Financial projections are forecasted analyses of your business’ future that include income statements, balance sheets and cash flow statements. We have found them to be an crucial part of your business plan for the following reasons:

• They can help prove or disprove the viability of your business idea. For example, if your initial projections show your company will never make a sizable profit, your venture might not be feasible. Or, in such a case, you might figure out ways to raise prices, enter new markets, or streamline operations to make it profitable. 
• Financial projections give investors and lenders an idea of how well your business is likely to do in the future. They can give lenders the confidence that you’ll be able to comfortably repay their loan with interest. And for equity investors, your projections can give them faith that you’ll earn them a solid return on investment. In both cases, your projections can help you secure the funding you need to launch or grow your business.
• Financial projections help you track your progress over time and ensure your business is on track to meet its goals. For example, if your financial projections show you should generate $500,000 in sales during the year, but you are not on track to accomplish that, you’ll know you need to take corrective action to achieve your goal.

Below you’ll learn more about the key components of financial projections and how to complete and include them in your business plan.

What Are Business Plan Financial Projections?

Financial projections are an estimate of your company’s future financial performance through financial forecasting. They are typically used by businesses to secure funding, but can also be useful for internal decision-making and planning purposes. There are three main financial statements that you will need to include in your business plan financial projections:

1. Income Statement Projection

The income statement projection is a forecast of your company’s future revenues and expenses. It should include line items for each type of income and expense, as well as a total at the end.

There are a few key items you will need to include in your projection:

• Revenue: Your revenue projection should break down your expected sales by product or service, as well as by month. It is important to be realistic in your projections, so make sure to account for any seasonal variations in your business.
• Expenses: Your expense projection should include a breakdown of your expected costs by category, such as marketing, salaries, and rent. Again, it is important to be realistic in your estimates.
• Net Income: The net income projection is the difference between your revenue and expenses. This number tells you how much profit your company is expected to make.

Sample Income Statement

2. Cash Flow Statement & Projection

The cash flow statement and projection are a forecast of your company’s future cash inflows and outflows. It is important to include a cash flow projection in your business plan, as it will give investors and lenders an idea of your company’s ability to generate cash.

There are a few key items you will need to include in your cash flow projection:

• The cash flow statement shows a breakdown of your expected cash inflows and outflows by month. It is important to be realistic in your projections, so make sure to account for any seasonal variations in your business.
• Cash inflows should include items such as sales revenue, interest income, and capital gains. Cash outflows should include items such as salaries, rent, and marketing expenses.
• It is important to track your company’s cash flow over time to ensure that it is healthy. A healthy cash flow is necessary for a successful business.

Sample Cash Flow Statements

3. Balance Sheet Projection

The balance sheet projection is a forecast of your company’s future financial position. It should include line items for each type of asset and liability, as well as a total at the end.

A projection should include a breakdown of your company’s assets and liabilities by category. It is important to be realistic in your projections, so make sure to account for any seasonal variations in your business.

It is important to track your company’s financial position over time to ensure that it is healthy. A healthy balance is necessary for a successful business.

Sample Balance Sheet

How to Create Financial Projections

Creating financial projections for your business plan can be a daunting task, but it’s important to put together accurate and realistic financial projections in order to give your business the best chance for success.  

Cost Assumptions

When you create financial projections, it is important to be realistic about the costs your business will incur, using historical financial data can help with this. You will need to make assumptions about the cost of goods sold, operational costs, and capital expenditures.

It is important to track your company’s expenses over time to ensure that it is staying within its budget. A healthy bottom line is necessary for a successful business.

Capital Expenditures, Funding, Tax, and Balance Sheet Items

You will also need to make assumptions about capital expenditures, funding, tax, and balance sheet items. These assumptions will help you to create a realistic financial picture of your business.

Capital Expenditures

When projecting your company’s capital expenditures, you will need to make a number of assumptions about the type of equipment or property your business will purchase. You will also need to estimate the cost of the purchase.

When projecting your company’s funding needs, you will need to make a number of assumptions about where the money will come from. This might include assumptions about bank loans, venture capital, or angel investors.

When projecting your company’s tax liability, you will need to make a number of assumptions about the tax rates that will apply to your business. You will also need to estimate the amount of taxes your company will owe.

Balance Sheet Items

When projecting your company’s balance, you will need to make a number of assumptions about the type and amount of debt your business will have. You will also need to estimate the value of your company’s assets and liabilities.

Financial Projection Scenarios

Write two financial scenarios when creating your financial projections, a best-case scenario, and a worst-case scenario. Use your list of assumptions to come up with realistic numbers for each scenario.

Presuming that you have already generated a list of assumptions, the creation of best and worst-case scenarios should be relatively simple. For each assumption, generate a high and low estimate. For example, if you are assuming that your company will have $100,000 in revenue, your high estimate might be $120,000 and your low estimate might be $80,000.

Once you have generated high and low estimates for all of your assumptions, you can create two scenarios: a best case scenario and a worst-case scenario. Simply plug the high estimates into your financial projections for the best-case scenario and the low estimates into your financial projections for the worst-case scenario.

Conduct a Ratio Analysis

A ratio analysis is a useful tool that can be used to evaluate a company’s financial health. Ratios can be used to compare a company’s performance to its industry average or to its own historical performance.

There are a number of different ratios that can be used in ratio analysis. Some of the more popular ones include the following:

• Gross margin ratio
• Operating margin ratio
• Return on assets (ROA)
• Return on equity (ROE)

To conduct a ratio analysis, you will need financial statements for your company and for its competitors. You will also need industry average ratios. These can be found in industry reports or on financial websites.

Once you have the necessary information, you can calculate the ratios for your company and compare them to the industry averages or to your own historical performance. If your company’s ratios are significantly different from the industry averages, it might be indicative of a problem.

Be Realistic

When creating your financial projections, it is important to be realistic. Your projections should be based on your list of assumptions and should reflect your best estimate of what your company’s future financial performance will be. This includes projected operating income, a projected income statement, and a profit and loss statement.

Your goal should be to create a realistic set of financial projections that can be used to guide your company’s future decision-making.

Sales Forecast

One of the most important aspects of your financial projections is your sales forecast. Your sales forecast should be based on your list of assumptions and should reflect your best estimate of what your company’s future sales will be.

Your sales forecast should be realistic and achievable. Do not try to “game” the system by creating an overly optimistic or pessimistic forecast. Your goal should be to create a realistic sales forecast that can be used to guide your company’s future decision-making.

Creating a sales forecast is not an exact science, but there are a number of methods that can be used to generate realistic estimates. Some common methods include market analysis, competitor analysis, and customer surveys.

Create Multi-Year Financial Projections

When creating financial projections, it is important to generate projections for multiple years. This will give you a better sense of how your company’s financial performance is likely to change over time.

It is also important to remember that your financial projections are just that: projections. They are based on a number of assumptions and are not guaranteed to be accurate. As such, you should review and update your projections on a regular basis to ensure that they remain relevant.

Creating financial projections is an important part of any business plan. However, it’s important to remember that these projections are just estimates. They are not guarantees of future success.

Business Plan Financial Projections FAQs

What is a business plan financial projection.

A business plan financial projection is a forecast of your company's future financial performance. It should include line items for each type of asset and liability, as well as a total at the end.

What are annual income statements? 

The Annual income statement is a financial document and a financial model that summarize a company's revenues and expenses over the course of a fiscal year. They provide a snapshot of a company's financial health and performance and can be used to track trends and make comparisons with other businesses.

What are the necessary financial statements?

The necessary financial statements for a business plan are an income statement, cash flow statement, and balance sheet.

How do I create financial projections?

You can create financial projections by making a list of assumptions, creating two scenarios (best case and worst case), conducting a ratio analysis, and being realistic.

• Free Revenue Projection Templates

Last updated on Tuesday, September 10, 2019

Financial projections play an essential role in the success of any business, regardless of size. Revenue projections, sales projections, burn rate, and cash flow data can all be used to gain a clear view of current and projected business health and performance.

Revenue projections are particularly useful for business owners who are:

• Putting together a new business plan
• Revamping an existing business model
• Completing business planning for an upcoming financial quarter
• Considering introducing new products or services

As with any financial planning, your revenue projection is only as accurate as the tools you use and the data you enter. There is a wide range of revenue projection templates and tools available to you, as well as software that can automate your revenue projection processes.

Before we dive into revenue projection templates and software, let’s recap what revenue projections are and why you need them in your business.

Sales Forecasts vs Revenue Projections

Revenue projections differ from sales forecasting. Sales forecasting refers to the projected sales of specific products or services over a period of time. Figures may be based on the cost of goods sold and gross profit, but do not necessarily take into account a business’ operating expenses.

Businesses may use sales forecasting to predict their company’s monthly sales and expected growth rate. Business owners or sales managers may use sales forecast templates to help the sales team set realistic goals and make adjustments if it looks like monthly sales goals won’t be met.

Revenue projections refer to the actual revenue a business expects to bring over a period of time. It is a function of financial statements, historical data, operating expenses, and profit margins.

Businesses may use revenue forecasts to predict future resourcing, identify revenue gaps, and report on the business’ financial health to stakeholders and investors.

Both sales forecasts and revenue projections are valuable to your business. But the value of each depends on how accurate, timely, and complete your data is. There is no room for guesstimating in these processes. It’s often hard for sales teams to be objective about the likelihood of deals in the sales funnel closing within a specific period of time. But even the smallest inaccuracy can easily skew cash flow projections and create challenges for your business down the road.

Key Concepts for Accurate Revenue Projections

To maximize the value of your CRM sales data and generate accurate revenue projections, you need a foundational understanding of financial ratios and other contributing concepts. Review the concepts below and identify how you currently track and evaluate these metrics.

Gross Margin

Review historical data and income statements, including accounts receivable, to calculate the difference between operating expenses and total revenue (plus direct costs) to see your gross margin.

Operating Profit Margin

Subtract your total operating expenses from total revenue to determine your operating profit margin.

Headcount per Client

The number of people in your company can directly affect your profit margins and revenue projection. Are you running a lean organization? Do you need to scale up to manage more clients and sales?

Total Addressable Market

Using historical data and market research, determine the number of potential customers in your target market.

Target Market Growth Rate

What is the potential growth of your target market? Can you expand this market? Will the market grow naturally?

Conversion Rate

What percentage of your target market can you convert into leads and customers?

Number of Projected Customers

How many sales can you expect to make in a given time period?

Unit Price per Sale

What is the unit price for each sale?

Pros and Cons of Manual Revenue Projections

Many businesses use Microsoft Excel or Google Sheets spreadsheets for revenue projections. These methods are widely used across industries, but they may not be the most efficient or accurate. And they’re only as accurate as the templates used and the data entered.

Let’s take a look at the pros and cons of using spreadsheets for revenue projection.

• Cloud-based spreadsheets enable anyone in your organization to access the data
• Simplified format most people can use, read, and understand
• Easy to share if your organization uses cloud-based Google Drive or Microsoft Office
• Manual process of exporting data from a CRM tool can lead to errors and inaccuracies
• Once you export the data, it may be out-of-date within hours or days
• No real-time forecasting
• One typo can create inaccurate projections, which can lead to disaster for enterprise organizations
• Anyone in the organization can modify data which can lead to errors and inconsistencies
• Does not integrate with CRM tools

Free Spreadsheet Revenue Projection Templates & Resources

If you’re looking to manually manage revenue projections using spreadsheets, explore these free revenue projection templates for PowerPoint, Excel, and Google Sheets.

• Sales Forecast Templates
• Revenue Projection Calculator Tool
• Revenue Projection Powerpoints

The Next Step: How to Automate Revenue Projection

Even with a robust revenue projection template, spreadsheets may not provide all the features and functionality you need for accurate revenue projection and sales forecasting.

Instead of relying solely on spreadsheets, consider leveraging a cloud-based SaaS solution that integrates directly with your CRM system.

revVana is a Salesforce-native application that automates the revenue projection process using historical data, sales pipelines, and sales projections. You can analyze revenue realization, compare expected sales forecasts against actual revenue, track progress to sales quotes, and evaluate corporate budgets — all in real time.

With revVana, sales managers, accounting teams, business owners, and CFOs can replace judgment-driven projections with accurate forecasts based on historical data, balance sheets, and cash flow statements. When your forecasting tools integrate with Salesforce , you can be assured of more accurate, real-time actionable insights to enable seamless business growth.

If you’re ready to move from manual, error-prone spreadsheets to an automated, accurate solution, request a demo of revVana .

Actuals vs. Forecasts: A Focus as Companies Shift to Usage-Based Models

As more businesses transition to consumption or usage-based revenue models, the comparison of Actuals vs. Forecasts needs to become a central focus. This analysis is key to navigating the variability inherent in these models and ensuring that companies can adapt quickly to changing customer behavior and market conditions.

How To Calculate Revenue Realization Rate

As we all know, measurements and metrics are extremely important for businesses to take note of. If you’re ignoring these…

Budget vs. Actual: Mastering Variance Analysis for Smarter Business Growth

Individuals and business owners alike set budgets to manage their spending and finances efficiently. CFOs and others involved in financial…

Find out how you can get more accurate forecasts

We’ll send you quick facts about revVana and how it can help you hit your revenue targets.

Give us a call at 855-536-7470 . Book a Sales Call

Call us 855-536-7470. Book a Sales Call

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How to write a cleaning business plan, with example

GorillaDesk Staff

“If you fail to plan, you plan to fail.” – Benjamin Franklin

A house cleaning service business plan can help you get a loan. It’s also a roadmap to a successful cleaning company. But — 

There are seven key elements every business plan must have. It’s not hard to write one, but you’ll need to know the answers to some questions before you start.

See how to write a cleaning business plan below, along with tips, advice, and a sample cleaning business plan to get you off on the right foot.

What is a cleaning business plan?

A cleaning business plan is a document that shows why your business should exist, what it will do, how you’ll do it, and who you’ll do it for. It maps out your path to success, including financial projections, a market analysis, your services, and a description of your organizational structure.

Most banks will want to see a business plan before they’ll lend you money. Even if you don’t need a loan, a plan can guide you as you start and scale your business.

Pro Tip: If you’re just looking for the steps to create a successful cleaning company, one of the most important is to set your prices higher than you think. See our article on how to start a cleaning business for more.

The 7 parts of a cleaning business plan

Each cleaning service business plan has seven important parts. The best way to write your own plan is to read this article, then come back with a pen and notebook and jot down your best answers and to-do items. Writing the plan will be a lot easier if you’ve answered all the questions first.

1. Executive summary

Since you haven’t written your house cleaning business plan yet, you’ll skip this part for now. Then when you’ve finished writing the rest, you’ll come back and summarize your plan at the top.

• Your business name
• A very brief overview of your services
• Your mission and vision statements (see examples here and here )
• Why you’re writing the plan (for example, to get a loan or to increase your odds of success)

2. Company description

What is your company all about, and how will it be structured? Write about 100 words on:

• Your business structure ( LLC , corporation , sole proprietorship )
• The types of consumers you’ll serve
• A complete list of your service offerings (for example, cleaning homes and Airbnbs)
• Your business goals

3. Cleaning services you’ll offer

Re-list your service offerings, and this time, write a short description of each one. Include:

• Benefits to the customer of each service
• Why your services are better than the competition’s

4. Market analysis

This is where you show how much you understand the cleaning industry. Include:

• A list of your different types of customers (like property managers and homeowners)
• How many customers are in your area
• A detailed description of the other cleaning companies near you and their strengths and weaknesses

Pro Tip: Make it easier by introducing yourself to a few cleaning company owners and asking how-to questions. (You can find them by searching “cleaning business owner” on LinkedIn.)

5. Strategy

Describe your sales and marketing plan and how you’ll put it into action, including:

• Your operating hours and locations
• Your service area
• How many employees you’ll have, and where you’ll find them
• How you’ll find and connect with customers
• Your pricing
• Your costs, both fixed and per cleaning
• How the company will function (from getting a new customer to doing a cleaning and invoicing)

6. Leadership

Who’s in charge of your cleaning company, and what are they responsible for? Make:

• A list of your company’s leaders and job descriptions
• Names of the owners, what percent of the business they own, their background, and how much they’ll be involved
• Names and bios of any advisors or mentors who will help, including attorneys or other professionals

7. Financial plan and projections

You’ll most likely need to pay an accountant to help with creating financial projections. Create 3-year projections of:

• P&L statement
• Balance sheet
• Cash flow statement

You can see examples of all three projections below, at the bottom of the cleaning company business plan template below.

Pro Tip: Writer’s block? Tell ChatGPT the answers to the questions above, then ask it to write your plan up for you. Then read and adjust it to fit it to your business goals.

Example cleaning business plan

You can copy, paste, and edit this sample cleaning service business plan template to get started:

1) Executive Summary

Business Name: [Your Business Name]

Owner: [Your Name]

Location: [City, State]

Business Structure: Sole Proprietorship / LLC

Services Offered: Residential Cleaning, Deep Cleaning, Move-In/Move-Out Cleaning, Seasonal Cleaning

Mission Statement: Our mission is to provide high-quality, reliable, and affordable cleaning services that make our clients’ homes healthier and more comfortable.

2) Business Description

A) Company Overview:

[Your Business Name] is a residential cleaning service committed to offering top-tier cleaning solutions to homeowners. We specialize in maintaining a clean, organized, and hygienic living space that enhances the well-being of our clients. Our services cater to a variety of needs, from regular upkeep to deep cleaning sessions.

B) Target Market:

Our primary target market includes busy professionals, families, and elderly individuals who require assistance with maintaining their homes. Our services are also ideal for property managers and real estate agents in need of cleaning services for move-in/move-out or post-renovation scenarios.

C) Unique Selling Proposition (USP):

We stand out by offering personalized cleaning plans tailored to each client’s specific needs. Our commitment to using eco-friendly products and methods sets us apart, ensuring a safe environment for children, pets, and allergy-sensitive individuals.

3) Market Analysis

A) Industry Overview:

The residential cleaning industry is a growing market with increasing demand due to busy lifestyles, dual-income households, and an aging population. The shift towards eco-friendly cleaning solutions is also driving growth.

B) Competitor Analysis:

• Competitor A: Offers basic cleaning services at low prices but lacks personalized service.
• Competitor B: Focuses on high-end clients with premium pricing but limited availability.
• Competitor C: Uses eco-friendly products but charges extra for this service.

C) Market Trends:

• Increasing demand for green cleaning services.
• Growing preference for personalized and flexible cleaning schedules.
• Rising use of online booking platforms for convenience.

D) Target Customer:

• Demographics: Ages 25-65, middle to upper-middle income, homeowners, renters, and property managers.
• Geographic: Residential areas within [City/Region].
• Psychographics: Value convenience, cleanliness, and a healthy living environment.

4) Services Offered

• Standard Residential Cleaning: Regular cleaning services including dusting, vacuuming, mopping, and bathroom/kitchen cleaning.
• Deep Cleaning: Comprehensive cleaning, including areas not typically covered in standard cleaning, such as baseboards, inside appliances, and behind furniture.
• Move-In/Move-Out Cleaning: Specialized cleaning service for homes being prepared for new occupants or post-move-out.
• Seasonal Cleaning: Deep cleaning services tailored to specific seasonal needs, like spring cleaning or pre-holiday preparation.
• Customized Cleaning Plans: Tailored cleaning schedules and services based on individual client preferences.

5) Marketing Strategy

A) Branding:

Develop a professional brand image with a clean, modern logo, and a user-friendly website. Emphasize your commitment to eco-friendly products and personalized service.

B) Marketing Channels:

• Online Presence: Develop a website with online booking options, service descriptions, and testimonials. Use SEO strategies to increase visibility.
• Social Media: Engage potential clients on platforms like Facebook, Instagram, and LinkedIn with before-and-after photos, cleaning tips, and promotions.
• Local Advertising: Distribute flyers, post ads in local newspapers, and participate in community events.
• Referral Program: Offer discounts or free services for clients who refer new customers.

C) Pricing Strategy:

• Competitive Pricing: Set prices based on market research, offering competitive rates that reflect the quality and value of your services.
• Package Deals: Create cleaning packages for regular clients, offering discounted rates for long-term contracts.

6) Operations Plan

A) Location and Equipment:

• Location: Operate from a home office with a storage area for supplies and equipment.
• Equipment: Invest in high-quality cleaning tools, vacuum cleaners, mops, and eco-friendly cleaning products.

B) Staffing Plan:

• Initial Staffing: Start as a sole proprietor or with a small team. As the business grows, hire part-time cleaners or contract workers.
• Training: Provide thorough training in cleaning techniques, customer service, and safety protocols.

C) Operations Workflow:

• Client Consultation: Discuss client needs, schedule, and pricing.
• Service Delivery: Perform the cleaning service based on the agreed plan.
• Quality Control: Conduct follow-up checks to ensure client satisfaction.
• Billing and Payment: Use an invoicing system for easy payment processing.

7) Financial Plan

A) Startup Costs:

• Initial Equipment: $2,000
• Supplies (3 months): $500
• Marketing Materials: $1,000
• Website Development: $1,500
• Legal and Licensing Fees: $500
• Total: $5,500

B) Revenue Projections:

• Year 1: $50,000
• Year 2: $75,000
• Year 3: $100,000

C) Break-Even Analysis:

• Monthly Fixed Costs: $2,000
• Variable Costs per Job: $50
• Average Revenue per Job: $150
• Break-Even Point: 14 jobs per month

D)) Funding Requirements:

Seeking $5,500 in startup funding, which will be used to cover initial costs and establish the business.

• Legal Documents: Business license, insurance, contracts.
• Sample Cleaning Checklist: Detailed checklist for standard and deep cleaning services.
• Client Testimonials: Positive reviews from early clients to build credibility.

This house cleaning business plan template outlines the key steps and strategies for launching and growing [Your Business Name], positioning it as a trusted and reliable cleaning service provider in [City/Region]. With a focus on quality, customer satisfaction, and eco-friendly practices, we aim to build a loyal client base and achieve sustainable growth.

Once you’ve used the cleaning business plan template above to start your company, it’s time to grow it fast. Start by breaking up with bad customers. See our article on how to grow a cleaning business for more tips.

Grow your company with cleaning business software

To grow, you need an efficient system to schedule cleanings, plan your routes so you don’t spend all your time driving from place to place, and create fast quotes and invoices. So — 

Use a cleaning business CRM like GorillaDesk to handle it all for you. GorillaDesk is a full-featured field service software tool to trim your workload, tame your schedule, and handle your invoicing.

GorillaDesk is the highest-rated cleaning company software on top review sites like Capterra for good reason. Our exemplary customer service chats with you in three minutes on average, and our interface is legendary for its ease of use and full-featured power. Call for a free demo today.

★★★★★ “Man am I so glad I went with GorillaDesk. Can’t wait to see what this year holds for our company after seeing what the program did for us last year.” -Tawndra F., Business Owner

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A Complete Guide to Revenue Operations

Table of Contents

Imagine trying to grow your business while everyone on your team pulls in different directions. Marketing generates leads that don’t quite match what sales needs, sales chases targets without a clear view of what’s coming down the pipeline, and customer success struggles to keep clients happy. This disconnection can lead to missed opportunities and lost revenue.

Revenue operations, or RevOps, is here to change that. It provides a unified, data-driven approach to streamline processes and scale revenue. According to Gartner, 75% of the highest-growth companies will deploy a RevOps model by 2025. It’s no wonder that the role of Chief Revenue Officer (CRO) or Head of Revenue Operations is now one of the fastest-growing positions .

If you want to boost your bottom line, revenue operations might just be your next big move. This article will explore revenue operations’ true purpose, highlight common pitfalls, and guide you on implementing it effectively, ensuring your business reaps the full benefits.

Key Takeaways

• Revenue operations bridges gaps between teams to drive sustainable revenue growth and achieve better business outcomes.
• It reduces friction on the customer journey to maximize lifetime value and retention.
• It drives consistent performance through standardized processes and clear metrics and KPIs.

What is Revenue Operations?

Revenue operations is a business function that aligns cross-functional teams—primarily sales, marketing, and customer success—toward a common goal of driving and accelerating revenue growth. Besides optimizing processes, it helps predict revenue more accurately and gives a clear view of how all revenue teams perform.

By breaking down silos, RevOps improves communication and provides teams with the tools, data, and insights they need to collaborate effectively and focus on shared goals. This, in turn, creates a seamless customer journey, from lead generation to closing deals.

How Does Revenue Operations Work?

Revenue operations starts with aligning sales, marketing, and customer success around common goals, encouraging collaboration. It then integrates data from various sources to provide visibility throughout the customer lifecycle, which helps teams make strategic decisions and forecast more accurately.

Revenue operations also connects existing systems and tools in the tech stack—such as CRM, marketing platforms, and analytics—to automate data exchange and coordinated actions across departments. As a result, sales reps gain access to a unified customer profile, ensuring that every interaction is informed and relevant. Marketing team delivers targeted content that aligns with the customer’s journey, avoiding irrelevant new sale offers, for instance, when an upsell is more appropriate. When the deal is closed, the customer success team is fully aware of what’s been promised so they can deliver exactly what the customer expects.

This alignment transforms fragmented efforts into a powerful, cohesive strategy, making it a game-changer for businesses looking to scale. It reduces customer frustration and enhances the overall experience, leading to higher satisfaction, loyalty, less customer churn, and, ultimately, more successful sales outcomes.

How Does Revenue Operations Differ from Sales Operations?

Although the terms are sometimes used synonymously, revenue operations and sales operations differ in their scope.

Sales ops concentrates on improving the sales team’s effectiveness. It focuses on key areas like deal management, territory planning, sales forecasting, CRM management, and training and development.

Meanwhile, RevOps takes a broader view, overseeing the entire customer journey, managing sales funnels, guiding go-to-market (GTM) execution, and enhancing the overall customer experience. This holistic approach ensures that all departments work together seamlessly toward shared revenue goals.

Benefits of Revenue Operations

RevOps can transform a disconnected organization into a cohesive, well-oiled machine. Here’s how RevOps enhances everything from revenue generation to adaptability.

1. Boost Revenue

It can determine new revenue streams by optimizing the customer journey from start to finish and beyond. This can help you acquire and retain more customers, ultimately increasing their lifetime value.

2. Improve Efficiency

RevOps breaks down silos and streamlines workflows across departments by implementing standardized processes. This can eliminate redundant data entry, reduce manual errors, and save countless hours each week. Furthermore, efficiency improves when you automate routine tasks, helping teams focus on what truly drives customer acquisition.

3. Increase Productivity

It isn’t just about efficiency—it’s about doing more with the same resources. B2B tech companies that implemented RevOps saw a 10% to 20% increase in sales productivity , showing how operational alignment can lead to significant gains in performance.

4. Adapt to Market Changes

What happens when there is a supply chain disruption or other market shift? RevOps equips companies with the agility to respond quickly. By realigning go-to-market strategies and keeping everyone informed, businesses can maintain customer trust and avoid significant revenue loss during critical periods.

5. Deliver a Seamless Customer Experience

It’s a common frustration: a prospect participates in a marketing campaign and shows interest in a product, only to speak with sales and find they have no idea who you are. This disconnect happens when systems aren’t integrated.

The RevOps team creates a consistent and connected customer journey, with everyone aligned and informed. When the right hand knows what the left is doing, customers experience a seamless interaction with higher satisfaction and retention rates. McKinsey emphasizes that companies with strong customer experience (CX) strategies, often supported by RevOps, achieve double the revenue growth of those lagging in CX .

6. Better Data Insights

RevOps unifies business data management so that all teams have more insight into customer behavior. This allows for targeted marketing campaigns and more impactful sales tactics. As a result, customers receive better service, no matter how or when they interact with your company and salesforce.

How to Implement Revenue Operations

Kicking off a RevOps implementation is no small undertaking. It is a significant project that requires time, investment, and careful planning. You will work with business leaders to manage expectations and nurture cross-functional collaboration at every stage.

Here’s a step-by-step guide to help you successfully implement RevOps in your organization:

1. Identify Your Goals and Objectives

The first step in implementing RevOps is clearly defining your goals and objectives. What do you want to achieve? Whether it’s increasing revenue, improving customer retention, or enhancing operational efficiency, having clear, measurable SMART goals will guide your RevOps strategy. For example, a company might work to improve cross-departmental collaboration in an effort to boost customer lifetime value by 20% over the next year.

2. Define Team Structure With Clear Roles and Responsibilities

Use your go-to-market process to identify any gaps in roles. You may need to redefine some existing roles or recruit new ones for your revenue operations team.

Team members often include:

• Chief Revenue Officer
• Revenue Operations Manager
• Sales Operations Manager
• Marketing Operations Manager
• Customer Success Manager
• Systems Operations Manager
• Product Manager

To make RevOps work, you’ll need a combination of skills. Strong analytical and problem-solving are essential for data-driven decision-making and resolving workflow issues. Meanwhile, communication and collaboration are key for aligning teams across sales, marketing, and customer success.

Besides that, you need technical proficiency with CRM systems and marketing automation tools, plus solid project management and organizational skills to handle multiple initiatives. Understanding sales processes and having strategic thinking skills are vital for long-term planning. Finally, a commitment to continuous learning helps you stay ahead.

3. Determine the Right Tech Stack

Based on your earlier assessments, decide on the technology stack that will serve as your single source of truth. Choose tools that integrate well and avoid fragmenting with tools that overlap functions and don’t communicate with each other. Integration and automation will provide all teams access to the same reliable data and workflows will be streamlined.

4. Invest in Support, Training, and Coaching

New strategies, technology, and processes need continuous nurturing and refinement. Provide ongoing support, answer questions, and ensure that everyone stays informed. For instance, a company could offer hands-on workshops, online tutorials, incentives, and regular Q&A sessions when implementing a new tool.

A r evenue enablement platform can be invaluable for streamlining this process. It centralizes resources, tracks progress, and provides personalized training to ensure that each team member is up to speed.

Designating “RevOps champions” within each department to address questions and provide guidance can further ease the transition. A feedback loop as part of overall revenue enablement also helps refine processes as issues arise, ensuring everyone is comfortable.

Guide: Aligning Sales Enablement and Revenue Operations

Common Challenges in Implementing Revenue Operations

RevOps sounds like a great investment, but it is not without its hurdles. However, you can overcome them with the right people, processes, technology, and data.

Some common challenges you might face include:

Lack of Executive Buy-in

Getting the necessary resources and alignment can be tricky without strong support from the top. Executives need to see the value of RevOps to back it up.

To overcome this, give them a clear roadmap, which should include:

• Expected benefits and ROI
• Step-by-step action plan with estimated completion dates
• Possible challenges and how you’ll address them
• Breakdown of your budget

Insufficient Resources

Sometimes, not having enough resources, such as budget, staff, or technology, can slow down your RevOps journey. Be sure your communication is solid and business leader buy-in is secure upfront. If you’re at a startup, take things slow. Demonstrate the value of RevOps through gradual changes, and then, as you build your case, request additional resources.

Siloed Data

One of the biggest obstacles to a successful RevOps implementation is data locked away in different departments. It’s hard to get the full picture and make informed decisions when data isn’t accessible to everyone. In that case, be sure to choose a CRM that can integrate seamlessly with the rest of your tech stack and all revenue-generating teams can access.

Resistance to Change

Change can be scary, and getting everyone on board with a new way of working isn’t always easy. Teams may be used to long-standing workflows and may feel that new processes will disrupt their efficiency. Changes in roles, responsibilities, and tools can also overwhelm employees, leading to frustration and resistance.

To address resistance to change, clearly explain RevOps’ goals and benefits, ensuring all team members understand how it aligns with your organization’s strategy. You should also lead by example, provide ongoing revenue enablement , support, and training on new processes and technologies, and adapt your system based on feedback and evolving circumstances.

When Does Revenue Operations Make Sense for My Business?

Implementing RevOps can be a game-changer, but it’s especially beneficial in certain scenarios. Here are some business models where RevOps makes the most sense:

• SaaS or subscription-based business: If your business relies on recurring revenue, like in SaaS or subscription models, RevOps helps ensure that every department is aligned to maximize customer lifetime value and renewals. The nature of these businesses requires continuous coordination to keep customers engaged and reduce customer churn.
• High-growth startup: Startups in a rapid growth phase often struggle with scaling their sales processes efficiently. RevOps brings structure and alignment to fast-growing companies, ensuring that your operations can keep up as your sales and customer base expand without becoming chaotic.
• Sizable or growing sales team: It’s easy for silos to form and for processes to become inconsistent when your sales team is growing. RevOps helps create standardized workflows, integrates customer data across teams, and ensures everyone is working toward the same revenue goals.
• Overwhelming tech stack: If you’re juggling multiple tools and technologies that don’t integrate well, leading to siloed data and communication problems, RevOps works to integrate your tools into a cohesive system. You’ll have a single source of truth, simplified workflows, and technology that supports your revenue goals rather than hindering them.
• Complex customer journeys: If your business deals with long, complex revenue cycles that involve multiple touchpoints, RevOps can help keep client engagement consistent and relevant. This reduces friction in the buyer’s journey and improves the overall experience, leading to higher conversion rates and customer satisfaction.

Unlock Sustainable Growth with Revenue Operations

relationships is a strategic advantage and essential for sustainable growth in today’s competitive market. Companies that successfully implement the RevOps function are seeing real-time revenue growth, faster sales cycle, improved customer satisfaction, and more streamlined operations. In fact, organizations that align their revenue efforts before and after the sale see 71% higher stock performance and 3x faster revenue growth than those that aren’t aligned. But remember, the goal is to reduce friction, not add to it.

If you’re looking to enhance your RevOps enablement and fully align your revenue teams, Highspot can help. Book a demo today !

The Highspot Team works to create and promote the Highspot sales enablement platform, which gives businesses a powerful sales advantage to engage in more relevant buyer conversations and achieve their revenue goals. Through AI-powered search, analytics, in-context training, guided selling, and 50+ integrations, the Highspot platform delivers enterprise-ready sales enablement in a modern design that sales reps and marketers love.

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8 revenue stream examples for your business

Eamonn Curley

The coronavirus pandemic has emphasized the need to diversify revenue streams. Having all your eggs in one basket and depending on one single revenue stream can be risky, especially in the current climate. While you already have your revenue stream, there are ways to identify new opportunities and diversify your income. 

If you can tap into different ways to generate revenue, you can keep your income flowing and put your business in a more secure position going forward. By understanding the revenue streams available, you can dive deep into your business to identify opportunities to make money.

In this article, we’re going to look at how you can target new customers, create new revenue streams and stay ahead of the competition. 

• What is a revenue stream? 
• The importance of revenue streams 
• How to choose the right type of revenue stream for your business 
• 8 revenue stream examples

What is a revenue stream? 

​​Revenue streams are sources where your business generates money. The sources of income vary depending on your type of business. A revenue stream is not a business model, but it does influence your business model and decisions. Here’s a breakdown of the difference between a business model, revenue stream, and revenue model: 

• Revenue stream – the source of your company’s income 
• Revenue model – the strategy of managing the revenue streams 
• Business models – the structure of the company including your revenue model and streams and how everything works together 

Often, when talking about revenue streams, these three terms are used a lot and it’s easy to confuse them. A business can have a single or multiple revenue streams, depending on the business model. When you’re looking at your revenue model, you’re diving deeper into elements like price and your value offering. Your business model takes everything into account, including your revenue streams and model. It’s a way of optimizing your business so that all elements work together to maximize profits. 

An example of a company that has multiple revenue streams is the apparel brand, Lululmeon. First, they have eCommerce and digital sales. But, they also sell wholesale products to health clubs, gyms, and fitness centers to increase brand image. Other streams of revenue include sales from temporary shop locations and showrooms. The brand has also branched out into the home fitness world with the Lululemon Mirror, after buying the fitness startup Mirror last year for $500 million.  

The importance of revenue streams 

Naturally, revenue streams are important because you need an income. It’s no surprise that revenue streams are essential, but they do more than just generate money for your business. You can use revenue streams as a way to evaluate performance across different areas of the business. For any business, revenue is a key performance indicator (KPI). 

By having a clear understanding of your revenue streams, you can track patterns and generate revenue projections across the business. If you can spot changes, trends, or dips in income, you can identify the cause and find out where you need to spend more time. Through a good understanding of the different types of revenue streams, you can identify opportunities to make more money. 

There is a clear need to diversify revenue streams to help reduce risk in an economic downturn. Advances in technology and a shift to digital transformation across most industries mean that there are new ways to diversify your current products and portfolio. From adding a subscription service to offering online workshops and training for customers, you can diversify revenue streams to target new customer segments.

How to choose the right type of revenue stream for your business 

As a startup, you may have to rely on one single source of revenue. But, the quicker you can diversify your revenue streams, the safer your business will be in the long run. Because if your one revenue stream dries up, your business could be in trouble. One of the biggest examples of a company that uses multiple revenue streams to drive growth is Amazon. The online retailer has eCommerce sales, Prime subscription, Amazon Music, AWS, and audible memberships. Of course, you don’t have to be a massive company like Amazon to develop multiple revenue streams. 

The best revenue streams for your business depend on your assets, who your customers are, and your current main source of income. With various types of revenue models and streams available, the right revenue streams can differ. At a high level, a company can generate revenue from transactional revenue from a one-off payment like sales or through recurring revenue like a subscription. 

Here are three factors to consider when choosing your revenue stream: 

• Value proposition – your revenue stream should connect with your value proposition. The value that your product or service delivers should align with your revenue streams. 
• The market – your customer base and market fit will determine your revenue streams. If you target individual customers, a subscription service would make sense. But if you’re a software company, then licensing your service could be more suitable. 
• Competitors – analyze how your competition generates revenue. You can study their strategies, mistakes, and wins to help you determine your own revenue streams. 

A useful tool to help you understand your business model is the Business Model Canvas (BMC). It helps you to visualize and assess your business model and capture value. A BMC includes elements like value proposition, revenue streams, customer segments, and channels to connect the building blocks of your business. Every value proposition should connect with a revenue stream and customer segment. By evaluating your business model as a whole, you can determine the most suitable revenue streams for your business. 

8 revenue stream examples 

There are several ways businesses can make money. Typically, there are pros and cons to each type of revenue stream. Depending on your value proposition and customers, one revenue stream may be more suitable for you than another. Here are eight examples of revenue streams that represent broad categories of ways your business can make money. 

1. Asset sale 

Asset sale or selling assets is one of the most mainstream ways that businesses make money across multiple industries. Your business sells something and then your customers own it. An asset sale also occurs when a business owner sells their company. Usually, it’s a one-off transaction sale. Once the sale is complete, typically, a customer can use the product, resell or even destroy it as they own the asset. The sale of a physical product generates revenue for the business. 

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2. usage fees .

Usage fees are how much a company charges to use its service. The customer pays you based on the amount they use the service. For example, a phone company charges customers for a certain number of minutes and data. Typically, customers pay a monthly fee to access phone service. Another good example is a car rental. The customer pays a car rental company to rent a car for how many miles they travel. A postal carrier charges you to deliver a parcel from one location to another. Essentially, with usage fees, the more customers use a service, the more they pay. 

3. Leasing and renting 

This revenue stream is built around customers using a temporary item for a fixed amount of time. For this, you’re giving customers exclusive use of an asset for a specific amount of time. Examples of businesses that use this revenue stream are Airbnb or car rental companies. 

Another example of this revenue stream is Rent the Runway, which allows members to rent designer clothes for a specific period of time. The designer rental brand offers both a monthly subscription membership and one-off rentals to customers. Memberships start at $135/month and give users access to up to eight items per month. You can see how they are tapping into multiple revenue streams to develop both recurring revenue and transaction revenue from one-off rental purchases. 

4. Advertising fees 

Advertising fees are a revenue stream where you make money by charging to showcase a product, service, or brand on your online or offline company assets. Essentially anywhere you charge a fee to advertise and promote another business. An advertising-based revenue stream is often used by businesses that have websites that attract a lot of traffic. You generate revenue by selling ad space. 

The benefit of this is that if you have a high-traffic space, online or offline, you can monetize it relatively instantly. The downside is that adverts are everywhere nowadays and you want to consider if you want to distract your customers with an advert. Examples of advertising revenue include incorporating Google Adsense on your website or adverts on your podcast or YouTube channel. 

5. Subscription fees 

Many businesses utilize a subscription-based revenue stream. Revenue is generated through customers paying for ongoing access to a service. Examples of companies that use subscription fees are Netflix, Shopify, Adobe as well as gym memberships, and fitness studios.

 In general, these types of revenue streams tend to be lower monthly amounts so customers continue to pay as it’s something you can easily forget about. As a subscription, customers pay a recurring fee to access a service. Other businesses that use this revenue stream are subscription boxes and some eCommerce companies. 

6. Licensing 

Licensing usually involves one-time customer payments that give a single user or group of users access to a software product. While the owner keeps the copyright, the third party can use the content for free. In the last few years, we’ve seen some major players move away from the licensing model to a subscription-based format. 

Companies like Adobe and Microsoft have moved a lot of products to subscription services. But licensing is still a popular option in photography, music, and video games where customers pay to use and access content, while the owner still retains the ownership rights. 

7. Brokerage fees 

When companies match people with a certain service, they can receive a brokerage fee. In a traditional sense, real estate agents and real estate brokers match people with property and receive a brokerage fee. Other examples of businesses that take brokerage fees are Uber, Booking.com, and Airbnb. They all take a fee matching customers to service. 

The benefit of this revenue stream is that you don’t have to deliver the product or service, you simply match the customer with the right business or service. The downside is that this sort of revenue stream really only applies to certain businesses and it takes a lot of time and effort to set up. Any business that acts as an intermediary takes a percentage fee for its services. 

8. Consulting or services 

The people on your team are also an asset. An asset doesn’t have to be a physical item. You can leverage your team in the form of consulting or services. Examples of this include financial advisors and marketing agencies or consultants. These types of businesses can include both retainer and project work. 

Retainer work is similar to a subscription setup where customers would pay a certain amount each month for a specific service. Offering services or consulting is a good way to create a revenue stream without creating brand new assets or developing a new product. 

In summary 

The right revenue stream for your business depends on your value proposition, customers, and your main source of income. While some revenue streams may not be relevant for your business, others could be opportunities to diversify your income and increase future stability. 

A great additional revenue stream is one that doesn’t add too much complexity to your current business model. By evaluating your current assets and surveying your existing customers, you can look to identify a new business revenue stream to expand your company. 

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