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

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

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

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

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

Let’s get started.

What Do You Need A Business Plan For?

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

1. Secure Funds

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

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

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

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

2. Monitor Business Growth

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

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

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

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

3. Measure Business Success

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

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

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

4. Document Your Marketing Strategies

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

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

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

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

How to Write a Business Plan Step-by-Step

1. create your executive summary.

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

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

A good executive summary should do the following:

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

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

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

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

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

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

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

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

2. Add Your Company Overview

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

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

Your company overview should contain the following:

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

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

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

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

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

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

• Mission Statement

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

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

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

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

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

Business Objectives

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

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

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

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

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

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

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

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

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

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

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

Market Analysis

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

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

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

• Market Research

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

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

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

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

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

How to Quantify Your Target Market

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

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

What Does a Good Market Analysis Entail?

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

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

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

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

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

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

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

Competitive Analysis

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

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

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

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

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

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

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

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

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

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

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

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

Direct vs Indirect Competition

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

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

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

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

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

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

Factors that Differentiate Your Business from the Competition

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

1. Cost Leadership

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

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

2. Product Differentiation

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

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

3. Market Segmentation

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

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

4. Define Your Business and Management Structure

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

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

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

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

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

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

Management Team

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

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

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

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

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

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

Key Questions to Answer When Structuring Your Management Team

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

Additional Tips for Writing the Management Structure Section

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

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

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

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

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

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

Organizational Chart

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

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

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

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

5. Describe Your Product and Service Offering

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Avoid Technical Descriptions and Industry Buzzwords

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

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

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

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

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

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

3. Long or Short Products or Services Section

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

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

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

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

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

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

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

4. Describe Your Relationships with Vendors or Suppliers

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

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

5. Your Primary Goal Is to Convince Your Readers

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

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

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

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

Key Questions to Answer When Writing your Products and Services Section

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

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

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

6. Show and Explain Your Marketing and Sales Plan

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

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

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

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

Outline Your Business’ Unique Selling Proposition (USP)

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

Target Market and Target Audience

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

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

Creating a Smart Marketing and Sales Plan

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

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

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

Your Positioning Statement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Basic Rules to Follow When Pricing Your Offering

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

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

Pricing Strategy

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

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

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

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

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

Advertising

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

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

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

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

Public Relations

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

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

Content Marketing

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

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

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

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

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

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

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

Social Media

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

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

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

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

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

Strategic Alliances

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

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

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

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

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

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

2. Evaluate Your Competition

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

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

These questions can help you know your competition.

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

3. Consider Your Brand

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

4. Focus on Benefits

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

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

5. Focus on Differentiation

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

Key Questions to Answer When Writing Your Marketing and Sales Plan

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

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

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

7. Clearly Show Your Funding Request

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

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

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

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

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

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

Funding Request: Debt or Equity?

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

Case for Equity

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

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

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

Case for Debt

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

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

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

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

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

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

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

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

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

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

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

8. Detail Your Financial Plan, Metrics, and Projections

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

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

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

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

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

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

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

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

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

Use Graphs and Charts

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

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

Address the Risk Factors and Show Realistic Financial Projections

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

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

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

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

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

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

1. Sales Forecast

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

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

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

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

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

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

2. Personnel Plan

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

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

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

3. Income Statement

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

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

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

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

4. Cash Flow Statement

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

5. Balance Sheet

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

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

6. Exit Strategy

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

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

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

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

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

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

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

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

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

9. Add an Appendix to Your Business Plan

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

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

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

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

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

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

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

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

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

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

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

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

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

Tips and Strategies for Writing a Convincing Business Plan

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

1. Know Your Audience

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

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

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

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

2. Get Inspiration from People

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

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

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

3. Avoid Being Over Optimistic

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

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

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

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

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

4. Keep it Simple and Short

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

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

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

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

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

5. Make an Outline and Follow Through

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

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

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

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

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

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

6. Ask a Professional to Proofread

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

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

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

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

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

1. hubspot's one-page business plan.

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

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

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

2. Bplan’s Free Business Plan Template

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

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

3. HubSpot's Downloadable Business Plan Template

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

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

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

4. Business Plan by My Own Business Institute

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

The comprehensive template consists of a whopping 15 sections.

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

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

5. Score's Business Plan Template for Startups

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

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

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

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

6. Minimalist Architecture Business Plan Template by Venngage

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

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

7. Small Business Administration Free Business Plan Template

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

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

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

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

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

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

9. PandaDoc’s Free Business Plan Template

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

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

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

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

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

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

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

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

Alternatives to the Traditional Business Plan

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

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

Business Model Canvas (BMC)

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

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

Segments of the Business Model Canvas

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

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

Lean Canvas

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

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

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

Startup Pitch Deck

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

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

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

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

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

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

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

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

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

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

Business Plan FAQ

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

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

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

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

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

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

Exlore Further

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

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

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

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How to Write a Business Plan for a Small Business

Last Updated: August 1, 2024 Approved

This article was co-authored by Helena Ronis . Helena Ronis is Co-founder and CEO of AllFactors, a unified web analytics software to drive company's marketing and business growth. She has worked in product and marketing in the tech industry for over 8 years, and studied Digital Marketing & Analytics at the MIT Sloan School of Management Executive Program. There are 9 references cited in this article, which can be found at the bottom of the page. wikiHow marks an article as reader-approved once it receives enough positive feedback. This article received 37 testimonials and 89% of readers who voted found it helpful, earning it our reader-approved status. This article has been viewed 1,028,266 times.

Preparing To Write Your Business Plan

• The mini plan. This is a shorter plan (likely 10 pages or less), and is useful for determining potential interest in your business, further exploring a concept, or starting point to a full plan. This is a great starting point. [2] X Research source
• The working plan. This can be considered the full version of the miniplan, and its main purpose is to outline, without emphasis on appearance, precisely how to build and operate the business. This is the plan that the business owner would refer to regularly as the business moves towards its objectives. [3] X Research source
• The presentation plan. The presentation plan is meant for individuals other than those owning and operating the business. This could include potential investors or bankers. It is essentially the working plan, but with an emphasis on sleek, marketable presentation, and proper business language and terminology. Whereas the working plan is made for reference by the owner, the presentation needs to be written with investors, bankers, and the public in mind. [4] X Research source

• The business concept is the first broad element of a business plan. The focus here is on the description of your business, its market, its products, and its organizational structure and management.
• The market analysis is the second major element of a business plan. Your business will operate within a particular marketplace, and it is important to understand customer demographics, preferences, needs, buying behavior, as well as the competition.
• The financial analysis is the third component of the business plan. If your business is new, this will include projected cash flows, capital expenditures, and the balance sheet. It will also include forecasts as to when the business will break-even.

• The above sections are the broad components of the business plan. These sections in turn break down into the following seven sections, which we will, in order, focus on writing next: Company description, market analysis, organization structure and management, products and services, marketing and sales, and request for funding. [6] X Research source

Writing Your Business Plan

• While the first section is technically known as the "Executive Summary" (which gives an official overview of your business), it is typically written last since all the information from the business plan is required to create it.

• For example, if your business is a small coffee shop, your description may read something like, "Joe's coffee shop is a small, downtown-based establishment focused on serving premium brewed coffee and fresh baking in a relaxed, contemporary environment. Joe's coffee is located one block from the local University, and aims to provide a comfortable environment for students, professors, and downtown employees to study, socialize, or simply relax between classes or meetings. By focusing on excellent ambiance, close location, premium products, and superb customer service, Joe's coffee will differentiate itself from its peers."

• Include information about your target market. You should be able to answer questions like, who is your target market? What are their needs and preferences? How old are they, and where are they located?
• Make sure to include a competitive analysis that provides research and information on immediate competitors. List your main competitors strengths and weaknesses and the potential impact on your business. This section is extremely important, as it outlines how your business will gain market share by capitalizing on competitor's weaknesses.

• Talk about your team's expertise and how decisions will be made. If the owners and managers and have extensive backgrounds in the industry or a track record of success, highlight it.
• If you have an organizational chart, include it.

• Address any questions about your product's life cycle. Do you currently have or anticipate developing a prototype, or filing for a patent or copyright? Note all planned activities.
• For example, if you are writing a plan for a coffee shop, you would include a detailed menu that would outline all your products. Before writing the menu, you would include a short summary indicating why your particular menu sets your business apart from others. You may state, for example, "Our coffee shop will provide five different types of beverages, including coffee, teas, smoothies, soda's, and hot chocolates. Our wide variety will be a key competitive advantage as we can provide a diversity of product offerings that our main competitors are currently not offering".

• Be clear in defining your sales strategy. Will you use sales representatives, billboard advertising, pamphlet distribution, social media marketing, or all of the above?

• Gather financial statements to support your funding request. To accurately complete this step, in some cases it might be necessary to hire an accountant, lawyer, or other professional.
• Financial statements should include all historical (if you are an existing business) or projected financial data, including forecast statements, balance sheets, cash-flow statements, profit and loss statements, and expenditure budgets. For one full year, provide monthly and quarterly statements. Each year after that, yearly statements. These documents will be placed in the Appendix Section of your business plan.
• Include projected cash flows for at least 6 years or until stable growth rates are achieved and if possible, a valuation calculation based on discounted cash flows.

• Existing businesses should include historical information about the company. When was the business first conceptualized? What are some notable growth benchmarks?
• Start-ups will focus more on industry analysis and their funding goal. Mention the company's corporate structure, its funding requirement, and if you will provide equity to investors.
• Existing businesses and start-ups should highlight any major achievements, contracts, current or potential clients and summarize future plans.

Finalizing Your Business Plan

• This should include financial statements, credit reports, business licenses or permits, legal documents and contracts (to demonstrate to investors that revenue forecasts are secured by concrete business relationships), and bios/resumes for key personnel.
• Elaborate risk factors. There should be a section clearly outlining the risk factors affecting your venture and your mitigation plans. This also indicates to the reader how well prepared you are for contingencies.

• Rework or completely rewrite content to ensure it works from the perspective of the reader. This is especially true if you are creating a "presentation plan".
• Read your document aloud. This allows you to detect if any sentences do not flow together well, and it also makes any grammatical mistakes more obvious.
• Make a copy and give it to a trusted friend or colleague to proofread and provide feedback. You can go online and print a Non-Disclosure Agreement (NDA) for them to sign to help protect your business idea.

• Your cover page should include: The words "Business Plan" centered in large bold font, along with your company name, company logo, and contact information. Simplicity is key.

Help Writing a Business Plan

Expert Q&A

• In addition to this guide, you can follow along with the SBA's Create A Business Plan [14] X Trustworthy Source U.S. Small Business Administration U.S. government agency focused on supporting small businesses Go to source for more in-depth step-by-step instructions. Thanks Helpful 0 Not Helpful 0
• Useful small business resources are available through city and state government agencies. Check with your local Chamber of Commerce, or visit the Small Business Administration (SBA) website at: www.sba.gov. Thanks Helpful 2 Not Helpful 0
• In the case of a startup, you should use a business model canvas according to the Lean Startup method. Thanks Helpful 0 Not Helpful 0

You Might Also Like

• ↑ Helena Ronis. Business Advisor. Expert Interview. 23 January 2019.
• ↑ http://www.entrepreneur.com/article/38290#sec2
• ↑ https://www.indeed.com/career-advice/career-development/parts-to-a-business-plan
• ↑ https://www.cdfifund.gov/sites/cdfi/files/documents/business-plan-outline.pdf
• ↑ https://openstax.org/books/entrepreneurship/pages/11-4-the-business-plan
• ↑ https://www.business.qld.gov.au/running-business/marketing-sales/marketing/strategy-planning/writing-strategy-plan
• ↑ https://www.entrepreneur.com/starting-a-business/first-steps-writing-the-executive-summary-of-your-business/241071
• ↑ https://writingcenter.unc.edu/tips-and-tools/editing-and-proofreading/
• ↑ Create A Business Plan

About This Article

To write a business plan for a small business, start by writing an executive summary that briefly outlines your business. Follow that with a company description that explains your business in more detail. You'll also want to include sections on your target customers, how your business will be structured, and what products or services you will offer. Finally, conclude your business plan with a section on your marketing strategy and also a funding request for potential investors. For help writing each section of your business plan, read the article! Did this summary help you? Yes No

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How to Write a Startup Business Plan (10 Effective Steps)

Learn how to create an effective business plan in 10 easy steps and discover the transformative power of mentorship to elevate your startup's strategy.

Robin Waite

5 minute read

Short answer

What should an effective business plan include?

An effective business plan should include the following elements:

• Executive summary
• Company description
• Market analysis
• Your products or services
• Marketing and sales strategies
• Organization and management
• Financial projections
• Funding requirements
• Risk assessment
• Conclusion and Call to Action

You need a strategic business plan to successfully navigate the startup world

Diving into the startup world without a clear plan is like setting sail without a compass ; you might drift aimlessly or even crash.

A solid business plan isn't just a piece of paper—it's your roadmap to success. It attracts the right investors, guides your decisions, and sets you on a clear path to victory.

In this article, I’ll walk you through 10 essential steps to craft that perfect plan. Plus, I’ll touch on the invaluable insights a business mentor can offer.

So, if you want to avoid common pitfalls and boost your chances of success, keep reading. Your startup's future might just depend on it.

Step 1: Executive summary

Think of the executive summary as the elevator pitch for your startup. It's a quick snapshot that captures the heart of your business idea, mission, and goals.

In this brief section, make sure to highlight who your target audience is, what sets you apart in the market, and your unique selling points.

And don't forget to give a glimpse of your financial outlook and any funding needs—it sets the stage for the details that follow.

Here's an example of an executive summary slide:

Step 2: Company description

Here's where you tell your startup's story. It's not just a list of facts or a timeline. It's about painting a picture that connects with your readers.

Clearly outline your vision, mission, and the values that drive you. Share key milestones you've hit and where you currently stand in your business journey. This section gives depth to your startup, showing both where you've been and where you're headed.

Here's an example of a company introduction slide:

Step 3: Market analysis

To thrive, you've got to know the lay of the land. That's where market analysis comes in. Start by zeroing in on your target audience and truly understanding what they're looking for.

Dive deep into industry trends, the overall market size, and where it's headed. And don't just know your competitors—understand what makes you stand out from the crowd.

Here's what a market analysis slide should look like:

Step 4: Products or services

Here's your chance to shine a spotlight on what you're offering. What problems are your products or services solving? What makes them special? Whether it's a unique feature, a patent, or some groundbreaking tech, make it clear why your offerings are game-changers.

Here's an example of a solution slide:

Step 5: Marketing and sales strategies

In today's crowded market, standing out is crucial. This step is all about your game plan to grab attention and win customers. Detail how you'll sell, where you'll promote, and how you'll get your products or services into the hands of those who need them.

Here's what a go-to-market slide should look like:

Step 6: Organization and management

Behind every great startup is a team of passionate people. Here, introduce your squad. Highlight their expertise, define their roles, and show the structure that keeps everything running smoothly.

If you've got advisors or partners in your corner, mention them—it shows you're serious about growing in every direction.

Here’s a full guide on how to create the perfect team slide for your startup . And here's a great example of one:

Step 7: Financial projections

Numbers don't lie, and in this step, they sketch out your startup's potential future. Dive into the financials, projecting where you see your revenue, expenses, and profits heading over the next few years.

By breaking down your initial costs and where you expect to get your funding, you give a clear view of how you're setting up for success.

Here's an example of a financials slide:

Step 8: Funding requirements

Every startup needs fuel to get off the ground, and that fuel is capital. Here, be clear about how much you need to launch and keep things running.

Break down where every dollar will go, whether that's marketing, product development, or daily operations.

If you've already got some backers or have your eye on potential investors, mention them—it adds weight to your pitch.

Here's what a use of funds slide should look like:

Step 9: Risk assessment

Every venture has its bumps in the road. Here, show that you're not just aware of potential challenges but that you've got a plan to tackle them. In assessing risks, it's crucial to choose the right business structure at the beginning. For examples, the formation of an LLC as a strategic measure not only protects your personal assets from business liabilities but also mitigates financial risks for stakeholders. By laying out your strategies for handling risks, you prove you're not just optimistic—you're realistic and ready.

Here's an example of a risk assessment slide:

Step 10: Conclusion and Call to Action

Time to wrap it up and rally your readers. Summarize the key points of your plan, driving home why your startup is a solid bet.

But remember, this isn't just a conclusion—it's a launchpad. Encourage readers to get involved, whether that's investing, partnering, or simply supporting your vision. Let's get this journey started!

And, if you need more information, check out our comprehensive guide on how to write a business plan .

Here's an example of a next step slide:

Seek guidance from a business mentor

While a solid business plan is your startup's compass, adding guidance from a business mentor to your journey is like having a seasoned captain on board.

They bring a treasure trove of insights, lessons from past experiences, and a network of industry contacts. Their tailored advice doesn't just polish your plan—it also boosts your confidence and resilience, two must-haves for the unpredictable startup seas.

By embracing mentorship, you're signaling that you're all in on growth, ready to soak up wisdom and accelerate your path to success.

Why is a business plan crucial for startups?

Think of a business plan as your startup's GPS. It helps you navigate the twists and turns, pointing out both the challenges and the golden opportunities ahead. It's your master blueprint, detailing everything from your big-picture goals to your financial forecasts .

What role does a business mentor play in this process?

A business mentor serves as a seasoned guide in the startup journey. Drawing from their wealth of experience, they offer invaluable insights, helping startups navigate challenges and optimize their strategies. Their guidance is instrumental in making informed, strategic decisions.

How can a mentor enhance my market analysis?

Mentors have their finger on the pulse of the industry. They can help you get a clearer picture of market trends, spot who you're really up against, and gauge where the opportunities lie. With their insights, your market analysis won't just be good—it'll be top-notch.

Can a mentor assist in financial projections?

Absolutely. If your mentor has a financial background, they can be a goldmine. They'll help you craft projections that are both ambitious and grounded in reality. From revenue estimates to potential expenses, they'll ensure your numbers make sense.

How can you incorporate mentorship into the business plan?

Consider adding a dedicated section in your business plan to highlight the mentorship aspect. By detailing the insights and guidance you've received, or intend to seek, you underscore your commitment to informed growth. This proactive approach can resonate well with potential investors and stakeholders.

Business plan templates

Starting your business plan can feel like staring at a blank canvas—it's full of potential, but where do you begin? That's where interactive business plan templates come into play.

These templates serve as a structured guide, ensuring you don't miss any crucial details while allowing for flexibility and customization. They're designed to streamline the process, making it easier to organize your thoughts and present your vision in a coherent manner.

Ready to dive in? Grab a template from the library below and give your business plan a head start.

Robin Waite is a business coach based in the UK, bestselling author, and also regular business speaker. Robin's Fearless Business Accelerator covers pricing, productising services, and sales for coaches, consultants, and freelancers. Robin's passion is content marketing and blogging and he enjoys finding creative ways to make complex business topics simple for his readers.

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Writing a Good Business Plan: the Ultimate Guide for Small Businesses 

By: Tatyana Parham 

Whether you're a startup company newly developing tools for your business, or you're a seasoned business owner seeking loans or investments, writing a good business plan is a fundamental part of becoming a well-established company. A strong small business plan provides direction for your company's future, helps you fully develop your business concept, and lays out clear objectives to grow your business from a marketing, financial, and operational standpoint for the next 3-5 years. 

Essentially, a business plan is a living document that grows with your business, and describes your core business activities, objectives, and strategies to achieve your goals. This resource is typically 15-20 pages, and should be reviewed and updated periodically to keep you on track with your goals. Reviewing your business plan is a great opportunity to see how your business has evolved, and can enable you to align your objectives to your company's most pressing interests in real-time. Successful business plans provide an industry overview, outlining how your business differentiates from potential competitors, as well as documenting your financial performance and operational strategy. Most importantly, writing a simple business plan can attract potential investors before your company has established a proven track record, showing that you have a fully vetted business idea. Click here to watch a webinar that provides extra guidance for writing a business plan for investors. 

Across the board, a good business plan is the best internal resource for business executives to identify core objectives and remain competitive in the market landscape. It can be one of the most important tools for small business owners that want to self-manage a startup before obtaining financial resources to hire additional accounting or strategic support. Although the length and content of the business plan may vary depending on the business, there are generally two types of business plans: traditional and lean startup business plans. Traditional business plans, which are most common, are much more detailed and tend to require more work. Lean business plans provide a less detailed snapshot of your company's performance and objectives, and the executives are typically expected to be able to provide more information to investors upon request. 

Here, we detail some common elements to traditionally include while writing a good business plan for your company's overall success. 

Executive Summary 

The executive summary is the first page of your business plan, and it provides a quick overview of the company, including the mission and vision statements, location, a brief description of your products and services, and key information such as ownership structure. Think of this page as your business's elevator pitch - who are you, what do you provide, and what do you want to achieve? In addition, you can include an objective statement, which clearly identifies your company's goals and strategies to achieve them. This is where you can explain a clear need for funding, how financing will help your business grow, and what you intend to do with the expected funds. 

Company Description 

Your company description provides a more granular look into your small business’s technical information. This may include important information such as registered name and EIN, address of physical locations, key players such as owners, leadership, or Board of Directors, and a brief history of the company. 

Products and Services

What products and/or services do your company provide to its target customers, and how do they solve a specific problem or fulfill a specific need? Provide an outline of your company’s general products and service offerings, including your pricing model, consumer benefits, and your sales and distribution strategy. You can also include supplemental information about your products here, such as production and manufacturing, and any information about current or pending trademarks or patents for proprietary technologies associated with your product. 

Market Analysis 

An effective market analysis section provides an understanding of the industry and target market, as well as a look at different personas of your target consumers - who they are, what they need, and how you can help. This is a great section to include your S.W.O.T. Analysis, highlighting your company’s strengths and weaknesses, and your market placement amongst the competition. 

Marketing Strategy 

Once you provide a brief market analysis, you are able to describe your company’s plans to attract and retain a substantial consumer base. Your marketing strategy typically outlines a thorough distribution channel, as well as potential advertising and media campaigns that can be executed separately to reach each of your business’s goals. Your marketing strategy can also include a snapshot of your branding portfolio, including key messaging and differentiators. 

Financial Analysis 

Even if your business isn’t mature enough to have robust financials, it is critical to include a section highlighting your business’s financial performance and projections in order to attract potential lenders and investors. For established businesses, be sure to provide income or profit-and-loss statements, a balance sheet detailing your assets and liabilities, and a cash flow statement to show how much money is coming into and out of your company. Also, this is where you include ratios that showcase the financial health of your company, such as the net profit margin, current ratio, and accounts receivables per year. 

For both established companies and startups, it is ideal to include future financial projections that can outline how your business will generate enough profits to repay potential loans, or how you can earn a considerate return for investors. Including monthly or quarterly sales statements can be sufficient enough to position your company to be capable of financing. You can provide full financial statements in the Appendix for reference. 

Appendix  

The appendix serves as a hub for any supplemental documents that may support the content of your business plan. This includes, but is not limited to, financial statements, bank statements, licenses, equipment and property leases, permits, patents, receipts, contracts, and personal and business credit history. These documents are always useful to have on-hand, just in case a potential lender requests supporting information. 

Further Tips and Resources

By including the most fundamental information in your business plan, future investors and lenders will be more attracted to your company and interested in your objectives. Make sure to keep your plan concise - including only the most necessary information and documents that will support your path to funding. Also double-check your sales estimates and projections, ensuring not to over-reach expected outcomes, which can severely hurt your chances of loan approval. Finally, once you’ve finished creating your business plan, proofread the entire document before hand-off. Prospective investors and lenders may be turned off by spelling, punctuation, and grammatical errors. If necessary, hire a professional writer or copyeditor to finalize a polished and professional document. 

Writing a good business plan may seem overwhelming for any small business owner at any stage of the business life cycle. A no-cost Business Advisor can be a vital resource for writing a simple business plan, as well as providing assistance in several other areas to help your business succeed. 

Click here   to find your local SBDC and get matched with a small business advisor today. 

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How to start a business in 10 easy steps – from set up to launch.

If you buy something through our links, we may earn money from our affiliate partners. Learn more .

Wondering how to start a business? Starting your own business can be a rewarding endeavor, requiring careful planning, dedication, and a strategic approach from the beginning. If you’re interested in business ownership but aren’t sure where to start, this guide has you covered.

Refer to the Table of Contents to navigate through the key steps and strategies for starting your business.

Table of Contents

How to Start a Business

Though every business start journey is different, there are several steps that apply to most entrepreneurs, from finding your business niche to marketing your products and services. The business start process involves choosing a viable idea, market analysis, and securing financing. Following our detailed steps to start a business will ensure you cover all essential aspects, from legal registration to market entry, providing a clear roadmap for launching your venture.

We’ve laid out this entire to do list/ startup checklist in the 10 steps below!

1. Brainstorm to Find the Right Business Idea to Begin

Before starting a business, it’s important to have a strong business idea. A successful business idea should be unique and innovative, and the concept should provide value to potential customers.

Some business owners start something that’s never been done before, while others venture into an existing industry and simply find one or two ways to stand out. Buying into a franchise system, or franchising can streamline the startup process by providing a ready-made business model and support network (Check out our franchise guide for more on selecting the right options). However, if you come up with something truly unique, consider patenting an idea to protect your business.

As you narrow down your business concept, here are some qualities to prioritize:

• Simple and clear – A good business concept should be easy to understand and explain to others.
• Unique – A good business concept should be different from what is already available in the market.
• Scalable – A good business concept should have the potential to grow and expand over time.
• Profitable – A good business concept should be able to generate enough revenue to cover costs and make a profit.
• Sustainable – A good business concept should be able to operate over the long term without running out of resources.

Popular Types of Business Startups to Consider

If you need inspiration to kick off your new business venture, here are some popular business ideas to consider:

• E-commerce Store – An e-commerce store is an online platform that allows businesses to sell products or services to customers over the internet. E-commerce stores can be created for various types of businesses and niches, and they can be set up on platforms like Shopify or WooCommerce. Online stores can be run from anywhere in the world, making them a great option for entrepreneurs looking to work remotely.
• Freelance Service – Freelance services offer specialized skills and expertise to clients on a project basis. Freelancers work independently and can offer services such as writing, graphic design, programming, or photography. Freelance services are becoming increasingly popular due to the growth of the gig economy and remote work opportunities.
• Food Truck – A food truck is a mobile food business that can sell various types of food. These trucks can be found at festivals, markets, and street corners, and can offer a range of cuisines from fast food to gourmet fare. A food truck can be a great business opportunity for entrepreneurs who love cooking and want to bring their cuisine to the masses.
• Home-based Daycare – A home-based daycare provides childcare services in a home setting. This type of business can be ideal for stay-at-home parents or caregivers who love working with children. Daycare providers must comply with state regulations and requirements and ensure that they have appropriate insurance coverage.
• Personal Trainer – Personal trainers provide fitness coaching and training services to clients. Personal trainers can work with individuals or groups and may specialize in areas like weight loss, strength training, or endurance training. This type of business can be started with minimal equipment and can be operated from a home gym or a rented space.
• Virtual Assistant – A virtual assistant offers administrative and support services to businesses and entrepreneurs remotely, including tasks such as scheduling, customer support, bookkeeping, email management, social media management, and more.
• Bed and Breakfast – A bed and breakfast provides lodging and breakfast to guests in a home setting. Bed and breakfasts can offer a more intimate and personalized experience compared to traditional hotels and can be located in urban or rural areas. This type of business can be ideal for individuals who enjoy hospitality and have a spare room or two in their homes.
• Pet Grooming – A pet grooming business offers grooming and care services for pets. Grooming services can include bathing, nail trimming, hair cutting, and more. This type of business can be ideal for individuals who love animals and want to work with them on a daily basis.
• Cleaning service – A cleaning service provides the cleaning and organizing services to homes and businesses. This type of business can be operated solo or with a team and can specialize in residential or commercial cleaning. Cleaning services require little overhead costs, making them an ideal option for those looking to start a business with low startup costs.
• Event Planning – Event planning involves helping clients plan and execute events. Event planners can work with clients to plan weddings, conferences, parties, and other special occasions. This type of business requires strong organizational and communication skills, as well as attention to detail.
• Consulting – A consultant offers expertise and advice to businesses and individuals. Consultants can specialize in various areas including marketing, finance, human resources, operations, or economic development. This type of business can be ideal for individuals with years of experience in a particular field and who want to help others succeed.
• Food Delivery – A food delivery business delivers food to customers who order online or via phone. Food delivery services can be offered for various types of cuisine, including fast food, pizza, Chinese food, and more. This type of business can be started with minimal startup costs, as delivery drivers can use their own vehicles and equipment.
• Social Media Management – Social media management involves managing businesses’ social media accounts. Social media managers can create and publish content, engage with followers, and analyze performance metrics to improve social media strategies. This type of business can be ideal for individuals who are skilled in social media marketing and have a strong understanding of different social media platforms.
• Tutoring – Tutoring involves offering one-on-one educational services to students. Tutors can specialize in various subjects, including math, science, language, and test preparation. Tutoring services can be offered in-person or online, making it a flexible business opportunity for individuals who enjoy teaching.
• Graphic Design – Graphic designers create visual designs for businesses and individuals, helping to establish a strong brand identity through branding, web design, print design, and more. This type of business can be ideal for individuals with strong creativity and design skills who enjoy working on a variety of projects.
• Landscaping – Landscaping involves providing landscaping and gardening services to homeowners and businesses. Landscapers can offer services such as lawn care, garden design, tree trimming, and more. This type of business can be ideal for individuals who enjoy working outdoors and have experience in gardening and landscaping.
• Mobile Car Detailing – A mobile car detailing business provides car cleaning and detailing services at clients’ locations. Mobile car detailers can offer services such as washing, waxing, and interior cleaning. This type of business can be started with minimal equipment and can be operated from a home garage or rented space.
• Personal Shopping – Personal shoppers offer shopping services to individuals and businesses. Personal shoppers can help clients find the perfect outfit for a special occasion, or they can help businesses source products and supplies. This type of business can be ideal for individuals with a passion for fashion and shopping.
• Subscription Box – A subscription box business sends monthly boxes of curated items to subscribers. Subscription boxes can include a variety of products, such as beauty supplies, food, clothing, or pet products. This type of business can be ideal for individuals who enjoy sourcing and curating unique products.
• Web Development – Web developers design and develop websites for businesses and individuals. Web developers can specialize in front-end or back-end development, or they can offer full-stack development services. This type of business can be ideal for individuals with strong technical skills and a passion for web design and development.
• Drop Shipping – This business model allows you to sell products without needing to hold inventory. With this method, you partner with suppliers who handle the inventory and shipping process while you focus on marketing and customer acquisition. If you want to learn how to start dropshipping, check out our comprehensive guide on “ How to Start Dropshipping ,” which provides step-by-step instructions on setting up and running a successful dropshipping business.

This is but a small sample of what is available out there, and remember you can always come up with a new business no one has thought of, too.

Choose a Name for Your Business

How do you start a business? Choosing a name is just the first of many pivotal decisions ahead. Once you have a general idea, it’s time to consider how to come up with a business name . A solid name is distinctive and memorable. Bonus points if the name makes it obvious what products or services you sell and is easy to both say and spell. You can also test potential names with customers to see how they react.

Once you settle on an idea, perform a preliminary search on Google, the Secretary of State database for your state, and the U.S. Patent and Trademark Office (USPTO) site . A no-conflict, free trademark search will let you see if business names are available in all 50 states. You can also look into how to buy a business name if your choice is taken but not currently in use.

If you don’t find the name, you can go to your local county clerk’s office and file a “Doing Business As” (DBA) or a “Fictitious Business Name” (FBN). The DBA and FBN protect against name theft and it lets people know who actually owns the business. Additionally, reserve your business name as a website domain and on various social media sites, even if you’re not set on using every popular site right away.

2. Write a Solid Business Plan

A business plan is your company’s guiding document. A business startup faces many challenges, including market entry, competition analysis, and building a customer base.

Embracing the lean startup methodology, which emphasizes adaptability and customer feedback, can help your business navigate these challenges.

Here’s a list of elements to include in your business plan:

• Executive Summary: Summarize your business’s mission, vision, and goals, providing an overview of your entire plan. Highlight your company’s unique selling points and future growth potential.
• Company Description: Detail your company’s background, structure, and the problem it aims to solve. Explain how your products or services fill a gap in the market or serve a target audience.
• Market Analysis: When conducting Market Analysis, it’s essential to adopt a systematic methodology that encompasses industry trends, target market behavior, and competitor benchmarking.
• Business Model: Outline how your company will generate revenue, specifying the pricing, distribution channels, and customer acquisition strategies. Include your value proposition and competitive advantage.
• Products and Services: It’s very important to describe your offerings in detail when you start a business. Emphasize their benefits and unique features. Explain how they address customer needs and differentiate them from competitors.
• Your Break Even Point: Calculating your break-even point is important for strategic planning and investor confidence. Conducting a break-even analysis is also important for any business, as it precisely calculates the sales level needed to cover costs, guiding pricing and financial strategies.
• Marketing and Sales Strategy: Develop a plan for promoting your business, reaching your target audience, and converting leads into sales. This will help you have a more in-depth knowelege of how to launch effectively. Consider advertising, public relations, social media, and other tactics. Have a brainstorm session to generate creative and effective promotional ideas that resonate with your target audience.
• Startup Costs and Financial Projections: Calculate the initial investment required to launch your business, and provide a detailed breakdown of projected expenses and revenues. Include income statements, balance sheets, and cash flow forecasts.
• Management and Organization: Present your company’s leadership team, their roles, and their experience. Describe the organizational structure and any key personnel you plan to hire.
• Exit Strategy: Outline possible exit scenarios for your business, such as mergers, acquisitions, or public offerings. This demonstrates foresight and provides a roadmap for potential investors.
• Appendix: Include any supplementary information, such as resumes, legal documents, permits, or industry research, to support your plan and provide additional context.

Research Your Competitors and Your Customer Base

Understanding your competition is key to the success of your business. So a thorough evaluation of your market should be part of this planning stage. Here’s how to conduct market research and target the right audience: Market research is a cornerstone of your business planning, providing the data needed to make informed decisions about your product, pricing, and promotional strategies.

• Primary Research: Conducting primary research involves gathering first-hand information directly from competitors, potential customers, and local businesses. Visit their establishments, interact with their customers, and attend industry events to gain valuable insights. Collect data by surveying your target audience and analyzing their preferences and pain points. Primary research helps to validate assumptions and uncover new opportunities in the market.
• Secondary Research: Secondary research involves analyzing existing information from external sources, such as market reports, industry publications, and competitor websites. Study their marketing materials, customer reviews, and social media presence to gauge their brand image and customer satisfaction. This research helps you understand the current market trends, assess competitor positioning, and identify areas for improvement.
• SWOT Analysis: A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis allows you to evaluate the competitive landscape systematically. Learning How to perform a personal SWOT analysis can help you identify your competitors’ strengths and weaknesses by examining their products, services, pricing, marketing strategies, and customer service. With a SWOT analysis, you can explore market opportunities and potential threats, such as emerging trends, shifts in consumer behavior, or new regulations. A comprehensive SWOT analysis will provide a clear understanding of your competitive advantages and areas for growth. Check out SWOT analysis examples online to see how to create your own.
• Understanding Market Needs and Customer Behavior: When launching a new business, it’s essential to deeply understand your target market’s needs and behaviors. To begin your entrepreneurial journey, it is essential to conduct thorough market research to gather insights about your potential customers – what drives their purchasing decisions, their preferences, and their pain points. Use surveys, focus groups, and market analysis tools to collect this vital information. This understanding will inform your product development, marketing strategies, and customer service approach, ensuring that your offerings resonate well with your intended audience.

3. Sort Out Your Business Finances

By keeping a close eye on your business costs, you can identify areas to optimize, reduce expenses, and make informed decisions for the future. Here are some practical steps to help you sort out your business finances, ensuring you maintain a healthy cash flow and stay on top of your business costs.

Proper accounting practices are essential not just for compliance but also for gaining insightful financial data to guide your business decisions. Make sure you consider the implications of income tax early in your planning process to ensure compliance and optimize your financial strategy.

Start a Business Bank Account

Opening a separate bank account for your business is essential to keep your personal finances separate from your business transactions. This separation simplifies bookkeeping, tax preparation, and provides a clear financial overview of your business operations.

To start a business bank account, research various banks in your area and their offerings. For example, some banks may offer many options for small business loans and credit cards, while others may prioritize things like online and mobile banking. Once you choose a bank that best fits your needs, gather the required documents (such as business registration and tax identification) and visit the bank to open the account.

Consider Business Credit Cards

Acquiring a business credit card can help streamline expenses, provide additional financing, and offer valuable rewards. It allows you to separate personal and business expenses, making bookkeeping and tax preparation easier. A business credit card can offer more than just a convenient payment method; it can also help you manage cash flow and build your business credit history.

Moreover, some cards offer cash back, travel rewards, or other benefits tailored for businesses. Research different credit card companies and their offerings, considering factors such as interest rates, fees, and reward programs. Choose one that aligns with your business needs and spending habits to maximize benefits.

Select an Accounting Software

Investing in accounting software or hiring a skilled bookkeeper is a smart move for any business owner, as it simplifies financial management, bookkeeping, and tax preparation. Selecting the right accounting software early on can save you time and help avoid financial management errors as your business grows. The best accounting software for small business users automates processes, reducing the chances of human error and saving time.

Some popular accounting software options include QuickBooks, Xero, and FreshBooks, each offering various features to cater to different business needs. Evaluate your requirements and choose software that provides the necessary tools to manage your finances effectively, ensuring the long-term financial health of your business.

Determine Your Break-Even Point

Understanding your break-even point is crucial for any business, as it indicates the level of sales necessary to cover your costs without generating a profit or loss. This financial metric can help you set realistic sales targets and effective pricing strategies.

To calculate your break-even point, divide your fixed costs by the contribution margin (selling price per unit minus variable cost per unit). Knowing this figure will assist in making informed financial and operational decisions for your business.

4. Fund Your New Business – Bank Loan and Beyond

Starting a new business often requires capital, making it crucial to manage your money wisely across all phases of development. Exploring options like bank loans, venture capital, or crowdfunding can provide the necessary resources for your venture.

Methods to finance a new business include bootstrapping, venture capital investments, crowdfunding, business lines of credit, and business loans and grants. Understanding these options will enable you to choose the most suitable approach to fund your business.

Bootstrapping

Bootstrapping is the process of self-funding your business using personal savings, assets, or reinvesting profits. Bootstrapping, or self-funding, allows you to maintain complete control over your business, emphasizing fiscal prudence from the outset. This is an especially popular option for low-cost business ideas

Bootstrapping can be a slow process but provides a solid foundation for business growth. Entrepreneurs choosing this method must be prepared to manage their finances carefully and make sacrifices to invest in their venture.

Venture Capital Investments

Venture capital (VC) investments involve obtaining funds from investors in exchange for equity in your business. VC firms typically target high-growth, innovative companies with the potential for substantial returns.

This funding option can provide a significant financial boost, but entrepreneurs should be prepared to share decision-making power and potentially relinquish some control over their businesses. Networking and creating a compelling pitch are essential to attract venture capital investments. The structured setup of corporations and scalability appeal to investors looking for high-growth opportunities.

Crowdfunding

Crowdfunding involves raising funds from a large number of people, typically through online platforms like Kickstarter or Indiegogo.

This funding method allows entrepreneurs to showcase their business idea or product to potential backers, who contribute money in exchange for rewards or equity. Crowdfunding can not only provide capital but also help validate your idea and generate interest from potential customers. Check out our post on What is Crowdfunding ? for more on this option.

Business Line of Credit

A business line of credit is a flexible financing option that allows businesses to access funds up to a predetermined limit. Entrepreneurs can borrow and repay funds as needed, only paying interest on the amount utilized.

This funding method can help manage cash flow fluFctuations and cover short-term expenses, making it an ideal solution for businesses with variable financial needs.

Business Loans and Business Grants

Obtaining a small business loan or grant can provide the necessary capital to fund your venture. Business loans, available through banks or alternative lenders, require repayment with interest over a specified period.

Business grants, on the other hand, are non-repayable funds typically offered by governments or non-profit organizations. Research available options, prepare a strong business plan, and demonstrate financial responsibility to increase your chances of securing a loan or grant for your business. Explore financing options offered by the Small Business Administration (SBA), which provides loans and grants tailored for small businesses.

5. Choose a Business Structure

What is the right business structure for you? The structure you choose will impact taxes, financing, compensation, and insurance. Not to mention the risk and liabilities of your personal assets.

When you Choose a Business Structure, it’s pivotal to briefly discuss how different structures impact the management and oversight of finances, directly influencing fiscal responsibilities and tax obligations. Choosing the right business structure is crucial when you start business planning.

Another point to remember when choosing your structure is the variations from state to state. Mak When choosing a business structure, consider a corporation for its benefits in liability protection and potential tax advantages, especially if you’re planning to seek significant investment.

Consider forming a Limited Liability Partnership (LLP) if you’re starting a business with partners and want to prfotect your personal assets while enjoying the flexibility of partnership taxation.

A Limited Liability Company (LLC) combines the liability protection of a corporation with the tax efficiency and operational flexibility of a partnership.

Be sure to find out how the common business structures like sole proprietorship are applied in your state to protect yourself from legal and tax liabilities.

Before choosing, get familiar with all the potential options below. You may also consult an accountant or business consultant for guidance. When you start a small-business, it’s especially important to choose the right business structure. Consider the following elements when making your decision:

• Your financing needs and options.
• How you want to pay taxes.
• The kind of liability protection you need.
• What kind of administrative complexity can you handle?

Keep in mind that you will need to fill in an article of incorporation for certain business structures like corporations for legal recognition.

Sole Proprietorship

This is the simplest business structure. The profits and debts of a sole proprietorship company are the responsibility of one person. As such, the owner is personally liable for any debts.

This means creditors can come after your personal property and savings and you are personally liable for any lawsuits brought against the business.

A sole proprietorship is easy to set up, low cost and has an easy exit. When it comes to taxes, all you need to do is to keep track of all the business’ income and expenses. At tax time, just report it on Schedule C with your personal tax return.

Doing Business As (DBA)

“Doing Business As” (DBA) or a “Fictitious Business Name” (FBN) registration is not technically a legal structure. It allows you to conduct business under a name other than your own.

Although a DBA is more common among sole proprietors, LLCs, corporations, and partnerships can all file to get a DBA.

States have different DBA requirements, so make sure you comply. For instance, New York State has specific DBA filing requirements.

Limited Liability Company (LLC)

An LLC is a cross structure combining the best features of partnerships and S Corps. It provides owners, called members, with the liability protection of corporations while allowing earnings and losses to pass through to the owners as income on their personal tax returns.

Single or multiple members can be part of an LLC, and the profits and losses don’t have to be divided among members equally. A single-member LLC can be taxed as a corporation or an individual using the Schedule C form. A multi-member LLC, on the other hand, is taxed as a partnership with the K-1 form.

Corporation

A corporation is an entity that is separate from its owners with its own legal rights. A company structured as a corporation can sue, be sued, own property, and sell its ownership in the form of stocks.

There are several types of corporations:

• C corporations – Owned by shareholders, they allow an unlimited number of investors and are taxed as separate entities.
• S corporations – Are designed for small businesses to avoid double taxation. It doesn’t file its own taxes and profits are passed through and reported on the personal income tax return of the shareholders. An S corporation has employment and profit taxation rules as well as strict ownership laws.
• B corporations – Are for-profit entities structured to make a positive impact on society. They are also known as benefit corporations.
• Closed corporations – These are not publicly traded companies and they benefit from limited liability protection. Compared to publicly traded companies, they have more flexibility.
• Open corporations – Are traded on a public market by allowing anyone to invest in them.
• Nonprofit corporations – Are formed to serve the public good and they have tax exemptions to help with that goal.

Partnership

A partnership is an unincorporated business owned by multiple people or other businesses. The profits in partnerships are divided among owners and it is reported on their tax returns.

Some of the different types of partnerships are general partnerships, limited partnerships, limited liability partnerships (LLPs), and limited liability limited partnerships (LLLPs).

If your business goes beyond a sole proprietorship, make sure you are fully aware of your liabilities. Find qualified experts to guide you while you are on your way to starting a perfect business.

Want to learn more? Take our business structure quiz to learn what kind of business organization is right for you.

6. Register Your New Business

Registering a new business is a very important step for startups and involves several important steps, including obtaining a business license, registering with the federal and state government, getting an Employer Identification Number (EIN), obtaining the necessary insurance, paying taxes, and acquiring professional licenses.

Obtaining an Employer Identification Number (EIN) is a necessary step for tax purposes and when planning to hire employees.

Employer Identification Number (EIN)

An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify your business for tax purposes. It’s needed for various reasons, such as filing taxes, hiring employees, opening a business bank account, and applying for business licenses or permits. It also establishes your business as a separate legal entity to maintain financial separation between your personal and business finances.

You can apply for an EIN directly through the IRS online, or by fax, mail, or phone.

Tax Documents

As a business owner, it’s essential to understand and fulfill your finance and tax obligations. This includes filing taxes, paying self-employment tax, and staying informed about any changes in tax laws or regulations. Understanding your tax obligations, including sales and use tax, is vital for operating legally and efficiently

• Filing Taxes : All businesses are required to file taxes annually with the federal and state governments. The type of tax forms you’ll need to file depends on your business structure (e.g., sole proprietorship, partnership, LLC, or corporation). It’s crucial to maintain accurate financial records and file your taxes on time to avoid penalties.
• Self-Employment Tax : If you’re self-employed, you’ll need to pay self-employment tax in addition to income tax. Self-employment tax covers Social Security and Medicare taxes for self-employed individuals. It’s important to calculate and pay these taxes to ensure you’re contributing to your future Social Security and Medicare benefits.
• Sales and Use Tax : Depending on your business’s location and the products or services you offer, you may need to collect sales tax from customers and remit it to your state or local government. Be sure to register for a sales tax permit if required and stay up-to-date on your state’s sales tax laws.
• Employment Taxes : If your business has employees, you’ll need to withhold and pay employment taxes, which include federal income tax, Social Security and Medicare taxes, and state income taxes (if applicable). You may also need to pay state unemployment taxes and other employer-specific taxes.

Professional Licenses

Some businesses may require professional licenses or permits to operate legally. Here are a few common examples:

• Health Department Permits : Businesses in the food industry, such as restaurants, bakeries, and catering companies, often need health department permits to ensure they meet sanitation and food safety standards.
• Alcohol Licenses : Businesses that sell or serve alcohol, such as bars, restaurants, or liquor stores, must obtain an alcohol license or permit from their state or local government.
• Building Permits : If your business requires construction or renovations, you may need to obtain building permits from your local government to ensure that your project complies with building codes and regulations.
• Occupational Licenses : Some professions, such as doctors, lawyers, accountants, and real estate agents, require specific occupational licenses to practice legally. Check with your state’s licensing board or agency to determine the requirements for your profession.

Business Insurance

Insurance is a vital aspect of protecting your business from potential risks and liabilities. There are several types of business insurance to consider, depending on your industry, location, and specific needs:

• General Liability Insurance : This insurance covers your business against claims related to property damage, bodily injury, and personal injury resulting from your business operations. It is essential for most businesses, as it protects against common risks and potential lawsuits.
• Property Insurance : Property insurance covers your business’s physical assets, such as buildings, equipment, and inventory, against damage or loss caused by events like fire, theft, or natural disasters. This insurance is crucial for businesses with significant investments in physical assets.
• Workers’ Compensation Insurance : If your business has employees, workers’ compensation insurance is typically required by law. This insurance covers medical expenses, lost wages, and disability benefits for employees who are injured or become ill as a result of their job.
• Professional Liability Insurance : Also known as errors and omissions (E&O) insurance, this coverage is designed to protect your business against claims of negligence or mistakes made while providing professional services. It’s particularly important for businesses that offer specialized services or advice, such as consultants, lawyers, or architects.

7. Source Products and Equipment for Your Business

The best places to source products will vary depending on your industry, target market, and business model. Thoroughly research your options and consider factors such as product quality, cost, shipping times, and supplier reliability when making your sourcing decisions.

By carefully selecting your product sources, you can build a strong foundation for your business and offer products that appeal to your customers. Managing your inventory efficiently is crucial for product-based businesses, ensuring you meet demand without overstocking. Here are some popular options for sourcing products:

• Domestic Manufacturers and Wholesalers : Sourcing products from domestic manufacturers and wholesalers can provide several benefits, including shorter shipping times, lower shipping costs, and easier communication with suppliers. Additionally, products made domestically may be perceived as higher quality by customers. To find domestic manufacturers and wholesalers, you can attend trade shows, join industry associations, or search online directories and marketplaces.
• Overseas Manufacturers : Many businesses choose to source products from overseas manufacturers, particularly in countries like China, India, and Vietnam, due to lower production costs. Working with overseas manufacturers can result in significant cost savings, but it may also present challenges, such as language barriers, time zone differences, and longer shipping times. To find reputable overseas manufacturers, you can attend international trade shows, use online platforms like Alibaba and Global Sources, or work with a sourcing agent.
• Private Label Manufacturers : Private label manufacturing allows you to source products that are already being produced and rebrand them with your company’s name and logo. This approach can save time and resources, as you won’t need to invest in product development or manufacturing. To find private label manufacturers, you can search online directories, attend trade shows, or contact manufacturers directly to inquire about their private label services.
• Dropshipping Suppliers : Dropshipping is a business model where you sell products without holding inventory. Instead, you partner with a dropshipping supplier who handles product storage, packing, and shipping on your behalf. This can be a cost-effective way to source products, as you don’t need to invest in inventory or warehousing. To find dropshipping suppliers, you can use platforms like Oberlo, SaleHoo, or Spocket, or search for suppliers within your industry.
• Marketplaces and Online Retailers : Online marketplaces and retailers like Amazon, eBay, and Etsy can be great sources for niche or unique products. These platforms allow you to buy products at wholesale prices and sell them through your own online store. Keep in mind that competition can be high on these platforms, so it’s essential to find ways to differentiate your products and brand.
• Local Artisans and Craftsmen : For businesses looking to source unique, handmade, or artisanal products, working with local artisans and craftsmen can be a great option. By partnering with local creators, you can support your community and offer one-of-a-kind products to your customers. To find local artisans, you can visit craft fairs and farmers’ markets or search online platforms like Etsy.

Manage Your Supply Chain and Cost

Supply chain management involves coordinating with suppliers, managing logistics, and navigating international trade regulations. A robust supply chain management strategy helps mitigate risks like delays and shortages, ensuring smooth operations and customer satisfaction.

Source Equipment and Software

Businesses that aren’t product-based don’t need to worry about inventory. But These businesses still often need to invest in equipment and/or technology to successfully manage their operations. Sourcing these purchases early can help you manage costs and select the best possible investments for your business goals.

8. Select Your Business Location

Today’s businesses can be established in the digital or physical world. Some businesses need a large commercial storefront or office space, while others can make do with a home office and a few freelancers around the globe. Selecting the general type of location is the first step and will significantly affect your business model. Then it’s time to narrow down commercial spaces if that’s the route you choose. Here are some tips to consider:

Consider Whether a Commercial Space is Necessary

Some businesses require a storefront or physical office space right away. Aside from retail businesses and those with obvious needs, many office-based businesses might choose to do business in person to encourage collaboration or productivity. Other benefits of having a physical space include fostering a sense of community and providing a professional space to welcome clients and/or partners.

However, doing business virtually is also a viable option. Many sole proprietors simply work from a home office or coworking space to save money. This format also allows businesses to build their teams with top talent from around the world since they can easily work remotely using virtual collaboration tools. Additionally, many businesses start out operating virtually and then invest in a physical space later once finances allow.

Determine Whether to Buy or Lease

For those looking for a brick-and-mortar location, it all starts by deciding whether you want to lease or buy your commercial property. There are tax implications for the decision you make, so consult your legal and financial advisors to make the best decision.

If you plan on leasing, go through the agreement thoroughly and make sure you understand it fully before you sign the contract. There are many clauses in lease agreements. If you don’t have the expertise, seek legal advice before you sign.

For those buying, work with a commercial realtor in your area to find spaces that fit your needs and guide you through the process.

Choose the Right Space to Start

The location you choose should address some, most, or even all of the needs of your business. Here are some questions to consider as you narrow your search:

• Is the price affordable?
• Is the location known for the products and services you offer, and does it complement your business?
• Are there suppliers and distributors for your industry close by?
• Is the area a business hub the city is pushing with future growth opportunities?
• Is there any future development planned in the area or region?
• Does the location have a good reputation?
• Is it secure? What is the crime rate?
• What is the skill base in the area?
• Does the space have the right infrastructure in place to accommodate your operations?
• Are the local zoning regulations in line with your business?

9. Find and Hire Employees

Building a strong team can significantly impact your company’s growth, productivity, and overall work culture. Providing health insurance and benefits can attract and retain top talent, ensuring that your team remains healthy and motivated.

In this guide, we will discuss how to find new staff, manage payroll, and provide health insurance and benefits.

Find New Staff

There are several options for advertising job opportunities and finding new hires. Here are a few to consider:

• Job Advertisements : One of the most effective ways to find new employees is by posting job advertisements on various online platforms, such as job boards like Indeed, Monster, or LinkedIn. Be sure to create a clear and detailed job description that outlines the required skills, qualifications, and responsibilities. This will help attract qualified candidates and make it easier to filter through applications.
• Networking : Networking can be a powerful tool for finding potential employees. Attend industry events, trade shows, and conferences to meet professionals in your field. Also, leverage your personal and professional networks, including friends, family, and colleagues, to spread the word about job openings at your company. Social media platforms like LinkedIn can also be useful for connecting with potential candidates.
• Recruitment Agencies : Partnering with a recruitment agency can help you find qualified candidates for your new business quickly and efficiently. Recruitment agencies have access to extensive talent pools and can help match your job requirements with suitable candidates. They can also assist with screening and interviewing applicants, saving you time and resources.

Set Up Business Payroll

Once you hire your first employee, you need a payroll system to manage and streamline their compensation. Here’s what you need to know:

• Setting Up Payroll : Managing payroll is a critical aspect of running a business with employees. Using services like ADP to set up a system can help you track employee hours, calculate wages, withhold taxes, and make payments more efficiently. You can choose to manage payroll in-house using software like QuickBooks or outsource it to a payroll service provider. Be sure to research and follow federal, state, and local payroll laws and regulations. Choosing insurance options as part of employee benefit packages is also very important.
• Withholding Taxes : As an employer, you are responsible for withholding federal and state income taxes, Social Security and Medicare taxes, and any other applicable taxes from your employee’s wages. Be sure to obtain the necessary tax forms, such as W-4 and W-9 forms, from your employees when they are hired. Stay informed about current tax rates and requirements to ensure compliance.
• Paying Employees : Establish a consistent pay schedule for your employees, such as weekly, biweekly, or monthly. Make sure to pay your employees on time and provide them with detailed pay stubs that outline their earnings, withholdings, and any deductions. Keep accurate records of all payroll transactions for tax and legal purposes.

Offer Health Insurance and Benefits

Many employers must offer health insurance and benefits to full-time employees. These elements can also help you attract and retain top talent. Here’s what you should know:

• Health Insurance Options : Providing health insurance is an essential aspect of attracting and retaining quality employees. Research the different types of health insurance plans available, such as Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), or Health Savings Account (HSA) compatible plans. Choose a plan that fits your budget and meets your employees’ needs.
• Employee Benefits : In addition to health insurance, offering additional benefits can help make your business more appealing to potential employees. Consider providing benefits such as paid time off, retirement plans, flexible work arrangements, or professional development opportunities. Tailor your benefits package to the needs and preferences of your target employees to maximize its appeal.
• Legal Requirements : Be aware of any legal requirements for providing health insurance and benefits, particularly if your business has a certain number of employees. For example, under the Affordable Care Act (ACA), businesses with 50 or more full-time employees are required to offer health insurance to their employees. Familiarize yourself with federal, state, and local laws related to employee benefits to ensure compliance.

Navigate Remote Work Dynamics

With the rise of remote work, understanding how to manage a distributed team effectively is essential. This includes selecting the right communication tools, establishing clear remote work policies, and fostering a strong virtual team culture. Embrace strategies that ensure productivity and collaboration, while also supporting work-life balance for your team members.

10. Market and Expand Your Business

Determining how to grow a small business can vary based on your industry and business goals. For example, some may target new customer segments while others may diversify product offerings or launch new marketing campaigns.

Both marketing and expansion efforts require ongoing analysis, adaptation, and innovation to ensure long-term success in an ever-evolving marketplace. Here are some methods you might consider as your business grows:

Develop a Brand Identity

Developing a strong brand identity is essential for differentiating your business from competitors, building customer trust, and creating a memorable experience. Here are some key steps to develop your brand identity:

• Define your target audience: Identify your ideal customers, their demographics, preferences, and pain points. This will help you create a brand that appeals to them. Knowing your customer base deeply through market research and direct engagement is key to creating offerings that meet their needs and exceed expectations.
• Establish your unique selling proposition (USP): Determine what sets your business apart from others in your industry. Your USP should showcase the unique value you offer to customers.
• Create a compelling brand story: Craft a narrative that encapsulates your brand’s mission, values, and purpose. This story should resonate with your target audience and be consistently conveyed across all marketing channels.
• Design a memorable logo: Your logo should be visually appealing, unique, and reflective of your brand’s personality. Invest in professional design services to create a logo that represents your business well.
• Develop a consistent color palette and typography: Choose a set of colors and fonts that reflect your brand’s personality and use them consistently across all marketing materials and platforms.
• Establish brand guidelines: Develop a comprehensive brand style guide that outlines your brand’s visual elements, voice, tone, and messaging. This guide will help ensure consistency across all channels and touchpoints.
• Register a ‘Doing Business as’: When establishing your brand identity and legal presence in the market, registering a ‘Doing Business As’ (DBA) can be a strategic step. This not only secures your business name but also enables you to conduct business under a name that aligns with your branding efforts, without the need to create a formal legal entity.

Create a Marketing Plan for Launch and Beyond

A marketing plan is a strategic document that outlines your business’s marketing goals, objectives, strategies, and tactics. It serves as a roadmap to help you achieve your marketing goals and measure your progress. Here’s a list of what should be included in a marketing plan:

• Executive Summary : This section provides a high-level overview of your marketing plan, summarizing your objectives, strategies, and key takeaways.
• Market Analysis : Conduct an in-depth analysis of your industry, market trends, and competitors. This will help you identify opportunities and threats, as well as understand the competitive landscape. Thorough research is important for understanding customer needs and market gaps.
• Target Audience : One of our main tips for starting a business is to define your target customers, including their demographics, preferences, and pain points. This information will guide your marketing efforts and help you tailor your messaging.
• Marketing Goals and Objectives : Set specific, measurable, achievable, relevant, and time-bound (SMART) marketing goals and objectives that align with your business’s overall goals.
• Marketing Strategies : Outline the high-level strategies you will use to achieve your marketing goals, such as content marketing, social media marketing, or email marketing.
• Marketing Tactics : List the specific tactics and channels you will use to implement your marketing strategies. This might include blog posts, social media posts, or email newsletters.
• Marketing Budget : Determine how much money you will allocate to your marketing efforts and how you will distribute those funds across different marketing channels and tactics.
• Performance Metrics : Identify key performance indicators (KPIs) that will help you track your marketing efforts’ success and measure progress toward your goals.
• Implementation Timeline : Create a timeline for executing your marketing tactics, including milestones and deadlines.
• Review and Adjustments : Establish a process for regularly reviewing your marketing plan’s performance, making data-driven adjustments, and updating your plan as needed.

Improve Customer Experience and Engagement

In the digital age, customer experience is king. Focus on creating seamless, engaging experiences across all touchpoints – from your website and social media to customer service interactions. Use social media platforms to build brand awareness and engage directly with your customers, creating a community around your products or services.

Use customer feedback to continuously improve and personalize the experience. Remember, a delighted customer is not just a repeat customer but also an advocate for your brand. After meticulous planning, you’ll be positioned to launch your business effectively.

Network and Build Business Relationships

Strong business relationships and networking are invaluable for business growth and support. Networking can unlock many opportunities for your startup business, from partnerships to fundingAttend industry events, join professional organizations, and engage in online forums. These connections can lead to new business opportunities, partnerships, and valuable mentorships.

Set Up a Business Website

A well-designed and user-friendly business website is a necessary part of establishing an online presence, attracting customers, and promoting your products or services in today’s digital ecosystem.

• Choose a domain name : Select a domain name that is easy to remember, reflects your brand, and ideally includes relevant keywords. Register your domain through a domain registrar like GoDaddy or Namecheap.
• Select a web hosting provider : Web hosting providers offer storage space and services needed for your website to be accessible on the internet. Choose a hosting provider that meets your needs in terms of speed, reliability, and support, such as Bluehost, SiteGround, or HostGator.
• Pick a website builder : Website builders like Wix, Squarespace, or WordPress offer user-friendly tools and templates for creating and customizing your website. For e-commerce businesses, utilizing platforms like Shopify with features like breadcrumb navigation enhances user experience and site structure.
• Design your website : Create a visually appealing and easy-to-navigate website that reflects your brand identity. Prioritize user experience by using a responsive design, clear navigation, and engaging visuals. Ensure your website is mobile-friendly, as an increasing number of users access the web through mobile devices.
• Develop website content : Create informative, relevant, and engaging content for your website, focusing on your target audience’s needs and preferences. Make sure your content is well-organized, easy to read, and includes keywords to improve search engine visibility.
• Optimize for SEO : Implement search engine optimization (SEO) techniques to improve your website’s visibility in search results. This includes using relevant keywords, creating quality content, optimizing meta tags, and building a strong backlink profile.
• Integrate analytics : Track your website’s performance and user behavior by integrating analytics tools like Google Analytics. This will provide insights into user demographics, traffic sources, and user engagement, helping you make data-driven decisions for your website.

Expand Internationally

Selling internationally exposes your business to new markets, increasing your customer base and revenue potential. Embracing global expansion can lead to business growth, risk diversification, and a competitive edge. Here are some steps you must navigate in order to reap these benefits:

• Market research : Conduct thorough research on potential target markets, evaluating factors such as consumer preferences, local competition, and cultural differences. This will help you tailor your marketing efforts and product offerings to resonate with international customers.
• Regulatory compliance : Familiarize yourself with the legal and regulatory requirements of your target countries, including import/export laws, taxes, and customs regulations. Ensure your business complies with all relevant laws to avoid fines or other penalties.
• Payment processing : Offer a variety of secure payment options that cater to the preferences of your international customers. Consider partnering with payment gateways like PayPal, Stripe, or Adyen, which support multiple currencies and international transactions.
• Currency conversion : Display prices in local currencies to make it easier for international customers to understand the cost of your products or services. Use currency conversion tools or plugins on your website to provide accurate, real-time exchange rates.
• Shipping and logistics : Develop a reliable and cost-effective shipping strategy for international orders. Partner with reputable shipping carriers and consider using fulfillment services like Fulfillment by Amazon (FBA) or ShipBob to streamline your logistics.
• Website localization : Adapt your website’s content, design, and language to cater to your target international markets. Use tools like Google Translate or work with professional translators to offer your content in multiple languages.
• Customer support : Provide multilingual customer support to address the needs and concerns of your international customers. Consider hiring native speakers or using translation tools to communicate effectively with customers in their local language.
• Marketing and promotion : Develop tailored marketing strategies for each international market, taking into consideration local preferences, language, and culture. Leverage local social media platforms, influencers, and advertising channels to reach your target audience effectively.

What Tools Do You Need to Start a Business?

Starting a business requires a combination of planning, research, and the right tools to help you streamline your operations and increase efficiency. Here is an expanded list of business tools that can support the many different aspects of your new business:

• Business Plan Software : A solid business plan is crucial for outlining your objectives, target market, and financial projections. Business plan software like LivePlan, Upmetrics, or Bizplan can guide you through the process and help you create a professional-looking plan to present to potential investors or lenders.
• Accounting and Bookkeeping Software : Keeping track of your business finances is essential. Tools like QuickBooks, Xero, or FreshBooks can help you manage your income and expenses, generate financial reports, and simplify tax preparation.
• Project Management and Collaboration Tools : Streamline your team’s communication and project management with tools like Trello, Asana, or Basecamp. These platforms enable you to assign tasks, track progress, and collaborate with your team in real time.
• Customer Relationship Management (CRM) Software : CRMs like Salesforce, HubSpot, or Zoho CRM can help you manage and nurture customer relationships, track leads, and analyze sales data to optimize your sales process.
• Email Marketing Software : Stay connected with your customers and promote your products or services with email marketing tools like Mailchimp, Sendinblue, or Constant Contact. These platforms offer email templates, automation features, and analytics to help you optimize your campaigns.
• Social Media Management Tools : Simplify your social media marketing efforts with tools like Hootsuite, Buffer, or Sprout Social. Schedule posts, monitor engagement, and track analytics across multiple social media platforms.
• Eommerce Platforms : If you plan to sell products online, consider using e-commerce platforms like Shopify, WooCommerce, or BigCommerce to build and manage your online store.
• Payment Processing Solutions : Accepting payments from customers is crucial for any business. Payment processing tools like Square, Stripe, or PayPal can help you process payments securely and efficiently.
• Inventory Management Software : Keep track of your stock levels and streamline your inventory processes with tools like TradeGecko, Zoho Inventory, or inFlow Inventory.
• Human Resources (HR) Software : Manage employee data, benefits, and payroll with HR tools like Gusto, BambooHR, or Zenefits. These platforms can help you stay compliant with labor laws and ensure smooth HR operations.
• Website Builders : Create a professional-looking website for your business with user-friendly website builders like Wix, Squarespace, or WordPress.
• Analytics and Reporting Tools : Monitor your business’s performance and make data-driven decisions with analytics tools like Google Analytics, Tableau, or Looker.
• Video Conferencing and Communication Tools : Stay connected with your team and clients through video conferencing and communication platforms like Zoom, Microsoft Teams, or Slack.
• Graphic Design Software : Create eye-catching visuals and marketing materials for your business with design tools like Canva, Adobe Creative Cloud, or Figma.
• Time Tracking and Productivity Tools : Monitor your team’s productivity and optimize work processes with time tracking tools like Toggl, Time Doctor, or Clockify.

These are just a few of the many tools available to support your new business. By investing in the right tools and technologies, you can streamline your operations, save time and resources, and set your business up for success. And always be on the lookout for new technologies to improve your operations.

Start a Business with These Helpful Resources

One way to ensure the success of your business is to take advantage of all the resources that are available to you. Public and private organizations as well as nonprofits offer everything from financial help to education, mentorship, and much more. Here are some of the many resources that are available to you as a budding entrepreneur.

• SCORE: SCORE provides free business advice and mentoring from experienced business owners and professionals.
• Small Business Administration (SBA): The SBA offers resources and support for small businesses, including loans, counseling, and training.
• StartUpNation: StartUpNation offers resources, advice, and tools for starting and growing a small business.
• Small Business Development Centers (SBDCs): SBDCs offer free business consulting and training for small business owners.
• National Association of Small Business Owners (NASBO): NASBO offers resources, advocacy, and support for small business owners.
• National Association of Women Business Owners (NAWBO): NAWBO offers resources and support for women-owned businesses.
• Women’s Business Enterprise National Council (WBENC): WBENC offers resources and support for women-owned businesses, including certification as a women’s business enterprise.
• Bplans: Bplans offers business planning resources, including templates, guides, and examples.
• AngelList: AngelList offers resources for startup funding and connecting with investors.
• Crunchbase: Crunchbase offers insights and data on startups and investors.
• HubSpot: HubSpot offers resources for marketing, sales, and customer service, including software and training.
• Mailchimp: Mailchimp offers email marketing tools and resources, including templates and guides.
• Hootsuite: Hootsuite offers social media management tools and resources for businesses of all sizes.
• Fundera: Fundera offers resources and tools for small business funding and loans.
• Nav: Nav offers resources and tools for small business credit monitoring and financing.
• Yelp: Yelp offers resources for business owners to manage and promote their online reputation.
• LegalZoom: LegalZoom offers legal resources and services for small business owners, including incorporation and trademark filing.
• UpCounsel: UpCounsel offers legal services for businesses, including contracts, intellectual property, and employment law.
• QuickBooks: QuickBooks offers accounting and financial management tools and resources for businesses of all sizes.
• Google Analytics: Google Analytics offers insights and data on website traffic and user behavior.
• Canva: Canva offers design tools and templates for creating graphics and marketing materials.
• Trello: Trello offers project management and collaboration tools for teams.
• Zoom: Zoom offers video conferencing and communication tools for remote teams and meetings.
• Minority Business Development Agency (MBDA): The MBDA offers resources, training, and financing support for minority-owned businesses.
• Department of Veterans Affairs (VA): The VA offers resources and support for veteran-owned businesses, including access to capital and procurement opportunities.
• National Minority Supplier Development Council (NMSDC): The NMSDC offers resources and support for minority-owned businesses, including certification as a minority business enterprise.
• Association for Enterprise Opportunity (AEO): The AEO offers resources and support for microenterprises and small businesses, including training, financing, and networking opportunities.
• Export-Import Bank of the United States (EXIM): The EXIM offers resources and support for small businesses looking to export their products or services, including financing and insurance.
• U.S. Department of Commerce (DOC): The DOC offers resources and support for businesses looking to export their products, including export counseling and market research.
• U.S. Patent and Trademark Office (USPTO): The USPTO offers resources and support for businesses looking to protect their intellectual property, including patent and trademark registration.
• Occupational Safety and Health Administration (OSHA): OSHA offers resources and support for businesses looking to ensure a safe and healthy workplace, including training and compliance assistance.
• Economic Development Administration (EDA): The EDA offers resources and support for businesses looking to create jobs and spur economic growth in their communities, including financing and technical assistance.
• Small Business Investor Alliance (SBIA): The SBIA offers resources and support for small businesses seeking investment and growth capital, including education and advocacy.

How to Start a New Business FAQs

How can i start my own business with no money.

This is a very common FAQ. You CAN start a small business without any money, but you must bring other equity into the equation. For example, you might bring knowledge and expertise into an online consulting business, or you may turn an unused part of your home into an Airbnb business. Other free business ideas include dog walking, house sitting, blogging, and social media influencing.

See our free checklist for more on how to start a business with no money

Can I start a business with $1,000?

The answer is yes, you can start a business with $1,000. This generally requires starting an online or service-based business.

Online businesses like virtual assistant services, web design, ecommerce sites, and online courses can all be started for under $1,000. In-person service-based businesses like event planning, cleaning and errand services, and personal chef businesses are also quite affordable.

Be sure to check out our related article 25 Businesses You Can Start For Less Than $1,000  for more information.

What business is best for beginners?

Factors such as your skills, interests, budget, and market demand will greatly dictate what the best business for beginners is.

Some low-cost businesses that require minimal investment and have relatively low risk include home-based business ideas like dog walking, cleaning services, and lawn care. Online businesses such as e-commerce stores, dropshipping, affiliate marketing, and digital product creation can also be easy for beginners.

Do you need a business credit card?

While having a business credit card can be helpful for managing expenses and building credit for your business, you will not always need one to start a business. In fact, many small business owners use their personal credit cards to cover expenses when starting out.

However, it’s important to keep business and personal expenses separate, as this can make accounting and tax filing easier.

If you decide to get a business credit card, shop around for the best rates and rewards and use it responsibly to build your business credit history.

Do you need a business degree to start a business?

While a business degree can be helpful in starting and growing a business, it is not a requirement to become a successful entrepreneur. Many successful business owners do not have a formal education in business but instead rely on practical experience, industry knowledge, and a willingness to learn and adapt.

However, it’s important to have a basic understanding of business concepts such as accounting, marketing, and finance. This can be achieved through self-education, attending workshops or seminars, or working with a mentor or advisor.

Do you need a special license or permit to start a small business?

The licenses and permits required to start a small business vary depending on the type of business and the location. Some businesses may require specific licenses and permits from state and local agencies, such as a food service permit or professional license.

Businesses that handle hazardous materials or operate in regulated industries often require additional permits. It’s important to research the requirements in your specific industry and location and obtain any necessary licenses and permits before starting your business. Failure to do so can result in fines, legal issues, or even the closure of your business.

Working with a professional advisor can help ensure that you are in compliance with all necessary requirements.

How do I price my products and services?

To price products and services, calculate the total cost of materials, labor, and any other resources that go into your operations. Then project how many products or services you intend to sell each month to cover those expenses. This is just your break-even point. You should also consider the perceived value of your goods and services and look at what competitors are charging. If you offer extra value in some way, it’s often wise to charge a bit more. However, some businesses set themselves apart through affordability.

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• Building Your Business
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How To Start a Small Business in 8 Steps

A Step-by-Step Guide To Starting a Business

• Determine Your Market Niche

Write a Compelling Business Plan

Form a legal business entity, register your business.

• Explore Financing Options

Hire Employees

• Suppliers, Manufacturers, Vendors

Advertise Your New Business

Frequently asked questions (faqs).

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Do you have a shiny new business idea you can’t wait to pursue? The prospect of starting a new business can be very exciting, but there are many hoops you’ll need to jump through first. From ensuring the idea is viable to covering the startup costs, here are eight key steps you need to take to start a small business.

Key Takeaways

• Your business idea needs to serve a niche market with demand.
• A compelling business plan serves as an essential guide for your company.
• Register your business and ensure you have the necessary tax IDs, licenses, and/or permits.
• You may be able to finance your startup with funds from government loan programs, grants, investors, or your own savings.
• Advertising will often require a mix of online and offline tactics.

8 Steps To Starting a Small Business

You can start a small business in just eight steps.

• Clarify how your business fits into a market niche
• Write a compelling business plan
• Form a legal business entity
• Register your business
• Explore financing options
• Hire employees
• Find suppliers, manufacturers, and vendors
• Advertise your business

Clarify How Your Business Idea Fits Into a Market Niche

All successful businesses have one thing in common: They’re in demand. To be successful, people must want or need what you’re offering. It’s important to figure out whom your company will serve, which companies you’ll be competing against, and how you’ll stand out among them. You can find those answers by performing market research. The research process should involve looking into your potential market to assess its demand, market size, pricing, economic indicators, market saturation, and where your customers are located.

The next step is to write a business plan that will become the foundation for your company. But what should it include? Here are the main sections the U.S. Small Business Administration (SBA) recommends:

• Executive summary : The executive summary gives an overview of your entire plan in a succinct introduction that is meant to pique the reader’s interest.
• Company description : The company description gives an in-depth explanation of your company, including information about who started it, when it was founded, what type of entity it is, and why it exists.
• Market analysis : The market analysis section gives a detailed look at the industry you plan to enter, your target market, the competition, and your positioning.
• Organization and management : The management and organization section explains who’s on your management team and how each person contributes to achieving the business’s goals.
• Service or product line : The products and services section explains what you’ll be offering to your target market and the value it provides them.
• Marketing and sales : The marketing and sales section outlines how you plan to reach and sell to your target market.
• Funding request : If you plan to seek funding for your business, the funding request section should include how much capital you need, how it will be used, and the details of your current financial situation.
• Financial projections : The financial section lays out your income, cash flow projections, balance sheet, and shareholder equity allotments to show whether the idea is viable and profitable.

Next, decide which legal business entity type is best for your situation. The entity you choose will impact your level of personal liability for the business, how you’re taxed, and more. Here’s a look at the main options for small business owners.

Sole Proprietorship

A sole proprietorship is the default entity type for a business. If you don’t set up any structure, you’ll be a sole proprietor. In short, it means that you and your business are legally one entity. You’ll file a Schedule C for your business along with your personal tax return (Form 1040), and your business income will be taxed along with any other income you earn. If your business is sued, your personal assets could be at risk because you and your business are one and the same.

Filing a Schedule C as a sole proprietor will typically trigger the self-employment tax, which is 15.3% and consists of 12.4% for Social Security and 2.9% for Medicare.

Partnership

A general partnership is a pass-through entity for two or more people who are running a business together. You may want to use this entity type if you and one or more other people are both contributing to the business and sharing in the profits/losses of it. While you must file a return for the partnership each year, the company will not be taxed. All of the tax liability is passed down to the partners’ personal returns. Additionally, the owners have unlimited liability for the business. You’ll also be responsible for self-employment taxes.

Limited Liability Company (LLC)

A limited liability company (LLC) is the chameleon of business entities. It’s created by state statute and can be treated as a sole proprietorship, general partnership, or corporation. If you’re an individual business owner, the default classification will be a sole proprietorship. If you’re in business with at least one other person, the default classification will be a partnership. However, you can fill out Form 8832 and elect to be treated as a corporation in either case. Corporations are treated as independent entities and will have tax liabilities while offering legal protections for the owner(s).

Corporations

Corporations (sometimes called C corps) are recognized as separate taxpaying entities that offer liability protection to the owners. They can be privately held with stock that is shared by the owners or publicly held with stock offered for sale to the public. The major downside of corporations is that they are double taxed—the corporation is taxed on the company’s profits and the owners are taxed on the dividends they receive from those profits. However, qualifying businesses can elect S corp status which removes the tax on the corporation.

Once you decide on your company structure, it’s time to register your business. There are a few things involved.

State Registration

First, choose the home state for your business. If you want to do business in other states, you can register in those as well by completing a foreign registration. While the registration process can vary, you’ll typically need to:

• Choose your business location
• Register your business name and entity type with the Secretary of State
• Register with the required state entities (i.e. tax-filing commissions, departments of labor)
• Apply for any required business licenses or permits

Employer Identification Number (EIN)

An Employer Identification Number (EIN) is a number assigned by the federal government and used to identify your business. You can apply online and get one for free from the Internal Revenue Service (IRS). You may not need one if you are a sole proprietor and/or answer “no” to a series of questions on the IRS website .

Open Bank Accounts

Open a bank account for your business to keep business and personal transactions separate. Consider getting a business credit card to build business credit and earn rewards on your business expenses.

Get Business Insurance

At this stage, it’s also a good idea to look into business insurance to protect yourself and your business against potential liabilities. A business owner’s policy, also known as a BOP, typically includes general liability insurance, business property insurance, and business interruption insurance.

Explore Financing Options for Your Business

Now for the costs. If you don’t have funds to cover your startup costs out of pocket, you may be able to finance them. Many banks and online lenders offer business loans; however, they’ll often want to see some time in business and proof of revenue before they’ll approve you. As a new business, you’ll usually have a better chance with government loan programs, personal loans, or investors.

Government Business Loan Programs

The U.S. Small Business Administration’s (SBA) microloan program offers loans up to $50,000 through SBA funding intermediaries, which can be used for startup or expansion costs. Additionally, SBA 7(a) loans up to $5 million can also be used for startup costs.

Personal Loans

Personal loans or credit cards can also be worth considering. Instead of basing approval on your business track record, they’ll look at your personal credit history. As a result, if you have good credit, you could access competitive rates and terms. However, this shouldn’t be a long-term strategy as it’s best to keep your business and personal finances separate for tax and liability purposes. Further, using personal credit for business will limit the credit you have available for personal needs such as housing costs, car expenses, or family stuff.

You may be able to find investors who believe in you and your company’s potential and are willing to buy stakes in it. These may be private lenders, angel investors, venture capitalists, or even friends or family members.

Consider who you need to hire and whether employees or contractors are better fits.

Employees vs. Contractors

When your business requires hired help, you can opt to bring on employees or contractors . If you hire employees, you have to withhold and pay income taxes, Medicare taxes, and Social Security taxes. You also must pay unemployment tax on their wages. In return, you gain the right to control what workers do and the way they do it.

Contractors are self-employed. You hire them on a contract basis, so you don’t need to pay anything but their fees. However, they retain the right to control how they perform a job.

It’s important to classify the people you hire properly. If the IRS determines an independent contractor is an employee, you could be held liable for back employment taxes.

Setting Up Payroll

If you decide you want to bring on employees, you’ll need to set up a plan for payroll before you start recruiting. According to the SBA, that involves:

• Getting the required tax IDs in place (federal, state, local)
• Providing all new employees with a W-4 form
• Scheduling pay periods to coordinate with IRS tax withholding
• Choosing a payroll administration service
• Knowing the rules for recordkeeping
• Checking the payroll reporting requirements
• Creating a compensation plan for mandatory leave

In addition to setting up payroll, consider additional non-mandatory benefits you want to offer employees, such as retirement plans and health insurance. Be sure to review the federal and state labor laws that apply to you.

From there, you can begin the search for the right team members . You can hire a recruiter to help you, or perform the search yourself. Both online and offline avenues can be effective for finding talent. Online, you can look to platforms such as LinkedIn, Indeed, Monster, job boards, and other professional websites. Offline, you can take steps such as attending job fairs and posting ads in your local area.

Find Suppliers, Manufacturers, and Vendors

Most businesses need help from other businesses in one way or another, whether it’s sourcing materials and products or purchasing communication software and internet service. As a business owner, you’ll need to hunt for the best overall value when choosing your suppliers, manufacturers, and vendors.

A good first step is to identify everything you’ll need to outsource and make a list. Then, you can shop around and compare offerings to strike the right balance between price and quality. If you aren’t sure where to start, ask other small business owners for recommendations and read reviews online.

How do you get the word out about your new business? There are a variety of ways both online and offline.

Build a Website

A website gives your business a digital home base. While you’ll likely want to advertise across many online channels, they should all point back to your website—a web property you own. This will be your company’s main source of truth online and where you’ll want to drive traffic. Further, building a website that’s professional and user-friendly will help you build trust and credibility with your audience.

Social Media Marketing

Social media is a great place to build a presence and attract your target audience. According to the Pew Research Center, 72% of U.S. adults said they were using at least one social media site in 2021. Identify the platforms your target audience uses most, then create an optimized profile and begin crafting content that speaks to your audience and aligns with your brand. Consistency is key when using social media for your business. Over time, you can build a loyal following and continue to attract more customers.

Email Marketing

Email marketing can be used to connect the dots between new leads and loyal customers. Many businesses invite people to sign up for their email lists at the point of sale, on their website, or in exchange for a special offer. You can then use personalized sequences to communicate with your subscribers on a one-on-one basis over time. This allows you to nurture the relationship and provide relevant messaging in response to their brand interactions.

Search Engine Optimization (SEO)

According to a global retail study by Think With Google, 59% of shoppers said they use Google to research a purchase they plan to make online or in-store. If you want to show up at the top of the search engine results for your potential customers, you’ll need to invest in search engine optimization (SEO). SEO involves creating content such as articles and web pages that are designed to show up at the top of the search results for specific searches. You want to fill your website with content that answers a wide range of questions your audience is asking at each step of the buying cycle.

Local Listings

If you run a local business, get listed in various online directories such as Google My Business, Yelp, Bing Places, and Facebook. These are today’s versions of the Yellow Pages and will help people discover that your business exists. Plus, many have review features that can help you establish social proof.

Press Releases

Press releases can help you to notify the world about your business and any big announcements you’d like to make. Again, this can be especially helpful for local companies because you can notify your local news outlets and create some buzz.

While you can reach an audience without paying for ads, ads help you get the word out much faster to more people. You can opt for a variety of channels, from social media sites like LinkedIn, TikTok, and Instagram, to radio stations, billboards, and search engines. The payment structures vary depending on the ad network, but you’ll often pay for impressions, specific actions such as clicks, or the expected reach of the ad.

In-Person Events

While online advertising is highly effective and efficient, there’s power in meeting people face-to-face. You can do so by buying space at a tradeshow or a community event and setting up a branded booth. You can also join local business organizations and networking groups . This can help you meet people in your industry or community, build your network, and raise awareness of your brand.

The Bottom Line

Starting a new business is an exciting venture, yet one that is very involved. From clarifying a viable idea and ticking all the legal boxes to getting your target market to buy, it will require a large investment of time, effort, and capital. However, as a result, you can bring your dream to life and create your own revenue stream.

How much does it cost to start a business?

The amount it will cost you to start a business can vary depending on the type of business you’re starting and your go-to-market strategy. For example, a service-based online business as a transcriptionist is going to have a much lower startup cost than a bakery with a physical location. First put together a list of your startup expenses (both one-time and monthly), then research each of the costs. The SBA provides an editable worksheet to guide you.

How do you start a business with no money?

To start a business with no money, you need a good idea and a strong business plan. Then, you’ll need sales and marketing skills to get others to believe in what you offer. Whether it’s an investor, business partner, lender, friend, or family member, you’ll need to convince someone else to come on board and provide the startup funding . A small business grant program may also be a good match for your situation.

U.S. Small Business Administration. “ Market Research and Competitive Analysis .”

U.S. Small Business Administration. “ Write Your Business Plan .”

IRS. “ Sole Proprietorship .”

IRS. “ Self-Employment Tax (Social Security and Medicare Taxes) .”

 IRS. “ Tax Information for Partnerships .”

IRS. “ Single Member Limited Liability Companies .”

IRS. “ Limited Liability Company: Possible Repercussions .”

 IRS. “ Forming a Corporation .”

U.S. Small Business Administration. “ Register Your Business .”

 IRS. “ Employer ID Numbers .”

U.S. Small Business Administration. “ Get Business Insurance .”

U.S. Small Business Administration. “ Microloans .”

 U.S. Small Business Administration. “ 7(a) Loans .”

IRS. “ Independent Contractor (Self-Employed) or Employee? ”

U.S. Small Business Administration. “ Hire and Manage Employees .”

 Pew Research Center. “ Social Media Fact Sheet .”

Think With Google. “ Product Research Search Statistics .”

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How to Write a Small Business Plan

• Published August 26, 2024 August 26, 2024

Starting a small business can be both exciting and overwhelming. To set yourself up for success, start by creating a solid small business plan. A business plan not only helps you clarify your ideas but also serves as a roadmap for growth and a tool to attract investors and secure loans.

What is a Small Business Plan?

A business plan is a document that explains what your business does, how you intend to make money, and what your future strategies will be. According to the U.S. Small Business Association , “Your business plan is the tool you’ll use to convince people that working with you—or investing in your company—is a smart choice.” It often includes a mission statement, details about the products or services offered, and a timeline for achieving goals. They are also living documents, so you can—and should—change your business plan as your business evolves.

What to Include in Your Small Business Plan

As the U.S. Small Business Association notes, there is no right or wrong way to write a business plan. The key is to structure your plan to meet your business’s needs. Here’s a simple guide to help you write a small business plan (along with some essential business banking tips to keep in mind).

1. Executive Summary

What it is: A brief overview of your business, including your mission statement, the products or services you offer, and your business goals.

Why it matters: This section captures the essence of your business and is often the first thing potential investors or lenders will read. Keep it concise and compelling.

2. Business Description

What it is: A detailed description of your business, including its history, the market needs it will meet, and what sets it apart from competitors.

Why it matters: This section shows you have a clear understanding of your industry and your place within it.

3. Market Analysis

What it is: An analysis of your target market, including demographics, buying habits, and market trends.

Why it matters: Demonstrating knowledge of your market can help you craft strategies that resonate with your audience and help you stand out.

4. Organization and Management

What it is: A breakdown of your business’s organizational structure, including the roles of your team members.

Why it matters: This section shows that you have the right people in place to execute your business plan.

5. Product Line or Services

What it is: A detailed description of the products or services your business will offer.

Why it matters: Clearly defining what you’re selling helps investors and customers understand your value proposition.

6. Marketing and Sales Strategy

What it is: Your plan for attracting and retaining customers, including pricing, promotion, and distribution strategies.

W hy it matters: A strong marketing plan shows that you’re serious about reaching your target audience and generating revenue.

7. Funding Request

What it is: If you’re seeking financing, this section outlines how much money you need, what you’ll use it for, and how you’ll repay it.

Why it matters: Being clear about your financial needs and plans shows lenders that you’re responsible and prepared.

8. Financial Projections

What it is: Forecasts of your business’s future financial performance, including income statements, cash flow statements, and balance sheets.

Why it matters: This section shows potential lenders and investors that your business is financially viable.

9. Appendix

What it is: Additional information that supports your business plan, such as resumes, permits, and other legal documents.

Why it matters: The appendix provides credibility and additional context for your business plan.

Writing a small business plan might seem daunting but breaking it down into these sections makes it manageable. Remember, your business plan is a living document—update it regularly as your business grows and changes.

With a well-thought-out business plan and the right banking strategies in place, you’ll be better positioned to navigate the challenges of starting and growing your small business.

Small Business Banking Tips

• When seeking funding, consider opening both business checking and savings accounts to draw a clear line between your personal and business finances. This makes managing your finances easier and more professional.
• Use online business banking tools to monitor your cash flow regularly. Many financial institutions (including Maps) offer budgeting tools that can help you track expenses and income in real time, making it easier to stay on top of your financial projections.
• As your business evolves, your banking needs might change too. Regularly review your business bank account, credit options, and financial services to ensure they align with your current goals.

Want more small business strategies?

• Check out our article on how to minimize small business taxes (coming soon).
• Learn about the business banking tools Maps has to offer .
• Find out whether your  side hustle should become a small business .

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How to Create a Basic Business Budget

8 Min Read | Aug 28, 2024

You’d never intentionally set your business up to fail, right? But if you don’t know your numbers and how to make a business budget, that’s exactly what you’re doing. Money problems and bad accounting are two reasons why many small businesses don’t make it past their first five years. 1

Talking about budgets can feel overwhelming. We get it. For a lot of business leaders, it’s a lot more comfortable dreaming up big ideas and getting stuff done than digging into numbers. But you can’t set yourself up for steady growth until you have a handle on the money flowing in and out of your company. You also can’t enjoy financial peace in your business.

Not a numbers person? That’s okay. Follow the simple steps below to learn how to create a budget for a business and manage your finances with confidence. We’ll even give you a link to an easy-to-use small-business budget template in the EntreLeader’s Guide to Business Finances .

But before we get to that, let’s unpack what a budget is and why you need one.

Don't Let Your Numbers Intimidate You

With the EntreLeader’s Guide to Business Finances, you can grow your profits without debt—even if numbers aren’t your thing. Plus, get a free business budget template as part of the guide!

What Is a Business Budget?

A business budget is a plan for how you’ll use the money your business generates every month, quarter and year. It’s like looking through a windshield to see the expenses, revenue and profit coming down the road. Your business budget helps you decide what to do with business profit, when and where to cut spending and grow revenue, and how to invest for growth when the time comes. Leadership expert John Maxwell sums it up: “A budget is telling your money where to go instead of wondering where it went.”

But here’s what a business budget is not: a profit and loss (P&L) report you read at the end of the month. Your P&L is like a rearview mirror—it lets you look backward at what’s already happened. Your P&L statement and budget are meant to work together so you can see your financial problems and opportunities and use those findings to forecast your future, set educated goals, and stay on track.

Why Do I Need to Budget for My Business?

Creating a budget should be your very first accounting task because your business won’t survive without it. Sound dramatic? Check this out: There are 33.2 million small businesses in the United States. Out of the small businesses that opened from 1994 to 2020, 67.7% survived at least two years. But less than half survived past five years. 2    The top reasons these businesses went under? They hit a wall with cash-flow problems, faced pricing and cost issues, and failed to plan strategically . 3

As a business owner, one of the worst feelings in the world is wondering whether you’ll be able to make payroll and keep your doors open. That’s why we can’t say it enough: Make a business budget to stay more in control and have more financial peace in running your business.

A budget won’t help you earn more money, but it will help you:

• Maximize the money you’ve got
• Manage your cash flow
• Spend less than your business earns
• Stay on top of tax payments and other bills
• Know if you’re hitting your numbers so you can move at the true speed of cash

How to Create a Budget for a Business

Your ultimate goal is to create a 12–18-month business budget—and you will get there! But start by building out your first month. Don’t even worry about using a fancy accounting program yet. Good ol’ pen and paper or a simple computer document is fine. Just start! Plus, setting up a monthly budget could become a  keystone habit  that helps kick-start other smart business habits.

Here’s how to create your first budget for business:

1. Write down your revenue streams.

Your revenue is the money you earn in exchange for your products or services. You’ll start your small- business budget by listing all the ways you make money. Look at last month’s P&L—or even just your checking account statement—to help you account for all your revenue streams. You’re not filling in numbers yet. Just list what brings in revenue.

For example, if you run an HVAC business, your revenue streams could be:

• Maintenance service calls
• Repair services and sales
• New unit installation
• Insulation installation
• Air duct cleaning

2. Write down the cost of goods sold (if you have them).

Cost of goods is also called inventory. These expenses are directly related to producing your product or service. In the HVAC example, your cost of goods would be the price you pay for each furnace and air conditioning unit you sell and install. It could also include the cost of thermostats, insulation and new ductwork.

3. List your expense categories.

It’s crazy how much money can slip through the cracks when we’re not careful about putting it in the budget. Think through  all  your business expenses—down to the last shoe cover your technicians wear to protect your customers’ flooring during house calls. Here’s a list of common business budget categories for expenses to get you started:

• Office supplies and equipment
• Technology services
• Training and education

Related articles : Product Launch: 10 Questions to Ask Before You Launch a New Product New Product Launch: Your 10-Step Checklist

4. Fill in your own numbers.

Now that you have a solid list of revenue and expense categories, plug in your real (or projected) numbers associated with them. It’s okay if you’re not sure how much you’ll sell just yet or exactly how much you’ll spend. Make an educated guess if you’re just starting out. If your business has been earning money for a while, use past P&L statements to guide what you expect to bring in. Your first budget is about combining thoughtful guesswork with history and then getting a more realistic picture month over month.

5. Calculate your expected profit (or loss). 

Now, number nerds and number haters alike—buckle in. We’re about to do some basic accounting so you know whether you have a profit or loss. This is your chance to figure out exactly how much you’re spending and making in your business.

Take your  gross revenue (the total amount of money you expect to make this month) and subtract your expenses and  cost of goods sold  to find your profit or loss. Here’s what that calculation looks like:

Revenue - Expenses - Cost of Goods Sold = Profit or Loss

Don’t freak out if your first budget shows a loss. That actually happens a lot with your first few monthly budgets. You’re learning and getting context on what’s coming in and going out so you can make adjustments. Keep doing your budget, and before you know it, you’ll be a rock star at telling your money where to go, planning for emergencies ,  investments and opportunities , and building momentum.  

6. Review your budget often. 

Whew! Once you get that first business budget under your belt, take a deep breath and celebrate. You’ve just done something huge for your business! (You’ll also be happy to know, budgeting gets easier from here since you can copy and paste your first one and tweak your income and expenses each month.)

But here’s the thing: Your budget can’t just sit in a drawer or on your computer. You’ve got to look at it consistently to make sure you’re actually following it.

Weekly Review

At least once a week, someone in your business (whether it’s you, a qualified team member or a bookkeeper) needs to track your transactions so you know what’s happening with your money all month. Then you can make adjustments before you have more month than money.

Every time you review your budget, ask yourself these three questions:

• Are we on target to hit our revenue goal this month?
• If not, what we can change to get there?
• Are there any expenses we can cut or minimize?

Monthly Review

You also need to review your business budget when you close your books every month to compare it to your actuals—your P&L. Otherwise, how can you know how you’re doing?

7. Work toward a 12–18-month budget.

Now that you’ve created your first month’s budget, move on to the next one. You’ve got this! The more budget-building reps you get in, the better you’ll be at looking forward and planning for growth. In no time, you’ll reach that ultimate goal of a 12–18-month budget. Just keep adjusting as you go based on all you’re learning about getting an accurate road map for your finances.

As you start owning your numbers, remember: It’s okay if you’re a little intimidated by the process of accounting and making a budget for business. But it’s not okay to avoid the financial details that will make or break you. So just keep applying the basics we covered and keep moving forward.

Follow the steps above to create your budget, and review it often to stay on track.

Want a tool to make budget building simpler? Check out the EntreLeader’s Guide to Business Finances. It includes an easy-to-use small-business budget template in the extra resources section.

What are the benefits of budgeting?

A business budget will help you:

• Make informed, strategic decisions
• Invest in under-resourced areas
• Trim over-resourced areas
• Plan for the future
• Set goals and track your progress

Does using a small-business budget template save time?

Yes! Using a small-business budget template helps you plug in the numbers you need to operate with more confidence and fewer wrong turns. Check out the small-business-budget template inside our EntreLeader’s Guide to Business Finances .

How do I budget if I own a seasonal business?

Just like farmers put extra hay in the barn to cover leaner months, if you’re a seasonal business owner, you need to set aside resources in times of plenty to cover months your business turns down. Use your P&L statements to go back in time and look at financial performance year over year. Then, create your business budget based on what you learn and on any changes you see coming. You can also go to trade conferences to get an idea of your industry’s seasonal benchmarks.

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About the author

EntreLeadership

EntreLeadership is the part of Ramsey Solutions that exists to help small-business owners thrive by mastering themselves, rallying their teams, and imposing their will on the marketplace. Thousands of leaders use our proven EntreLeadership System and resources to develop as leaders and grow their businesses. These resources include The EntreLeadership Podcast , EntreLeadership Elite digital membership , books, live events, coaching sessions and business workshops. Learn More.

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• Creating a Small Business Financial Plan

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on September 02, 2023

Are You Retirement Ready?

Table of contents, financial plan overview.

A financial plan is a comprehensive document that charts a business's monetary objectives and the strategies to achieve them. It encapsulates everything from budgeting and forecasting to investments and resource allocation.

For small businesses, a solid financial plan provides direction, helping them navigate economic challenges, capitalize on opportunities, and ensure sustainable growth.

The strength of a financial plan lies in its ability to offer a clear roadmap for businesses.

Especially for small businesses that may not have a vast reserve of resources, prioritizing financial goals and understanding where every dollar goes can be the difference between growth and stagnation.

It lends clarity, ensures informed decision-making, and sets the stage for profitability and success.

Understanding the Basics of Financial Planning for Small Businesses

Role of financial planning in business success.

Financial planning is the backbone of any successful business endeavor. It serves as a compass, guiding businesses toward profitability, stability, and growth.

With proper financial planning, businesses can anticipate potential cash shortfalls, make informed investment decisions, and ensure they have the capital needed to seize new opportunities.

For small businesses, in particular, tight financial planning can mean the difference between thriving and shuttering. Given the limited resources, it's vital to maximize every dollar and anticipate financial challenges.

Through diligent planning, small businesses can position themselves competitively, adapt to market changes, and drive consistent growth.

Core Components of a Financial Plan for Small Businesses

Every financial plan comprises several core components that, together, provide a holistic view of a business's financial health and direction. These include setting clear objectives, estimating costs , preparing financial statements , and considering sources of financing.

Each component plays a pivotal role in ensuring a thorough and actionable financial strategy .

For small businesses, these components often need a more granular approach. Given the scale of operations, even minor financial missteps can have significant repercussions.

As such, it's essential to tailor each component, ensuring they address specific challenges and opportunities that small businesses face, from initial startup costs to revenue forecasting and budgetary constraints.

Setting Clear Small Business Financial Objectives

Identifying business's short-term and long-term financial goals.

Every business venture starts with a vision. Translating this vision into actionable financial goals is the essence of effective planning.

Short-term goals could range from securing initial funding and achieving a set monthly revenue to covering startup costs. These targets, usually spanning a year or less, set the immediate direction for the business.

On the other hand, long-term financial goals delve into the broader horizon. They might encompass aspirations like expanding to new locations, diversifying product lines, or achieving a specific market share within a decade.

By segmenting goals into short-term and long-term, businesses can craft a step-by-step strategy, making the larger vision more attainable and manageable.

Understanding the Difference Between Profitability and Cash Flow

Profitability and cash flow, while closely linked, are distinct concepts in the financial realm. Profitability pertains to the ability of a business to generate a surplus after deducting all expenses.

It's a metric of success and indicates the viability of a business model . Simply put, it answers whether a business is making more than it spends.

In contrast, cash flow represents the inflow and outflow of cash within a business. A company might be profitable on paper yet struggle with cash flow if, for instance, clients delay payments or unexpected expenses arise.

For small businesses, maintaining positive cash flow is paramount. It ensures that they can cover operational costs, pay employees, and reinvest in growth, even if they're awaiting payments or navigating financial hiccups.

Estimating Small Business Startup Costs (for New Businesses)

Fixed vs variable costs.

When embarking on a new business venture, understanding costs is paramount. Fixed costs remain consistent regardless of production levels. They include expenses like rent, salaries, and insurance . These are predictable outlays that don't fluctuate with business performance.

Variable costs , conversely, change in direct proportion to production or business activity. Think of costs associated with materials for manufacturing or commission for sales .

For a startup, delineating between fixed and variable costs aids in crafting a more dynamic budget, allowing for adaptability as the business scales and evolves.

One-Time Expenditures vs Ongoing Expenses

Startups often grapple with numerous upfront costs. From purchasing equipment and setting up a workspace to initial marketing campaigns, these one-time expenditures lay the foundation for business operations.

They differ from ongoing expenses like utility bills, raw materials, or employee wages that recur monthly or annually.

For a small business owner, distinguishing between these costs is critical. One-time expenditures often demand a larger chunk of initial capital, while ongoing expenses shape the monthly and annual budget.

By categorizing them separately, businesses can strategize funding needs more effectively, ensuring they're equipped to meet both immediate and recurrent financial obligations.

Funding Sources for Small Businesses

Personal savings.

This is often the most straightforward way to fund a startup. Entrepreneurs tap into their personal savings accounts to jumpstart their business.

While this method has the benefit of not incurring debt or diluting company ownership, it intertwines the individual's personal financial security with the business's fate.

The entrepreneur must be prepared for potential losses, and there's the evident psychological strain of putting one's hard-earned money on the line.

Loans can be sourced from various institutions, from traditional banks to credit unions . They offer a substantial sum of money that can be paid back over time, usually with interest .

The main advantage of taking a loan is that the entrepreneur retains full ownership and control of the business.

However, there's the obligation of monthly repayments, which can strain a business's cash flow, especially in its early days. Additionally, securing a loan often requires collateral and a sound credit history.

Investors, including angel investors and venture capitalists , offer capital in exchange for equity or a stake in the company.

Angel investors are typically high-net-worth individuals who provide funding in the initial stages, while venture capitalists come in when there's proven business potential, often injecting larger sums. The advantage is substantial funding without the immediate pressure of repayments.

However, in exchange for their investment, they often seek a say in business decisions, which might mean compromising on some aspects of the original business vision.

Grants are essentially 'free money' often provided by government programs, non-profit organizations, or corporations to promote innovation and support businesses in specific sectors.

The primary advantage of grants is that they don't need to be repaid, nor do they dilute company ownership. However, they can be highly competitive and might come with stipulations on how the funds should be used.

Moreover, the application process can be lengthy and requires showcasing the business's potential or alignment with the specific goals or missions of the granting institution.

Preparing Key Financial Statements for Small Businesses

Income statement (profit & loss).

An Income Statement , often termed as the Profit & Loss statement , showcases a business's financial performance over a specific time frame. It details revenues , expenses, and ultimately, profits or losses.

By analyzing this statement, business owners can pinpoint revenue drivers, identify exorbitant costs, and understand the net result of their operations.

For small businesses, this document is instrumental in making informed decisions. For instance, if a certain product line is consistently unprofitable, it might be prudent to discontinue it. Conversely, if another segment is thriving, it might warrant further investment.

The Income Statement, thus, serves as a financial mirror, reflecting the outcomes of business strategies and decisions.

Balance Sheet

The Balance Sheet offers a snapshot of a company's assets , liabilities , and equity at a specific point in time.

Assets include everything the business owns, from physical items like equipment to intangible assets like patents .

Liabilities, on the other hand, encompass what the company owes, be it bank loans or unpaid bills.

Equity represents the owner's stake in the business, calculated as assets minus liabilities.

This statement is crucial for small businesses as it offers insights into their financial health. A robust asset base, minimal liabilities, and growing equity signify a thriving enterprise.

In contrast, mounting liabilities or dwindling assets could be red flags, signaling the need for intervention and strategy recalibration.

Cash Flow Statement

While the Income Statement reveals profitability, the Cash Flow Statement tracks the actual movement of money.

It categorizes cash flows into operating (day-to-day business), investing (buying/selling assets), and financing (loans or equity transactions) activities. This statement unveils the liquidity of a business, indicating whether it has sufficient cash to meet immediate obligations.

For small businesses, maintaining positive cash flow is often more vital than showcasing profitability.

After all, a business might be profitable on paper yet struggle if clients delay payments or unforeseen expenses emerge.

By regularly reviewing the Cash Flow Statement, small business owners can anticipate cash crunches and strategize accordingly, ensuring seamless operations irrespective of revenue cycles.

Small Business Budgeting and Expense Management

Importance of budgeting for a small business.

Budgeting is the financial blueprint for any business, detailing anticipated revenues and expenses for a forthcoming period. It's a proactive approach, enabling businesses to allocate resources efficiently, plan for investments, and prepare for potential financial challenges.

For small businesses, a meticulous budget is often the linchpin of stability, ensuring they operate within their means and avoid financial pitfalls.

Having a well-defined budget also fosters discipline. It curtails frivolous spending, emphasizes cost-efficiency, and sets clear financial boundaries.

For small businesses, where every dollar counts, a stringent budget is the gateway to financial prudence, ensuring that funds are utilized judiciously, fostering growth, and minimizing wastage.

Strategies for Reducing Costs and Optimizing Expenses

Bulk purchasing.

When businesses buy supplies in large quantities, they often benefit from discounts due to economies of scale . This can significantly reduce per-unit costs.

However, while bulk purchasing leads to immediate savings, businesses must ensure they have adequate storage and that the products won't expire or become obsolete before they're used.

Renegotiating Vendor Contracts

Regularly reviewing and renegotiating contracts with suppliers or service providers can lead to better terms and lower costs. This might involve exploring volume discounts, longer payment terms, or even bartering services.

Building strong relationships with vendors often paves the way for such negotiations.

Adopting Energy-Saving Measures

Simple changes, like switching to LED lighting or investing in energy-efficient appliances, can lead to long-term savings in utility bills. Moreover, energy conservation not only reduces costs but also minimizes the environmental footprint, which can enhance the business's reputation.

Embracing Technology

Modern software and technology can streamline business processes. Automation tools can handle repetitive tasks, reducing labor costs.

Meanwhile, data analytics tools can provide insights into customer preferences and behavior, ensuring that marketing budgets are used effectively and target the right audience.

Streamlining Operations

Regularly reviewing and refining business processes can eliminate redundancies and improve efficiency. This might mean merging roles, cutting down on unnecessary meetings, or simplifying supply chains. A leaner operation often translates to reduced expenses.

Outsourcing Non-core Tasks

Instead of maintaining an in-house team for every function, businesses can outsource tasks that aren't central to their operations.

For instance, functions like accounting , IT support, or digital marketing can be outsourced to specialized agencies, often leading to cost savings and access to expert skills.

Cultivating a Culture of Frugality

Encouraging employees to adopt a cost-conscious mindset can lead to collective savings. This can be fostered through incentives, regular training, or even simple practices like recycling and reusing office supplies.

When everyone in the organization is attuned to the importance of cost savings, the cumulative effect can be substantial.

Forecasting Small Business Revenue and Cash Flow

Techniques for predicting future sales in a small business, past sales data analysis.

Historical sales data is a foundational element in any forecasting effort. By reviewing previous sales figures, businesses can identify patterns, understand seasonal fluctuations, and recognize the effects of past initiatives.

This information offers a baseline upon which to build future projections, accounting for known recurring variables in the business cycle .

Market Research

Understanding the larger market dynamics is crucial for accurate forecasting. This involves tracking industry trends, monitoring shifts in consumer behavior, and being aware of potential market disruptions.

For instance, a sudden technological advancement can change consumer preferences or regulatory changes might impact an industry.

Local Trend Analysis

For small businesses, localized insights can be especially impactful. Observing local competitors, understanding regional consumer preferences, or noting shifts in the local economy can offer precise data points.

These granular details, when integrated into a larger forecasting model, can enhance prediction accuracy.

Customer Feedback

Direct feedback from customers is an invaluable source of insights. Surveys, focus groups, or even informal chats can reveal customer sentiments, preferences, and potential future purchasing behavior.

For instance, if a majority of loyal customers express interest in a new product or service, it can be indicative of future sales potential.

Moving Averages

This technique involves analyzing a series of data points (like monthly sales) by creating averages from different subsets of the full data set.

For yearly forecasting, a 12-month moving average can be used to smooth out short-term fluctuations and highlight longer-term trends or cycles.

Regression Analysis

Regression analysis is a statistical tool used to identify relationships between variables. In sales forecasting, it can help understand how different factors (like marketing spend, seasonal variations, or competitor actions) relate to sales figures.

Once these relationships are understood, businesses can predict future sales based on planned actions or expected external events.

Understanding the Cash Cycle of Business

The cash cycle encompasses the time it takes for a business to convert resource investments, often in the form of inventory, back into cash.

This involves the processes of purchasing inventory, selling it, and subsequently collecting payment. A shorter cycle implies quicker cash turnarounds, which are vital for liquidity.

For small businesses, a firm grasp of the cash cycle can aid in managing cash flow more effectively.

By identifying bottlenecks or delays, businesses can strategize to expedite processes. This might involve renegotiating payment terms with suppliers, offering discounts for prompt customer payments, or optimizing inventory levels to prevent overstocking.

Ultimately, understanding and optimizing the cash cycle ensures that a business remains liquid and agile.

Preparing for Seasonality and Unexpected Changes

Seasonality affects many businesses, from the ice cream vendor witnessing summer surges to the retailer bracing for holiday shopping frenzies.

By analyzing historical data and market trends, businesses can prepare for these cyclical shifts, ensuring they stock up, staff appropriately, and market effectively.

Small businesses, often operating on tighter margins , need to be especially vigilant. Beyond seasonality, they must also brace for unexpected changes – a local construction project obstructing store access, a sudden competitor emergence, or unforeseen regulatory changes.

Building a financial buffer, diversifying product or service lines, and maintaining flexible operational strategies can equip small businesses to weather these unforeseen challenges with resilience.

Securing Small Business Financing and Capital

Role of debt and equity financing.

When businesses seek external funding, they often grapple with the debt vs. equity conundrum. Debt financing involves borrowing money, typically via loans. While it doesn't dilute ownership, it necessitates regular interest payments, potentially impacting cash flow.

Equity financing, on the other hand, entails selling a stake in the business to investors. It might not demand regular repayments, but it dilutes ownership and might influence business decisions.

Small businesses must weigh these options carefully. While loans offer a structured repayment plan and retained control, they might strain finances if the business hits a rough patch.

Equity financing, although relinquishing some control, might bring aboard strategic partners, offering expertise and networks in addition to funds.

The optimal choice hinges on the business's financial health, growth aspirations, and the founder's comfort with sharing control.

Choosing Between Different Types of Loans

A staple in the lending arena, term loans offer businesses a fixed amount of capital that is paid back over a specified period with interest. They're often used for significant one-time expenses, such as purchasing machinery, real estate , or even business expansion.

With predictable monthly payments, businesses can plan their budgets accordingly. However, they might require collateral and a robust credit history for approval.

Lines of Credit

Unlike term loans that provide funds in a lump sum, a line of credit grants businesses access to a pool of funds up to a certain limit.

Businesses can draw from this line as needed, only paying interest on the amount they use. This makes it a versatile tool, especially for managing cash flow fluctuations or unexpected expenses. It serves as a financial safety net, ready for use whenever required.

As the name suggests, microloans are smaller loans designed to cater to businesses that might not need substantial amounts of capital. They're particularly beneficial for startups, businesses with limited credit histories, or those in need of a quick, small financial boost.

Since they are of a smaller denomination, the approval process might be more lenient than traditional loans.

Peer-To-Peer Lending

A contemporary twist to the traditional lending model, peer-to-peer (P2P) platforms connect borrowers directly with individual lenders or investor groups.

This direct model often translates to quicker approvals and competitive interest rates as the overheads of traditional banking structures are removed. With technology at its core, P2P lending can offer a more user-friendly, streamlined process.

However, creditworthiness still plays a pivotal role in determining interest rates and loan amounts.

Crowdfunding and Alternative Financing Options

In an increasingly digital age, crowdfunding platforms like Kickstarter or Indiegogo have emerged as viable financing avenues.

These platforms enable businesses to raise small amounts from a large number of people, often in exchange for product discounts, early access, or other perks. This not only secures funds but also validates the business idea and fosters a community of supporters.

Other alternatives include invoice financing, where businesses get an advance on pending invoices, or merchant cash advances tailored for businesses with significant credit card sales.

Each financing mode offers unique advantages and constraints. Small businesses must meticulously evaluate their financial landscape, growth trajectories, and risk appetite to harness the most suitable option.

Small Business Tax Planning and Management

Basic tax obligations for small businesses.

Navigating the maze of taxation can be daunting, especially for small businesses. Yet, understanding and fulfilling tax obligations is crucial.

Depending on the business structure—whether sole proprietorship , partnership , LLC , or corporation—different tax rules apply. For instance, while corporations are taxed on their earnings, sole proprietors report business income and expenses on their personal tax returns.

In addition to income taxes, small businesses may also be responsible for employment taxes if they have employees. This covers Social Security , Medicare , federal unemployment, and sometimes state-specific taxes.

There might also be sales taxes, property taxes, or special state-specific levies to consider.

Consistently maintaining accurate financial records, being aware of filing deadlines, and setting aside funds for tax obligations are essential practices to avoid penalties and ensure compliance.

Advantages of Tax Planning and Potential Deductions

Tax planning is the strategic approach to minimizing tax liability through the best use of available allowances, deductions, exclusions, and breaks.

For small businesses, effective tax planning can lead to significant savings.

This might involve strategies like deferring income to a later tax year, choosing the optimal time to purchase equipment, or taking advantage of specific credits available to businesses in certain sectors or regions.

Several potential deductions can reduce taxable income for small businesses. These include expenses like rent, utilities, business travel, employee wages, and even certain meals.

By keeping abreast of tax law changes and actively seeking out eligible deductions, small businesses can optimize their financial landscape, ensuring they're not paying more in taxes than necessary.

Importance of Hiring a Tax Professional or Accountant

While it's feasible for small business owners to manage their taxes, the intricate nuances of tax laws make it beneficial to consult professionals.

An experienced accountant or tax consultant can not only ensure compliance but can proactively recommend strategies to reduce tax liability.

They can guide businesses on issues like whether to classify someone as an employee or a contractor, how to structure the business for optimal taxation, or when to make certain capital investments.

Beyond just annual tax filing, these professionals offer year-round counsel, helping businesses maintain clean financial records, stay updated on tax law changes, and plan for future financial moves.

The investment in professional advice often pays dividends , saving businesses from costly mistakes, penalties, or missed financial opportunities.

Regularly Reviewing and Adjusting the Small Business Financial Plan

Setting checkpoints and milestones.

Like any strategic blueprint, a financial plan isn't static. It serves as a guiding framework but should be flexible enough to adapt to evolving business realities.

Setting regular checkpoints— quarterly , half-yearly, or annually—can help businesses assess whether they're on track to meet their financial objectives.

Milestones, such as reaching a specific sales target, launching a new product, or expanding into a new market, offer tangible markers of progress. Celebrating these victories can bolster morale, while any shortfalls can serve as lessons, prompting strategy tweaks. F

or small businesses, where agility is an asset, regularly revisiting the financial plan ensures that the business remains aligned with its overarching financial goals while being responsive to the dynamic marketplace.

Using Financial Ratios to Monitor Business Health

Financial ratios offer a distilled snapshot of a business's health. Ratios like the current ratio ( current assets divided by current liabilities ) can shed light on liquidity, indicating whether a business can meet short-term obligations.

The debt-to-equity ratio , contrasting borrowed funds with owner's equity, offers insights into the business's leverage and potential financial risk.

Profit margin , depicting profitability relative to sales, can highlight operational efficiency. By consistently monitoring these and other pertinent ratios, small businesses can glean actionable insights, understanding their financial strengths and areas needing attention.

In a realm where early intervention can stave off major financial setbacks, these ratios serve as vital diagnostic tools, guiding informed decision-making.

Pivoting Strategies Based on Financial Performance

In the ever-evolving world of business, flexibility is paramount. If financial reviews indicate that certain strategies aren't yielding anticipated results, it might be time to pivot.

This could involve tweaking product offerings, revising pricing strategies, targeting a different customer segment, or even overhauling the business model.

For small businesses, the ability to pivot can be a lifeline. It allows them to respond swiftly to market changes, customer feedback, or internal challenges.

A robust financial plan, while offering direction, should also be pliable, accommodating shifts in strategy based on real-world performance. After all, in the business arena, adaptability often spells the difference between stagnation and growth.

Bottom Line

Financial foresight is integral for the stability and growth of small businesses. Effective revenue and cash flow forecasting, anchored by historical sales data and enhanced by market research, local trends, and customer feedback, ensures businesses are prepared for future demands.

With the unpredictability of the business environment, understanding the cash cycle and preparing for unforeseen challenges is essential.

As businesses contemplate external financing, the decision between debt and equity and the myriad of loan types, should be made judiciously, keeping in mind the business's health, growth aspirations, and risk appetite.

Furthermore, diligent tax planning, with professional guidance, can lead to significant financial benefits. Regular reviews using financial ratios allow businesses to gauge their performance, adapt strategies, and pivot when necessary.

Ultimately, the agility to adapt, guided by a well-structured financial plan, is pivotal for businesses to thrive in a dynamic marketplace.

Creating a Small Business Financial Plan FAQs

What is the importance of a financial plan for small businesses.

A financial plan offers a structured roadmap, guiding businesses in making informed decisions, ensuring growth, and navigating financial challenges.

How do forecasting revenue and understanding cash cycles aid in financial planning?

Forecasting provides insights into expected income, aiding in budget allocation, while understanding cash cycles ensures effective liquidity management.

What are the core components of a financial plan for small businesses?

Core components include setting objectives, estimating startup costs, preparing financial statements, budgeting, forecasting, securing financing, and tax management.

Why is tax planning vital for small businesses?

Tax planning ensures compliance, optimizes tax liabilities through available deductions, and helps businesses save money and avoid penalties.

How often should a small business review its financial plan?

Regular reviews, ideally quarterly or half-yearly, ensure alignment with business goals and allow for strategy adjustments based on real-world performance.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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A small business owner’s guide to starting a 401(k) plan

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By Dom DiFurio

As a small business owner, planning for employees’ retirement may sound daunting, but it doesn’t have to be. To help demystify the process, Guideline compiled this list of introductory tips about 401(k) plans for small business owners using information from a variety of sources, including the IRS and the Department of Labor. There are many different approaches to create a 401(k) plan that fits a company, and while there is no one size fits all approach, this beginners’ guide can help business owners begin to explore options.

Whether it’s a traditional 401(k), a profit-sharing plan, or another retirement plan altogether, defined-contribution plans can provide your workers with more peace of mind about their futures. In fact, some states like Oregon, Illinois, and California have passed legislation requiring employers to allow paycheck deductions for retirement savings.  

A 401(k) may be one of the simplest ways to differentiate your job benefits from peer companies in today’s tight labor market. There are nearly twice as many openings as there are workers looking for jobs, according to July 2022 data from the Labor Department’s Job Openings and Labor Turnover Survey, so making your company’s benefits more appealing can help with recruitment.

As of 2021, nearly 63 percent of U.S. households—which represents about 82 million Americans of all ages—had either an employer-sponsored retirement plan or IRA. And when it comes to small businesses, 58 percent of workers at companies with fewer than 100 employees have access to retirement benefits, per March 2021 data from the U.S. Bureau of Labor Statistics. These plans held assets totaling around $7.3 trillion in the first quarter of 2022, according to data from the Investment Company Institute. 

This guide can help small business owners take part in boosting the ratio of Americans with access to retirement benefits—because planning ahead is good for business, workers, and the U.S. economy.

Types of 401(k) plans

A traditional 401(k) plan gives employees the option to regularly defer a portion of their pre-tax earnings to an account that invests that cash based on parameters they set. The employer can choose to contribute a set amount to plan participants’ retirement accounts or match a percentage of participants’ contributions. A profit-sharing retirement plan also allows the employer to adjust contributions annually depending on business performance.

Those investments grow over many years or until the worker surpasses the age of 59 ½. At this age, an account holder can make withdrawals from the account without penalty—however, any withdrawals from a traditional 401(k) are taxed similar to income.

It’s important to keep in mind, however, that there are more options besides the traditional 401(k). 

A Roth 401(k) plan allows an employee to contribute a percentage of after-tax earnings. When withdrawals are made after age 59 ½, they are tax-free. 

A profit-sharing 401(k) allows employees to defer a portion of their earnings and make retirement contributions, while also giving employers the ability to contribute to employees’ plans each year, including the ability to make large contributions. 

A safe harbor 401(k) requires a minimum 3 percent contribution to all participants, or specified matching contributions of at least 4 percent from employers. This type of plan allows employers to pass most mandatory nondiscrimination testing, which would otherwise need to be completed annually to ensure fairness and equity in the company’s benefit programs.

And an automatic enrollment 401(k) plan operates the way it sounds—automatically enrolling every employee once they become eligible in a plan. It defers a set percentage of their paycheck into their 401(k) plan for each pay period. Employees who don’t opt-out can reduce their annual income for potential tax benefits while also growing a retirement nest egg. These savings can grow even faster if an employer offers a matching contribution.

What to consider when setting up a 401(k) plan

After deciding which 401(k) plan is best for your business, it’s time to set it up. The exact list of required documentation can vary depending on the business and plan chosen, but some of the items include a written plan document that outlines the plan itself, a trust to hold the plan’s assets, a system for keeping plan records, and informational resources for employees eligible to participate. How a business owner decides to roll these out depends on whether you choose to tackle it more hands-on or with professionals.

Financial advisors, institutions, and consultants can be hired to assist with these steps or carry out much of the process for you. Financial institutions often offer paid services to keep track of companies’ 401(k) plans, participants, investments, and distributions, but it can also be handled by the same party administering the plan. Proper record-keeping will be beneficial when the company files retirement plan documents with the IRS each year.

Employers are required to give employees what is called a summary plan description, which outlines the inner workings of the plan, any potential employer matching, and other essential plan details. An employer can also provide information regarding why they chose a specific retirement plan for employees and the perceived benefit over other types.

How to pick a service provider

With operating a retirement account comes fiduciary responsibility and, of course, potential liability. Employers who wish to limit their liability sometimes opt to hire a service provider to handle operations. It’s worth noting, however, that bringing on a service provider doesn’t necessarily free the company from all liability.

When choosing a 401(k) service provider, the federal government recommends first considering the firm’s partners, financial stability, and assets already under management.

The company should also understand how the service provider conducts business. Your small business should be asking itself and prospective service providers: Will the firm handle selecting and managing investment for the assets in the plan? How? Who are the professionals handling the plan? Have they been the subject of any recent litigation? Has the firm?

It’s also recommended that a company keep tabs on the financial institution or retirement benefit professional hired over the lifetime of the contract.

What to report to the government

One of the most advantageous aspects of setting up a 401(k) retirement plan for employees is the fact that company contributions are tax-deductible from business income. And of course, the money that sits in these plans can grow with a deferred tax burden.

But a company is still expected to report some things to the government through an IRS document called Form 5500. Businesses with fewer than 100 employees enrolled in a 401(k) plan are required to file a Form 5500-SF, specifically. You’ll be required to share some basic information about your plan and how many people use it, as well as details about the plan’s assets, liabilities, and income. If the plan for your small business only has one person enrolled, the company should file a Form 5500-EZ.

Some employers will also have to undergo annual testing of their plan to ensure it isn’t favoring employees with higher compensations nor discriminating against employees with lower incomes. The IRS provides a handy checklist for keeping your plan in compliance.

Terminating a 401(k) plan

Need to terminate your 401(k) plan? Retirement plans are intended to be set up and run in perpetuity, but there are times when a business may need to end its plan.

The company will need to prepare for this by amending its current 401(k) plan. Companies should establish a date by which they want to end the plan, stop all contributions, give all account holders affected by the plan’s termination full vesting benefits, and make sure the company can distribute all of the plan’s benefits to participants within a year of the termination date, according to the IRS. Importantly, don’t forget to notify participants about the plan’s termination.

Any outstanding amounts you are obligated to contribute under the plan must be paid prior to termination. You should also be sure to provide notice to affected participants about what to expect should they choose to roll their accounts over to another type of retirement account, such as an IRA.

This article was originally published by Stacker Studios.

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Published: 28 August 2024

Ewelina Wróbel

How to Create a Small Business Marketing Strategy

How to create a marketing plan for a small business? What do you think it should include? What do you think you should focus on and what can you leave out? Check out my tips that will take your business to another level. 

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What is a Small Business Marketing Strategy?

The truth is brutal — even the best, most qualitative, and life-changing product will not find its buyer if no one knows of its existence. And marketing is largely responsible for this. But not only that… There is a belief among many people that marketing is simply promotion or advertising. This is a mistake! 

A company's marketing strategy aims to create specific values for customers. This process involves the full spectrum of analyzing, planning, managing, budgeting, setting goals, positioning, targeting, and communicating. Advertising is just one of the tools here to help accomplish the task. 

Why Do You Need a Small Business Marketing Strategy?

Many people associate a company's marketing plan with a legacy or something only needed in large companies and enterprises.

For local and small businesses, it is worthwhile to approach marketing by simply starting to develop a strategy. Your marketing will be blind, and you will not be able to measure the impact of your activities and the tools you use on individuals. 

Remember that no matter what industry you are in, a s mall business website will be essential to gain new customers and showcase your company against the competition. 

Understanding Your Target Market

I'm very fond of the saying, “Even the simplest plan is better than no plan.” It perfectly illustrates the premise of taking a conscious approach to marketing your business. If you are running a small business that you set up on your own or have a few employees, it is often a problem to mobilize yourself enough to do your local marketing successfully.

So, a marketing plan keeps you on track and allows you to distribute tasks effectively.

Conducting a SWOT Analysis

The method of strategic analysis of a company, called SWOT analysis, is a compilation of four words - strengths, weaknesses, opportunities, and threats. Interestingly, this analysis can be applied to both the entire company and individual segments.

Strengths, or strengths

Positive internal factors effectively distinguish a company from its competitors. A particular company's strengths could be its qualitatively good products or how it serves its customers. 

 There are all negative internal factors. During the analysis, we are bound to notice that some aspects of the business are not refined. There needs to be more financial resources or knowledge to limit its development.

Opportunities

It's external factors. They are divided into social, political, economic, legal, technological, and ethical opportunities. 

External circumstances that can negatively impact a company. These threats are market-specific, depending on the industry in which a company operates. The impact of the external environment is beyond the entrepreneur's control, but he must consider how to take advantage of friendly factors and mitigate threats.

Choosing Your Marketing Channels

Building a strategy for small businesses has considerable potential, even though it requires a greater focus on financial issues. The basic principle you should remember is to focus on the proper marketing channels that will allow you to maximize your company's growth and achieve the best possible results.

What are the most important channels for marketing to reach its audience? In my opinion, these are:

Your website 

The first outlines of your strategy should include maintaining a blog, creating valuable and useful content, managing user experience, and other related activities.

Social media

Activities on Instagram, Facebook, LinkedIn, Pinterest, etc., are a must today; be sure to choose those sites that best fit your business.

Email marketing

This is your chance to reach your actual and potential customers directly. Creative, attention-grabbing e-mail marketing can attract a broad audience.

Whisper marketing

Building your brand through positive publicity, provoking conversations, giving advice and comments, helping potential customers, etc. — all of this will not strain your budget, and a positive image (especially at the beginning of your business) can prove invaluable.

Content Marketing

Content marketing is all about what you say and how you say it to your customers. This type of marketing defines your brand, how you address your audience, what type of content you serve them, and whether it's delivered earnestly or maybe a little tongue-in-cheek. This area is a broad field. It is worth paying special attention to. 

The entire SEO effort is also one of the marketing channels. Thanks to properly conducted SEO activities, your site displays in a given place in the search engine (of course, it is worth ensuring that it is as high as possible). 

The benefits of SEO for a small business website are invaluable! First, improving your position in search results makes your site more visible to potential customers, increasing your chances of attracting new visitors. A higher position in search results also affects the credibility and trust of users, which can translate into higher conversions and sales.

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Creating a Digital Marketing Strategy

A successful marketing campaign should incorporate online and free marketing techniques like word-of-mouth marketing. By collaborating with a marketing agency or building a capable marketing team, a strategy for your small business can be developed that aligns with your overall goals. 

It’s crucial to continually assess and adjust your marketing strategy for your small business based on performance metrics and feedback. A solid marketing idea can transform your marketing efforts into a lasting impact, ensuring the success of your product or service.

In conclusion - creating a marketing strategy for a small business is not easy. However, this does not mean that it is not worth paying attention to. After all, it is important in the overall business operations and often determines how your products or services are accepted in the public's mind. 

What is a marketing plan and why is it essential for small business owners?

A marketing plan is a strategic document that outlines the marketing goals and the tactics to achieve them. For small business owners, it is important because it helps to define the target audience, allocate the marketing budget effectively, and measure the success of marketing initiatives.

How can I create a marketing strategy for my small business?

To create a marketing strategy for your small business, start by defining your marketing goals, understanding your target audience, and determining which marketing tools will be most effective. Consider both online marketing and traditional methods to reach your audience.

What are some successful marketing tactics for promoting my business?

Successful marketing tactics for promoting your business include social media marketing, email marketing, content marketing, and influencer marketing. Each tactic should be tailored to your business’s target audience and marketing goals.

How do I determine my marketing budget for a small business?

To determine your marketing budget, evaluate your overall business finances, set clear marketing goals, and decide how much you can allocate to each marketing initiative. Many small businesses often set aside a percentage of their revenue for marketing purposes.

What role does online marketing play in a small-business marketing plan?

A: Online marketing plays a crucial role in a small-business marketing plan by allowing business owners to reach a wider audience through digital channels. It includes tactics such as social media marketing, search engine optimization (SEO), and email campaigns which can be cost-effective and have a measurable impact.

How can I measure the effectiveness of my marketing strategy?

You can measure the effectiveness of your marketing strategy by tracking key performance indicators (KPIs) such as website traffic, conversion rates, customer engagement, and return on investment (ROI) for your marketing initiatives. Regular analysis will help you adjust your marketing tactics accordingly.

What are some small business marketing tools I can use?

Some effective small business marketing tools include social media management platforms, email marketing services, customer relationship management (CRM) software, and analytics tools to track performance. These tools can streamline your marketing efforts and provide insights into your marketing strategy.

What should I include in my small-business marketing plan?

Your small-business marketing plan should include an executive summary, market research, target audience analysis, marketing goals, budget allocation, marketing tactics, and a timeline for implementation. This comprehensive approach will guide your marketing efforts effectively.

How do I create a successful marketing plan for my local business?

To create a successful marketing plan for your local business, focus on understanding your community, utilizing local SEO strategies, engaging with local influencers, and participating in community events. Tailoring your marketing messages to resonate with local customers will enhance your reach.

What are the best practices for marketing my small business?

Best practices for marketing your small business include consistently defining your brand message, engaging with your target audience on social media, utilizing diverse marketing tactics, and continually evaluating your marketing strategy to adapt to changing market conditions.

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How to set up a business bank account

In a nutshell

Most businesses need a dedicated bank account to manage expenses, regardless of the company's size.

• A business bank account isn’t required, but it can help you stay legally compliant.
• These types of accounts can help you manage business-related expenses, payroll and taxes.
• It takes a few minutes to open a business bank account online.

The benefits of business bank accounts

Business bank accounts offer many different benefits for business owners, including:

• Separation: Keeping your business and personal transactions separate comes in handy at tax time. Whether you file quarterly or annually, taxes can get messy if you have to weed through one bank account to remember which transactions were personal and which were professional.
• Protection: A business bank account comes with personal liability protection. If something happens to your company, your personal finances are protected. This means you won’t lose personal assets — like your home or car — if your business fails, as long as your business structure is set up under a partnership, LLC or corporation (not a sole proprietorship).
• Financing: Having a business bank account shows potential lenders your business is in good standing with creditors. This may help you qualify for a business credit card , line of credit or loan . While lenders may look at your personal credit history to see if you’re responsible with credit, the longer your business has its own accounts, the more those accounts will stand on their own, separate from your personal credit history.

What to look for in a business bank account

The average business bank account offers several benefits, but not all accounts are equally beneficial. When comparing business bank accounts, consider:

• Fees (minimum balance fees, transaction fees, ATM fees, NSF fees and more).
• Bonuses and special offers.
• Interest rates and high yields, if applicable.
• Money transfers (ACH, wires and deposit options).
• Referral program.
• Customer service availability.
• Branch access, if applicable.

Some business owners prefer a brick-and-mortar location to do business, and branch access might be necessary for folks who deal regularly with cash. If you are OK with an online-only account, you can explore banking options that don't have physical branches.

How to gather the right documents and apply

Before you do anything with a bank account, you’ll need a federal Employer Identification Number, or EIN. It’s like a Social Security Number for your business. If you operate as a sole proprietorship, you need your SSN.

For LLCs, corporations and partnerships, you’ll need other business-related documents, including:

• Business formation documents.
• Ownership agreements.
• Business license.

If your business has a physical location, you may need some further details, including the address, phone number, number of employees and the type of business you do.

You should also bring some personal identification, like a driver's license. If you have a partnership, you'll need to bring identification for anyone else listed on the business bank account.

Each bank has its own required documents, so read through the requirements before applying.

Funding your new business bank account

The amount of money you’ll need to open a business bank account varies depending on your account provider. Some let you open your account with as little as $0 while others may require $25, $50, $100 or more. Because each institution has different requirements, see what your new account asks for so you can immediately make your initial deposit.

Top bank accounts for small businesses

Not all banks and credit unions have the same benefits and offers. It’s important to compare options to see which ones are the best for you and your business.

American Express Business Checking

The American Express Business Checking account doesn't charge monthly maintenance fees and lets you earn a 1.30% APY on account balances up to $500,000. There are no fees for incoming domestic wires or international ACH, nonsufficient funds (NSF) or extra debit cards.

This card offers 30,000 membership rewards points if you meet specific qualifications when you open your account. You'll also earn one point for every $2 you spend on eligible purchases with your debit card. Those points can be used for travel, gift cards, statement credits and more.

Axos Basic Business Checking

Axos is an online-only bank, but if you deal with cash, you can still access your account from anywhere without worrying about the extra fees. That’s because Axos has unlimited ATM fee reimbursements. There’s no minimum deposit to open your account, no monthly maintenance fees and unlimited free transactions.

Chase Business Complete Banking

While the Chase Business Complete Banking account charges a $15 monthly maintenance fee, you can get it waived if you meet other requirements, like having at least $2,000 in daily ending balance or making $2,000 worth of purchases from your Chase Ink Business Card. Chase has thousands of branches nationwide, so if you need in-person access, this might fit your business.

The AP Buyline roundup

A business bank account might require more details than a personal one. While you may need personal documents, like a driver's license to prove your identity, you might also need your business license, formation documents and ownership agreements. Unless you're a sole proprietor, you should obtain a federal Employer Identification Number (EIN) before setting up a business bank account.

When exploring business bank accounts, consider your needs. For instance, do you need in-person access or round-the-clock customer service? What about low fees and qualifying requirements? Think about who will have access to your account, like other employees and the work you'll do through it. Find one that meets your needs and expectations before applying.

Frequently asked questions (FAQs)

What is required to open a business bank account.

You'll need your Social Security Number if you're a sole proprietorship. If you're a partnership, LLC or corporation, you'll need your federal Employer Identification Number, or EIN. It's like a Social Security Number for your business. Most banks require proof of your business, like your business license, ownership agreements and formation documentation. If you have a partner, you should both bring personal identification when you set up your account.

How much does it cost to open a business bank account?

The minimum deposit amount depends on where you open your business bank account. Some don't have any minimum requirements, while others do. It's important to review requirements before completing an application, so you can make an initial deposit immediately and get your new account working.

Do I need an EIN to open a bank account for an LLC?

Not all limited liability corporations, or LLCs, need an EIN to open a business bank account. You might need an EIN to open your account if you have employees — including yourself.

How long does a business account take to open?

You can open a business bank account within a few minutes. Unless your bank requires extra documentation or has outstanding questions, you should be able to open your account, link external accounts and fund it immediately.

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What We Know About Kamala Harris’s $5 Trillion Tax Plan So Far

The vice president supports the tax increases proposed by the Biden White House, according to her campaign.

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By Andrew Duehren

Reporting from Washington

In a campaign otherwise light on policy specifics, Vice President Kamala Harris this week quietly rolled out her most detailed, far-ranging proposal yet: nearly $5 trillion in tax increases over a decade.

That’s how much more revenue the federal government would raise if it adopted a number of tax increases that President Biden proposed in the spring . Ms. Harris’s campaign said this week that she supported those tax hikes, which were thoroughly laid out in the most recent federal budget plan prepared by the Biden administration.

No one making less than $400,000 a year would see their taxes go up under the plan. Instead, Ms. Harris is seeking to significantly raise taxes on the wealthiest Americans and large corporations. Congress has previously rejected many of these tax ideas, even when Democrats controlled both chambers.

While tax policy is right now a subplot in a turbulent presidential campaign, it will be a primary policy issue in Washington next year. The next president will have to work with Congress to address the tax cuts Donald J. Trump signed into law in 2017. Many of those tax cuts expire after 2025, meaning millions of Americans will see their taxes go up if lawmakers don’t reach a deal next year.

Here’s an overview of what we now know — and still don’t know — about the Democratic nominee’s views on taxes.

Higher taxes on corporations

The most recent White House budget includes several proposals that would raise taxes on large corporations . Chief among them is raising the corporate tax rate to 28 percent from 21 percent, a step that the Treasury Department estimated could bring in $1.3 trillion in revenue over the next 10 years.

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How To Start A Bookkeeping Business (2024 Guide)

Updated: Apr 28, 2024, 5:57pm

Businesses of all kinds will always need bookkeeping services. If you’re considering becoming a bookkeeper, read our guide to learn how to start a bookkeeping business in 2024. We’ll cover everything from the legal side of registering a new business to pricing, marketing and more.

Bookkeeper Duties

Common bookkeeping responsibilities.

Companies often hire bookkeepers to help them maintain financial records and accounting reports. Among other things, a bookkeeper will often do the following :

• Document and categorize transactions, including income and expenses
• Manage a company’s finances via business accounting software, such as QuickBooks or Xero
• Assess a company’s cash flow
• Prepare financial statements, such as balance sheets and profit and loss statements

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How a Bookkeeper Is Different Than an Accountant

Unlike certified public accountants, bookkeepers don’t file tax returns or audit financial statements. Bookkeepers are also not required to have an accounting degree. Unless they are a certified public accountant (CPA), bookkeepers should not prepare tax returns or sign the returns as a paid preparer.

Certifications for Your Bookkeeping Business

Some bookkeepers choose to obtain certifications for their business. Bookkeepers can be certified in various financial platforms, such as QuickBooks, or via training programs. You can also choose to become a certified public bookkeeper to market yourself better as a bookkeeping professional.

Professional associations also offer certifications so that you can hone your skills and market yourself as a professional bookkeeper. For instance, both the American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB) offer certification programs.

Create a Business Plan

New businesses, including bookkeeping businesses, depend on a solid business plan to get off on the right foot. Not only will a business plan help you clarify your business goals and objectives , but it can also be used if you seek funding from lenders or investors. In general, a business plan will include the following:

• Executive summary―the “elevator pitch” of your business
• Overview of the business – a more detailed description of your business
• Market/competitive analysis
• Description of key products and services provided
• Marketing and sales plan
• The proposed budget and financial projections

For a bookkeeping business, you may also want to include information regarding your niche and any certifications that you have as well.

Choose a Business Name

You want your business name to reflect you as a person and the type of services you provide. Your business name is the first thing that lets customers, clients, competitors and others in the marketplace know about who you are and what you do.

Register Your Business

Once you’ve settled on a business name, you’ll need to register your business in the state in which you will do business. The specific requirements for registering your business will vary depending on your business structure, such as whether it’s a sole proprietorship, corporation, partnership, or LLC, and the state in which your business will be registered. You may also need to obtain a business license. Learn more about how to set up an LLC .

Get the Right Software

There’s no shortage of business accounting software to use. Some popular options include QuickBooks, Xero, FreshBooks and Zoho Books, among others. You can read more about our ratings for various business accounting software here. You should be familiar with more than one software as some of your clients may have a preference in terms of the accounting software that they’d like you to use.

Price Your Services

Deciding what to charge your clients is often a difficult process. You will want to do your research before pricing your services, and you will also want to maintain some level of flexibility to adjust your rates in the future.

You can look at freelance sites, such as Upwork, to see what others are charging for bookkeeping services, but you can also learn a lot by asking around. Talk to businesses in your area to see what they are currently paying for bookkeeping services. Talk to people in your network who are also bookkeepers and ask what they are charging. In doing so, you can get a good idea as to the range bookkeepers charge for services.

The specific amount you charge your clients for bookkeeping services will depend on your certifications, years of experience and familiarity with the client’s business.

Research Funding Options

You will likely want to establish a business banking account and credit card. This can help you keep your own business expenses organized and separate. If you plan to hire employees, such as an administrative assistant, you may also want to seek a small business loan . If you seek funding from a bank or investor, your business plan will be especially important because it is how potential lenders and investors will understand your business.

Market Your Business

Before launching your bookkeeping business, you should consider creating a marketing and sales plan so that you are set up for success. Your bookkeeping marketing and sales plan might include:

• Determining where clients will find out about you and finding ways to meet them there (e.g., Google My Business, Google Ads, etc…).
• Develop an online presence with a website that is optimized for search. Learn how to make a small business website .
• Add your bookkeeping business to relevant online business directories.
• Assess who in your network might be a potential client or customer.
• Assess who in your network might be a possible referral source for business.
• Consider whether your budget allows for paid advertising and marketing materials.
• Consider local advertising opportunities.

Bottom Line

In addition to being good with finances and accounting software, operating a successful bookkeeping business requires staying up-to-date on accounting software technology trends, marketing your business, managing your own business and maintaining positive relationships with your clients.

Forbes Advisor staff reviewer Kelly Main contributed to this article.

Frequently Asked Questions (FAQs)

Do i need to rent office space for my bookkeeping business.

No, a separate office isn’t necessary for a bookkeeping business. You may want to start your business out of your home. As your business grows and you hire employees, you can consider whether to rent office space or keep working remotely. You can also take advantage of office “hoteling” options.

Do I need to specialize in a niche area?

While it’s not required for bookkeepers to specialize in a niche, many choose to do so for marketing purposes. If you focus on a specific industry, you can gain referrals from others within the industry and join industry associations.

Can I do my own bookkeeping for my business?

A small business can likely do all its own bookkeeping using accounting software. Many of the operations are automated in the software, making it easy to get accurate debits and credits entered.

What skills does a bookkeeper need?

Unlike accounting, bookkeeping does not require any certifications. Individuals who are successful bookkeeping professionals are highly organized, can balance ledgers accurately, have an eye for detail and are excellent communicators.

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Christine is a non-practicing attorney, freelance writer, and author. She has written legal and marketing content and communications for a wide range of law firms for more than 15 years. She has also written extensively on parenting and current events for the website Scary Mommy. She earned her J.D. and B.A. from University of Wisconsin–Madison, and she lives in the Chicago area with her family.