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How to Write a Business Plan, Step by Step

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What is a business plan?

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

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

ZenBusiness

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

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

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

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

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

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

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

Your business’s registered name.

Address of your business location .

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

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

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

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

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

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

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

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

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

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

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

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

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

Licenses and permits.

Equipment leases.

Bank statements.

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

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

How much do you need?

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

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

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

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

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

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

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

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

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

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

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

Let’s get started.

What Do You Need A Business Plan For?

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

1. Secure Funds

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

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

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

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

2. Monitor Business Growth

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

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

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

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

3. Measure Business Success

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

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

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

4. Document Your Marketing Strategies

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

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

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

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

How to Write a Business Plan Step-by-Step

1. create your executive summary.

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

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

A good executive summary should do the following:

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

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

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

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

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

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

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

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

2. Add Your Company Overview

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

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

Your company overview should contain the following:

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

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

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

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

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

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

• Mission Statement

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

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

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

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

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

Business Objectives

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

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

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

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

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

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

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

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

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

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

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

Market Analysis

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

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

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

• Market Research

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

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

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

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

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

How to Quantify Your Target Market

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

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

What Does a Good Market Analysis Entail?

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

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

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

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

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

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

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

Competitive Analysis

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

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

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

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

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

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

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

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

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

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

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

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

Direct vs Indirect Competition

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

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

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

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

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

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

Factors that Differentiate Your Business from the Competition

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

1. Cost Leadership

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

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

2. Product Differentiation

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

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

3. Market Segmentation

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

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

4. Define Your Business and Management Structure

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

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

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

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

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

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

Management Team

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

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

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

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

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

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

Key Questions to Answer When Structuring Your Management Team

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

Additional Tips for Writing the Management Structure Section

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

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

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

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

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

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

Organizational Chart

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

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

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

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

5. Describe Your Product and Service Offering

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Avoid Technical Descriptions and Industry Buzzwords

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

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

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

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

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

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

3. Long or Short Products or Services Section

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

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

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

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

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

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

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

4. Describe Your Relationships with Vendors or Suppliers

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

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

5. Your Primary Goal Is to Convince Your Readers

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

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

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

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

Key Questions to Answer When Writing your Products and Services Section

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

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

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

6. Show and Explain Your Marketing and Sales Plan

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

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

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

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

Outline Your Business’ Unique Selling Proposition (USP)

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

Target Market and Target Audience

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

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

Creating a Smart Marketing and Sales Plan

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

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

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

Your Positioning Statement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Basic Rules to Follow When Pricing Your Offering

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

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

Pricing Strategy

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

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

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

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

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

Advertising

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

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

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

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

Public Relations

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

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

Content Marketing

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

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

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

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

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

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

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

Social Media

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

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

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

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

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

Strategic Alliances

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

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

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

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

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

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

2. Evaluate Your Competition

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

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

These questions can help you know your competition.

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

3. Consider Your Brand

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

4. Focus on Benefits

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

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

5. Focus on Differentiation

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

Key Questions to Answer When Writing Your Marketing and Sales Plan

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

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

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

7. Clearly Show Your Funding Request

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

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

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

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

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

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

Funding Request: Debt or Equity?

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

Case for Equity

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

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

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

Case for Debt

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

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

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

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

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

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

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

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

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

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

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

8. Detail Your Financial Plan, Metrics, and Projections

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

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

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

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

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

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

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

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

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

Use Graphs and Charts

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

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

Address the Risk Factors and Show Realistic Financial Projections

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

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

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

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

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

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

1. Sales Forecast

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

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

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

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

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

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

2. Personnel Plan

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

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

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

3. Income Statement

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

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

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

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

4. Cash Flow Statement

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

5. Balance Sheet

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

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

6. Exit Strategy

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

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

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

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

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

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

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

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

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

9. Add an Appendix to Your Business Plan

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

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

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

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

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

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

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

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

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

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

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

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

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

Tips and Strategies for Writing a Convincing Business Plan

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

1. Know Your Audience

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

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

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

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

2. Get Inspiration from People

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

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

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

3. Avoid Being Over Optimistic

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

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

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

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

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

4. Keep it Simple and Short

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

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

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

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

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

5. Make an Outline and Follow Through

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

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

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

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

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

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

6. Ask a Professional to Proofread

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

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

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

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

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

1. hubspot's one-page business plan.

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

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

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

2. Bplan’s Free Business Plan Template

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

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

3. HubSpot's Downloadable Business Plan Template

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

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

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

4. Business Plan by My Own Business Institute

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

The comprehensive template consists of a whopping 15 sections.

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

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

5. Score's Business Plan Template for Startups

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

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

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

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

6. Minimalist Architecture Business Plan Template by Venngage

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

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

7. Small Business Administration Free Business Plan Template

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

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

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

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

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

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

9. PandaDoc’s Free Business Plan Template

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

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

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

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

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

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

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

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

Alternatives to the Traditional Business Plan

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

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

Business Model Canvas (BMC)

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

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

Segments of the Business Model Canvas

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

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

Lean Canvas

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

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

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

Startup Pitch Deck

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

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

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

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

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

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

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

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

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

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

Business Plan FAQ

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

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

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

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

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

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

Exlore Further

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

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Martin luenendonk.

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

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

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Business plans might seem like an old-school stiff-collared practice, but they deserve a place in the startup realm, too. It’s probably not going to be the frame-worthy document you hang in the office—yet, it may one day be deserving of the privilege.

Whether you’re looking to win the heart of an angel investor or convince a bank to lend you money, you’ll need a business plan. And not just any ol’ notes and scribble on the back of a pizza box or napkin—you’ll need a professional, standardized report.

Bah. Sounds like homework, right?

Yes. Yes, it does.

However, just like bookkeeping, loan applications, and 404 redirects, business plans are an essential step in cementing your business foundation.

Don’t worry. We’ll show you how to write a business plan without boring you to tears. We’ve jam-packed this article with all the business plan examples, templates, and tips you need to take your non-existent proposal from concept to completion.

Table of Contents

What Is a Business Plan?

Tips to Make Your Small Business Plan Ironclad

How to Write a Business Plan in 6 Steps

Startup Business Plan Template

Business Plan Examples

Work on Making Your Business Plan

How to Write a Business Plan FAQs

What is a business plan why do you desperately need one.

A business plan is a roadmap that outlines:

• Who your business is, what it does, and who it serves
• Where your business is now
• Where you want it to go
• How you’re going to make it happen
• What might stop you from taking your business from Point A to Point B
• How you’ll overcome the predicted obstacles

While it’s not required when starting a business, having a business plan is helpful for a few reasons:

• Secure a Bank Loan: Before approving you for a business loan, banks will want to see that your business is legitimate and can repay the loan. They want to know how you’re going to use the loan and how you’ll make monthly payments on your debt. Lenders want to see a sound business strategy that doesn’t end in loan default.
• Win Over Investors: Like lenders, investors want to know they’re going to make a return on their investment. They need to see your business plan to have the confidence to hand you money.
• Stay Focused: It’s easy to get lost chasing the next big thing. Your business plan keeps you on track and focused on the big picture. Your business plan can prevent you from wasting time and resources on something that isn’t aligned with your business goals.

Beyond the reasoning, let’s look at what the data says:

• Simply writing a business plan can boost your average annual growth by 30%
• Entrepreneurs who create a formal business plan are 16% more likely to succeed than those who don’t
• A study looking at 65 fast-growth companies found that 71% had small business plans
• The process and output of creating a business plan have shown to improve business performance

Convinced yet? If those numbers and reasons don’t have you scrambling for pen and paper, who knows what will.

Don’t Skip: Business Startup Costs Checklist

Before we get into the nitty-gritty steps of how to write a business plan, let’s look at some high-level tips to get you started in the right direction:

Be Professional and Legit

You might be tempted to get cutesy or revolutionary with your business plan—resist the urge. While you should let your brand and creativity shine with everything you produce, business plans fall more into the realm of professional documents.

Think of your business plan the same way as your terms and conditions, employee contracts, or financial statements. You want your plan to be as uniform as possible so investors, lenders, partners, and prospective employees can find the information they need to make important decisions.

If you want to create a fun summary business plan for internal consumption, then, by all means, go right ahead. However, for the purpose of writing this external-facing document, keep it legit.

Know Your Audience

Your official business plan document is for lenders, investors, partners, and big-time prospective employees. Keep these names and faces in your mind as you draft your plan.

Think about what they might be interested in seeing, what questions they’ll ask, and what might convince (or scare) them. Cut the jargon and tailor your language so these individuals can understand.

Remember, these are busy people. They’re likely looking at hundreds of applicants and startup investments every month. Keep your business plan succinct and to the point. Include the most pertinent information and omit the sections that won’t impact their decision-making.

Invest Time Researching

You might not have answers to all the sections you should include in your business plan. Don’t skip over these!

Your audience will want:

• Detailed information about your customers
• Numbers and solid math to back up your financial claims and estimates
• Deep insights about your competitors and potential threats
• Data to support market opportunities and strategy

Your answers can’t be hypothetical or opinionated. You need research to back up your claims. If you don’t have that data yet, then invest time and money in collecting it. That information isn’t just critical for your business plan—it’s essential for owning, operating, and growing your company.

Stay Realistic

Your business may be ambitious, but reign in the enthusiasm just a teeny-tiny bit. The last thing you want to do is have an angel investor call BS and say “I’m out” before even giving you a chance.

The folks looking at your business and evaluating your plan have been around the block—they know a thing or two about fact and fiction. Your plan should be a blueprint for success. It should be the step-by-step roadmap for how you’re going from Point A to Point B.

How to Write a Business Plan—6 Essential Elements

Not every business plan looks the same, but most share a few common elements. Here’s what they typically include:

• Executive Summary
• Business Overview
• Products and Services
• Market Analysis
• Competitive Analysis
• Financial Strategy

Below, we’ll break down each of these sections in more detail.

1. Executive Summary

While your executive summary is the first page of your business plan, it’s the section you’ll write last. That’s because it summarizes your entire business plan into a succinct one-pager.

Begin with an executive summary that introduces the reader to your business and gives them an overview of what’s inside the business plan.

Your executive summary highlights key points of your plan. Consider this your elevator pitch. You want to put all your juiciest strengths and opportunities strategically in this section.

2. Business Overview

In this section, you can dive deeper into the elements of your business, including answering:

• What’s your business structure? Sole proprietorship, LLC, corporation, etc.
• Where is it located?
• Who owns the business? Does it have employees?
• What problem does it solve, and how?
• What’s your mission statement? Your mission statement briefly describes why you are in business. To write a proper mission statement, brainstorm your business’s core values and who you serve.

Don’t overlook your mission statement. This powerful sentence or paragraph could be the inspiration that drives an investor to take an interest in your business. Here are a few examples of powerful mission statements that just might give you the goosebumps:

• Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.
• Tesla: To accelerate the world’s transition to sustainable energy.
• InvisionApp : Question Assumptions. Think Deeply. Iterate as a Lifestyle. Details, Details. Design is Everywhere. Integrity.
• TED : Spread ideas.
• Warby Parker : To offer designer eyewear at a revolutionary price while leading the way for socially conscious businesses.

3. Products and Services

As the owner, you know your business and the industry inside and out. However, whoever’s reading your document might not. You’re going to need to break down your products and services in minute detail.

For example, if you own a SaaS business, you’re going to need to explain how this business model works and what you’re selling.

You’ll need to include:

• What services you sell: Describe the services you provide and how these will help your target audience.
• What products you sell: Describe your products (and types if applicable) and how they will solve a need for your target and provide value.
• How much you charge: If you’re selling services, will you charge hourly, per project, retainer, or a mixture of all of these? If you’re selling products, what are the price ranges?

4. Market Analysis

Your market analysis essentially explains how your products and services address customer concerns and pain points. This section will include research and data on the state and direction of your industry and target market.

This research should reveal lucrative opportunities and how your business is uniquely positioned to seize the advantage. You’ll also want to touch on your marketing strategy and how it will (or does) work for your audience.

Include a detailed analysis of your target customers. This describes the people you serve and sell your product to. Be careful not to go too broad here—you don’t want to fall into the common entrepreneurial trap of trying to sell to everyone and thereby not differentiating yourself enough to survive the competition.

The market analysis section will include your unique value proposition. Your unique value proposition (UVP) is the thing that makes you stand out from your competitors. This is your key to success.

If you don’t have a UVP, you don’t have a way to take on competitors who are already in this space. Here’s an example of an ecommerce internet business plan outlining their competitive edge:

FireStarters’ competitive advantage is offering product lines that make a statement but won’t leave you broke. The major brands are expensive and not distinctive enough to satisfy the changing taste of our target customers. FireStarters offers products that are just ahead of the curve and so affordable that our customers will return to the website often to check out what’s new.

5. Competitive Analysis

Your competitive analysis examines the strengths and weaknesses of competing businesses in your market or industry. This will include direct and indirect competitors. It can also include threats and opportunities, like economic concerns or legal restraints.

The best way to sum up this section is with a classic SWOT analysis. This will explain your company’s position in relation to your competitors.

6. Financial Strategy

Your financial strategy will sum up your revenue, expenses, profit (or loss), and financial plan for the future. It’ll explain how you make money, where your cash flow goes, and how you’ll become profitable or stay profitable.

This is one of the most important sections for lenders and investors. Have you ever watched Shark Tank? They always ask about the company’s financial situation. How has it performed in the past? What’s the ongoing outlook moving forward? How does the business plan to make it happen?

Answer all of these questions in your financial strategy so that your audience doesn’t have to ask. Go ahead and include forecasts and graphs in your plan, too:

• Balance sheet: This includes your assets, liabilities, and equity.
• Profit & Loss (P&L) statement: This details your income and expenses over a given period.
• Cash flow statement: Similar to the P&L, this one will show all cash flowing into and out of the business each month.

It takes cash to change the world—lenders and investors get it. If you’re short on funding, explain how much money you’ll need and how you’ll use the capital. Where are you looking for financing? Are you looking to take out a business loan, or would you rather trade equity for capital instead?

Read More: 16 Financial Concepts Every Entrepreneur Needs to Know

Startup Business Plan Template (Copy/Paste Outline)

Ready to write your own business plan? Copy/paste the startup business plan template below and fill in the blanks.

Executive Summary Remember, do this last. Summarize who you are and your business plan in one page.

Business Overview Describe your business. What’s it do? Who owns it? How’s it structured? What’s the mission statement?

Products and Services Detail the products and services you offer. How do they work? What do you charge?

Market Analysis Write about the state of the market and opportunities. Use date. Describe your customers. Include your UVP.

Competitive Analysis Outline the competitors in your market and industry. Include threats and opportunities. Add a SWOT analysis of your business.

Financial Strategy Sum up your revenue, expenses, profit (or loss), and financial plan for the future. If you’re applying for a loan, include how you’ll use the funding to progress the business.

5 Frame-Worthy Business Plan Examples

Want to explore other templates and examples? We got you covered. Check out these 5 business plan examples you can use as inspiration when writing your plan:

• SBA Wooden Grain Toy Company
• SBA We Can Do It Consulting
• OrcaSmart Business Plan Sample
• Plum Business Plan Template
• PandaDoc Free Business Plan Templates

Get to Work on Making Your Business Plan

If you find you’re getting stuck on perfecting your document, opt for a simple one-page business plan —and then get to work. You can always polish up your official plan later as you learn more about your business and the industry.

Remember, business plans are not a requirement for starting a business—they’re only truly essential if a bank or investor is asking for it.

Ask others to review your business plan. Get feedback from other startups and successful business owners. They’ll likely be able to see holes in your planning or undetected opportunities—just make sure these individuals aren’t your competitors (or potential competitors).

Your business plan isn’t a one-and-done report—it’s a living, breathing document. You’ll make changes to it as you grow and evolve. When the market or your customers change, your plan will need to change to adapt.

That means when you’re finished with this exercise, it’s not time to print your plan out and stuff it in a file cabinet somewhere. No, it should sit on your desk as a day-to-day reference. Use it (and update it) as you make decisions about your product, customers, and financial plan.

Review your business plan frequently, update it routinely, and follow the path you’ve developed to the future you’re building.

Keep Learning: New Product Development Process in 8 Easy Steps

What financial information should be included in a business plan?

Be as detailed as you can without assuming too much. For example, include your expected revenue, expenses, profit, and growth for the future.

What are some common mistakes to avoid when writing a business plan?

The most common mistake is turning your business plan into a textbook. A business plan is an internal guide and an external pitching tool. Cut the fat and only include the most relevant information to start and run your business.

Who should review my business plan before I submit it?

Co-founders, investors, or a board of advisors. Otherwise, reach out to a trusted mentor, your local chamber of commerce, or someone you know that runs a business.

Ready to Write Your Business Plan?

Don’t let creating a business plan hold you back from starting your business. Writing documents might not be your thing—that doesn’t mean your business is a bad idea.

Let us help you get started.

Join our free training to learn how to start an online side hustle in 30 days or less. We’ll provide you with a proven roadmap for how to find, validate, and pursue a profitable business idea (even if you have zero entrepreneurial experience).

Stuck on the ideas part? No problem. When you attend the masterclass, we’ll send you a free ebook with 100 of the hottest side hustle trends right now. It’s chock full of brilliant business ideas to get you up and running in the right direction.

About Jesse Sumrak

Jesse Sumrak is a writing zealot focused on creating killer content. He’s spent almost a decade writing about startup, marketing, and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped business. A writer by day and a peak bagger by night (and early early morning), you can usually find Jesse preparing for the apocalypse on a precipitous peak somewhere in the Rocky Mountains of Colorado.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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How To Write a Business Plan

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

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

Table of contents

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

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Step 1: Write your executive summary

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

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

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

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

Step 2: Do your market research homework

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

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

Step 3: Set your business goals and objectives

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

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

Step 4: Plan your business strategy

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

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

Step 5: Describe your product or service

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

Step 6: Crunch the numbers

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

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

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

Step 7: Finalize your business plan

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

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

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The takeaway

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

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How to Write a Business Plan in 2023: The Ultimate Guide for Every Entrepreneur

Are you starting a new business or trying to get a loan for your existing venture? If so, you’re going to need to know how to write a business plan. Business plans give entrepreneurs the opportunity to formally analyze and define every aspect of their business idea .

In this post, you’ll learn how to put together a business plan and find the best resources to help you along the way.

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What is a Business Plan? 

A business plan is a formal document that outlines your business’s goals and how you will achieve those goals. Entrepreneurs who start out with business plans are 16 percent more likely to build successful companies , according to the Harvard Business Review.  Developing a business plan ensures sustainable success, guiding you as you grow your business, legitimizing your venture, and helping you secure funding (among countless other benefits). 

What Are the Main Purposes of a Business Plan?

Most financial institutions and service providers require you to submit a detailed business plan to obtain funding for your business. Online businesses will likely have a low overhead to start, so they may not need funding and therefore may not feel the need to write a business plan. That said, writing a business plan is still a good idea as it can help you secure a drastic increase limit on your credit card as your business grows or open a business account. This varies per bank.

If you’re growing your business, use it to help you raise expansion capital, create a growth strategy, find opportunities, and mitigate risks.Palo Alto software found that companies who make business plans are twice as likely to secure funding . .

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If you’re just starting your business, making a business plan can help you  identify your strengths and weaknesses, communicate your vision to others, and develop accurate forecasts.

How to Make a Business Plan: The Prerequisites 

Here are the prerequisites to creating a solid business plan:

• Establish goals
• Understand your audience
• Determine your business plan format
• Get to writing! 

Establish Goals

There are two key questions to ask here: 

• What are you hoping to accomplish with your business?
• What are you hoping to accomplish with your business plan?

Approaching your business plan through that lens will help you focus on the end goal throughout the writing process. These also provide metrics to measure success against. 

Before writing your business plan, gather the content and data needed to inform what goes in it. This includes researching your market and industry – spanning everything from customer research to legalities you’ll need to consider. It’s a lot easier to start with the information already in front of you instead of researching each section individually as you go. 

Turn to guides, samples, and small business plan templates to help. Many countries have an official administration or service dedicated to providing information, resources, and tools to help entrepreneurs and store owners plan, launch, manage, and grow their businesses. 

The following will take you to online business plan guides and templates for specific countries.

• United States Small Business Administration (SBA) – The “write your business plan page” includes traditional and lean startup business plan formats, three downloadable sample business plans, a template, and a step-by-step build a business plan tool.
• Australian Government – The “business plan template” page includes a downloadable template, guide, and business plan creation app.
• UK Government Business and Self-Employed – The “write a business plan” page includes links to a downloadable business plan template and resources from trusted UK businesses. .
• Canada Business Network – The “writing your business plan” page includes a detailed guide to writing your business plan and links to business plan templates from Canadian business development organizations and banks.

These business resource sites also offer a wealth of valuable information for entrepreneurs including local and regional regulations, structuring, tax obligations, funding programs, market research data, and much more. Visit the sites above or do the following Google searches to find official local business resources in your area:

• your country government business services
• your state/province government business services
• your city government business services

Some Chamber of Commerce websites offer resources for business owners, including business plan guides and templates. Check your local chapter to see if they have any.

Banks that offer business funding also often have a resource section for entrepreneurs. Do a Google search to find banks that offer business funding as well as business plan advice to see the business plans that get funding. If your bank doesn’t offer any advice, search for the largest banks in your area:

• business plan guide bank name
• business plan samples bank name
• business plan template bank name

If you’re looking for more sample business plans, Bplans has over 500 free business plan samples organized by business type as well as a business plan template. Their collection includes 116 business plans for retail and online stores. Shopify also offers business plan templates intended to help small business owners and aspiring entrepreneurs identify functional areas of a business they may not have considered.

Understand Your Audience

Because business plans serve different purposes, you’re not always presenting it to the same audience. It’s important to understand who’s going to be reading your business plan, what you’re trying to convince them to do, and what hesitations they might have. 

That way, you can adapt your business plan accordingly. As such, your audience also determines which type of business plan format you use. Which brings us to our next point…

Which Business Plan Format Should You Use? 

The United States Small Business Administration (SBA) presents two business plan formats: 

• The traditional business plan format is for entrepreneurs who want to create a detailed plan for themselves or for business funding. 
• The lean startup business plan format, on the other hand, is for business owners that want to create a condensed, single-page business plan.

If the business plan is just for you and internal folks, draft a lean startup business plan or a customized version of the traditional business plan with only the sections you need. If you need it for business funding or other official purposes, choose the formal business plan and thoroughly complete the required sections while paying extra attention to financial projections.

If your business operates outside the U.S., clarify the preferred format with your bank.

How to Create a Business Plan: Questions to Ask Yourself

As you write a business plan, take time to not only analyze your business idea, but yourself as well. Ask the following questions to help you analyze your business idea along the way:

• Why do I want to start or expand my business?
• Do my goals (personal and professional) and values align with my business idea?
• What income do I need to generate for myself?
• What education, experience, and skills do I bring to my business?

How to Write a Business Plan Step by Step

According to the business plan template created by SCORE, Deluxe, and the SBA , a traditional business plan encompasses the following sections. 

• Executive summary
• Company description
• Products & services
• Market analysis
• Marketing & sales
• Management & organization
• Funding request
• Financial projections
• SWOT analysis

Since not everyone is aware of the key details to include in each section, we’ve listed information you can copy to fill in your business plan outline. Here’s how to build a business plan step by step.  

Executive Summary

The Executive Summary is the first part of your business plan, so this is where you need to hook readers in. Every business plan starts this way — even a simple business plan template should kick off with the Executive Summary. Summarize your entire business plan in a single page, highlighting details about your business that will excite potential investors and lenders. 

Explain what your business has to offer, your target market , what separates you from the competition, a little bit about yourself and the core people behind your business, and realistic projections about your business’ success.

While this is the first section of your business plan, write it after you’ve completed the rest of your business plan. It’s a lot easier because you can pull from the sections you’ve already written, and it’s easier to identify the best parts of your business plan to include on the first page.

Company Description

In the Company Description, share 411 about your business. Include basic details like: 

• Legal structure (sole proprietor, partnership, corporation, etc.)
• Business and tax ID numbers
• When the business started
• Ownership information
• Number of employees

Your mission statement , philosophy and values, vision, short- and long-term goals, and milestones along with a brief overview of your industry, market, outlook, and competitors should also be in the Company Description.

Pro tip: These are the details you’ll use each time you create a business profile, whether that's on social media, business directories, or other networks. Keep your information consistent to reduce confusion and instill more confidence in potential customers. 

Products & Services

The Products & Services section details what you plan to sell to customers. For a dropshipping business , this section should explain which trending products you’re going to sell, the pain points your products solve for customers, how you’ll price your products compared to your competitors, expected profit margin, and production and delivery details.

Remember to include any unique selling points for specific products or product groupings, such as low overhead, exclusive agreements with vendors, the ability to obtain products that are in short supply / high demand based on your connections, personalized customer service, or other advantages.

For dropshipping businesses selling hundreds or even thousands of products, detail the main categories of products and the number of products you plan to offer within each category. By doing this, it’s easier to visualize your business offerings as a whole to determine if you need more products in one category to fully flesh out your online store.

Market Analysis

The Market Analysis section of your business plan allows you to share the research you have done to learn about your target audience — the potential buyers of your products. People requesting a business plan will want to know that you have a solid understanding of your industry, the competitive landscape, who’s most likely to become your customers. It’s important to demonstrate that  there’s a large enough market for your product to make it profitable and/or to make a strong return on investment .

To complete the Market Analysis component of your business plan, check out the following resources for industry, market, and local economic research:

• U.S. Embassy websites in most countries have a business section with information for people who want to sell abroad. Business sections include a basic “getting started” guide, links to economic and data reports, trade events, and additional useful business links for a particular region.
• IBISWorld is a provider of free and paid industry research and procurement research reports for the United States , United Kingdom , Australia , and New Zealand .  
• Statista offers free and paid statistics and studies from over 18,000 sources including industry reports, country reports, market studies, outlook reports, and consumer market reports.   

Use these websites and others to learn about the projected growth of your industry and your potential profitability. You can also use social media tools like Facebook Audience Insights to estimate the size of your target market on the largest social network

Another way to research your market and products is through Google Trends . This free tool will allow you to see how often people search for the products your business offers over time. Be sure to explain how your business plans to capitalize on increasing and decreasing search trends accordingly.

Marketing & Sales

Knowing your target market is half the battle. In the Marketing & Sales section, share how you plan to reach and sell products to your target market. Outline the marketing and advertising strategies you intend to use to market your product to potential customers – search marketing , social media marketing , email marketing , and influencer marketing methods .

If you’re unsure how to market your business’ products, analyze your competitors for some inspiration. Discovering your competition’s marketing tactics will help you customize your own strategy for building a customer base and ultimately taking your business to the next level. 

Do a Google search for your competitor’s business name to find the websites, social accounts, and content they’ve created to market their products. Look at the ways your competitor uses each online entity to drive new customers to their website and product pages.

Then come up with a plan to convert a similar audience with your marketing and advertising messages. For dropshipping businesses, conversions will typically take place on your website as people purchase your products and/or by phone if you take orders over the phone. 

Management & Organization

In the Management & Organization piece of your business plan, describe the structure of your business. In terms of legal structure and incorporation, most businesses are classified as sole proprietorships (one owner), partnerships (two or more owners), corporations, or S corporations.

Draft a condensed resume for each of the key members of your business. If you’re a solopreneur , include how your past education and work experience will help you run each aspect of your business. If you have one or more partner(s) and employee(s), include their relevant education and experience as well.

Think of this as a great way to evaluate the strengths of each individual running your business. When self-evaluating, you’ll be able to identify the aspects of your business that’ll be easier to manage and which ones to delegate to freelancers, contractors, employees, and third-party services. This also makes it easier to find the best way to utilize their strengths for business growth.

Funding Request

Chances are, you don’t have a funding request for a startup dropshipping business since the appeal to dropshipping is the low upfront investment . If you’re looking for a loan, however, this would be the section where you outline the dollar amount you need, what you plan to invest in, and how you see the return on your investment.

Another way to use this section is to analyze the investment you have or plan to make when starting or growing your business. This should include everything from the computer you use to run your website to the monthly fee for business services.

Financial Projections

In Financial Projections, share your projected revenue and expenses for the first or next five years of your business. The idea here is to demonstrate that the revenue you’re anticipating will easily lead to a return on any investment, whether from your personal finances or a capital lending service.

If you’re looking for funding, you’ll need to go into detail with projected income statements, balance sheets, cash flow statements, and capital expenditure budgets. If you aren’t looking for funding, it won’t hurt to create these types of financial projections so you can realistically plan for the future of your business.

The Appendix of your business plan includes any supplemental documents needed throughout the sections of your business plan. These may include, but are not limited to: 

• Credit histories
• Product brochures
• Legal forms
• Supplier contracts

If you’re submitting your business plan for funding, contact the lender to see what documentation they want included with your funding request.

SWOT Analysis

In addition to the above sections, some business plans also include a SWOT Analysis. This is a one-page summary of your business’s strengths, weaknesses, opportunities, and threats. The strengths and weaknesses you include will be internal, whereas opportunities and threats you include will be external. 

Depending on the revelations of this section, you may or may not want to make a SWOT analysis when submitting your business plan formally unless it is requested.

Summary: How to Create a Business Plan

As you can see, creating a business plan for your dropshipping business is a great way to validate your business idea , discover your business’s strengths and weaknesses, and make a blueprint for your business's future.

In summary, here are the sections you will need to write for your business plan, step by step:

• SWOT analysis (Optional)

If you haven’t already, take the time to create a business plan to launch or grow your business in 2023!

Want to Learn More?

• How to Start a Dropshipping Business
• How to Register a Business in the USA
• How to Launch Your Ecommerce Store in Less Than 30 Minutes Flat
• 30+ Amazing Startup Business Ideas That’ll Make You Money

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

May 24, 2021

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

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

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

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

What Is a Business Plan?

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

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

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

Get a Business Idea

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

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

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

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

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

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

Conduct Market Analysis

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

Product and Service Demand

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

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

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

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

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

Identify Demographics of Target Market

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

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

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

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

How to Write a Business Plan

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

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

• Business Plan Cover Page
• Table of Contents
• Executive Summary
• Company Description
• Description of Products and Services
• SWOT Analysis
• Competitor Data
• Competitive Analysis
• Marketing Expenses Strategy 
• Pricing Strategy
• Distribution Channel Assessment
• Operational Plan
• Management and Organizational Strategy
• Financial Statements and/or Financial Projections

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

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

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

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

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

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

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

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

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

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

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

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

Mike told us,

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

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

It consists of three basic parts:

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

Example of an informal executive summary 

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

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

What should I include in an executive summary for investors?

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

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

Successful business plan examples

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

Here’s the interview with the owner of Urbanity:

When to write an executive summary?

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

What mistakes do people make when writing an executive summary?

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

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

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

How to Write a Business Plan Step 4. Company Description

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

• Mission statement
• Philosophy and vision
• Company goals

Target market

• Legal structure

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

Mission Statement

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

Company Philosophy and Vision

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

What makes your company different?

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

Examples of core values

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

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

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

What is a vision statement?

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

Example vision statements

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

A world without Alzheimer’s Disease and other dementia.

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

Business Goals

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

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

How far in advance should a business plan?

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

Example of great business goals

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

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

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

Use information from the specific lender when you are applying for lending. Most lenders provide industry research reports and using their data can strengthen the position of your business plan.

A small business plan should include a section on the external environment. Understanding the industry is crucial because we don’t plan a business in a vacuum. Make sure to research the industry trends, competitors, and forecasts. I personally prefer IBIS World for my business research. Make sure to answer questions like:

• What is the industry outlook long-term and short-term?
• How will your business take advantage of projected industry changes and trends?
• What might happen to your competitors and how will your business successfully compete?

Industry resources

Some helpful resources to help you establish more about your industry are:

• Trade Associations
• Federal Reserve
• Bureau of Labor Statistics

Legal Structure

There are five basic types of legal structures that most people will utilize:

• Sole proprietorships
• Limited Liability Companies (LLC)

Partnerships

Corporations.

• Franchises.

Each business structure has their pros and cons. An LLC is the most common legal structure due to its protection of personal assets and ease of setting up. Make sure to specify how ownership is divided and what roles each owner plays when you have more than one business owner.

You’ll have to decide which structure is best for you, but we’ve gathered information on each to make it easier.

Sole Proprietorship

A sole proprietorship is the easiest legal structure to set up but doesn’t protect the owner’s personal assets from legal issues. That means if something goes wrong, you could lose both your company and your home.

To start a sole proprietorship, fill out a special tax form called a  Schedule C . Sole proprietors can also join the American Independent Business Alliance .

Limited Liability Company (LLC)

An LLC is the most common business structure used in the United States because an LLC protects the owner’s personal assets. It’s similar to partnerships and corporations, but can be a single-member LLC in most states. An LLC requires a document called an operating agreement.

Each state has different requirements. Here’s a link to find your state’s requirements . Delaware and Nevada are common states to file an LLC because they are really business-friendly. Here’s a blog on the top 10 states to get an LLC.

Partnerships are typically for legal firms. If you choose to use a partnership choose a Limited Liability Partnership. Alternatively, you can just use an LLC.

Corporations are typically for massive organizations. Corporations have taxes on both corporate and income tax so unless you plan on selling stock, you are better off considering an LLC with S-Corp status . Investopedia has good information corporations here .

There are several opportunities to purchase successful franchises. TopFranchise.com has a list of companies in a variety of industries that offer franchise opportunities. This makes it where an entrepreneur can benefit from the reputation of an established business that has already worked out many of the kinks of starting from scratch.

How to Write a Business Plan Step 5. Products and Services

This section of the business plan should focus on what you sell, how you source it, and how you sell it. You should include:

• Unique features that differentiate your business products from competitors
• Intellectual property
• Your supply chain
• Cost and pricing structure 

Questions to answer about your products and services

Mike gave us a list  of the most important questions to answer about your product and services:

• How will you be selling the product? (in person, ecommerce, wholesale, direct to consumer)?
• How do you let them know they need a product?
• How do you communicate the message?
• How will you do transactions?
• How much will you be selling it for?
• How many do you think you’ll sell and why?

Make sure to use the worksheet on our business plan template .

How to Write a Business Plan Step 6. Sales and Marketing Plan

The marketing and sales plan is focused on the strategy to bring awareness to your company and guides how you will get the product to the consumer.  It should contain the following sections:

SWOT Analysis stands for strengths, weaknesses, opportunities, and threats. Not only do you want to identify them, but you also want to document how the business plans to deal with them.

Business owners need to do a thorough job documenting how their service or product stacks up against the competition.

If proper research isn’t done, investors will be able to tell that the owner hasn’t researched the competition and is less likely to believe that the team can protect its service from threats by the more well-established competition. This is one of the most common parts of a presentation that trips up business owners presenting on Shark Tank .

SWOT Examples

Examples of strengths and weaknesses could be things like the lack of cash flow, intellectual property ownership, high costs of suppliers, and customers’ expectations on shipping times.

Opportunities could be ways to capitalize on your strengths or improve your weaknesses, but may also be gaps in the industry. This includes:

• Adding offerings that fit with your current small business
• Increase sales to current customers
• Reducing costs through bulk ordering
• Finding ways to reduce inventory
•  And other areas you can improve

Threats will normally come from outside of the company but could also be things like losing a key member of the team. Threats normally come from competition, regulations, taxes, and unforeseen events.

The management team should use the SWOT analysis to guide other areas of business planning, but it absolutely has to be done before a business owner starts marketing. 

Include Competitor Data in Your Business Plan

When you plan a business, taking into consideration the strengths and weaknesses of the competition is key to navigating the field. Providing an overview of your competition and where they are headed shows that you are invested in understanding the industry.

For smaller businesses, you’ll want to search both the company and the owners names to see what they are working on. For publicly held corporations, you can find their quarterly and annual reports on the SEC website .

What another business plans to do can impact your business. Make sure to include things that might make it attractive for bigger companies to outsource to a small business.

Marketing Strategy

The marketing and sales part of business plans should be focused on how you are going to make potential customers aware of your business and then sell to them.

If you haven’t already included it, Mike recommends:

“They’ll want to know about Demographics, ages, and wealth of your target market.”

Make sure to include the Total addressable market .  The term refers to the value if you captured 100% of the market.

Advertising Strategy

You’ll explain what formats of advertising you’ll be using. Some possibilities are:

• Online: Facebook and Google are the big names to work with here.
• Print : Print can be used to reach broad groups or targeted markets. Check out this for tips .
• Radio : iHeartMedia is one of the best ways to advertise on the radio
• Cable television : High priced, hard to measure ROI, but here’s an explanation of the process
• Billboards: Attracting customers with billboards can be beneficial in high traffic areas.

You’ll want to define how you’ll be using each including frequency, duration, and cost. If you have the materials already created, including pictures or links to the marketing to show creative assets.

Mike told us “Most businesses are marketing digitally now due to Covid, but that’s not always the right answer.”

Make sure the marketing strategy will help team members or external marketing agencies stay within the brand guidelines .

This section of a business plan should be focused on pricing. There are a ton of pricing strategies that may work for different business plans. Which one will work for you depends on what kind of a business you run.

Some common pricing strategies are:

• Value-based pricing – Commonly used with home buying and selling or other products that are status symbols.
• Skimming pricing – Commonly seen in video game consoles, price starts off high to recoup expenses quickly, then reduces over time.
• Competition-based pricing – Pricing based on competitors’ pricing is commonly seen at gas stations.
• Freemium services –  Commonly used for software, where there is a free plan, then purchase options for more functionality.

HubSpot has a great calculator and blog on pricing strategies.

Beyond explaining what strategy your business plans to use, you should include references for how you came to this pricing strategy and how it will impact your cash flow.

Distribution Plan

This part of a business plan is focused on how the product or service is going to go through the supply chain. These may include multiple divisions or multiple companies. Make sure to include any parts of the workflow that are automated so investors can see where cost savings are expected and when.

Supply Chain Examples

For instance, lawn care companies  would need to cover aspects such as:

• Suppliers for lawn care equipment and tools
• Any chemicals or treatments needed
• Repair parts for sprinkler systems
• Vehicles to transport equipment and employees
• Insurance to protect the company vehicles and people.

Examples of Supply Chains

These are fairly flat supply chains compared to something like a clothing designer where the clothes would go through multiple vendors. A clothing company might have the following supply chain:

• Raw materials
• Shipping of raw materials
• Converting of raw materials to thread
• Shipping thread to produce garments
• Garment producer
• Shipping to company
• Company storage
• Shipping to retail stores

There have been advances such as print on demand that eliminate many of these steps. If you are designing completely custom clothing, all of this would need to be planned to keep from having business disruptions.

The main thing to include in the business plan is the list of suppliers, the path the supply chain follows, the time from order to the customer’s home, and the costs associated with each step of the process.

According to BizPlanReview , a business plan without this information is likely to get rejected because they have failed to research the key elements necessary to make sales to the customer.

How to Write a Business Plan Step 7. Company Organization and Operational Plan

This part of the business plan is focused on how the business model will function while serving customers.  The business plan should provide an overview of  how the team will manage the following aspects:

Quality Control

• Legal environment

Let’s look at each for some insight.

Production has already been discussed in previous sections so I won’t go into it much. When writing a business plan for investors, try to avoid repetition as it creates a more simple business plan.

If the organizational plan will be used by the team as an overview of how to perform the best services for the customer, then redundancy makes more sense as it communicates what is important to the business.

Quality control policies help to keep the team focused on how to verify that the company adheres to the business plan and meets or exceeds customer expectations.

Quality control can be anything from a standard that says “all labels on shirts can be no more than 1/16″ off center” to a defined checklist of steps that should be performed and filled out for every customer.

There are a variety of organizations that help define quality control including:

• International Organization for Standardization – Quality standards for energy, technology, food, production environments, and cybersecurity
• AICPA – Standard defined for accounting.
• The Joint Commission – Healthcare
• ASHRAE – HVAC best practices

You can find lists of the organizations that contribute most to the government regulation of industries on Open Secrets . Research what the leaders in your field are doing. Follow their example and implement it in your quality control plan.

For location, you should use information from the market research to establish where the location will be. Make sure to include the following in the location documentation.

• The size of your location
• The type of building (retail, industrial, commercial, etc.)
• Zoning restrictions – Urban Wire has a good map on how zoning works in each state
• Accessibility – Does it meet ADA requirements?
• Costs including rent, maintenance, utilities, insurance and any buildout or remodeling costs
• Utilities – b.e.f. has a good energy calculator .

Legal Environment

The legal requirement section is focused on defining how to meet the legal requirements for your industry. A good business plan should include all of the following:

• Any licenses and/or permits that are needed and whether you’ve obtained them
• Any trademarks, copyrights, or patents that you have or are in the process of applying for
• The insurance coverage your business requires and how much it costs
• Any environmental, health, or workplace regulations affecting your business
• Any special regulations affecting your industry
• Bonding requirements, if applicable

Your local SBA office can help you establish requirements in your area. I strongly recommend using them. They are a great resource.

Your business plan should include a plan for company organization and hiring. While you may be the only person with the company right now, down the road you’ll need more people. Make sure to consider and document the answers to the following questions:

• What is the current leadership structure and what will it look like in the future?
• What types of employees will you have? Are there any licensing or educational requirements?
• How many employees will you need?
• Will you ever hire freelancers or independent contractors?
• What is each position’s job description?
• What is the pay structure (hourly, salaried, base plus commission, etc.)?
• How do you plan to find qualified employees and contractors?

One of the most crucial parts of a business plan is the organizational chart. This simply shows the positions the company will need, who is in charge of them and the relationship of each of them. It will look similar to this:

Our small business plan template has a much more in-depth organizational chart you can edit to include when you include the organizational chart in your business plan.

How to Write a Business Plan Step 8. Financial Statements 

No business plan is complete without financial statements or financial projections. The business plan format will be different based on whether you are writing a business plan to expand a business or a startup business plan. Let’s dig deeper into each.

Provide All Financial Income from an Existing Business

An existing business should use their past financial documents including the income statement, balance sheet, and cash flow statement to find trends to estimate the next 3-5 years.

You can create easy trendlines in excel to predict future revenue, profit and loss, cash flow, and other changes in year-over-year performance. This will show your expected performance assuming business continues as normal.

If you are seeking an investment, then the business is probably not going to continue as normal. Depending on the financial plan and the purpose of getting financing, adjustments may be needed to the following:

• Higher Revenue if expanding business
• Lower Cost of Goods Sold if purchasing inventory with bulk discounts
• Adding interest if utilizing financing (not equity deal)
• Changes in expenses
• Addition of financing information to the cash flow statement
• Changes in Earnings per Share on the balance sheet

Financial modeling is a challenging subject, but there are plenty of low-cost courses on the subject. If you need help planning your business financial documentation take some time to watch some of them.

Make it a point to document how you calculated all the changes to the income statement, balance sheet, and cash flow statement in your business plan so that key team members or investors can verify your research.

Financial Projections For A Startup Business Plan

Unlike an existing business, a startup doesn’t have previous success to model its future performance. In this scenario, you need to focus on how to make a business plan realistic through the use of industry research and averages.

Mike gave the following advice in his interview:

Financial Forecasting Mistakes

One of the things a lot of inexperienced people use is the argument, “If I get one percent of the market, it is worth $100 million.” If you use this, investors are likely to file the document under bad business plan examples.

Let’s use custom t-shirts as an example.

Credence Research estimated in 2018 there were 11,334,800,000 custom t-shirts sold for a total of $206.12 Billion, with a 6% compound annual growth rate.

With that data,  you can calculate that the industry will grow to $270 Billion in 2023 and that the average shirt sold creates $18.18 in revenue.

Combine that with an IBIS World estimate of 11,094 custom screen printers and that means even if you become an average seller, you’ll get .009% of the market.

Here’s a table for easier viewing of that information.

The point here is to make sure your business proposal examples make sense.

You’ll need to know industry averages such as cost of customer acquisition, revenue per customer, the average cost of goods sold, and admin costs to be able to create accurate estimates.

Our simple business plan templates walk you through most of these processes. If you follow them you’ll have a good idea of how to write a business proposal.

How to Write a Business Plan Step 9. Business Plan Example of Funding Requests

What is a business plan without a plan on how to obtain funding?

The Small Business Administration has an example for a pizza restaurant that theoretically needed nearly $20k to make it through their first month.

In our video, How to Start a $500K/Year T-Shirt Business (Pt. 1 ), Sanford Booth told us he needed about $200,000 to start his franchise and broke even after 4 months.

Freshbooks estimates it takes on average 2-3 years for a business to be profitable, which means the fictitious pizza company from the SBA could need up to $330k to make it through that time and still pay their bills for their home and pizza shop.

Not every business needs that much to start, but realistically it’s a good idea to assume that you need a fairly large cushion.

Ways to get funding for a small business

There are a variety of ways to cover this. the most common are:

• Bootstrapping – Using your savings without external funding.
• Taking out debt – loans, credit cards
• Equity, Seed Funding – Ownership of a percentage of the company in exchange for current funds
• Crowdsourcing – Promising a good for funding to create the product

Keep reading for more tips on how to write a business plan.

How funding will be used

When asking for business financing make sure to include:

• How much to get started?
• What is the minimum viable product and how soon can you make money?
• How will the money be spent?

Mike emphasized two aspects that should be included in every plan, 

How to Write a Business Plan Resources

Here are some links to a business plan sample and business plan outline. 

• Sample plan

It’s also helpful to follow some of the leading influencers in the business plan writing community. Here’s a list:

• Wise Plans –  Shares a lot of information on starting businesses and is a business plan writing company.
• Optimus Business Plans –  Another business plan writing company.
• Venture Capital – A venture capital thread that can help give you ideas.

How to Write a Business Plan: What’s Next?

We hope this guide about how to write a simple business plan step by step has been helpful. We’ve covered:

• The definition of a business plan
• Coming up with a business idea
• Performing market research
• The critical components of a business plan
• An example business plan

In addition, we provided you with a simple business plan template to assist you in the process of writing your startup business plan. The startup business plan template also includes a business model template that will be the key to your success.

Don’t forget to check out the rest of our business hub .

Have you written a business plan before? How did it impact your ability to achieve your goals?

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Related articles

How to Start a Pressure Washing Business & Make $150K/Month

Do you want to go where you’ve never gone?

You’ll have to change what you’ve always done.

We’ll show you how to start a pressure washing business. Becoming a pressure washer changed Joshua Brown’s life, and it can do the same for you.

Josh started Brown’s Pressure Washing with just $5K and grew it to $1M in revenue annually in just four years. You’ll be amazed how he progressed from a life of poverty to becoming a preacher, then realizing:

I’m tired of creating someone else’s kingdom.

[su_note note_color="#dbeafc"] We’ll share his pressure washing mistakes, lessons learned, and how you can benefit from his experiences to start a pressure washing business that helps you thrive financially. We’ll also share an industry breakdown and tips on equipment, marketing, and more.

What Is Pressure Washing?

Case study: brown’s pressure washing, learn about the pressure washing industry, watch the free masterclass, step 1. establish a business structure, step 2. buy your pressure washing setup, step 3. set prices for pressure washing services, step 4. open a business bank account, step 5. establish marketing channels, pressure washing faqs.

• It’s Your Turn to Start a Successful Pressure Washing Business [/su_note]

Pressure washing is using high-pressure water to remove grease, dirt, and other grime from surfaces like roofs, walls, patios, and driveways to help make a property look more pristine.

Joshua Googled “top 5 businesses to start with $5,000,” and that’s how he started Brown’s Pressure Washing . We’ll show you how to start a pressure washing business that grows from $5K invested to $225K, $445K, $780K, and then nearly $1M in revenue in its first four years.

Today, Brown’s Pressure Washing makes $2M in annual revenue.

It wasn’t without struggle. Josh made a ton of mistakes. He’d run out of gas and chemicals and didn’t know what an O-ring was. Find out how Josh grew Brown’s Pressure Washing below.

If you want to know how to start a pressure washing business, you’ll have to understand the industry. We’ll answer some common questions about pressure washing businesses that people commonly ask.

How much does it cost to start a pressure washing business?

You can start a successful pressure washing business for between $220 and $48K depending on whether you have a vehicle and pressure washing equipment. Most people can start a pressure washing company for less than $5K, but Joshua explained:

[su_quote] Your equipment will determine how much you can make. … Start with the best equipment you can afford and build from there. [/su_quote]

Before starting your own pressure washing business, you’ll need to cover the following costs:

• Limited liability company formation: $50 to $900
• Pressure washing business license: $0 to $1,000
• Pressure washer: $100-$3K
• Nozzles and hoses: $20-$100
• Water tank: $100-$900
• Vehicle: $0 to $35K, depending on whether you own one already
• Auto insurance: $1,762 annually ( according to Insureon )
• Smartphone and plan: $0 to $1,800
• Business software: $0 to $500
• Marketing: $0 to $5K

All told, these costs range from $220 to $48K.

Joshua invested $5K to start his business. He bought a boat trailer for $300, a pressure washer for $3,500, and related equipment and expenses that accounted for the remainder of his relatively low startup costs.

How much does a pressure washer business make?

These businesses have an average annual revenue of $45,073 with an average profit margin of 8.44%. Some of the most successful pressure washing businesses make way more, though. Brown’s Pressure Washing makes $150K per month.

You can download the IBIS World pressure washing report for $925 to get detailed breakdowns of the industry revenue, businesses, profit margins, and expense reports.

Is a pressure washing business profitable?

Yes. A pressure washing business will normally have a net income ratio of between 5.6% and 8.4% of revenue, but Joshua told us his profit margins are typically between 20% and 30%.

A pressure washing business owner should expect revenue to be spent on the following expenses:

• Wages: 21 to 31% of revenue
• Purchases: 31-50% on equipment, vehicles, and other purchases
• Marketing: Expect to spend at least 1.5% to 3%, but many successful power washers spend 8-12%.
• Rent: Pressure washing rent expenses average 1 to 2% of revenue, but many people run their services from home offices. A home office can make the rent expense more of an on-paper cost than a monetary expense.
• Utilities: Normally, utilities are nominal—between one-third of a percent and 2.1% of revenue.
• Depreciation: Between 1% and 2% of revenue
• Other Costs: Between 17.8% and 22.8% of revenue
• Profit: The net income ratio is between 5.6% and 8.4%, but you can increase it dramatically by automating services.

What equipment do I need to start a pressure washing business?

At a minimum, you need the following pressure washer equipment:

• Pressure washer
• Water hoses
• Surface cleaner
• Telescoping wand
• Downstream injector
• Detergent tank

Additional equipment needed for pressure washing business operations may include:

• Water source (a water tank is best, but you can use a garden hose)
• Angled tips
• Hydrostatic line testers

Nozzles impact how a pressure washer operates. They are calibrated in degrees, and lower numbers create more powerful streams.

For example, a 65-degree nozzle works well for dousing concrete with detergent, while a lower angle might be better for commercial pressure washing services that need to get gum off the sidewalk in front of local businesses.

A surface cleaner is a tool that attaches to your pressure washer to clean large, flat surfaces like patios, driveways, and sidewalks.

Do I need a license to start a pressure washing business?

You may need a license when starting a pressure washing business depending on your location. Some states require a license, while others do not.

License requirements for pressure washing businesses include:

• Business license: You might need a state small business license and a sales tax license if you sell taxable services and products.
• Occupational license: Some states and local governments require a pressure washer license.
• Handyman's license: You may need a handyman license to offer pressure washer and roof cleaning services.

Check with your local municipality to find out what bonds, contractor licenses, insurance, permits, and registrations are needed in your location for licensing.

Pro Tip: Be aware that opening an unlicensed company of any kind can result in fines or even criminal charges.

Learn How to Use a Pressure Washer

Before you start a pressure washing business, you should learn how to use all the necessary equipment. Home and business owners expect quality results.

If you know how to efficiently and effectively pressure wash several surface types, including stone, cement, wood, and shingles, you’ll make your pressure washing company stand out.

Some of the best pressure washing business resources are below:

• Hands-on Practice: Learn and get paid by another pressure washing business to develop skills.
• Environmental Protection Agency: Contact the EPA to learn about pressure washing regulations.
• United Association of Mobile Contract Cleaners: The UAMCC provides certifications, publications, online learning, and hands-on learning.
• YouTube Videos: The video-sharing platform offers numerous pressure washing tutorials.

What you’ll in get FREE in the next 39 minutes:

• Little-known secrets to successfully finance your business
• The basics you’ll need to quickly start earning
• The most profitable services to offer for unlimited clients
• Proven ways to maximize your marketing budget.

…and so much more. See for yourself—watch the pressure washing masterclass here! [/su_note]

How to Start a Pressure Washing Business

• Establish a business structure
• Buy your pressure washing setup
• Set your rates
• Set up your banking
• Establish marketing channels

Starting a business requires forming a business structure for your pressure washing company. You’ll want to choose a business structure like a limited liability company (LLC), corporation, or sole proprietorship.

A sole proprietorship uses a “doing business as” (DBA) name and your social security number to operate under a different business name. This low-cost business structure leaves you personally liable for everything that occurs in your business, so legal experts don’t recommend it.

Meanwhile, an LLC or corporation will protect from personal liability.

To register your business, perform a name search on the Secretary of State’s website for the business name you want to use. Next, file the appropriate paperwork and pay the registration fee, which may be $200 to $700, to create the business entity.

You’ll need the right equipment to start a successful pressure washing business. Josh says when you’re just starting, you’ll need a:

• Pressure washing trailer
• Bumper tank
• Chemical tank

He says that though the equipment can cost around $15K, it can earn you $200K per year.

You could spend less on pressure washing equipment, but the money you save might slow your business growth. Washing with lower pressure means you can’t take as many customers. A lower-quality pressure washer might also break down more frequently.

You should also consider an equipment rig that can go in the back of a truck. Josh told us:

[su_quote] A pressure washing skid costs $22K but saves even more time, is safer than a trailer, and will make you look like the most professional pressure washer in town. [/su_quote]

You’ll probably want equipment insurance to protect against loss due to theft, damage, or malfunction.

Pro Tip: Read our trailer setup guide to learn more about Brown’s Pressure Washing trailers.

Now that we’ve covered your initial startup costs, it’s time to move on to pricing.

Brown’s focus is on pressure washing homes and businesses. His best pressure washing contract is with Top Golf, at $60K annually.

Josh explained that his crew can clean four homes daily with a pressure washing trailer or skid and charge $300 for each job. His primary pressure washing services are:

• Concrete cleaning and sealing
• Gutter cleaning
• Window cleaning
• Commercial building cleaning

They use a unique technique called a softwash. Softwash systems differ from regular pressure washing services because they use less pressure, which makes them less likely to damage a customer’s property.

How to Charge for Pressure Washing

All price data in this section comes from HomeGuide .

There are essentially three ways to determine the price of a pressure washing job. You can charge by:

• Space: $0.35 to $0.77 per square foot
• Time: $50 to $160 per hour
• Service: $100 to $500 flat rate

Charging by Space

Charging by square footage is transparent and projects objectivity to your potential customers. Here is a breakdown of average prices for different pressure washing services:

• Driveway: $0.50 per square foot
• Patio or Deck: $0.55 per square foot
• Fencing: $0.45 per square foot
• Roofing: $0.70 per square foot
• Siding: $0.50 per square foot

Charging by Time

To charge by time, multiply the time you think a job will take by your hourly rate. Don’t forget to include the time to estimate, book, and travel to the job in your calculation.

Charging by Service

Many businesses offer set prices for certain kinds of services. This can make budgeting easier for both the business and the client.

For example, your business could charge a set fee of $100 to pressure wash a deck, $150 to pressure wash a driveway, and $250 to pressure wash the exterior of a house. You will need to decide which services to provide and how much to charge for each.

To decide on a final price, you will also need to consider the cost of providing your services. Since the most commonly requested pressure washing service is the driveway, we will use this as an example.

Breaking Down the Cost to Pressure Wash a Driveway

Assuming you’re a one-person operation, the primary costs associated with this work will be fuel and time. The average driveway will take one to two hours to pressure wash.

The fuel cost (for both your vehicle and pressure washer) will depend on the size of the driveway and the distance you need to drive from your business location. That said, you can calculate your costs by assuming you will use approximately two gallons per hour on the job (including travel time).

The cost of your time is much trickier to calculate. You want to make enough to offset your business expenses and compensate for wear and tear on your equipment.

For those reasons, this number will largely depend on the cost of your existing business expenses. If you’re just starting with essential equipment, you can estimate that the cost to you will be around $20 to $30 per hour, plus the cost of fuel.

So if you’re pressure washing a small driveway (one hour of labor) with a one-hour drive, it will cost your business about $65 (assuming fuel is $2.50 per gallon). If you have employees, you must add their hourly cost to this figure.

From there, consider your competition, determine how much you want to profit, and set your price. Want more in-depth information?

Learn more about estimating pressure washing jobs in our ultimate pricing guide .

A business bank account is critical for business operations. For protection under an LLC, you must keep your personal and business accounts separate. Plus, business bank accounts make paying your taxes easier because you don’t have to sort through every expense.

Business bank accounts will even make it easier to get approved for things like business credit cards and business loans .

Find out how to open a business bank account .

Josh explained how to market a pressure washing business. He discussed the following types of pressure washing advertising options:

• Business cards
• Door hangers

Google Advertising

• Professional-looking videos
• Television ads
• Hiring a professional marketer

First, Josh invested in a comprehensive and well-designed website for the pressure washing company. Check out the website here . Then go check out our cleaning business website examples for insights into what customers look for when reviewing cleaning solutions’ websites.

Business Cards

Business cards are inexpensive marketing tools that can help you connect with partners and customers. Check out our blog about inexpensive business cards , make your own, and leave them everywhere you go.

Door Hangers

Door hangers or flyers are also good business expenses. A pressure washer company can leave them at neighbors’ houses or send them in the mail after you pressure wash a property.

Josh explained his experience with digital advertising in the pressure washing industry. And it didn’t start off great. He failed on platforms like Nextdoor, Facebook, and Google.

But eventually, he found a strategy for Google Advertising that leads to a good return on investment.

[su_quote] Invest your money during the warm times, then ramp down your ads during the summer. … We spend $6 per pressure wash customer on Google and make about $80 per dollar spent. [/su_quote]

He still uses Google to market his pressure washing company but avoids most other digital advertisements. He advises dedicating about 75% of your advertising budget to Google and the rest to the other options.

Professional-Looking Videos

Another trick to jumpstarting a pressure washing company is to create videos. Find beautiful homes that need pressure washing services, clean them, and share videos of the process.

Make sure your video is well-lit, properly framed, and edited smoothly. It will make you look more professional than other local businesses in the pressure washing industry.

This leads to another way Josh makes his pressure washing business successful…

Television Ads

Develop a relationship with a news network like Brown’s Pressure Washing did when they were a new business.

[su_quote] Once we hit a million [in revenue per year], I started advertising in the news, Monday Night Football, and college sports. Without this relationship [with Fox 17 in Nashville], things would not be the same. [/su_quote]

As a small business owner, this may sound like an expensive strategy compared to online advertising. Still, it gets your business in front of more potential customers in your target market. You can expect to pay $5 to $10 per 1,000 viewers for a 30-second ad.

Hiring a Professional Marketer

Don’t be afraid to hire someone who understands effective marketing strategies. Power washing services can save a lot of money by outsourcing their advertising.

[su_quote] I was spending $9K to $10K in Google Ads, which got cut to $3K monthly when I hired a professional marketer. [/su_quote]

Pro Tip: Talk to other successful pressure washing companies to find out who they hire for their marketing services.

How much is it to pressure wash a house?

The average cost to pressure wash a home is $400, but the range is between $200 and $1,250 depending on factors including house size, location, cost of labor, and cleanliness of the property.

Pressure washing businesses commonly use linear feet and the number of stories to determine the cost of pressure washing. They may use estimates of $0.15 to $0.75 per square foot, or hourly rates of $60 to $100 per hour.

How do pressure washing companies get clients?

Josh’s pressure washing business venture has a remarkable 73% closing rate. He attributes a good share of his success in booking jobs to his sales manager, Brady Ridings. Josh said:

[su_quote] An investor contacted me. I told him, ‘I don’t need an investor, I need a salesperson.’ That’s how I met Brady, who sold $1M his first year. His biggest challenge was fixing my mistakes. [/su_quote]

Brady shared that to win jobs, he makes sure to use the three Cs: constant clear communication .

Josh also shared one of his secrets for getting return customers. It’s simple: Rinse the plants after cleaning a roof.

What is the difference between pressure washing and power washing?

Some say that pressure washing and power washing are interchangeable terms, which is a sign that they’re laymen writing about the pressure washing business!

You can differentiate pressure washing and power washing by the temperature of the water. A pressure washer uses high-pressured room-temperature water, while a power washer uses pressurized steam to clean surfaces.

You want to use a pressure washer for products that you are concerned would be damaged or warped by steam, including paint, patios, decks, concrete, brick, and masonry. Meanwhile, pressure washing is better for removing grease, gum, salt, mold, and mildew.

Can you scale a pressure washing business?

Yes, you can scale a successful pressure washing business by adding more employees and locations or starting a pressure washing franchise business.

As your pressure washing business grows in size, you can increase the profit margins by creating your own customer relationship management software, selling franchises, offering pressure washing courses, and selling pressure washing business equipment.

What sort of things need to be pressure washed?

People commonly pressure wash brick, decks, driveways, fences, pools, porches, roofs, siding, sidewalks, solar panels, and other building materials.

A soft washing business uses similar pressure washing business equipment to wash cars and other vehicles at a lower pressure than a pressure washing business.

It’s Your Turn to Start a Successful Pressure Washing Business

A successful pressure washing company requires a lot of planning, hard work, and maybe a little bit of luck. Pressure washers will need to establish the business structure and get all the necessary equipment.

Then you’ll need to set prices for your residential and commercial pressure cleaning services. Next, you’ll need to open a business bank account to keep your personal and business expenses separate.

Finally, you’ll need to market your business and provide excellent customer service.

So what do you think? Is the pressure washing market right for you?

321 Best Small Business Ideas (for 2024)

Are you looking for small business ideas to start in 2024? Every business owner has different priorities, so we’ve structured this blog to help you consider the business ideas that are best suited to you.

One question many new entrepreneurs have is how to find business ideas that match their skills, lifestyle, and financial goals. This article will help you brainstorm business ideas by listing small businesses that have

• A proven business model
• A reasonable initial investment

And they don’t require too much effort for most business owners to get off the ground .

We’ll start by providing some resources that will help you narrow your business options then break our list of lucrative business ideas into sections based on different interests and business goals. That’s followed by a brief overview of how to choose the best business to start for you.

By the end of this article, you’ll have the resources you need to review relevant testimonials, home in on a great business idea, and take your first steps toward small business ownership.

[su_note note_color="#dbeafc"]

We’ve broken the business ideas into the following categories. Click any of the links below to jump straight to that section:

The 23 Most Profitable Business Ideas (2024)

6 businesses that never fail (well, rarely), 22 home business ideas, 33 low-cost business ideas with high profit potential, 59 online business ideas, what are good business ideas for women, 12 truly unique business ideas, 56 small business ideas for teens, 19 categories of business ideas you can also consider, research methodology, how to choose small business ideas, implement your own business idea.

• Conclusion [/su_note]

Get ready to find a successful business idea that fits your needs. Let’s start with some of the most profitable business ideas you can start in 2024.

Business owners are trying to make good money, and the best way for new small business owners to succeed is by starting a company in a thriving sector. The industries with the highest profit margins are included in the table below:

• Investments and Asset Management
• Software Applications
• Healthcare Products
• Real Estate Investment Trusts
• Financial Services
• Healthcare IT
• Household Products
• Gaming Software
• Information Services
• Restaurants
• Insurance Companies
• Computer Companies
• Education Businesses
• Drink Companies
• Brokerage and Investment Banking
• Home Builders
• Broadcasting
• Diversified Companies
• Electronics
• Retail Building Supplies
• Real Estate

Keep in mind that these are just broad categories, and there are a variety of successful business ideas you can start within each of these segments.

Case Study: Hill Vending

Want to enter the restaurant or drink company niche? Starting a vending machine business can be a practical and lucrative business idea for those with limited resources. With minimal upfront costs and potential for passive income, it offers flexibility in hours worked and a way to dip your toes into entrepreneurship.

Check out the interview we’ve done with Adam Hill and how he generates almost $60K a month with his vending business :

If you enjoyed the interview, make sure to check out our free vending machine course !

Case Study: The Restaurant Boss

There are also successful small business ideas that span multiple categories. A consulting business is one example of a niche that has high demand in multiple sectors. For someone who is a CPA or has other financial sector experience, financial advising or investment management consulting can be an easy business to start.

On the other hand, someone who is an experienced restaurant manager could find consulting in that niche is a good small business idea. That’s what Ryan Gromfin did when he wanted to become his own boss. Now The Restaurant Boss is a $35K-a-month company. You can hear how he started it in this interview:

Starting your own business often comes down to matching your expertise with the needs of the market. Consider the profitable niches listed above and whether you have any skills or interests that will let you start a small business that will thrive in that area.

What are some business ideas that are guaranteed to succeed? The truth is, even great business ideas aren’t going to be profitable 100% of the time. However, six businesses have such high success rates that they make great starter businesses. If you’re looking for the easiest business to start, consider the options below.

Laundromats

Statistics from Alliance Laundry Systems show a 94.8% success rate for their franchisees. Independent laundromat business owners confirm this high rate of success. Combine that with the success of laundromats we’ve interviewed , and they seem to be one of the top easy businesses to start and make a great profit.

Real Estate Investing

With good credit and a few thousand dollars in down payment, you can start real estate investing . The 50 largest cities have a median rent of $1,879 and average mortgages are $1,427, meaning you can make an extra $450 a month renting homes. Add Airbnb rentals to that and you can make even more.

Self-Storage

Self-storage can make a lot of money, too. The average space rental is $1 to $3 per square foot monthly. When you buy a space for less than $150 square foot , you can add automation and a coat of paint and increase the value.

After six to seven years, you’ll have made enough to pay it off if you want, and then it’s nearly 100% cash flow.

Last-Mile Delivery

Rideshare and delivery businesses have both low startup costs and high demand, making them excellent contenders for the best small business to start. You don’t have to set pricing, though you must manage expenses and ongoing costs.

These local business ideas give you easy wins when you start, but they aren’t the most profitable. They’ll show you why a business needs to be scalable .

Online Business Flipping

Buying successful online businesses, automating them, and increasing their revenue is a great way to get started. The best part is you don’t need to develop your own online business idea. Simply find an online business for sale at a low price, then improve it and sell it to make a profit.

Senior Care Centers

The over-65 population will double by 2060, and they’ll need care centers. All levels of government subsidize these centers and each resident space receives $2K to $5K per month for the service.

Some of the best business ideas are home-based businesses. When working in your own home, startup costs are low. You can also save on recurring costs since you can deduct a portion of your rent or mortgage, internet connection, and power bill from your expenses.

A few low-cost business ideas to start from your own home include:

• Online Translator
• Virtual Call Center Operator
• Online Store
• Affiliate Marketing
• Virtual Assistant
• Digital Marketing Services
• Niche Website Owner
• Interior Decorator
• Make Jewelry
• Public Relations
• Real Estate Agent
• Remote Concierge (helps connect people with things they want)
• Personal Trainer
• 3D Printing Services
• Web Development
• Social Media Manager
• Graphic Design Business
• Event Planning Business
• Property Manager
• Landscaping Business
• Pet Business

Mobile businesses are great to start from home because potential clients won’t need to come to your storefront—instead, you go to them. Popular mobile business ideas include a car detailing business, a pressure washing business, or a personal training business.

A landscape business is another great option for starting a small business from home. That’s what Mike Andes did. His landscaping business is now one of the fastest-growing franchises in the world. Hear his story in this interview:

The business world is full of entrepreneurs who have started small businesses with little or no money. When you think about low-cost, high-profit small companies, many require no formal qualifications or licensing. Here are 33 we suggest exploring:

• Dropshipping
• Tutoring Services
• Hauling Business
• Digital Marketing Consultant
• Tour Guides
• Green Business Consultant
• Window Blind Cleaning Service
• Online Business Manager
• Fashion Designer
• Local Delivery Services
• YouTube Content Creator
• Search Engine Optimization
• Freelance Writer
• Equipment Rental Service
• Ice Cream Truck
• Meal Prep Company
• Mobile Food Carts
• Mobile Locksmith Services
• Telephone Answering Service
• Mobile Pet Grooming Business
• Candle Maker
• Security Company
• Mobile Car Wash
• Research Services
• Decorating Services
• Dent Removal Service
• Dog Walking Business
• Pet Sitting Service

Most small businesses have the potential for low startup costs—as long as you focus on keeping your overhead costs down, start from home, and document your business finances. If you haven’t watched our interviews with Paul Akers, check out the one below:

For more information on most of these lucrative business ideas, check out our blog about 30 businesses to start for less than $10K . It’s full of experiences from existing business owners who have already succeeded.

The best part about many online business ideas is that they have a low barrier to entry. As long as you have a stable internet connection, you can start a small business fast and with low upfront costs.

What are some good business ideas to start online? Some of the top start-up business options for online entrepreneurs include:

• Virtual Assistant Services
• Digital Marketing Campaign Manager
• Career Coaching Business
• Sell Beard Care Products Online
• Start an Online Clothing Boutique
• Any Consulting Business
• WordPress Themes
• Online Course Creator
• Mobile App Development
• Custom Drone Builder
• VR/AR App Developer
• Web Developer
• SaaS Business Owner
• Electronic Repair Business
• Freelance Writing
• Self-Publishing
• Audio or Video Transcription
• Medical Transcription
• Meeting Transcription
• Business Plan Writer
• Sell Handmade Goods Online
• Image Consultant
• YouTube Stardom
• Data Analyst Consulting
• Social Media Management
• Graphic Design Artist
• Career Coaching
• Sell Print-on-Demand T-shirt Designs
• Sell Poster Designs
• Sell Greeting Cards
• Sell Handmade Jewelry
• Music Lessons
• Freelance Musician
• Nutritionist
• Design and Sell Gift Baskets
• Clothing Boutique
• Language Teacher
• Online Teaching
• Financial Planner
• Online Bookkeeping
• Business Incubator
• Property Management Company

You can check out this interview with Kevin Espiritu to learn how he turned his gardening side hustle and blog into a $7.3M-a-year online business:

Or check out this podcast to find out how Workello grew into a $70K-a-month SaaS company:

You can also learn more about the best online business ideas on our blog.

Women play a very different role in business now than a few decades ago. The U.S. Census Bureau conducted a study and found that women business owners are starting businesses faster than the sector growth rate in most major industries.

According to the same U.S. Census Bureau report, many businesses tend to attract an initial investment from women. The industries with the most women are:

• Food Services
• Professional Services
• Scientific Advancements
• Tech Services
• Administration
• Waste and Remediation
• Hospitality
• Construction

Good news! Many of these are extremely profitable business ideas with high demand. Here’s a list of 114 new business ideas for women.

Best Business to Start for Women

• Makeup Artist
• Personal Shopper
• Hair Stylist
• Create WordPress Themes
• Mobile App Developer
• Energy Auditor
• Solar Energy Consultant
• Content Writer
• Handmade Goods
• Audio and Video Transcription

Check out our podcast with Charmaine Nicole, founder of Sydney Nicole Hair and Black Hair and Skincare, to learn how to start your own business in the beauty niche:

• T-Shirt Design
• Poster Design
• Greeting Cards
• Drone Videographer
• Social Media Consultant
• Expert Witness
• Mobile Laundry
• Decluttering Services
• Green Cleaning Services
• Airbnb Cleaner
• Vrbo Cleaner
• New Home Construction Cleaner

We also had the chance to talk to Afshan Abbas, founder of Fuchsia Shoes. Find out what she told us about her $60K-a-month shoe business .

You might also check out our video with Shed Gal Susan Frair to see how she has become the number one shed dealer in the country:

• Teach Computer Skills
• Event Planner
• Party Planner
• Wedding Planner
• Wedding Officiant
• Wedding Photographer
• Wedding Videographer
• Holiday Decorator
• Open an Event Space
• Catering Business
• Craft Beer Brewing
• Espresso Cart
• Gluten-Free Bakery
• Organic Vending Machines
• Organic Food Catering
• Organic Café
• Coffee Shop
• Farmers Market

Check out our blog about Pam Christenson of Synergy Massage Therapy to learn how to start your own massage business.

• Personal Chef
• Fitness Instructor
• Anti-Aging Spa
• CrossFit Gym
• Medical Courier Service
• Mobile Medical App Developer
• Acupuncture Business
• Mobile Hearing Aid Specialist
• Respite Care 
• Medical Marijuana
• Massage Therapist
• Interpreter
• Paralegal Services

Every small business idea should be somewhat unique, but what are some truly quirky business ideas?

Living in Vegas, I’ve had the opportunity to see some of the most distinctive business ideas in the world. From Cirque du Soleil to fire dancers, we have some crazy businesses here. Here’s a list of unusual business ventures you can consider:

• Tours of haunted locations
• Prop design for parties
• Throw concerts.
• Creatively themed haunted houses
• Video game-themed restaurants and bars
• Comic-themed businesses
• Star Wars-themed businesses (Get Disney’s permission.)
• Swingers clubs (Yes, they exist.)
• Become a meme lord—create funny memes, share them, then sell them on designs.
• Create your own cryptocurrency.
• Professional huggers are also a thing. If you want to make depressed people feel better, hugs increase the chemicals responsible for happiness.
• Sell Non-Fungible Tokens—they can be artwork, titles to homes, and concert tickets. There are a ton of use cases you can read about in FinTech Magazine . The Merge by Pak below sold for $91.8 million .

If you start a business venture in these fields, be careful—some of them may put you at risk depending on laws and regulations in your jurisdiction.

Teens historically have a higher unemployment rate because they have no experience. If you are a young adult who wants to earn money, consider some of these teen entrepreneur ideas:

• Transcription
• Proofreader
• Tech Consulting
• Graphic Design
• Cleaning Service
• Photography
• Greeting Card Writer
• Handmade Jewelry
• Babysitting
• Social Media Influencer
• Pet Sitting
• Fire Spinner
• Pet Photographer
• Pet Grooming
• Dog Walking
• Errand-Running Service
• Delivery Service
• Packing Business
• Holiday Decorating Business
• App Development
• Recycling Business
• Provide Art Lessons
• Livestream Your Gaming
• Sports Promotion
• Videographer
• Gift Wrapping Service
• Landscaping
• Laundry Service
• Cake Making
• Resell Stuff Online
• House Sitting
• College Prep Courses
• Social Media Marketing
• Leaf Removal
• Sell Lemonade or Other Drinks
• Sell Ice Cream
• Sell Your Art
• Power Washing
• Sell Print-on-Demand Products
• Invent Cool Stuff
• Teach Tech to the Elderly
• Tech Support
• Set Up Computers for People
• Caricature Artist
• Window Washing
• Sign Spinning

Read more about each of these in our Best Business Ideas for Teens blog post.

Watch our interview with an 18-year-old who started a $144K-a-month pressure washing business :

If you’re still not sure how to get ideas for a business, it might help to start with a topic that interests you so you can answer “What are business ideas in my niche?” Peruse these groups to see if any of them catch your eye.

Fashion Business Ideas

If you’re into fashion, consider these ideas:

• Barbershop Owner
• Beard Care Products
• Tattoo Studio

Technology Business Ideas

If you’re into technology, consider these ideas:

• Importing Electronic OEM Gadgets
• IoT Service Provider
• Smart Home Contractor

Want to Start a Writing Business?

Try these ideas if you want to start a business that leverages your passion for writing:

Choose an Artistic Business Idea

These are some great business ideas if you love artistic endeavors:

• Graffiti Art

Businesses to Start in Photography or Videography

If you love working with a camera, you should consider some of these ideas for a business:

• Family Photography
• Business Headshots Photographer
• School Photography Business
• Event Photography
• Product Photography
• Boudoir Photography
• Real Estate Photography
• Create Your Own Movies
• Music Video Production
• Wedding Photography
• Wedding Videography
• Virtual Tour Production

Check out our blog about becoming a photographer .

Want to Be a Consultant? Check Out These Ideas!

If you know a ton about a specific subject matter, consulting could be your perfect business idea. Here are some of the best options:

Find out how Cliff Ravenscraft has helped more than 40,000 people launch podcasts in this podcast interview:

List of Cleaning Business Ideas

We’ve created tons of educational content related to starting a cleaning business . These are some of the ideas you can apply it to:

• New Commercial Construction Cleaning
• Move-In and Move-Out Cleaning
• Home Cleaning
• Apartment Cleaning
• Office Cleaning
• Specialty Cleaning
• Duct Cleaning
• Carpet Cleaning Business
• Window Cleaning Business
• IT Cleaning Business
• Property Cleaning Services
• Dry Cleaning Business
• Rug Cleaning
• Hazardous Waste Removal
• Mold Remediation
• Power Washer Business
• Laundromat or Clothes Washing Business
• Dry Cleaning
• Boat Cleaning

Check out our interview about how to start a cleaning business with Chris Mondragon below.

Need a Business Idea that Involves Teaching?

Whether you’re a certified educator or just love teaching, consider these business ideas:

Start a Business that Helps People Plan

Some people are great at execution, while others are good at planning. These business ideas are for planners:

Ideas that Involve Weddings

Some people just love weddings. If you’re one of them, any of these could be the right business for you:

• Start a Wedding Band

Love Food? Look at this Business Idea List!

Here are 14 ideas that involve delights for foodies:

• Food Truck Business
• Create Recipe Books

Here’s a great interview we’ve done with a food trucking business.

Learn about running a restaurant straight from one of the oldest restaurants in the country:

I’m a Financial Wizard…What Business Idea Is Good for Me?

For those of you who are great at math, consider these opportunities:

• Data Analytics

Businesses That Involve Tangible Work

If you like doing physical work that keeps your hands busy, consider a business idea in one of these fields:

• Antique Refurbishment
• E-Bike Repair Services
• Solar Contractor
• Sustainable Landscaping
• Furniture Repair
• Upholstery Cleaning
• Upholstery Repair
• Custom Furniture Maker
• Appliance Repair
• Fence Installer
• Graffiti Removal
• Moving Company
• Christmas Tree Sales
• Mobile Car Repair
• Tow Truck Company
• Tree Trimming

Construction is another great hands-on niche. For advice on how to start a small business in construction, watch this interview with Vitaly, whose company, VP Homes, brings in very impressive profit margins:

Consider These Real Estate Ideas

If you want to own land or buildings, consider these businesses:

• Business Broker
• Office Space Rental
• Hostel Owner
• VR Arcade Owner
• Indoor Drone Racing
• Flea Market
• Home Inspector

Learn how JayMarc Homes grew into an $80M-a-year real estate business in this interview:

I Want to Start a Healthy Living Business

If you love health, here are some business ideas for you:

• Growing Medical Marijuana

Business Ideas in the Legal Field

You could become a lawyer, but there are a handful of other businesses that keep the legal field running. Consider one of these to get you started:

Love Animals? Start a Pet Business

If you love animals, there are a variety of businesses you can get into, from providing in-demand services to pet owners to raising animals of your own.

Here are some of them:

• Dog Groomer
• Pet Sitting or House Sitting
• Veterinarian
• Pet Trainer
• Start a Ranch
• Start a Farm

Businesses that Require Driving or Traveling

Expect to be on the go with these ideas for a business:

• Security Services
• Guided Tours
• Electric Charging Station Provider
• Uber or Lyft Driver
• Delivery Driver
• Mobile Pet Grooming
• Exotic Rental Car Company
• Mobile Massage Therapist

Miscellaneous Business Ideas

• Importing Electronic Gadgets
• Subscription Service Owner
• Professional Juggler
• Start a Franchise
• Buy a Franchise

To compile this list of profitable business ideas, we took the following steps:

• Download the NYU Stern’s Industry Sector database of publicly held companies.
• Adjust the Net Margin by adding the Stock-Payments-to-Sales Ratio because most small businesses will not be paying employees with stock. This step gives a more accurate estimation of privately owned companies’ profits.
• Compare each segment to the total market (including and excluding financials). Financial companies have a completely different set of rules they live by, and the way they make money is not comparable to other small business ideas.
• Include segments with a higher net income than the overall market (excluding financials).
• Compare the industries based on barriers to entry (green is best, red is worst).
• Compare the industries based on the percentage of the industry representation in the database.

If you’d like to play with the complete data, you can find it here .

Every business owner is different, as is every successful business. If you want ideas on how to start a business, you need to consider small business ideas that fit your personality, skillset, and lifestyle.

Before you go full steam ahead, ask yourself the following questions:

• Is there a problem I want to solve?
• What do I want to spend the rest of my life doing?
• Do I have experience in the industry?
• Do I have the education to implement my business idea?
• How much will my small business idea cost?

Let’s look at how these questions will impact choosing your best small business ideas.

Is There a Problem I Want to Solve?

Many small business owners start their own businesses because they see a problem in an industry and believe they can solve it. If you have a problem that needs to be solved, do market research, create a business plan , and start your own business.

If you don’t already have a small business idea, keep reading. I have some strategies I have developed to help people achieve their goals.

What Do I Want to Spend the Rest of My Life Doing?

Over the years, a lot of people have told me, “I want to start a business but have no ideas.”

A business is simply the intersection of what you are good at, what you enjoy, and what you can make money doing. There are so many business opportunities that people sometimes find these three questions overwhelming. That’s why I recommend a simple two-step strategy:

• Take an aptitude and interest test.
• Research your results.

I’ll explain the benefits of each step and how they’ll help you find good small business ideas for you.

Take an Aptitude and Interest Test

An aptitude and interest test is a two-part test used by high schools, colleges, the military, and state unemployment offices to help people find careers.

The aptitude portion of the test is skills-based and helps you figure out what you do well compared to other test takers. There are various questions involving abstract thought, math, English, and problem-solving. Job Test Prep has some examples of the questions you’ll be answering.

The interest portion asks questions like:

• How much do you enjoy working outside on a scale of 1 to 10?
• How much do you enjoy driving on a scale from 1 to 10?

The interest portion is focused on narrowing down the fields you are good at to ones that you will enjoy based on job descriptions. If you don’t like driving and don’t like working outside, then you probably won’t want to start a landscaping company.

I recommend reaching out to your local college or unemployment office and asking if they offer free or low-cost tests. They tend to have the most effective tests. O*NET ONLINE has resources for you to find the nearest career services centers.

Onet also provides online tests through My Next Move . You can find reviews of other tests on Monster.com. When you finish the test, it will give you a list of potential jobs that look similar to the one below:

It will also ask you to limit jobs by the education required. I chose “high education” for this one, and it suggested the following positions:

• Advertising & Promotions Managers
• Advertising Sales Agents
• Art Directors
• Commercial & Industrial Designers
• Fundraisers
• Graphic Designers
• Interior Designers
• Media Programming Directors
• Media Technical Directors and Managers
• Music Directors & Composers
• Producers & Directors
• Talent Directors
• Video Game Designers
• Writers & Authors
• Choreographers
• Marketing Managers
• Public Relations Specialists

Now, you have a list of good business ideas, but how do we limit it to one great idea? You’re about to find out.

Research Your Results

We just limited the choices dramatically, but that doesn’t mean you’ll make a great living doing all these. Fortunately, the Bureau of Labor Statistics is extraordinary at collecting and analyzing data. The Occupational Outlook Handbook (OOH) shows the data on each industry, including:

• Expected Growth
• Education Level
• Job Functions

The picture below shows an example of the OOH. Your goal here is to verify that your business idea is in a growing field and will make you a reasonable living. Without those two characteristics, a small business idea will be competing with existing businesses for a smaller pie.

The best small business ideas will be in quickly growing industries because it’s easier to make a great living. Future Business Tech has a quick read about the fastest-growing sectors, and except for renewable energy and e-learning, all of them are in tech.

The Future Business Tech blog coincides with historical trends from the stock market, where IT, healthcare, and consumer discretionary offerings beat the market average between 2007 and 2021.

Do I Have Experience in the Industry?

Paul Akers, the owner of FastCap , has brought hundreds of products to market in the woodworking industry, and he told us:

[su_quote] You have to be an expert in your field, or you almost don’t have a chance these days. [/su_quote]

If you don’t have experience, there are plenty of ways to gain it. You can:

• Work with a small business in the field to gain experience.
• Take online courses.
• Find a business partner.
• Freelance on Fiverr .

Once you’ve built up some experience, it will be easier to implement a business idea successfully.

Do I Have the Education to Implement My Business Idea?

Some fields have educational requirements that may lengthen the time to launch a business idea. For instance, states require engineers to have a bachelor’s degree, references, and five or more years in the field to become a Principal Engineer (the person who signs construction documents certifying they are up to code).

If you don’t have the education and experience, you have a few options:

• Consider small business ideas with less stringent requirements and get the education you need while working on another business idea or in a related field.
• Fast-track your education. I completed a bachelor’s and an MBA between 2013 and 2017. You can move fast if you are determined.

How Much Will My Small Business Idea Cost?

Small business ideas can cost several thousand to millions of dollars, depending on the industry. According to Zen Business , some with the highest barriers to entry include:

• Telecommunications
• National and international shipping providers
• Drug manufacturing (the legal kind)
• Air transportation

Those niches are likely to be more expensive business ideas to start. The flip side of this is that they often have equally high revenue potential...if you have the financial resources for them.

On the other hand, some small business ideas require only a few hundred dollars. You can still make excellent money with a low-investment business, too.

For example, Mignon Francois had about $5 to her name when she started her cupcake business. Today, the Cupcake Collection is a $10 million company. Hear her story in this interview:

Now that you know how to come up with business ideas, get ready to implement your idea.

After reviewing the list of business ideas, you’ll need to narrow it down to a few that might work for you. Then, begin working through these actions:

• Perform market research.
• Write a business plan.
• Identify the total addressable market.
• Get funding.
• Name the business.
• Structure the business.
• Prepare to start running your business.

Let’s look at how each of these helps you turn a good business idea into a profitable business.

Perform Market Research

Understanding the industry you are going into is critical. You’ll need to understand who the major players are, what role they play in the market, and how they attract customers.

You’ll also need to understand who your customers are. That’s the point of market research. You are working to become an expert in the field. We have a whole blog dedicated to conducting market research .

While doing market research, make sure to save information about your competitors. I also suggest following their social media accounts to keep up to date on what businesses owned by other people are doing.

Make sure to sign up for early access to our mentor group .

Write a Business Plan

After researching the market, you’ll want to write a business plan. A business plan is simply a document that communicates what you are trying to achieve.

You can write a one-page plan or a highly detailed one. Regardless of whether you are going into event planning, becoming a life coach, or teaching a foreign language, complete business plans all include:

• Marketing Expenses Strategy

For more information on each of these subjects, check out our blog about how to write a business plan or watch our interview with Mike Andes. He started mowing lawns to pay for college and has turned Augusta Lawn Care into one of the fastest-growing franchises in the world:

Go here to download our free template to help you create your own business plan. Or, if you don’t want to create your own, try Wise Business Plans . Their team of MBA writers, market researchers, and graphic designers has written more than 15,000 business plans.

Financial projections are an important part of this planning. We’ll explain the easiest way to estimate the market opportunity next.

Identify the Total Addressable Market

The total addressable market (TAM) is how much a small business idea is worth if the small business captures 100% of the addressable market. You’ll be able to establish this through market research.

For instance, if you’re selling custom-made tags for dogs, you would find the TAM by establishing:

• The number of dogs: We might encounter 76,811,305 in the U.S., according to the American Veterinarian Association .
• Percent of people who prefer custom products: Approximately 3.5% prefer vanity products based on U.S. vanity license plates.
• Value of tag: The average is about $20.

So the TAM would be 76,811,305 x 3.5% x $20 = $53,767,913.50. Of course, you aren’t likely to get 100% of that, but the #1 Etsy pet product seller makes approximately 2% of it per year. Find out how.

You’ll also need to fund your business. We’ll show you how.

Get Funding

Realistically, to succeed, you’ll need at least $1,000 to start some of the best small business ideas, plus enough to cover any personal and business expenses. Consider eCommerce shop ideas if you want low-cost side business ideas .

Whether you take a low-cost approach as you start a business or want to build a company you’ll eventually franchise, the most common options are:

• Self-funding: This might be what you earn from work or pull from retirement funds.
• Personal loan and mortgage refinance: Talk to your bank about these options.
• Loans from friends and family: Make sure to treat them like you would any other business partner.
• SBA Loans : These are harder to get but often have some of the best terms on the market.

Make sure you have a well-documented business plan if you are seeking loans. Lenders want to know that you have truly thought out your small business idea before they will consider lending you money for it.

One of the biggest mistakes small business owners make in their attempts to get funding is assuming they can make as much as major corporations do.

Most businesses make less than $100K in revenue, and businesses without employees average less than that. In fact, most earn less than $50K per year in revenue. But as employees increase, so does revenue. Consider this breakdown of average revenue by number of employees:

• 1-4 Employe es : $387,000 average revenue
• 5-9 Employee s : $1,080,000 average revenue
• 10-19 Employees: $2,164,000 average revenue
• 20-99 Employees: $7,124,000 average revenue
• 100-499 Employees: $40,775,000 average revenue

Even if you’re borrowing money from friends and family, presenting them with your plans for the business can prove that you’re serious about your new small business, making them feel more comfortable investing in it.

If you're looking for financing, go apply with our lending partners .

Name the Business

You’ll need to choose a business name. You’ll want to make sure:

• The .com domain is available . Use GoDaddy to check and reserve your domain.
• The name is available in the state(s) where you want to re gister . Just search ”my state’s SOS website” to find where to check for your state.
• The trademark is available. Use the Trademark Electronic Search System .

As long as all three show the name is available, you are ready to go to the next step, creating the business structure.

Structure the Business

A business structure simply identifies the type of business you are operating. This means you will:

• Choose whether you want to be an LLC, Sole Proprietor, S-Corp, C-Corp, or other structures. Read about the 11 types of business structures to see which is best for you.
• Register with the Secretary of State.
• Get an Employer Identification Number from the IRS.
• Get a state seller’s permit/tax ID.
• Get any city or county licenses required.
• Fulfill any special requirements for your industry.

Make sure to consider your personal liability when choosing a structure. People typically go with an LLC, but recent research shows many businesses should opt to become an S-Corp for tax purposes.

Once you’ve taken these steps, you’ll be legally able to open a business. For low-cost businesses like blogging or social media management, you can get started almost immediately. For others, you’ll have other work you need to do. We’ll look at that next.

Prepare to Start Running Your Business

If you completed the last step, you are now a business owner. You’ll need to do a little more before you are ready to serve customers, though. Depending on your business type, you might need to:

• Order inventory.
• Choose a location .
• Hire employees.
• Create your own website .
• Get insurance .
• Get a business bank account.
• Market your business.

There’s no one perfect business for everyone. Knowing how to get business ideas is the first step to evaluating all the options out there. Ultimately, you’ll have to identify which small profitable business ideas are best for your skills, personality, and location.

While it’s great being your own boss and setting your own hours, not everyone wants to start a business from scratch. We have resources for you if you’d prefer to buy a business, too. Check out our blog about how to buy a business for another way to become a small business owner!

What are some small business ideas you are considering, and what’s the most important factor in your decision-making process?

How to Start a $500K/Year Auto Repair Shop (2024)

Develop Repair Shop Knowledge

Industry information, major players.

• TravelCenters of America 
• TBC Corporation
• Love’s Travel Stops & Country Stores, Inc.
• Meineke Car Care Centers, LLC
• The Boyd Group Inc.
• NationaLease
• New car dealerships
• Oil changes services
• Used car dealerships
• Automotive part supply shops

Automobile Repair Shop Revenue

Operating Expenses

• Other Costs: 46.7% (includes taxes, IT, professional services, repairs, and miscellaneous). Based on my reading of the entire report, it appears that parts are the majority of this. You should expect parts to be $1 out of every $3 earned on parts, but if you can reduce this to $1 in every $4, it will increase profits to triple the market average. That’s why an auto repair shop needs to call multiple vendors for the best price.
• Wages: 28.1% (Lucky says more like $40K per mechanic)
• Purchases : 9.5% equipment and tools
• Rent : 4.7%
• Marketing : 1.9%
• Depreciation : 1.6%
• Utilities : 1.2%

Profit Margins 

What do you do with profits.

Educate Yourself

• Teach yourself to repair cars with YouTube videos.
• Attend technical school.
• Get a job at an auto mechanic shop.

YouTube Videos About Cars

Technical School

Get a job as a mechanic.

Do you need a mechanic license to open a shop?

• Automotive Service Excellence Certification ( ASE ) : The ASE offers 58 Certifications for techs. They also offer a Blue Seal certification for shops with at least 75% ASE-certified techs and at least one ASE technician for each service. This gives you a high-quality backlink to your website, marketing materials, and more.
• I-Car Gold Class Certification : Shop owners might want to consider I-Car Gold certification if their car repair shop wants to be an automobile repair center. The certifications are a multi-year process that requires the majority of employees to be trained in specific vehicle repair shop knowledge.
• AAA Approved Auto Repair Facility : Triple A has really high requirements to become a certified repair shop for cars. You’ll need ASE certified technicians, a high Better Business Bureau rating, a 94% customer satisfaction rating based on a survey of mechanic garage clients, and more. Given each AAA site is different by region, this link or this one by region might be more direct. I got my information from RepairesHub .

Business Plan for an Auto Repair Shop

• Services Offered
• Business Structure and Licensing Needed
• Startup Costs
• Ongoing Expenses

What services will you offer?

• Routine Maintenance : Every new car has a maintenance schedule, which is 31% of revenue for the industry.
• Powertrain Repair : These focus on engines, transmission, axles, and wheels. They generate 18.1% of industry revenues. Lucky told us these are the highest profit margins. 
• Brake Repair : Brakes must be replaced every 10K to 20K miles and rotors every 70kK. 17.4% of industry revenue is from brake work.
• Alignment Repair : Alignments focus on parts like wheels and axles that help the vehicle drive in a straight line. Makes up 8.1% of industry revenue.
• Electrical Repairs : Electric work focuses on the electrical system like alarm equipment at 6.4%. 
• Heating/AC Repairs : This work involves components that keep the car warm or cold, and 4.9% of revenue comes from these services.
• Muffler and Exhaust Repairs : These services repair parts regarding the emissions system. These may also include government required inspections. Without these parts, a car will be polluting the environment more than necessary. These repairs are 3.5% of industry revenue.
• Other Services : If it doesn’t fit neatly in one of the other categories, the service is thrown in here. It makes up 10.6% of revenue industry wide.
• Mobile Mechanic Business : Go to people’s sites and fix their cars.
• Mechanic Workshop : This term is normally a synonym for a repair shop, but you could also turn it into a classroom environment or space where D-I-Y mechanics can go to work on their cars.
• Parts Supply : Sell automotive parts to other shops and D-I-Yers.
• Collision Repair : Specifically focus on fixing cars that were in wrecks.

How Much Does It Cost to Open a Mechanic Shop?

Breakdown of Startup Costs

• Limited Liability Company (LLC) or Corporation: $1,000 or less in most states. Both an LLC and a Corporation separate personal assets from business assets as long as you have a business bank account. Check out our blog about business structures to learn more.
• Business Licenses: $200 to $3,000. You’ll have to check with your state, county, and city governments for exact pricing and licensing requirements. Learn how to get a business license .
• General Liability Insurance: $500 to $3,000 per year. Alternatively, you can choose the next option:
• Business Owner Policy: $500 to $3,000 per year. Combines general liability and commercial property insurance. Make sure to purchase insurance. Check out Simply Business f or easy to purchase plans.
• Workers Compensation: $500 to $4,000 per year, median $1,667. 
• Commercial Auto Insurance : Median cost $778 per year. (All insurance pricing is based on this Insureon blog .)
• Specialty Tools: Rates vary, but you can rent many tools from Autozone until you can afford to buy them.
• Diagnostic Tools: $25 to $10K+. Used to test the vehicles to see what codes and issues they are having. It can also be used for tuning. High end or Affordable options are available. Obviously the high end ones have more features and precision.
• Professional Lift: $5,000 to $40,000 depending on height and weight requirements .
• Parts budget : Rates vary, and new parts can cost from $15 for brake pads to $20,000+ for some engines. 
• Shop : $1,750+ a month for rent and utilities.
• Total : $10,753 to $100K+ for all items as shown here.
• How to start a mechanic shop at home

What permits do I need to open a mechanic shop?

Get a Business Bank Account

Get accounts with suppliers.

• AutoZone Pro : Get parts through AutoZone with special rates, marketing materials, and apply for OnDeck financing to get Net30 terms.
• O’Reilly First Call : This is the site for shops to use on O’Reilly’s website.
• Advantage Part Systems : An OEM wholesaler 

Choose an Auto Repair Business Location

• What is to be the amount of traffic around your car repair shop?
• Is there enough parking to handle existing and new customers?
• A local taxi company
• The police department
• A limousine service
• Car dealerships (which sometime have 24 to 36 of their own)
• The price of the space matters. Industrial and lower traffic areas tend to have lower rent.

How to Open Your Own Car Repair Shop

How to open mechanic shop: software used .

• OWL Carousel : For pictures
• Google Tag Manager : For tracking what occurs on the site
• Tawk.to : Customer support agents for $1 per hour
• Google Analytics UA : Web Tracking
• CloudFlare CDN : Provides fast access to content
• CDN JS : Provides fast access to content
• ProDemand® Optimized with SureTrack® : Diagnostic machine software helps diagnose cars including top 10 issues by vehicle, partners needed, and wiring diagrams.
• Manager™ SE : Custom Relationship Management software helps keep track of existing customers spending and prior work, pre-diagnosing the type of repairs needed to help technicians diagnose the vehicle, and manage invoicing and parts.
• TruckSeries : This is used for Medium and Heavy Duty Trucks. If your shop specializes in Class 4 to 8 trucks, you’ll need this to help reduce repair time and increase revenue.
• SocialCRM : Use this to manage the social aspect of running your own business. This includes customer reviews, preventive maintenance reminders, promotions, and other marketing automations.

Bolt On Technology

Arrange your space.

• The tools should be convenient, but out of the way where technicians can move around the cars freely.
• Have a specific dock for oil changes, battery replacement, and other quick jobs. They shouldn’t have to wait while you are changing out an engine.
• Tool boxes should have locks and be locked at the end of the night.
• Always have an alarm system in case vandals or robbers break in.
• Make customer spaces comfortable. Provide a seating space, reading materials, a TV, a restroom, drinking water, and maybe a vending machine .

Marketing Your Car Repair Shop

• Building signs
• Vehicle signs
• Company letterhead for invoices and other communication
• Brand messaging guidelines
• Communication channels
• Brand colors and font specification
• Marketing analytics 
• Branded pens (These are a cheap way for any business to get their name out because people tend to take pens, plus you can get them for less than $1 per pen for less than $500.)
• Use social media
• Partner with other businesses
• Pay for leads on Google Local Ads
• Create videos on how to fix cars
• Use print ads in local papers and billboards
• Try Lucky’s method:

How to Open Your Own Mechanic Shop: Employees

Mechanic Garage Customer Service

• Customer is added to the system
• Complimentary inspection (body, wheels, suspension)
• Get quotes for parts from vendors
• Provide an estimate
• Get approval
• Put the vehicle on the lift
• Perform the work
• Accept payment and ask for reviews

How to Start a Mechanic Shop: The Keys to Success

• Hiring the right people
• Customer service
• Asking for reviews

Pay Your Bills

• Lease payments
• Payments on any bank loan for business assets
• Business insurance costs
• Payroll taxes
• State and federal taxes
• Annual business license and business structure fees

Live Mechanically Ever After…

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

Posted november 14, 2022 by noah parsons.

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

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

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

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

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

• Value proposition
• Market need
• Your solution

Competition

Target market.

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

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

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

When do you need a more detailed business plan?

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

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

Flesh out the details 

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

Build a more detailed financial forecast

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

Be prepared for lenders and investors

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

Selling your business

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

How to write a detailed business plan

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

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

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

1. Executive summary

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

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

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

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

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

2. Opportunity

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

Mission statement

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

Problem & solution

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

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

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

3. Execution

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

Marketing & sales

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

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

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

Milestones & metrics

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

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

Organizational structure

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

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

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

5. Financial plan and projections

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

Financial Forecasts

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

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

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

6. Appendix 

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

Download a business plan template

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

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

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

Using your plan to grow your business

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

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

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

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

By Joe Weller | October 11, 2021

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

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

What Is a Business Plan?

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

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

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

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

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

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

Business Plan Steps

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

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

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

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

Do I Need a Simple or Detailed Plan?

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

How to Choose the Right Plan for Your Business

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

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

Is the Order of Your Business Plan Important?

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

The Difference Between Traditional and Lean Business Plans

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

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

How to Write a Business Plan Step by Step

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

Step 1: Executive Summary

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

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

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

Step 2: Description of Business

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

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

Step 3: Market Analysis

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

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

Step 4: Competitive Analysis

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

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

Step 5: Description of Organizational Management

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

Step 6: Description of Products or Services

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

Questions to answer in this section are as follows:

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

Step 7: Marketing Plan

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

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

Step 8: Sales Plan

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

Start by answering the following questions:

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

Step 9: Funding Details (or Request for Funding)

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

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

Step 10: Financial Projections

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

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

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

Business Plan Template

Download Business Plan Template

Microsoft Excel | Smartsheet

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

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

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

How to Write a Simple Business Plan

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

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

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

Simple Business Plan Template

Download Simple Business Plan Template

Microsoft Excel |  Microsoft Word | Adobe PDF  | Smartsheet

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

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

How to Write a Business Plan for a Lean Startup

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

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

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

Lean Business Plan Template for Startups

Download Lean Business Plan Template for Startups

Microsoft Word | Adobe PDF

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

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

How to Write a Business Plan for a Loan

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

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

Download free financial templates to support your business plan.

Tips for Writing a Business Plan

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

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

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

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

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

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

Resources for Writing a Business Plan

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

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

How a Business Plan Helps to Grow Your Business

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

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

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Learn How to Craft a Successful Business Plan (Even with No Experience)

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Take the First Step in Learning How to Write a Business Plan, Even with No Experience

Antonio Del Cueto, CPA

May 8, 2024

Imagine your business as a spaceship blasting off into uncharted territory. It may sound exciting, but without a precise flight plan, that thrilling journey could end in a fiery crash. Similarly, most businesses don't fail because of bad ideas. They fail because they lack a clear roadmap.

This article will guide you through the process of crafting a business plan that's more than just numbers on a page. Learn the secret formulas that propel businesses from mere concepts to thriving realities.

Reimagining Traditional Business Plan Components

Executive summary with interactive elements.

Transform the executive summary into a dynamic experience using multimedia elements such as videos and interactive timelines. These components help demonstrate the business’s mission and goals, making it more attractive to would-be investors and potential customers.

Flexible Organizational Structures

Suggest designing an adaptable organizational framework that evolves according to strategic business needs and operational demands. This is especially beneficial for entrepreneurs who might need to navigate changes without a background in HR or traditional management.

Navigating Financial Management Without a Background

Simplified accounting tools.

For many new entrepreneurs, managing finances can feel overwhelming. Leveraging simplified digital accounting tools can significantly reduce this stress by automating most of the routine bookkeeping tasks. These tools are particularly beneficial for those without a financial background, making it easier to focus on other aspects of entrepreneurship.

• Automation : Choose tools that automate entries for sales, purchases, and payroll transactions, ensuring accuracy and saving time.
• User-Friendly Dashboard : Opt for software with an intuitive interface that simplifies financial tracking and report generation. This feature is essential for entrepreneurs who need to quickly access financial data without navigating complex menus.
• Integration Capabilities : It’s important to invest in software that integrates with other business tools (e.g., inventory management systems, e-commerce platforms) to streamline all financial processes.
• Scalability : As your business grows, you’ll need accounting software that can adapt to more complex financial demands without requiring a complete overhaul.

Further reading: Mastering Accounting for Tech Companies: The Ultimate Guide to Industry Accounting in the Technology Sector

Understanding business taxes.

A basic understanding of business taxes is essential for any entrepreneur, including those running a nonprofit or other types of organizations. Here are key elements your business plan should focus on:

• Fundamental Tax Responsibilities : Clearly outline what taxes the business is liable for, such as income, payroll, and sales taxes. This information should be specific to your business's location and structure.
• Maximizing Deductions : Include information on how to identify and claim relevant deductions to minimize tax liability. For example, if your business has significant equipment expenses or if you’re renting office space, you should know how these affect your taxes.
• Seeking Professional Advice : While basic tax guides are helpful, consulting with a tax advisor or strategist can provide tailored advice that ensures compliance and optimizes tax benefits. This step is integral for complex situations or where the tax implications could significantly impact business finances.

Further reading: Maximizing Your Small Business Tax Benefits: 2023 Tax Year Strategies & New Reporting Changes

Budgeting made easy.

Budgeting effectively is a core skill every business owner should develop to ensure financial stability and facilitate growth. Here’s how to incorporate straightforward budgeting strategies into your business operations:

• Expense Tracking : Start by categorizing expenses to track where every dollar is going. Categories might include rent, salaries, marketing, and web design. This clarity helps in making informed spending decisions.
• Financial Forecasting : Use historical data to predict future spending needs and income . This is especially important for planning major investments or when scaling operations.
• Regular Financial Reviews : Conducting regular reviews of your budget will help you stay on track and make necessary adjustments in response to financial performance or changing market conditions.
• Budgeting Tools : Recommend specific budgeting tools that are designed for small business needs. These tools should provide visual representations of financial data, making it easier to digest and act upon.

Each of these sections should be detailed in the business plan to demonstrate a thorough understanding and proactive management of financial aspects. This approach not only helps in securing funding (e.g., from banks or venture capital) but also in managing day-to-day financial operations efficiently.

Building Strategic Partnerships and Collaborative Networks

Cross-industry alliances.

Engaging in cross-industry alliances is a strategic move that can drive substantial business growth and innovation. These partnerships leverage complementary strengths and resources, offering a multitude of benefits:

• Innovation through Diverse Expertise : Combining knowledge and resources from different sectors can catalyze innovative solutions that neither partner could develop alone. For instance, a tech startup could collaborate with an established manufacturing firm to optimize production processes using advanced technology, resulting in a competitive edge in the market.
• Access to New Markets : Each industry has its unique customer base. By forming alliances, businesses can bridge their offerings to new audiences. A successful example could involve a collaboration between a software development company and a telecommunications firm to introduce a new tech product to a broader audience, utilizing the telecom firm's extensive customer network.
• Resource Sharing : Strategic partnerships allow for the sharing of critical assets such as technology, marketing channels, and expertise, leading to cost savings and enhanced product offerings. This might involve sharing R&D facilities or co-branding efforts for joint marketing campaigns.
• Enhanced Credibility and Brand Perception : Partnering with reputable firms in other sectors can significantly boost a company's credibility and strengthen its brand image, attracting more customers and potential investors.

Documenting cross-industry alliances in a business plan must specify the objectives, expected outcomes, and the nature of the collaboration. Include specific information on how these alliances align with the business’ strategy and how they contribute to achieving the company’s goals.

Customer Involvement in Product Development

Integrate customer feedback into the product development process for aligning products with market needs and enhancing customer satisfaction. This strategy not only improves product-market fit but also fosters customer loyalty:

• Direct Feedback for Better Products : Involving customers early in the development process ensures that the final product meets actual user needs and solves relevant problems. This can be achieved through methods like crowdsourcing ideas, beta testing new products, and incorporating user-generated content and suggestions into product design.
• Build Customer Loyalty : Customers who participate in the product development lifecycle are more likely to develop a deeper connection with the brand, increasing their likelihood of becoming repeat buyers and brand advocates.
• Agile Feedback Loops : Utilizing customer feedback during product testing phases allows for quick iterations and adjustments, greatly enhancing the product’s relevance and appeal upon launch.
• Unlocking New Ideas : Customers often see different uses for a product or identify missing features that can lead to significant innovations, helping a company stay ahead of competitors.

The business plan must include a dedicated section outlining how customer feedback will be integrated into product development processes. This section should also include pricing strategies informed by customer input to ensure market competitiveness.

For businesses seeking funding or partnership, a well-crafted business plan is essential. Including sections like Cross-Industry Alliances and Customer Involvement showcases a comprehensive approach to strategic planning and market engagement.

For simplicity and clarity, especially when presenting to potential investors, consider summarizing key strategies in a one-page overview within the larger business plan. This not only highlights the strategic vision but also ensures that readers can quickly grasp the core elements of your plan.

Key Takeaways

• Clarity is Key : Craft a clear, concise business plan to create financial projections and ensure a solid foundation.
• Know Your Audience : Tailor your plan to engage stakeholders, addressing related topics like brand awareness.
• Research Matters : Thorough market research strengthens your plan, supporting its solidity.
• Financial Focus : Develop realistic projections for revenue and expenses to fortify your business plan.
• Stay Adaptable : Flexibility is key to evolve strategies, including those for brand awareness, to maintain relevance.

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The AI assistant by Anthropic

Anthropic pbc.

• #54 in Productivity
• 4.7 • 563 Ratings
• Offers In-App Purchases

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Get help on a variety of tasks whenever inspiration strikes—on everything from writing to analysis to math—from Claude, your trusted AI assistant. INSTANT ANSWERS With Claude you have a world of intelligence right in your pocket. Just start a chat, send Claude a photo, attach a file—and ask away. FASTER DEEP WORK Collaborate with Claude on critical tasks, brainstorming, and complex problems to make significant progress while you’re on the go. LESS BUSY WORK Claude can help draft your emails, summarize your meetings, and assist with all the small tasks you don't want to do. INTELLIGENCE AT YOUR FINGERTIPS Claude is powered by the Claude 3 model family—powerful AI models built by Anthropic—giving you instant access to knowledge on every subject. TRUSTED PARTNER Claude is designed to be reliable, accurate, and helpful. It's brought to you by Anthropic, an AI research company dedicated to building safe and dependable AI tools. Claude is free to use. If you want access to 5x more Claude usage and our most powerful model (Claude 3 Opus), consider upgrading to our paid Pro plan. Terms of Service: https://www.anthropic.com/legal/consumer-terms Privacy Policy: https://www.anthropic.com/legal/privacy

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563 Ratings

Good work + Feature Request

Nice work on the app guys. What I’d love is if you would allow the iPad version to be installed on apple silicon mac devices. The ChatGPT app disallows this currently and I really believe that Claude would appeal more to technically-savvy users (hackernews demographic certainly) if you simply flip the switch and enable your official app on macOS. Using the iPad version on macOS would be particularly tolerable for this type of application. Moreover, typical mac users would not stumble upon your app because the macOS store search is awful; you wouldn’t be dealing with complaints of how the designed-for-iPad app UX is lacking. Please consider enabling it 🙂

Good so far

It appears Claude does not know the privacy policy of Anthropic, when I asked it to summarize it. I recommend copying and pasting the policy into Claude and asking it to help you understand it, if you’re interested in having an idea of what data is collected and shared to third parties. It’s almost a given that reading the various policies doesn’t occur enough by the average user, not the user’s fault. However, using AI, it’s now possible to understand what the end user is agreeing to without spending an hour on the toilet trying to decipher legal/policy jargon. Happy learning!

Amazing just like the web version

I have been waiting for the app publisher to release an iOS app version of this and now that it’s here, I am more than happy. Was so intuitive to use on the web and I can confirm that you get the same experience on the app. Response time to chat inputs is so fast and the accuracy I’m used to is still there. 10/10 I would recommend!

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The developer, Anthropic PBC , indicated that the app’s privacy practices may include handling of data as described below. For more information, see the developer’s privacy policy .

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Privacy practices may vary, for example, based on the features you use or your age. Learn More

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Us judge halts rule capping credit card late fees at $8.

A federal judge in Texas on Friday halted the Consumer Financial Protection Bureau's new rule capping credit card late fees at $8, a victory for business and banking groups challenging part of the Biden administration's crackdown on "junk fees."

RIP Metaverse

An obituary for the latest fad to join the tech graveyard

The Metaverse , the once-buzzy technology that promised to allow users to hang out awkwardly in a disorientating video-game-like world, has died after being abandoned by the business world. It was three years old.

The capital-M Metaverse, a descendant of the 1982 movie "Tron" and the 2003 video game "Second Life," was born in 2021 when Facebook founder Mark Zuckerberg changed the name of his trillion-dollar company to Meta. After a much-heralded debut, the Metaverse became the obsession of the tech world and a quick hack to win over Wall Street investors. The hype could not save the Metaverse, however, and a lack of coherent vision for the product ultimately led to its decline. Once the tech industry turned to a new, more promising trend — generative AI — the fate of the Metaverse was sealed.

The Metaverse is now headed to the tech industry's graveyard of failed ideas. But the short life and ignominious death of the Metaverse offers a glaring indictment of the tech industry that birthed it.

Grand promise

From the moment of its delivery, Zuckerberg claimed that the Metaverse would be the future of the internet. The glitzy, spurious promotional video that accompanied Zuckerberg's name-change announcement described a future where we'd be able to interact seamlessly in virtual worlds: Users would "make eye contact" and "feel like you're right in the room together." The Metaverse offered people the chance to engage in an "immersive" experience, he claimed.

These grandiose promises heaped sky-high expectations on the Metaverse. The media swooned over the newborn concept: The Verge published a nearly 5,000-word-long interview with Zuckerberg immediately following the announcement — in which the writer called it "an expansive, immersive vision of the internet." Glowing profiles of the Metaverse seemed to set it on a laudatory path, but the actual technology failed to deliver on this promise throughout its short life. A wonky virtual-reality interview with the CBS host Gayle King , where low-quality cartoon avatars of both King and Zuckerberg awkwardly motioned to each other, was a stark contrast to the futuristic vistas shown in Meta's splashy introductory video .

The Metaverse also suffered from an acute identity crisis. A functional business proposition requires a few things to thrive and grow: a clear use case, a target audience, and the willingness of customers to adopt the product. Zuckerberg waxed poetic about the Metaverse as "a vision that spans many companies'' and "the successor to the mobile internet," but he failed to articulate the basic business problems that the Metaverse would address. The concept of virtual worlds where users interact with each other using digital avatars is an old one, going back as far as the late 1990s with massively multiplayer online role-player games, such as "Meridian 59," "Ultima Online," and "EverQuest." And while the Metaverse supposedly built on these ideas with new technology, Zuckerberg's one actual product — the VR platform Horizon Worlds, which required the use of an incredibly clunky Oculus headset — failed to suggest anything approaching a road map or a genuine vision. In spite of the Metaverse's arrested conceptual development, a pliant press published statements about the future of the technology that were somewhere between unrealistic and outright irresponsible . The CNBC host Jim Cramer nodded approvingly when Zuckerberg claimed that 1 billion people would use the Metaverse and spend hundreds of dollars there, despite the Meta CEO's inability to say what people would receive in exchange for their cash or why anyone would want to strap a clunky headset to their face to attend a low-quality, cartoon concert.

A high-flying life

The inability to define the Metaverse in any meaningful way didn't get in the way of its ascension to the top of the business world. In the months following the Meta announcement, it seemed that every company had a Metaverse product on offer, despite it not being obvious what it was or why they should.

Microsoft CEO Satya Nadella would say at the company's 2021 Ignite Conference that he couldn't "overstate how much of a breakthrough " the Metaverse was for his company, the industry, and the world. Roblox, an online game platform that has existed since 2004, rode the Metaverse hype wave to an initial public offering and a $41 billion valuation. Of course, the cryptocurrency industry took the ball and ran with it: The people behind the Bored Ape Yacht Club NFT company conned the press into believing that uploading someone's digital monkey pictures into VR would be the key to "master the Metaverse." Other crypto pumpers even successfully convinced people that digital land in the Metaverse would be the next frontier of real-estate investment . Even businesses that seemed to have little to do with tech jumped on board. Walmart joined the Metaverse. Disney joined the Metaverse.

Companies' rush to get into the game led Wall Street investors, consultants, and analysts to try to one up each other's projections for the Metaverse's growth. The consulting firm Gartner claimed that 25% of people would spend at least one hour a day in the Metaverse by 2026. The Wall Street Journal said the Metaverse would change the way we work forever . The global consulting firm McKinsey predicted that the Metaverse could generate up to "$5 trillion in value," adding that around 95% of business leaders expected the Metaverse to "positively impact their industry" within five to 10 years. Not to be outdone, Citi put out a massive report that declared the Metaverse would be a $13 trillion opportunity .

A brutal downfall

In spite of all this hype, the Metaverse did not lead a healthy life. Every single business idea or rosy market projection was built on the vague promises of a single CEO. And when people were actually offered the opportunity to try it out, nobody actually used the Metaverse.

Decentraland, the most well-funded, decentralized, crypto-based Metaverse product (effectively a wonky online world you can "walk" around), only had around 38 daily active users in its "$1.3 billion ecosystem." Decentraland would dispute this number, claiming that it had 8,000 daily active users — but that's still only a fraction of the number of people playing large online games like "Fortnite." Meta's much-heralded efforts similarly struggled: By October 2022, Mashable reported that Horizon Worlds had less than 200,000 monthly active users — dramatically short of the 500,000 target Meta had set for the end of 2022. The Wall Street Journal reported that only about 9% of user-created worlds were visited by more than 50 players , and The Verge said that it was so buggy that even Meta employees eschewed it . Despite the might of a then-trillion-dollar company, Meta could not convince people to use the product it had staked its future on. 

The Metaverse fell seriously ill as the economy slowed and the hype around generative AI grew. Microsoft shuttered its virtual-workspace platform AltSpaceVR in January 2023, laid off the 100 members of its "industrial metaverse team ," and made a series of cuts to its HoloLens team . Disney shuttered its Metaverse division in March, and Walmart followed suit by ending its Roblox-based Metaverse projects. The billions of dollars invested and the breathless hype around a half-baked concept led to thousands — if not tens of thousands — of people losing their jobs .

But the Metaverse was officially pulled off life support when it became clear that Zuckerberg and the company that launched the craze had moved on to greener financial pastures. Zuckerberg declared in a March update that Meta's "single largest investment is advancing AI and building it into every one of our products." Meta's chief technology officer, Andrew Bosworth, told CNBC in April that he, along with Mark Zuckerberg and the company's chief product officer, Chris Cox, were now spending most of their time on AI. The company has even stopped pitching the Metaverse to advertisers , despite spending more than $100 billion in research and development on its mission to be "Metaverse first." While Zuckerberg may suggest that developing games for the Quest headsets is some sort of investment, the writing is on the wall: Meta is done with the Metaverse.

Did anyone learn their lesson?

While the idea of virtual worlds or collective online experiences may live on in some form, the Capital-M Metaverse is dead. It was preceded in death by a long line of tech fads like Web3 and Google Glass. It is survived by newfangled ideas like the aforementioned generative AI and the self-driving car. Despite this long lineage of disappointment, let's be clear: The death of the Metaverse should be remembered as arguably one of the most historic failures in tech history.

I do not believe that Mark Zuckerberg ever had any real interest in "the Metaverse," because he never seemed to define it beyond a slightly tweaked Facebook with avatars and cumbersome hardware. It was the means to an increased share price, rather than any real vision for the future of human interaction. And Zuckerberg used his outsize wealth and power to get the whole of the tech industry and a good portion of the American business world into line behind this half-baked idea. 

The fact that Mark Zuckerberg has clearly stepped away from the Metaverse is a damning indictment of everyone who followed him, and anyone who still considers him a visionary tech leader. It should also be the cause for some serious reflection among the venture-capital community, which recklessly followed Zuckerberg into blowing billions of dollars on a hype cycle founded on the flimsiest possible press-release language. In a just world, Mark Zuckerberg should be fired as CEO of Meta (in the real world, this is actually impossible ). 

Zuckerberg misled everyone, burned tens of billions of dollars, convinced an industry of followers to submit to his quixotic obsession, and then killed it the second that another idea started to interest Wall Street. There is no reason that a man who has overseen the layoffs of tens of thousands of people should run a major company. There is no future for Meta with Mark Zuckerberg at the helm: It will stagnate, and then it will die and follow the Metaverse into the proverbial grave.

Ed Zitron  is the CEO of  EZPR , a national tech and business public-relations agency. He is also the author of the tech and culture newsletter  Where's Your Ed At .

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6 easy steps to become a sep-ira millionaire.

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Can a SEP IRA make you a millionaire?

Anyone, and I mean anyone, can become an IRA millionaire if given enough time. According to Fidelity, the number of IRA millionaires on its platform has grown 40% over the past year. That figure doesn't include all retirement account millionaires (those combining assets in retirement accounts).

Becoming a SEP-IRA millionaire may be easier than becoming a 401(k) millionaire. However, you will need to have self-employment income to contribute. Keep reading as we share the reasonably easy steps to put yourself on the path to becoming a SEP-IRA millionaire.

1) Be Self-Employed And Pay Yourself

To become a SEP-IRA millionaire, you need to be eligible to contribute to one. For most people, this means owning a business, being self-employed, or being an independent contractor with income paid via 1099.

2) Open A SEP-IRA Account

For many, the biggest hurdle to becoming a SEP-IRA millionaire is simply getting started. This is a relatively easy process that involves a bit of paperwork. It gets even easier if you have a tax-planning-focused financial planner who takes care of opening the account for you.

If you are self-employed, take the time to set up a SEP-IRA or Solo 401(k) for your business. If you make more than $500,000 per year, consider also setting up a c ash balance pension plan for even more tax savings.

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The best queen mattresses that promote more restful nights, vasiliy lomachenko vs. george kambosos jr: date, time and how to watch, 3) contribute enough money to your sep-ira.

The third step toward becoming a SEP-IRA millionaire is determining how much money to contribute. Below, we will share some math for building a millionaire retirement account. A rough rule of thumb is to save at least 10% of your salary. If you start late or want to become a SEP-IRA millionaire more quickly, you must contribute even more.

The tax benefits of contributing to a SEP-IRA can help you make even larger contributions each year. You will not owe income taxes on the amount you contribute to your SEP-IRA each year. The maximum SEP-IRA contribution for tax year 2023 is $66,000. The SEP-IRA contribution limit for 2024 is $69,000. Remember that your maximum SEP contribution each year will depend on your business income.

The magic of compound interest can help you use your SEP IRA to become a millionaire.

4) Invest Your SEP-IRA Contributions

Becoming a SEP-IRA millionaire without contributing $1 million into your retirement account will require investing your funds. Compounding interest can help your money grow even faster.

If you want to do it the slow and hard way by contributing $22,500 per year to your SEP-IRA and just having it sit there, it will take around 45 years. Assuming a 10% return on your investments, it would take 18 years with the same $22,500 yearly contribution.

If you were able to make the current maximum $69,000 contribution to your SEP each year, it would take just under 10 years to become a SEP-IRA millionaire.

5) Take The Time To Become A SEP-IRA Millionaire

Becoming a SEP-IRA millionaire takes time. There are annual contribution limits to your retirement accounts, so at a minimum, we are talking about a few years for anyone to become a SEP-IRA millionaire. Here are some rough calculations to become a SEP-IRA millionaire, depending on how long you have to reach this big milestone. We are assuming an eight-percent return on your retirement account investment.

Forty-eight years requires about $170 per month.

Thirty years requires about $735 per month.

Twenty years requires about $1,821 per month.

Ten years would require about $5,755 per month.

Five years require about $14,205 per month (which is above the contribution limits.)

As you can see, the earlier you start investing for retirement, the easier it will be to become a SEP-IRA millionaire.

Avoid raiding your SEP IRA when times get tough.

6) Don't Make The Mistake Of Raiding Your SEP-IRA

Following these five steps should have you well on your way to becoming a SEP-IRA millionaire. However, if you make the mistake of raiding your investments before retirement, you will significantly reduce your chance of achieving financial freedom. You will also get hit with taxes and penalties on withdrawals. Not raiding your SEP-IRA when times get tough is essential to accumulating enough assets to maintain your standard of living in retirement.

Follow these simple steps, and you should be on your way to becoming a real-life retirement account millionaire. While a million-dollar balance in your SEP-IRA is a huge accomplishment, most people reading this post will likely need to accumulate even more retirement assets to have the retirement they dream of. Work with your fiduciary financial planner to determine your financial freedom number .

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5 Consequences of Skipping a Business Plan

9 min. read

Updated May 10, 2024

You’ve got a great business idea, something that could be truly special. 

You’re ready to dive in, ditch the day job, and build it yourself.

But you keep being told you need to write a business plan .

It feels like an unnecessary roadblock when all you want to do is go, and you’re tempted to skip it entirely.

After all, what’s the worst that could happen? 

That’s the question we’re tackling in this article. 

I spoke with seasoned planning experts Tim Berry , Sabrina Parsons , and Noah Parsons to uncover the consequences of starting a business without a plan. 

1. An idea isn’t always a business

That initial rush of excitement when a business idea hits is intoxicating. You imagine the possibilities, the potential…but the journey from concept to reality is where things get tricky.

“Without a business plan, you won’t know if your idea can be turned into a business,” Sabrina cautions. “To transform an idea into an actual business, you need to test if it’s viable .”

The problem? Most people lack a framework for that testing. 

The idea remains trapped in your head. You lack answers to critical questions, like:

• Does it solve a real problem ? Who are your ideal customers, and what pain point are you addressing?
• Is there a market? Are enough people willing to pay for your solution?
• How will you make money? What’s your basic business model for turning a profit?

Creating a one-page plan gives you a structured way to answer these questions. It could save you from wasting time and resources chasing a dream that was never meant to be a business. 

Or it might just reveal that your idea has potential and deserves more research.

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2. If you build it, they don’t always come

Even a seemingly good idea may not actually work . 

It could be too expensive to execute, face overwhelming competition, or simply not appeal to enough customers. 

“If you build it, they will come” is one of the biggest myths in business,” says Sabrina. “You need to attract people who actually want to buy what you are selling.”

This means finding product-market fit—the sweet spot where your solution meets a real customer need.

“It’s the single most important factor in the early stages of a business,” explains Noah. “If your product doesn’t solve a problem for your customers, you don’t have a business.”

True product-market fit requires testing. It means getting out there, talking to potential customers, and getting honest feedback:

• Do they truly need what you offer?
• Is the price point appealing?
• Are you even targeting the right audience?

You can’t meaningfully ask these questions without first outlining the assumptions baked into your idea. Who are your customers? What problem do you solve? What’s your basic business model?

Again, creating a one-page plan forces you to address these assumptions from the start. It lays the groundwork for the kind of testing that separates successful startups from those that fizzle out because they misread the market.

3. You won’t know how much money you need

You hear about bootstrapping success stories—entrepreneurs building empires from scratch. But the reality is every business requires some investment, even if it’s your own .

“You need to know how much it will cost to start and keep the business running—and then what it will take to become profitable,” Noah stresses. 

If you lack a business plan, you’ll have no idea of your revenue and expense categories. These are the starting points for creating sales, expense, and cash flow forecasts that help you understand:

• Startup Expenses : How much cash do you need to make your business operational?
• Operating Costs: How much will it take to run your business for the first year?
• Hidden Fees: Have you considered every potential expense, from licenses to marketing?
• Cash Flow : How long will it take for enough money to come in to cover your ongoing expenses?

Trying to figure this out in real-time is a recipe for disaster. 

As Sabrina puts it, “It’s like playing high-stakes poker blindfolded. You’re risking everything without a clear picture of what you’re working with.”

A plan brings clarity. It helps you determine whether you have the funds to succeed, how quickly you might become profitable, and how to allocate your cash wisely. 

Without it, you risk running out of money before your business has a fighting chance.

4. You won’t know what is and isn’t working

“Tracking your business performance— reviewing how your actual results measure up to your plan—is the key to running a successful business,” Noah emphasizes. 

Without a business plan and financial forecasts, you’ll lack the foundation to build a business strategy. That ‘blindfold’ that Sabrina mentioned before will stick with you throughout the life of your business.

Here’s what that means:

• Inefficiencies bleed profits: You won’t be able to identify the areas where you’re losing money.
• “Big decisions” are risky: You won’t know when it’s the right time to make critical decisions (like hiring team members or expanding).
• Profitability is a mystery: Without tracking towards specific business goals, “what it will take to be profitable” remains unknown.
• No data for decisions: When do you need to change course? Without the clarity a business plan provides, it’s impossible to say.

“Managing your business against your plan leads to better decisions,” says Sabrina. 

It doesn’t have to be complicated—again, with a simple one-page plan, you’ll have a tool “to better understand your financial drivers and revenue opportunities.” 

This plan becomes your roadmap. It lets you make data-driven decisions, minimize risk, and proactively steer your business toward success. With this knowledge, surprises become fewer, and your understanding of your business will grow deeper.

• 5. You will struggle to raise money

Investors and banks live in the world of business and financial plans . 

As Tim states, “Don’t get caught thinking investors just want pitches and summaries. They expect a plan and will want to go over every detail.” Without these documents, you’ll face serious hurdles in securing funding. Tim adds: “I’ve seen investors reject a startup from just summaries without reading a business plan document. But I’ve never seen them invest without having seen a plan.”  

Think of it this way: If you don’t have a plan, you either scramble to assemble one or walk into investor meetings unprepared. 

“I’ve seen it countless times in actual investor pitches,” Tim recounts. “Things seem promising until investors start digging into specifics like marketing spend or administrative costs. Those without a well-thought-out plan freeze up. Investors can smell that a mile away.”

The very process of creating a business plan primes you for the questions investors will undoubtedly ask. “The planning process forces you to answer questions about your business that you may not have thought to ask yourself,” explains Noah. 

This includes the critical question: How much funding do you truly need?

“Getting the right amount of financing for your business will save you heartache and money,” says Sabrina. “Do yourself a favor and create a full financial forecast to understand exactly how much funding you need.” Otherwise, you risk under or overestimating, damaging your credibility with investors.

TLDR: If you’re seeking outside funding, a formal business plan isn’t just helpful—it’s essential. While a more detailed plan is likely necessary, the one-page plan we’ve discussed will form the foundation.

• Failing to plan is planning to fail

Writing a business plan will make you a better business owner.

It’s not just about avoiding pitfalls; it’s about unlocking your business’s full potential. The planning process forces you to dig deep, examine your ideas, and refine them into a powerful strategy built for long-term success.

The best part? You don’t need a complex, time-consuming document to reap these rewards. 

“We’re talking about a lean one-page plan to run your business,” Tim emphasizes. It’s easy to develop, keep updated, and build on bullet points, lists, and tables. If you know your business, you can do it quickly.”

So, whether you’re a new or existing business—don’t face the consequences caused by skipping out on your business plan.

Download our free one-page business plan template and write it in as little as 30 minutes . You and your business will be glad you did.

What are the consequences of not having a business plan?

Skipping the business planning process can lead to several negative consequences:

• Your idea might not be viable: You risk wasting time and money on a product or service that nobody wants or isn’t profitable.
• You could miss your target market: A plan helps you understand your ideal customer and ensure you’re offering something they truly need.
• You’ll be financially unprepared: You won’t know your true startup and operational costs or how to reach profitability.
• You’ll lack a roadmap: Without a plan, it’s difficult to track progress, identify problems, or make strategic decisions.
• You’ll struggle to get funding: Investors and lenders rely on business plans and financial statements to assess the potential of your venture.

Remember, even a simple one-page plan can help you avoid these pitfalls and set your business up for success.

Can a business survive without a business plan?

Technically, yes, a business can survive without a plan. There are examples of businesses that found success without traditional planning—but they are the outliers.

The reality is that businesses without a plan face significantly greater obstacles. They’re more likely to:

• Make costly mistakes due to a lack of foresight.
• Miss out on opportunities due to a lack of direction.
• Struggle to obtain funding from investors and lenders.
• Fail to understand their full financial picture.

While survival is possible, a business plan dramatically increases the odds of not just surviving but thriving.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

Table of Contents

• 1. An idea isn’t always a business
• 2. If you build it, they don’t always come
• 3. You won’t know how much money you need
• 4. You won’t know what is and isn’t working

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