how do you write a business plan for a startup

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

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

Robin Waite

5 minute read

Short answer

What should an effective business plan include?

An effective business plan should include the following elements:

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

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

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

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

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

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

Step 1: Executive summary

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

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

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

Here's an example of an executive summary slide:

Step 2: Company description

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

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

Here's an example of a company introduction slide:

Step 3: Market analysis

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

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

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

Step 4: Products or services

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

Here's an example of a solution slide:

Step 5: Marketing and sales strategies

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

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

Step 6: Organization and management

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

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

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

Step 7: Financial projections

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

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

Here's an example of a financials slide:

Step 8: Funding requirements

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

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

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

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

Step 9: Risk assessment

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

Here's an example of a risk assessment slide:

Step 10: Conclusion and Call to Action

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

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

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

Here's an example of a next step slide:

Seek guidance from a business mentor

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

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

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

Why is a business plan crucial for startups?

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

What role does a business mentor play in this process?

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

How can a mentor enhance my market analysis?

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

Can a mentor assist in financial projections?

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

How can you incorporate mentorship into the business plan?

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

Business plan templates

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

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

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

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

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

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

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

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

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

Let’s get started.

What Do You Need A Business Plan For?

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

1. Secure Funds

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

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

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

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

2. Monitor Business Growth

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

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

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

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

3. Measure Business Success

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

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

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

4. Document Your Marketing Strategies

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

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

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

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

How to Write a Business Plan Step-by-Step

1. create your executive summary.

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

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

A good executive summary should do the following:

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

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

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

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

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

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

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

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

2. Add Your Company Overview

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

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

Your company overview should contain the following:

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

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

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

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

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

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

• Mission Statement

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

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

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

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

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

Business Objectives

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

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

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

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

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

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

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

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

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

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

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

Market Analysis

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

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

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

• Market Research

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

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

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

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

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

How to Quantify Your Target Market

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

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

What Does a Good Market Analysis Entail?

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

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

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

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

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

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

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

Competitive Analysis

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

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

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

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

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

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

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

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

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

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

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

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

Direct vs Indirect Competition

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

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

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

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

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

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

Factors that Differentiate Your Business from the Competition

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

1. Cost Leadership

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

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

2. Product Differentiation

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

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

3. Market Segmentation

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

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

4. Define Your Business and Management Structure

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

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

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

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

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

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

Management Team

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

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

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

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

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

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

Key Questions to Answer When Structuring Your Management Team

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

Additional Tips for Writing the Management Structure Section

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

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

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

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

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

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

Organizational Chart

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

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

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

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

5. Describe Your Product and Service Offering

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Avoid Technical Descriptions and Industry Buzzwords

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

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

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

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

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

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

3. Long or Short Products or Services Section

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

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

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

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

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

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

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

4. Describe Your Relationships with Vendors or Suppliers

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

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

5. Your Primary Goal Is to Convince Your Readers

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

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

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

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

Key Questions to Answer When Writing your Products and Services Section

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

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

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

6. Show and Explain Your Marketing and Sales Plan

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

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

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

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

Outline Your Business’ Unique Selling Proposition (USP)

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

Target Market and Target Audience

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

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

Creating a Smart Marketing and Sales Plan

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

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

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

Your Positioning Statement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Basic Rules to Follow When Pricing Your Offering

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

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

Pricing Strategy

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

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

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

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

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

Advertising

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

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

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

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

Public Relations

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

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

Content Marketing

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

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

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

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

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

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

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

Social Media

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

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

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

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

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

Strategic Alliances

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

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

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

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

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

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

2. Evaluate Your Competition

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

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

These questions can help you know your competition.

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

3. Consider Your Brand

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

4. Focus on Benefits

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

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

5. Focus on Differentiation

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

Key Questions to Answer When Writing Your Marketing and Sales Plan

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

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

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

7. Clearly Show Your Funding Request

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

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

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

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

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

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

Funding Request: Debt or Equity?

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

Case for Equity

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

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

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

Case for Debt

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

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

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

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

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

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

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

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

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

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

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

8. Detail Your Financial Plan, Metrics, and Projections

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

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

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

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

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

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

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

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

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

Use Graphs and Charts

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

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

Address the Risk Factors and Show Realistic Financial Projections

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

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

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

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

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

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

1. Sales Forecast

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

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

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

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

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

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

2. Personnel Plan

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

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

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

3. Income Statement

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

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

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

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

4. Cash Flow Statement

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

5. Balance Sheet

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

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

6. Exit Strategy

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

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

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

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

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

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

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

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

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

9. Add an Appendix to Your Business Plan

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

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

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

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

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

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

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

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

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

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

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

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

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

Tips and Strategies for Writing a Convincing Business Plan

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

1. Know Your Audience

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

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

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

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

2. Get Inspiration from People

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

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

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

3. Avoid Being Over Optimistic

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

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

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

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

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

4. Keep it Simple and Short

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

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

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

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

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

5. Make an Outline and Follow Through

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

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

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

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

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

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

6. Ask a Professional to Proofread

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

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

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

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

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

1. hubspot's one-page business plan.

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

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

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

2. Bplan’s Free Business Plan Template

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

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

3. HubSpot's Downloadable Business Plan Template

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

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

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

4. Business Plan by My Own Business Institute

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

The comprehensive template consists of a whopping 15 sections.

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

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

5. Score's Business Plan Template for Startups

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

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

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

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

6. Minimalist Architecture Business Plan Template by Venngage

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

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

7. Small Business Administration Free Business Plan Template

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

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

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

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

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

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

9. PandaDoc’s Free Business Plan Template

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

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

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

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

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

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

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

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

Alternatives to the Traditional Business Plan

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

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

Business Model Canvas (BMC)

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

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

Segments of the Business Model Canvas

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

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

Lean Canvas

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

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

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

Startup Pitch Deck

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

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

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

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

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

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

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

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

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

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

Business Plan FAQ

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

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

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

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

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

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

Exlore Further

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

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Martin luenendonk.

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

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

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How To Write a Business Plan

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

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

Table of contents

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

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Step 1: Write your executive summary

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

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

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

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

Step 2: Do your market research homework

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

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

Step 3: Set your business goals and objectives

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

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

Step 4: Plan your business strategy

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

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

Step 5: Describe your product or service

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

Step 6: Crunch the numbers

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

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

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

Step 7: Finalize your business plan

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

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

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The takeaway

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

Related content

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

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How to Write a Business Plan, Step by Step

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What is a business plan?

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

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

ZenBusiness

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

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

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

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

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

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

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

Your business’s registered name.

Address of your business location .

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

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

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

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

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

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

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

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

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

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

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

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

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

Licenses and permits.

Equipment leases.

Bank statements.

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

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

How much do you need?

with Fundera by NerdWallet

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

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

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

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

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

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

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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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How to make a business plan

Table of Contents

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

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

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

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

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

What is a business plan?

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

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

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

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

Business plan vs. business model canvas

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

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

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

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

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

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

Why is a business plan important?

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

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

Helps to define the business goals and objectives

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

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

Guides decision-making

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

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

Attracts investors and secures funding

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

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

Identifies potential challenges and risks

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

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

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

Provides a basis for measuring success

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

Are we where we want to be at this point?

Did we achieve our goals?

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

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

How to make a business plan step by step

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

1. Create an executive summary

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

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

2. Write your company description

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

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

3. Conduct a market analysis

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

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

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

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

4. Describe your products and services

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

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

5. Design a marketing and sales strategy

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

Pricing strategy

Advertising and promotional tactics

Sales channels

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

6. Determine budget and financial projections

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

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

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

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

8. Make an action plan

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

Types of business plans

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

Startup business plan

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

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

Strategic business plan

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

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

Operational business plan

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

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

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

Growth-business plan

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

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

One-page business plan

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

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

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

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

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

Be practical

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

Be specific

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

Be thorough with your research

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

Get input from others

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

Review and revise regularly

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

Create a winning business plan to chart your path to success

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

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

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

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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 Startup Business Plan

May 28, 2022 - 10 min read

A startup business plan is an outline of your ideas and strategies for what you’ll need to do to start, manage, and even complete your startup’s mission. Creating one might sound simple enough, but because it’s a startup’s roadmap for success, it can be a complex document to create. 

Writing a business plan can make a world of difference for entrepreneurs who desire external funding. It involves determining your target customers, understanding what makes them tick, and figuring out how to reach them through marketing campaigns. 

In this blog post, we’ve explained why you should have a startup business plan, different types of startup business plans, and we’ve included 12 of the most effective tips for writing a startup business plan. If you’re ready to start with now, we have a product launch template to get you started quickly. 

What is a startup business plan?

A startup business plan is a written document that outlines your ideas and strategies for launching, managing, and eventually exiting your new venture. 

A well-constructed business plan can be crucial to the success of any entrepreneurial endeavor . As you prepare your proposal, keep in mind that it will evolve as you learn more about your market.

To start, create an outline of the most important items you'd like feedback on before writing anything down officially.

Then ask yourself these questions:

• What do I want?
• Why does my company exist?
• How will I make money?
• What are my long-term goals?

A detailed business plan helps you set milestones for measuring success. You can share the plan with investors who may want some reassurance on the viability of their investment in your company.

The best way to create a successful startup business plan is by including everything in an organized and easy-to-read document — marketing strategies, financial projections, team bios, timelines, and more.

What is a lean startup business plan?

A lean startup business plan is a method for developing products that relies on iterative experimentation to reduce uncertainty. 

It has been used by companies such as Google , Amazon, and Facebook in the early stages of their development, and involves testing your idea with real customers early in development.

Lean startups are less likely to fail because they have tested their product or service with live feedback from consumers. Doing this allows them to make changes quickly without wasting resources on something no one wants.

The goal is not to build an extensive business plan but rather a "lean" one that can be changed based on customer feedback and then re-evaluated in regular intervals until it reaches market potential — or fails.

A lean startup business plan is a strategy that focuses on getting a product in front of customers as quickly and cheaply as possible. Use the lean startup business plan to validate your ideas before wasting time and resources.

Why do you need a small startup business plan?

A small startup business plan is one of the most important steps in building a company. Apart from helping you to focus on company goals, it aids in obtaining feedback from potential partners and keeps the team on the same page.

The best thing about starting small? You can change course at any time! If you need help developing or tweaking your small startup business plan, use this guide for entrepreneurs to get started.

You've built a product and you're ready to take the next step, but what's your plan? First, you need a strategy in place. Do you know how much money it will cost, or where exactly that funding should come from? What about marketing strategies for getting customers in the door? 

You’ll also need to find ways to retain them afterwards so they keep coming back again and again (and spending more).

Obtain external funding

If you want to get funding from lenders or investors, you need a startup business plan. Lenders want to make sure they're investing in a company that will last and grow.

A well-organized idea shows passion for its purpose and outlines clear goals for helping customers. At the same time, having an exit strategy is also important.

Making a plan for when things don’t pan out as desired lets investors understand how much value there can be while giving customers (and yourself) peace of mind.

Understand your target market

One key piece of your business plan is knowing how to conduct a market analysis. To do this, consider the industry, target market, and competitors. 

Are there any market trends or competitor factors that can affect your business? Review them closely and get ready to make required changes to your business plan.

Prioritize high ROI strategies

In business, ROI is important. Any business that doesn’t generate as much cash as it burns is likely to fail.

With a startup business plan in place, the strategies with the highest ROI become crystal clear. You'll know exactly what to tackle first and how to prioritize the rest of your tasks.

Accelerate financial health

Business plans are not crystal balls, but they can help forecast your financial health. Planning for expenses is vital to keep operations steady and identify problems as soon as possible. 

Cash flow projections can help you see if goals are achievable or highlight upcoming issues that need correction before it's too late.

How to write a small startup business plan

Use this guide for entrepreneurs to develop or tweak a startup business plan. By following this easy six-step process, you'll soon have a clear path to startup success.

1. Clarify the startup vision, mission, and values

The first step to writing a startup business plan is understanding the startup itself.

Once you know what your startup does, ask yourself why. What is the startup's mission? What problem will it help customers solve? The startup's mission statement helps define its reason for existing.

It’s usually expressed in a simple sentence, but can also be written as a short paragraph.

Try to answer these questions: What does your startup do? How will it make money? How quickly do you hope it will grow? Are there any significant milestones or deadlines that need to be met?

2. Outline the executive summary

Now that you have an idea for your startup, its mission, and a vision in mind, it's time to write your startup business plan executive summary.

Keep it simple and precise. Begin by writing a one-sentence startup business plan introduction that showcases the core customer need/pain point and how you propose to solve it.

3. Develop startup goals and milestones

Next, write down the milestones and goals for your startup business plan. This is a crucial step that many entrepreneurs forget when they're starting out.

Do you want to focus on getting new customers? Or attaining a specific revenue number?  Without clear short-term goals, it can be hard to know how to prioritize startup tasks.

4. Write a company description

Answer the two fundamental questions — who are you and what will you do? Then, give an introduction to why you're in business.

Provide a summary of introspective goals, clarifying intangible aspects such as values or cultural philosophies. Make sure to mention:

• Proposed business structure (limited partnership, sole proprietorship, incorporated company, or a general partnership)
• Business model
• Business vision and mission statement
• Background information of your team members

5. Conduct market analysis

Choosing the right market is crucial to your organization’s success. There are different kinds of products and services that a business can offer and each has particular requirements for a successful market fit.

If you choose one that doesn't have a large enough customer base or is not profitable enough, your company may end up struggling for every sale.

Ensure that there is a clear market niche — an ideal audience of customers with a need or a pain point that your business can help solve.

6. Develop startup partnerships and resources

When you're launching a small startup, one of the most important things that your business needs is capital. There are several ways to get going on this front.

When thinking about sources of funding for startups , consider startup grants, startup loans, startup investors, and startup accelerators.

7. Write a startup marketing plan and startup budget

Your startup business plan is almost complete! All that's left is to create a startup marketing plan and budget. Your startup marketing plan will help you define your company’s target audience and brand image.

The startup budget is an integral part of any startup that helps you take the guesswork out of writing expenses.

Examples of startup business plans

Business plans differ based on the nature of the business, target market, competitive advantage, delivery of product/service, scope, and size.

Though the core business plan template remains the same, the content and flow change. Here is an example of an accounting firm's business plan:

Vision statement

At our company, ABC Accounting Services LLC, we work hard to provide the best service and build a strong team. Our vision is for this brand to be recognized as #1 throughout NYC by both smaller businesses and larger corporations.

Our values are reflected in all that we do: integrity (ethical behavior), service (giving top priority to clients' needs), excellence ("doing it right"), teamwork (working together).

Executive summary

ABC Accounting Services LLC is the premier accounting firm in New York City and will handle various financial services. We specialize in audits, bookkeeping, tax preparation/compliance work, and budgeting assistance with high-quality consulting.

Business structure

ABC Accounting Services LLC will be structured as an LLC — a Limited Liability Company in the state of New York. It will provide accounting, bookkeeping, taxation, auditing, and compliance-related services to small, medium, and large enterprises situated in New York City.

Marketing strategy and competitive advantages

Despite the fact that there are many established accounting services firms in our industry, we have a great chance of becoming successful because of the high demand for financial consulting. 

Often, small businesses don't need full-time employees but would rather hire an accounting service provider like us to handle their bookkeeping and tax returns on time every year.

It is best to find a unique niche or carve out your own market in the financial consulting services industry. If you're able to create an identifiable brand identity for your accounting business, then you will likely see less competition from other firms.

Startup milestones

ABC Accounting Services LLC will focus on delivering an exceptional client experience to grow the business and expand market share.

Startup business plan template

Here's a template you can follow when creating your startup business plan:

Top tips for writing a startup business plan

The following tips will help you create a compelling startup business plan without getting overwhelmed.

Know your audience

To write an effective business plan, tailor your language and level of detail to match the audience reading it. 

Have a simple and clear goal

If you have a goal of securing funding for your business, it will be an uphill task with lots of work and research.

Simplifying and breaking down bigger goals into smaller, actionable tasks will assist you in getting through them faster.

Spend time researching

Avoid assuming anything about your target audience, product/service, or the market need.

Spending adequate time and effort on research from primary and secondary sources will help you develop an accurate business plan.

Build a startup toolkit

The process of creation becomes easier if you have the right startup tools and software by your side. Pick the right ones that will help you in your journey.

Keep it precise

Short and easy-to-read business plans are best kept within 20 pages. If you have additional documents, consider adding them as appendices or provide a link if available online.

Ensure tonal consistency

Keep the tone consistent by having just one author write your startup business plan. Otherwise, be sure to edit it thoroughly before you finalize it.

Add reference points

All information regarding the market, your competitors, and your customers should reference authoritative data points.

Be ready to pivot

A business plan should be fluid and flexible. Think of it as an evolving document that will continue to change over time.

How to create a business plan with Wrike

A good business plan is a powerful tool and can be a key predictor of future progress, but simply filling in a startup business plan won’t help you achieve success. You need to create action steps with accountability that will help you reach your goals. 

Wrike’s project management software can help your organization deliver successful projects and maximize individual and team productivity, and our product launch template can help you turn your startup business plan goals into actionable steps. 

Start a free trial of Wrike today to see how it can help to simplify work, showcase progress to stakeholders, and achieve startup success.

Yuvika Iyer

Yuvika is a freelance writer who specializes in recruitment and resume writing.

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How to Write a Business Case (With Example & Template)

A business plan is a straightforward document. In it, you’ll include market research, your overall goals for the business, and your strategies for achieving those goals.  But what is a business case and why do you need one if a business plan outlines everything else? A business case takes a closer look at a specific problem and how you can solve it. Think of a business case as the reason you create a project you’re going to manage in the first place.  The article provides a step-by-step guide on how to write a successful business case, including a checklist for identifying problems, researching solutions, and presenting to stakeholders. As a bonus, we’ll show you how to use Wrike to manage your product business cases with a requirements management template or implement them with a project scheduling template. What is a business case? A business case is a project you’ll assemble for identifying, addressing, and solving a specific business problem.  The key to a business case is the change it creates in your business. Developing a business case starts with identifying a problem that needs a permanent solution. Without that lasting change, a business case is only an observation about what’s going wrong. A complete business case addresses how a company can alter its strategy to fix that problem. Front-to-back, a business case is a complete story. It has a beginning, a middle, and an end. It typically looks like this: Beginning: Someone identifies a problem within the business and presents the business case to the key decision-makers. Middle: With the project go-ahead, the company launches an internal team to address the business case and deliver results. End: The team delivers a presentation on the changes made and their long-term effects. In short, a business case is the story of a problem that needs solving.   Examples of business cases The problem for many companies is that they can turn a blind eye to challenges that are right in front of their faces. This is even the case when the company has a compelling product to sell. Consider the example of Febreze. In the mid-1990s, a researcher at Procter & Gamble was working with hydroxypropyl beta-cyclodextrin. His wife noticed that his clothes no longer smelled like cigarettes, which was a frequent complaint. P&G had something of a miracle product on its hands. However, their approach was wrong. They initially marketed Febreze as a way to eliminate embarrassing smells. Predictably, the product flopped.  But P&G stuck at it. They had a potential business case on their hands: a highly marketable product proved difficult to market. What was going wrong? Working on the business case from beginning to end provided the answer. After some focus group testing, P&G found out that few consumers recognized the nasty odors they were used to. Instead, they learned to use a different business case for Febreze: it was a cleaning product now, a way to make the house smell nice when the floors are vacuumed and the counters are wiped clean. They gave it its own pleasant smell and fashioned it into a cleaning product. And because it worked so well, so did the campaign.  That’s an example of a business case overall. But let’s get specific: developing a business case is easier when you have a template to look at. Let’s build an example using a made-up company, ABC Widgets, and a hypothetical business case. Let’s call our business case example “Operation Super Widgets”: Business Case: ABC Widgets Section 1: Summary Briefly describe the problem and the opportunities.  ABC Widgets’ latest widget, the Super Widget, is suffering from supply issues, requiring higher shipping costs to procure the necessary resources, and eating into profits. We need to switch to a new supplier to restore the viability of the Super Widget. Section 2: Project Scope This section should include the following: Financial appraisal of the situation. Super Widgets are now 20% more expensive to produce than in the year prior, resulting in -1% profits with each Super Widget sold. Business objectives. To get revenues back up, we need to restore profit margins on Cost Per Unit Sold for every Super Widget back to 2020 levels. Benefits/limitations. Restoring Cost Per Unit Sold will restore 5% of sagging revenues. However, we are limited to three choices for new Super Widget suppliers. Scope and impact. We will need to involve supply chain managers and Super Widget project management teams, which may temporarily reduce the number of widgets we’re able to produce, potentially resulting in $25,000 in lost revenue. Plan. Project Management Teams A and B will take the next two weeks to get quotes from suppliers and select one while integrating an immediate plan to bring in new Super Widget parts for manufacturing within four weeks. Organization. Team Member Sarah will take the lead on Operation Super Widget Profit. Both teams will report to Sarah. This is a bare-bones example of what a business case might look like, but it does hit on the key points: what’s the problem, how can you fix it, what’s the plan to fix it, and what will happen if you succeed? How do you write and develop a business case? When writing your own business case, the above example is a good guide to follow as you get started with the basics.  But, once you’re more familiar with the nuts and bolts, it’s also worth being prepared for some potential roadblocks you could face along the way.  Challenges of writing a good business case Why don’t more companies create a business case? It might come down to a lack of good communication. Many people don’t even know how to write a business case, let alone present one. “The idea may be great, but if it’s not communicated well, it won’t get any traction,” said Nancy Duarte, communication and author who wrote The HBR Guide to Persuasive Presentations. The key challenge, notes Duarte, is taking abstract business concepts (like lagging numbers) and turning them into an immediately recognizable problem. After all, if a company already had perfect awareness that it was making a mistake, it likely would find a way to stop the error in its tracks.  A business case is challenging because it usually means you’ll have to persuade someone that change is needed. And change can be difficult. In a thriving business, it’s especially problematic because it’s easy to point to the bottom line and say that whatever the company is doing is already working. How do you present a business case? The tips and examples above give you some nice remedies for creating a business case without the typical problems. But you’ll still want to present a business case with the straightforward proposals and numbers you’d associate with any new project.  Essentially, it all comes down to how well your business case can persuade the decision-makers. That’s why you shouldn’t just build a case off of raw numbers. The bottom line might be a compelling argument, but it’s not always what “clicks.”  If you’re presenting a business case, you’re a salesperson. And not every sale is a matter of precise logic. It’s also about emotion—the story of why something’s gone wrong and what needs doing if you’re going to overcome it.  The art of a good business case is the art of persuasion. Keep these specific points in mind as you craft one of your own: Point to an example of a bad business case and liken it to the present case. No one likes the idea of watching themselves walk into a mistake. Presenting an example of a business that made the same mistake your company is making and then translating it into the present moment is a compelling way to craft a business case that makes ears perk up. Build a narrative. Nancy Duarte pointed out that in one business case, a client convinced a CEO to follow through with a project by using simple illustrations. It’s not that the idea of adding illustrations to the business case was so great. It’s that the illustrations were able to tell a compelling story about why the case needed to go through. Distill the idea into an elevator pitch. Try this exercise: get your business case down to one sentence. If you can’t explain it any more simply than that, your business case might not be as memorable as it needs to be to sway decision-makers. Use analogies to drive the point home. Let’s say you discovered a problem in a growing business. Overall, revenues are good — but you’ve noticed an associated cost that has the potential to explode in the future and tank the business. But it’s not compelling to use dollars and cents when the business is doing so well. Instead, consider introducing the business case with a simple analogy: “Without repair, every leaky boat eventually sinks.” You now have their attention. Use the numbers to drive the point home, but not to make the point. If you’re presenting a business case to decision-makers, remember that it’s not only the logic of your argument that will convince people — it’s how persuasive you can be. Business case checklist Before you can check “learn how to write a business case” off your list, you have to know the essentials. Make sure you include the following elements in your business case checklist (and, of course, your business case itself): Reasons. This should be the most compelling part of your business case. You can tell a story here. And the most compelling stories start with a loss or a complication of some sort. What is the threat to the business that needs remedy? What are the reasons for moving forward? Potential courses of action. It’s not a complete story until we know the next chapter. A business case isn’t just about the problem — it’s about rectifying a problem through the solution. Recommend a few specific courses of action to help spur discussion about what to do next. Risks and benefits. Not every solution is going to be perfectly clean. There are going to be solutions with downsides. There are going to be costs along with the benefits. Make sure to include each of these to give a clear and complete picture. This is the time to manage expectations — but also the time to inspire action. Cost. What’s it going to cost to complete the project? The people making the decisions need to know the bottom line figure to assess which business cases to prioritize. Timeline. A good project isn’t only measured in dollars but in days, weeks, and months. What is the expected timeline for the business case? How quickly can the problem meet its solution?  With every business case, specificity is key. A vague timeline won’t help — a timeline with specific weekly milestones looks more achievable. To make your business case more compelling, always look for the specific details that tie your story together. Business case template A business case template is a document that outlines the key elements of a business case in a structured format. By using a standardized template, companies can ensure that all relevant information is captured and shared in a clear and consistent manner. Depending on the size of your business and the scope of your project, your business case template can be as detailed or as simple as you like. For a smaller project, you can use a one-pager to get started, detailing the main points of your project, which include: Executive summary: An overview of your project, its goals, and the benefits of completing it for your business Team and stakeholders: A list of the relevant people involved in your project, and their contact information SWOT analysis: An analysis of how your strengths, weaknesses, opportunities, and threats weigh up against your competitors Risk analysis: An overview of the kind of risks that are involved with your project and how you may avoid them Budget and financial plan: Details of your budget and where you may secure financing for your project Project plan: A schedule of how you plan to implement your project and what tasks are involved Let's see what that might look like. Executive summary   Team and stakeholders   SWOT analysis   Risk analysis   Budget   Project plan   How to write a business case with Wrike Wrike’s project management software can step in and turn a business case from the seedling of an idea to a full-fledged initiative.  The requirements management pre-built template can help you document and track project requirements in a structured manner. The template includes sections for capturing stakeholder requirements and business cases, as well as any constraints that may affect the project’s success. By using this template, you can ensure that all necessary requirements are identified and that potential issues are addressed early in the project planning process. If you want to move from the business case description to the actual implementation faster, consider using the project scheduling template. This template can help you create a detailed project timeline with milestones, identify task dependencies, and assign resources. By utilizing this template, you can ensure that the project is realistically achievable and meets all business needs, giving stakeholders confidence in the project’s success.

Operational Planning: How to Make an Operational Plan

Learn how to create an operational plan that will help your business succeed. Check out our guide to everything you need to know about operational planning.

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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.

Streamline Your Business Planning Activities with Real-Time Work Management in Smartsheet

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

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• 212 best farm names

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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How to Start a 7-Figure Poultry Farm (2024)

Step 1. Learn About Poultry Farming

• Why poultry is better than beef
• Different feeds for different chickens

How much to start a chicken farm?

• 32 broiler chickens : $75
• One chicken tractor : $220
• 150 pounds feed : $100
• Gravity water dispenser : $60
• Total : Under $500

How much does it cost to start a chicken farm if you don’t own land?

Is chicken farming profitable?

Poultry companies selling dtc, selling as a commodity, poultry industry.

• A processing plant (or slaughterhouse)
• A wholesale processor
• Supermarkets and retailers
• The final consumer

• Land : It’s best to be near but not in big cities. Prices of land can vary dramatically. For example, you might find two to five acres ranging from $5,000 per acre to $2.5 million per acre.
• Chicken coop : Later on, we’ll explain how to build a chicken coop, but if you’re building with three square feet per chicken, you’ll probably end up spending a ton on your chicken house.
• Chickens: You might find day-old chickens for approximately $1 to $2.50 per chick based on the quantity, sex, and whether they are GMO-raised.
• Feed: You’ll need to feed the chickens, and you’ll probably want to buy in bulk. Per pound, smaller bags are much more expensive than when you buy a ton of feed.
• Transportation costs : IRS mileage deductions change each year, but have been over $.50 per mile since 2008. You can deduct actual costs instead.
• Employees: If you have over 500 chickens per owner, plan to spend $15 per hour according to the BLS .
• Purchase price per pound: $.99
• Additional expenses per pound: $.75
• Profit per pound: $.09
• Sell to the wholesaler by the pound: $1.83

Poultry Wholesalers

• Purchase price per pound: $1.83 
• Additional expenses per pound: $.40 per pound
• Profit per pound: $.57
• Sell to supermarkets by the pound: $2.80 

Supermarkets

• Payment to wholesaler: $2.80
• Profit: $.07
• Other expenses: $1.13
• Consumer price per pound: $4

Why does this matter to a poultry farm?

Governing laws.

• EPA rules on animal feed operations
• USDA policies regarding livestock
• Farmers Service Agency (FSA, a division of the USDA specifically to help farmers succeed)
• State agencies may have policies about farming permits, licensing, or inspection. Check the FSA map to find experts on your state regulations.
• Many cities and counties may have regulations that apply to starting a chicken farm. I would suggest talking to your local SBA office and health district.

Market Forces

Choose a poultry sector next.

• Sell chickens for meat
• Create feed to sell for poultry farmers
• Hatchery and breeding chicks
• Egg and meat processing
• Broiler farm : meat per pound of feed 
• Laying eggs : Eggs per pound of feed 

Type of Bird

• Number of eggs per year
• Growth potential
• Aggressiveness
• Space requirements 
• And other considerations

Step 2. Write a Poultry Farming Business Plan

Step 3. poultry business loans, step 4. find a location of chicken farm.

Step 5. How to Make a Chicken Farm 

• Establish how to position everything on your land.
• Decide how to make the most of your space.
• Build a chicken coop.
• Manage your supply chain.
• Purchase and care for your chickens.
• Process and sell your poultry products.

How to start a poultry farm: Build a Chicken Coop

• Nine 2” x 2” wood beams : $4 each = $36
• Seven 8’ x 2’ corrugated steel panels : $22 each = $154
• Chicken wire : $39 (should be approximately 1 roll)
• Nails and screws: $5
• Estimated Total: $234 + tax, shipping, and handling

How to start a poultry farm: Buy Feed

• Baby chickens: Starter food is best for ages that range from day old chicks to 20 weeks.
• Chicken broilers: If you’re just trying to raise chicks to sell the meat, get food specifically for broilers.
• Teenage chickens: If you want to keep your chicks properly cared for until they each become an adult chicken, you might want to change from starter food to grower food at six weeks. You’ll want to change this when they start laying eggs.
• Egg layers: Once chickens start laying eggs, they need layer feed to help produce healthier eggs. It’s like grower feed but with more calcium and minerals.

How to start a poultry farm: Other Equipment

• Waste removal system(s)
• Lighting instruments
• Brooders (for breeding)
• Heaters (for cold weather)
• Crates (for collecting eggs)
• Egg trays (for handling and selling eggs)
• Perches (for laying hens)
• Nests (for laying hens and breeding)
• Incubator (for breeding)

Get Your Chickens

• Jenks : Business success is often measured by profitability, but longevity is also important. As the longest operating poultry company supplier, they know they understand the poultry farm business.
• Cackle Hatchery : If you are looking to buy from only one supplier, Cackle is probably the place. They sell pretty much everything you need for raising and selling chickens. Plus, they’ve been around for over 80 years.
• Privett Hatchery : If you are on the west coast, you might consider getting your chickens from Privett. It’s in New Mexico making it more convenient for a farmer located in the southwest United States.

Step 6. How to Run a Chicken Farm

• Feed your birds the proper nutrients: We discussed this in the section on feed. This will help promote chicken health.
• Treat against poultry diseases: If your flock catches a chicken disease, you need to separate the sick ones and care for them. You may also have to hire a vet. Learn more about diseases chickens catch .
• Protect against predators: We discussed this during the section on design.
• Dispose of their waste: You’ll need a waste disposal system to help keep the chicken coop clean. 
• The deep litter system is a method of composting inside the coop. 
• You can also use an automated system.
• Treat against poultry diseases : If your flock catches a chicken disease, you have to separate sick ones and care for them. You may also have to hire a vet.
• Maintain documentation of care: You'll need a great system to document your date of purchase, care, date of processing, and more. Check out USDA documentation requirements .

Step 7. Process the Birds

Step 8. sell the chickens or eggs.

• Consumers: Reach this target market through websites, social media, your own retail location, and farmers' markets.
• Restaurants: Get in touch with restaurant owners through similar channels as consumers but also through trade organizations.
• Poultry processors and wholesalers : Join trade associations or keep reading to find out how to farm for Perdue or Tyson.

How to start a chicken farm for Perdue

• Some of the most advanced systems in the industry
• A consistent supply of industry best practices
• A regional vet dedicated to helping provide care for your poultry
• Flock advisors to help you maximize gross income and profit
• Technical assistance to maintain your systems

How to start a chicken farm for Tyson

How to start a chicken farm to sell eggs, step 9. other business functions.

• Bartering (unique to farming)

How to start a poultry farm: Hiring

• Skill: Do they at least somewhat understand the job?
• Personality: Are they fun to be around? Similar values? Work Ethic?

How to start a poultry farm: Accounting 

How to start a poultry farm: marketing.

Go start your own business!

The Most Profitable Businesses to Start in 2024

You want your time to be used wisely when you start your own business. That means you should know the most profitable businesses to start with the time, education, resources, and connections you currently have.

What’s considered “profitable” is always changing, of course, and that’s why we continually update our rankings. Every year the most profitable businesses will change slightly as our economy evolves, products become obsolete, and technology advances.

What follows is a freshly updated ranking of the most profitable small businesses, plus the info and resources you need to get started.

[su_note note_color="#dbeafc"]You’ll want to check out the following businesses. Click on any of the links below to jump to the one that interests you.

Industries With the Most Profitable Business Ideas

• 1.  Cupcake Business

2. Sports Memorabilia Shop

3. bridal gowns and accessories, 4. consignment shop, 5. food truck, 6. bed and breakfast (b&b), 7. party rental business, 8. sewing and alterations shop, 9. gently used maternity clothing shop, 10. cleaning service, 11. virtual assistant, 12. social media management, 13. accounting and bookkeeping, 14. consulting, least profitable industries, what are the top five most profitable businesses in the world, what are the easiest businesses to start, what businesses are in high demand.

• So What Are the Most Profitable Businesses to Start? [/su_note]

First, some context. We took a look at financial reports from early 2024 to ensure relatively recent data. When you consider industries with the most profitable businesses in demand, you’ll find:

• Financials: The monetary sector leads the most profitable companies, with over 30% net income and gross profits for banks nearing 100%.
• Oil & Gas: The oil and gas energy still has high net profits with 28.26% and a gross profit of 58.75%
• Tobacco Companies: Selling addictive products pays off with a 27.52 net profit and 61.25% gross profit. If you could start growing and selling your own tobacco, you’d probably make a killing!
• Transportation Companies: Railroads aren’t making as much as previous years, but they still have a 23.52% average net profit. Ship makers also have been making a great living.
• Real Estate Investment Trusts (REITs): Real estate investment trusts are a big winner this year. They moved up from ninth place last year. Players in this industry can expect to earn 23.32% net profit and nearly 78% gross margins.
• Software: Entertainment and system applications software companies are doing well with 20% net margins. Entertainment software has gross margins of 63%, while systems and applications have around 72% gross margins.
• Investments and Asset Management: Managing other people’s money is an easy startup business. People with the right qualifications can tap into 19.82% net income and 67% gross margins.
• Water Utilities: Providing water to municipalities can earn a sweet 19.34% net margin and 56% gross margin.
• Semiconductors: Producing parts for electronic equipment can earn 17.94% net profits.
• Computers: Computer and peripherals companies have a slightly less profitable business than the semiconductor companies that provide much of their technology, but they still have 17.47% profits.

Many of the most profitable businesses aren’t practical for people who want successful small business ideas for business owners.

Most of us don’t have access to venture capitalists or the ability to run a business for 10 years before it starts making money. So, we’re constraining our list to the most profitable and best small businesses to start.

What Small Business is Good to Start?

A good small business to start will normally have high growth opportunities and low barriers of entry, work well as a home-based business, and provide great profit margins. We’ve handpicked some of the most profitable small business ideas for you. Check out our picks for best profitable businesses 2024 below.

1. Cupcake Business

• Average Annual Revenue: $1.95M • Average Profit Margins: 5.4% • Startup Costs: $100-$3M • Time To Revenue: 1-6 months • Annual Market Growth Rate: 1.1% • Best For: Cooks, chefs, bakers, or foodies with customer service, leadership, and marketing skills

Does your baking prowess receive rave reviews?

Consider exploring that talent! The cake industry is anticipated to see 3.3% growth, bringing it to $94.7 billion globally in 2028 . Small specialty shops are poised to reap the majority of the profits.

A cupcake business emerges as a feasible option for individuals with limited resources. Launching this potential home-based venture requires only an oven and basic baking supplies.

As sales pick up, there's room for expansion to larger formats. Initially, you might sell cupcakes in a display case at a local shop, progress to a food truck, and eventually establish a standalone brick-and-mortar store.

Before diving in, thoroughly research the laws in your state governing the licenses, permits, and standards applicable to your budding bakery business.

Find out how Mignon Francois started the Cupcake Collection with just $5 and built a $10 million cupcake empire.

• Average Annual Revenue: $453,257 • Average Profit Margins: 6.7% • Startup Costs: $100K-$3.5M • Time To Revenue: 6-18 months • Annual Market Growth Rate: 1.5% • Best For: Sports and pop culture experts, customer- and community-focused entrepreneurs, collectors

The current valuation of the sports memorabilia market is $26.1 billion—and it’s expected to grow to $227.2 billion by 2032 according to a report by Market Decipher .

This projection suggests significant annual profits for brick-and-mortar sports memorabilia shops. The essence of this small business concept lies in acquiring genuine or replica memorabilia and reselling it at a markup.

Procure memorabilia through various channels, including wholesalers, auctions, estate sales, advertisements, and online platforms like eBay. Make sure to confirm the authenticity of any signed memorabilia by autograph authenticators.

As you become proficient in authenticating pieces, you can generate additional income by authenticating memorabilia brought to your shop by customers.

Find out how Jim Sears makes $750K a year selling sports cards.

• Average Annual Revenue: $114K+ • Average Profit Margins: 10.3% • Startup Costs: $500-$250K • Time To Revenue: 3+ months • Annual Market Growth Rate: 2.0% • Best For: Designers, artists, and fashion experts with strong marketing and customer service skills

The bridal industry is expected to grow to $79.8 billion by 2027, which is a compound annual growth rate of 4.4%. According to BusinessWire , nearly 85% of bridal shopping is still done in retail stores.

Pro Tip: Note that bridal shops may cost $250,000 or more to get started because of all the gowns, veils, and accessories you’ll have to stock for your customers.

• Average Annual Revenue: $60K-$120K • Average Profit Margins: 5-15% • Startup Costs: $100-$10K • Time To Revenue: 30-90 days • Annual Market Growth Rate: -9.3% • Best For: Fashion and style experts who are excellent negotiators and communicators

The projected growth of the secondhand market in the U.S. is astonishing. According to GlobalData and thredUP , the resale clothing market is expected to more than double its current value. With a growth rate that’s 16x faster than the overall retail clothing market, the resale clothing industry will reach a value of $82 billion by 2026.

A consignment shop is the ideal business model for entrepreneurs with limited funds. Entrepreneurs can participate in the profits without purchasing inventory by showcasing other people’s used products, including clothing, antiques, collectibles, and memorabilia.

Additionally, selling items on online marketplaces like Poshmark, Mercari, and eBay creates additional profitable opportunities by expanding to a national or even global market.

Primary consignment shop expenses are:

• Business formation as an LLC
• Storefront rental
• Licenses and insurance
• Point-of-sale (POS) system
• Hiring (if needed)

Overall, the growth in the secondhand market presents a promising opportunity for entrepreneurs interested in the consignment business model.

• Average Annual Revenue: $41K+ • Average Profit Margins: 6.4% • Startup Cost: $1K-$100K • Time to Revenue: 3+ months • Annual Market Growth Rate: 1.2% • Best For: Foodies, chefs, cooks, bakers, and other food service veterans

Many people start food trucks because they are more profitable than owning a restaurant. You can save money by:

• Holding off on hiring employees
• Avoiding the costs associated with a building
• Offering a more focused menu

Kyle Gourlie, the owner of Vet Chef, told us:

[su_quote] To get started, it cost me around $41,200. Today, I am making $417K a year and aim to keep my food costs under 35%. [/su_quote]

Check out our interview with him below to learn how to start a profitable food truck business .

Keep reading for more of our top small business ideas that will make for the most profitable, best businesses in 2024.

• Average Annual Revenue: $263K+ • Average Profit Margins: 10.1% • Startup Cost: $100K-$3.5M • Time to Revenue: 6-18 months • Annual Market Growth Rate: 1.3% • Best For: Property owners who are service industry pros with a passion for entertaining and hosting

If you happen to own a charming, rustic, or historically significant home, a bed and breakfast could serve as an excellent starter business.

According to the Bureau of Labor Statistics , the U.S. bed and breakfast (B&B) industry is presently valued at $2 billion. While it faced a slowdown during the COVID-19 pandemic, its typical growth rate stands at 3.8% annually.

One notable advantage is you’ll live in the business, which cuts down the costs of accommodations. Customers normally expect:

• Personalized customer service
• Unique travel experience
• Home-cooked meals
• Grocery stores nearby
• Personal advice about local attractions

Pro Tip: It's important to invest in home insurance, a food handling permit, and potentially a license to sell alcohol, if applicable. Additionally, if you plan to convert a traditional home into a B&B business, collaborating with your local planning commission may be necessary.

• Average Annual Revenue: $444K+ • Average Profit Margins: 35-40% • Startup Cost: $100-$3.5M • Time to Revenue: 6-18 months • Annual Market Growth Rate: -0.8% • Best For: People who own rentable assets, collectors, great networkers

The party rental industry boasts a valuation of $5.9 billion and is experiencing a steady annual growth of 4.3% as indicated by Research and Markets .

A business in party rentals involves leasing various products for events, including tables, tents, caterers, sound equipment, and stages. The venture holds significant profit potential, and your business could cater to a range of events, from nonprofit fundraisers to upscale galas.

While the potential earnings are promising, it's crucial to make a substantial upfront investment in equipment before expecting to see profits. The strategy involves recovering these costs through repeated equipment rentals.

When setting up your business's inventory, you can consider the option of renting a storage facility to potentially save costs. Then maximize community awareness of your offerings by engaging in robust marketing efforts. Establish a physical location as early as possible to build brand credibility and reap long-term savings.

• Average Annual Revenue: $27K+ • Average Profit Margins: 8.3% • Startup Cost: $500-$250K • Time to Revenue: 3+ months • Annual Market Growth Rate: 1.6% • Best For: Detail-focused entrepreneurs, fashion and clothing experts who excel at listening and communication

Tailoring and alterations earn $9.4 billion, and the industry is anticipated to experience 4.7% year-over-year growth according to a report by Polaris Market Research .

The beauty of venturing into this type of business lies in its scalability, plus it will help you expand your skill set. Tasks like sewing simple hems and replacing buttons might evolve into dressmaking and design as your knowledge and experience grow.

I actually have an acquaintance who designed costumes for Cirque de Soleil before opening her own small business. With that experience in altering and customizing high-end garments, she opened a brick-and-mortar shop and gets asked to design work for businesses and live performances throughout the country.

During the initial stages, it is entirely respectable to launch your operation in a clean, smoke- and pet-free space within your home.

Pro Tip: Begin by making gradual investments in a commercial-grade sewing machine, a variety of fabrics, backup equipment, and a point-of-sale (POS) system. The costs can range from $150 for an entry-level sewing machine to $10,000 or more for a top-of-the-line model.

In 2021, the maternity wear industry held a valuation of $12.2 billion, and projections from Research and Markets indicate a growth to $16.5 billion by 2028, featuring a 4.4% year-over-year increase.

The demand for formal business women's maternity attire is notably driven by the nearly 57% female composition of the U.S. workforce, as per the Bureau of Labor Statistics .

Following their pregnancies, many women opt to pass their maternity clothing on to others in need. You can play a role in facilitating this by establishing a shop specializing in gently used maternity attire and other pregnancy supplies.

Start your used maternity clothing venture by selecting and legally formalizing your business structure .

Then, get a seller's permit and source inventory from social media, consignment shops, and thrift stores. Promote your business within the community, expressing your interest in purchasing used maternity clothing. Finally, ensure profitability by selling the clothing at prices that exceed your purchase cost.

• Average Annual Revenue: $74K+ • Average Profit Margins: 6.7% • Startup Costs: $1K-$30K • Time to Revenue: 1-6 months • Annual Market Growth Rate: 1.2% • Best For: Self-motivated, independent, and detail-oriented entrepreneurs

Cleaning businesses are virtually gold mines. They’re easy to start, and they have high success rates. Our friend Chris Mondragon pulls in over $125K monthly with his company, Queen Bee Cleaning! In his words:

[su_quote] As you start out, your margins are 40-50%. [/su_quote]

Forty to fifty percent! Seasoned business owners and aspiring entrepreneurs know how significant that is! With only 13 weekly cleaning contracts, you can rake in $7,800—not in revenue, but pure profit! Now imagine signing 20 or 30 of these high-paying contracts.

Cleaning is a business built to scale. But be careful: You can’t scale to millions of dollars just anywhere. There’s a tried-and-true calculation that reveals the earning potential in your area. If the numbers line up, you can scale to seven figures.

If you’re curious about how to use the calculation and want to know how to start your cleaning business from scratch—no franchise required—check out this free masterclass with Chris Mondragon.

You can read Chris’s incredible story here or watch our exclusive interview below.

• Average Annual Revenue: $35K-$50K • Average Profit Margins: 10.5% • Startup Costs: $100-$200 • Time To Revenue: 1-3 months • Annual Market Growth Rate: 1.9% • Best For: People with strong organization and communication skills, those who want to work from home and set their own hours

Becoming a virtual assistant for clients you choose is a profitable business to start. Some of the top virtual assistants on Upwork make $85 an hour. That’s up to $152K per year for doing things like scheduling appointments, sending emails, completing research, and other jobs you can do remotely.

Like other jobs that use a knowledge-based business model, the main startup costs are licensing and software. If you want to make more than that, you can start a VA agency and hire other people to help with this small business idea.

• Average Annual Revenue: $817K • Average Profit Margins: 6.9% • Startup Costs: $100-$10K • Time to Revenue: 1-6 months • Annual Market Growth Rate: 1.3% • Best For: Social media experts, writers and content creators, people with search engine optimization (SEO) expertise

Social media marketing is a vast industry. According to Statista , it is a $153.7 billion industry. And all you need is a computer, some software, and to find some clients.

Jason Yormark of Socialistics told us:

[su_quote] You can expect each client to be around $2,000-5,000 per month and require 20-40 man-hours to give them proper service. [/su_quote]

That means a single person can make up to $40K monthly from home without investing in inventory. Find out how Jason turned his company into a $500K-a-year social media marketing agency:

Pro Tip: You can also learn from our blog on how to start a marketing agency .

• Average Annual Revenue: $244K per employee • Average Profit Margins: 18% • Startup Cost: $500-$2.5K • Time To Revenue: 3-12 months (plus accounting degree) • Annual Market Growth Rate: 1% • Best For: Certified accountants, entrepreneurs with strong math and financial skills

To become a certified public accountant, you will need 150 hours of education in accounting. That’s a bachelor’s degree and passing the CPA exam, which is a test for proficiency created by the American Institute for Certified Public Accountants ( AICPA ).

Once you have a CPA license, you can start a company and make a great living. There are only 40,000 AICPA members and over 80 million tax returns filed annually by tax professionals, so there’s plenty of work.

Granted, tax prep services do some of those, but CPAs do the big ones. Even at the low end of $100 per tax return, that’s still $8 billion in revenue, and that’s just part of what CPAs do.

Add in payroll, quarterly minimum filing, certifying businesses for SOC 2 compliance , managing business sales tax payments, and other business finances, and it’s obvious why working as a CPA is one of the most lucrative business ideas in 2022.

• Average Annual Revenue: $364K • Average Profit Margins: 6.4% • Startup Costs: $1K-$3.5M • Time To Revenue: 6-18 months • Annual Market Growth Rate: 2.2% • Best For: Executives and business leaders, entrepreneurs with management or business expertise, people with strong analytic, problem-solving, and communication skills

A consulting business is focused on helping other business owners solve their problems. You can choose a niche if you have a specific area in which you are an expert, or you can be an all-in-one solution.

When I initially started my consulting business, I was consulting on everything. One day I’d analyze payment processors, and the next, I would look for good influencers for a brand. I eventually gravitated to writing about business and technology because it makes it easier to pass knowledge on to thousands of people per month.

Business consultants can make anywhere from several hundred per day to billions per year. Consultants who specialize in mergers and acquisitions can earn huge commissions .

Check out this interview with Ryan Gromfin, who makes $35K a month with his consulting business:

There are some industries that are really struggling right now. You might want to avoid these industries if you want to make a profit fast.

Most of these industries are tied to big purchases. You’re seeing losses tied to inflation of expenses like materials and wages, combined with people cutting back on making new purchases. This is expected when discretionary income decreases.

Pro Tip: Assuming wage growth continues and outpaces inflation, we should see these return to profitability in a few years. Until then, our blog on recession-proof businesses can provide even more inspiration for getting started in a bad (or questionable) economy.

Frequently Asked Questions (FAQs)

According to CompaniesMarketCap.com on December 11, 2023, the five most profitable businesses were

• Apple (valued at $2.99 trillion)
• Microsoft (valued at $2.741 trillion)
• Saudi Aramco (valued at $2.139 trillion)
• Alphabet (Google, valued at $1.665 trillion)
• Amazon (valued at $1.503 trillion).

Note that the values of these companies fluctuate daily.

Dog walking, house cleaning, and sewing businesses are the easiest to start because they have low startup costs and low barriers when it comes to getting licenses and permits.

IBISWorld states that fruit and nut farming, solar power, online gambling services, hybrid and electric vehicle manufacturing, and 3D printing and prototyping are the fastest-growing businesses in 2024.

So What Are the Most Profitable Businesses to Start?

We’ve discussed the most profitable business ideas from multiple vantage points. Some are easy businesses to start from home, and some are not as easy to get into because of education requirements or other barriers to entry.

When it comes down to it, the most profitable business for you to start is one you have knowledge in, you know how to find customers for, and you want to spend the rest of your life exploring and working with.

You can make any of your favorite 2024 business ideas one of the most profitable and successful business ideas if you:

• Create a business plan: Read our guide if you’ve never created one.
• Provide excellent customer service: Check out HelpScout’s blog on what makes great customer service.
• Educate yourself on the industry: Follow our blogs and YouTube .
• Don’t give up: Many business owners give up right before they hit exponential growth. Learn how to run a business .

What other profitable and successful small business ideas are you thinking about starting?

664 Painting Business Names (2024)

Painting business names are used in all kinds of industries. From house painters to artists and face painting businesses, if your company uses paint, you need a good paint company name.

[su_note note_color="#dbeafc"] Shop the entire list or click on any of the links below to jump right to the kind of painting company names you need.

76 House Painting Business Names

90 good painting business names, 102 creative painting business names, 120 professional painting business names, 96 cool painting business names, 94 catchy painting business names, 86 face painting business names, what makes good painting company name ideas, what should i name my painting business, examples of good names for painting companies, how to register your painting business name.

• Next Steps After Naming Your Painting Business   [/su_note]

Are you looking for painting company name ideas that will work for a house painting company? Check out these names for painting businesses!

1. Precision Painting Services 2. Northwest Painting Co. 3. FreshCoat Homes 4. MasterCraft Painting Services 5. Elite Paint Solutions 6. Paint Perfection 7. Empire State Painting Services 8. Elite Color Homes 9. Mammoth Painters 10. Masterful Painting 11. Lincoln Memorial Painters 12. Golden Gate Painters 13. Precision Pro 14. Crafty Painters 15. Elite Artistry 16. Paint Masters 17. Niagara Falls Painting 18. World Trade Painting Co 19. MasterCraft Colorists 20. Elite Paint Finishes 21. Precision Palette 22. Crafty Coatings 23. Elite Impressions 24. Garden of the Gods Painting 25. Pearl Harbor Painting Solutions 26. Spectrum Coatings 27. Gateway Arch Painters 28. Bright House 29. Quality Coatings 30. Monument Valley Painters 31. Master Stroke 32. Precision Coatings 33. Color Splash 34. Liberty Island Painting Services 35. Niagara Painting 36. Worldwide Painters 37. Yosemite Painting Services 38. Yellowstone Painting

39. Arlington Painting Solutions Co. 40. Brighten Up 41. Color Works 42. Master Stroke 43. Color Splash 44. Space Needle Painting 45. Portland Light Painting Services 46. Paint Craft 47. Precision Masters 48. Everglades Painting Services 49. Boone’s Lick Painters 50. Spectrum Painting 51. Expert Brushstrokes 52. Premier Pigments 53. Coatings Master 54. Premier Paintworks 55. Colorway Solutions 56. Premier Brushworks 57. Prime Artisans 58. The Expert Canvas 59. Home Masterpiece Painters 60. Vibrant Makers Co. 61. Color Revival 62. Prime Concept 63. The Bright Side Painters 64. Prime Brush and Beyond 65. Expert Mural Kings 66. Infinite Tints 67. Elegance Painters Co. 68. SprayWay 69. Color Coaters 70. Spray Zone 71. Home Artisans 72. Spray Works 73. Spray Savers 74. House Painting Services 75. Mural Works Co. 76. Gallery Haus Solutions

Pro Tip: Choose a name that conveys expertise, reliability, and creativity. Incorporate words like “precision,” “mastercraft,” or “elite” to highlight skill.

You might also consider local landmarks or your city's name for a personalized touch. Keep it simple, memorable, and easy to spell for word-of-mouth referrals. Spray-Net decided to keep it simple and communicate what makes their painting services different. Check out our interview with them below.

Some good painting business name ideas include:

1. Prime Colors 2. Expert Painting Solutions 3. Paint Wise 4. Prime Time Painting 5. Paint Perfect 6. Paint Bros. 7. Expert Color Concepts 8. Paint Express 9. Superior Painters 10. Master Painters 11. Expert Prime Coaters 12. Painters Plus 13. Quality Painting 14. Master Coaters 15. Paint Artisans 16. Color Masters 17. Painters Deluxe 18. Professional Coating Masters 19. Elite Painting Solutions 20. Paint Premier 21. Prime Painting 22. Expert Paint Solutions 23. Quality Paint Pros. 24. Lean on Me Painting Services 25. Trust Paint 26. Premier Painters 27. Skillful Painters 28. Premier Coatings 29. Expert Paint Works 30. Quality Paint Masters 31. Trustworthy Painting Solutions 32. Skill Paint 33. Premier Finishes 34. The Color Theory 35. Color Expressions 36. Color Stylists 37. Paint Plus 38. Paint Sense 39. Color Smart 40. Paint Gallery Artisan 41. Color Power Co. 42. Prime Paints 43. Expert Coating Solutions 44. Quality Paint Design 45. The Reliable Painters

46. Paint Max 47. Color Crafty 48. Paint Edge 49. Color Sensibilities 50. Paint Power Pro 51. Trust Coatings 52. Skilled Painting Co. 53. Color Pro 54. Paint Studio 55. Color Vision 56. Paint Focus 57. Your Paint Crew 58. Color Experts 59. Paint Style Deluxe 60. Color & Skill 61. Expert Color Craftsmen 62. Fine Coat Solutions 63. Premier Artistic Impressions 64. Expert Coatings 65. The Prime Palette 66. Pigment Kings Co. 67. Chroma Royals 68. Color Printers 69. Vivid Interiors 70. Brushstroke Haven 71. Room Reimagined 72. Fresh Coat Living 73. Interior Artistry 74. Home Harmony 75. Nook Refinement 76. Curb Appeal Crafters 77. Color Impressions 78. Roof Colors Renaissance 79. Brick & Blossom Consultants 80. Exterior Envy Co. 81. Full Spectrum Finishes 82. The Foyer Theory 83. Living Canvas Creations 84. Fresh Start Finishes 85. The Palette 86. Wall Makers Anonymous 87. Bland to Grand 88. Repaint Revolution 89. Brushstroke Boutique 90. Canvas Consultants

Pro Tip: Choose a name that reflects professionalism, quality, and reliability. You might incorporate words like “premier,” “prime,” or “expert” to convey expertise. Also, consider including your location or specialty to stand out. Most importantly, emphasize your trustworthiness and skill in the painting industry.

Creative names for a painting company include:

1. Creative Coats 2. Colorful Creations 3. Canvas Creations 4. Brush On 5. Fresh Paint 6. Brighter Homes 7. Artistic Painting 8. Rainbow Masters 9. Colorful Coating 10. Splash Painting 11. Paint Pros 12. Elegant Coating 13. Paint Express 14. Vibrant Homes 15. Creative Painting Services 16. Paint Solutions 17. Quality Coating 18. Paint Works 19. Paint and Sip 20. Color Vision 21. Paint Zone 22. Stylish Coating 23. Paint Magic 24. Color Therapy 25. Paint House 26. Paint Shop 27. My Color Story 28. Paint Party 29. Mix-Color 30. Paint Brush 31. Color Blocking Society 32. Paint Bucket 33. Color Burst 34. My Paint Spot 35. Color Match 36. Paint Line 37. Waves and Colors 38. Paint Dropper 39. Color Crush 40. Paint Flow 41. The Smooth Painter 42. Color Mood 43. Paint Point 44. Color Space 45. Easy Painting 46. Paint Appeal 47. Color Spark 48. Paint Dot 49. Blends and Paints 50. Paint Patch 51. Paint the Night Away

52. Paint Your Own 53. Color Code Painting Service 54. Paint Bucket 55. Bright and Glossy Co. 56. Gallery Pros 57. The Minimalist Painters 58. Bright Drop Painting 59. Paint Strokes 60. Custom Paint Bros. 61. Spectrum Canvas 62. Wonderful Dwellings 63. Chromatic Craftsmen 64. Canvas Renew 65. Huesmiths & Co. 66. The Finishing Touch 67. Next Chapter Color 68. Facade & Fable 69. Wallflower Revival 70. Skylark Palette 71. The Color Architects 72. The Canvas Chameleons 73. Huescape Design 74. Pigment Makers 75. Prism Renovations 76. The Color Curators 77. Brushstroke Alchemy 78. The Mural Maestros 79. Sun & Shadow Creative 80. Whispers of Color 81. Kaleidoscope Homes 82. The Color Foundry 83. Light & Layers, Inc. 84. The Canvas Whisperers 85. Brushfire Transformations 86. The Color Code 87. Brush with Brilliance 88. Color Canvas Studios 89. The Sunlit Brush 90. Brush & Bloom Designs 91. Facade Alchemists 92. Hue Curated Homes 93. The Canvas Alchemists 94. Brushstroke Symphony Design 95. The Shifting Palette 96. Wallflowers 2 Wow 97. Chromatic Chameleons 98. Brush & Blossom Interiors 99. The Sunlit Facade 100. Hue Haven Designs 101. Brushstroke Dreamscape 102. The Color Whisperers

Pro Tip: Choose a creative name for your business in painting to help people understand what you do. Check out this painting terminology blog for words to use in creative names for your painting business.

Professional painters need a naming process that shows they are experts. Consider some of these names that are perfect for a professional painter:

1. Paint Pros 2. PaintGreen Professional Painters 3. Chicago Paint Experts 4. Dependable Painting LV 5. Paint Kings 6. Superior Painting 7. Paint Perfectionists 8. Ace Color Solutions 9. Higher League Coating 10. Elite Painters 11. Pro Painting League 12. Top Coating Masters 13. Prime Painters 14. Expert Painting 15. Superior Coating 16. Master Painters 17. Skillful Painting 18. Great Coating 19. Smart Painters 20. Top Notch Painting 21. Ace Painting Plus 22. Top Paint Pros 23. Perfect Painting 24. Paint Vision 25. Ace of Shades 26. Paint Concepts 27. Big League Coatings 28. Brush Craft Professionals 29. Palette Prestige 30. Master Stroke Services 31. Artisan Hues 32. Prime Canvas Creations 33. Precision Paintcraft 34. ProFinish Artistry 35. ColorVista Studios 36. Elite Palette Partners 37. Canvas Masters 38. Brush Masters Co. 39. TopCoat Artisans 40. Fine Line Finishes 41. Prestige Paintworks 42. Canvas Elite Decor 43. Artistry Experts 44. Brushwork Artisans Co. 45. Viva Color Studios 46. Prime Hue Masters 47. Artisan Finishes 48. Superior Painters Co. 49. Luxe Finishings Co. 50. Painters' Collective 51. Vivid Palette Ventures 52. Brush Elite Artisans 53. My Pigment Partners 54. Fine Line Artistry Studios 55. Finish Prestige 56. Brush Masters Artistry 57. Color Connoisseurs 58. Elite Palette Artisans 59. Artisan Studios 60. TopCoat Brilliance

61. The Fine Line Co. 62. Canvas Decorators 63. Your Pigment Partners 64. Vivid Palette Artisans 65. Brush Elite Finishes 66. Precision Paintworks 67. The Fine Line Collective 68. ProFinish Partners 69. Atelier Painters 70. My Pigment Decorators 71. Luxe Finishings Artistry 72. Vivid Palette Studios 73. Brush Connoisseurs 74. Pigment Masters 75. Canvas Artisans 76. Precision Palette Makers 77. Masterstroke Renovations 78. Chromatic Transformations 79. Elevated Finishes 80. Brushcraft Collective 81. Colored Surfaces 82. Vivid Hues Design 83. Reimagine Design Co. 84. Pro Brush Painting Solutions 85. The Flawless Finish 86. Pinnacle Paintworks 87. Keystone Coatings 88. Stellar Palette 89. Zenith Strokes 90. Vantage Point Painting 91. Master Class Colors 92. Bespoke Canvas 93. Envisionary Paintworks 94. The Color Architects 95. Impeccable Shades 96. Reimagine Exteriors 97. The Finish Line Painting 98. Luxe Living Paintscapes 99. Precision Paint Collective 100. Signature Color Studios 101. Aura Aesthetics 102. Kaleidoscope Interiors 103. The Transformation Squad 104. Pinnacle Refinement 105. Bespoke Interiors Co. 106. Flourish Home Designs 107. The Surface Masters 108. Chromatic Revolutions 109. Vivid Vision Painters 110. Elevate Design Studios 111. Pinnacle Finishes 112. Color Alchemy Design 113. The Precision Brush 114. Luxe Canvas Studios 115. Signature Interiors Co. 116. Elevate Exteriors 117. The Transformation Collective 118. Master Class Renovations 119. Vantage Point Design Studio 120. Envision Interiors Co.

Pro Tip: Consider incorporating words like “ace,” “big league,” or other synonyms when choosing a professional name for your painting company.

Paint pros might want cool painting company names. Here are our top picks:

1. Paint It Cool 2. Artistic Touch 3. Paint Pro 4. Colorful Solutions 5. Brush Masters 6. Color Magic 7. Artful Painters 8. Color Zone 9. Paint Express 10. Brush Works 11. Paint and Chill 12. Color Splash 13. Artistic Expressions 14. PaintWise 15. Brush Strokes 16. Paint Vibes 17. Paint Fusion 18. Artful Solutions 19. Paint Smart 20. Brush Up 21. Chroma Craft Studios 22. Urban Brush Collective 23. Cool Canvas Creations 24. Hue Artistry 25. Paint Pulse Studios 26. Color Fusion Co. 27. Street Palette Painters 28. Spectrum Decor Co. 29. Graffiti Glow Arts 30. Urban Easel Studios 31. Chromatic Vista 32. City Canvas Crafters 33. Metro Palette Artisans 34. Splatter Street Studios 35. Street Brush Creations 36. Concrete Canvas 37. Color Wave Artistry 38. Downtown Dyes 39. Graffiti Groove 40. Spectrum Shade Crafters 41. City Hue Artisans 42. Neon Nectar Studios 43. Chroma Collective 44. Urban Canvas Experts 45. Vibrant Studios 46. City Graffiti Artistry 47. Street Splash Creations 48. The Abstract Decor

49. Urban Easel Decorators 50. Chromatic Painters 51. Graffiti Studios 52. City Brush Artisans 53. Concrete Canvas Solutions 54. Splash City Artistry 55. Street Palette Decorators 56. Abstract Artisans Co. 57. The Urban Brush 58. City Canvas Co. 59. Vibe Artistry 60. Concrete Palette Solutions 61. Chroma Painters 62. Color Wave Collective 63. Vibrant ’n’ Visionary 64. Chroma Royals 65. Spectrum Shifters 66. Wallflower Wonderland 67. The Sunlit Palette 68. Brushfire Design 69. Whispering Walls Studio 70. Facadism 71. Brushstroke Dreamscapes 72. Color & Canopy 73. Metamorphosis Masters 74. Wallflower Revival Company 75. The Color Alchemists 76. Silhouette Studios Inc 77. Shifting Palettes 78. The Colour Chameleons 79. Wow Interiors 80. The Sunlit Facade Co. 81. My Canvas Chronicles 82. The Facade Alchemists 83. Curated Homescapes 84. The Canvas Whisperers Atelier 85. Artisan Hues & Co. 86. The Colour Code Studio 87. Sun-Kissed Brushstrokes 88. Canvas Odyssey Collective 89. Whispers of Color Interiors 90. The Facade Architects 91. Light & Layers Painters 92. The Shifting Palette Collective 93. Wow Renovations 94. Chromatic Atelier 95. Prism & Bloom Studios 96. Floral Walls Inc.

Pro Tip:   Cool painting names can come in all forms. Think of some cool paint company names specific to your business idea. For instance, Everline Coatings paints the lines for parking lots, and their name suggests the lines are long-lasting. Check out our interview with the CEO below.

Consider some of these catchy painting company names to get inspired:

1. Paintegrity 2. Paint the Town Red 3. Brush Off 4. Art Sense 5. Color Wheel 6. Artful Dodger 7. Paint by Numbers 8. Color Coders 9. Rose Colored Brushes 10. Painting with Passion 11. Mr. Paint 12. Art Attack 13. Picture Perfect 14. Color Palette 15. Brush with Fame 16. Paint Pride Co. 17. Color Harmony 18. Art Smart 19. Dreamscape Painters 20. ColorPop 21. Art Lab 22. Art House 23. Creative Canvas 24. Fine Tints 25. Dazzling Hues 26. Imaginative Paint, Inc. 27. Kaleidoscope Palette 28. Palette Pro 29. Art Wise, Inc. 30. Paint Fun 31. Brush Play 32. The Color Scheme 33. Tint Artisans 34. Stain’d Artists 35. Express Graffiti 36. Paint Corner 37. My Personal Palette 38. Brush Popper 39. The Joy in Color 40. Paints and Sensibilities 41. I Love Me in Color 42. Life x Rainbow 43. Paint and Run 44. Paint It Forward 45. Green Paint 46. Paint Pals 47. Happy Paints

48. Brush Ministries 49. Brush and Beyond 50. InfiniTints 51. House of Hue 52. Splash Kings 53. Star Colors 54. Touch of Hues 55. Paint and Decor 56. Color Your Home 57. Interior Motives 58. Paint the Walls 59. Paint and Polish 60. Interior Magic 61. Paint and Shine 62. Paint and Spice 63. Color My Harmonies 64. Paint and Sparkle 65. Color Palette 66. Interior Trends 67. Paint and Grace 68. Color Sense 69. Interior Impressions 70. Paint and Glam 71. Your Interior Flair 72. Paint and Charm 73. Interior Touch 74. Paint Your Dream 75. Paint and Create 76. Inspired Paints 77. Interior Bliss 78. Paint and Transform 79. Interior Glow 80. Paint and Refresh 81. Color House 82. Interior Works 83. Paint and Renew 84. Color Flow 85. Interior Joy 86. Paint and Enhance 87. ColorMix 88. Interior Wonder 89. The Eco Brush 90. Wall Melodies 91. Wall Wonders 92. Paintallica 93. Hue & You 94. The Shade Shifters

Pro Tip: A catchy painting business name will often use wordplay to help create a compelling and memorable name. Some ways to create a memorable name include alliteration, puns, and other fanciful language with keywords related to your painting services.

Starting a face painting business? Consider these hand-picked names:

1. Color Me Happy 2. Painted Smiles 3. Color Me Crazy 4. Face Off Painting 5. Paint the Town 6. Face the Rainbow 7. Color Me Pretty 8. Paint It Forward 9. Painted Smiles 10. Sparkle Painting 11. Paint Me Happy 12. FaceMagic 13. Paint Box 14. Face Pop 15. Painted Wishes Co. 16. Face Paintopia 17. Paint Parties 18. Paint It Forward 19. Fizz Painters 20. Paint Splash 21. Rainbow Splash 22. Brush With Magic 23. Paint and Smile 24. Colorful Expressions 25. Rainbow Faces 26. Let's Face It 27. Paint and Play 28. Colorful Creations 29. Painted Wonders 30. Rainbow Magic 31. Artful Faces 32. Face Time 33. My Face Rainbows 34. Brush Me Away 35. The Doodler 36. Whimsy Brush Express 37. Doodle Studios 38. The Cheeky Canvas 39. Smiles and Paints 40. Fanciful Faces Co. 41. Doodle Gallery 42. Happy Hue Designs 43. Playful Palette Studios

44. Pint Size Paints 45. My Joyful Jester 46. Wacky Creations 47. Lively Blush Arts 48. Mask Studio Creations 49. Laughs and Paints 50. Laugh Lines 51. Dab Creations 52. Chuckle Lines Co. 53. Smile Artist 54. The Jolly Face 55. Face Graffiti 56. Mask Studios 57. Paint and Pout 58. Art on Your Face 59. Babyface Paint Parties 60. Painted Lady 61. Face the Facts 62. Face Value 63. Art of the Matter 64. Paint Your Wagon 65. Painted Love 66. Color Me Beautiful 67. Face of the Future 68. Color Me Impressed 69. Carnival Face Painters 70. Face of the Crowd 71. Face Dreams 72. Face Forward 73. Paint for All Ages 74. Art Nouveau Face Painting 75. Face the Music 76. Paint Your Heart Out 77. Paint Safari 78. Color Me Mine 79. Face Art House 80. Paint It Green 81. Face Up 82. Paint and Glow 83. Colors of The Wild 84. Face Art Therapy 85. Face the World 86. Paint Me Up

Pro Tip: Opt for a name that sparks creativity and captures the fun and whimsy of face painting. Consider playful words like “ColorSplash,” “ImaginFace,” or “WhimsiPaint.” Ensure it's family-friendly (unless you’re doing adult-only events!) and easy to remember for word-of-mouth recommendations.

Incorporate elements that highlight your artistic skills and the joy you bring to events. Check for domain availability to establish a strong online presence, and ensure the name aligns with your brand's image.

A good painting business name should incorporate several key qualities to effectively represent your brand and attract customers. Painting company name ideas should be:

• Memorable so that people don’t forget it
• Relevant to the painting services you offer
• Professional so that people aren’t turned off by the name
• Unique to help people remember
• Creative to inspire potential customers
• Locally relevant to help identify your painting company within the community
• Scalable so you don’t limit yourself from the start
• Available as a domain because you’ll need it for a website
• Positive so people don’t question it
• Versatile so your painting company can add new services in the future

Remember to take your time and carefully evaluate different options before finalizing your painting business name. Get feedback from others, and make sure the chosen name aligns with your brand identity and values.

Naming your painting business is an important decision. Here are a few suggestions to help you brainstorm:

• Precision Paintworks
• Artisan Brush Co.
• Vivid Visions Painting
• Epic Coat Creations
• Prime Palette Painters
• Majestic Strokes Painting
• Urban Canvas Crafters
• Masterpiece Painters
• Elite Edge Coatings
• ChromaCraft Solutions

Remember to choose a name that aligns with your brand values, is easy to remember, and gives a positive impression of your painting services. Additionally, check for domain availability if you plan to have an online presence.

Wise Coatings is another company similar to a painting service. They epoxy surfaces and make it easy for people to have wonderful-looking homes. Their CEO has partnered with us to offer franchises and a course to help you achieve your business vision, brand identity, and a lasting impression. Be one of the first to try out the new course .

Registering your painting business name involves several steps to ensure legal compliance and protection. Here's a general guide:

• Check Name Availability: Before you start the registration process, ensure the name you've chosen is unique and not already in use by another business. You can check with your local business registry or online business name databases.
• Business Structure Registration: Depending on your location, you may need to register your business structure (e.g., sole proprietorship, LLC, corporation). Contact your local government or business registration office for information on the specific requirements and forms.
• Trademark Search and Registration (optional): Consider conducting a trademark search to ensure there are no existing trademarks on the name. While not mandatory, registering a trademark can provide additional legal protection. You can do this through the United States Patent and Trademark Office (USPTO) or the relevant authority in your country.
• Domain Name Registration: If you plan to have an online presence, check the availability of the domain name associated with your business. Registering a domain name that matches your business name can help establish a consistent brand presence.
• Local Business License: Obtain the necessary licenses and permits to operate your painting business legally. Contact your local city or county government to inquire about the specific requirements for your location.
• Register with Tax Authorities: Register your business with the appropriate tax authorities. Obtain an Employer Identification Number (EIN) if required—depending on your business structure, it may be required for tax purposes and hiring employees.
• Business Insurance: Consider obtaining business insurance to protect your painting business from potential liabilities. Insurance requirements may vary based on your location and business structure.
• Open a Business Bank Account: Separate your personal and business finances by opening a business bank account. This is crucial for tracking expenses, managing taxes, and maintaining financial transparency.

Always consult with a legal representative and business authorities to ensure you are following the specific regulations and requirements applicable to your location and industry.

Next Steps After Naming Your Painting Business

Discovering the ideal name for your painting business is an exciting and crucial step in launching your venture. With a plethora of options ranging from catchy and cool, humorous to professional, you have a diverse selection of names to consider for your painting business.

Outstanding painting business names revolve around uniqueness, memorability, and a connection to your target audience. A well-chosen name will make a distinct mark in a competitive market, creating a lasting impression on your clients.

In addition to presenting numerous name ideas, we've guided you on what factors to weigh when naming your painting business and how to register it once you've made a decision.

Ultimately, your painting business name serves as the cornerstone of your brand identity. Choose thoughtfully, register diligently, and help your painting business name become synonymous with a quality experience. What painting company name ideas do you like most?

nice work https://binarychemist.com/

My Name is PRETTY NGOMANE. A south African female. Aspiring to do farming. And finding a home away from home for the differently abled persons in their daily needs.

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How to Write a Business Plan for a Startup

Last Updated: December 22, 2023 Fact Checked

This article was co-authored by Jack Herrick . Jack Herrick is an American entrepreneur and wiki enthusiast. His entrepreneurial projects include wikiHow, eHow, Luminescent Technologies, and BigTray. In January 2005, Herrick started wikiHow with the goal of creating "the how-to guide for everything." He has a Master of Business Administration (MBA) from Dartmouth College. There are 13 references cited in this article, which can be found at the bottom of the page. This article has been fact-checked, ensuring the accuracy of any cited facts and confirming the authority of its sources. This article has been viewed 116,073 times.

As a startup, you will need a business plan. For example, you will need to show your plan to a bank if you are seeking a loan. You also need to show the plan to any investor. Business plans are helpful because they force you to step back and analyze your business critically. You should consider your target market, the products or services you will offer, and your projected finances. Writing a business plan isn’t difficult, though it will require considerable research and planning.

Explaining Your Marketing Plan

• Your mission. What is your driving goal every day? Don’t simply write, “Make money.” Identify how you will make money. For example, you can write: “Our mission is to offer residents of the Lakeview neighborhood the best day spa experience in the Near North Side of Chicago. We are committed to providing value and quality in a fun atmosphere that is never predictable.”
• Your goals. For example, a day spay might have the following goal: “To attract a minimum of 35 customers each day in the first year of operations.” Make your goals as concrete as possible.
• Description of the industry. Explain whether the industry is growing or poised for growth in the short and long term.
• The factors that will drive your success. How will you set yourself apart? For example, “You All Day will separate itself from the pack based on the owner’s deep experience running a day spa in Seattle for ten years. This experience includes familiarity with successful marketing techniques and trends analysis.”
• Your legal form. Are you a sole proprietorship, partnership, limited liability company (LLC), or corporation? Also explain why you selected this form.

Jack Herrick

Don’t skimp on how much energy and time you put into your mission. When asked about creating wikiHow’s mission, Jack Herrick, founder of wikiHow, responded: “We had the whole management team — alongside members of the wikiHow community — reviewing it, discussing it, and going back and forth on the wording. Those two sentences were many hours of work.”

• You can search for industry information in other places. For example, talk to people in your industry at trade shows. Also search online. Many industries have trade associations, which have websites with information.
• For example, when analyzing the day spa industry, you might want to talk about how it is growing because more upper-income men in urban areas are visiting. (If that’s true).
• By analyzing the industry, you gain insight as to your likely target market and how you can reach them.

• Age. What is the average age of your likely customer? If you don’t know, then visit similar businesses and note the ages of the clientele.
• Gender. Will men or women—or both—primarily use your products or services?
• Location. Generally, your market will be located near your business. However, if you have a web-based business, your target audience could have no geographic boundaries.
• Income level.
• Occupation. For example, a day spa might target stressed-out white collar professionals.
• Education level. There is often a link between education, income, and occupation—though not always. For example, a discount bookstore might target an educated audience that nevertheless has a lower income.

• To find competitors, look in the phone book and do a general Google search. Make sure to read their website and stop into the business.
• If you’re opening a restaurant, you’ll want to see a sample menu, as well as the hours of operation.
• Also identify indirect competitors. For example, a day spa is competing with more than other spas. You also compete with any business that offers relaxation, such as massage parlors or meditation centers.
• Name of your competitor.
• What you offer that they don’t. Think about products and services, but also location, ease of ordering, etc. What will make the consumer experience different at your business?
• What they offer that you don’t. Identify why you don’t offer their products or services. For example, they may be serving multiple niches while you are focused on only one. Alternately, they may have a favorable location.

• Whether you will sell pizza by the slice, as whole pies, or both
• How big your pizzas will be
• What toppings your customers can offer
• If you will have take-out and delivery options
• What other food items will be sold

• What type of advertising or promotion will you use? How often will you use paid promotion?
• What other promotion other than paid advertising will you use? For example, you might use social media, professional networks, etc.
• Will you create a logo and use it on cards, letterhead, websites, etc.?
• How large will your promotional budget be?

Discussing Your Business Organization

• State how much you expect to pay each employee in your first three years of business.
• Also name your professional support, such as your business lawyer, accountant, and insurance agent. Professionals are independent contractors you use but don’t employ. Calculate how much you expect to spend on each professional.

• You might write: “Lisa Jones is the sole proprietor of You All Day and will run day-to-day operations. As a certified massage therapist, she ran the Relax! chain of day spas in the Greater Seattle area for ten years. A former accountant, Lisa has an MS in accounting from the University of New Hampshire and worked as a CPA briefly before going into the spa business.”
• If you are asking for a loan, then include resumes for each owner. You can put them in the appendix at the end of the document.

• You should create professional-looking financial statements using a spreadsheet.
• You’ll have to gather quite a bit of information to make the financial statement. For example, you will need information on your assets, investments, and personal debts.
• You might also want to get a free copy of your credit report and review it as you draft your business plan.

Analyzing Business Finances

• Common startup costs include insurance, licenses, equipment, advertising, and employee expenses. [9] X Trustworthy Source U.S. Small Business Administration U.S. government agency focused on supporting small businesses Go to source
• Also identify the source of the startup capital. For example, if your startup has three initial owners, state how much each is contributing to the business and their ownership percentage.
• If you need financing, state how much. Include the terms of any proposed loan.

• You’ll need to make some assumptions in order to come up with a forecast of sales. You should explain these assumptions in your business plan.
• For example, you can write, “We assume continued interest in day spas in the Chicago area.”
• Another assumption is the overall health of the economy. “Although the Chicagoland economy has grown more slowly than other regions of the country, we assume that the Chicago economy will grow on par with other large metropolitan areas in the coming decade.”
• You can also include a four-year projection, though this is optional.

• Also talk about how you will build up your cash reserves. For example: “In addition to normal cash flow, we will focus on obtaining sufficient cash reserves for emergencies. These reserves include a line of credit with a bank, which we can use when business is slow. We will also invest excess cash in certificates of deposits at our bank.”

• Fixed costs: these don’t vary depending on your sales volume. For example, your rent, employee salaries, and insurance are fixed costs.
• Variable costs: these fluctuate depending on your sales and include shipping, inventory, and manufacturing costs.

Finishing Your Business Plan

• Add a cover page to your document. You can title it “[Company Name]’s Business Plan” or “Business Plan for [Your Name].” If you have a logo, include that too.

• For example, you can write, “You All Day is a start-up dedicated to providing men and women in Chicago a high-quality day spa experience at an affordable price. We specialize in pedicures, manicures, massage, and herbal aromatherapy. The Near North Side of Chicago has grown substantially over the past 20 years, with young, educated millennials settling in to start families. This area is currently under served, and we hope You All Day can meet the demand of the local market.”

• Executive Summary
• Company Description
• Industry Analysis
• Market and Competition
• Products and Services
• Marketing and Sales Plan
• Operations and Management
• Financial Forecasts
• Exhibits/Appendix

• Review for typos and other errors. An accountant should check your numbers to make sure they are accurate.
• Analyze the overall presentation. Is the information crammed in so that the document is tiring to read? If so, spread out the information so that there is a lot of white space on each page.
• You can also show the plan to a business adviser. If you live in the U.S., you can show it to someone at your nearest Small Business Development Center, which provides help drafting business plans. You can find your nearest SBDC by visiting this website: https://www.sba.gov/tools/local-assistance/sbdc .

• You might want to include tabbed partitions between each section of your business plan. This will make it easier for someone to flip through it and find what they are looking for.

Expert Q&A

• Don’t be afraid to change your business plans as you research and draft the document. That’s one of the reasons for writing the plan in the first place. For example, you might have intended to target women as consumers only to realize that there are growth opportunities with men. You can adjust your plans accordingly. Thanks Helpful 1 Not Helpful 0

You Might Also Like

• ↑ https://business.vic.gov.au/business-information/marketing-and-sales/increasing-sales-through-marketing/do-market-research
• ↑ https://openstax.org/books/entrepreneurship/pages/7-5-reality-check-contests-and-competitions
• ↑ https://www.sba.gov/business-guide/plan-your-business/market-research-competitive-analysis
• ↑ https://www.indeed.com/career-advice/career-development/business-plan-product-description
• ↑ https://business.gov.au/planning/business-plans/develop-your-marketing-plan
• ↑ https://openstax.org/books/entrepreneurship/pages/11-4-the-business-plan
• ↑ https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs
• ↑ https://www.alberta.ca/preparing-financial-projections-and-monitoring-results.aspx
• ↑ https://www.pwc.com/gx/en/services/entrepreneurial-private-business/small-business-solutions/blogs/preparing-a-cash-flow-forecast-simple-steps-for-vital-insight.html
• ↑ https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan
• ↑ https://smallbusinessbc.ca/article/5-reasons-business-plan-review/

About This Article

To write a business plan for a startup, break your plan up into several sections, including an executive summary, a description of your company, an industry analysis, market and competition information, your products and services, your marketing and sales plan, operations and management information, your financial forecasts, and finally, an appendix. To format your business plan, use a professional font, like Times New Roman, and include a cover page with your company's name and logo on it. To learn how to write each section of your business plan, read on! Did this summary help you? Yes No

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How To Write a Business Plan in 9 Steps

Write your business plan with this step by step guide and take your idea into reality.

Salesforce Staff

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You have this amazing idea for a business. It’s been brewing for a couple of years now, and you’re finally ready to act on it. So, what’s your plan?

Like you, many people are preparing to start a business — and even some who have already started one — and fail to research and write a business plan that tests the feasibility of their idea. Some may think it’s a “waste of time.” They would rather wing it, stick with a pitch deck, or hope for the best.

But hope, unfortunately, isn’t a strategy for success. Writing a business plan and executing it kick-starts your road to success.

Here’s what you’ll learn:

Three reasons why you need to write a business plan Writing a business plan doesn’t have to be difficult How to write a business plan in 9 steps What’s left to do?

Three reasons why you need to write a business plan

If you haven’t considered writing a business plan until now, here are three key reasons why it’s a crucial tool when starting your business .

1. A business plan provides clarity

One of the easiest ways to gain clarity on your goals and brand message is to practice how you communicate them. Clearly describe what problem or need your business addresses and why it’s necessary for your target market. This strengthens your case when marketing and selling to your target audience.

It’s also useful when you need to apply for or raise funding for your small business. A clear picture of what your goals are will help you chart a course to deliver it as promised.

2. A business plan confirms the math

A lot of ideas sound great on paper or in casual conversations. But when you dive into the financials, such as how you plan to make money and how much it will cost, those ideas can fall apart.

Writing a business plan provides you with the space to create a financial model. It outlines the best- and worst-case scenarios that validate your idea’s worth.

3. A business plan establishes goals

Writing a business plan helps establish benchmark goals — those that are on your path to the main goal — and determine what you need for your success. Setting mini benchmark goals with deadlines for each month, quarter, and year provides you with short-term targets to focus on.

Nearly every plan for your business changes as the company grows. These benchmark targets ensure that your company is always moving forward.

( Back to top .)

Writing a business plan doesn’t have to be difficult

Creating a plan for your business can seem like an overwhelming project. Especially, if it’s your first business or you lack a background in finance or operations. Luckily, there are a number of resources available online, including Trailhead’s “ Salesforce Essentials for Small Business ” lesson, which helps you write a detailed plan. Your options vary based on your specific industry or product offering. However, all plans share a similar outline that you can follow when writing your own.

Below, we’ve put together a resource template for creating a thorough business action plan . Following a template allows you the opportunity to organize your thoughts and clearly present the plan to prospective partners, investors, or vendors. It can be a lot of trouble to start from scratch. Instead, try using this outline to draft a plan for your business and turn your napkin scribbles into a solid, well-researched plan that’s ready for financial investment.

How to write a business plan in 9 steps

Almost every detailed plan for a business follows the same framework. You can expand this however you’d like, but make sure these essential pieces are in place:

• Executive summary
• Company overview

Industry overview

• Market analysis
• Sales and marketing plan
• Business team

Operating plan

1. Executive Summary

Every thorough plan for a business opens with an executive summary that provides a brief description of the business, a mission statement, the products and services offered, and a summary of plans to succeed in the marketplace. If someone were to ask for a more involved version of your business elevator pitch, you’d recite your executive summary.

2. Company Overview

This is your napkin drawing on steroids. The company overview section is a snapshot of your business:

• Your business’s history
• A detailed list of products and services
• The physical location (if there is one)
• The problem/need your product or service addresses

Briefly touch on your target audience and how you plan to attract them (you’ll go into more detail later). This is only a snapshot summary for someone to grasp your idea and see the opportunity behind it. You also want to clearly define your company’s strategy for starting or growing in the marketplace.

3. Industry Overview

Your plan needs to address the industry as a whole, including relevant statistics, current trends, consumer demographics , and any external influences affecting the industry. Use this section to address how your business will fit into a specific industry and what (if any) subsections of the industry you will target.

4. Market analysis

Who will you battle for customers? The market analysis section requires you to validate that there is enough demand in the market for your business to both enter and grow. Research competitors in the industry, their market share, and how you plan to compete against them.

This is also a great opportunity to describe any industry barriers upon entry. You can explain how your company will establish itself — including your unique selling proposition — and share how the barriers will help protect your business from other startups or companies that want to go after your market share.

5. Sales and marketing plan

How will you execute your strategies and reach your goals? Your sales and marketing plan should clearly describe how you will grab the attention of busy consumers and persuade them to buy from your company. Use this opportunity to showcase your strengths, account for how your brand will stand out in the marketplace, and detail how you plan to build long-term customer loyalty for repeat business.

Don’t forget to describe your pricing strategy and how it compares to the rest of your market, as well as the advertising strategies you will use during your launch and first year.

6. Business team

Your business team section should focus on your business’s legal structure. Are you a sole proprietorship, partnership, corporation, or other type of business? Introduce your key team members such as managers, board members, and additional owners. Detail who owns what percentage of the company and each team member’s involvement in the business’s day-to-day operations.

7. Operating plan

Your operating plan gives insight into how your business will function on an ongoing basis and what daily operations will look like. The questions you’ll address in your operating plan may include:

• Will you have a physical location?
• What responsibilities will the management team shoulder?
• Do you have a customer invoice prepared?
• What expenses are related to running the business?

8. Financials

This is the money-making section, which can be an exciting part to investigate and budget. The financials portion of your plan may be the most important because it shows how your business will make money and grow over time. This section is even more crucial if you’re seeking outside financing or investors to help fund your startup.

Your financials should outline how your business will generate revenue and profit, and if necessary, how it will repay its loan or investors. Create monthly, annual, and three-to-five-year profit and loss projections and outline anticipated expenses.

9. Appendix

Close your business plan with an appendix that provides supporting documentation such as bank statements, employee bios, licenses, agreements, and business credit history. Think of it as your supporting research and reference documents.

What’s left to do?

Once you’ve outlined a plan for your business and gathered all the necessary research and documentation, it’s time to write it. By following this template, you should have no problem taking your great idea from a general concept to real life.

Your plan doesn’t have to be as long as War and Peace — it simply has to address each key point referenced above and show that your business addresses a need in the market. Then, after you finish writing your business plan, you can follow its guidance and get started on building your business.

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How to Start a Business From Scratch in 6 Easy Steps

10 min. read

Updated April 30, 2024

Did you know that most of the world’s new businesses are bootstrapped ? 

That’s right, most business owners do not launch with loans or outside investment but instead use their personal resources and savings to get up and running. They start from scratch and reinvest in the business as it gains traction.

And you can do the same. 

Key Takeaways:

• Start with an idea that uses your experience, knowledge, or passion.
• Determine if there’s a need for your product or service.
• Create a plan and financial forecasts.
• Treat it like a side hustle until you get traction.
• What does it mean to start from scratch?

“Starting a business from scratch” does not mean:

• Using no money to launch your business.
• Getting no outside assistance.
• Inventing a business idea no one has done before.

Starting from scratch is about building a business from the ground up, using personal resources and minimal external financial support. The goal is to establish a sustainable business you control that satisfies a need in the market. 

• Why start a business from scratch?

Here’s why starting from scratch might be the right approach for you:

• Risk reduction: Control your initial investment and expenses and scale gradually, allowing you to avoid overspending.
• Full control: With no outside investment or stakeholders to please, you can shape your business how you see fit.
• Proves your idea has real customers: Test your concept with customers early to help refine your offering and validate market demand.
• Fast decision-making: Quickly pivot to meet changing market demands without the red tape of larger organizations.
• Potentially makes future funding easier: You take the time to prove your business model and profitability before seeking funding. Your track record reduces investor and lender risk and can lead to better funding terms.

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• 6 steps to start a new business from scratch

For this article, we will focus on the steps that take you from a budding business idea to generating sales. 

For additional resources, check out our starting a business guide .

1. Start with an idea

Do some self-reflection and choose an idea you’re passionate about or one that uses your existing skills and experience. 

This will make it far easier to execute and often requires less research, training, and upfront investment to get up and running than an idea completely new to you.

For example, service-based businesses, like accounting or consulting, often need just your time and expertise. If any cash is needed, it should be a small enough amount to fund yourself, giving you full control over the speed at which you grow your business.

As you explore possible ideas, create a one-page business plan to document how it could work. 

It doesn’t have to be an official plan at this stage; just fill in what you can, mark any assumptions, and keep adding details throughout the rest of this process.

What businesses can you typically start from scratch?

While not an exhaustive list, here are a few potential ideas that can be started from scratch:

• Freelance Writing or Content Creation: Offer writing skills to businesses and online publications.
• Consulting Services: Share your professional management, marketing, or tech expertise.
• Handmade Crafts and Art: Sell your unique creations on platforms like Etsy or at local fairs.
• Tutoring: Offer either in-person or online.
• Web Design and Development: Build websites for small businesses or individuals.
• Virtual Assistant: Provide administrative support to businesses remotely.
• Landscaping and Gardening Services: Turn your love of plants into a business with basic gardening tools.

For more business options and a process to generate ideas, check out our guide on developing good business ideas .

2. Find product-market fit

Landing on an idea is not enough to create a viable business. You need to determine if you have initial product-market fit—that your business satisfies and is demanded by a large enough group of people. 

This involves identifying your potential customers, understanding their motivations and needs, and determining whether they are willing to pay for your product or service. Additionally, spend time researching the market and understand who your competitors are. 

At this stage, you don’t need a fully fleshed-out business. You just need enough of an idea to start speaking to potential customers.  

This is where your one-page plan can be incredibly useful, as it helps you formalize enough information to have the working framework of a business. You can even add notes from your customer interviews to help adapt your plan.

Your goal, in this instance, is to:

• Hone in on pain points your potential customers have
• Verify that you can solve them
• Identify any gaps or issues with your idea
• (Bonus) Make initial sales 

Keep in mind that you may find none of that. Your solution may not be needed or is missing key components. You may even be targeting the wrong audience and need to change course.

That’s completely okay! Most businesses don’t get things right the first time. Be willing to refine and iterate on your initial idea. Verify what works and what doesn’t, and make the right adjustments to create a sustainable business that customers really want.

3. Examine your resources

While I have this as the third step, you’ll likely be doing this throughout every stage of starting a business.

Start by evaluating your funding sources. Personal savings are ideal as they keep you in full control of your business. If needed, consider asking friends and family for small contributions, as they’ll likely be much more flexible about repayment than traditional lenders.

Next, consider if a partner could benefit your venture. Do they bring complementary skills, share the workload, or offer additional resources? 

The right partner can fill crucial roles – like marketing or operations – allowing you to focus on your core strengths. They may even fill a necessary gap to get customers in the door.

Finally, don’t underestimate the power of your network. Reach out to former colleagues, industry peers, and mentors for advice, services, or referrals.

Why you need to know your available resources

Taking stock of your resources is the first step in understanding what is feasible for your business. It helps you determine whether you have enough cash, expertise, and support to meet your customers’ expectations.

For example, let’s say you want to launch an eCommerce website and have enough cash on hand to fulfill orders but require customers to pay for shipping. If you’re competing with similar businesses that offer free shipping, your lack of it could turn customers away.

Similarly, you have a solid understanding of product development and have already gotten pre-orders. But you have no idea how to set up an eCommerce site , keep track of orders, and ensure they actually ship.

In both circumstances, your resources fall short of the needs of your customers. You may have to explore funding ( it doesn’t have to be a loan ) and find a partner with the right skill set to get your site up and running. 

4. Write a business plan and develop financial forecasts

At this point, you need to finalize your business plan and create initial forecasts . 

If you’ve been using the one-page plan throughout the last few steps, then this shouldn’t be a time-consuming process. Your goal at this point is to clearly define:

• Business Model: Value proposition, customer segments, distribution channels, and revenue streams.
• Milestones: Set realistic goals (landing your first customer, scaling, etc.) with specific timelines and action steps to track progress.

For your forecasts, start by estimating your:

• Startup costs and ongoing expenses
• Revenue in the first year of operation
• Cash flow — how much money will be moving in and out of your business each month as you collect revenue and pay expenses

These numbers do not have to be perfect. You’ll likely be making educated guesses or using industry estimates. The point is to have something that you believe represents your business. It will help you maintain a healthy cash flow and understand what it will take to be profitable.

Remember, you don’t need to create an overly lengthy plan or complex financial statements. They’re your tools, so focus on usability – they should be flexible and evolve with your business, helping you make informed decisions.

Dedicate time ( at least monthly or quarterly) to reviewing and updating your plan and forecasts as you gather data to ensure your strategy aligns with real-world performance.

5. Protect your business

As a business owner, you must make your business legal and guard against liabilities. To keep things simple, we’ll assume you’re starting as a sole proprietorship for this article.

Check out our full guide to learn more about the specifics of each legal structure .

Necessary legal components for a simple startup:

• Business Registration: As a sole proprietor, you may not need to register your business with the state government if you do business under your legal name. However, if you operate under a name that’s not yours, you must file for a “Doing Business As” (DBA) name. This is often required to set up a business bank account.
• Licenses & Permits: Research local requirements for your specific business type. You may need a general business license, professional licenses, or specific permits (e.g., health and safety). Contact your city or county business office for details.
• Tax Registration: Report business income on your personal tax return. If you plan to hire employees, you’ll need to apply for an Employer Identification Number (EIN) from the IRS. Even without employees, an EIN can protect your personal information and may streamline certain business transactions. Check if you need to register for state sales tax collections.
• Insurance : Consider general liability insurance for accidents and negligence claims. Get professional liability (errors and omissions) insurance if you offer professional services.
• Contracts: Use written agreements for business partners and supplier or contractor transactions. This clarifies expectations, prevents disputes, and protects both parties. Contact a lawyer to review or help you write this documentation if needed.

6. Promote and run your business

At this point, you just need to run your business. You don’t need to go all in, either. Launch it as a side hustle until you hit the point where it can become your full-time focus.

Don’t overcomplicate it: Set up a simple website, payment system, and essential operational tools. You want to serve customers immediately and learn from real-world experience.

But unless you locked in pre-orders earlier in this process, you’ll need to market your business to do it. 

Select marketing channels you believe will reach your target customers. Start small — you want to avoid overspending while you determine the right mix of marketing tactics. If you’re unsure where to start, paid social media ads (Facebook and Instagram), email campaigns, and local partnerships can be inexpensive options.

Stick to the budget you created, run small, easily measured marketing tests, and look for a positive return on investment (i.e., bringing in more revenue from sales than you spent on advertising). 

Only consider increasing spending after you start bringing in customers.

• Continue to review and revise

You are on your way to running a sustainable business and may even have your first customers already! 

Just don’t get too far ahead of yourself. You’re still proving that there is traction that can be repeated with multiple customers. 

As you operate, review your plan and forecasts. Pay close attention to your cash flow and be willing to pivot if things aren’t working. 

That’s the benefit of starting from scratch: You are in full control and can scale and spend at a pace that improves your chances of success.

If you haven’t yet, download a free one-page business plan template to document your idea. The earlier you begin developing the plan, the more useful it will be throughout the startup process.

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.

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How to write an effective business plan in 11 steps (with workbook)

February 02, 2023 | 14 minute read

Writing a business plan is a powerful way to position your small business for success as you set out to meet your goals. Landmark studies suggest that business founders who write one are 16% more likely to build viable businesses than those who don’t and that entrepreneurs focused on high growth are 7% more likely to have written a business plan. 1 Even better, other research shows that owners who complete business plans are twice as likely to grow their business successfully or obtain capital compared with those who don’t. 2

The best time to write a business plan is typically after you have vetted and researched your business idea. (See How to start a business in 15 steps. ) If conditions change later, you can rewrite the plan, much like how your GPS reroutes you if there is traffic ahead. When you update your plan regularly, everyone on your team, including outside stakeholders such as investors, will know where you are headed.

What is a business plan?

Typically 15-20 pages long, a business plan is a document that explains what your business does, what you want to achieve in the business and the strategy you plan to use to get there. It details the opportunities you are going after, what resources you will need to achieve your goals and how you will define success.

Why are business plans important?

Business plans help you think through barriers and discover opportunities you may have recognized subconsciously but have not yet articulated. A business plan can also help you to attract potential lenders, investors and partners by providing them with evidence that your business has all of the ingredients necessary for success.

What questions should a business plan answer?

Your business plan should explain how your business will grow and succeed. A great plan will provide detailed answers to questions that a banker or investor will have before putting money into the business, such as:

• What products or services do you provide?
• Who is your target customer?
• What are the benefits of your product and service for customers?
• How much will you charge?
• What is the size of the market?
• What are your marketing plans?
• How much competition does the business face in penetrating that market?
• How much experience does the management team have in running businesses like it?
• How do you plan to measure success?
• What do you expect the business’s revenue, costs and profit to be for the first few years?
• How much will it cost to achieve the goals stated in the business plan?
• What is the long-term growth potential of the business? Is the business scalable?
• How will you enable investors to reap the rewards of backing the business? Do you plan to sell the business to a bigger company eventually or take it public as your “exit strategy”?

How to write a business plan in 11 steps

This step-by-step outline will make it easier to write an effective business plan, even if you’re managing the day-to-day demands of starting a new business. Creating a table of contents that lists key sections of the plan with page numbers will make it easy for readers to flip to the sections that interest them most.

• Use our editable workbook to capture notes and organize your thoughts as you review these critical steps. Note: To avoid losing your work, please remember to save this PDF to your desktop before you begin.

1. Executive summary

The executive summary is your opportunity to make a great first impression on investors and bankers. It should be just as engaging as the enthusiastic elevator pitch you might give if you bumped into a potential backer in an elevator.

In three to five paragraphs, you’ll want to explain what your business does, why it will succeed and where it will be in five years. The executive summary should include short descriptions of the following:

• Business concept. What will your business do?
• Goals and vision. What do you expect the business to achieve, both financially and for other key stakeholders, such as the community?
• Product or service. What does your product or service do — and how is it different from those of competitors?
• Target market. Who do you expect to buy your product or service?
• Marketing strategy. How will you tell people about your product or service?
• Current revenue and profits. If your business is pre-revenue, offer sales projections.
• Projected revenue and profits. Provide a realistic look at the next year, as well as the next three years, ideally.
• Financial resources needed. How much money do you need to borrow or raise to fund your plan?
• Management team. Who are the company’s leaders and what relevant experience will they contribute?

2. Business overview

Here is where you provide a brief history of the business and describe the product(s) or service(s) it offers. Make sure you describe the problem you are attempting to solve, for whom you will solve it (your customers) and how you will solve it. Be sure to describe your business model (such as direct-to-consumer sales through an online store) so readers can envision how you will make sales. Also mention your business structure (such as a sole proprietorship , general partnership, limited partnership or corporation) and why it is advantageous for the business. And be sure to provide context on the state of your industry and where your business will fit into it.

3. Business goals and vision

Explain what you hope to achieve in the business (your vision) as well as its mission and value proposition. Most founders judge success by the size to which they grow the business using measures such as revenue or number of employees. Your goals may not be solely financial. You may also wish to provide jobs or solve a societal problem. If that’s the case, mention those goals as well.

If you are seeking outside funding, explain why you need the money, how you will put it to work to grow the business and how you expect to achieve the goals you have set for the business. Also explain your exit strategy—that is, how you would enable investors to cash out, whether that means selling the business or taking it public.

4. Management and organization

Many investors say they bet on the team behind a business more than the business idea, trusting that talented and experienced people will be capable of bringing sound business concepts to life. With that in mind, make sure to provide short bios of the key members of your management team (including yourself) that emphasize the relevant experience each individual brings, along with their special talents and industry recognition. Many business plans include headshots of the management team with the bios.

Also describe more about how your organization will be structured. Your company may be a sole proprietorship, a limited liability company (LLC) or a corporation in one or more states.

If you will need to hire people for specific roles, this is the place to mention those plans. And if you will rely on outside consultants for certain roles — such as an outsourced CFO — be sure to make a note of it here. Outside backers want to know if you’ve anticipated the staffing you need.

5. Service or product line

A business will only succeed if it sells something people want or need to buy. As you describe the products or services you will offer, make sure to explain what benefits they will provide to your target customers, how they will differ from competing offerings and what the buying cycle will likely be so it is clear that you can actually sell what you are offering. If you have plans to protect your intellectual property through a copyright or patent filing, be sure to mention that. Also explain any research and development work that is underway to show investors the potential for additional revenue streams.

6. Market/industry analysis

Anyone interested in providing financial backing to your business will want to know how big your company can potentially grow so they have an idea of what kind of returns they can expect. In this section, you’ll be able to convey that by explaining to whom you will be selling and how much opportunity there is to reach them. Key details to include are market size; a strengths, weaknesses, opportunities and threats (SWOT) analysis ; a competitive analysis; and customer segmentation. Make it clear how you developed any projections you’ve made by citing interviews or research.

Also describe the current state of the industry. Where is there room for improvement? Are most companies using antiquated processes and technology? If your business is a local one, what is the market in your area like? Do most of the restaurants where you plan to open your café serve mediocre food? What will you do better?

In this section, also list competitors, including their names, websites and social media handles. Describe each source of competition and how your business will address it.

7. Sales and marketing

Explain how you will spread the word to potential customers about what you sell. Will you be using paid online search advertising, social media promotions, traditional direct mail, print advertising in local publications, sponsorship of a local radio or TV show, your own YouTube content or some other method entirely? List all of the methods you will use.

Make sure readers know exactly what the path to a sale will be and why that approach will resonate with customers in your ideal target markets as well as existing customer segments. If you have already begun using the methods you’ve outlined, include data on the results so readers know whether they have been effective.

8. Financials

In a new business, you may not have any past financial data or financial statements to include, but that doesn’t mean you have nothing to share. Preparing a budget and financial plan will help show investors or bankers that you have developed a clear understanding of the financial aspects of running your business. (The U.S. Small Business Administration (SBA) has prepared a guide you can use; SCORE , a nonprofit organization that partners with the SBA, offers a financial projections template to help you look ahead.) For an existing business, you will want to include income statements, profit and loss statements, cash flow statements and balance sheets, ideally going back three years.

Make a list of the specific steps you plan to take to achieve the financial results you have outlined. The steps are generally the most detailed for the first year, given that you may need to revise your plan later as you gather feedback from the marketplace.

Include interactive spreadsheets that contain a detailed financial analysis showing how much it costs your business to produce the goods and services you provide, the profits you will generate, any planned investments and the taxes you will pay. See our startup costs calculator to get started.

9. Financial projections

Creating a detailed sales forecast can help you get outside backers excited about supporting you. A sales forecast is typically a table or simple line graph that shows the projected sales of the company over time with monthly or quarterly details for the next 12 months and a broader projection as much as five years into the future. If you haven’t yet launched the company, turn to your market research to develop estimates. For more information, see “ How to create a sales forecast for your small business. ”

10. Funding request

If you are seeking outside financing such as a loan or equity investment, your potential backers will want to know how much money you need and how you will spend it. Describe the amount you are trying to raise, how you arrived at that number and what type of funding you are seeking (such as debt, equity or a combination of both). If you are contributing some of your own funds, it is worth noting this, as it shows that you have skin in the game.

11. Appendix

This should include any information and supporting documents that will help investors and bankers gain a greater understanding of the potential of your business. Depending on your industry, you might include local permits, licenses, deeds and other legal documents; professional certifications and licenses; media clips; information on patents and other intellectual property; key customer contracts and purchase orders; and other relevant documents.

Some business owners find it helpful to develop a list of key concepts, such as the names of the company’s products and industry terms. This can be helpful if you do business in an industry that may not be familiar to the readers of the business plan.

Tips for creating an effective business plan

Use clear, simple language. It’ll be easier to win people over if your plan is easy to read. Steer clear of industry jargon, and if you must use any phrases the average adult won’t know, be sure to define them.

Emphasize what makes your business unique. Investors and bankers want to know how you will solve a problem or gap in the marketplace differently from anyone else. Make sure you’re conveying your differentiating factors.

Nail the details. An ideal business plan will be detailed and accurate. Make sure that any financial projections you make are realistic and grounded in solid market research. (If you need help in making your calculations, you can get free advice at SCORE.) Seasoned bankers and investors will quickly spot numbers that are overly optimistic.

Take time to polish it. Your final version of the plan should be neat and professional with an attractive layout and copy that has been carefully proofread.

Include professional photos. High-quality shots of your product or place of business can help make it clear why your business stands out.

Updating an existing business plan

Some business owners in rapidly growing businesses update their business plan quarterly. Others do so every six months or every year. When you update your plan make sure you consider these three things:

• Are your goals still current? As you’ve tested your concept, your goals may have changed. The plan should reflect this.
• Have you revised any strategies in response to feedback from the marketplace? You may have found that your offerings resonated with a different customer segment than you expected or that your advertising plan didn’t work and you need to try a different approach. Given that investors will want to see a marketing and advertising plan that works, keeping this section current will ensure you are always ready to meet with one who shows interest.
• Have your staffing needs changed? If you set ambitious goals, you may need help from team members or outside consultants you did not anticipate when you first started the business. Take stock now so you can plan accordingly.

Final thoughts

Most business owners don’t follow their business plans exactly. But writing one will get you off to a much better start than simply opening your doors and hoping for the best, and it will be easier to analyze any aspects of your business that aren’t working later so you can course-correct. Ultimately, it may be one of the best investments you can make in the future of your business.

Business plan FAQs

What are common mistakes when writing a business plan.

The biggest mistake you can make when writing a business plan is creating one before the idea has been properly researched and tested. Not every idea is meant to become a business. Other common mistakes include:

• Not describing your management team in a way that is appealing to investors. Simply cutting and pasting someone’s professional bio into the management section won’t do the trick. You’ll want to highlight the credentials of each team member in a way that is relevant to this business.
• Failing to include financial projections — or including overly optimistic ones. Investors look at a lot of business plans and can tell quickly whether your numbers are accurate or pie in the sky. Have a good small business accountant review your numbers to make sure they are realistic.
• Lack of a clear exit strategy for investors. Investors may want the option to cash out eventually and would want to know how they can go about doing that.
• Slapdash presentation. Make sure to fact-check any industry statistics you cite and that any charts, graphs or images are carefully prepared and easy to read.

What are the different types of business plans?

There are a variety of styles of business plans. Here are three major types:

Traditional business plan. This is a formal document for pitching to investors based on the outline in this article. If your business is a complicated one, the plan may exceed the typical length and stretch to as many as 50 pages.

One-page business plan. This is a simplified version of a formal business plan designed to fit on one page. Typically, each section will be described in bullet points or in a chart format rather than in the narrative style of an executive summary. It can be helpful as a summary document to give to investors — or for internal use. Another variation on the one-page theme is the business model canvas .

Lean plan. This methodology for creating a business plan is ideal for a business that is evolving quickly. It is designed in a way that makes it easy to update on a regular basis. Lean business plans are usually about one page long. The SBA has provided an example of what this type of plan includes on its website.

Is the business plan for a nonprofit different from the plan for other business types?

Many elements of a business plan for a nonprofit are similar to those of a for-profit business. However, because the goal of a nonprofit is achieving its mission — rather than turning a profit — the business plan should emphasize its specific goals on that front and how it will achieve them. Many nonprofits set key performance indicators (KPIs) — numbers that they track to show they are moving the needle on their goals.

Nonprofits will generally emphasize their fundraising strategies in their business plans rather than sales strategies. The funds they raise are the lifeblood of the programs they run.

What is the difference between a business plan, a strategic plan and a marketing plan?

A strategic plan is different from the type of business plan you’ve read about here in that it emphasizes the long-term goals of the business and how your business will achieve them over the long run. A strong business plan can function as both a business plan and a strategic plan.

A marketing plan is different from a business plan in that it is focused on four main areas of the business: product (what you are selling and how you will differentiate it), price (how much your products or services will cost and why), promotion (how you will get your ideal customer to notice and buy what you are selling) and place (where you will sell your products). A thorough business plan may cover these topics, doing double duty as both a business plan and a marketing plan.

Explore more

Editable business plan workbook

Starting a new business

1 . Francis J. Green and Christian Hopp. “Research: Writing a Business Plan Makes Your Startup More Likely to Succeed.” HBR. July 14, 2017. Available online at https://hbr.org/2017/07/research-writing-a-business-plan-makes-your-startup-more-likely-to-succeed.

2 . CorpNet, “The Startup Business Plan: Why It’s Important and How You Can Create One,” June 29, 2022.

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PESTLE Analysis

Insights and resources on business analysis tools

PEST Analysis: Examples and Meaning in Business

Last Updated: Apr 8, 2024 by Jim Makos Filed Under: PEST Analysis

What is a PEST analysis, and what are its four parts? What is the difference between PESTLE analysis and PEST, and why is it important for every business? As a business student, analyst, manager or owner, you are called to conduct a PEST analysis sooner or later. In the next 10 minutes, I’ll go through everything you need to know about PEST analysis and how you can do a PEST analysis of an organization starting from scratch. I promise you’ll know more about PEST analysis than 99% of people out there, as I’m explaining everything as concisely as possible. Let’s start with the PEST analysis definition.

What is a PEST Analysis?

PEST analysis is a strategic tool for organizations to identify and assess how Political, Economic, Social, and Technological external factors impact operations so that they can gain a competitive edge. A PEST analysis helps you determine how these factors will affect a business’s performance and strategy in the long term. It is often used in collaboration with other analytical business tools. For example:

• A combination of PEST and SWOT analysis usually gives a clearer understanding of a situation with related internal and external factors
• PESTLE analysis is an extension of PEST analysis that covers legal and environmental factors

I’m going to explain the PEST analysis as simply as possible with examples and a template for better understanding. I will also show how to do a PEST analysis starting from scratch, even for people without any business education like me!

Why Do a PEST Analysis

It’s simple: to succeed. For a business to be successful, they need a few things:

• A solid product
• Marketing plan
• Identifiable brand
• Happy customers
• Thorough budget
• An investor or two
• Unique selling position
• And a whole lot of research

Throughout the endless market research, customer acquisition costs, and project risk assessments, business managers could forget about outside influences ( we call these external factors in this type of analysis). Aside from the company’s internal resources and industry factors, PEST’s macroeconomic factors can impact a company’s performance in a big way.

By being aware of external factors, managers can aid their business. But if they don’t know them, they can cripple their business before it begins. That’s how advantageous PEST analysis is .

What are the four parts of PEST analysis?

Now, let me explain each of the four parts of a PEST analysis more thoroughly. You’ll better understand what each of these external factors in this analysis is all about.

• Political – Here, government regulations and legal factors are assessed in terms of their ability to affect the business environment and trade markets. The main issues addressed in this section include political stability, tax guidelines, trade regulations, safety regulations, and employment laws.
• Economic – Next, businesses examine the economic issues that have an impact on the company. This would include factors like inflation, interest rates, economic growth, the unemployment rate and policies, and the business cycle followed in the country.
• Social – At this stage, businesses focus on the society and people. Elements like customer demographics, cultural limitations, lifestyle attitudes, and education come into play here. This part allows a business to understand how consumer needs are shaped.
• Technological – This may come as a surprise, but technology may not always be an ally for businesses. Depending on the product, technology may affect the organization positively but also negatively. In PEST’s last section we find technological advancements, the role of the Internet, and how an industry’s innovation creates winners and losers.

Every business is different. Some factors may not affect a firm or industry as they would with others. But it’s beneficial to have a well-rounded view of the many factors that could affect them. Along with the ones that will affect them.

This is why we do PEST analysis for a business — to be aware of risks, opportunities, influences, and limitations. Let’s go deeper into these external factors that impact the success of a business. I’ll also briefly mention a specific example for each of them.

Political Factors

Political factors in PEST analysis refer to the extent to which the government and political actions in a country influence the business climate. Here are some examples that will occasionally make it into the (P) of my PEST analysis:

• Tax policies
• Tax incentives
• Political tensions
• Employment laws
• Import restrictions
• Health and safety laws
• Consumer protection laws
• Tariff and Trade restrictions
• Regulation and deregulation

For instance, a country’s foreign policy often plays an important role in determining trade regulations. This can either result in trade restrictions or trade incentives and can affect an organization’s operations. Read my dedicated page on political factors with more examples here .

Economic Factors

In the (E) part of PEST Analysis, we run into how the economy affects the organization. I consider the following economic factors when doing a PEST analysis:

• Interest rate
• Inflation rates
• Exchange rates
• Unemployment rate

For instance, exchange rates affect a global organization by influencing the cost of imported and exported goods. Furthermore, interest rates influence the cost of capital available to the organization. Thus they are significant in the expansion and growth of a business. Find more economic factors and examples of how they affect businesses here .

Social Factors

Social factors include different cultural and demographic aspects of society. These can affect the macro-environment in which the organization operates.

In the ‘S’ part of the PEST analysis I usually examine:

• Age distribution
• Cultural diversity
• Demographics shifts
• Population growth rate
• Health consciousness and trends
• Changing consumer lifestyles and preferences

A study of these factors can help organizations understand the dynamics of existing and emerging potential markets along with future customer needs.

Social factors are more unpredictable than economic and political factors, simply because people are unpredictable. But every business needs customers. And what and how they buy has an immediate effect on an organization’s profitability.

Based on these social factors, marketers create buyer personas. These avatars are necessary for businesses to target the ideal customer.

For example, if you’re selling whey powder, you go after fitness enthusiasts and bodybuilders. You are looking for people that follow an active lifestyle. Hence, a declining trend in health consciousness doesn’t seem encouraging.

That’s the tip of the iceberg. Learn more about social factors here .

Technological Factors

Technological factors aren’t important only for tech-related businesses. The (T) part in PEST analysis may affect even the most old-school organization that’s been operating for a century.

Technology is evolving at a rapid pace and consumers are becoming extremely tech-savvy. With the advent of new technology, older technology gets outdated and obsolete. If an organization does not look out for technological changes, it can lag behind its competitors.

I often include the following technological factors when conducting a PEST analysis:

• Cybersecurity Threats
• Emerging Technologies
• Big data and computing
• AI and Machine Learning
• Supply Chain Automation

Let’s consider the advancements in computing; more specifically, networking.

If a business offers the latest and fastest Wi-Fi in their store, it’s an added luxury. It’s annoying if it still operates on 3G speeds, but won’t ruin sales. However, if they handle all receipts in an online database and that goes offline because they didn’t keep their network infrastucture up-to-date then they have a major problem. Especially in big holidays like Black Friday.

Again, this is about impact on the business operation. How will ‘X’ technology affect the business in the long and short term? That’s what we’re trying to figure out with PEST analysis.

A ton more technological factors can be found here .

PEST Analysis Examples

Here is a hypothetical PEST analysis example that can give you a clear understanding of how this works:

Here at PESTLEanalysis.com I rarely limit myself to PEST analysis. I almost always go the extra mile and include the Legal and Environmental factors when I initiate a PEST analysis. This leads to a more detailed analysis called PESTLE.

PESTLE Analysis: An extension of PEST Analysis

PESTLE analysis is an extension of PEST that is used to assess two additional macroeconomic factors. These factors are the  Legal and Environmental conditions that can have an impact on a organization. Examples of PESTLE analysis are similar to those of a PEST analysis, but they will include factors such as these:

• Discrimination laws
• Copyright and patent laws

Environment:

• Waste management
• Changes in weather and climate
• Laws regarding pollution and recycling
• Use of green or eco-friendly products and practices

So, if you want to assess a business situation comprehensively, a PESTLE analysis is a definite must. You can find more about that analysis here .

Why PEST Analysis Is Important For Every Business

So, now that we did a PEST analysis, how’s that going to help the business?

What does a five-year business plan look like? Or a ten-year plan? It likely involves growth.

Whether it’s the expansion of a product line or opening stores in new locations, business changes need proper preparation. And that’s where the PEST analysis comes in.

PEST analysis is the foolproof plan for business expansion !

Both new business owners and veterans should include PEST analysis in their business plan. By breaking down the critical influences in the P.E.S.T. categories, businesses get a better understanding of whether their next business move is strategic or doesn’t make sense.

For example, politics isn’t just about political tensions, unrest and elections. Politics are also about trade policies, regulations and taxation. Companies doing business worldwide have to consider laws in the countries they operate, as well. Even if they aren’t doing international trade yet, it could be a possibility in the future, and going in blind is a good way to toss success out the window.

PEST analysis helps people become aware.

Aware of how political parties and regulations can impact a business. And how the economy (past, present, and future) affects an industry. It allows people to understand consumers — who they are, what they buy, and why they don’t buy. And finally, it identifies what technology is necessary for the development and success of a product, business, or industry.

It’s almost like an outline. It shows people what influences impact the quality, success, or devastation of businesses and industries. You can’t stop the four influences, but if you’re aware of them and their impact, you can plan around, against, or with them.

PEST analysis is often used by business analysts, marketers, students, and business owners, since it’s super important for every business!

All you need to do a proper PEST analysis is time. And the payoff is worth every second.

How PEST analysis works

PEST analysis requires research and data, sometimes ten years old, sometimes only a couple. The more information I have to go through, the more accurate my final results will be. By looking into the past and the present, I can make predictions for the future.

By studying these recent developments through a PEST analysis lens, organizations are deciding whether to jump into this for the long haul or for the time being.

You want to look at your industry in a similar light. Ten years ago, did it exist? Has it slowed down within the last two years or are more companies diving in? More competition can be a strong sign an industry is booming, but it could also be the first sign of oversaturation.

Break down your assessment into the four categories of PEST analysis. Start with politics and work your way through the remaining factors. Or start from the bottom. Whatever gets the job done and makes the analysis enjoyable.

How to Do a PEST Analysis From Scratch

I’ve written dozens of PEST analyses over the last couple of years. Below I document my process on how to do a PEST analysis , even when you’ve never written one before.

You should have a topic in mind. Most PEST analyses are about a specific business, industry, or product. However, they can also be applied to countries, too. You can’t start without a topic, though, so have it ready.

Where to find information for your PEST analysis

It’ll be easier to find and segment information if you break your analysis down into four sections, like the acronym implies:

• Technological

Each section will require its own information. However, some of this information will overlap.

For instance, the economy is often closely tied to political (in)stability. And the state of the economy always affects consumers (social). You don’t need to look for these patterns specifically— it’ll become apparent as you discover new information.

Start with the history

You should be familiar with your topic. If you’re not, read about its history. Learn how it was established, how long it has been around, and who founded it. Read about any major achievements on the organization in question over the last few years. Jot down notes whenever something that seems relevant or important pops up.

After this informational primer, it’s time to start on the four sections. I do my PEST analysis in order of the acronym because the information often bleeds into the next section.

Finding Political Information

Political information is easier to find than in other sections of the analysis (social and technological, specifically). Here, you’ll want to investigate the current political climate.

For instance, if the organization originates from America, you’ll research the current political parties. Who is in charge? Has this affected business operations in any way?

If your topic (business, product, industry) was established years ago, what was the political climate like then? Are different parties in power now? If this is the case, then you’ll want to compare how things have changed for your topic from then to now.

This is also the section where you’ll look into laws and regulations affecting business. Remember the list we went through in the beginning.

I find this information with a simple Google search. Such as “tariff laws USA” (plug in the country you’re searching for if it’s not the United States).

It’s best to get this information from a government site. These sites end in .gov. You may also find information from organizations (websites ending in .org) but not all of these sites are legitimate organizations. Be wary while you research.

Honestly, most of the information you’ll find is dense. But it’s easier if you have a goal. Look for signs of:

• Government (in)stability
• Possible political corruption
• New bills/regulations that may impact your topic
• Any issues your topic has had with current/former regulations or political parties

If your topic is a company, finding the right information may be easier. Search for “company name + political issues” or “company name + policies” and see what comes up. Avoid any information from untrustworthy sites and sites with no legitimate source.

Finding Economic Information

While you’re researching political information, you may come across connections to the current economy. For instance, political instability often leads to economic instability. This causes unemployment rates to rise and employee strikes. This affects how much disposable income people have.

You may have already found information in your political section that confirms economic problems. But if you haven’t, search government sites for current tax rates, interest rates (if your topic involves international business), and the current state of the economy. Is it good? Thriving? Or bad and declining?

Again, use government websites. Search for economic statistics over the last few years. If your topic is an industry, see how many companies (startups) have started within the last few years.

If your topic is a business that has international stores, look into the relationship between the country of origin and each country the company does business. If the relationship is good, it’s often a good outlook for the company. But if it’s bad, it may lead to problems. What problems? Do a bit of digging online.

Also, if your PEST analysis is for a company, you may look into stocks . Have they been declining? On the rise? Because if it’s the former, then the business may not be looking good. And you’ll want to find out why .

If my topic is a business, I sometimes check out the competition. I’ll look into how that other company has been fairing economically, specifically how its sales have risen or fallen over the last couple of years. If it’s dropped products, shifted marketing efforts, etc., I want to know why . A competitor analysis isn’t always necessary , but it can shed light on possible problems your topic may face.

Finding Social Information

This section is a bit trickier. Political and economic sectors rely heavily on data and evidence. You can find this information on government websites. News sites too, even. And although you can find databases about demographics and population growth for this section — all applicable in a PEST analysis — I wouldn’t stop there.

In the social section, I often examine how consumers are impacted by political and economic factors. You can draw conclusions based on the information you’ve already gathered from your political and economic segments.

For instance, if there is political instability and the economy is on the fritz, then consumers may feel uneasy. They may have fewer job options. And that means they’re less likely to spend frivolously. If your topic is a luxury product, it may mean the company that makes it may have lower sales this year.

But you also want to learn about how consumers feel about your topic. If it’s a company, do consumers generally like it? Or is public opinion souring? There should be a reason for why.

Consider Facebook. The company’s CEO, Mark Zuckerberg, has consistently been in hot water over the years. If not for data breaches affecting millions of users, but for their shady involvement with fake news and political tampering.

This has led many consumers to shy away from using Facebook. And this affects businesses that use Facebook to reach new customers.

In this section of the PEST analysis, I’m more likely to search for my topic on news sites and publications. The more popular the topic, the easier it’ll be to find articles written about it. But if the topic has ever been in the news, you’ll likely find it online.

Websites to search include :

• Consumer Reports
• Local news websites
• Other reputable sources

If you know your topic has been in the news for something bad, you can search the topic + the problem.

Although the information may overlap, take keynotes here. See how the problem is affecting consumer opinion. You may even want to take a look at the comments (if there are any) and see what people are saying. It’s coming straight from the lion’s mouth (consumers).

I think many PEST analyses favor numbers too much. We live in a world where anyone with an opinion can be heard, thanks to the internet. And enough of those voices can cause a business to change its policies and products. It can even cause the company to collapse.

So it’s important to search for how consumers feel about your topic too.

Finding Technological Information

This section of the PEST analysis is a bit abstract as well. You’re looking into how new technological advancements has affected your topic positively or negatively. You should also look into what technology your topic uses (currently). And what technology they may want to incorporate.

You may want to look at competitors if your topic is a product or business. See what others are using. And think about why they are.

Press releases

It may be beneficial to search for press releases involving your topic, if possible. If your company is using new technology, they may have announced it through a press release. You can search “company name + press release” or search through these press release websites:

• PR NewsWire
• NPR: National Public Radio

You may also find other information here for the other sections of the PEST analysis. Which is just an overall bonus. If all else fails, check if your topic has a website (unless it’s an industry or country). Discuss how they use social media (if they don’t, then… discuss that too!). In this section, you’re assessing what your topic uses, what it doesn’t, and why.

Putting it all together in a final PEST analysis

You’ll likely have heaps of information at hand. For some it’ll feel like too much — but that’s never the case for a PEST analysis. As you begin to read through each section’s notes, incorporate the most interesting, pressing, or surprising information. If anything overlaps with other sections, include that too.

I write each section of a PEST analysis at a time. I take my notes and create coherent sentences. Sometimes I make a list of the most important points and include them that way. If the section is long, I’ll use subheadings to break up the information.

Work on each section separately. And then if there are overlapping themes, incorporate those in. You may want to use those at the end of each section to connect to the next.

Once you’ve done this, you’ve completed your PEST analysis! Most of the work is in finding the information and making it coherent. The last 10-20 percent is putting it all together. So, once the research phase is done, you’re basically done too!

Understanding PEST Analysis: Taking Action

In conclusion, developing an understanding of what is PEST analysis becomes even more important when a company is about to launch a new business or a new product. In general, when they are about to change something drastically. That’s when all these factors play an important role in determining the feasibility and profitability of the new venture.

Therefore, developing an understanding of PEST analysis is useful for organizations for analyzing and understanding the ground realities of the environment they have to operate in.

Realizing what is PEST and knowing how to take this analysis into consideration, the organization can be in a better position to analyze the challenges, environment, factors, opportunities, restrictions and incentives it faces. In case an organization fails to take into account any one of these factors, it may fail to plan and operate properly.

But don’t PEST analysis stop you. Here are some variations that may come in handy when assessing how the external environment affects an organization:

• STEEP Analysis
• STEEPLED Analysis
• SWOT Analysis

How to Write a Property Management Business Plan (Free Template)

If you’re looking to start a property management business, you’ve come to the right place. The success of property management companies—or any companies, for that matter—absolutely depends on first creating a well-researched and thorough business plan .

Luckily, this guide aims to help you do just that. First, we’ll explain what a property management business plan encompasses, why you need one, and tips for going about it the right way. Then, we’ll walk you through the recommended business plan outline step-by-step and share details of what to include in each section.

Finally, we’ll send you off with a free template you can download and update with your business’s own information. Creating a business plan was never so easy!

Let’s dive in.

Don’t see the form to download our free property management business plan template? Click here .

What is a property management business plan?

A property management business plan is a document that summarizes your property management business: its current operations, goals for the future, strategies for achieving those goals, and other supporting details.

While you’ll want to create your business plan before launching your businesses, it’s not a one-and-done document. Instead, you should update it yearly and after major company and industry changes.

Why do you need a property management company business plan?

Whether you’re looking to start a new property management company or grow your existing one, you’re probably eager to get started. But while it can feel productive to hit the ground running, a business plan is crucial to drive your strategy and decision-making . It will serve as a roadmap you can refer back to as you get started and grow your business.

Moreover, business plans are also crucial as tools to help sell your property management agency to potential partners, investors, and banks . There’s no point in asking for their support if you can’t show you know what you’re doing, and business plans are one of the best ways to do that.

Finally, beyond mere financial gains, a thorough property management business plan enables you to measure your success accurately and pinpoint areas for improvement . It empowers you to zero in on critical indicators like your budget, local market insights, and expansion opportunities.

How do you write a property management business plan?

Do your research first.

It’s easy to spot the differences between a well-researched business plan and one that was written haphazardly. And those differences will be just as easy to mark in the results your business sees once it’s up and running.

Tailor it to your type of property management business

Chances are, you’re going to start your business plan from a standard template. There’s nothing wrong with that. In fact, it’s recommended, and we provide a free property management business plan template at the end of this article, if you’re still looking for one.

However, as you fill in your information, be sure to tailor your plan to your specific business. For example, what type of properties does your business manage? Common types of property management include:

• Residential rental property management , including both single-family and multifamily residences
• HOA property management , which typically involves working directly with homeowners’ associations
• Commercial property management , including office, retail, and industrial buildings
• Vacation rental property management , involving managing vacation rentals such as Airbnbs for their owners

Remember your goals

You might wonder whether you really need to include this much detail in your business plan, but remember what you’re hoping to achieve. And we don’t just mean a successful property management agency, but the specific things you’ll use your business plan for.

For example, if you’re hoping to find a partner for your business, your prospects will certainly appreciate a high level of detail in your operations plan. Similarly, potential investors will want to see solid financials.

Use a property management business plan template

Finally, don’t make it harder for yourself than you have to! You’re already going to have to do a significant amount of research, calculations, and brainstorming. Make it easier for yourself by starting with a template you can input specifics to, like the one pictured below:

Don’t have a template already? Scroll to the bottom of the article to download ours!

What is the outline of a property management plan?

Business plans, whether for property management or other industries, tend to follow this standard format:

Executive summary

Company overview, market analysis, marketing plan, operations plan, management team, financial plan, growth opportunities.

Keep reading for more information on what to include in each section. Or scroll to the bottom of the page to download our business plan template for property management and get started.

What to include in a business plan for property management

Your business plan should begin with an executive summary. This section serves as an introduction to both your business plan and your business , and should include information such as:

• The type of property management you plan to do
• How far along your business is
• Your target market
• Your strategy for achieving these goals

Depending on how thorough you want to be, you could even include a brief overview of every section of your business plan. Your goal should be to give a snapshot of your business that compels your readers—whether they be potential partners, investors, or banks—to finish reading your plan.

Pro tip: Because your executive summary needs to sum up your overall business plan, it’s often easiest to write it last. That way, you’ll have all the details ironed out and won’t forget to include anything.

In this section, you’ll give an overview and analysis of your property management company itself.

To start, explain how your company got started and which of the property management niches we explained above you fit into. You’ll also want to share your legal business structure (for example, sole proprietorship, LLC, C corporation, or S corporation).

The majority of this section, however, should be devoted to your competitive differentiators. What core competencies are you bringing to the market?

A market analysis isn’t only an important addition to your business plan. It’s also absolutely essential that you understand your market inside and out before you even consider launching a property management agency.

To be as thorough as possible, make sure that your market analysis includes specific analyses of your industry, target customers, and competitors.

Industry analysis

Provide an overview of your specific niche of the property management industry. Include as much detail as you can to help you become an expert in your industry, such as:

• Market size (in dollars)
• History of the industry
• Prospected growth

Customer analysis

Who are your target customers? Start with your property management niche, and then get even more specific:

• Residential rental property management → Will you target single-family or multifamily residences? Apartment buildings or individual homes? Affordable housing or high-end residences?
• HOA property management → Do you have specific HOAs in mind?
• Commercial property management → Will you manage office, retail, or industrial buildings?
• Vacation rental property management → Do you want to work with a specific type of vacation rental property or owner?

Be sure to include your target customers’ specific needs, goals, and any other information you can find to build a robust profile. The more detailed you can be, the easier it will be to target them with your services!

Competitive analysis

This is where you analyze your competitors, both direct and indirect:

• Your direct competitors include other property management companies in the same niche as you. These companies will likely be located nearby as well.
• Your indirect competitors include other options your customers have outside of property management agencies. This might include property owners who decide to manage their properties themselves, in-house managers, and even automated tools that claim to take the place of property managers.

After identifying the competition, you’ll want to provide additional information about your direct competitors. Who are their target customers? What services do they offer, and how much do they charge?

Gather as much information as you can, and then perform a SWOT (strengths, weakness, opportunities, and threats) analysis to identify potential competitive advantages. Your goal is to determine how you’ll outperform your competitors—whether via superior or additional services, lower prices, greater efficiency, or something else.

Remember: If you can’t identify any clear competitive advantages, your customers won’t be able to, either.

So, you have superior property management services at competitive rates. But how do you plan on getting in front of your target customers?

This is where your marketing plan comes in. Think about what marketing channels you’ll use, prioritizing those which will best reach your target customers. Consider both online and offline marketing, including the following options:

• Business cards
• Advertising in local newspapers and relevant magazines
• SEO marketing
• Email marketing
• Social media marketing
• Paid advertising

Creating your business plan has forced you to set some specific goals. How do you plan on meeting them?

This is exactly what your operations plan sets out to cover, with details on both short- and long-term processes.

Your short-term processes will include everything involved in the day-to-day running of your property management business . Again, these tasks will vary drastically depending on your property management niche. However, the following questions are a good starting point:

• Who will be in charge of running the business?
• Do you need to hire any additional staff? If so, how many people and for which roles?
• How will you structure your team?
• What are your service standards?
• Which manuals will you need to develop?
• What property management software will you use?

Once you’ve defined your daily operations, take a step back and think long-term. At any point in your business’s trajectory, do you plan to:

• Hire additional employees?
• Reach a certain sales figure?
• Grow your portfolio?
• Expand to a new location?

Having these long-term goals documented will not only show potential partners and investors that you’re thinking about the future. It will also give you something to refer back to in order to measure your progress.

Your property management business will only be as strong as the team leading it. So, once you’ve assembled the dream team, you’ll want to highlight its strengths in your business plan, paying specific attention to each member’s background, skills, and relevant experience.

If no one on your management team has property management or real estate experience, or your team is lacking in any way, it might be worthwhile to put together an advisory board. This board consists of a handful of mentors who have the experience necessary to guide your business in the right direction (and reassure any potential investors).

And now for everyone’s favorite part: the financial plan.

Specifically, your financial plan should consist of a five-year financial statement. The first year of your financial statement should include monthly and quarterly projections, with the remaining years including annual figures.

What goes in a financial statement? Let’s break it down:

• Profit and loss statement: Also referred to as an income statement, a profit and loss statement subtracts your costs from your revenue to find your profit. As you can imagine, you’re going to be making a lot of calculated assumptions at this point. Try to be as accurate as possible when predicting your costs and revenue. Otherwise, your profit and loss statement won’t paint a very accurate picture.
• Balance sheet: A balance sheet details your business’s assets (what you own) and liabilities (what you owe) in order to provide a snapshot of its finances. Your assets might include office space or software solutions, whereas liabilities would include any loans you’ve taken out to start your business.
• Cash flow statement: A cash flow statement shows how changes in your income and balance sheet affect your cash flow—and your ability to operate in the short- and long-term. Its goal is to show how much money you need to run your business so that you don’t run out of cash.

If you’re just getting started, it may feel too soon to consider growth opportunities. But thinking about your business’s long-term goals and plans is essential to set yourself up for success. After all, you don’t only want to succeed now. You want to make sure you have what’s necessary to succeed for years to come.

On that note, analyze the property management and real estate market in your area to identify growth opportunities for your business over the next five to 10 years, such as:

• Upgrades to your tech stack
• Strategic partnerships
• Expansion plans
• Opportunities to take advantage of new market trends

If you have any supporting documentation that could strengthen your business plan, such as buyer personas for your target customers or more complete financial projections, feel free to attach them in the appendix. That way, the additional information is there for anyone who wants to see it, but it doesn’t clutter up your business plan.

Property management business plan example

Curious about what a business plan for property management looks like? We’re including a property management business plan sample (the company overview, specifically) below to give you an idea:

Want a customizable version? Scroll to the bottom of the article to download our free template!

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How to Choose the Best Legal Structure for Your Business

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Your business’s legal structure has many ramifications. It can determine how much liability your company faces during lawsuits. It can put up a barrier between your personal and business taxes – or ensure this barrier doesn’t exist. It can also determine how often your board of directors must file paperwork – or if you even need a board. [Related article: What to Do if Your Business Gets Sued ]

We’ll explore business legal structures and how to choose the right structure for your organization. 

What is a business legal structure?

A business legal structure, also known as a business entity, is a government classification that regulates certain aspects of your business. On a federal level, your business legal structure determines your tax burden. On a state level, it can have liability ramifications.

Why is a business legal structure important?

Choosing the right business structure from the start is among the most crucial decisions you can make. Here are some factors to consider:

• Taxes: Sole proprietors, partnership owners and S corporation owners categorize their business income as personal income. C corporation income is business income separate from an owner’s personal income. Given the different tax rates for business and personal incomes, your structure choice can significantly impact your tax burden.
• Liability: Limited liability company (LLC) structures can protect your personal assets in the event of a lawsuit. That said, the federal government does not recognize LLC structures; they exist only on a state level. C corporations are a federal business structure that includes the liability protection of LLCs.
• Paperwork: Each business legal structure has unique tax forms. Additionally, if you structure your company as a corporation, you’ll need to submit articles of incorporation and regularly file certain government reports. If you start a business partnership and do business under a fictitious name, you’ll need to file special paperwork for that as well.
• Hierarchy: Corporations must have a board of directors. In certain states, this board must meet a certain number of times per year. Corporate hierarchies also prevent business closure if an owner transfers shares or exits the company, or when a founder dies . Other structures lack this closure protection.
• Registration: A business legal structure is also a prerequisite for registering your business in your state. You can’t apply for an employer identification number (EIN) or all your necessary licenses and permits without a business structure.
• Fundraising: Your structure can also block you from raising funds in certain ways. For example, sole proprietorships generally can’t offer stocks. That right is primarily reserved for corporations.
• Potential consequences for choosing the wrong structure: Your initial choice of business structure is crucial, although you can change your business structure in the future. However, changing your business structure can be a disorganized, confusing process that can lead to tax consequences and the unintended dissolution of your business. 

If you have to expand your business to another state , you won’t have to create a new company or structure, but you may have to register it as a “foreign entity.”

Types of business structures

The most common business entity types are sole proprietorships, partnerships, limited liability companies, corporations and cooperatives. Here’s more about each type of legal structure.

Sole proprietorship

A sole proprietorship is the simplest business entity. When you set up a sole proprietorship , one person is responsible for all a company’s profits and debts.

“If you want to be your own boss and run a business from home without a physical storefront, a sole proprietorship allows you to be in complete control,” said Deborah Sweeney, vice president and general manager of business acquisitions at Deluxe Corp. “This entity does not offer the separation or protection of personal and professional assets, which could prove to become an issue later on as your business grows and more aspects hold you liable.”

Proprietorship costs vary by market. Generally, early expenses will include state and federal fees, taxes, business equipment leases , office space, banking fees, and any professional services your business contracts. Some examples of these businesses are freelance writers, tutors, bookkeepers , cleaning service providers and babysitters.

A sole proprietorship business structure has several advantages.

• Easy setup: A sole proprietorship is the simplest legal structure to set up. If you – and only you – own your business, this might be the best structure. There is very little paperwork since you have no partners or executive boards.
• Low cost: Costs vary by state, but generally, license fees and business taxes are the only fees associated with a proprietorship.
• Tax deduction: Since you and your business are a single entity, you may be eligible for specific business sole proprietor tax deductions , such as a health insurance deduction.
• Easy exit: Forming a proprietorship is easy, and so is ending one. As a single owner, you can dissolve your business at any time with no formal paperwork required. For example, if you start a day care center and wish to fold the business, refrain from operating the day care and advertising your services.

The sole proprietorship is also one of the most common small business legal structures. Many famous companies started as sole proprietorships and eventually grew into multimillion-dollar businesses. These are a few examples:

• Marriott Hotels

Partnership 

A partnership is owned by two or more individuals. There are two types: a general partnership, where all is shared equally, and a limited partnership, where only one partner has control of operations and the other person (or persons) contributes to and receives part of the profits. Partnerships can operate as sole proprietorships, where there’s no separation between the partners and the business, or limited liability partnerships (LLPs), depending on the entity’s funding and liability structure.

“This entity is ideal for anyone who wants to go into business with a family member, friend or business partner – like running a restaurant or agency together,” Sweeney said. “A partnership allows the partners to share profits and losses and make decisions together within the business structure. Remember that you will be held liable for the decisions made as well as those actions made by your business partner.”

General partnership costs vary, but this structure is more expensive than a sole proprietorship because an attorney should review your partnership agreement. The attorney’s experience and location can affect the cost. 

A business partnership agreement must be a win-win for both sides to succeed. Google is an excellent example of this. In 1995, co-founders Larry Page and Sergey Brin created a small search engine and turned it into the leading global search engine. The co-founders met at Stanford University while pursuing their doctorates and later left to develop a beta version of their search engine. Soon after, they raised $1 million in funding from investors, and Google began receiving thousands of visitors a day. Having a combined ownership of 11.4% of Google provides them with a total net worth of nearly $226.4 billion.

Business partnerships have many advantages. 

• Easy formation: As with a sole proprietorship, there is little paperwork to file for a business partnership. If your state requires you to operate under a fictitious name ( “doing business as,” or DBA ), you’ll need to file a Certificate of Conducting Business as Partners and draft an Articles of Partnership agreement, both of which have additional fees. You’ll usually need a business license as well.
• Growth potential: You’re more likely to obtain a business loan with more than one owner. Bankers can consider two credit histories rather than one, which can be helpful if you have a less-than-stellar credit score.
• Special taxation: General partnerships must file federal tax Form 1065 and state returns, but they do not usually pay income tax. Both partners report their shared income or loss on their individual income tax returns. For example, if you opened a bakery with a friend and structured the business as a general partnership, you and your friend are co-owners. Each owner brings a certain level of experience and working capital to the business, affecting each partner’s business share and contribution. If you brought the most seed capital for the business, you and your partner may agree that you’ll retain a higher share percentage, making you the majority owner.

Partnerships are one of the most common business structures. These are some examples of successful partnerships:

• Warner Bros.
• Hewlett-Packard
• Ben & Jerry’s

Limited liability company 

A limited liability company (LLC) is a hybrid structure that allows owners, partners or shareholders to limit their personal liabilities while enjoying a partnership’s tax and flexibility benefits. Under an LLC, members are shielded from personal liability for the business’s debts if it can’t be proven that they acted in a negligent or wrongful manner that results in injury to another in carrying out the activities of the business.

“Limited liability companies were created to provide business owners with the liability protection that corporations enjoy while allowing earnings and losses to pass through to the owners as income on their personal tax returns,” said Brian Cairns, CEO of ProStrategix Consulting. “LLCs can have one or more members, and profits and losses do not have to be divided equally among members.”

According to Wolters Kluwer , the cost of forming an LLC comprises the state filing fee and can vary depending on your state. For example, if you file an LLC in New York, you must pay a $200 filing fee, a $9 biennial fee, and file a biennial statement with the New York Department of State .

Although small businesses can be LLCs, some large businesses choose this legal structure. The structure is typical among accounting, tax, and law firms, but other types of companies also file as LLCs. One example of an LLC is Anheuser-Busch, one of the leaders in the U.S. beer industry. Headquartered in St. Louis, Anheuser-Busch is a wholly owned subsidiary of Anheuser-Busch InBev, a multinational brewing company based in Leuven, Belgium.

Here some other well-known examples of LLCs:

• Hertz Rent-a-Car

To learn more about LLCs, read our LLC tax guide , our comprehensive overview of starting an LLC , and our guide to creating an LLC operating agreement.

Corporation 

The law regards a corporation as separate from its owners, with legal rights independent of its owners. It can sue, be sued, own and sell property, and sell the rights of ownership in the form of stocks. Corporation filing fees vary by state and fee category. 

There are several types of corporations, including C corporations , S corporations, B corporations, closed corporations, and nonprofit corporations.

• C corporations: C corporations, owned by shareholders, are taxed as separate entities. JPMorgan Chase & Co. is a multinational investment bank and financial services holding company listed as a C corporation. Since C corporations allow an unlimited number of investors, many larger companies – including Apple, Bank of America and Amazon – file for this tax status.
• B corporations: B corporations, otherwise known as benefit corporations, are for-profit entities committed to corporate social responsibility and structured to positively impact society. For example, skincare and cosmetics company The Body Shop has proven its long-term commitment to supporting environmental and social movements, resulting in an awarded B corporation status. The Body Shop uses its presence to advocate for permanent change on issues like human trafficking, domestic violence, climate change, deforestation and animal testing in the cosmetic industry.
• Closed corporations: Closed corporations, typically run by a few shareholders, are not publicly traded and benefit from limited liability protection. Closed corporations, sometimes referred to as privately held companies, have more flexibility than publicly traded companies. For example, Hobby Lobby is a closed corporation – a privately held, family-owned business. Stocks associated with Hobby Lobby are not publicly traded; instead, the stocks have been allocated to family members.
• Open corporations: Open corporations are available for trade on a public market. Many well-known companies, including Microsoft and Ford Motor Co., are open corporations. Each corporation has taken ownership of the company and allows anyone to invest.
• Nonprofit corporations: Nonprofit corporations exist to help others in some way and are rewarded by tax exemption. Some examples of nonprofits are the Salvation Army, American Heart Association and American Red Cross. These organizations all focus on something other than turning a profit.

Corporations enjoy several advantages. 

• Limited liability: Stockholders are not personally liable for claims against your corporation; they are liable only for their personal investments.
• Continuity: Corporations are not affected by death or the transferring of shares by their owners. Your business continues to operate indefinitely, which investors, creditors and consumers prefer.
• Capital: It’s much easier to raise large amounts of capital from multiple investors when your business is incorporated.

This structure is ideal for businesses that are further along in their growth, rather than a startup based in a living room. For example, if you’ve started a shoe company and have already named your business, appointed directors and raised capital through shareholders, the next step is to become incorporated. You’re essentially conducting business at a riskier, yet more lucrative, rate. Additionally, your business could file as an S corporation for the tax benefits. Once your business grows to a certain level, it’s likely in your best interest to incorporate it.

These are some popular examples of corporations:

• General Motors
• Exxon Mobil Corp.
• Domino’s Pizza
• JPMorgan Chase

Learn more about how to become a corporation .

Cooperative 

A cooperative (co-op) is owned by the same people it serves. Its offerings benefit the company’s members, also called user-owners, who vote on the organization’s mission and direction and share profits.

Cooperatives offer a couple main advantages.

• Increased funding: Cooperatives may be eligible for federal grants to help them get started.
• Discounts and better service: Cooperatives can leverage their business size, thus obtaining discounts on products and services for their members.

Forming a cooperative is complex and requires you to choose a business name that indicates whether the co-op is a corporation (e.g., Inc. or Ltd.). The filing fee associated with a co-op agreement varies by state. 

An example of a co-op is CHS Inc., a Fortune 100 business owned by U.S. agricultural cooperatives. As the nation’s leading agribusiness cooperative, CHS reported a net income of $422.4 million for fiscal year 2020. These are some other notable examples of co-ops:

• Land O’Lakes
• Navy Federal Credit Union
• Ace Hardware

The five types of business structures are sole proprietorship, partnership, limited liability company, corporation and cooperative. The right structure depends mainly on your business type.

Factors to consider before choosing a business structure

For new businesses that could fall into two or more of these categories, it’s not always easy to decide which structure to choose. Consider your startup’s financial needs, risk and ability to grow. It can be challenging to switch your legal structure after registering your business, so give it careful analysis in the early stages of forming your business. 

Here are some crucial factors to consider as you choose your business’s legal structure. You should also consult a CPA for advice.

Flexibility 

Where is your company headed, and which type of legal structure allows for the growth you envision? Turn to your business plan to review your goals and see which structure best aligns with those objectives. Your entity should support the possibility for growth and change, not hold it back from its potential. [Learn how to write a business plan with this template .]

When it comes to startup and operational complexity, nothing is more straightforward than a sole proprietorship. Register your name, start doing business, report the profits and pay taxes on it as personal income. However, it can be difficult to procure outside funding. Partnerships, on the other hand, require a signed agreement to define the roles and percentages of profits. Corporations and LLCs have various reporting requirements with state governments and the federal government.

A corporation carries the least amount of personal liability since the law holds that it is its own entity. This means creditors and customers can sue the corporation, but they can’t gain access to any personal assets of the officers or shareholders. An LLC offers the same protection but with the tax benefits of a sole proprietorship. Partnerships share the liability between the partners as defined by their partnership agreement.

An owner of an LLC pays taxes just as a sole proprietor does: All profit is considered personal income and taxed accordingly at the end of the year.

“As a small business owner, you want to avoid double taxation in the early stages,” said Jennifer Friedman, principal at Rivetr. “The LLC structure prevents that and makes sure you’re not taxed as a company, but as an individual.”

Individuals in a partnership also claim their share of the profits as personal income. Your accountant may suggest quarterly or biannual advance payments to minimize the effect on your return. 

A corporation files its own tax returns each year, paying taxes on profits after expenses, including payroll. If you pay yourself from the corporation, you will pay personal taxes, such as those for Social Security and Medicare, on your personal return. 

To simplify payroll complexities and taxation issues, consider using a payroll service. Check out our reviews of the best payroll services to find a partner that fits your needs and budget.

If you want sole or primary control of the business and its activities, a sole proprietorship or an LLC might be the best choice. You can negotiate such control in a partnership agreement as well.

A corporation is constructed to have a board of directors that makes the major decisions that guide the company. A single person can control a corporation, especially at its inception, but as it grows, so does the need to operate it as a board-directed entity. Even for a small corporation, the rules intended for larger organizations – such as keeping notes of every major decision that affects the company – still apply.

Capital investment

If you need to obtain outside funding from an investor, venture capitalist or bank, you may be better off establishing a corporation. Corporations have an easier time obtaining outside funding than sole proprietorships.

Corporations can sell shares of stock and secure additional funding for growth, while sole proprietors can obtain funds only through their personal accounts, using their personal credit or taking on partners. An LLC can face similar struggles, although, as its own entity, it’s not always necessary for the owner to use their personal credit or assets.

Licenses, permits and regulations

In addition to legally registering your business entity, you may need specific licenses and permits to operate. Depending on the type of business and its activities, it may need to be licensed at the local, state and federal levels.

“States have different requirements for different business structures,” Friedman said. “Depending on where you set up, there could be different requirements at the municipal level as well. As you choose your structure, understand the state and industry you’re in. It’s not ‘one size fits all,’ and businesses may not be aware of what’s applicable to them.”

The structures discussed here apply only to for-profit businesses. If you’ve done your research and you’re still unsure which business structure is right for you, Friedman advises speaking with a specialist in business law.

Max Freedman and Matt D’Angelo contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

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