is a business plan really necessary for a very small start up business

Do You Need a Business Plan? Scientific Research Says Yes

Noah Parsons

13 min. read

Updated November 20, 2023

Should you spend some time developing a plan for your business, or just dive in and start, figuring things out as you go? There has been plenty of debate on this topic, but no one has pulled together the scientific evidence to determine if planning is worthwhile—until now .

With the help of my friend Jeff, from the University of Oregon, I’ve been looking at academic research on business planning—the actual science around planning and how it impacts both startups and existing businesses.

But, before we dive into the data, why do we even need to look at research on business planning? It seems like most advice on  starting a business  includes writing a business plan as a necessary step in the startup process. If so many people encourage you to write one, business plans must add value, right?

Well, over the past few years, there’s been a lot of controversy about the value of business plans. People look at certain companies that have been very successful but haven’t written business plans and conclude that planning is a waste of time.

After all, taking the time to plan is a bit of a trade-off. The time you spend planning could be time spent building your company. Why not just “get going” and learn as you build your company, instead of taking the time to formulate a strategy and understand your assumptions about how your business might grow?

Well, the research shows that it’s really not a “write a plan” or “don’t write a plan” conversation. What really  matters is what kind of planning you do  and how much time you spend doing it.

• Planning can help companies grow 30 percent faster

One study (1) published in 2010 aggregated research on the business growth of 11,046 companies and found that  planning improved business performance . Interestingly, this same study found that planning benefited existing companies even more than it benefited startups.

But, this study still doesn’t answer the question it raises:

Why would planning help a business that has a few years of history more than one that is just starting up?

The answer most likely lies in the fact that existing businesses know a bit more about their customers and what their needs are than a new startup does. For an existing business, planning involves fewer guesses or assumptions that need to be proven, so the strategies they develop are based on more information.

Another study (2) found that  companies that plan grow 30 percent faster  than those that don’t plan. This study found that plenty of businesses can find success without planning, but that businesses with a plan grew faster and were more successful than those that didn’t plan.

To reinforce the connection between planning and fast growth, yet another study (3) found that fast-growing companies—companies that had over 92 percent growth in sales from one year to the next—usually have business plans. In fact,  71 percent of fast-growing companies have plans . They create budgets, set sales goals, and document their marketing and sales strategies. These companies don’t always call their plans “business plans” but instead often refer to things like strategic plans, growth plans, and operational plans. Regardless of the name, it’s all forward-looking planning.

Action:  Carve out some time to set goals and build a plan for your business. More importantly,  re-visit your plan as you grow  and revise it as you learn more about your business and your customers.

Business planning is not an activity you undertake only when you’re getting your business up and running. It should be something you return to, time and time again, to revise and improve upon based on new knowledge.

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• The quality of the plan matters

But, it’s not as simple as it might appear. Just having a plan doesn’t guarantee faster growth.  It’s the kind of plan you have and how you use it that really matters .

It turns out that startups, especially ones building highly innovative businesses, should create shorter, less detailed plans (4). That’s because these innovative startups are learning new things about their product and customers at a very fast pace and their strategies change more frequently. Simpler plans get updated more frequently and are more helpful to these companies because they can review their strategy at a glance.

Meanwhile, more established companies know a lot more about their products and customers and can craft more detailed strategies that are less likely to change as quickly. For these companies, more detailed planning is generally more helpful.

And it’s not just the size of the plan that matters. What you include in your plan is important as well.

The same study we talked about above—the one that found that businesses grow faster with a plan—also found that companies that did a good job defining their  value proposition  do even better than companies that have a hard time defining their customers’ needs.

These researchers also found that  having a plan is less about accurately predicting the future, and more about setting regular goals, tracking your actual progress toward those goals and making changes to your business as you learn more about your customers.  Silicon Valley businesses like to call the act of changing strategic direction “pivoting.” All it really means is that you need to stay nimble, keep your eyes open, and be willing to make changes in your business as you compare your actual results to your goals and gather additional feedback from your customers.

Action:  Skip the 40-page business plan and instead focus on simpler planning that defines your goals and documents your customers’ needs. Adjust your plan frequently as you learn more about your business.

Being prepared matters when you’re seeking funding

Over and over again, you hear venture capitalists talk about how much the team matters in a funding decision. Beyond just the team, you also hear them talk about passion—how much the entrepreneur believes in the idea.

But, it turns out that there is something that trumps passion when VCs make their decisions. Research shows (5) that how well an entrepreneur is prepared is much more important than how much passion they have.

This doesn’t mean that VCs will ask for a business plan. In fact, they probably won’t ask for one.

What it means is that entrepreneurs need to have done some planning, in some form, so that they can be prepared to talk intelligently about their idea, their target market, their sales and marketing strategies, and so on.

So, the formal 40-page business plan document may not be useful when you’re pitching VCs. But, you’d better have done some planning, so that you can communicate verbally or through a  pitch deck  what would normally have been found in that written document.

And, not only will business planning help you be more prepared, it will actually improve your chances of getting funded. A study at the University of Oregon (6) found that  businesses with a plan were far more likely to get funding than those that didn’t have a plan .

Action:  Know your business inside and out. Document your strategy in an internal document, but skip all the time and effort creating a well-crafted business plan document.

When you start planning is important—the earlier the better

So, if business planning increases your likelihood of success, and in fact helps you grow faster, when should you start working on a business plan?

Research shows (7) that entrepreneurs who started the business planning process early were better at what the scientists call “establishing legitimacy.” That’s a fancy way of saying that these entrepreneurs used business planning to start the process of talking with potential customers, working with business partners, starting to look for funding, and gathering other information they needed to start their business.

Entrepreneurs that did a good job of using their business plan to “establish legitimacy” early were more likely to succeed and their businesses tended to last longer.

Not only that,  starting the planning process before starting marketing efforts and before talking to customers reduces the likelihood that a business will fail ( 8). 

That said, planning should never take the place of talking to customers. An ongoing planning process—one in which the plan is constantly revised as new information is gathered—requires that you talk to your potential customers so that you can learn more about what they need, what they are willing to pay, and how you can best reach them.

Action:  Start the planning process early. Even if all you do is build out a simple  elevator pitch  to try your idea on for size, it will help you begin the conversation with potential customers and kick-start your business.

• Planning makes you more likely to start your business

If you’re like me, and like most entrepreneurs, you like to dream up new business ideas. You constantly think of new ways to improve existing businesses and solve new problems.

But, most of those dreams never become a reality. They live on as ideas in your head while other entrepreneurs see the same opportunity and find a way to make it happen.

It turns out that there’s a way to turn more of your ideas into a viable business. A study published in  Small Business Economics  found that  entrepreneurs that take the time to create a plan for their business idea are 152 percent more likely to start their business ( 9). Not only that, those entrepreneurs with a plan are 129 percent more likely to push forward with their business beyond the initial startup phase and grow it. These findings are confirmed by another study that found that entrepreneurs with a plan are 260 percent more likely to start their businesses (10). 

Interestingly,  these same entrepreneurs who build plans are 271 percent more likely to close down a business . This seems counterintuitive to the stats above, but when you think about it a bit more, it makes a lot of sense.

Entrepreneurs with plans are tracking their performance on a regular basis. They know when things aren’t going to plan—when sales aren’t meeting projections and when marketing strategies are failing. They know when it’s time to walk away and try a different idea instead of riding the business into the ground, which could have disastrous results.

Action:  If you really want to start a business, start committing your goals and strategy to paper. Even if it’s just a simple  one-page business plan,  that will help you get started faster. And, once you do start, track your performance so you know when to change direction and try something different.

You’re less likely to fail if you have a plan

Nothing can absolutely prevent your company from failing, but it turns out that having a plan can help reduce your risks.

Yet another study of 223 companies found that having a plan reduced the likelihood that a business would fail. Having a plan didn’t guarantee success, unfortunately. But, those companies with a plan had better chances of success than those that skipped the planning process.

Having a plan and updating it regularly means that you are tracking your performance and making adjustments as you go. If things aren’t working, you know it. And, if things are going well, you know what to do more of.

Action:  Build a plan, but don’t just stick it in a drawer. Track your performance as you go so you can see if you’re reaching your goals. Your plan will help you discover what’s working so you can build your business.

• Your success depends on the type of planning you do

In the end, creating a business plan seems like common sense. You wouldn’t set out on a trip without a destination and a map, would you?

It’s great to see research back up these common-sense assumptions. The research also validates the idea that the value of business planning really depends on how you approach it.

It’s not a question of whether you should plan or not plan—it’s what kind of planning you do.  The best planning is iterative; it’s kept alive and it adapts.

It’s not about predicting the future as if you’re a fortune teller at a carnival. Instead, it’s a tool that you use to refine and adapt your strategy as you go, continuing to understand your market as it changes and refining your business to the ever-changing needs of your customers.

I recommend starting with a one-page plan. It’s a simpler form of planning where you can start by documenting your business concept on a single page. From there, iterate, gather feedback, and adjust your plan as needed. If you need some inspiration, check out our gallery of over  550 free sample business plans .

Finally, a big “thank you” to  Jeff Gish at the University of Oregon , who was immensely helpful in gathering and analyzing the research mentioned in this article.

What has your experience with business planning been like? Will you approach the planning process differently in the future? Tell me on Twitter @noahparsons.

References:

1 Brinckmann, J., Grichnik, D., & Kapsa, D. (2010). Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning–performance relationship in small firms.  Journal of Business Venturing,  25(1), 24-40. doi: 10.1016/j.jbusvent.2008.10.007

2 Burke, A., Fraser, S., & Greene, F. J. (2010). The multiple effects of business planning on new venture performance.  Journal of Management Studies,  47(3), 391-415.

3 Upton, N., Teal, E. J., & Felan, J. T. (2001). Strategic and business planning practices of fast growth family firms.  Journal of Small Business Management, 39(1), 60-72.

4 Gruber, M. (2007). Uncovering the value of planning in new venture creation: A process and contingency perspective.  Journal of Business Venturing,  22(6), 782-807. doi: 10.1016/j.jbusvent.2006.07.001

5 Chen, X.-P., Yao, X., & Kotha, S. (2009). Entrepreneur passion and preparedness in business plan presentations: A persuasion analysis of venture capitalists’ funding decisions.  Academy of Management Journal,  52(1), 199-214.

6 Ding, E., & Hursey, T. (2010). Evaluation of the effectiveness of business planning using Palo Alto’s Business Plan Pro. Department of Economics. University of Oregon.

7 Delmar, F., & Shane, S. (2004). Legitimating first: Organizing activities and the survival of new ventures.  Journal of Business Venturing,  19(3), 385-410. doi: 10.1016/s0883-9026(03)00037-5

8 Shane, S., & Delmar, F. (2004). Planning for the market: Business planning before marketing and the continuation of organizing efforts.  Journal of Business Venturing,  19(6), 767-785. doi: 10.1016/j.jbusvent.2003.11.001

9 Hechavarria, D. M., Renko, M., & Matthews, C. H. (2011). The nascent entrepreneurship hub: Goals, entrepreneurial self-efficacy and start-up outcomes.  Small Business Economics,  39(3), 685-701. doi: 10.1007/s11187-011-9355-2

10 Liao, J., & Gartner, W. B. (2006). The effects of pre-venture plan timing and perceived environmental uncertainty on the persistence of emerging firms.  Small Business Economics,  27(1), 23-40. doi: 10.1007/s11187-006-0020-0

See why 1.2 million entrepreneurs have written their business plans with LivePlan

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

Table of Contents

• Being prepared matters when you’re seeking funding
• When you start planning is important—the earlier the better
• You’re less likely to fail if you have a plan

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Do You Really Need a Business Plan?

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Why is a business plan important?

• Who will the reader be?
• What do you want their response to be?

Four Reasons to Write a Business Plan

1. To raise money for your business

2. To make sound decisions

3. To help you identify any potential weaknesses

4. To communicate your ideas with stakeholders

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How to Write a Business Plan for Your Small Business

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Small Business Owners: How to Write Your Business Plan [+ Editable Templates]

By Krystle Wong , Apr 03, 2023

As a small business owner, it can be tempting to jump right into launching your business and skip the step of creating a business plan. However, having a well-written business plan is essential to the success and growth of your business. 

A business plan serves as a roadmap for your business, outlining your goals, strategies, and action plans. It helps you stay on track and focused, ensuring that every decision you make is aligned with your overall business objectives.

While creating a business plan may seem daunting, it’s worth the time and effort to ensure the long-term success of your business. In this article, I’ll dive into the insights on how a business plan can help your small business thrive and how to create one that stands out. 

Ready to get started with creating a business plan to win over your investors? Pick from Venngage’s 10,000+ professional  templates  to customize your own for free!

Click to jump ahead:, why is having a business plan important for small businesses, what are the 3cs for writing a successful small business plan, what are the 7 steps of creating a winning business plan, how to make my small business plan stand out.

Nevertheless, you may be wondering – is it really necessary to go the extra mile and build a business plan even as a small business? 

For many business owners, it’s easy to get caught up in the day-to-day operations of running your business. However, it’s essential to take a step back and create a solid business plan – especially if you’re looking to:

1. Clarify your vision and goals

Whether you’re trying to start a new business or expand your existing business, it’s important to know what your goals are. The plan will serve as a blueprint for how you plan to grow and sustain your business over time. 

2. Secure Funding

Another reason for writing a business plan is to seek out investors for your business. A compelling business plan demonstrates the potential for growth and profitability of your business and increases your chances of securing funding. Partnering with a reliable invoice finance provider can offer a flexible solution to manage cash flow and support growth, especially when navigating the financial complexities of expanding a small business.

3. Identify potential challenges

From financial obstacles to operational and staffing challenges, having a business plan forces you to think critically about your business. From there, you can develop strategies to address these challenges more effectively.

4. Attract and retain customers

Having an exciting product or service is simply not enough. You need to think about how you can get customers to keep coming back to sustain in the long run. With a business plan, you can develop a strategy that resonates with your customers and stand out from the competition.

5. Measure performance

Your should include your financial projections and key performance indicators to measure your achievements. By regularly reviewing and updating your business plan, you can also ensure that your business is on track to meet its goals.

Ready to put your ideas down on paper? Here are  15+ business plan templates you can use for strategic planning .

As an entrepreneur, you’d know that running a successful business goes beyond just your day-to-day operations. Therefore, having a detailed business plan can help you take a closer look at your business — starting by analyzing your 3Cs. 

By focusing on these three key areas, you can develop a plan that effectively communicates your business concept, identifies your target customer, and positions your business to compete in the market.

The first ‘C’ refers to the concept of your business. Look for gaps in the market you’re in and how your product or service solves a problem for your target market. Focus on what is your competitive advantage and how it sets you apart from your competitors. 

Your business plan should also include information about your company’s history, business structure and mission statement. Having a solid understanding of your business will also come in handy when writing your company description and earn you extra first impression points.

2. Customers

The second ‘C’ is all about understanding your target markets and potential customers. Before you dive deep into your business plan, you should first conduct market research. This would help you identify your ideal customer profile, including their demographics, behaviors and preferences.

Additionally, you should explain how you plan to reach and acquire these customers with a detailed marketing and sales strategy plan. Creating a user persona guide helps you understand your target market and how they use your product or service. Here’s an example that you can use:

Visualize your customers with Venngage’s  User Persona Guide  tool today. It’s free and most importantly — no design experience is required.

3. competitors.

Your final “C” in writing an effective business plan is no other than your competitors. Competitor analysis is critical in positioning your business for success. You should definitely research and evaluate your competitors, analyzing their strengths and weaknesses, market position, and pricing strategy.

At the same time, you should also outline your strengths and weaknesses and explain how you plan to overcome them. You can always conduct a SWOT analysis on both your and your competitors’ business. This SWOT competitor analysis template is a good example of how it’s done: 

Check out this article to learn everything about  utilizing infographics to create an effective business plan . 

If you’ve read this blog on  how to create a business plan , you’d know that a professional plan typically has the following sections: 

• Table of Contents
• Executive summary
• Company description
• Market analysis
• Organization and management
• Service or product line
• Marketing and sales
• Funding request
• Financial projections
• An appendix

This may seem overwhelming for many small business owners and you’re probably thinking of backing out at this point. Therefore, creating your  bus i ness plan outline  before you go into the details can ensure that you don’t leave any essential information out of your plan. 

But let me assure you that you’ll be well on your way to creating a successful business plan that can help you achieve your goals by following these steps:

Step 1: Define your business idea

Every business idea should be born out of a problem that needs solving. To find a good business idea , start by identifying a problem or a need in the market that is not adequately addressed. For example, if you notice members in your community Facebook group are often looking for cleaners in the area with little success, that’s a market you can tap into by starting a cleaning business .

You also should clearly define your business idea and what you plan to offer. Don’t forget to also consider your business’s cost, feasibility, scalability, and profitability.

For example, this candle business highlights that handmade candles are made from 100% beeswax to ensure product safety and quality: 

Once you have that figured out, it’ll be easy as pie for you to come up with your company description. Your company description should include details such as your business location, business resources, management team and more. 

Step 2: Conduct your market research

Conducting thorough market research builds a strong foundation for your market analysis. What’s more, it provides insights into the viability of your business idea and helps you develop a winning strategy.

You can conduct primary market research with:

• Customer interviews
• Online surveys or questionnaires
• In-person focus groups
• Purchasing a competitor product to study packaging and delivery experience

Or secondary market research by:

• Reading company records
• Examining the current economic conditions
• Researching relevant technological developments

This market overview template will help you look into industry trends and your target audience and collect vital data for your marketing strategy:

Step 3: Analyze your competitors

A  competitive analysis  report outlines the strengths and weaknesses of your competitors compared to those of your own business. 

Start by creating a competitor profile for each of your competitors which typically includes:

• The company’s revenue and market share
• The company’s size and management team
• A SWOT analysis 
• An overview of how the brand is perceived by customers

In addition to specific product features, here are some attributes that you might want to look into:

• Product quality
• Number of features
• Ease of use
• Customer support
• Brand/style/image

Use this competitor analysis report template to dive deeper into your competitor data and inform your marketing and business strategies: 

Step 4: Develop a marketing strategy

Your marketing strategy can be brief, covering a single campaign, or it can be long-term, detailing your marketing plans for an entire year. 

An effective marketing plan revolves around your target market and finding ways to reach them effectively. This may include branding, advertising, and social media .

While different marketing tactics are used to achieve different goals, they should always be in sync with the overall goals of your business. 

Use a mindmap to organize your marketing goals and strategies to make sure that they are in line with your business goals. 

If you’re running a small business, you may have limited funds to allocate toward marketing efforts. Some commonly used marketing strategies for small businesses include:

• Social media marketing
• Content marketing
• Work with local influencers
• Word-of-mouth
• Customer referral programs
• Customer loyalty plans

This Japanese restaurant business plan details both their online and offline marketing strategies. They’re also keen to capitalize on the steady stream of tourists coming into the city by catering to groups with large orders.

You can also use a timeline infographic like this one here to keep you on track with your marketing goals:

Don’t know where to start? This article will give you a crash course on  how to make your marketing plan . 

Step 5: identify your key performance indicators (kpi).

With all those marketing strategies in line, the next step is to identify the key metrics you’ll use to measure your business’s success. So, what is your KPI going to be? Is it revenue, profit margin, customer acquisition cost or customer retention rate?

KPIs give you a clear understanding of how well your business is doing and provide valuable insights that help make informed decisions. Without identifying KPIs, it can be difficult to gauge the effectiveness of your efforts. 

Step 6: Develop a Financial Plan

We’ve finally reached the core of your business strategy, which is the section that your potential investors are most interested in – your financial plan.

Having your business plan lined out can help you understand the financial viability of your business and prepare for potential challenges. It can also persuade investors and get the funding you need.

Some of the important details that you’d want to include in your financial plan are your:

• Income statement
• Cash flow statement
• Balance sheet 
• Sales forecast
• Break-even analysis
• Financial health 
• Financial forecasts

Planning to start your own gym ? Use this template to project your revenues and expenses: 

Step 7: Determine your funding needs

Now that you have your financial plans worked out, you’ll have a clearer picture of how much funding you’ll need to start and grow your business . 

There are several types of funding options available for small businesses seeking financing, including:

• Self-funding or bootstrapping
• Family and friend loans
• Crowdfunding
• Angel investors
• Venture capital
• Business loans

For example, this non-profit business plan template details the fundraising activities they have to generate operational funds.

Start customizing your business plan with these  15+ templates that would help you win over your investors, lenders, or partners . 

As new business owners, having a strong business plan is essential for securing funding and laying the foundation for your company’s success. However, with so many business plans vying for investors’ attention, it can be challenging to make yours stand out. 

In summary, the following tips can help you write a business plan that captures the attention of investors:

Focus on your competitive advantages

Furthermore, show customers and investors why they should choose you over others. Highlight what sets your business apart from your competitors and how your product or service can serve as a solution. 

Show a deep understanding of your target market

Visualize your ideal customers and their needs with a user persona and analyze your competitors. This will help you explain how your business can meet those needs better than your competitors. 

Provide a clear and concise executive summary

Start with a short, punchy summary that gives investors or lenders an overview of your business. Your executive summary should also include your plans, its value proposition, and the opportunities it presents to attract funding.

Provide solid financial projections

Investors and lenders want to see that your business has a foreseeable future. Make sure to detail your business financials such as cash flow statement, income statement, break-even analysis and balance sheet.

Be specific about your goals and milestones

Lay out achievable goals and milestones that you aim to reach in the short and long term. This will give investors a clear sense of your vision and your commitment to achieving it.

Show your passion

Finally, don’t be afraid to let your passion for your business shine through. Investors and lenders want to see that you are committed to your business and that you believe in its potential for success.

Elevate your small business with an exceptional business plan that sets you apart from the competition

Having a well-thought-out business plan can really max out your business’s potential and win over your investors. But as an entrepreneur, growing a business requires a lot of time and effort and you might not have the extra time to spend on designing your business plan. 

But don’t you worry – Venngage has got it covered for you. Designing a business plan requires little to no effort with Venngage’s customizable professional templates. Most importantly, no design experience is required. 

Pick from one of the templates above or browse for more  Business Plan Templates  and start customizing your own today! 

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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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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.

That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.

Document your strategy and goals

For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.

This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps .  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

• Sales and revenue projections
• Profit and loss statement
• Cash flow statement
• Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

Business model canvas

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

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Try the LivePlan Method for Lean Business Planning

Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process. 

To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan. 

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

Check out how LivePlan streamlines Lean Planning by downloading our Kickstart Your Business ebook .

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Starting a Business | How To

How to Start a Small Business: An Ultimate Guide

Published October 9, 2023

Published Oct 9, 2023

WRITTEN BY: Agatha Aviso

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This article is part of a larger series on Starting a Business .

Starting A Business?

• 1. Come Up With a Business Idea
• 2. Test Your Business Idea
• 3. Write a Business Plan
• 4. Acquire Funding
• 5. Choose Structure & Register
• 6. Get Business Insured
• 7. Build Team
• 8. Set Up Systems & Software

Bottom Line

Whether you’re starting a part-time business or quitting your corporate job to create your dream biz, you’ll find information in this guide to help you succeed. Throughout this article, you’ll learn how to start a small business from experts in finance, legal, marketing, human resources, software, insurance, as well as expert advice from former small business consultants.

Starting a small business involves coming up with a business idea, testing the idea, writing a business plan, acquiring funding, choosing a business structure, registering the business, getting it insured, making key hires, setting up systems, and finally, marketing and promoting it.

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As you’re starting your business, it’s wise to register it as a legal entity, like an LLC. Doing this will protect your personal assets if a lawsuit were to occur against the business. You can register your business as an LLC through an online legal service.

IncFile is an online service that handles and files the paperwork so your business can become an LLC quickly.

Start your business today with IncFile for as little as $0 plus state fees with no contracts and no hidden fees.

Should you start a business? Before coming up with a business, it’s crucial to determine if you’re ready to become a business owner and there are many things to consider. Examine the main points to consider by reading our guide on determining if you should start a business .

“Starting a business is not for everyone. Generally, starting a business, I’d say, No. 1 is to have a high pain threshold. When you first start a company, there’s lots of optimism and things are great. Happiness at first is high, then you encounter all sorts of issues and happiness will steadily decline, and then you will go through a whole world of hurt, and then eventually, if you succeed—and in most cases, you will not succeed—if you succeed then, after a long time, you will finally get back to happiness.” – Elon Musk

Step 1: Come Up With a Business Idea

All businesses start with the same first step— coming up with a business idea . When coming up with an idea for your business, consider your own skills and experiences, as well as business trends and problems or pain points your business could help address.

As you go through your day, you should write down any ideas you have. Look for problems you’re having in your own life. Can you solve that problem yourself and turn the solution into a business?

It’s also important to consider your personality when choosing a business idea:

• Would you like to work at home in silence or talk with customers in a store?
• Would you like to have a lifestyle business, which caps your income, or an eight-figure business with employees?
• Would you like to start from scratch or purchase an existing businesslike a franchise?
• Would you like to work 80-hour weeks and grow a business fast or keep a more balanced life and grow the business slowly?
• Would you like to create products and have other people sell them or sell products that other people have created?

Think about these questions to help you begin with the end in mind. Another personality-based test is to notice your energy levels when doing tasks at work and home. What tasks give you energy, and what depletes your energy? Running a business that gives you energy will be much more likely to succeed.

Business Idea Examples

Browse our list of business ideas for inspiration:

• Best Business Ideas to Make Money
• Best Business to Start
• Best Businesses to Start With Less Than $500
• Mompreneur Business Ideas
• Home-based Business Ideas
• Small Farm Business Ideas
• Low-cost Franchises
• Creative Business Ideas Started During the Pandemic

Additionally, you may want to browse “how to start a business” guides to learn more about a specific business idea:

• Restaurant or catering business
• Cleaning business
• Clothing boutique or a consignment store
• Coffee shop
• Dropshipping business
• FedEx routes
• Ghost kitchen
• Lifestyle blog
• Online store
• Online T-shirt business
• Personal training
• Retail store

Starting From Scratch vs Buying Existing vs a Franchise

One question you may have is if you should start your small business from scratch, buy an existing business, or purchase a franchise? Two things to consider are your business experience and available funds.

If you have no experience running a business or in a particular industry, buying into a franchise can increase your odds of success. When you buy into a franchise , you’re mostly learning how to run the business. If you follow the franchise formula in a well-populated area, you’re likely to succeed.

The same line of thinking applies to an existing business. Purchase an existing business, and you’ll learn how to run the business—plus receive previous customers. This combination makes the likelihood of success higher than you’d have for a brand-new franchise.

The challenge with buying a franchise or an existing business is cost. The high cost is one of the main reasons most new entrepreneurs start their business from scratch. However, keep in mind that there are dozens of franchises that cost under $25,000 .

• Buying a Franchise: How to Buy a Franchise in 8 Steps
• Financing a Franchise: 7 Best Loan Options
• 11 Franchise Marketing Tips to Grow Your Business
• 19 Best Franchises Under 10K

How Much Money Do You Need to Start?

It’s essential to know the answer to this question before starting your business. I’ve met with several people who never got their business off the ground because it required too much money. Remember, if you don’t have the capital available: Dream big, but start small.

To start some businesses, such as residential cleaning or power washing, you may only need $1,000. Use these funds to register the business, purchase supplies, get your first customers, and then, you’ll be in business.

Opening a store with a location is more costly. You’ll need at least $50,000 in funding—possibly several hundred thousand dollars. For a very small retail store, you should plan on earning at least $100,000 a year to cover overhead costs and make a nice profit.

If you need substantial debt to open your first business—over $20,000—you should seriously think about that decision. What’s the worst-case scenario? And how long will it take you to get out of debt? If possible, start part time with the business and acquire the necessary entrepreneurship skills. Or consider waiting. Save up cash, and take on as little debt as possible.

Learn More: How to Choose a Business to Start

Now that you’ve settled on an idea, it is time to really dive into the market.

Step 2: Research Your Market and Competitors

Once you have chosen your business idea, you need to test the idea to determine the likelihood that it will work. The majority of new business owners skip this step—that’s why 20–22% of small businesses fail within the first year according to the Bureau of Labor Statistics .

Don’t skip this step! You may learn valuable information that alters the type of business you start or how you implement it. All the information you collect will go into your business plan (step No. 3).

Validate Your Business Idea

Validating your business idea involves making efforts to ensure the solution you want to sell is something customers will pay for. True validation comes when someone spends their money on your product or service. However, you may not be able to figure out with certainty how well your product will do in the market until it’s created, or your business is open.

This is where research becomes crucial. Consider creating a few focus groups and surveys to gather feedback. Building an audience online is a great way to elicit feedback for your idea. Additionally, starting a crowdfunding campaign is one of the best ways to ensure your business idea is a good one.

• Evaluate your competitors. Consider your top five potential competitors and list their strengths and weaknesses. What strengths do your competitors have that you cannot beat? What weaknesses do they have that you can improve upon? If you have no competitors, that is not always a good sign. Ask yourself why there are no competitors in your area. There may be a reason. For example, the market may be too small to support your idea or people are not willing to pay for your product or service.
• Identify your target demographic. Customer research is key in deciding whether or not the business will work. There must be people willing to pay for your product or service in your area. To narrow down your customers, consider creating customer profiles for each type of customer you will have. Once you are clear on your customers, you want to determine how many of them are in your area. ReferenceUSA is a database you can use to do this research. ReferenceUSA is a powerful tool that allows you to research customers based on demographics. Tens of thousands of local libraries provide free access to ReferenceUSA.

Perform a SWOT Analysis

A SWOT (strengths, weaknesses, opportunities, threats) analysis is an exercise that helps you think critically about your business idea. SWOT analysis may reveal certain aspects of your business you have not considered—both positive and negative.

Go through each section below and list your ideas:

• Strengths: What will the business do well?
• Weaknesses: What may the business not do well?
• Opportunities: What external market opportunities are there—such as less competition and underserved segments?
• Threats: What external factors may make success difficult—such as regulations?

• Identify your competitive advantages. A SWOT analysis helps you identify your own competitive advantages. A question to ask yourself is: “What is my advantage that the competition will struggle to match? ” Is it your quality of product or service, customer service, or knowledge? This question will help you determine if you can be the best at something. Being the best in a certain area of a business makes it more likely that the business will succeed.

Research a Location

If you’re considering an office or storefront, start your research into the location now. You want to start early to make sure you can afford it. Look into potential locations to develop a rough estimate of the build-out cost (renovations) and monthly rent. The information you collect will go into your business plan and financial projections.

Once you have validated your idea, performed in-depth research, identified target demographics and possible locations, and performed competitive analysis, you are ready for the next step. So far, you have put together informal pieces of a business plan. Now, it’s time to write down information in a document as part of a formal business plan.

Step 3: Write a Business Plan

When you’re just starting your business, a business plan, along with a solid business philosophy , can help you plot your future. Additionally, a business plan is an opportunity to show why and how your business will become a success. All businesses need to create a business plan or a strategic roadmap to guide their business decisions.

The business plan contains several elements, including market analysis, competitor analysis, and financial projections. If you’re seeking funding from a bank or investor, you will need a business plan. The plan shows on paper how you will start your own business. After you open, the document keeps you focused and on track with your goals.

A typical business plan may contain over 40 pages of info about your business. You should plan on spending at least 30 hours creating a well-researched business plan. In addition to writing the plan, you will also spend time doing market research and creating financial projections.

Planning to launch a very small business such as a side business? Creating a one-page business plan might be better. With this plan, you’ll write a couple of sentences for important business concepts. It should include items such as the business model (how will it make money?) and competitive advantage (what will it do better than competitors?).

You should plan on spending around an hour to write out a one-page business plan. The simplified financial projections will be the most challenging and time-consuming. You most likely will need to do research online to get accurate income and expense estimates.

Download our one-page business plan template to start your business planning today.

Most business owners can easily do the research and write the plan. Where most have difficulty are the financial projections, which require creating several financial documents. If you don’t have a financial analysis background or interest, it’s a wise strategy to purchase business plan software that walks you through the financial projection process.

Related: 4 Types Of Business Plans (Plus Software & Writing Services)

Here are nine sections to include in your traditional business plan:

• Opening Organizational and Legal Pages: Cover page, nondisclosure agreement, and a table of contents
• Executive Summary: A summary of the entire business plan in fewer than two pages; Complete this section last
• Company Summary: Basics of the company, such as its history, location, facilities, company ownership, and competitive advantage
• Products and Services: How your business makes money (business model), the products or services it provides, and future products or services
• Market and Industry Analysis: Analysis of potential customers and industry. Include any data here about your current (or ideal) customers, business industry, and competitors
• Marketing Strategy and Implementation Summary: Discussion of marketing, sales, and pricing strategies
• Management and Organization Summary: Business ownership and operation. (If your business isn’t open yet, give a compelling reason why your background will make it a success. Include information on any managers in the business as well.)
• Financial Data and Analysis: Financial projections such as a profit and loss statement, projected cash flow, and business ratios
• Appendix: Any documents or information that doesn’t fit in the above categories goes in the appendix. You may want to include documents such as a floor plan, trademark, or marketing materials.

This might be a big undertaking for some, so there are business plan writing services you can seek help from. Alternatively, Here are some industry-specific business plan templates that can help:

• How To Write an SBA Business Plan [+Free Template]
• 4 Free Retail & Online Store Business Plans
• How to Write a Real Estate Business Plan (+ Free Template)

Learn More: How to Write a Business Plan

Step 4: Acquire Funding

Obtaining financing for your startup business may be the biggest challenge you face in your company’s infancy.

If you don’t have sufficient personal funds to start your business, you’ll need to secure additional funds. There are several funding options available for soon-to-be business owners, including several types of loans, investors, and crowdfunding.

No matter which type of startup financing your business applies for, you can increase the chances of getting a small business loan by preparing a solid business plan, improving your personal credit score , saving up personal capital, building your business’ customer base, and maintaining updated financial projections .

Family & Friends

A popular saying that many in startup financing like to say is, “You should always look to family, friends, and fools for funding before an investor or loan.” The reason is that family and friends (and fools) are the cheapest sources of capital.

The main downside of securing capital from family and friends is the potential for a damaged relationship. To avoid this, draw up an agreement that states how and when you need to pay back the funds.

A loan is a sum of money that needs to be paid back with interest. Business loan amounts can range anywhere from under $1,000 to over $1,000,000.

Just because you may qualify for a loan doesn’t mean you should use it. Start your small business with as little debt as possible. Remember, if your business were to fail, you would still need to pay off the debt you incurred, which could take several years.

Here are several different types of loans to fund your business:

• 10 Best Business Credit Cards for Startups
• 10 Best Sole Proprietorship Business Credit Cards
• 6 Best Instant Approval Business Credit Cards
• 6 Best Credit Cards for New Businesses With No Credit History
• 8 Best LLC Credit Cards
• 13 Best Small Business Credit Cards
• 6 Best Personal Loans for Business Funding
• Business Loans vs Personal Loans: Which Is Best for Your Small Business

See also: 7 Best Rollover for Business Startups (ROBS) Providers

• Home equity loan or line of credit : These loans pull equity out of your home for a loan. They are appealing because of their low-interest rate.

See also: SBA Microloans: What They Are & How to Apply

• SBA Loan Requirements
• How to Get an SBA Loan in 4 Steps
• How to Get an SBA Startup Loan in 6 Steps
• SBA Community Advantage Loan: What It Is & How to Apply
• Understanding the SBA Guarantee Fee

See also: How to Get Unsecured Startup Business Loans in 6 Steps

Find an Angel Investor

An angel investor is typically a wealthy individual who funds early-stage businesses. Investors usually want equity ownership in businesses they invest their money in. Having ownership means they will collect a percent of your profits in exchange for their investment. Read more about the pros and cons of angel investments .

Crowdfunding

Crowdfunding a small business is when you get customers to pre-order products or services. It’s a great way to raise funds before opening your business or creating a product.

Kickstarter and Indiegogo are crowdfunding platforms that assist with raising the money for your business. The cost to use the platforms is 5% of the final price raised plus payment processing fees, which are around 3%.

• Pros and Cons of Business Crowdfunding
• 11 Best Crowdfunding Sites for Small Businesses

Apply for Business Grants

Business grants are funds given to start a business that doesn’t have to be repaid. Federal, state, and local governments are common sources of grants. Many new business owners seek them, but they are hard to find.

A business grant is typically reserved for a particular type of business, such as a research-based business. Grants may also come in forms other than money, such as reduced rent to open a business in a disadvantaged area designated by a city.

• 8 Best Small Business Grants
• 8 Great Minority Small Business Grants
• 13 Best Small Business Grants for Women

Apply for Venture Capital Funding

Venture capital is private equity designed to help startups with long-term growth potential scale. In this arrangement, groups of investors pool money to fund a startup in exchange for equity. Typically, venture capitalist firms also shape the strategies of the companies, provide expertise, and make introductions. Read more about the disadvantages and advantages of venture capital funding .

Learn More: Startup Business Loans: The 7 Best Ways to Fund Your Startup

Step 5: Choose a Business Structure & Register Your Business

After acquiring funding, it is time to file the necessary legal paperwork and register your business. You want to take the steps below to comply with city, state, and federal laws. You also want to protect your personal assets if something happens in your business that results in a lawsuit. Additionally, if you have a unique business idea, you want to protect that from competitors.

The cost of registering a business varies between $40 to $500, depending on the state in which you choose to register. You can register through the state’s official business registration website. If you find the website challenging to navigate, use an online legal service such as Rocket Lawyer to assist with the process.

Registering your business is a must-do before taking on your first customer. You don’t want to start your business and not be properly prepared to deal with something like a trademark infringement or a home-based business inspection from a city official. To ensure the business registration process doesn’t become overwhelming, use our checklist to keep track of what has been accomplished and what needs to be completed.

Prepare to Register Your Business

This may only include obtaining an employment identification number (EIN), opening a business bank account, and registering the business as a legal entity in the state in which it operates.

Or registering your business can be several tasks including those above in addition to obtaining a professional business license, getting a State Taxpayer Identification Number, and passing a city health inspection. It’s best to prepare for these tasks in advance to ensure they go smoothly.

• Choose a business name. Before taking any legal steps below, you need to decide on your business name. This is important to do first because your business name will be on all of your legal documents. Know that you don’t have to stick with this name forever. If you’d like to change the public-facing name of your business, you can always file a DBA (doing business as) registration with the state in which your business is primarily located. Try our business name generator if you need help coming up with a name for your business.
• Choose a location to receive important documents. Your city or state may require certain documents to be signed and will mail them to you. Additionally, your state will mail documents to your address every year to remind you to re-register your business. It’s important to re-register on time because the late fee is often higher than the initial registration cost.
• Obtain your Employment Identification Number (EIN ). Your EIN is a federal business number provided by the Internal Revenue Service (IRS) to primarily identify your business for tax purposes. It’s free to obtain your EIN and you will use it on several documents. Many banks require an EIN before opening a business bank account.

See also: Can I Open a Business Bank Account Without an EIN?

• Open a business bank account. It’s important to open a business bank account before incurring any business expenses. This ensures you’re not mixing personal and business expenses. Many banks require a balance of at least $1,500 or they deduct a monthly fee.

Choose Your Business Structure

We recommend all businesses register as a legal entity, such as a limited liability company (LLC), S corporation, or C corporation. Registering your business as a legal entity protects your personal assets if a lawsuit were to ever occur against the business.

Research and determine the right type of legal entity for your business. While these legal entities have different pros and cons , they all achieve the vital goal of separating the business owner from personal financial liability if the business were sued or went bankrupt.

Here are the most common business structures:

• Sole proprietor: If you don’t register your business, this is the default business structure. Typically, only very low liability businesses should stay a sole proprietor, such as a beginner graphic designer or tutor.
• Partnership: Similar to a sole proprietor, except a partnership has two or more owners.
• LLC and LLP (legal entity) : This is similar to that of a sole proprietor, except it provides personal asset protection in the event of a lawsuit or business bankruptcy. An LLP (limited liability partnership) is for multiple partners.
• S corporation (tax status) : Elect your LLC or LLP as an S-corp to save money on taxes. Consider this structure if you are paying yourself more than $20,000 per year from the business.
• C corporation (legal entity) : This business structure provides several benefits, including transferable shares and perpetual existence. You’ll likely need to work with an attorney before forming a C-corp to create the needed documents.

Here is a snapshot of the different business structures you can consider and their key advantages and disadvantages.

Register Your Business With the State

Now that you’ve done the research and chosen your business’ legal entity, it’s time to submit the entity registration to the state it’s operating in. You can do this on your own by navigating to your state government’s business registration website. Or you can use an online legal service to assist you in the process. Additionally, if your business has a sales tax, you’ll want to obtain a state sales tax identification number (STIN).

Get State Licenses & Local Permits

Depending on your type of business, you may need a professional license issued by the state or a local permit. Additionally, if you work from home and receive customers or employees, you may need to obtain a work-from-home license.

• State professional licenses are typically for businesses that may pose a public health risk. Each state may require different professions to obtain a professional license.
• Local license and permit requirements vary by state; however, typically, before opening a physical location you’ll need a local building inspection to ensure the facility is safe for the public.
• A home-based business license is needed if you’re accepting employees and customers or creating products from your home. This license is to ensure the business isn’t causing a public health risk. However, Most businesses that operate from a home won’t need a license.

Secure Your Intellectual Property

Although it’s not necessary to start your business, you may want to register a trademark, copyright, or patent. A trademark ensures no other business uses your logo, business name, or tagline. A copyright gives you increased legal protection over your creative work. A patent ensures no one can take your product idea.

• Trademark Costs: DIY Registration vs Online Service vs Lawyer
• How Much Does a Patent Cost? The Beginner’s Guide

Step 6: Get Your Business Insured

Business insurance is a form of protection small business owners can buy to safeguard their personal or business assets. Getting the appropriate coverage for your operations protects your assets by covering customer lawsuits, property damage, and other perils so the costs following a disaster don’t put you out of business.

Most businesses deal with third parties who may claim your business caused their property damage, bodily harm, or financial loss. Different types of business insurance cover these accusations by paying the associated costs.

Certain small business insurance policies are considered fundamental because they protect against risks that most business owners face. General liability is a good example of this because it covers claims that your business is responsible for someone else’s damages. Many business owners also get commercial property insurance because it pays for damages to their property.

Common Types of Small Business Insurance Policies

How to get business insurance.

Small business owners can get business insurance online through brokers or directly from carriers. To get the appropriate coverage for your business, it’s important to first assess your risks and then to find providers who offer coverage that protects against them.

• 6 Best Small Business Insurance Companies
• 6 Ways To Save Money on Business Insurance

Because no business is immune to general liability claims, getting coverage should be a standard business practice. However, cash-strapped small business owners who are looking for inexpensive general liability insurance should remember that price shouldn’t be the only consideration. Smart business owners evaluate coverage limits, additional fees, and the carrier’s reputation as well.

Step 7: Build Your Business Team

After taking care of the necessary legal steps to get your business registered and protected, it is now time to make key hires. Your first employees will be vital to the success of your business. Additionally, many new business owners overlook the importance of hires outside of the business such as a bookkeeper, attorneys, and mentors.

Connect With a Business Attorney

A business attorney may help you form your new business, create custom forms or contracts, and provide legal advice. Even if you won’t need an attorney for these activities, it’s wise to connect with one before a legal matter occurs in your business. You don’t want the stress of interviewing business attorneys after your company has been served.

Meet With a No-cost Business Adviser

The federal and state government funds several organizations that provide no-cost business consulting and mentoring. The SBDC has over 5,000 consultants across the United States that provide no-cost consulting in a variety of business areas. These consultants typically have advanced education or experience owning a business.

SCORE Advisers are volunteers who typically have previously owned a business. They serve as mentors to business owners. A SCORE Adviser can be a great asset to your business, especially if they have experience in your industry.

Hire Your First Employee

Hiring great employees is the key to growing your business. A thoughtful hiring process includes well-written job descriptions, effective recruitment ads, and strong interview processes, all of which should promote your values and culture and adhere to fair labor practices.

Many first-time business owners find employees online these days —through job boards , LinkedIn , Facebook, and Instagram. You will likely hire your first employee through word-of-mouth or from one of your family members or friends .

• How to Hire Employees
• How to Create a New Hire Checklist [+ Free Template]
• 10 Best Startup Hiring Tips for Finding Top Candidates
• Hiring Bias: 13 Unfair Prejudices & How to Avoid Them
• New Employee Onboarding Best Practices: Steps & Checklist

Hire a Bookkeeper or Accountant

If you’re starting a part-time business, you can likely track your income and expenses with software such as QuickBooks Online. However, if you have a full-time business with multiple products and services and have several expenses to track, you may want to hire a professional.

Many new business owners are unsure if they should hire a bookkeeper or accountant, but most people starting a small business only need a bookkeeper . If you need complicated financial statements or business tax advice, it’s wise to hire a certified public accountant (CPA).

Step 8: Set Up Your Business Systems & Software

As you organize your business, you will find yourself creating systems to manage repeatable tasks and ultimately increase profits . You’ll often find software to assist with the tasks.

Below you’ll find two lists—one with processes and systems that almost all new small businesses will need to implement. The second list includes several systems and software that—if they apply to you—are highly recommended.

Must-have Systems & Software

• Payment processing: You’ll need this to accept credit card payments . Sign up with a merchant service provider before setting this up.
• Bookkeeping: This is how you track income and expenses. If you are managing it yourself, you’ll need accounting software . If not managing yourself, consider hiring a virtual bookkeeper .
• Payroll processing: If you have employees, you’ll use this system to pay them. To make the process easier, consider payroll processing software .
• Business tax payments: It’s a best practice to make business tax payments to the IRS quarterly so you don’t have a large tax bill at the end of the year. Aside from tax software , you can often use your accounting and payroll software to submit early tax payments.
• Business phone number: You’ll want to secure a business phone number so that you can separate personal calls from business calls. You can get a virtual phone line for free or for a small fee .
• Branded business email address: You don’t want potential customers to email a “@gmail,” “@yahoo,” or another alternative. It looks unprofessional. Get a business email that ends with “@yourcompanyname” so that it looks more professional . Google Workspace provides this for $6 a month.

Additional Systems & Software to Consider

• Business website: If potential customers are typing your business name into the search engines, you need a business website . You can set one up yourself and pay around $15 a month. Here are small business website examples you can use for inspiration.
• Sell online: Expand your products’ or services’ reach by selling to customers online . You can build an ecommerce website or use a platform such as Amazon , Facebook Shop , Instagram , or Etsy .
• Customer management: If you have dozens of customers (or more), you’ll need customer relationship management (CRM) software . This software helps you keep track of customer information such as previous communications and contact info.
• Appointment scheduling: Don’t schedule appointments by hand (unless you want to). Use free appointment scheduling software to store your appointments in the cloud. Also, allow clients to schedule online without communicating with you.
• Work from home: COVID-19 is forcing and encouraging many people to work from home for the first time. Set up your home office and manage it so that you can keep up productivity and enjoy your working environment.
• Take video calls: Video meetings and calls have skyrocketed since the pandemic arrived. Give your clients the option to meet through video conferencing software .

Overwhelmed? Don’t be. Free business software helps your company save money and become efficient. You can use free business tools to do accounting, accept payments, and pay employees.

If you’re starting a business, going with free business tools is a great way to keep operating expenses at a minimum. Free business tools are a low-risk test as you figure out the best systems and software for you. If you like them, keep them and possibly expand their features with a paid version. If you don’t like them, stop using the software with no added costs to your business.

Step 9: Market Your Business

Your last step to starting your business is to get customers. You’ll use your marketing strategy to get your new business in front of potential customers.

There are a lot of strategies you can implement to get your business noticed. Don’t get overwhelmed! Remember, you don’t have to implement—and pay for—all of these strategies. A few done well will get your business enough customers to make it a success.

Before diving headfirst into any of the marketing strategies, take time to write a marketing plan . Think through and plan out how you want to market your business. In your plan, outline your brand, such as the logo, colors, font, and tagline.

At a minimum, you’ll want to create business cards to hand out to potential customers and vendors or while networking. Other marketing materials to consider are brochures , flyers , cards , and branded apparel. Many new business owners make the mistake of relying too much on online marketing. Don’t overlook the effectiveness of having physical business marketing materials in someone’s home.

Market Online

• Social media marketing : Connect with your customers where they are spending their time online. Don’t try to grow a following on all social media platforms. Choose one and spend the majority of your time growing your account there.
• Email marketing : Stay in touch with past customers by sending them valuable or entertaining emails . Don’t make your emails all about sales and discounts. You’ll lose subscribers.
• Content marketing : Create and distribute articles, videos, case studies, and other forms of online content created to attract leads, create brand awareness, move prospects through the buying journey, or convert them to customers.
• Google My Business (GMB) listing : This listing is free for all businesses looking for local customers. Many marketers are calling GMB the new small business “homepage.” It’s what customers see on Google before your website when they search for your business.
• Online directories : It’s likely your business can be on several online directories such as Yelp and Yellow Pages . Consider any industry-specific directories as well.

Network With Local Businesses

When you first open, explore networking groups available for local businesses. It’s always a good idea to meet and network with other business owners. Word-of-mouth recommendations and referrals may lead to some of your first customers.

Related: 8 Business Networking Statistics to Generate New Opportunities

Pay for Advertising

You may want to pay to get your business in front of ideal customers. This paid marketing can give your brand recognition a jump-start. You can pay for advertising online or through traditional advertising channels.

• Search engine ads : Pay to get your business at the top of Google or Microsoft . Typically, you will pay every time an interested searcher clicks on your ad. The cost of the click will depend on the number of businesses competing for the ad space.
• Social media ads : Get your social media ad in front of both followers and nonfollowers. Ad cost depends on the competitiveness of the audience you’re targeting.
• Online directory leads: Depending on the directory, you can pay for higher rankings or leads. Yelp provides both options.
• Direct mail : Create cards or brochures and send them to homes of potential customers near your business.
• Radio ads : This type of advertising is an excellent option if your business appeals to an audience in a broad industry such as retail or home improvement.
• Billboards : The cost of a billboard varies depending on location. Pay anywhere from $250 per month for a rural area to over $15,000 per month in a larger market.

Media Package

You want local media to know about your new business. Local media prefers information about your business submitted to them in a press release. A press release is a summary and story of your business. You also want to include owner headshots and photos of the business in the press kit . It’s important to include a hook, which is a way to present your business that creates interest so that the business journalist will cover the opening of your startup.

Learn More: 11 Strategies to Market a New Business

How to Start a Small Business Frequently Asked Questions (FAQs)

Click through the questions below to get answers to some of your most frequently asked starting a small business questions.

How can I start a small business with no money?

A business can be started with no money, but it is not recommended. You aren’t required to spend money to register your business. When you don’t register, it is called a sole proprietorship. The problem with not registering is that your personal assets are at risk. For example, if you’re starting a lawn care business and something costly gets destroyed at a customer’s property, that customer can sue you for damages, and your personal assets are at risk.

What is the easiest business to start up?

The easiest business to start is one that relies on your expertise. People pay you for your expertise because you know more than they do. For example, if you are a social media manager for a business, you can take your social media marketing expertise and charge local businesses to manage their accounts.

There is little cost to this type of business because your time and expertise are the product.

How much does it cost to start a small business?

Starting a business does not need to cost a lot of money. If you’re providing a service like resume writing, the only cost is registering the business in your state. As you add additional components to your business like a website, accounting software, and a branded email address, your business costs will increase. For example, adding a low-cost website is another $100 or more per year. A branded email address will cost another $100 or more per year.

If you’re feeling overwhelmed with all the tasks to start your business, don’t stress! Starting a business is a marathon, not a sprint. Be patient. Give yourself time to absorb and understand the above steps.

“The truth is, success is a process—you can ask anybody who’s been successful.” – Oprah Winfrey

Be proud that you’re learning and trying to figure out this messy world of starting a business. Make your next move today: What micro-step are you taking today to make your idea a reality?

About the Author

Find Agatha On LinkedIn

Agatha Aviso

Agatha Aviso is a retail software expert writer at Fit Small Business. She specializes in evaluating ecommerce and retail software features that help small businesses grow. She has evaluated dozens of the top software for retail SMBs. Agatha has more than 10 years of experience writing online content for both small business owners as well as the marketing industry. She also served as a content strategist and digital marketing manager for many entrepreneurs.

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What Is a Business Plan: An Introductory Guide

An introductory guide to explain what a business plan is, why you need it (and how it helps), key components, how long it should be, how to write it, who needs to see it, and much more..

May 16th, 2018    |    By: The Startups Team     |    Tags: Planning , Idea Validation

Introduction

It’s been said that a goal without a plan is just a wish.

In the same way, a startup idea without a business plan is little more than just that: an idea — no matter how earth-shatteringly innovative that idea might be.

Whether you’ve committed to starting a business for the first time or you’re still tiptoeing around the idea , chances are you’ve described your startup concept to your friends or family. And chances are you’ve been told by someone that having a well-thought-out business plan in place is absolutely vital for every entrepreneur.

But what you might not have been told was why having a business plan is so important, what critical elements to include, how much of it to include, and how to put it all together in a way that gets potential investors fired up about your idea and eager to get involved.

If that’s the case, then you’re in luck — we’re about to break all of this down for you step by step.

If you'd like to see some samples - we've got 4 awesome business plans for you here.

Business Plan, Defined

First things first. What is a business plan, exactly?

Quite simply, a business plan is a detailed roadmap of your business — a written document that communicates to readers and potential investors what your business goals are and the steps that you plan on taking to achieve them.

You’ll often hear startup origin stories that begin with Founders sitting at a bar or in a restaurant when suddenly they’re struck by that “aha!” moment of inspiration and begin furiously scribbling down their concept on a cocktail napkin.

This has become something of a romanticized idea in the startup world. But if you’ve had an experience similar to this, then you’ve got the makings of a business plan in its most basic, stripped-down form. And while the shorter, one-page business plan can be ideal in certain situations (more on that later), fleshing out a hastily-scrawled cocktail napkin blueprint into a comprehensive, actionable business plan requires a bit more work (and fewer drinks).

We say “actionable” because the very best business plans do more than just inform readers about what your company does — they excite and persuade them about jumping on the opportunity to get involved (and mutually benefit) in helping your company succeed.

How do you do this?

By answering at a very high level the big, fundamental questions your readers will have about your business going in. These questions fall into two key categories: the WHY questions and the HOW questions.

The WHY Questions:

The HOW Questions:

• How will you make money?
• How will you get customers?
• How will you grow your business?

In the process of answering these questions, your business plan should illustrate that your company has:

• The right product/service
• The right market (at the right time)
• The right team
• The right strategy

Why You Need a Business Plan (And How it Can Help You)

Making sure that you have a polished business plan at the ready might seem like one of those things that you’re just kind of expected to do as a Founder. But it really is about more than just going through the motions. You’ve been beaten over the head with the assertion that you need one of these things.

Now here’s a few reasons why.

A. To Optimize Your Strategies

Laying out your objectives and researching your market helps you uncover trends that could help or harm your forward progress and allow you to tailor your growth strategies accordingly.

B. To Give You Direction

A business plan can help you organize your ideas so you can figure out which goals to set, which to prioritize, and how to reach them without spreading yourself too thin.

C. To Convince Investors To Fund Your Business

Investors want to see evidence for why they should risk their time and money in your business and how they’ll recoup their investment. Your business plan helps you make that case.

D. To Secure A Business Loan

If you’re trying to secure a business loan from the bank, if the lender doesn’t already request it (which they probably will), you can bolster your loan application using your business plan.

E. To Forge Strategic Alliances

Your plan can be used to communicate specific parts of your business to lock down potential partnerships.

F. To Sell Your Business

In the event that you find yourself in acquisition discussions, your business plan can be instrumental in helping the buyer better understand the best possible price for the sale of your business .

Who Needs a Business Plan?

A lot of people assume that the only businesses that need business plans are startups seeking funding, and that once they’ve secured said funding their business plan gets stuffed into a filing cabinet where it lives out the rest of its days collecting dust.

Not entirely. So who needs a business plan?

A. Startups Seeking Funding

If you’re a startup with the chief goal of raising capital to fund your growth, then yes, as previously mentioned, a business plan is a must. Simply having one doesn’t necessarily mean you’ll get funding. But not having one reduces the likelihood precipitously.

B. Established Companies Managing Their Business

Unlike startups, existing businesses use business plans more with an eye toward guiding the business and accelerating and tracking growth. Established businesses also use business plans to convince buyers to acquire the company or to bring potential partners or employees into the fold.

How to Choose the Right Kind of Business Plan

Depending on your growth stage and what you intend on using it for, business plans can come in a few different form factors.

If you’re a startup looking to raise investment capital, for example, your business plan is going to look a bit different than that of an established company more concerned with internal strategic planning and actually running the business.

Let’s take a quick look at a handful of the most common examples.

A. Standard Business Plan

If your goal is to convince investors to financially back your business, the standard business plan — or “external business plan”, as it’s sometimes called — is the most commonly-requested iteration you’ll need.

Standard business plans are much more fine-tuned and focused on showing investors how your vision translates into big returns versus an internal business. For our purposes, we’ll be focusing our discussion strictly on the standard business plan for this article.

B. One-Page Business Plan

The one-page business plan is essentially an executive summary — in other words, the TL;DR version of your business plan where you distill down each of the core sections of your business plan to a paragraph or two, giving investors an at-at-glance look at the key takeaways.

The one-pager is a great asset to break out when you establish early discussions with a potential investor. Investors are incredibly busy, so the one-pager is a perfect go-to when you’re trying to spark interest and set the stage for more in depth discussions about your business after you’ve made first contact.

C. Internal Business Plan

As its name implies, internal business plans generally stay within the confines of the office and are meant to act essentially as a management tool to help business owners set and meet goals.

Internal business plans are less concerned with covering things like team overview or outlining the problem you’re solving and more geared toward business strategy, which milestones to reach next, budgeting, and forecasting. This kind of business plan tends to be used more frequently by more established companies than startups.

The Key Components of a Business Plan

Whether you’re starting a brewery, launching a cryptocurrency business, or setting up a subscription box service for your homemade cupcake operation, there are several common elements that are absolute musts to include in virtually every business plan — regardless of your industry.

These include:

• Executive Summary
• Company Description
• Problem, Solution & Market Size
• Product (How it Works)
• Revenue Model
• Operating Model
• Competitive Analysis
• Customer Definition
• Customer Acquisition
• Management Team

A. Executive Summary

Your Executive Summary is essentially a brief overview of your business plan as a whole. The goal is to break down each key section into a sentence or two to convey a birds-eye view of your business and prepare the reader for the content to come.

B. Company Description

The Company Description will serve as a “big idea” statement that introduces your company, what it does, and why it matters. It conveys to your readers the direction your company is going, and the scope of the business you’re building.

Every great product or service starts with a clear and specific problem that it’s setting out to solve. What problems do your target customers face that your product/service solves for them?

If you don’t articulate the problem you’re solving really well, then the solution (and rest of your plan) falls by the wayside.

D. Solution

Once you’ve explained the painful problem you’re setting out to solve, highlight how your product/service connects back directly to that problem and solves it beautifully.

E. Market Size

• How big is your total addressable market?
• Is it growing? By how much?
• Is the market big enough for potential investors to get excited about?
• Have there been any notable exits from similar companies in your space?

F. Product (How it Works)

Give readers an overview of your company’s products and services, their key features, with a special emphasis on what makes them unique from existing solutions in the market.

G. Revenue Model

• How does (or will) your company make money?
• How are you pricing your product/service?
• How does your pricing compare with similar products in the market?
• What are your revenue projections for the next 5 years?

H. Operating Model

While your Revenue Model explains the ways you’re going to make money, your Operating Model is all about the clever ways you’re going to manage costs and efficiencies to earn it.

I. Competitive Analysis

Identify other similar companies working in your same space:

• What are your their strengths and how do you plan to neutralize those strengths?
• What are their weaknesses and how do they translate into an advantage for your company?

J. Customer Definition

Define your customer to help readers get a crystal clear understanding of who is most likely to use and buy your product:

• What are their personas?
• What are their demographics?
• What motivates them to take action (make a purchase)?

K. Customer Acquisition

• What strategies will you implement to actually acquire your customers?
• What acquisition channels will you explore ( direct sales , paid ads , SEO , social media , etc.)?
• What are the cost assumptions for each channel?

L. Traction

List any accomplishments that signal to readers that your company is making moves:

• Where are you in the product development process?
• Have you established a production or manufacturing partner?
• Have you secured any notable partnerships?
• Do you have any patents for the technology or ideas behind your company?

M. Management Team

Introduce your team and how you’ll work together to bring the business to life. Each team member bio should include:

• The team member’s name
• Their title and position at the company
• Their professional background
• Any special skills they’ve developed as a result of their prior experience
• What makes them uniquely qualified to drive success at your company
• How much money do you need to meet your next milestone?
• What are your terms (in other words, what will investors get in exchange for their investment)?
• How will you use the funding that you secure?

O. Financials

Determine what assumptions you need to target in order to make the business viable. Typical assumptions include:

• Sale Price per Product
• Cost of Goods Sold
• Customer Acquisition Costs
• Staff Costs

How Long Should Your Business Plan Be?

To get a better sense of what a 21st century business plan is, it’s best to look at what it’s not. Or, more specifically, what it’s not anymore.

When most people think about a business plan, the first thing that usually comes to mind is an incredibly dense, 50-plus-page manifesto that’s as hard to write as it is to read.

There’s a reason why people think this. It’s because for a long time, that’s pretty much what a business plan was. Thankfully for the writer and the reader, that’s no longer the case.

At a certain point, it became clear that the number of investors who actually took the time (let alone had the time) to read these glassy eye-inducing paperweights front to back was approximately 0.

Which is why the modern business plan as we know it today is far more concise — a mere fraction of the length of its long-winded predecessor.

A good rule of thumb is shooting for around 15 pages.

This should give you more than enough room to provide color to each of the required sections of your business plan while also leaving some room for visual elements to break up the copy and make your business plan much more digestible (and aesthetically engaging)  for readers.

If you find yourself exceeding 20 pages, there’s probably opportunities where you can go back through your plan and eliminate redundant or superfluous information.

How to Approach Writing a Business Plan

Remember sitting at your computer back in college, opening up a blank word document, and staring at the blinking cursor as you tried mustering the courage and motivation to dive into your final essay?

For a lot of Founders, that’s kind of what it feels like getting ready to commit their business plan to paper, but even more daunting.

The thing is, if you approach this with a solid understanding of what information you need to cover, how to cover it, and how to make everything flow properly, it doesn’t have to be .

Here are some useful tips to help you get organized and give you the confidence to tackle this head on .

A. Nail The Research First

Going into this knowing everything there possibly is to know about the market you will be competing in, who your audience is, and how you will make money will always be the first step in the business planning process.

Conducting the necessary fact gathering will also help you prove or disprove any assumptions you have about your market fit — either validating what you initially thought, or telling you it’s time to go back to the drawing board.

B. Create a Business Plan Outline

We talked before about the key components that you’ll want to include in your business plan. Instead of jumping in willy-nilly, draft a very basic outline of each of the sections that you will touch on in your business plan.

Not only will this make it significantly easier to stay laser focused on only detailing the relevant information you need for each specific section, but it will help the writing process feel much more manageable by breaking it up into bite-sized pieces.

C. Organize Your Goals and Objectives

Start dividing up all of the information that you need to include in your business plan by section.

The best way to do this is by thinking about each section as if it were comprised of a series of questions that your readers will want answered.

For example, in the Customer Acquisition section, some of the key questions you want to address are:

• How will you reach your target customers?
• What marketing strategies will you use?
• What will it cost to acquire customers?

Once you’ve laid this out for each section, you now have a good jumping-off point to go in and start shedding light on each of these key questions .

Business Planning Tools

Whether you’re doing this for the first time or the tenth time, building a plan from scratch is time and energy-consuming.

Luckily, there are some great business planning software tools available online designed to make this whole business planning process a whole lot easier for you.

In fact, we’ve got one of them!

Our business planning software lets you break down this big undertaking into bite-sized pieces that you can complete in any order you like and in collaboration with your team.

All of the most important sections of a business plan are conveniently built into drag-and-drop templates. Plus, you get everything you need to generate investor-ready financial reports — balance sheets, income statements, break even analysis, you name it.

You can even share your finished product with investors online. You should check it out if you need a leg up with this.

Who Needs to See Your Business Plan (and When)?

Congratulations!

You’ve overcome the odds and succeeded in what frequently proves to be an insurmountable task for many startups: you’ve reached out to a prospective investor and they actually got back to you saying that they’re interested in learning more about your project.

If you find yourself in the fortunate position of pitching an investor, this is precisely the right time to have your business plan on hand.

Most of the time, you’ll start by providing a pitch deck — a presentation (PowerPoint, Keynote) version of your business plan highlighting the most basic elements of your plan in a handful of highly visual slides.

Most investors will want to start here because it’s much quicker to read up front than poring over your business plan.

Assuming that you’ve blown your pitch out of the water and have the investor(s) on the edge of their seat, they may ask for the longer-form narrative to start getting into the nitty-gritty of your plan — which you will be able to easily provide courtesy of your finely-tuned business plan.

The Dos and Don’ts of Writing a Business Plan

If you’re learning this stuff for the first time, it might feel a bit overwhelming being asked to remember which specific pitfalls to avoid here and which strategies to follow there.

To make this all a bit more digestible and help you stay on the right track, we’ve compiled a list of some of the top dos and don’ts to keep in mind when you launch into writing your business plan.

• Do your research before you start writing to demonstrate that you have a firm understanding of your market, competitors, and audience.
• Do update your plan as you go to keep information relevant and up to date.
• Do write in clear, plain language that anyone can easily understand, whether it’s an investor or your elderly neighbor.
• Do cite your sources where necessary.
• Do create an engaging narrative around the problem your customers face and why your product or service is the perfect solution to that problem.
• Do explain how you arrived at your financial assumptions.
• Do keep your business plan concise, compelling, and persuasive.
• Do make it more personal and immediate by writing in the 1st person grammatical point of view (write as if it were your team having a conversation about the company to the reader in person “Our team is on the forefront of innovation…”).
• Don’t assume that your reader is already familiar with your industry.
• Don’t overload your plan with industry-specific jargon.
• Don’t exceed 20 pages (or 15 if possible).
• Don’t write lengthy walls of copy.
• Don’t repeat the same information ad nauseum throughout your plan.
• Don’t refer to yourself as “The Company” or use 3rd person grammatical point of view (this is a bit of an outdated approach).
• Don’t claim you have “no competitors” (#1: your investors won’t buy it, and #2: no matter how unique your solution, there’s almost always someone competing with you either directly or indirectly. Really dig in and do your homework on this).
• Don’t forget to proofread (make sure you’ve gone back and corrected any spelling or grammatical errors and that your formatting remains consistent throughout).

We’ve thrown a ton of information at you in this crash course introduction to the business plan. You should now have a fairly good grasp of what a business plan is, what goes into it, and how to use it to maximum effect.

The key thing to take away here is to remain calm and not rush this. Business planning isn’t something that you just casually knock out in a day and walk away with the perfect finished product your first time around.

Founders can spend numerous cycles repositioning their strategies based on discoveries made during research, rethinking how to best boil down their vision and value proposition, and refining their overall story. Such is the nature of the ever-evolving business plan.

As you dive into crafting your own business plan, remember that you’re not alone in this. We’ve got a boatload of other great resources created specifically to help you conquer this every step of the way!

About the Author

The startups team.

Startups is the world's largest startup platform, helping over 1 million startup companies find customers , funding , mentors , and world-class education .

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Business plan

How to write an effective business plan in 11 steps (with workbook)

February 28, 2024 | 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. HBR. July 14, 2017. Available online at https://hbr.org/2017/07/research-writing-a-business-plan-makes-your-startup-more-likely-to-succeed" data-footnote="sevenpercent" aria-label="Footnote 1" data-options="{"interstitialType":"leaving-site","targetAction":"new-tab"}" class="spa-ui-layer-link spa-fn spa-ui-layer-interstitial"> Footnote [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. Footnote [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:

1. Are your goals still current? As you’ve tested your concept, your goals may have changed. The plan should reflect this.

2. 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.

3. 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

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.

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.

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.

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.

The Small Business Community is now Small Business Resources .

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December 10, 2020, do you really need a business plan for a startup, by: andrey zadorozhnyy, published on: july 6, 2018.

Ready to start a business? I'm sure you've been told to start writing a business plan immediately. But do you really have to?

Last week one of my friends who is planning to start his own business came to me to find out if I could help him with writing a business plan. He needs the plan to show it to banks or angel investors in order to get some financial support. From an investors’ perspective, it seems logical to ask an entrepreneur for a plan illustrating some figures. They not only want to see a PowerPoint presentation full of ideas but also to be able to measure the costs and future returns. But is it really worth it to make a business plan for an entrepreneur?

Yes, but…

Some people say “Yes”.

“If you can’t explain it simply, you don’t understand it well enough.” – Albert Einstein’s quote helps to realize why a business plan is necessary for a startup. It helps to figure out and explain your product to others; it is your plan for how you’re going to sell it. This model on paper helps you structure your ideas in a bit more logical, clustered form. According to Jon Westenberg, founder of Creatomic, a  business plan has to show :

• What your product is, and what it does;
• Your strategy for bringing that product to market;
• Details about your revenue model;
• Goals and milestones;
• The method you’ll use to know if you’ve failed;
• Your customer personas and target market;
• Your financial needs.

Thus, the key point here is that the plan must be clear and simple not only to the entrepreneur but also to an investor. Otherwise, the product is too complicated.

Also, we can’t overlook the discussions about creating a business plan when we talk about lean startups. Some entrepreneurs, including Tim Berry, suggest making a specific type of business plan – the “lean business plan”. This is a type of a plan which should be used, revised and changed. It should evolve with the development of your startup, it’s continuously cycle-based on three similar repeating phases: plan, review and revise.

According to the research  by Francis J. Greene and Christian Hopp in 2017, who studied more than 1000 U.S.-based entrepreneurs, making business plan gives startups more chances for success. “Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical non-planning entrepreneurs.” They also concluded that there are two major groups of entrepreneurs who do it: high-growth oriented startup entrepreneurs and entrepreneurs seeking external financial support.

…not all the time.

However, others think differently saying “No” to a business plan.

Brian Hamilton, Chairman of Sageworks, believes that entrepreneurs don’t know how their startups would work in reality . In new business, the areas like product, pricing, marketing, and distribution are unpredictable in the beginning. Entrepreneurs make hypotheses about different aspects of their business and test them in reality. It’s one of the features of a founder, to be flexible and bold, to change the plans that don’t work or work not good enough. At the same time, the business plan can be even harmful; it creates pressure on the entrepreneur, forcing them to follow the wrong path instead of creatively evolving and shaping the future of their business.

Neil Patel says that writing a business plan takes a lot of time and effort which should rather be spent on developing the business itself. Starting a business is an energy- and time-consuming process, so as human beings, entrepreneurs should set priorities. If you prioritize writing a plan, rather than focusing on sales, marketing, development, etc., you lose valuable time.

Our world changes faster and faster every day. Technology is evolving, customer preferences alter, macroeconomic conditions vary. Nowadays, the situation when your business plan will be outdated after a short period of time is very real.

Tony Robbins said : “The most painful mistake I see in first-time entrepreneurs is thinking that just having a business plan or a great concept is enough to guarantee success. It’s not. Business success is 80% psychology and 20% mechanics. And, frankly, most people’s psychology is not meant for building a business.”

Guy Kawasaki said: “I believe that is no longer necessary to write a business plan. You can’t foresee the future five years from now. You know, you’d be lucky if you can foresee one year from now. And even one year from now, you gonna be one year late. Because you just don’t know.”

Find The Golden Mean

The recent study of Greene and Hopp shows that the question is not about whether a business plan should be done or not, but WHEN. According to their research, the most successful entrepreneurs were those who wrote their business plan between 6 and 12 months after deciding to start a business. This increases the probability of venture viability by 8%. They also found that the optimal time to spend on the plan is 3 months, less or more time will have no effect. Writing a business plan during activities such as talking to customers, getting the product ready for market and thinking through promotional and marketing activities, increases a startup’s chances by 27%.

In conclusion, I’d like to say, that if you plan every step of your future venture or rely only on inspiration and creativity, the most important what you should do is to have faith in yourself.

Oh, and what about my friend? I advised him that if he wants to start a business, he should make a simple spreadsheet, a roadmap of his financial costs and revenues. These figures and percentages should reflect the goals of his business. I also told him to keep it close to his garbage bin, because after some months of production, sales and payments; after his enterprise starts running, he will have to throw it away.

And THEN create a real business plan .

____________

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Is a Business Plan Necessary?

Before you dedicate your life to crafting a business plan the length of a book, read these two paragraphs from the 1/9/07 edition of the Wall Street Journal in an article called “ Enterprise: Do Start-ups Really Need Formal Business Plans “

A study recently released by Babson College analyzed 116 businesses started by alumni who graduated between 1985 and 2003. Comparing success measures such as annual revenue, employee numbers and net income, the study found no statistical difference in success between those businesses started with formal written plans and those without them…

“What we really don’t want to do is literally spend a year or more essentially writing a business plan without knowing we have actual customers,” says William Bygrave , an entrepreneurship professor at Babson College in Wellesley, Mass., who says he generally advocates “just do it.” Entrepreneurs must be nimble, and will be more apt to stick with a flawed concept they spent months drafting, he adds.

I think that Prof. Bygrave’s study is so right. Here is the entire study if you’d like to read it. This is the plan’s abstract:

This study examined whether writing a business plan before launching a new venture affects the subsequent performance of the venture. The data set comprised new ventures started by Babson College alums who graduated between 1985 and 2003. The analysis revealed that there was no difference between the performance of new businesses launched with or without written business plans. The findings suggest that unless a would-be entrepreneur needs to raise substantial startup capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan before opening a new business.

The phrase “unless a would-be entrepreneur needs to raise substantial startup capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan” merits discussion. Most venture capitalists require a business plan as part of due diligence. This doesn’t mean they spend more than ten minutes reading the plan, and it certainly doesn’t mean that they believe it. :-) A great plan won’t make a lousy idea successful, and a lousy plan won’t necessarily stop a great idea.

Most of the plans that we see at Garage are too long and too detailed—to the point of reducing credibility. Here is my prior blog posting about business plans that you might find helpful. The gist of it is:

Perfect your pitch , then write your plan.

Use the business-plan exercise as a way to get your team on the same page.

Keep it short: ten to twenty pages.

Spend no more than two weeks writing it.

Don’t get obsessed with with details in your financial forecast because it should be one page long.

However, don’t draw the wrong conclusion from this study: “Analysis, planning, vision, and communication are unnecessary.” This isn’t true. What is true is that a business plan should not take on a life of its own. It is a tool—one of many that may help you get funded (or, more accurately, hinder you from getting funded if you don’t have one) and may help you get your team working as a team. But it is not an end in itself.

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Are business plans obsolete?

Despite those (supposed) qualities, however, some recent studies are starting to show that the practice of using formal business plans as a corner stone of business ventures is not as widely spread as the theory suggests. Caddell mentions, for instanc…

I find this post somewhat ironic given that I’m in a business plan development class in b-school. I agree with your point wholeheartedly but I suppose it’s very difficult to find the balance between overplanning v. underplanning. I assume that this article is mainly intended for those who are on the overplanning end of the spectrum. Overall, great advice. I’ll keep this in mind as the semester progresses.

Who is Musgrave? That word isn’t in the MS Word doc that you link to. Sorry to pick nits.

I think one should give some thought to whether your business idea could be profitable, but not obsess over the exact amount. Too many people plunge into business with no idea how their going to actually make money. If youtube didn’t get bought out, how were they going to survive? You can’t bet on a billion dollar miracle.

To me this is a sticky subject (I’m somewhat living it right now with one business – and it’s working without a plan – at the same time we are self-funding with our own cash and time with no real idea of where it’ll break-even ;). Guy, you have told me not to start killing the dolphins until you know the dogs are going to eat the food and I agree…to a point. Most business plans are full of fluff, BS and baseless projections. Further, if strictly adhered to they would likely contribute to the demise of just about any business (they are usually not nimble as a business needs to be) – because it’s not until you are working the business that you really know what it’s going to turn out to be, how it helps and who wants what. What about just covering the basics in a plan? Perceived market needs/solutions, demographics, psychographics, competition, and what will it cost/create in income should it be wildly successful, moderately successful and a complete failure?

Having founded three companies, I found the discipline of creating a Business Plan for the first business absolutely necessary. This discipline is probably vital for the ‘virgin’ entrepreneur and ensures they at least think about key elements such as customers, product, competitors, funding and so on. With the second company, the Business plan was shorter, more specific and avoided hyperbole. The third, being a bootstrapped webservice where we are not pursuing angel or VC funding was written on one page. So far, we are delivering against our own expectations. This could be because we have tapped into a gap in the market but a succinct one page plan has not hurt and has maintained critical focus! Andrew http://www.AdvisorGarage.com

Some great guy wrote a terrific bit about start-ups, “be impatient for profits and patient for growth.” Working on my third business, I’ve got to say the idea of profits sits far forward in my mind than does a business plan. I don’t think the idea of Guy’s post is not to write a business plan, just don’t get in the business of writing a business plan. Some entrepreneurs (me with my second company) get stuck on the idea of writing a perfect business plan. I ,now, highly advise against that. In fact, I advise against what a friend calls “constructive procrastination” in the beginning of a new business. Most of us entreprenuers aren’t starting up the next Cogent Communication that requires hundreds of millions just to get started. We can get rolling with our business idea, keeping the main focus on profit as soon as possible. Growth and a business plan can follow once we discover if the fish are biting your bait. Glad to see you back Guy! Neil McDonnell http://sften.blogspot.com

It seems to confirm that a restaurant is a restaurant while a web application is not. Maybe a different type of paper applies?

as ever, sound and pragmatic real-world advice – thank you. my own business plan has evolved into some 40+ pages and i am inclined to agree – next time i’d go for a lot more visual emphasis and some compelling sound-bites. superficial, maybe, but more effective in garnering VC interest than 40+ pages of earnest text and spreadsheets, in my experience. ergo, maybe a business plan would be better done in powerpoint as opposed to word – would totally change one’s approach. think i’ll give it a go … ;-)

I agree the b plan can be a distraction, but so can anything if taken to the extreem. I have intergrated tracking into my plan so a new promotion, process or what every can be tracked and changed faster if the stats don’t show what i’m looking for.

“Perfect your pitch, then write your plan.” Yes! That’s constructive advice because it is soooo important that an entrepreneur answer key fundamental questions and focus on the critical areas. This requires discipline to listen, to think honestly, and to fend off fluff and hyperbole. While I agree with your points about “formal business plans”, I do think that basic planning is essential.

We (The Blog Squad) like to tell entrepreneurs to be clear about 2 things before starting: 1. Who are the members of your targeted audience, your future customers/clients? 2. What is the purpose of your biz (how will you make money?) This can be used before starting a blog, a program, an e-book, many things.

In my opinion, a business plan is not necessary for running a business. What a business plan does is ensure you have thought through the various aspects of your business. If you can do that in your head, and do not need to present your company to outside investors (just need to present to your internal team to get them hyped up about moving the idea of the business forward), then you are are good to go. However, a business plan is necessary when you have to take your business to institutional money and other outside investors. They like to have a document to ensure they were not making a bad decision when deciding to help your business out with their money. Remember, a business plan can be less than 10 pages long. It is like teaching the golf swing: good teachers understand the complexity of the golf swing so well that they can explain it in simple words to their students. Guy, nice topic for discussion.

I’m currently working on my 3rd startup (the previous 2 being successful) and I never even considered writing a business plan. I may be too far to the other extreme, but I’ve always managed fine without one. Of course that doesn’t mean I didnt have a “business plan” – I always knew exactly what we were doing – in my head. I dont think the business plan is such a bad thing. I think the issue is that if you are spending too much time formalizing a business plan and other tasks not adding value to the customer, you might not be attacking the startup business the right way. Just my 2 cents.

Thanks, Guy. It certainly helps to know it is a good idea to save my time for something else. Overall, though, do you think writing a business plan is absolutely necessary for a single person project instead of keeping everything in one’s head?

I actually worked with Prof. Bygrave at Babson during the one year I was there. Amazing entrepreneurship scholar. This study reminds me of that classic quotation from Herb Kelleher that goes something like this: “Yeah, we have a business plan at Southwest Airlines. It’s called doing things.”

I think business plans are best written in a group. I used to work in a company that used Instant Messaging as the primarily means of communication. We wrote several business plans for our clients by hammering out the details in the chatroom.

Richard Branson uses a one-page business plan to sketch out if he’ll do a business. He makes it in one day and it helps him minimize the downside and understand how the business works.

So, I’ve seen hundreds of business plans. I’ve seen them for venture start-ups and internally funded businesses at big tech companies. A few observations: 1. Trying to generalize whether or not business plans are necessary is a bit presumptuous. The need greatly depends on the experience/skill of the founder and the demand for capital to fund the enterprise (and a bunch of other things). To say that they are or are not helpful based upon a survey done by a bunch of MBAs is like using Gartner to make investment decisions. 2. Smart entrepreneurs already have a business plan in their head before they ever sit down with PowerPoint or Word. The entrepreneurs that are most ‘fundable’ in VC world are those who come from a very large company already in the space, have spotted a disruptive opportunity that their current employer won’t pursue and have relationships with their first 3 beta customers already committed to the product. These guys don’t need no stinking business plans. 3. Bplans are great for finding the ‘weak spots’. Most entrepreneurs are great at a couple of dimensions, but not all fo the dimensions really required to create a great business. Reading their plan will highlight what they don’t know. “No competition? Hmm…looks like you need to do some work there.” “GTM Plan = Big Companies? Let’s figure out some focus for you.” “TAM = x% of GDP? Riiiiiight.” The funny thing is that weak entrepreneurs HATE to show their weaknesses when good VCs can spot them a mile away. The VC wants someone smart enough to say, “I got a great product designed and I’ve figured out my target customer, but I have no idea how to begin a viral marketing strategy and I’d like to find someone who knows what that’s about to really turn the crank on my deal.” 4. As an entrepreneur, my bplan was great for identifying the 3 critical variables that I needed to focus my time on. I knew if I couldn’t make significant progress or find a solution for all three variables, I didn’t have a business. Most VCs are looking for the entrepreneur that not only knows his standard bplan stuff, but then is able to focus his strategy by saying “With all of this analysis, I’ve figured out that I will have a great business if I can do x, y & z.” Strategy is about what you don’t do.

Great point! I’ve worked in venture debt and we saw a lot of wasted paper. Now I’m founding a next gen social network and I have found shorter is better for a b-plan. In fact an exec summary may be all that’s needed to get people on the same page. If it’s too long people just won’t read it. Cheers. -Chris Comella, Founder BuzzPal – The World Is Your Party www.buzzpal.com

True true… it’s not an end in itself. but written or not, it’s surely helpful :)

I see a business plan as the business equivalent of personal goals. Sure, you can have all the information in your head (goal,strategy, action plan) but studies show that writing down goals increases the likelihood of achievement. Plus the whole idea of building a sustainable business is having it be able to run without the founder. Difficult to do with the information all in the founder’s head. Not to mention budgeting for cash flow. Lack of cash flow can kill a business. Keep it brief, sure but I would reco doing a business plan.

Plans are nothing; planning is everything.– Dwight D. Eisenhower Plans are of little importance, but planning is essential — Winston Churchill Planning is everything. Plans are nothing. — Field Marshal Helmuth Graf von Moltke (1800-1891) which clearly Ike reorganised…

Thinking Of Starting Your Own Agency?

Nice post over on Guy Kawasaki’s blog about the modern day business planwhich, in some cases, may include not having one. He highlights some findings from a report as published in this Wall Street Journal article: This study examined whether…

I concur very much with this findings. Why? Because that is what I am presently doing. In the last internet boom,one of the lessons I learned was the time I wasted courting VCs to fund by company. Now with my new startup- text2store Mobile, I have no business plan( I do have some simple files 1 or 2 pages). That is it. We are learning and rolling out features and things are moving forward. We are recruiting based on ideas in my journal.A form of boostrapping. Ola Ayeni Founder Text2store.com

Great stuff Guy. As a veteran of business planning over the past 25 years I merely add in that the great benefit of the business planning process is the “joint diagnosis” resulting in shared ownership of the challenge,and the end result that all involved finish the process facing in the same direction and supporting a common cause.Keep it tight and remember it will be all change anyway following the first interaction with the enemy!

Someone wrote that study (the .doc-file) using a typewriter. A friend said; ‘first I became skilled in programming M$ Words, then I became a skilled programmer’. Though the researcher probably aren’t programmers, they would be better of with a pdf.

Fuzzy Thinking About Fuzzy Planning

How would you react to somebody saying that regular exercise is bad for you because some people exaggerate? That’s how I feel about the January 9 Wall Street Journal column that confuses plans with planning. Guy Kawasaki’s response, Is a

Do you need a busines plan – part deux

A few weeks ago, I posted a sneak peak of this month’s Globe and Mail column on whether or not you need a business plan. Well today it hit the wire:….Hundreds of years ago, Magellan, Cabot and Drake explored the

Thanks for the fisk Guy. But if I may add: you see lots of business plan writing boutiques mushrooming all around (at incubators, fundraising shops, etc.). Don’t go with these whatsoever! Should you decide to write a business plan, do it yourself, with your team if you like, but don’t outsource the writing of your business plan. Writing a business plan if a good way for entrepreneurs to reflect on their business model and forecasts – and see later the standard deviation between their planned figures and the actual reality. One last thing: a business plan isn’t static and may become a useful tool to the entrepreneurial team itself if updated once a month (spend no more than 2 hours). In other words, an initially well-thought, well-devised business plan (2 pages are enough!) may serve as a compass during execution.

Hi, A couple of business planning methods already take this into account. A good start is the wikipedia article on assumption based planning http://en.wikipedia.org/wiki/Assumption_based_planning

I agree that a formal business plan isnt needed. Especially when you invest too much time in it. But you should plan your entry into a new business; that’s something different… For that I’d recommend the “The New Business Road Test: What Entrepreneurs and Executives Should Do Before Writing a Business Plan” book; got more out of it than a whole lot of courses at my MBA. — MV

A great post on this lasting debate. Personally, I think the attention should be focused on business outcomes – that is execution. Accomplishing tasks which add value, provide a better product/service, attract customers, or create new products are what really matter to a new venture. Most of us seem to agree that these goals and how to accomplish them should be written down (and thought through) prior to getting started, but not this is not necessary. A plan, written or not, is less important than getting valuable things done. Clearly, if you are trying to convince others that your way to change the world is the best, start writing… What do you think? Amish Parashar Inventure Global, Inc Small Business Outsourcing Made Easy

Can’t remember where I first came across this classic quote: “As I’ve said many times before, the trouble with our business plan is that it depends for its success upon a steady, rapid increase in the supply of really smart people (to buy our stuff). Whereas what we see instead is explosive growth in the supply of idiots.”

www.onepagebusinessplan.com – Tom Peters favourite book on the subject – and the name sums it up. Genius methodology (even if the software looks a bit rubbish – buy the book)

Venture Design, part 23

I love this post from Guy Kawasaki: Is a Business Plan Necessary? For all but the most incremental of innovation efforts, a comprehensive business plan is shot in the dark. You’re guaranteed to be 100% wrong. So why try to

There are so many holes in this discussion. First of all – we can’t and don’t know how many great businesses that failed might have made it, had they spent the time developing a plan. Then, read the fine print on this study: “Those companies with a business plan in comparison with those without one had greater revenue (mean $2.52 million, median $550,000 vs. mean $2.18 million, median $350,000), higher net income (mean $371,086, median $97,500 vs. mean $272,952, median $93,000), and more employees (mean 31.80, median 5 vs. mean 9.59, median 3).” Ok, so you’ve succeeded at getting your company up and running without a plan, but you’re generating 20% of the revenues of the companies that did take the time to plan (albeit at a higher margin – which could have to do with number of employees). In any case, to leap to the conclusion that it’s better to “Just Do It” than to plan, based on the results of this study, seems irresponsible to me. And, Guy, it also seems it flies in the face of your own Zen of Business Plan approach: “The [more] relevant and important reason to write is a business plan, whether you are raising money or not, is to force the management team to solidify the objectives (what), strategies (how), and tactics (when, where, who). Even if you have all the capital in the world, you should still write a business plan. Indeed, especially if you have all the capital in the world because too much capital is worse than too little.”

Is business planning obsolete?

Guy Kawasaki writes about a WSJ article about the current use of business plans. He is absolutely correct that a business plan will never be 100% correct. But of course, what is. I’ve been the planning business for a dozen

I’ve only once written a business plan: my business partner (who called me his business “partner” but called himself “president” of the company and made all the final decisions, even after all the “partners” had decided on a different course of action) delegated this critical task to me. I don’t think he felt a business plan was really necessary, he was just humouring me and everyone else who was getting on his case to write one. Trying to write the B.P. entailed discussing key stuff with my boss/partner. That’s when I realized that I wasn’t clear about his real intentions or objectives for the business: he would tell me whatever I wanted to hear at the time, but never seemed to take anything he said as any kind of promise or commitment. My job was to write a business plan so that he could tell people “Yeah, we’ve got a business plan”, but he never intended to follow it. When I (very belatedly) realized this, I bailed out. I was recently invited to join a project with a friend. Remembering my previous experience, I suggested we write a business plan: “Oh, we really don’t need a business plan: either it’ll work or it won’t!” Oh, god, I thought, another one! Obviously a business plan shouldn’t take on a life of its own, as Guy says, but I think you need one to convince others that you know what you’re doing, that you’ve done your homework. The fact that neither of my two “partners” think a business plan is really necessary simply told me that they were too lazy to do the homework.

Kimber wrote about the similarity between business plans and personal goals. That reminded me of a blog post I had read recently on David St Lawrence’s blog, Making Ripples, which readers might find of interest.

Agreed a business plan is a very useful and helpful thing before starting any business. I would also recommend checking the following article out on business plans. It is a very good one. I hope you find it as useful as I did. Do check it out. Business Plan

For more information about business plans visit us at www.Gadish.com or call us at 1-310-433-0694

Business plan ¿Algo absolutamente necesario o una pérdida detiempo?

Una entrada en el blog de Guy Kawasaki habla sobre un tema que se ha puesto de moda: la discusión sobre si los planes de negocio aportan valor o son una pérdida de tiempo. Mi opinión, que he expresado multitud de veces en este blog y en comentarios…

Don’t Skip the Planning Process

Experts in business planning like Guy Kawasaki, and our own Tim Berry, are all talking about the recent Wall Street Journal article “Enterprise: Do Start-ups Really Need Formal Business Plans.” The article is based on a study conducted by Professor

5 Easy Things You Could Do With Your Business Idea

Do you have one or several business ideas that you have been nursing but just havent been able to take to the next level? Well, you are certainly not alone. I for one (and I am sure there are many like me) find that I cant stop coming up …

You can find additional information on this topic at www.Gadish.com

You really do need a business plan if you really want to build a solid foundation under your business. The “Working Business Plan” is the best form of business plan to start out with. This plan answers the 5 “W’s” – Who, What, Where, When and Why about your business. There is no pre-required length that a Working Business Plan should be. Just remember that you aren’t writing to impress, you are writing to address the important issues of starting your business. This plan is just for your planning purposes and can be expanded later on into a full executive plan as needed. You can read more at Women About Biz

Do you need a strategic plan?

For a while now, strategic planning has been the big rage. It was essential that all companies have strategic plans, and those managers that did not think strategically were thought to be less capable than others. Management consultants c…

I compare preparing a road map to creating a business plan with my clients. Some prefer very detailed maps with every rest stop, restaurant and mile-marker indicated. Others just want a list of directions of when turns or changes in direction are needed. Maps are useful and necessary for long trips, trips into unknown territory, and for newer drivers. Business plans can be simple or complex — it all depends on who is driving and where they want to go.

I really appreciated this post on business planning. It’s something that every entrepreneur should be aware of… we have a large subscriber base and we featured this post on our site under the research and planning category on our content site www.northstarthinktank.com. Thanks again for the useful information!

Nice article and certainly true. I think that no matter how excelent is a business plan or the idea behind it, if you just did not raise any succesfull business previously OR you didnt work for many years for an outstanding company as a manager OR you dont have very important contacts, the plan will be almost useless despite of being able to make the plan happen. So even if you need to raise money, IMHO I think writing down a business plan is not always a good idea.

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How To Start Writing A Business Plan That Works

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For the entrepreneur, knowing how to start writing a business plan can be as exhilarating as it is overwhelming. The business plan is a foundational document and the blueprint of your business and is critical for securing funding, setting clear goals, and communicating your vision to the world.

Let’s explore the significance of a business plan, the essential elements it should include, and strategies to forge a plan that resonates with stakeholders and steers your business toward success.

Whether you are about to launch your first business or need to revitalize an existing business strategy, a business plan provides the foundation that supports your entrepreneurial journey.

Why a Business Plan Is Needed

A business plan is not solely for the benefit of a bank manager or an investor . The business plan is a document that helps bring clarity to your vision and can guide every decision and strategy within your company.

A well written business plan forces you to put your goals and ideas into concrete, manageable steps. It cuts through the noise, ensuring you stay focused on what truly matters for your business’s growth.

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For startups looking to secure that critical initial investment, a business plan is often the first point of reference for potential backers. It’s a chance to sell your vision, show your financial acumen, and demonstrate a roadmap to profit.

Identifying potential pitfalls early is a vital aspect of proactive business ownership. A good business plan helps you prepare for the unexpected and develop strategies to mitigate risk and safeguard the longevity of your business.

Setting clear, measurable goals in your business plan provides a framework for tracking your progress. This will give you the insight needed to pivot or double down on strategies as the market dictates.

Creating Your Story

Before you start drafting sections and compiling data, step back and consider the story of your business. Your plan should be like a good book, with a clear narrative arc that compels the reader from the first sentence to the last.

Any good story is rooted in an understanding of the world it inhabits. Your business's narrative begins with a comprehensive analysis of the industry in which you operate, as well as the consumers you aim to serve.

Think about how you define your unique selling proposition (USP) . What sets your business apart from competitors? All good stories have a unique twist, and your business plan should articulate what makes your venture different from, and better than, the competition.

Introduce your team into the story. Highlight their expertise, experience, and any relevant achievements that lend credibility to the business’s ability to execute on its vision.

Writing Your Business Plan Is Just the Beginning

A business plan can span from a quick roadmap sketched on the back of a napkin to a hefty document carefully crafted to align with industry standards. Regardless of size, it should contain certain fundamental elements .

The act of writing a business plan, while pivotal, is just the first step in an ongoing process of refinement and execution.

Here’s how to make sure your business plan is a living document:

1. Regular reviews and updates

Markets shift, consumer behavior changes, and your business will grow. Your plan must evolve with these factors, which makes regular reviews and updates a must-do.

2. Be realistic

It’s essential to be both ambitious and realistic in your plan. Don’t over-inflate projections or underestimate costs. An unrealistic plan is as unattractive to investors as a lack of vision and ambition.

3. Seek professional input

Don’t be afraid to ask for help. Experienced business advisors, accountants, and mentors can provide invaluable feedback and spot issues you may have missed.

4. Start small

Your first draft doesn’t have to be perfect. Write down your initial thoughts, outline your ideas, and refine them over time. Starting with a large plan can be intimidating but working on it gradually can be a more manageable and effective approach.

The bottom line is that writing a business plan can feel overwhelming, but with the right approach and attention to detail, you can create a document that not only articulates your vision but actively works to make that vision a reality. It’s a living, breathing narrative that outlines your business’s course of action, and should be treated with care and enthusiasm.

Melissa Houston, CPA is the author of Cash Confident: An Entrepreneur’s Guide to Creating a Profitable Business . She is the founder of She Means Profit, which is a podcast and blog . As a Finance Strategist for small business owners, Melissa helps successful business owners increase their profit margins so that they keep more money in their pocket and increase their net worth.

The opinions expressed in this article are not intended to replace any professional or expert accounting and/or tax advice whatsoever.

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3 Important Plans You'll Need to Start a Small Business

Alyssa Gregory is an entrepreneur, writer, and marketer with 20 years of experience in the business world. She is the founder of the Small Business Bonfire, a community for entrepreneurs, and has authored more than 2,500 articles for The Balance and other popular small business websites.

For some, the decision to start a business is one that takes years of research and thoughtful consideration. For others, it happens quickly — an idea takes root and you're building the foundation for your new business within days. Whether your process is fast and furious or slow and steady, a number of steps are necessary to start a business.

Each step in the business startup process is important, but there is one phase you simply cannot skip: the planning phase. You'll have to focus on three essential plans to do it right and give your small business the best chance at survival. These plans are relevant for every type of small business: the business plan, the marketing plan, and the financial plan. Although each is best created as a separate document, all three overlap in some areas and they should work in concert. 

Here's a rundown of these three plans and how they will help you make progress in starting your new business. It's best to start with your business plan, then move onto your marketing plan. Leave your financial plan for last because you'll need to know the details about how you'll launch and promote your business before you can estimate the capital you'll need to meet your goals.

A Business Plan

Do you break out in a sweat when you hear the phrase "business plan" because all you can think about is how difficult it must be to create a 40-page document that covers every single intricacy of your business idea? Maybe you aren't even convinced that you need a business plan at all.

Well, I have good news and bad news. First, the bad news: You really do  need a business plan . There's just no getting around it. But here's the good news: Your business plan doesn't have to be a massively long and boring document that you painstakingly create and then never look at again. A functional business plan is really a working document that can take many forms and act more as a flexible action-planning tool than a structured concrete document.

At a minimum, you'll need a streamlined business plan that focuses on:

• Vision:  What are you creating?
• Mission Statement:  What is the purpose of your business?
• Objectives:  What are your  business goals ?
• Strategies:  How, what, and where?
• Startup Capital:  How much do you need to launch?
• Expenses:  What will it cost monthly to keep your business running?
• Projected Income:  What do you expect to earn? Back this up with research!

This working business plan may be the beginning of a more  traditional business plan  that you use to pitch investors or to apply for loans. Then again, it may be all you need to outline where you are right now, determine where you want to go, and create a plan to get from Point A to Point B. By focusing only on the essential items listed above, you can get down to figuring out your business much more productively.

A Marketing Plan

Now that you have your business plan in hand and guiding your progress, you'll need a marketing plan that will help you attract your customers and begin to create a revenue stream. You may have more than one marketing plan. You can create one to promote your business, one to introduce new products or services to your market, another to target new niche markets, and one that develops new ways to reach and attract customers. But for start-up proposes, we'll focus on your initial marketing plan, the one you'll use to promote your new business.

Your start-up marketing plan should include:

• Strategies:  What do you want your marketing plan to do for your business?
• Mission Statement:  What is the purpose of your business?  This is the same mission you included in your business plan.
• Target Market:  Who is your ideal customer?
• Competitive Analysis:  Who are your competitors?
• Unique Selling Proposition:  What makes your business unique?
• Pricing:  What will you charge for your products and services?
• Promotional Plan:  How will you reach your target market?
• Marketing Budget:  How much money will you spend, and on what?
• Metrics:  How will you track the success of your marketing activities?

The last step is often overlooked but it is extremely important. Take time to think through the details of how you'll track the success or failure of the various marketing tactics you use so you can make wiser decisions with each marketing campaign you launch.

You'll be on your way to creating a marketing plan that you can use as a blueprint for your small business when you've answered these targeted questions. 

A Financial Plan

Your financial plan is last, but it may very well be the most important of these three plans. Without the funds to launch and maintain your business, it will very likely sputter and die when it runs out of financial fuel. Keep in mind that it takes most new businesses months or even years to begin to make a profit. This is why you have to make sure you have your financial bases covered until you're able to create a healthy cash flow.

Start your  financial plan  by figuring out how much capital you'll require to start your business and where that capital will come from. Create a spreadsheet of all of the expenses you anticipate in launching your business. Some items on your list may include:

• Office space/store location
• Remodeling work
• Starting inventory
• Public utility deposits
• Legal and other professional fees
• Licenses and permits
• Employee training
• Website and other digital properties
• Marketing collateral 
• Grand opening event
• Advertising for grand opening

Include the cost — or estimated cost — of each expense and total them to get an idea of the initial capital you'll need to get your doors opened.

Now do the same exercise focusing on anticipated ongoing monthly expenses. Your list may include some of the following:

• Your salary
• Staff salaries
• Advertising and promotion
• Shipping and handling
• High-speed Internet
• Website maintenance
• IT services
• Bookkeeping or accounting services

Total up the estimated cost of each of these items to get an idea of your monthly expenses. Multiply that number by 12 to get an estimate of what it will cost to keep your business afloat for one year.

The last piece of your financial plan is estimating what your business will bring in, immediately and as it grows. You can't see into the future so you won't know with 100-percent certainty how successful your business will be or how long it will take before it generates income. Be conservative in this step. Use the information on your projected income from your business plan as a starting point, then add in more details to fine tune your estimates.

With your completed spreadsheet, you should have a very clear idea of how much you'll need to start your business. You can begin exploring  small business funding options.

You may realize you need to do some additional research to gather information about the market as you begin working on your three plans. You may need more information to develop pricing strategies or reach cost projections. Take the time to get all the information you'll need so your plans are comprehensive and accurate. If you get stuck, consider enlisting the help of an expert — a business consultant, marketing expert or accountant — to help you through. You can also reach out to your local  SCORE  chapter to get free business advice and mentoring.

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Small Business Owners Weigh In on the Realities of Starting a Business

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Syndicated from The Penny Hoarder

What are some keys to small-business success ? We talked to a few small-business owners to find out, and I am sharing a bit of what I learned when I went out on my own six years ago.

I decided to try working as a reporter and producer on a full-time freelance basis. I knew about writing and producing, but I had a lot to learn about running a business.

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Small businesses in the United States

There are 33.2 million small businesses in the United States, which the U.S. Small Business Administration Office of Advocacy’s 2022 Small Business Profile defines as businesses with fewer than 500 employees.

Most of them, roughly 32.5 million, have either no employees or between one and 19 employees.

Just less than half or 46.4% of employees in the U.S. work for a small business.

Success isn’t always easy. The report says between March 2020 and March 2021, 1.1 million businesses opened, while 965,995 closed. Keep in mind, that was during the peak of the COVID-19 pandemic.

Why start a small business?

For business owners, there’s a desire to make decisions for yourself and do what you want to do.

Steve Dunn is a mediator based in Charlotte, North Carolina. For 21 years, he was both a litigator and a mediator at a law firm. He left the firm in 2019 to go it alone as a mediator.

“I realized that I had this dream to be a full time mediator and knew if I was going to do it, I needed to make myself do it by just jumping into the deep end of the pool,” Dunn said. “So I went to my partners and gave them six months notice.”

Sometimes, the entrepreneurial spirit has always been present, like for Jennifer Marcus, the co-owner along with her husband, Heath, of Mad Science of Hampton Roads in Virginia.

“[My husband] grew up in a family of business owners and saw a lot of ups and downs. He knew there are great parts about it and some really hard parts,” Marcus said. “I think it really appealed to us to control our own destiny, not have a boss, be able to set goals and reach them, and create something on our own.”

Other times, life gives you the kick in the butt you need to make a decision to go out on your own. That’s what happened to me when the funding ran out for the project I was working on for 14 years as a full-time employee at a college.

I had to find something to do, and since I love to travel, I decided to try something I could do from anywhere and take time off when I wanted to. That meant working for myself.

For Jeanine Blackburn, she wanted to help fulfill her daughter’s vision.

Jeanine Blackburn is the CEO and co-owner with her daughter Alyson Blackburn of Kolor-N-Kiln paint-your-own pottery studio in a mall in Pittsburgh, PA.

They opened their doors in June 2013 after Jeanine Blackburn was downsized from a corporate job and Alyson Blackburn was graduating from college.

“It was never my dream to be an entrepreneur. I liked having a guaranteed paycheck. I just kept stepping out on faith,” she said. “I had some money set aside and I was just thinking what better way to invest in my daughter’s dream. I said I’ll try it and if it doesn’t work, I could always go back to what I know.”

Deciding what kind of small business to open

Deciding what kind of business to open can sometimes be a challenge. There are all kinds of possibilities. Do you follow your passion and try to find a way to make money at it? Do you open a franchise of something that already exists? Do you do something else entirely?

For Dunn, he knew mediation was what he liked about his law firm job, so finding a way to do that full time was his goal.

“I had a moment where I realized how much I really hated the litigation aspect of my job. A light bulb went off and I realized I didn’t have to do this,” he said. “It was a moment of clarity about how unsatisfied I was with what I was doing.”

Opening a franchise was the best option for Jennifer Marcus. She and her husband, Heath Marcus, opened their location in 2008 after Heath left a military job and Jennifer wanted to reenter the workforce after staying at home with three small children.

“We were ready for a new challenge and a new adventure,” she said. “But we were nervous about not having a steady paycheck and a lack of financial security, which is super common. … We thought there was a little bit more of a safety net in some ways if you’re following a pattern that someone else has set for you.”

They started looking at all kinds of franchises and even met with a franchise attorney who suggested they look for an established brand with franchising experience that did not have a location in their area.

“Mad Science had been franchising for about 20 years already and had franchises all over North America and the world, but none in our part of Virginia,” Marcus said.

Finding funding

It’s not cheap to open a new business, no matter what it is. There are startup costs .

Even as a writer, I realized I needed big things like business insurance and smaller things like a good computer with my own software licenses and paper and printer ink to get things going.

Everyone we talked with said knowing how much you can spend on opening the business is important.

“We put all our eggs in that basket,” Marcus said. “[My husband] left his government job and worked full time with Mad Science. I did not have an income because I was a stay-at-home mom and I worked part time in the business. We couldn’t live off that income so we took out loans.”

Even after covering expenses and making a profit from the beginning, a change was necessary.

“We were running up the credit cards a little too much and we thought we needed to figure something out,” she said, adding that’s when she started working for Mad Science full time while her husband took a job outside the business.

A stock deal that came with being downsized from her job helped Blackburn fund Kolor-N-Kiln.

“When we opened, I was nervous. I was excited. I was anxious. I just spent all of this money and was wondering what would happen if nobody shows up,” Blackburn said. “How do I get paid?”

Luckily, people showed up.

“On grand opening day, we were jam-packed.”

Choosing a location

We’ve all heard location, location, location when referring to the success of just about anything.

For owning a business, it can be about a physical space to open a shop, start a restaurant, or provide a professional service.

It can also be about finding the right place to do paperwork and administrative tasks.

The Blackburns needed to find a place for their pottery studio that had enough space, was easy to access, had enough parking, and was within their budget .

“I did a ton of research, driving around, trying to find every pottery studio I could find and visit,” Blackburn said. “I brought back a lot of data because that's my background and then figured out if it would work. We wrote down ideas and brainstormed almost too much about what it could look like.”

The result was a 1,100-square-foot storefront in a strip plaza with room for 35 people inside.

“We opened on faith. To be 100% honest with you, we opened with a lot of, ‘let’s do it and see if it works,’” she said. “If it doesn’t, we could tweak it.”

The current mall location became available later, and Kolor-N-Kiln moved to a much bigger 5,700-square-foot space.

While Marcus knew her business was primarily going to be instructors going to various locations, they decided to get an office space.

“You can absolutely run Mad Science out of your house, but having three little kids, we just wanted to go to work somewhere,” she said. “We wanted to make it really professional.”

Realities of business ownership

As a business owner just getting started, you’re your own marketing and sales department, IT department, scheduling department, accounting and invoicing department, and much more.

“What I regret is you don't think about the number of hours you've been managing the business,” Blackburn said. “When you work for somebody else and they’re only open from 8 to 5, you only work 8 to 5. When you own your own business, you don't get a break. You don't get to take a day off not thinking about the business.”

She said it’s important for you and everyone around you to prepare for the amount of work it takes and that it will take many more hours than you think.

“There are so many little things that can fall through the cracks,” she said, and suggests making lists and keeping a detailed calendar of what needs to be done.

At first, Dunn said he thought it would be fun to do everything himself. He even learned how to do his own web page.

“It was like a new challenge. I kind of embraced the idea that I could do everything just exactly the way that I wanted to do it,” he said, adding he soon realized how much the assistants at his law firm used to do for him, like scheduling and invoicing .

“It quickly became a chore and was something I did not enjoy and did not want to do. The newness and freshness wore off very quickly.”

That’s about the time Miles Mediation & Arbitration approached Dunn about joining their team as a contractor, not an employee. For a percentage of revenue, they now handle those kinds of things, provide office space, and do the website and some marketing, leaving Dunn to do the mediation he enjoys.

Marcus knew from the beginning employees were necessary.

“We knew right away that we were not going to try to do everything ourselves and we were going to hire people to work for us,” she said. “There were other franchise owners who did everything themselves for the first year or two, and we knew that was not going to work for us. We wanted to have weekends with our kids.”

I still do all of the administrative tasks myself, and I need to make sure I need to set aside time for them.

Being prepared for downturns

All of the business owners we talked with were up and running successfully before COVID-19 became part of our lives in March 2020.

As we all know, the pandemic forced everyone to change and pivot.

Preparing for the worst is something Blackburn says all business owners should do. While nobody wants to think about a doomsday scenario for your business, she says the fact she has always planned for the worst things that could happen helped her weather the pandemic and anything else that might come along.

“When you’re opening a business, you need to know your backup plan and a pivot plan,” she said. “If the business is not going anywhere, when is it time to bail out? You have to have an entrance plan and an exit plan.”

She said the plan doesn’t need to include everything, but it should lay out the triggers of when it might be time to say goodbye.

“Is it when I’m broke and owe everybody and am still borrowing money to stay afloat? That’s not success.”

You are only one person

No matter if you handle everything yourself or hire people, all the business owners we talked with said knowing your limits and making sure you have time for yourself is important.

“I beat myself up a lot that I wasn’t working hard enough for many years. I was learning how to be a working mom and I was learning how to be a business owner and that was a double whammy,” Marcus said. “I was working towards building something that might eventually produce a steady paycheck, so it felt even more key that I was giving it all my time.”

After a period working late into the night and being exhausted, reality hit.

“I looked at myself in the mirror, and said, ‘Jen, don’t beat yourself up. You don’t need to work at nine o’clock at night. It’s okay to go to bed,’” she said. “I wish I could have learned sooner to put my own rest first. You need time off.”

Dunn said he wished he realized earlier he couldn’t be everything to everyone.

“My initial vision as a mediator was to be the mediator for all occasions like a Swiss Army Knife of mediation, available for any case, anywhere, anytime, anything you need,” he said. “What I eventually realized is that it was much more productive for me to focus on what I actually know and what I'm actually known for, rather than trying to be all things to all people, and that is employment law.”

Enjoy the ride

Everyone we talked with said the efforts they have put into their businesses have been worth it.

“In a couple of years, I would like to step completely out of it and let it be a company [my daughter] runs. It’s her legacy,” Blackburn says. “She can grow it and do whatever she wants to do with it. It’s like a movie where the man and woman ride off into the sunset. I’m looking for my husband and I to ride off into the sunset. I want to hand it over to my daughter 100%.”

For Dunn, the ability to control his calendar is a huge bonus.

“I can decide when I am available and when I am not. I have never had that. I can schedule a vacation.”

It took a while, but Marcus said she finally found balance.

“It’s okay to work a half day and go get a massage or have lunch with a friend if you’re a business owner. You’re the boss,” Marcus said with a laugh.

For me, I realized I really can work from anywhere and nobody needs to know where I am. As long as I have a phone, a computer, and internet, I’m good.

Tiffani Sherman is a Florida-based freelance reporter with more than 25 years of experience writing about finance, health, travel and other topics.

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Creating a business plan for your startup: step-by-step guide

You’ve had a great idea for a startup or new business. Now you need to make sure it all makes sense and create a document that shows how and why your business will succeed.

Every company is unique and this will be reflected in its business plan. The steps below can be tailored to your requirements but should ensure the key elements are all included.

Step 1. Set out your stall

You may be clear about what will make your new business great, but you need to be able to communicate that to investors, customers and other stakeholders. An effective business plan will often start with a clear statement about what the business will do, and what product or service it will sell.

Step 2.  Set clear goals

Do you want to takeover the world or just a small corner of it? Is creativity, social impact or innovation more important than maximum profit? Decide on the business, financial and even personal goals you want to achieve in the short and medium term.

Step 3. Explain your product

Describe what your product or service will be, and what makes it unique or different. What are its limitations or downsides? How will you make, develop or source it?

Step 4. Introduce your customer and market

Who is your target customer and how big is your potential market? The better you understand the customer, the more likely you will create something they will buy. Market research is critical. Consider how you could test the market and assess demand with a Minimal Viable Product.

Step 5. Explain your sales and marketing approach

How will you make potential customers aware of your product or service? Marketing and advertising costs are often underestimated, especially in a crowded market with a lot of competition for customers. Will you have time to do the marketing yourself or will you need to hire staff or outsource tasks?

Step 6. Consider variable costs

These are the costs associated with the product or service itself, including manufacture, storage and delivery. For a digital business this could include development and testing.

Step 7. Estimate fixed costs

There will also be fixed costs that you will need to pay no matter how much you sell. These could include salaries and wages, National Insurance, tax, office costs, accountant’s fees, bad debts, interest payments and rates.

Step 8. Work out your pricing

Take the cost of the product or service away from the sales price and you have your gross profit. Subtract your overhead costs for the relevant time period and you’ll start to have an idea of how much you’ll need to sell to make a profit. There are various pricing models and you may need to experiment to find the right one for your business.

Step 9. Evaluate the competition

Identify other businesses that could compete for customers. Make a list of factors related to their product or service – everything from cost and service level to features and reputation. Assess your idea against the competition to spot risks and opportunities.

Step 10. Crunch the numbers

Financial calculations and forecasts are at the heart of a business plan. They could include capital requirements, profit and loss forecasts, cashflow forecasts, required assets and funding requirements. How much startup capital do you need and what runway will that give you before more investment or revenue is required?

Step 11. Decide on a legal structure and business organisation

Will you be a sole trader, limited company or set up a business partnership, perhaps with a co-founder? Do you need staff and will they be offered any equity?  What access to advice and expertise do you have – and what will you need to pay for?

Step 12. Assess the risks

With so much disruption and uncertainty it has never been more important to assess the risks your business may face. Be honest about gaps in the founders’ knowledge or experience and look to fill them. Work out contingency plans and stress-test your assumptions.

Step 13. Iterate your approach

A business plan should be an evolving document that reflects what you are learning and the data and insight that is being collected. The sections may need to be adapted or added to, depending on the nature of the business, its sales model and type of funding.

Step 14. Talk to Barclays Eagle Labs

The Ecosystem Managers at Barclays Eagle Labs are used to working with founders and entrepreneurs at the start of their business journey. They can advise you on approaches, considerations and next steps. Find your nearest Eagle Lab here.

Step 15. Find a business plan template to suit your needs

There are numerous business plan templates online with some specifically tailored for startups. No two are the same, so it pays to search widely and borrow from multiple sources to create the business plan that best fits your circumstances and concept.

This Barclays Business Plan Generator is a great first step in clarifying your business idea.

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Thinking about Starting a Small Business?

Small Business Development Centers (SBDCs) assist small business owners in starting or growing their businesses. Sometimes we also have to help prospective business owners realize that business ownership is not right for them or that they are not prepared at present to be a business owner. These are not easy conversations; however, it is much better to realize you should not start a business than it is to start a business and realize that you made a mistake.

Before you take the plunge into business ownership, you should ask yourself these questions and answer them as honestly as you can.

• Do I have money to invest in starting a business? We meet with many people who do not have any cash to invest in starting a business. They expect to be able to borrow 100% of the start up costs. This is not going to happen.  A lender will expect the business owner to have 10- 20% of the start up funding needed.  If you do not have capital to invest but you really desire to start a business, you should consider options that requires little or no investment.  Such businesses include consulting services or virtual services you can do from home using only your computer.
• Do I have time to devote to running a business? All businesses will consume time, both for working in the business and working on the business.  Many business owners tell us that they work 40 or more hours in their businesses each week, and they work another 10 – 20 hours on the business.  Working on the business includes marketing and networking efforts to find customers, invoicing, bill paying, scheduling, and many other tasks that are necessary but do not generate revenue.
• Am I comfortable at making decisions? A business owner makes many important decisions every day.  These decisions include which jobs you want to bid on, the proper price to charge for your services, how you will market your services, and should you hire (or fire) an employee. If you are hesitant to make decisions, business ownership may not fit your personality.
• Do I have the expertise to do the work and run the business? We meet many people who do not have the ability to perform the work to be done in the business they want to start. They are planning to hire the right people to do the work.  An example of this is when a non-chef opens a restaurant with the intent to hire a great chef. This might work well until the chef leaves to take another job.  Prospective business owners need to have some training and experience in the services they will offer, so they can do the work themselves when necessary. They also need to be able to recognize when an employee is not doing the work properly or well.
• Does my family support my decision? Running a business is hard work. It requires putting in long hours and committing family financial resources to the business in order to achieve success.  You need the support of those in your immediate family.  If those closest to you do not support your decision, you should reconsider.

If you are considering starting a business, the Virginia Small Business Development Centers (SBDCs) are here to help. We offer free consulting and low-fee training classes to prepare you for becoming a business owner.  We recommend that you start by taking our online, on-demand class, First Steps to Starting a Business   or a similar introduction to business ownership.

Then, if you are ready to move forward, you can complete a Request for An Appointment Form . The form will be sent to the SBDC center in your locality.  A consultant will contact you to schedule your first appointment.  We look forward to assisting in your journey to business ownership and to giving you the tools that will help you to succeed.

Tips for Starting a Small Business

I t is a great way to start a new business. Where do you start? There are many ways to create a business. You also need to consider several important factors. Follow our guide to help you take the guesswork and increase your chances of success. You'll be guided through every step, from defining your idea to registering, starting, and growing your company.

Be Prepared Before You Start: Have the right mindset

Publicity is often drawn to exciting stories of overnight success. However, it's not always that easy—they can't see all the work you put into planning, building, and positioning for a public launch. Remember to stay focused on your own business journey and not compare your success with someone else's.

Consistency Is Key

New business owners are initially motivated and energized but become frustrated as soon as that motivation fades. It's important to develop habits and routines that will help you keep going when motivation is low.

The Next Step

Some entrepreneurs jump in without thinking and just make things as they go. Some business owners are stuck in analysis paralysis and need help getting started. You may be a mix of both, and that's where you should be. To achieve any personal or business goal, it is best to list all the steps necessary to reach that goal. Order the steps according to what must happen first. Some steps can take only a few minutes, while others may take hours. It is important to take the next step.

What is your top tip for launching a small company?

We asked entrepreneurs and business leaders for tips on launching a small business. Following a few tips can help you start your own small business.

Ask for Help:

Asking for help is the best advice I can give anyone wanting to start a small company. Nobody should try to reinvent the wheel on their own. If you're stuck with your business plan and don’t know what to do next, ask other entrepreneurs or mentors for their advice. Many people are willing and ready to assist you.

• Alex Johnson, CEO of Man and Van Star

Define and Embed Your Core Values: 

Establish clear core values that resonate with your mission and vision from the outset. These values will be your north star, guiding decision-making, shaping your company culture, and informing how you interact with customers and stakeholders. At Pumex, our commitment to excellence and customized solutions has defined our brand and consistently driven us to exceed client expectations.

• Chris Bourn, Chief Marketing Officer at Pumex

Embrace Your Unique Vision: 

Your business should reflect your passion and unique perspective. Especially in creative industries, distinguishing your brand with a clear, compelling vision is crucial. It's not just about what you do; it's about how you do it differently and better. In my journey, ensuring that Musa Art Gallery stood out for its unique approach to storytelling through design was fundamental to our success.

• Thery Benjamin, CEO of Musa Art Gallery

Surround yourself with experts:

You can't do everything. There are many aspects to running a small company. Look for professionals with different skill sets who are eager to work in an entrepreneurial environment. By combining your expertise, your team and you can help your business get off to a good start.

• Adam Jacobs, The Managing Director of Hunter Talent

Understanding the Financing Role

There are many options for financing a startup, from venture capital through a local bank loan to an unsecured loan. You can challenge yourself by deciding which financing option will be best for your business and when you should seek funding to help fuel growth. Small businesses that develop a financing plan can execute a better strategy to scale up with their capital requirements.

• Matt Jones, The CEO of Wonder Days

Market Research

Conducting thorough market research ensures your solution addresses a real problem. Following this, crafting a clear, concise business plan is essential, outlining your vision, mission, objectives, and the strategies to achieve them. At Big Ben, we champion innovation and efficiency, integrating these values from the inception of our business strategies. 

• Ben Johnson, The CEO of Big Ben

Strong Brand Identity and Company Culture: 

Your brand is not just a logo or a website; it's the experience you deliver. From the outset, define what your brand stands for and ensure this is reflected across all aspects of your business. Simultaneously, build a company culture that empowers and motivates your team. At Flower Delivery, our passion for floral excellence and commitment to joy and satisfaction are at the heart of everything we do, driving our success and resonating with our customers.

• Sarah Fletcher, CEO of Flower Delivery

Reduce Uncertainty and Increase Certainty

Reduce your uncertainty when starting a business. Does my idea work? Is this product a good fit for the market? Does my marketing plan work? There are many questions and few answers. It's normal for new businesses to have many questions. There wouldn't be any opportunity if all were clear at the beginning. You should still focus on reducing the uncertainty of your business by validating assumptions as early as possible. Run tests and engage in conversations with potential clients as early as possible.

• Johnny Austin, The Owner of Sell My House Fast Puyallup

Don't Be Afraid To Hire Professionals

I recommend hiring a professional to help you launch a new company. Many business owners may be talented in their field but need to learn how to start a new business. Professional assistance can save time by reducing research and ensuring you know what to do and when. This also reduces the risk of not knowing the federal, state, or local regulations required by the industry. It will also save you money over time as a professional can provide cost-effective, best-practice solutions.

• Chris Langley, Owner of Composite Doors

Know Your Audience

You may be putting a lot of effort into your company and yet it is not growing. You may be putting all your effort in the wrong direction. It's important to know the market in which you plan to launch your business and your target audience. Consider your product or service's needs to determine your target audience. Then, identify the pain point and determine who is experiencing it. If you want to start a company that creates websites, the next step is to determine who would need a website but would need help creating one. Your target audience in the example above is most likely small business owners. Understanding your target audiences can help you advertise more effectively as you will know who you are targeting and how to reach out to them. You'll also save money by not wasting it on uninterested audiences.

• Elia Guidorzi, The CEO of TECHNI Waterjet

Money blog: Cost of £7 pint broken down - how much is tax and profit?

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• How to make your money work harder while it's sat in your current account
• How much will your take-home pay increase this month with NI cut? Use our calculator
• 'Are they going to go around sniffing people?' Big Issue founder says government has 'lost the plot' over homelessness plan
• Eight big price hikes this week - and six boosts to Britons' pockets
• All the places kids can eat cheap or free this Easter

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Tens of thousands of people are facing crippling tax demands from HMRC for taxes their employers failed to pay. 

It's a campaign that has driven people to the brink of bankruptcy and devastated families.

At least 23 victims have taken - or attempted to take - their own lives.

For the first time, two people who tried to end their lives have shared their story with Sky News.

The following article contains references to suicide that readers may find distressing.

We've all found ourselves stuck on a delayed train and wished we'd chosen any other route to get home. You might even be on one right now.

Well, thanks to a new study you can at least take note of routes you might want to avoid.

It has listed the worst offending companies on the UK's rail network by looking at official data from the Office of Rail and Road between January 2021 and September 2023.

It looked at trains that were cancelled or delayed by 15 minutes or more during that time period.

The research found Avanti West Coast had 15.36% of its services delayed or cancelled. 

The study's second worst offender, with 12.32% of all trains either cancelled or seriously late, is Grand Central Rail . 

And  CrossCountry was the third least reliable operator, with 12.26% of trains arriving 15 minutes or more late, or being cancelled altogether. 

Axel Hernborg, founder of Tripplo , which conducted the study, said: " It's no secret that the UK's rail network is a far shout from those within mainland Europe in terms of efficiency and reliability, and these findings simply underscore that."

Look at the table below for the full list of the 10 least reliable train operators, as ranked by the travel website. The column on the right shows the number of minutes customers lost in delays.

By Faith Ridler, news reporter

At the start of the year, I set myself what felt like an impossible challenge - to make enough cash to finally go on my dream holiday to Japan – all through side hustles.

After a few false starts – and a lot of cat sitting – I discovered Vinted, a second-hand selling app which had the very convenient side effect of helping me declutter my very tiny London flat.

I set up my account at the very end of January, listing a few items that were spilling out of my wardrobe – jackets, dresses and shoes I hadn’t worn once since purchasing them.

I also listed some craft supplies that had become a hobby graveyard on my cluttered desk during COVID lockdowns.

To my surprise, pretty much everything sold.

And to date, I've made the hefty sum of around £1,500. 

This was more than enough for my flight to Japan, a new suitcase, and a hotel for my arrival in Tokyo this summer.

Here are the tips and tricks I’ve learned along the way…

Do your research

The biggest piece of advice I could give you if you’re thinking about selling on Vinted is to make sure you know the value of what you're selling.

I was surprised to find through my own selling experience that some brands hold their value much better than others. 

For example, a dress I bought for £40 from a brand called Louche sold (after some weeks) for only £4.

On the other hand, a Lucy & Yak T-shirt I bought for £30 sold used for £20.

You may ask, how do I know what something is worth?

The best way to investigate this is to check what other people are doing on the app. That way, you don’t list things too cheaply and end up losing out.

Other items I found hold their value are Nintendo Switch games, some of which I sold on for face value after completing a playthrough myself.

An important note – make sure you check which items you can sell through Vinted before listing. If you have listings deleted too often, you can get your account banned. You can find this information through the app itself.

No printer? InPost lockers are your friend

A key element of Vinted selling is physically posting the items, which can become a bit of a headache if you don’t know the ins and outs of the app.

I fell victim to the many shipping options at the start of my selling journey – until a kind friend mentioned you can actually switch off methods not available in your area in the Postage tab of Settings.

My advice would be to have a good look at what you can offer for delivery, and make sure those are the only options available for people buying items through your page.

If – like me – you don’t have a printer, you can turn off every option but InPost lockers.

These are postal lockers you simply need to scan a QR code to open and leave the parcel inside.

No label, no problem.

Learn how to haggle

This was something that shocked me about the app.

Although you set a price for your items, almost everybody will try to haggle the price down.

You can ask for people not to send offers in the description of the items, but I’ve had very limited success with that method.

What I find works best is to list the item for slightly more than you would accept, and just let people haggle down. You're still earning the best price, and the buyer goes away with a "deal".

Everybody wins.

Taxes and Vinted

When it comes to earning money through any method, you always have to consider the tax ramifications.

However, as Vinted explains clearly on its website , if the money you make on the app over a year is less than what you paid for the items initially, you pay no tax.

It adds: "The only time that an individual item might be taxable is when you sell it for more than £6,000 and there is a profit from the sale.

"Even then, you can use your capital gain tax-free allowance (which is £3,000) to reduce this profit."

Essentially, if, like me, you're simply decluttering your way to Japan, you're very unlikely to find yourself crossing paths with HMRC.

Trade groups have warned of higher food prices and empty supermarket shelves because of new post-Brexit border fees being introduced this month.

A maximum charge of £145 will apply on imports of plant and animal products, such as cheese and fish, entering the UK through the Port of Dover and Eurotunnel from 30 April.

The fees are intended to cover the cost of operating new border control posts required after Brexit, and will not apply to goods brought into the UK for personal use, the government said.

But importers warned the new charges could lead to higher prices for consumers.

Read more here ...

Ted Baker is the latest in a string of high-street giants to call in administrators in recent years. 

But how does it affect you? 

Let's use Ted Baker as an example. 

Purchases and returns

You can still purchase online or walk into a Ted Baker shop and buy items, but you could run into trouble returning them. 

If the retailer stops trading, it may not be able to get your money back to you.

If that is the case, you would have to file a claim with Teneo (Ted Baker's administrator) to join a list of creditors owed money by Ted Baker – and even then there's no guarantee you'd get your money back.

You could also file a claim with your debit or credit card provider - but again, no guarantees. 

TL;DR: If you have one - use it as soon as possible. 

Teneo has made no changes to the way gift cards can be used at Ted Baker, but as is the case with all administrators, it can change the terms and conditions at will. 

As above, if you lose out on cash because of a company going into administration, you can raise it with the administrators themselves. 

Credits and debits

As we mentioned earlier, you can file a claim with your debit or credit card provider to recover lost funds - but how exactly does that work?

• Credit card:  If you bought any single item costing between £100-£30,000 and paid on a credit card, the card firm is liable if something goes wrong. If any purchase was less than £100, you may still be able to get your money back via chargeback
• Debit card:  Under chargeback, your bank can try to get your money back from Ted Baker's bank. However, be aware that this is not a legal requirement and it can later be disputed and recalled back to Ted Baker's bank

A US state is considering a bill giving employees the right not to respond to calls, emails and texts from their bosses outside of paid work hours.

The so-called "right to disconnect" would allow California's labour commission to fine employers for interrupting personal time, reports our partner network NBC News.

The bill makes exceptions for emergencies, scheduling and collective bargaining.

The state's Chamber of Commerce called the proposed legislation a step backwards for flexibility.

However, Professor Amira Barger told NBC the changes would help tackle an "epidemic of burnout" and were a "necessary adaptation" for the future of work.

The planned £15bn mega-merger of UK mobile networks Vodafone and Three is to face an in-depth investigation by the competition watchdog.

The Competition and Markets Authority confirmed it will launch a so-called Phase 2 probe after both firms told the regulator they would not be offering measures to ease its concerns ahead of the deadline, 2 April.

The CMA said last month that the tie-up could have a "substantial" impact on competition, warning it may lead to higher prices and reduced quality.

Read more in our full story .

School strikes over teachers' pay and funding could be staged in September, the leader of a teaching union has warned.

Daniel Kebede, general secretary of the National Education Union (NEU), the largest education union in the UK, did not rule out launching a ballot on walkouts for the autumn term.

Teachers at the NEU’s annual conference in Bournemouth will vote today on whether the union should "build capacity" to deliver national industrial action.

Ofgem is considering plans for rules on the use of artificial intelligence in the energy industry amid fears the technology could risk "tacit collusion", reports  The Times.

Algorithms that make pricing decisions for companies would make it more difficult to identify who is accountable when it comes to competition issues, the regulator said.

Customers also need to be protected from higher-risk AI used to help balance supply and demand that could cause power outages if they fail.

By Daniel Binns, business reporter

The FTSE 100 is up more than 0.4% this morning, after a rise in the price of gold boosted precious metal mining firms.

Also up is British fintech Cab Payments. Its shares have shot up 11% in early trading.

It comes after the firm secured a payment provider licence in the Netherlands, paving the way for it to expand in the country.

Meanwhile, the cost of oil continues to slowly creep up in the wake of investor concerns over the Middle East and Ukraine's attacks on Russian refineries.

A barrel of Brent crude is currently trading at just over $89 (£70).

The currency markets remain stable, with £1 buying you $1.26 US or €1.17, with the rates almost unchanged from yesterday.

Google is considering charging for premium AI-powered features, the Financial Times reports.

It would be the first time the tech giant put any core products behind a paywall, as it seeks to gain ground in the fast-moving AI space

The FT cited sources familiar with Google's plans as saying it could incorporate a generative AI-powered search engine in its subscription services, which already provide access to its new Gemini AI assistant in Gmail and Docs.

Google's traditional search engine would remain free of charge and ads would continue to appear alongside search results even for subscribers.

"We're not working on or considering an ad-free search experience. As we've done many times before, we'll continue to build new premium capabilities and services to enhance our subscription offerings across Google," the company told Reuters.

Google, which invented the foundational technology for today's AI boom, is locked in battle with two industry players that have captured the business world's attention - ChatGPT's creator OpenAI and its backer Microsoft.

Every Thursday we look at a different savings option, explain the pros and cons, and reveal the best deals on the market (see table below for that).  This week we're talking about the top interest-paying current accounts. Savings Champion founder Anna Bowes  writes...

From time to time there are plenty of incentives available to attempt to encourage people to switch their current accounts - but switching is not always necessary. There are also some current accounts that offer competitive interest rates, even if there's not a switching incentive. 

While not as prevalent as they have been in the recent past, interest-paying current accounts can offer some very competitive interest rates – especially bearing in mind that most current accounts offer no interest at all. In fact, according to the Bank of England, there is £253bn currently held in these non-interest bearing accounts.

These accounts are usually more complicated than a traditional savings account and there are a number of hoops to jump through and potential hazards to avoid, in order to get the returns on offer. 

Potential traps to look out for are: low maximum balances, introductory rates, monthly fees, a requirement to set up direct debits, a minimum amount to pay in each month and a minimum amount to maintain in the account.

All of these factors need to be taken into account when choosing an account and if you feel that you may fall foul of the rules, take a look at one of the alternatives that will suit your circumstances better. 

Setting up standing orders is an easy way to ensure you deposit and withdraw the qualifying amounts each month and can be effective in managing multiple current accounts. It may take a while to set it all up, but the rates on offer could make it worthwhile. It is also worth remembering that many of these accounts can be opened without having to switch your main current account. 

A final point to bear in mind is that some of these accounts give you access to exclusive savings accounts, which often pay competitive rates - especially true with regular savings accounts.

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