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How to Write a Business Plan for a Startup

Last Updated: December 22, 2023 Fact Checked

This article was co-authored by Jack Herrick . Jack Herrick is an American entrepreneur and wiki enthusiast. His entrepreneurial projects include wikiHow, eHow, Luminescent Technologies, and BigTray. In January 2005, Herrick started wikiHow with the goal of creating "the how-to guide for everything." He has a Master of Business Administration (MBA) from Dartmouth College. There are 13 references cited in this article, which can be found at the bottom of the page. This article has been fact-checked, ensuring the accuracy of any cited facts and confirming the authority of its sources. This article has been viewed 114,069 times.

As a startup, you will need a business plan. For example, you will need to show your plan to a bank if you are seeking a loan. You also need to show the plan to any investor. Business plans are helpful because they force you to step back and analyze your business critically. You should consider your target market, the products or services you will offer, and your projected finances. Writing a business plan isn’t difficult, though it will require considerable research and planning.

Explaining Your Marketing Plan

Step 1 Describe your mission and objectives.

  • Your mission. What is your driving goal every day? Don’t simply write, “Make money.” Identify how you will make money. For example, you can write: “Our mission is to offer residents of the Lakeview neighborhood the best day spa experience in the Near North Side of Chicago. We are committed to providing value and quality in a fun atmosphere that is never predictable.”
  • Your goals. For example, a day spay might have the following goal: “To attract a minimum of 35 customers each day in the first year of operations.” Make your goals as concrete as possible.
  • Description of the industry. Explain whether the industry is growing or poised for growth in the short and long term.
  • The factors that will drive your success. How will you set yourself apart? For example, “You All Day will separate itself from the pack based on the owner’s deep experience running a day spa in Seattle for ten years. This experience includes familiarity with successful marketing techniques and trends analysis.”
  • Your legal form. Are you a sole proprietorship, partnership, limited liability company (LLC), or corporation? Also explain why you selected this form.

Jack Herrick

Jack Herrick

Don’t skimp on how much energy and time you put into your mission. When asked about creating wikiHow’s mission, Jack Herrick, founder of wikiHow, responded: “We had the whole management team — alongside members of the wikiHow community — reviewing it, discussing it, and going back and forth on the wording. Those two sentences were many hours of work.”

Step 2 Discuss your industry.

  • You can search for industry information in other places. For example, talk to people in your industry at trade shows. Also search online. Many industries have trade associations, which have websites with information.
  • For example, when analyzing the day spa industry, you might want to talk about how it is growing because more upper-income men in urban areas are visiting. (If that’s true).
  • By analyzing the industry, you gain insight as to your likely target market and how you can reach them.

Step 3 Identify your target market.

  • Age. What is the average age of your likely customer? If you don’t know, then visit similar businesses and note the ages of the clientele.
  • Gender. Will men or women—or both—primarily use your products or services?
  • Location. Generally, your market will be located near your business. However, if you have a web-based business, your target audience could have no geographic boundaries.
  • Income level.
  • Occupation. For example, a day spa might target stressed-out white collar professionals.
  • Education level. There is often a link between education, income, and occupation—though not always. For example, a discount bookstore might target an educated audience that nevertheless has a lower income.

Step 4 Scope out your competition.

  • To find competitors, look in the phone book and do a general Google search. Make sure to read their website and stop into the business.
  • If you’re opening a restaurant, you’ll want to see a sample menu, as well as the hours of operation.
  • Also identify indirect competitors. For example, a day spa is competing with more than other spas. You also compete with any business that offers relaxation, such as massage parlors or meditation centers.
  • Name of your competitor.
  • What you offer that they don’t. Think about products and services, but also location, ease of ordering, etc. What will make the consumer experience different at your business?
  • What they offer that you don’t. Identify why you don’t offer their products or services. For example, they may be serving multiple niches while you are focused on only one. Alternately, they may have a favorable location.

Step 6 Describe your products and services.

  • Whether you will sell pizza by the slice, as whole pies, or both
  • How big your pizzas will be
  • What toppings your customers can offer
  • If you will have take-out and delivery options
  • What other food items will be sold

Step 7 Devise your marketing...

  • What type of advertising or promotion will you use? How often will you use paid promotion?
  • What other promotion other than paid advertising will you use? For example, you might use social media, professional networks, etc.
  • Will you create a logo and use it on cards, letterhead, websites, etc.?
  • How large will your promotional budget be?

Discussing Your Business Organization

Step 1 Explain your daily operations.

  • State how much you expect to pay each employee in your first three years of business.
  • Also name your professional support, such as your business lawyer, accountant, and insurance agent. Professionals are independent contractors you use but don’t employ. Calculate how much you expect to spend on each professional.

Step 2 Identify management.

  • You might write: “Lisa Jones is the sole proprietor of You All Day and will run day-to-day operations. As a certified massage therapist, she ran the Relax! chain of day spas in the Greater Seattle area for ten years. A former accountant, Lisa has an MS in accounting from the University of New Hampshire and worked as a CPA briefly before going into the spa business.”
  • If you are asking for a loan, then include resumes for each owner. You can put them in the appendix at the end of the document.

Step 3 Provide personal financial statements.

  • You should create professional-looking financial statements using a spreadsheet.
  • You’ll have to gather quite a bit of information to make the financial statement. For example, you will need information on your assets, investments, and personal debts.
  • You might also want to get a free copy of your credit report and review it as you draft your business plan.

Analyzing Business Finances

Step 1 Explain your start-up costs.

  • Common startup costs include insurance, licenses, equipment, advertising, and employee expenses. [9] X Trustworthy Source U.S. Small Business Administration U.S. government agency focused on supporting small businesses Go to source
  • Also identify the source of the startup capital. For example, if your startup has three initial owners, state how much each is contributing to the business and their ownership percentage.
  • If you need financing, state how much. Include the terms of any proposed loan.

Step 2 Forecast profits for the first year.

  • You’ll need to make some assumptions in order to come up with a forecast of sales. You should explain these assumptions in your business plan.
  • For example, you can write, “We assume continued interest in day spas in the Chicago area.”
  • Another assumption is the overall health of the economy. “Although the Chicagoland economy has grown more slowly than other regions of the country, we assume that the Chicago economy will grow on par with other large metropolitan areas in the coming decade.”
  • You can also include a four-year projection, though this is optional.

Step 3 Identify expected cash...

  • Also talk about how you will build up your cash reserves. For example: “In addition to normal cash flow, we will focus on obtaining sufficient cash reserves for emergencies. These reserves include a line of credit with a bank, which we can use when business is slow. We will also invest excess cash in certificates of deposits at our bank.”

Step 4 Provide a break-even analysis.

  • Fixed costs: these don’t vary depending on your sales volume. For example, your rent, employee salaries, and insurance are fixed costs.
  • Variable costs: these fluctuate depending on your sales and include shipping, inventory, and manufacturing costs.

Finishing Your Business Plan

Step 1 Format your document.

  • Add a cover page to your document. You can title it “[Company Name]’s Business Plan” or “Business Plan for [Your Name].” If you have a logo, include that too.

Step 2 Draft your executive summary.

  • For example, you can write, “You All Day is a start-up dedicated to providing men and women in Chicago a high-quality day spa experience at an affordable price. We specialize in pedicures, manicures, massage, and herbal aromatherapy. The Near North Side of Chicago has grown substantially over the past 20 years, with young, educated millennials settling in to start families. This area is currently under served, and we hope You All Day can meet the demand of the local market.”

Step 3 Assemble the pieces.

  • Executive Summary
  • Company Description
  • Industry Analysis
  • Market and Competition
  • Products and Services
  • Marketing and Sales Plan
  • Operations and Management
  • Financial Forecasts
  • Exhibits/Appendix

Step 4 Add attachments in the appendix.

  • Review for typos and other errors. An accountant should check your numbers to make sure they are accurate.
  • Analyze the overall presentation. Is the information crammed in so that the document is tiring to read? If so, spread out the information so that there is a lot of white space on each page.
  • You can also show the plan to a business adviser. If you live in the U.S., you can show it to someone at your nearest Small Business Development Center, which provides help drafting business plans. You can find your nearest SBDC by visiting this website: https://www.sba.gov/tools/local-assistance/sbdc .

Step 6 Print and bind the plan.

  • You might want to include tabbed partitions between each section of your business plan. This will make it easier for someone to flip through it and find what they are looking for.

Expert Q&A

  • Don’t be afraid to change your business plans as you research and draft the document. That’s one of the reasons for writing the plan in the first place. For example, you might have intended to target women as consumers only to realize that there are growth opportunities with men. You can adjust your plans accordingly. Thanks Helpful 1 Not Helpful 0

how to develop a business plan for a startup

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  • ↑ https://business.vic.gov.au/business-information/marketing-and-sales/increasing-sales-through-marketing/do-market-research
  • ↑ https://openstax.org/books/entrepreneurship/pages/7-5-reality-check-contests-and-competitions
  • ↑ https://www.sba.gov/business-guide/plan-your-business/market-research-competitive-analysis
  • ↑ https://www.indeed.com/career-advice/career-development/business-plan-product-description
  • ↑ https://business.gov.au/planning/business-plans/develop-your-marketing-plan
  • ↑ https://openstax.org/books/entrepreneurship/pages/11-4-the-business-plan
  • ↑ https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs
  • ↑ https://www.alberta.ca/preparing-financial-projections-and-monitoring-results.aspx
  • ↑ https://www.pwc.com/gx/en/services/entrepreneurial-private-business/small-business-solutions/blogs/preparing-a-cash-flow-forecast-simple-steps-for-vital-insight.html
  • ↑ https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan
  • ↑ https://smallbusinessbc.ca/article/5-reasons-business-plan-review/

About This Article

Jack Herrick

To write a business plan for a startup, break your plan up into several sections, including an executive summary, a description of your company, an industry analysis, market and competition information, your products and services, your marketing and sales plan, operations and management information, your financial forecasts, and finally, an appendix. To format your business plan, use a professional font, like Times New Roman, and include a cover page with your company's name and logo on it. To learn how to write each section of your business plan, read on! Did this summary help you? Yes No

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How to Write a Startup Business Plan

May 28, 2022 - 10 min read

Yuvika Iyer

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

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

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

What is a startup business plan?

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

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

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

Then ask yourself these questions:

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

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

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

What is a lean startup business plan?

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

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

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

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

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

Why do you need a small startup business plan?

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

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

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

Mobile image promo promo

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

product launch startup template

Obtain external funding

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

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

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

Understand your target market

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

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

Prioritize high ROI strategies

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

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

Accelerate financial health

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

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

How to write a small startup business plan

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

1. Clarify the startup vision, mission, and values

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

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

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

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

2. Outline the executive summary

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

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

3. Develop startup goals and milestones

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

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

4. Write a company description

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

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

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

how to develop a business plan for a startup

5. Conduct market analysis

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

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

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

6. Develop startup partnerships and resources

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

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

7. Write a startup marketing plan and startup budget

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

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

Examples of startup business plans

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

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

Vision statement

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

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

Executive summary

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

Business structure

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

Marketing strategy and competitive advantages

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

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

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

Startup milestones

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

Startup business plan template

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

how to develop a business plan for a startup

Top tips for writing a startup business plan

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

Know your audience

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

Have a simple and clear goal

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

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

Spend time researching

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

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

Build a startup toolkit

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

Keep it precise

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

Ensure tonal consistency

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

Add reference points

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

Be ready to pivot

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

How to create a business plan with Wrike

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

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

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

Yuvika Iyer

Yuvika Iyer

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

Related articles

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

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

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

Operational Planning: How to Make an Operational Plan

Operational Planning: How to Make an Operational Plan

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

What Is a PMIS and How Does it Work?

What Is a PMIS and How Does it Work?

Discover how a PMIS can help your team deliver high-quality projects faster in this in-depth guide. Learn what is PMIS and how you can set one up.

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How to Write a Business Plan, Step by Step

Rosalie Murphy

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

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.

Bizee

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

how to develop a business plan for a startup

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.

On a similar note...

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How to make a business plan

Strategic planning in Miro

Table of Contents

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

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

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

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

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

What is a business plan?

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

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

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

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

Business plan vs. business model canvas

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

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

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

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

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

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

Why is a business plan important?

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

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

Helps to define the business goals and objectives

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

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

Guides decision-making

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

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

Attracts investors and secures funding

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

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

Identifies potential challenges and risks

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

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

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

Provides a basis for measuring success

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

Are we where we want to be at this point?

Did we achieve our goals?

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

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

How to make a business plan step by step

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

1. Create an executive summary

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

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

2. Write your company description

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

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

3. Conduct a market analysis

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

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

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

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

4. Describe your products and services

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

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

5. Design a marketing and sales strategy

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

Pricing strategy

Advertising and promotional tactics

Sales channels

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

6. Determine budget and financial projections

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

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

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

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

8. Make an action plan

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

Types of business plans

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

Startup business plan

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

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

Strategic business plan

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

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

Operational business plan

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

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

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

Growth-business plan

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

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

One-page business plan

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

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

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

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

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

Be practical

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

Be specific

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

Be thorough with your research

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

Get input from others

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

Review and revise regularly

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

Create a winning business plan to chart your path to success

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

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

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

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How to Start a Business: A Comprehensive Guide and Essential Steps

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Conducting Market Research

Crafting a business plan, reviewing funding options, understanding legal requirements, implementing marketing strategies, how much does it cost to start a business, what should i do before starting a business, what types of funding are available to start a business, do you need to write a business plan, the bottom line.

Building an effective business launch plan

how to develop a business plan for a startup

Starting a business in the United States involves a number of different steps, spanning legal considerations, market research, creating a business plan, securing funding, and developing a marketing strategy. It also entails decisions around a business’s location, structure, name, taxation, and registration.

This article covers the key steps involved in starting a business, as well as important aspects of the process for entrepreneurs to consider.

Key Takeaways

  • Entrepreneurs seeking to develop their own business should start by conducting market research to understand their industry space and competition, and to target customers.
  • The next step is to write a comprehensive business plan, outlining the company’s structure, vision, and strategy. Potential funders and partners may want to review the business plan in advance of signing any agreements.
  • Securing funding is crucial in launching a business. Funding can come in the form of grants, loans, venture capital, or crowdfunded money; entrepreneurs may also opt to self-fund instead of or in combination with any of these avenues.
  • Choosing a location and business structure can have many implications for legal aspects of business ownership, such as taxation, registration, and permitting, so it’s important to fully understand the regulations and requirements for the jurisdiction in which the business will operate. 
  • Another key aspect of launching a new business is having a strategic marketing plan that addresses the specifics of the business, industry, and target market.

Before starting a business, entrepreneurs should conduct market research to determine their target audience, competition, and market trends. 

The U.S. Small Business Administration (SBA) recommends researching demographic data around potential customers to understand a given consumer base and reduce business risk. It also breaks down common market considerations as follows:

  • Demand : Do people want or need this product or service?
  • Market size : How many people might be interested?
  • Economic indicators : These include income, employment rate, and spending habits of potential customers.
  • Location : Where are the target market and the business located?
  • Market saturation : How competitive is the business space, and how many similar offerings exist?
  • Pricing : What might a customer be willing to pay?

Market research should also include an analysis of the competition (including their strengths and weaknesses compared to those of the proposed business), market opportunities and barriers to entry, industry trends, and competitors’ market share .

There are various methods for conducting market research, and the usefulness of different sources and methodologies will depend on the nature of the industry and potential business. Data can come from a variety of sources: statistical agencies, economic and financial institutions, and industry sources, as well as direct consumer research through focus groups, interviews, surveys, or questionnaires.

A comprehensive business plan is like a blueprint for a business. It will help lay the foundation for business development and can assist in decision making, day-to-day operations, and growth. 

Potential investors or business partners may want to review and assess a business plan in advance of agreeing to work together. Financial institutions often request business plans as part of an application for a loan or other forms of capital. 

Business plans will differ according to the needs and nature of the company and only need to include what makes sense for the business in question. As such, they can vary in length and structure depending on their intended purpose. 

Business plans can generally be divided into two formats: traditional business plans and lean startup business plans. The latter is typically more useful for businesses that will need to adjust their planning quickly and frequently, as they are shorter and provide a higher-level overview of the company.

The process of funding a business can be as unique as the business itself—that is, it will depend on the needs and vision of the business and the current financial situation of the business owner. 

The first step in seeking funding is to calculate how much it will cost to start the business. Estimate startup costs by identifying a list of expenses and putting a number to each of them through research and requesting quotes. The SBA has a startup costs calculator for small businesses that includes common types of business expenses. 

From there, an entrepreneur will need to determine how to secure the required funding. Common funding methods include:

  • Self-funding , also known as bootstrapping  
  • Seeking funding from investors, also known as venture capital  
  • Raising money by crowdfunding
  • Securing a business loan
  • Winning a business grant

Each method will hold advantages and disadvantages depending on the situation of the business. It’s important to consider the obligations associated with any avenue of funding. For example, investors generally provide funding in exchange for a degree of ownership or control in the company, whereas self-funding may allow business owners to maintain complete control (albeit while taking on all of the risk). 

The availability of funding sources is another potential consideration. Unlike loans, grants do not have to be paid back—however, as a result, they are a highly competitive form of business funding. The federal government also does not provide grants for the purposes of starting or growing a business, although private organizations may. On the other hand, the SBA guarantees several categories of loans to support small business owners in accessing capital that may not be available through traditional lenders.

Whichever funding method (or methods) an entrepreneur decides to pursue, it’s essential to evaluate in detail how the funding will be used and lay out a future financial plan for the business, including sales projections and loan repayments , as applicable.  

Legally, businesses operating in the U.S. are subject to regulations and requirements under many jurisdictions, across local, county, state, and federal levels. Legal business requirements are often tied to the location and structure of the business, which then determine obligations around taxation, business IDs, registration, and permits.

Choosing a Business Location

The location—that is, the neighborhood, city, and state—in which a business operates will have an impact on many different aspects of running the business, such as the applicable taxes, zoning laws (for brick-and-mortar, or physical locations), and regulations.

A business needs to be registered in a certain location; this location then determines the taxes, licenses, and permits required. Other factors to consider when choosing a location might include:

  • Human factors : Such as the target audience for your business, and preferences of business owners and partners around convenience, knowledge of the area, and commuting distance
  • Regulations and restrictions : Concerning applicable jurisdictions or government agencies, including zoning laws
  • Regionally specific expenses : Such as average salaries (including required minimum wages), property or rental prices, insurance rates, utilities, and government fees and licensing
  • The tax and financial environment : Including income tax, sales tax, corporate tax, and property tax, or the availability of tax credits, incentives, or loan programs

Picking a Business Structure

The structure of a business should reflect the desired number of owners, liability characteristics, and tax status. Because these have legal and tax compliance implications, it’s important to fully understand and choose a business structure carefully and, if necessary, consult a business counselor, lawyer, and/or accountant.

Common business structures include:

  • Sole proprietorship : An unincorporated business that has just one owner, who pays personal income tax on profits
  • Partnership : Options include a limited partnership (LP) or a limited liability partnership (LLP)
  • Limited liability company (LLC) : A business structure that protects its owners from personal responsibility for its debts or liabilities
  • Corporation : Options include a C corp , S corp , B corp , closed corporation , or nonprofit

Getting a Tax ID Number

A tax ID number is like a Social Security number for a business. Whether or not a state and/or federal tax ID number is required for any given business will depend on the nature of the business, as well as the location in which the business is registered.

If a business is required to pay state taxes (such as income taxes and employment taxes), then a state tax ID will be necessary. The process and requirements around state tax IDs vary by state and can be found on individual states’ official websites. In some situations, state tax IDs can also be used for other purposes, such as protecting sole proprietors against identity theft.

A federal tax ID, also known as an employer identification number (EIN) , is required if a business:

  • Operates as a corporation or partnership
  • Pays federal taxes
  • Wants to open a business bank account
  • Applies for federal business licenses and permits
  • Files employment, excise, alcohol, tobacco, or firearms tax returns

There are further situations in which a business might need a federal tax ID number, specific to income taxation, certain types of pension plans, and working with certain types of organizations. Business owners can check with the Internal Revenue Service (IRS) about whether they need an EIN.

Registering a Business

Registration of a business will depend on its location and business structure, and can look quite different depending on the nature and size of the business. 

For example, small businesses may not require any steps beyond registering their business name with local and state governments, and business owners whose business name is their own legal name might not need to register at all. However, registration can include personal liability protection as well as legal and tax benefits, so it can be beneficial even if it’s not strictly required. 

Most LLCs, corporations, partnerships, and nonprofits are required to register at the state level and will require a registered agent to file on their behalf. Determining which state to register with can depend on factors such as:

  • Whether the business has a physical presence in the state
  • If the business often conducts in-person client meetings in the state
  • If a large portion of business revenue comes from the state
  • Whether the business has employees working in the state

If a business operates in more than one state, it may need to file for foreign qualification in other states in which it conducts business. In this case, the business would register in the state in which it was formed (this would be considered the domestic state), and file for foreign qualification in any additional states.

Some businesses may decide to register with the federal government if they are seeking tax-exempt status or trademark protection, but federal registration is not required for many businesses.

Overall registration requirements, costs, and documentation will vary depending on the governing jurisdictions and business structure.

Obtaining Permits

Filing for the applicable government licenses and permits will depend on the industry and nature of the business, and might include submitting an application to a federal agency, state, county, and/or city. The SBA lists federally regulated business activities alongside the corresponding license-issuing agency, while state, county, and city regulations can be found on the official government websites for each region.

Every business should have a marketing plan that outlines an overall strategy and the day-to-day tactics used to execute it. A successful marketing plan will lay out tactics for how to connect with customers and convince them to buy what the company is selling. 

Marketing plans will vary according to the specifics of the industry , target market, and business, but they should aim to include descriptions of and strategies around the following:

  • A target customer : Including market size, demographics, traits, and relevant trends
  • Unique value propositions or business differentiators : Essentially, an overview of the company’s competitive advantage with regard to employees, certifications, or offerings
  • A sales and marketing plan : Including methods, channels, and a customer’s journey through interacting with the business
  • Goals : Should cover different aspects of the marketing and sales strategy, such as social media follower growth, public relations opportunities, or sales targets
  • An execution plan : Should detail tactics and break down higher-level goals into specific actions
  • A budget : Detailing how much different marketing projects and activities will cost

The startup costs for any given business will vary greatly depending on the industry, business activity, and product or service offering. Home-based online businesses will usually cost less than those that require an office setting to meet with customers. The estimated cost can be calculated by first identifying a list of expenses and then researching and requesting quotes for each one. Use the SBA’s startup costs calculator for common types of expenses associated with starting a small business.

Entrepreneurs seeking to start their own business should fully research and understand all the legal and funding considerations involved, conduct market research, and create marketing and business plans. They will also need to secure any necessary permits, licenses, funding, and business bank accounts.

Startup capital can come in the form of loans, grants, crowdfunding, venture capital, or self-funding. Note that the federal government does not provide grant funding for the purposes of starting a business, although private sources do.

Business plans are comprehensive documents that lay out the most important information about a business. They are important references for the growth, development, and decision-making processes of a business, and financial institutions as well as potential investors and partners generally request to review them in advance of agreeing to provide funding or work together.

Starting a business is no easy feat, but research and preparation can help smooth the way. Having a firm understanding of the target market, competition, industry, business goals, business structure, funding requirements, tax and operating regulations, and marketing strategy, and conducting research and consulting experts where necessary, are all things that entrepreneurs can do to set themselves up for success.

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

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

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

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

U.S. Small Business Administration. “ Pick Your Business Location .”

U.S. Small Business Administration. “ Choose a Business Structure .”

U.S. Small Business Administration. “ Get Federal and State Tax ID Numbers .”

Internal Revenue Service. “ Do You Need an EIN? ”

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

U.S. Small Business Administration. “ Apply for Licenses and Permits .”

U.S. Small Business Administration. “ Marketing and Sales .”

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

  • How to Start a Business: A Comprehensive Guide and Essential Steps 1 of 25
  • How to Do Market Research, Types, and Example 2 of 25
  • Marketing Strategy: What It Is, How It Works, and How to Create One 3 of 25
  • Marketing in Business: Strategies and Types Explained 4 of 25
  • What Is a Marketing Plan? Types and How to Write One 5 of 25
  • Business Development: Definition, Strategies, Steps & Skills 6 of 25
  • Business Plan: What It Is, What's Included, and How to Write One 7 of 25
  • Small Business Development Center (SBDC): Meaning, Types, Impact 8 of 25
  • How to Write a Business Plan for a Loan 9 of 25
  • Business Startup Costs: It’s in the Details 10 of 25
  • Startup Capital Definition, Types, and Risks 11 of 25
  • Bootstrapping Definition, Strategies, and Pros/Cons 12 of 25
  • Crowdfunding: What It Is, How It Works, and Popular Websites 13 of 25
  • Starting a Business with No Money: How to Begin 14 of 25
  • A Comprehensive Guide to Establishing Business Credit 15 of 25
  • Equity Financing: What It Is, How It Works, Pros and Cons 16 of 25
  • Best Startup Business Loans 17 of 25
  • Sole Proprietorship: What It Is, Pros and Cons, and Differences From an LLC 18 of 25
  • Partnership: Definition, How It Works, Taxation, and Types 19 of 25
  • What is an LLC? Limited Liability Company Structure and Benefits Defined 20 of 25
  • Corporation: What It Is and How to Form One 21 of 25
  • Starting a Small Business: Your Complete How-to Guide 22 of 25
  • Starting an Online Business: A Step-by-Step Guide 23 of 25
  • How to Start Your Own Bookkeeping Business: Essential Tips 24 of 25
  • How to Start a Successful Dropshipping Business: A Comprehensive Guide 25 of 25

how to develop a business plan for a startup

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  • Building Your Business
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  • Business Plans

Create a Startup Business Plan in Easy Steps

Henrik Sorensen / Getty Images

In addition to creating a business plan to use for getting startup financing, there are other good reasons to create a plan. Use a business plan template to look at all the areas of your most standard businesses. The template will help you make sure all areas are covered, so your startup goes more smoothly.

Small business expert Amanda McCormick suggests looking at five key assumptions to make sure you are ready to start and they will help you be more confident of success.

Probably the most important thing you can do with your business plan is to use it to build your startup business. Small business expert Susan Ward suggests creating goals for each section of your business plan and making an action plan to achieve each one of those goals.

Begin with a General Description of Your Business

The first step is to write a general description of your business. This exercise helps you distill your vision and will focus many other portions of your startup plan.

Type of Business

Describe what type of business you are starting, retail, manufacturing, industrial, construction, or some other type of services. Describe what the business will produce or sell.

Legal Organization

Discuss how the business will be organized. Corporations are legal entities that keep the business and personal liability separated. A limited liability company (LLC) is another way to separate business interests from personal. Other forms include the sole proprietorship, partnership, S corporations, and C corporations. The structure you choose will have legal and tax implications so, be sure you research and choose carefully. You may wish to talk to an accountant as you learn about which form your company will take.

Business Location

Describe the facility you will use for your business, including an address and information about the area. Include the square footage and a layout of the business, if this is available. If your business is in your home, describe the space you will use. Discuss whether this location will be purchased or rented and the terms for purchase or rental.

Licenses and Permits

Include information on local ordinances that pertain to your business, as well as licenses and permits you have obtained or need to obtain.

Management and Employees

Describe the owners and management of the business, along with the expected number and types of employees who will be working in the business. This will be a very brief description; you'll be doing a more detailed management plan in a later section. 

Specific Plan for Your Products or Services

  • A general description of each product
  • The pricing structure of this product and whether you will have different prices for various markets
  • Whether you will produce this product or purchase from a wholesaler to resell to your customers

If you are providing services, describe these services in detail, including:

  • A general description of each type of service and how it will be performed
  • Pricing for the various services you will be providing

Create Your Marketing Plan 

Create a description of your target market. This description should include:

  • A description of your "ideal" customer in terms of this person or company's characteristics, attitudes, and buying behaviors. This description should be as complete as possible.
  • A discussion of the information about the "population" to whom you will be selling, in terms of numbers and demographics (characteristics), like age, sex, education level, income level, and other important information
  • A description of the buying behaviors of your target market

Describe the Competition for Your Products or Services

Create a description of the competition for your products or services within your target market, including:

  • Numbers of competitors
  • Characteristics of your top three competitors
  • Unique points of difference between you and your competitors
  • The ways in which you will emphasize the difference between your products/services and those of your competitors, in terms of delivery, customer service, product differentiation, or other characteristics

Design a Business Marketing Strategy

The next step is creating a strategy for marketing and promoting your company's products or services to this market. Here are some items this marketing and promotion plan should include:

  • The top three ways in which you will initially inform your target market about the existence of your products and services.
  • The types of paid advertising you will use to promote your products and services.
  • The ways in which you will use publicity to promote your products and services.
  • The personal selling methods you will use to promote your products and services.
  • The types of materials (brochures, flyers, web site)you will use to promote your new products and services.

Along with your marketing and promotion strategies, you will need to create a budget for all of these activities, for the first three years of your business.

Necessary Financial Statements for Business Startup

The most important step in the process of creating your business plan is the creation of your financial documents. This section will also take the most time and effort. Here is the information you need to include in your financial plan:

Startup Costs Worksheet

This financial statement should include all of the equipment, supplies, and other items you will need to purchase for the startup, as well as fees and licenses, deposits, initial expenditures for advisers, and costs for creating your business structure.

Beginning Balance Sheet

You will need to prepare a startup balance sheet , showing assets, liabilities, and owner's equity as of the date of the startup.

Month-by-Month Budget for 1st Year

Include a detailed statement (sometimes called a "cash flow statement")showing month-by-month sales and collections, along with all monthly business expenses.

Pro Forma Income Projections

You will need to prepare a pro forma (projected) income statement (P&L) for the first three years of operations, showing income and expenses, along with pre-tax income, tax liability, and after-tax income for each of these years.

Break-Even Analysis

If you are selling products, you should create a break-even analysis , showing the point at which you expect to break even on product sales.

Sources and Uses of Funds

Many lenders request that you include this statement , itemizing all of your financial needs for the business, along with your personal investment in the business, and the financing expected from your lender or investor.

Personal Financial Information

If you take your business plan to a lender or investor, you will also be asked to provide personal financial information. Preparing this information for inclusion in your business plan will help you gain the trust of these individuals. Here is what you should bring with you to all owners for the last three years.

  • Tax returns for the past three years
  • A recent credit report, showing credit score
  • A personal financial statement -- you can use the  SBA personal financial statement (PDF) template as a guide
  • A resume or curriculum vitae

Finally, you will need to create a management plan (who's running this company), an operating plan (how is it being run), and an executive summary.

Create a Management Plan

Create a description of the management of your business, including:

Owners and Directors

Describe the backgrounds and qualifications of the individuals who will own the company and make top-level decisions. This may include your Board of Directors if you are incorporating.

Managers and Employees

Describe the key management positions you will require; if you have any of these key positions filled, discuss the qualifications of the people who will fill them. Include an organization chart, showing the top positions and the types of employees who will be working in your organization.

Business Advisors

Include information about the key advisers for your business, including consultants, your CPA or financial advisor, attorney, insurance agent, and banker. If you have not selected some of these individuals, discuss the qualifications you will be looking for to fill these positions.

Create an Operating Plan

 Create a plan for operations for your business, including:

Day-to-day Operations

Describe how your business will operate on a daily basis. What production process will be used? What will you do to market and sell products and services? What hours will you be open?

Accounting and Financial Operations

Describe how your accounting, billing and collections, and other financial operations will be conducted.

Computer and Technology

Include a discussion of the computer and technological systems in your business. Will you operate a website? If so, who will maintain it? What computer hardware and the software will be used? What will your phone system look like? What office equipment will you need?

Create an Executive Summary 

The last step in preparing your business plan is to create an Executive Summary. This document summarizes the business plan information and is placed at the beginning of the document.

Your Executive Summary is important! It may be the only part of your business plan that a lender sees, so make it excellent.

The Executive Summary should be interesting to your reader and provide basic information about the business. In particular, the Executive Summary is intended to summarize your financial needs for startup or purchase. Here are the points you should emphasize in your Executive Summary:

  • Company information , including the company name, when it was founded or purchased when it will open for business, and the location and legal form of organization.
  • A one-sentence description of the products and services of the business.
  • Several sentences that discuss the purpose of the business , its mission/vision, and other information to interest your reader in the business.
  • A general description of your target market, your competitive position, and your unique differences from your competition.
  • A discussion of your specific financing needs , including your own investment in the business, startup/purchase funding, and needs for operating capital during startup.
  • A discussion of your own investment in the business and your expectations of when the business will break even or make a profit.

Now that you have completed writing your startup business plan, one more important task is ahead. 

Read, review, and revise. Make sure your business plan is 100% perfect. 

how to develop a business plan for a startup

Free Startup Business Plan Templates and Examples

By Joe Weller | May 6, 2020

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In this article, we’ve rounded up a variety of the top, professionally designed startup business plan templates, all of which are free to download in PDF, Word, and Excel formats.

Included on this page, you’ll find a one-page startup business plan template , a business plan outline template for startups , a startup business planning template with a timeline , and a sample startup business plan .

Startup Business Plan Template

how to develop a business plan for a startup

Download Startup Business Plan Template - Word

Word | Smartsheet

This startup business plan template contains the essential components you need to convey your business idea and strategy to investors and stakeholders, but you can customize this template to fit your needs. The template provides room to include an executive summary, a financial overview, a marketing strategy, details on product or service offerings, and more.

One-Page Startup Business Plan Template

One Page Business Plan For Start Up Template

Download One-Page Startup Business Plan Template

Excel | Word | PDF

This one-page business plan is ideal for startup companies that want to document and organize key business concepts. The template offers an easy-to-scan layout that’s ideal for investors and stakeholders. Use this plan to create a high-level view of your business idea and as a reference as you flesh out a more detailed roadmap for your business.

For additional resources, visit " Free One-Page Business Plan Templates with a Quick How-To Guide ."

Simple Fill-In-the-Blank Business Plan Template for Startups

Simple Fill In The Blank Business Plan Template

Download Simple Fill-in-the-Blank Business Plan Template for Startups

This comprehensive fill-in-the-blank business plan template is designed to guide entrepreneurs through the process of building a startup business plan. This template comes with a customizable cover page and table of contents, and each section includes sample content that you can modify to fit the needs of your business. For more fill-in business templates, read our  "Free Fill-In-the-Blank Business Plan Templates"  article.

Lean Business Plan Template for Startups

Lean Business Plan Templates for Startups

Download Lean Business Plan Template for Startups

This Lean business plan template takes a traditional business plan outline and extracts the most essential elements. Use this template to outline your company and industry overview, convey the problem you are solving, identify customer segments, highlight key performance metrics, and list a timeline of key activities.

Business Plan Outline Template for Startups

Simple Business Plan Outline Template

Download Business Plan Outline Template for Startups

You can use this business plan outline as a basis to create your own business plan. This template contains all the elements of a traditional business plan, including a title page, a table of contents, and information on what to include in each section. Simplify or expand this outline based on the size and needs of your startup business.

Startup Business Planning Template with Timeline

Simple Business Planning Template with Timeline

Download Startup Business Planning Template with Timeline

Excel | Smartsheet

As you create your business plan, this business planning template doubles as a schedule and timeline to track the progress of key activities. This template enables you to break down your plan into phases and provides space to include key tasks and dates for each task. For a visual timeline, shade in the cells according to each task’s start and end dates. The timeline ensures that your plan stays on track.

Business Plan Rubric Template for Startups

how to develop a business plan for a startup

Download Business Plan Rubric Template for Startups

Excel | Word | PDF | Smartsheet

If you’re starting a business and want to keep all your ducks in a row, use this rubric to evaluate and score each aspect of your startup business plan. You can tailor this template to the needs of your specific business, and can also highlight areas of your plan that require improvement or expansion. Use this template as a tool to make sure your plan is clear, articulate, and organized. A sharp, insightful, well thought-out plan will definitely get the attention of potential investors and partners.

For additional resources to help support your business planning efforts, check out “Free Startup Plan, Budget, and Cost Templates.”

What’s the Best Business Plan Template for Startups?

The template you choose for your startup business depends on a number of factors, including the size and specific needs of your company. Moreover, as your business grows and your objectives change, you will need to adjust your plan (and possibly your choice of template) accordingly. 

Some entrepreneurs find it useful to use a Lean business plan template design in order to jot down a business concept and see if it’s feasible before pursuing it further. Typically one to three pages, a Lean business plan template encourages you to highlight core ideas and strategic activities and remain focused on key points.

Other entrepreneurs prefer a template with a more traditional business plan design, which allows you to go into greater detail and ensure you include every detail. A traditional plan can range from 10 to 100 pages and cover both the high-level and granular particulars of your overall concept, objectives, and strategy.

There is no one-size-fits-all solution, but the following section outlines the minimum that your business plan template should include in order to gain buy-in from potential investors.

What to Include in a Startup Business Plan

Whether you choose to use a template to develop your startup business plan or decide to write one from scratch, you need to include the following elements:

  • An overview of your company and the industry in which it operates
  • The problem you are solving and the proposed solution
  • A description of your product or service offerings, including key features
  • The existing alternatives that customers use and your competitive advantage
  • The target customer segments and the channels you will use to reach them
  • The cost structure and revenue streams associated with your business
  • A financial plan, including sales and revenue projections (ideally 3-5 years)
  • If applicable, the financial requirements to get your business running, including how you will source and allocate funds

Each of the following sections provides an example of a business plan that you can use for reference as you develop your own.

One-Page Lean Business Plan Example

This Lean business plan example displays a visually appealing and scannable one-page illustration of a business plan. It conveys the key strategies you need to meet your main objectives. Each element of this concise plan provides stakeholders and potential investors with links to resources that support and expand upon the plan’s details, and it can also serve as an investor pitch deck.

One Page Business Plan Example

Startup Business Plan Sample

This business plan sample contains all the aspects of a standard business plan. Using a fictional food truck business as the basis for a startup business plan, this sample will give you all the ideas you need to make your plan outstanding.

Basic Business Plan Sample

Download Startup Business Plan Sample - PDF

When the time comes that you need more space to lay out your goals and strategies, choose from our variety of  free simple business plan templates . You can learn how to write a successful simple business plan  here . 

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

Top 10 Tips to Create a Startup Business Plan

Putting together a business plan can be overwhelming and time consuming, especially if you aren’t sure where to begin. Below, we share tips you can use to help simplify the process of developing a startup business plan of your own. 

  • Use a business plan template, or begin with a business plan outline that provides all the elements of a standard plan to get your ideas down on paper in a structured manner. (You can choose from the selection of templates above.)  
  • Remove sections from your outline that aren’t relevant or that aren’t necessary to launch and operate your business.
  • Compile the data you have gathered on your business and industry, including research on your target market and product or service offerings, details on the competitive landscape, and a financial plan that anticipates the next three to five years. Use that information to fill in the sections of your plan outline. 
  • Get input and feedback from team members (e.g., finance, marketing, sales) and subject matter experts to ensure that the information you’ve included in the plan is accurate.
  • Make certain that the objectives of your plan align with marketing, sales, and financial goals to ensure that all team members are moving in the same direction.
  • Although this section of the plan comes first, write the executive summary last to provide an overview of the key points in your business plan.
  • Prepare a pitch deck for potential clients, partners, or investors with whom you plan to meet in order to share vital information about your business, including what sets you apart and the direction you are headed. 
  • Who are the founders and management executives, and what relevant experience do they bring to the table?
  • What is the problem you are solving, and how is your solution better than what currently exists? 
  • What’s the size of the market, and how much market share do you plan to capture?
  • What are the trends in your market, and how are you applying them to your business?
  • Who are your direct competitors, and what is your competitive advantage?
  • What are the key features of your product or service that set it apart from alternative offerings, and what features do you plan to add in the future?
  • What are the potential risks associated with your business, and how do you plan to address them?
  • How much money do you need to get your business running, and how do you plan to source it?
  • With the money you source, how do you plan to use it to scale your business?
  • What are the key performance metrics associated with your business, and how will you know when you’re successful?
  • Revisit and modify your plan on a regular basis as your goals and strategies evolve.
  • Use a work collaboration tool that keeps key information across teams in one place, allows you to track plan progress, and captures updates in real time.

Successfully Implement Your Startup Business Plan with Real-Time Work Management in Smartsheet

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

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

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

Discover why over 90% of Fortune 100 companies trust Smartsheet to get work done.

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How to Write a Business Plan for Your Startup

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Anyone can have a great idea. But turning an idea into a viable business is a different ballgame.

You may think you’re ready to launch a startup company . That’s great news, and you should be excited about it.

Before you start seeking legal advice, renting office space, or forming an LLC, you need to put your thoughts on paper. This will help you stay organized and focused.

You’ll also be able to share this plan with others to help you get valuable feedback. We don’t recommend starting a company without consulting people first.

A typical business plan consists of the following elements:

  • An executive summary
  • A company description
  • Market research
  • Descriptions of products and/or services
  • The management and operational structure
  • Marketing and sales strategy

We recommend using the LivePlan business plan so ftware to help guide you through structuring your business plan in the proper way.

Thoroughly writing out your plan accomplishes several things.

Save your business plan progress in one place across all the document apps you use.

First, it gives you a much better understanding of your business. You may think  you know what you’re talking about, but putting it on paper will truly make you an expert.

Writing a formal plan increases your chances of success  by 16%.

Having a business plan also gives you a better chance of raising capital for your startup  company. No banks or investors will give you a dollar if you don’t have a solid business plan.

Plus, companies with business plans also see higher growth rates  than those without a plan.

image1 5

If you have an idea for a startup company but not sure how to get started with a business plan, we can help you out. We will show you how to write different elements of your business plan and provide some helpful tips along the way.

Top Business Plan Software to Write a Business Plan

If you want to write a business plan, you’ll need a business plan software. Here’s the best options.

  • Enloop  – Best Free Business Plan Software
  • LivePlan  – Best Business Plan Software For Startups
  • GoSmallBiz  – Best Business Plan Software For Business Consulting
  • BizPlan  – Best Business Plan Software For Raising Capital
  • Business Sorter  – Best Business Plan Software For Simple Business Plan
  • PlanGuru  – Best Business Plan Software For Financial Reporting & Forecasting

8 Steps to Write a Business Plan

Here’s what you need to know to get started.

  • Make sure your company has a clear objective
  • Identify your target market
  • Analyze your competition 
  • Budget accordingly
  • Identify your goals and financial projections
  • Clearly define the power structure
  • Discuss your marketing plan
  • Keep it short and professional

Step 1 – Make sure your company has a clear objective

When writing a company description, make sure it’s not ambiguous.

“We’re going to sell stuff”

isn’t going to cut it.

Instead, identify who you are and when you plan on going into business. State what kinds of products or services you’ll be offering and in what industry.

Where will this business operate? Be clear whether you’ll have a physical store, operate online, or both. Is your company local, regional, national, or international?

Your company description can also incorporate your mission statement.

This is an opportunity for you to gain a better understanding of your startup. The company summary forces you to set clear objectives. The type of company you have and how you will operate should be obvious to anyone who reads it.

Include the reasons for going into business. For example, let’s say you’re opening a restaurant. A reason for opening could be that you identified that no other restaurants in the area serve the cuisine you specialize in.

You can briefly discuss the vision and future of your startup company, but you don’t need to go into too much detail. You’ll cover that in greater depth as you write the rest of your business plan.

Keep in mind, this description is a summary, so there’s no reason for you to write a ton. This section should be pretty concise and no more than three or four paragraphs.

Step 2 – Identify your target market

Your business isn’t for everyone. Although you may think everyone will love your idea, that’s not a viable business strategy.

One of the first steps to launching a successful business is clearly identifying the target market of your startup .

But to find out whom you’ll target, you need to conduct market research .

Target market infographic

This is arguably the most important part of launching a startup company. If there’s no market for your business, the company will fail. It’s as simple as that.

All too often we see entrepreneurs rush into a decision because they fall in love with an idea. Due to this tunnel vision, they don’t take the necessary steps to conduct the proper research.

Sadly, those businesses don’t last.

But if you take the time to write a business plan, you may discover there’s not a viable market for your startup before it’s too late. It’s much better to learn this information in these preliminary stages than after you’ve dumped a ton of money into your venture.

To figure out your target market, start with broad assumptions and slowly narrow it down. Typically, the best way to segment your audience is using these four categories:

  • demographic
  • psychographic

Start with things like:

  • income level

As we said earlier, start broadly. For example, you may start by saying your target market lives in North America, and then narrow it down to the United States.

But as you continue going through your market research, you can get even more specific. You can target customers living in New England, for example.

By the time you’re finished, the target market could look something like this:

  • ages 26 to 40
  • living in the Boston area
  • with an annual income of $55,000-$70,000
  • who are into recycling

This profile encompasses all four demographic segments we mentioned earlier. Plus, it’s very specific.

Your business plan should talk about the research you conducted to identify this market. Talk about the data you collected from surveys and interviews .

You’ll use this target market in other sections of the business plan as well when you discuss future projections and your marketing strategy. We’ll cover both of those topics shortly.

Step 3 – Analyze your competition

In addition to researching your target market, you need to conduct a competitive analysis as well. You’ll use this information to create your brand differentiation strategy .

Brand Essence infographic

When you’re writing a business plan, your startup doesn’t exist yet. Nobody knows about you. Don’t expect to be successful if you’re planning to launch a competitor’s carbon copy.

Customers won’t have a reason to switch to your brand if it’s the same as the company they already know and trust.

How will you separate yourself from the crowd?

Your differentiation strategy could involve your price and quality. If your prices are significantly lower, that can be your niche in the industry. If you have superior quality, there is a market for that as well.

Competitive analysis should be conducted simultaneously with identifying your target audience. Both of these fall under the market research category of your business plan.

Once you figure out who your competitors are, it will be easier to determine how your company will be different from them. But this information will be based on your target market.

For example, let’s say you’re in the clothing industry. Your competitors will depend on your target market. If you’re planning to sell jeans for $50, you won’t be competing with designer brands selling jeans for $750.

Or you can base your price differentiation on what you learned about your target market. From there, you’ll be able to identify your competitors.

As you can see, the two go hand in hand.

Step 4 – Budget accordingly

You need to have all your numbers in order when you’re writing a business plan, especially if you’re planning on securing investment funding.

Figure out exactly how much money  you need to start the business and stay operational; otherwise, you’ll run out of money.

The top 20 reasons startups fail infographic

Running out of cash is one of the most common reasons why startup companies fail. Taking the time to sort your budget out before you launch will minimize that risk.

Consider everything. Start with the basics like:

  • equipment costs
  • property (buying or leasing)

Here’s an example  of what this will look like in your business plan:

Startup budget example

These numbers need to be accurate. When in doubt, estimate higher. Things don’t always go according to plan.

In the example above, although the total startup expenses are less than $28k, it may not be a bad idea to raise $40k or even $50k. That way, you’d have some extra cash in the bank in case something comes up.

You don’t want poor budgeting to be the reason for your startup’s failure.

Step 5 – Identify your goals and financial projections

Let’s continue talking about your financials. Obviously, you won’t have any income statements, balance sheets, cash flow reports, or other accounting documents if you’re not fully operational.

However, you can still make projections. You can base these projections on the total population of the target market in your area and what percentage of that market you think you can penetrate.

If you have an expansion strategy in mind, this would also be outlined in your financial projections.

These projections should cover the first three to five years of your startup. Make sure they are reasonable. Don’t just say you’ll make $10 million in your first year. In fact, your company may not be even profitable for the first couple of years.

As long as you’re being honest with yourself and potential investors, your financial plan will cover your break-even analysis.

Break-even analysis infographic

While it’s reasonable to expect your sales revenue to increase each year, you still need to take all factors into consideration.

For example, if you’re planning to expand to a new location in year four, your financial projections need to be adjusted accordingly.

You may not be profitable until your third year of operation, but if you’re opening a new facility in year four, that year may have a net loss as well. Again, this is completely fine as long as you’re planning and budgeting accordingly.

Another example of a goal could be launching an ecommerce store in addition to your brick-and-mortar locations. Just don’t try to bite off more than you can chew. Keep everything within reason.

Step 6 – Clearly define the power structure

Your business plan should also cover the organizational structure of your startup. If it’s a small company with just you and maybe one or two business partners, this should be easy.

But depending on how you’re planning to scale the company, it’s best to get this sorted out sooner rather than later. Here’s an example of what your organizational chart  may look like:

Organizational chart example

It’s really important to have this hierarchy in place before you get started. That way, there’s no debate over who reports to which position. It’s clear who is in charge of specific people and departments.

Don’t get too complex with this.

If you put too many layers of managers, directors, and supervisors between the top of the chart and the bottom of the chart, things can get confusing.

You don’t want any instructions or assignments to get lost in translation between levels. You also don’t want anyone to be confused about who is in charge.

This is an opportunity for you to outline how your company will operate in terms of board members and investors. Who has the final say in decisions?

While we understand you may need to give up some equity in your startup to get off the ground, we recommend keeping the power in your hands.

Step 7 – Discuss your marketing plan

Your marketing plan relies on everything else we’ve talked about so far.

How will you acquire customers based on the market research of your target audience and competitive analysis?

This strategy needs to be aligned with your budget and financial projections as well.

We could sit here and talk about different marketing strategies all day. But there’s no right or wrong way to approach this for your startup company.

Our recommendation would be to stay as cost-effective as possible. Be versatile and well-balanced too.

Acquiring customers is expensive. You don’t want to dump your entire marketing budget into one strategy. If it doesn’t work, you’ve got nothing to fall back on.

Take these categories into consideration when you’re coming up with a marketing plan:

Marketing plan infographic

Before you try anything too crazy, get the basics sorted out first:

  • launch a website
  • stay active on social media platforms
  • start building an email subscriber list
  • focus on customer retention
  • come up with customer loyalty programs.

Don’t ease into this one step at a time. Come out fast. Even before your company officially launches, you can start building your website and social media profiles.

The last thing you want is for consumers to find out about your brand but then be unable to find your website or contact information. Or worse, get directed to a website that’s broken or unfinished.

Step 8 – Keep it short and professional

We’ve talked about many different components of your business plan. It may sound overwhelming, but don’t be alarmed.

This shouldn’t be a 100-page dissertation.

You definitely want it to be detailed and thorough, but don’t go overboard. There’s no exact number of pages it should be, but have at least one page per section.

It should also be written cleanly and professionally. Don’t use slang terminology.

Proofread it for grammatical and spelling errors.

Remember, you may need to use this to raise capital. People may be hesitant to give you money if you overlook the small stuff like proper grammar.

Launching a startup company is exciting. It’s easy to get so caught up in the moment that you rush into things.

If you want to set yourself up for success, you need to take a step back and plan things out.

Going through the process of writing a formal business plan will increase your chances of securing an investment and also improve your potential growth rate.

The market research you’ll need to conduct in order to write this plan will also help you determine whether this is a viable business venture to proceed with.

If you’ve never written a business plan, use this post as a guide for what you should include. Follow our tips for best practices.

Writing a business plan may seem like a tedious task right now, but we promise it will keep you organized and save you lots of headaches down the road.

Get started by using LivePlan business plan software to create your perfect business plan today. Good luck!

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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.

how to develop a business plan for a startup

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.

Barclays (including its employees, Directors and agents) accepts no responsibility and shall have no liability in contract, tort or otherwise to any person in connection with this content or the use of or reliance on any information or data set out in this content unless it expressly agrees otherwise in writing. It does not constitute an offer to sell or buy any security, investment, financial product or service and does not constitute investment, professional, legal or tax advice, or a recommendation with respect to any securities or financial instruments.

The information, statements and opinions contained in this content are of a general nature only and do not take into account your individual circumstances including any laws, policies, procedures or practices you, or your employer or businesses may have or be subject to. Although the statements of fact on this page have been obtained from and are based upon sources that Barclays believes to be reliable, Barclays does not guarantee their accuracy or completeness.

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7 Steps on How to Write a Startup Business Plan

Business plans can be a long, and hard process, yet they are crucial to the initial planning and eventual success of your business.

Why is a startup business plan so important? Well, for instance, it can help you to not only understand the current situation in the marketplace, identify your company’s missions and values, and outline a marketing strategy, but it can also help you research your competition.

And while, it is a tedious process, especially for those not certain where they should start, it can be made easier going step by step.

  • Define Your Mission, and Values
  • Write a Short Summary
  • Set Goals and Milestones
  • Analyze the Market and Find Your Target Audience
  • Develop Partnerships and Outline Your Business Structure
  • Set a Marketing Strategy and Budget
  • Be Flexible, Know How to Adapt

1. Define Your Mission, and Values

The very first thing you need to do is to define the values, and mission of your company. In case you’re wondering what this is supposed to mean exactly, here are a few examples:

Mission Statement

  • The mission statement of Tesla is “To accelerate the world’s transition to sustainable energy.”
  • PayPal’s mission statement is: “To build the web’s most convenient, secure, cost-effective payment solution.”
  • Amazon wants: “To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”

Company Values

  • Focus on the user and all else will follow.
  • It’s best to do one thing really, really well.
  • Fast is better than slow.
  • Democracy on the web works.
  • You don’t need to be at your desk to need an answer.
  • You can make money without doing evil.
  • There’s always more information out there.
  • The need for information crosses all borders.
  • You can be serious without a suit.
  • Great just isn’t good enough.
  • Customer Obsession
  • Invent and Simplify
  • Are Right, a Lot
  • Learn and Be Curious
  • Hire and Develop the Best
  • Insist on the Highest Standards
  • Bias for Action
  • Have Backbone; Disagree and Commit
  • Deliver Results
  • Communication
  • Selflessness

In other words, your mission statement should explain to the world what your company wants to achieve; a company’s values are all about what matters most to you, as an organization.

Readers Also Enjoy : How Important Are Company Core Values? [+Examples] – DevriX

2. Write a Short Summary

Now that you’re done with establishing your values, mission, and goals, the next step in creating a business plan for a startup is to outline a short summary of your plan. For instance, the pain points of your customers and how you plan to solve them.

Make sure to keep this section short and to the point, and avoid any confusing or unclear statements. In short, this should be where one can immediately understand the most crucial information in your business plan.

3. Set Goals and Milestones

Business goals are the targets and accomplishments you want to achieve. They can be either short term (less than a year) or long term.

Setting such goals and milestones are important, since it helps you measure your progress, improve decision-making, and establish accountability, to name a few reasons.

Here are a couple of examples of goals and/or milestones:

  • Increase revenue by 15% in the first year.
  • Reduce the sales cycle from 6 months to 3.
  • Adjust and optimize product/service pricing according to competitors.
  • Find new channels to market our products/services.

Additionally, business goals can be divided into separate categories:

  • Financial goals . Increase revenue, and profit, decrease costs.
  • Process goals . Increase the number of software releases, optimize workflows.
  • Employee goals . Retain employees, career development, work-life balance.
  • Social goals . Environmental concerns, sustainability, diversification.
  • Time-based goals . Set a timeline to complete both long and short-term goals.
  • Growth goals . Release new products/services, acquire new customers, enter a new market.

Readers Also Enjoy : Why Is Setting SMART Goals Important and How to Do It – DevriX

4. Analyze the Market and Find Your Target Audience

Next on how to make a business plan for a startup, is analyzing the market situation, and establishing who your target customers are . It’s essential to the success of your startup. You need to understand if the products/services you plan to offer are a good market fit, and whether there is a demand for them.

For instance, if there is only a very small group of people that are interested in what you offer, you may end up experiencing financial difficulties. It’s always a good idea to think about these things before you’ve launched your product/service.

5. Develop Partnerships and Outline Your Business Structure

No one said you should fight the battle alone. Developing partnerships with other companies can be of great help to your startup. For example, sharing resources with a partner, could decrease your overall costs.

Setting up your business structure also means that you are establishing the company’s hierarchy and defining who is in charge of what. This makes it easier for everyone involved in the company to know who is responsible for each section. It can also improve performance.

A well defined business structure also makes the process of communication, and evaluating team performances much more efficient, breaking down the work into smaller chunks where each department knows what it has to do.

6. Set a Marketing Strategy And Budget

In order to create a business plan for a startup, you can’t miss out on marketing. The marketing strategy you choose, and how you execute it, is a crucial part of the success or failure of your business.

In general, the types of marketing strategies are:

  • Public Relations
  • Communications
  • Content Marketing
  • Email Marketing
  • Inbound Marketing
  • Social Media

It’s safe to say that you can’t invest an equal amount of time and effort into all of these channels, so it’s best to pick a few and focus on them.

Over time, when you track their efficiency, you can decide, based on results, whether to change any of the strategies you have selected, or add new ones to fortify your brand positioning.

Setting a budget is also important, because it outlines your initial investment, which you can then measure (otherwise known as ROI ).

Readers Also Enjoy : 11 Marketing Objectives You Should Care About – DevriX

7. Being Flexible, Know How to Adapt

As a final step in today’s “how to” guide, you should remember that nothing stays the same. Being flexible and knowing how to adapt are great skills to have in today’s business world. That should also apply to your business plan – as it will evolve over time, and that’s completely normal.

Anything, in practice, can happen, as the past few years have shown us. So, set your goals, and strategy, follow them, but always be prepared to react accordingly.

Writing a startup business plan is a very important process. By establishing who you are (values and mission), understanding the market, your audiences, and competitors, picking a marketing strategy, and outlining your business structure, you will have a solid foundation on which to develop your business.

Of course, since everything is constantly evolving, your business needs to be open to change and always be prepared to face any obstacle head on.

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Our marketing experts specialize in the complete spectrum of inbound marketing strategies. As an accredited HubSpot Agency Partner and a Semrush Partner, we engage in meticulous research, blending our extensive experience with the unique insights of our highly skilled team.

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how to develop a business plan for a startup

How To Create A Winning Business Plan For Your Startup

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When it comes to starting a business, having a solid business plan is absolutely crucial.  Consider this as a conversation between you and your business’s future. You’d need to start by clearly defining what your startup offers – this is your product or service. It needs to answer the question, “What problem are you solving for your customers?”

Next, delve into market analysis. Understand who your competitors are and pinpoint your target customers. Once you have that, consider your business strategy and the sales and marketing plans you’ll employ to achieve your goals.

It’s crucial not to forget the operational aspect – how will your business function daily? And lastly, the financial projections. They can be a little tricky, but they’re the crux of the plan, demonstrating the financial viability of your startup.

We have got a helpful guide that’ll dive deep into all the essential elements you need to craft a top-notch business plan, tailored specifically for your unique startup. A solid business plan will help you make smarter decisions, catch the eye of potential investors, and give yourself an edge over your competitors in the market.

Why Business Plan Is Important For A Startup

importance of business plan

Just as you wouldn’t venture into unknown territory without a compass, initiating a startup without a business plan can lead to wandering aimlessly, wasting precious resources, or even getting lost in the market’s vast wilderness. Here are some reasons why a business plan is crucial for a startup.

Your Guide To Decision-Making

Entrepreneurship involves constant decision-making and crisis management. The luxury of pondering the possible ramifications of every choice isn’t always an option for a fledgling business. This is where a well-thought-out business plan proves its worth. Setting out your strategies, goals, and expected outcomes in advance, can guide you in making smart decisions, reducing the likelihood of costly mistakes. It’s like your startup’s crystal ball, helping you predict and navigate future challenges.

Smoothing Out The Road Ahead

Compiling a business plan requires you to dig deep, ask tough questions, and seek out insightful, well-researched answers. It’s about creating a realistic vision of your startup’s future, and it’s the process that matters. Even if you never look at the document again, the act of writing it down helps to refine your vision and identify potential gaps in your plan.

Avoiding Common Pitfalls

There’s a sobering statistic that approximately half of all small businesses don’t reach their fifth birthday. Many of these failures result from issues that a well-structured business plan can help to avoid.

According to data from  CB Insights , common reasons businesses fail include a lack of market need, cash flow problems, inadequate team structure, intense competition, and pricing errors. An effective business plan can help you avoid these pitfalls by foreseeing issues like cash flow forecasts, market analysis, and pricing strategy before they become problems. 

Proving Business Viability

Passion is an excellent motivator when launching a startup. However, passion alone does not guarantee success. Your plan is crucial in demonstrating your startup’s potential by outlining exactly how your vision translates into a profitable business.

For instance, the market research section of your plan can provide deep insights into your customers, competitors, and industry. This information can be pivotal in shaping strategies for marketing, product development, and scaling your business.

A Roadmap For Growth

Business plans play a crucial role in setting objectives and creating benchmarks. Without a business plan, goals can become arbitrary, losing their relevance over time. A well-documented plan keeps you accountable, aligns your team with your vision, and provides insights into the effectiveness of your strategies.

Facilitating Communication And Collaboration

A business plan isn’t just a guide for you, but also for your team. Whether you have a staff of two or two hundred, everyone needs to understand your business’s goals and how you plan to reach them. Your business plan can serve as a communication tool, spelling out the next steps when you’re unavailable for direct guidance. It aligns everyone with your vision, fostering a sense of shared purpose and commitment to the objectives outlined.

Navigating The Business Landscape

Running a successful business is about more than just managing what’s happening within your company’s four walls. It’s also about understanding the larger market environment. Crafting a business plan encourages you to study your competition, identify trends and preferences among consumers, anticipate potential disruptions, and garner insights that might not be apparent at first glance. Armed with this information, you’re better equipped to anticipate and respond to changes in your industry.

Leveraging External Support

Startups often depend on a range of external service providers for expertise in areas like accounting, marketing, and legal matters. Your business plan can serve as a reference point for these professionals, helping them understand your business better and align their services with your needs. By sharing relevant sections of your business plan, you can ensure everyone is on the same page, enhancing the effectiveness of their support.

Securing Investment

Here’s a fact to consider: you are 2.5 times more likely to secure funding if you have a business plan. Investors, banks , and potential partners want to know that their investment is in capable hands and that your business has a promising future. A well-crafted business plan is your opportunity to demonstrate this, making it a must-have document if you’re seeking external financing.

Mitigating Risks

All entrepreneurial ventures involve some level of risk, but a well-designed business plan can significantly mitigate these dangers. By considering revenue and expense projections, operational plans, and the competitive landscape, you’ll be equipped with a risk management tool that can guide your decision-making and limit the chances of unpleasant surprises.

Some Facts About A Successful Business Plan

  • According to the  Small Business Administration , a successful business plan typically includes an executive summary , market analysis, competitive analysis, description of products and services offered, management overview, financial projections, and funding requirements.
  • A  Harvard Business School survey  found that entrepreneurs who have written a business plan are 16% more likely to achieve success than those who have not.
  • One  study  found that companies with a business plan grow 30% stronger than those without a plan.

Business Plan Formats

While there is no one-size-fits-all approach, there are common formats that cater to different needs and objectives. Understanding these formats will help you choose the most suitable one for your venture and tailor it to your specific needs.

Traditional Business Plan

The traditional business plan is the most comprehensive and widely used format. It typically spans multiple pages and contains detailed information about your company’s strategy, objectives, and financial projections. Venture capitalist firms and lenders often require these plans when seeking investment or loans. Key sections in a traditional business plan include:

  • Executive Summary: A brief overview of your company, including its mission, goals, and key selling proposition.
  • Company Description: Details about your company, history, and unique selling proposition (USP).
  • Market Analysis: An examination of the industry, market, and competition.
  • Marketing and Sales Strategies: Plans for promoting your products or services and generating sales.
  • Organization and Management: An outline of your company’s organizational structure and management team.
  • Product Line or Services: A description of your products or services and their benefits.
  • Financial Projections: A forecast of your company’s financial performance, including income statements, balance sheets, and cash flow statements.

Download the Traditional Plan template from  here .

Lean Business Plan

A lean business plan is a condensed version of a traditional plan, focusing on the most critical information. This format is ideal for businesses that need a quick, accessible reference or for those looking to modify existing plans to target a specific market. A lean business plan will cover the same sections as a traditional plan but in a more concise manner.

Nonprofit Business Plan

A nonprofit business plan is tailored for organizations that operate for public or social benefit. This format incorporates all elements of a traditional business plan, with an additional section highlighting the organization’s intended impact.

This section may describe the social or environmental issues the organization aims to address and how its operations contribute to solving these problems. Donors and grant-makers often request nonprofit business plans to assess the organization’s mission, strategies, and potential impact.

Comparative Analysis Of The Common Business Plan Models

 how to write a business plan:.

business plan stat

Stats Source:  1 , 2

The business plan acts as the blueprint of your venture, outlining its mission, operational strategy, market analysis, financial needs, and more. It gives stakeholders a holistic view of your company, underpinning decisions and attracting potential investors. Let’s explore the key components of a business plan that will serve as the compass guiding your startup toward success.

1. Write An Executive Summary

The executive summary is at the forefront of your business plan, which introduces your plan to the world. It encapsulates everything your plan will detail but at a much higher level. As a pro tip, this summary is often more effective when written last, ensuring you fully grasp your plan.

In the executive summary, you’ll present your organization’s mission statement and the offerings you intend to bring to the market. If your venture is a new startup, including the reasons that inspired you to initiate this journey might be beneficial.

Here is how you can write an executive summary for your business plan.

  • Your executive summary begins with the “Mission” – a clear and concise statement of your company’s purpose. Your mission is not merely what you do; it’s why you do it and how you want to impact your customers and the world.
  • Next is the “Company History and Management” section. Provide a snapshot of your company’s location, the period of operation, and the people at the helm. A brief overview of their experience will also be valuable.
  • A significant part of your executive summary will be the “Products or Services” your company offers. What problems does your product or service solve? How does it add value to the customer’s life? Providing succinct answers to these questions can pique the reader’s interest.
  • In the “Market” section, you summarize the potential of your product or service or Total Addressable Market (TAM). Highlight key insights into the size and nature of your target market, indicating the business growth potential.
  • The “Competitive Advantages” segment allows you to shine a light on what sets you apart from the competition. Make sure to highlight the unique strengths that will make customers choose your company.
  • Finally, you must present your “Financial Projections” and “Startup Financing Requirements.” Provide an estimate of sales for the first few years and a clear outline of what it’ll cost to launch and run your company.

2. Add A Business Description

The business description paints a vivid picture of your venture, its goals, the industry it serves, and your target customers. This section allows you to share the passion behind your venture while detailing your industry, including prevalent trends and formidable competitors. Highlight your team’s industry experience and what sets your venture apart from competitors.

3. Market Research And Strategies

The purpose of the market analysis and strategy component of a business plan is to research and identify a company’s primary target audience and where to find this audience. Factors to cover in this section include:

  • The geographic locations of your target markets
  • The primary pain points experienced by your target customers
  • The most prominent needs of your target market and how your products or services can meet these needs
  • The demographics of your target audience
  • Where your target market spends most of their time, such as particular social media platforms and physical locations
  • This section aims to clearly define your target audience so that you can make strategic estimations about how your product or service might perform with this audience.

4. Marketing And Sales Plan

This part of your business plan covers the specifics of how you plan to market and sell your products and services. This section includes:

  • Your anticipated marketing and promotion strategies
  • Pricing plans for your company’s products and services
  • Your strategies for making sales
  • Reasons for your target audience to purchase from your company versus your competition
  • Your organization’s unique selling proposal

5. Management And Organization Description

This section of your business plan explores the details of your business’s management and organization strategy. Introduce your company leaders and their qualifications and responsibilities within your business. You can also include human resources requirements and your company’s legal structure.

6. Products And Services Description

Use this section to further expand on the details of the products and services your company offers that you covered in the executive summary. Include all relevant information about your products and services. This includes how you plan to manufacture or develop them, how long they can last, what needs they may meet, and how much you project it might cost to create them.

7. Competitive Analysis

Add a detailed competitive analysis that clearly outlines a comparison of your organization to your competitors. Outline your competitors’ weaknesses and strengths and how you expect your company might compare to these. Include any advantages or distinctions your competition has in the marketplace. In addition, explore what makes your business different from other companies in the industry and any potential challenges you may face when entering the marketplace, if applicable.

8. Operating Plan

This part of your business plan describes how you plan to operate your company. Include information regarding how and where your company plans to operate, such as shipping logistics or patents for intellectual property. The operating plan also details personnel-related operations, like how many employees you hope to hire in various departments.

9. Financial Projection And Needs

The financial section of your business plan explains how you anticipate bringing in revenue. If you need funding for your business, this section also describes the sources and amounts for that funding. Include your financial statements, an analysis of these statements, and a cash flow projection.

10. Exhibits And Appendices

The last section of your business plan provides any extra information to support further the details outlined in your plan. You can also include exhibits and appendices to support the viability of your business plan and give investors a clear understanding of the research that backs your plan. Common information to put in this section includes:

  • Resumes of company management and other stakeholders
  • Marketing research
  • Proposed or current marketing materials
  • Relevant legal documentation
  • Image Of your product (or demo)

Tips To Create A Small Business Plan

business plan tips

Know Your Audience

Knowing your audience is paramount when crafting your small business plan. It’s not just about offering a product or service, but understanding who will buy it and why. Start by defining your target market – age, gender, geographic location, income level, occupation, and lifestyle preferences are just a few factors to consider. Once you’ve identified your potential customers, dive deeper. What are their pain points? How can your product or service address these issues? Having this knowledge not only helps you tailor your offerings but also guides your marketing and sales strategies.

Have A Clear Goal

Your business plan must have a clear goal – a specific aim that you intend to achieve. This could be anything from reaching a certain revenue target, expanding to new locations, or securing a specific market share within a given period. Setting clear, measurable goals serves as a roadmap, guiding your actions and decisions. Remember, these goals should be SMART – Specific, Measurable, Achievable, Relevant, and Time-bound. Each goal should directly support your overall business objectives and provide a clear path to success.

Invest Time In Research

A successful business plan is built on solid research. Market trends, competitive landscape, and regulatory environment – these are all factors that could affect your business and, thus, must be considered in your business plan. Research can inform product development, pricing, and promotional strategies, as well as identify potential opportunities and threats. Conduct both primary (surveys, interviews) and secondary research (reports, articles) to gather comprehensive information. It’s an investment of time that pays off in the long run by guiding informed decision-making.

Keep It Short And To The Point

While your business plan should be comprehensive, resist the temptation to include every minor detail. Remember, the plan is a tool to communicate your business idea and strategy to stakeholders, including potential investors, partners, or employees. Therefore, it should be concise, focusing on key aspects such as your product or service, market analysis, business model, marketing and sales strategy, and financial projections. Avoid jargon and keep your language simple and straightforward. It makes the plan easier to read and understand, increasing its effectiveness.

Keep The Tone, Style, And Voice Consistent

Consistency is key in the tone, style, and voice of your business plan. It not only enhances readability but also reflects your brand identity. If your business is a modern tech startup, a casual, conversational tone might work well. For a law firm, a more formal tone would be appropriate. Choose a tone and style that aligns with your brand, and maintain it throughout the plan. This consistency helps build a strong brand image and makes a positive impression on readers.

Use A Business Plan Software

In the digital age, business plan software can simplify the planning process. These tools come with features like templates, step-by-step guides, and financial forecasting tools, making it easier to create a professional, comprehensive plan. Using such software can save time, increase accuracy, and ensure that your plan covers all essential aspects. Some popular options include LivePlan, Bizplan, and Upmetrics. Before choosing a tool, consider your needs, budget, and the software’s ease of use.

Mistakes To Avoid When Writing A Business Plan

1. not choosing a feasible business idea.

When it comes to selecting a business idea, there’s a fine line between ambitious and unrealistic. Too often, entrepreneurs get so enthralled by their passion project that they lose sight of its practicality in the market. They overlook crucial factors like the demand, the target audience, or the industry’s economic climate. In the business world, a great idea isn’t enough; it also has to be feasible. Validate your idea with market research, seek professional advice, and listen to potential customer feedback before making a commitment.

2. No Clear Exit Strategy

Although it might seem counterintuitive to plan your business’s end before it has even begun, a clear exit strategy is paramount. It guides your decisions, indicates your long-term goals, and reassures investors about the safety of their investments. Whether it’s selling the business, distributing dividends, or opting for an IPO, consider your exit strategy from the get-go.

3. Lack Of A Balanced Team

A start-up’s success isn’t a one-person show; it involves a balanced team with diverse skills and experiences. Without a robust team, you may be overwhelmed, attempting to manage all aspects of the business singlehandedly. When composing your team, look for complementary skill sets. A mix of leadership, financial acumen, marketing prowess, and technical skills ensures a well-rounded, capable team.

4. No Comprehensive Financial Projections

Many startups fall into the trap of undervaluing comprehensive financial projections. The figures you present in your business plan should be accurate and realistic and include projections for revenue, expenses, and cash flow. This detail is not only vital for you to understand the financial requirements and sustainability of your venture, but it is also crucial for securing funding from investors. Your business plan should include:

  • Balance Sheet: A snapshot of your company’s financial position, including assets, liabilities, and equity.
  • Cash Flow Statement: An overview of cash inflows and outflows, highlighting your ability to generate and manage cash.
  • Profit and Loss (P&L) Statement: A summary of your company’s revenues, expenses, and net income over a specified period.

5. Spelling And Grammar Mistakes

Nothing undermines the credibility of a business plan like spelling and grammar mistakes. They give an impression of carelessness and lack of attention to detail. In the business world, these are attributes that no entrepreneur should embody. Always proofread your plan, use professional editing tools, or seek the help of an editor to ensure impeccable presentation.

6. Not Conducting A Proper Competitive Analysis

Understanding your competition is pivotal in carving your unique place in the market. An improper or superficial competitive analysis can lead to an ill-informed strategy and poor decision-making. Use methods like SWOT analysis to understand your competitors’ strengths, weaknesses, opportunities, and threats, and use this information to differentiate your offering.

7. A Proper Marketing And Sales Strategy

Without a well-defined marketing and sales strategy, even the most innovative product can get lost in the shuffle. Outline your strategy, detailing the mediums and  channels  you plan to use to reach your target audience. Be sure to include the  estimated costs  of these strategies to ensure alignment with your financial projections.

8. No Incorporating Scalable Business Model

A scalable business model is key to long-term success. It ensures that your business can adapt to increased demand without significantly increasing operational costs. If you neglect this aspect, you may struggle to grow or, worse, become overwhelmed by success.

9. Not Setting Realistic And Measurable Goals

Setting lofty, abstract goals may seem visionary, but in practice, they leave a business adrift. Your business plan should define realistic, measurable, and time-bound objectives. The idea here is to give your team a

10. No Presence Of A Risk Management Plan

All businesses face risks, whether they are financial, operational, strategic, or related to reputation. Ignoring these potential hazards won’t make them go away. On the contrary, it leaves you unprepared (i.e. SVB bank collapse). Incorporate a risk management plan into your business strategy, outlining potential challenges and your proactive steps to mitigate them.

11. Not Updating And Refining Your Business Plan

Remember, a business plan isn’t a static document you write once and forget. As your business evolves, so should your plan. Market dynamics change, customer preferences shift, and new competitors emerge. Regularly updating and refining your business plan ensures that it remains a useful tool for decision-making and a clear roadmap for your business’s future. An outdated plan will not reflect your current business status and may lead to misguided decisions.

Avoiding these common mistakes can set you on a successful path, enabling your startup to grow, thrive, and eventually, command a formidable presence in the market. It’s not an easy task, but with these guidelines in mind, you’re better equipped to navigate the challenges ahead.

1. Why Is A Traditional Business Plan Important For A New Business?

You know that feeling when you embark on a road trip without a map? It’s a blend of excitement and anxiety, right? Well, launching a new business without a traditional business plan is pretty much the same. It’s like sailing a ship with no compass or map.

The business plan serves as your guiding star, illuminating your path forward. It outlines your mission, vision, goals, and how you plan to achieve them. It’s your secret recipe for success, the blueprint for your entrepreneurial journey.

2. What Are The Key Elements Of A Traditional Business Plan?

Think of a business plan as a puzzle, made up of several key pieces that come together to create a complete picture. These pieces include the  executive summary  (think of it as your business’s elevator pitch), company description, market analysis (your business battlefield), organization and management structure (the captains of your ship), service or product line (the bread and butter of your venture), marketing and sales strategy (your business megaphone), and financial projections (the treasure you’re after). When these pieces fall into place, you get a clear image of your business’s future.

3. How Can I Make My Business Plan Stand Out?

You know the feeling when you’re trying to bake a cake for the first time? You can follow the recipe to the letter, but it might not turn out as you hoped. The same goes for a business plan. Using a  business plan template  can be helpful, but adding your unique flavor makes all the difference. Personalize it, and infuse it with your passion and vision. Use engaging anecdotes to highlight your experiences and lessons learned. It’s like telling a captivating story about your business, leaving everyone eager for the next chapter.

4. How Often Should I Update My Business Plan?

A business plan isn’t a “set it and forget it” type of deal. It’s a living document that evolves with your business. Like a gardener tending to his plants, you must regularly nurture and adjust your plan.  

Wrapping Up

In conclusion, crafting a comprehensive and effective business plan is crucial for any venture’s success. By outlining your vision, objectives, target market, competitive analysis, organizational structure, and financial projections, you can attract investors and provide a roadmap for growth.

Remember to keep the plan concise, realistic, and adaptable, as it will evolve with your business. Continually reviewing and updating your plan will serve as a dynamic tool, guiding your business toward its ultimate goals and long-term success.

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About the author: Oran Yehiel

Oran Yehiel is the founder of Startup Geek, with an MBA specializing in financial management and a background in Deloitte. As a Certified Public Accountant and Digital Marketing Professional, he writes about venture capital, marketing, entrepreneurship, and more, bringing a wealth of experience to businesses seeking growth and success.

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How to start a small business at home in 2024

Blair Travers

Sierra Campbell

Sierra Campbell

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

Published 8:07 a.m. UTC Feb. 16, 2024

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Starting a small business at home can help you turn your passions, skills or ideas into financial prosperity. There are some unique perks and challenges to consider when deciding to start a home-based business. 

You’ll also want to have a solid plan and follow some key steps to get your business off on the right foot. It’s helpful to know where you can find ideas, answers to your questions and other resources you need to run an at-home business successfully.

Should you start a business at home?

There are many factors to consider when deciding to start a small business at home. On the one hand, it’s important to make sure there is demand for your business. On the other hand, you want to be able to handle the amount of business you receive. Gauging things like demand, profit margins and the ability to scale your business early on can help you avoid trouble down the road.

Across the country, at-home businesses make up a large portion of small businesses. C.E. “Tee” Rowe is the president and CEO of America’s Small Business Development Centers (SBDC), which provides free or low-cost support for small businesses in partnership with the U.S. Small Business Administration. “Here at America’s SBDC, we have seen an uptick in home-based businesses that started during the pandemic but continues to date,” said Rowe. 

Pros of a home business

Here are some key benefits to starting a business at home:

  • Increased flexibility: Set your own hours, freeing you up for other commitments as needed.
  • Less commuting: Save time and money by skipping the drive to work.
  • Comfortable work environment: Design your workspace how you want it. After all, it is your home.
  • Money-saving perks: Pay lower startup costs compared to larger businesses by avoiding costs like renting retail or office space. Take advantage of tax breaks for at-home businesses.
  • Reduce risk: Protect yourself by limiting your liability and avoiding the cost and risk of maintaining commercial space.
  • Rewards for your hard work: Work hard for your business, and your business reaps the benefits instead of some other employer.

Cons of a home business

These are some of the disadvantages of starting a business at home:

  • Limited space: You give up part of your home, and even then, you may still need more space for your business.
  • Distracting work environment: Crying babies, barking dogs and loud neighbors can all be distracting when running a business at home.
  • Professional boundaries: Some people may feel awkward about meeting to discuss business at your home or a public location.
  • Increased mental health risks: Running a home business can feel isolating for some. A lack of social interaction, time outside, work-life balance or effective time management can also threaten mental health.
  • Growth restrictive: If your home-based business scales too rapidly, you may outgrow your workspace quickly. In this situation, success creates a problem for home businesses to solve.
  • Increased costs: Whether you’re paying new employee salaries or wages or forking over more money for higher utility bills, you may feel the financial squeeze.

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7 steps to start a home business

After considering the pros and cons, does the idea of taking the reins and starting a home business appeal to you? You’re not alone. 

“When we work with individuals seeking to start a home-based business, it is frequently based on a desire to control their own circumstance and success, which are great reasons, but it always needs to be thought out carefully,” Rowe explained.

Planning is key. From creating a business plan and determining your business structure to securing funding and setting your marketing strategy, there’s a lot to think through. Follow the steps below to get on the right track to starting a small business at home.

1. Find your niche

Plenty of successful at-home businesses arise from emotion: a passion to do what you love, a frustration with the status quo or excitement to seize on a timely opportunity.

If you’re struggling to find your niche, ask yourself:

  • What do you love to do that others may find challenging?
  • What is a need that no business currently has the right solution for?
  • What are you good at? What do people ask for your help with?
  • What high-demand skills or services do you have to offer?

2. Draft a business plan

Having a business plan is essential for running your business effectively. As Rowe pointed out, “Every business needs a solid, comprehensive plan to guide them to success. That plan needs to focus on skills, finance, revenue and marketing.”

A business plan outlines the direction of the business — its goals, strategies, structure, ways of measuring success and plans for dealing with things like change and risk. Simply put, it’s the roadmap to success for your business.

When creating your business plan, include key sections such as an executive summary, a business description, market analysis and financial projections. For more on what to cover, check out this step-by-step guide to drafting a business plan .

3. Select a business structure

According to the IRS, the most common business structures are sole proprietorships, partnerships , corporations and limited liability companies (LLC) . Each business structure comes with its own set of operational, legal, financial and tax considerations. 

A sole proprietorship is a business owned and operated by a single individual, while a partnership is jointly owned by two or more individuals who share responsibilities. 

In contrast, corporations — like C corporations and S corporations — are independent legal entities. C corporations limit shareholder liability but are highly complex. S corporations feature pass-through taxation, distributing income (and losses) to shareholders.

While sole proprietorship is a common structure for just starting out, LLC is another popular option for at-home businesses. It combines elements of a corporation and a partnership, offering limited liability to its members and the flexibility of pass-through taxation. Members of an LLC can choose to be taxed as a sole proprietorship, partnership, C corporation or S corporation.

4. Register your business and get an EIN

After you choose a business structure, you’ll need to register your business with state and federal governments. Select a business name , pay fees and provide required documents, which vary by state.

After getting registered with your state, you can then apply for an Employer Identification Number (EIN) from the IRS. Once you’re approved, you’ll receive this unique nine-digit number that is essential for all sorts of business purposes, from filing your taxes to hiring employees. 

Not all businesses need an EIN, such as sole proprietors and single-member LLCs with no employees.

5. Get any required licenses and permits

Depending on your industry and federal, state and local requirements, you may also need to obtain licenses and permits for your business. 

Here are some examples of licenses and permits you may need, depending on your business:

  • Occupational, professional or trade licenses.
  • Online business permits.
  • Sales tax permits.
  • Health department permits.
  • Safety permits.
  • Home-based child care licenses.
  • Zoning, signage, environmental and other permits to operate an at-home business, as required by local government, HOA or deed restrictions.

6. Obtain funding for your business

Many owners fund their businesses using their own savings. Self-funding is a viable choice if you can get up and running without much money, can come up with the needed funding from your own accounts or can ask for help from family or friends. 

You can also apply for a business loan . Banks will likely want to see a rock-solid business plan, strong financial projections, good personal and/or business credit history and any collateral you’ll use for your loan. If you are a good candidate for lending, make sure that shows in your application so that you can get the best funding and terms for your business.

If you don’t have much personal or business credit history, it may be easier to get a business credit card . This gives you benefits like payment flexibility, credit card rewards and essential early or emergency spending power. It will also help your business establish or strengthen its credit so you can get favorable terms on future loans and other credit.

7. Launch and market your business

You’ve planned out your business, defined its structure and gotten your business registered, licensed, permitted and even paid for. Now it’s showtime. For many who seek to start a small business at home, the launch is the most exciting part of the journey. You are now ready to conduct business.

It’s also important to get others excited about your small business — and keep them engaged. Here are some of the most common marketing strategies for small home-based businesses:

  • Social media marketing: Reach potential customers on platforms like Facebook, Instagram, TikTok and X (formerly Twitter) by sharing engaging content and updates.
  • Business website: More than just a place to sell your products or services online, your business website should help users find what they want to meet their needs. It should also help achieve business objectives by offering features like payment services or e-commerce functionality .
  • Advertising: Platforms such as search engines and social media can help you reach your target audience.
  • Content marketing: Write blog posts, produce videos or create helpful graphics to explain what your business offers and to establish trust and authority.
  • Email marketing: To keep business coming back, build an email list to communicate using promotions, newsletters and updates.
  • Word of mouth: In the early stages, many small home-based businesses rely on word of mouth. You can also ask for customer reviews on platforms like Google and Yelp.

Weigh the costs and benefits when deciding on your marketing plan, so you choose what’s best for your business.

Top home business ideas

Check out these home business ideas to find the right fit for you:

  • Retail: Sell products you make — including crafts and customized gifts — or resell products you get for less than what you pay for them.
  • Case-based services: Open up an in-home daycare, provide home-based care for adults or even take care of pets by offering pet sitting and mobile grooming.
  • Events: Plan weddings and events. Create the perfect look as a makeup artist or stylist. Play music in a band or take your place on the 1s and 2s as a DJ.
  • Art and creative services: Capture the moment as a photographer, or maybe you’d rather bring your vision to life as an artist. More of a words person? Write, edit or translate content. 
  • Education: Teach the next generation how to do math, play an instrument or learn a new language. Provide adults with specialized training in arts and crafts, life coaching or test preparation.
  • Health and wellness: Become a personal trainer to get people in the best shape of their lives or a mental health counselor to help them find their inner peace.
  • Home and real estate: Transform homes by organizing, decorating or even staging. Produce virtual home tours for real estate agents, or become a realtor yourself.

Resources to start a business

For more resources and guidance on how to start a small business at home, check out these guides and articles:

  • Follow our step-by-step guide on how to start a business from the ground up.
  • Learn how to start an LLC if that’s your chosen business structure.
  • Discover how to start a business with no money so funding doesn’t hold you back.
  • Skip the overhead that comes with brick-and-mortar stores and find out how to start an online business .
  • Explore options to accept payments online and start making money in your sleep.
  • Find the cheapest payroll services to pay your employees and contractors.
  • Build a successful business by attracting loyal, repeat customers. 

Frequently asked questions (FAQs)

The cost of starting a business at home varies widely and depends on several factors. Some businesses, including sole proprietorships, can get away with paying little to no money to start their business. Other home-based businesses, including those with manufacturing or inventory expenses, could have considerably higher startup costs.

Yes, you can use your home address to register a business. However, you’ll want to make sure that usage does not go against local laws, HOA bylaws or property covenants. It’s also a good idea to check with your mortgage and homeowners insurance companies to make sure that running a business out of your home does not introduce unforeseen headaches.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy . The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Blair Travers

Blair Travers is a business writer and content strategist with over a decade of experience breaking down complex problems to help businesses move forward with confidence. He brings a wide range of technology, banking and retail expertise. Blair enjoys helping businesses figure out complex processes and make choices that are right for them. His work has been published in U.S. News & World Report and Carfax.

Sierra Campbell is a small business editor for USA Today Blueprint. She specializes in writing, editing and fact-checking content centered around helping businesses. She has worked as a digital content and show producer for several local TV stations, an editor for U.S. News & World Report and a freelance writer and editor for many companies. Sierra prides herself in delivering accurate and up-to-date information to readers. Her expertise includes credit card processing companies, e-commerce platforms, payroll software, accounting software and virtual private networks (VPNs). She also owns Editing by Sierra, where she offers editing services to writers of all backgrounds, including self-published and traditionally published authors.

How to start a small business: A step-by-step guide

How to start a small business: A step-by-step guide

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How Fast Should Your Company Really Grow?

  • Gary P. Pisano

how to develop a business plan for a startup

Growth—in revenues and profits—is the yardstick by which the competitive fitness and health of organizations is measured. Consistent profitable growth is thus a near universal goal for leaders—and an elusive one.

To achieve that goal, companies need a growth strategy that encompasses three related sets of decisions: how fast to grow, where to seek new sources of demand, and how to develop the financial, human, and organizational capabilities needed to grow. This article offers a framework for examining the critical interdependencies of those decisions in the context of a company’s overall business strategy, its capabilities and culture, and external market dynamics.

Why leaders should take a strategic perspective

Idea in Brief

The problem.

Sustained profitable growth is a nearly universal corporate goal, but it is an elusive one. Empirical research suggests that when inflation is taken into account, most companies barely grow at all.

While external factors play a role, most companies’ growth problems are self-inflicted: Too many firms approach growth in a highly reactive, opportunistic manner.

The Solution

To grow profitably over the long term, companies need a strategy that addresses three key decisions: how fast to grow (rate of growth); where to seek new sources of demand (direction of growth); and how to amass the resources needed to grow (method of growth).

Perhaps no issue attracts more senior leadership attention than growth does. And for good reason. Growth—in revenues and profits—is the yardstick by which we tend to measure the competitive fitness and health of companies and determine the quality and compensation of its management. Analysts, investors, and boards pepper CEOs about growth prospects to get insight into stock prices. Employees are attracted to faster-growing companies because they offer better opportunities for advancement, higher pay, and greater job security. Suppliers prefer faster-growing customers because working with them improves their own growth prospects. Given the choice, most companies and their stakeholders would choose faster growth over slower growth.

Five elements can move you beyond episodic success.

  • Gary P. Pisano is the Harry E. Figgie Jr. Professor of Business Administration at Harvard Business School and the author of Creative Construction: The DNA of Sustained Innovation (PublicAffairs, 2019).

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How to Write a Food and Beverage Business Plan + Sample Business Plan PDF

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Elon Glucklich

7 min. read

Updated February 17, 2024

Free Download: Sample Food and Beverage Business Plan Templates

The food and beverage sector is booming. Restaurant openings rose 10% in 2023 compared to 2022 — even higher than in pre-pandemic years.

From fine dining to food trucks, farmers to brewers, and wholesalers to coffee makers, there are opportunities across the food and beverage industry. 

But starting a business without covering the basics — your operations plan, marketing tactics, financial strategy, and more — carries huge risks. 

That’s why we recommend you write a business plan.

  • Why write a food and beverage business plan?

Writing a business plan is an easy first step that you can start for free. Plus, businesses that take time to plan are significantly more successful than those that don’t.

Many food and beverage establishments fail because of one of the following:

  • Poor inventory management
  • Underestimated expenses
  • High employee turnover
  • Misjudged the size of their market

Writing a business plan can help you:

  • Develop processes for managing inventory and logistics
  • Understand your cash flows and create a realistic expense budget
  • Budget for competitive employee pay that increases worker retention
  • Analyze your competition and determine how big your market is  

If you’re looking for funding from investors for your business, you’ll definitely need a business plan.

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  • How to write a food and beverage business plan

Many business plans follow a standard format and you can use it as a starting point when writing your own plan. Here’s what that includes:

Executive summary

  • Company summary and funding needs
  • Products and services
  • Marketing plan
  • Management team

Financial plan

For food and beverage companies, you must give extra attention to your market analysis, operations plan, and financial forecasts.

If you’re ready to start, download a free business plan template and fill it out as you read this article.

A sample business plan outline for a food and beverage business.

Every business plan should include an executive summary . It’s a brief outline summarizing the plan, no more than one or two pages.

We recommend that you write the executive summary last after fleshing out the details of your plan. 

Just summarize the vision for your business, describe your offerings and target market , and touch on your management team and financials. Don’t go into tons of detail — just provide a high-level sense of what you want your business to accomplish.

Opportunity: problem and solution

This section of your food and beverage business plan describes the opportunity you hope to capture.

Maybe you’re a farmer looking to diversify your revenue streams by distributing to grocery stores. Or a bar owner with high-end liquor that competitors in the market aren’t serving. 

Whatever your business is, describe the gap in the market and how you aim to fill it.

If you’re operating a more common type of business, like a restaurant , you can probably keep this section short. But it’s useful to document what makes your business unique and it will help focus your sales and marketing efforts later on.

Market analysis

In a field as crowded with competitors as the food and beverage space, a detailed market analysis is essential. 

Your focus should be on identifying the specific customer segments you aim to serve. 

Maybe you’re a butcher with connections to fresh livestock. Will you be more successful selling directly to consumers, or should you focus on selling to grocery stores and markets in your area?

Or, you’re opening  a diner. Should your menu focus on healthy meals or easy-to-make child-friendly options?

These are the types of questions that market research helps you answer. This section should detail the defining characteristics of your target market, including the demographics and preferences of your ideal customer and the size of the market you’re targeting. Market research questions specific to a food and beverage business could include:

  • Business location and characteristics
  • Area income
  • Local food and beverage preferences
  • Existing food and beverage options 

Elaborate on how your food and beverage offerings align with that target market ’s needs. Remember, you can’t please everyone, so focus on a specific group of people or type of person and build out from there.

Marketing and sales

For food and beverage businesses promotions are how you stand out and seize a share of your market.

The marketing and advertising chapter of your business plan is where you’ll detail your strategies for capturing the attention — and loyalty — of the customers you identified as your target market in the previous section.

With so many options for consumers in the food and beverage space, you’ll likely have to rely on multiple marketing channels , including::

  • Advertising on websites, television, and in relevant publications.
  • Content marketing — developing an engaging website and writing blog content that’s search engine optimized to drive traffic to your site.
  • Engaging with your customers on social media.
  • Offering discounts and customer loyalty programs.
  • Appearing at food and beverage industry trade shows and community events.

It doesn’t matter how delicious your recipes are, how fresh your crops are, or how innovative your cocktails are — if you don’t operate efficiently, your business probably won’t last long.

The operations strategy may be the most detailed section of your business plan, especially if you’re writing it for a bank loan or investment. This section describes how you will run your business day to day.

When writing the operations section, describe the following:

Physical space

Whether it’s a restaurant, a farm, or a food transportation business, describe the space you’re operating in, and all of the physical assets and equipment you’ll need to be successful. 

If it’s a sit-down restaurant, consider including a floorplan mockup in your appendix.

Supply chain 

List the suppliers and partners that get your product to customers. Think about the businesses you purchase ingredients from, the warehouses that goods are stored in, and the trucking companies that deliver your products to grocery stores. 

These are your supply chain partners. It’s crucial that you maintain good relationships with them.

Production processes

How long it takes to make your product, and what materials and equipment are required. Documenting how you produce your goods or services demonstrates that you understand the costs of making them. 

You may also uncover ways to produce them more quickly, or at a lesser cost.

Detail how you’ll handle matters of efficiency like order fulfillment, storage, shipping, and returns, as well as customer satisfaction. If you provide delivery services, document how you will handle the process of getting your product to customers’ homes or businesses.

List your staffing needs, training, and experience requirements for key staff. Also, document the management structure of your business. 

This helps ensure that important tasks you don’t have time to monitor are being done and that workers are being supervised.

Describe investments in payment processing systems, inventory management software, and other tools that support sales or operations in your business. Cataloging your technology systems will help you determine where it might make sense to invest in upgrades for efficiency.

Take some time to write a financial plan . Create detailed financial projections, including sales , expenses , and profitability .

If that sounds intimidating, take a deep breath, and remember that financial forecasts are really just best guesses. If you’re running an existing business, you can start with your previous year’s numbers. If you’re starting, make an educated guess about where you hope to be financially a year from now.

Investors will want to see a: 

  • Sales forecast
  • Income statement (also called a profit and loss statement )
  • Cash flow statement
  • Balance sheet 

If you use a tool like LivePlan , you’ll be able to build out your financial forecasts relatively quickly, even if you don’t have experience with business numbers.

Even if you aren’t seeking investment, the financial plan is crucial for understanding the viability of your business. It allows you to adjust your business model based on projected performance, and make informed decisions about where to spend your money.

  • Food and beverage business plan templates and examples

If you want to see how other food and beverage businesses have created their plans, check out our free library of food and beverage business plans . 

You can download all of them in Word format and jump-start your own business plan.

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

Content Author: Elon Glucklich

Elon is a marketing specialist at Palo Alto Software, working with consultants, accountants, business instructors and others who use LivePlan at scale. He has a bachelor's degree in journalism and an MBA from the University of Oregon.

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Start » strategy, 9 steps to creating a procurement process for your small business.

An effective procurement strategy is the foundation for implementation success. Learn how to plan your approach, choose the right technologies, and find suitable suppliers.

 A small business owner checks a delivery. Before her is an open box. She is holding the shipping invoice in her right hand and comparing it against the goods delivered.

Disruptions, shortages, and out-of-stock situations impact your uptime and ability to meet customer expectations. Indeed, in the second quarter of 2023, supply chain issues remained a top concern for 23% of small business owners, according to the MetLife and U.S. Chamber Small Business Index . A procurement strategy increases supply chain visibility and resiliency while reducing your financial and operational risks.

In addition, a purposeful approach to procurement can save your company money and bolster relationships with suppliers. Follow this step-by-step guide to develop a procurement process suitable for your business goals and needs.

1. Assess your needs, goals, and budget

Procurement cycles differ by company; small and medium businesses (SMBs) should refrain from trying to create a one-size-fits-all plan. Instead, complete an internal review to learn what goods and services each department requires. Categorize these as direct (raw materials or services for production) or indirect (supports business activities). Then, break them into goods or services. Remember to include pricing and quantities to understand the spend for each group.

This step aims to see how much your business spends on direct and indirect goods and services. These figures will give you an idea of how procurement can benefit your company and how a strategy can help you overcome supply chain challenges .

[ Read more: 6 Ways to Protect Your Business From a Supply Chain Disruption ]

2. Establish metrics to measure your procurement performance

Procurement key performance indicators (KPIs) track your company’s efficiency and process goals. Monitoring metrics increases visibility into your supply chain and shows where you’re improving or need further action. You should set small business KPIs before beginning any new process.

Consider tracking the following metrics:

  • Rate of emergency purchases.
  • Procurement return on investment (ROI) and benefits.
  • Supplier defect rate.
  • Purchase order (PO) and invoice accuracy.
  • Compliance rate.
  • Supplier lead time.
  • Vendor availability.
  • PO cycle time.
  • Cost per invoice and PO.
  • Procurement ROI and benefits.
  • Spend under management.
  • Price competitiveness.

[ Read more: Big Brands’ Inventory Management Partners Share Top Tips to Slay Supply Chain Snarls ]

3. Consider current and new procurement technologies

Capterra stated, “Nearly 30% of SMBs plan to implement a new supply chain management tool in 2023.” Moreover, MHI predicts that “digital supply chains will be the norm” by 2033.

Although companies can choose an all-in-one procure-to-pay suite, Capterra found that many organizations opt for specialized tools. Niche programs are easier to use, integrate, and deploy.

See if your current software supports your procurement process, and while planning your strategy, look for opportunities to automate tasks using supply chain tech . Doing so can decrease errors and save time, allowing your procurement team to focus on high-value activities instead of data entry.

Procurement software solutions fall into the following categories (and several tools cover multiple areas):

  • Accounts payable and spend analysis: This software helps companies understand the procurement process and find cost-saving opportunities. Solutions include Coupa , SAP Ariba , Precoro , and PRM360 .
  • Procure to pay: These end-to-end platforms centralize many procurement activities. Consider solutions like mjPRO , Procurify , Precoro , Basware , and MHC Software .
  • Purchasing: Automate your approval workflows and view real-time spend data with SAP S/4HANA Cloud , Emburse Certify Expense , Spendwise , Veeqo , Unleashed , Planergy , Teampay , and Order.co .
  • Request for proposal (RFP): Create a central database for your procurement documents and use artificial intelligence (AI) tools to improve your workflows. Software solutions include Responsive (formerly RFPIO), Loopio , Avnio Response Cloud , RFP360 , QorusDocs , and RocketDocs .
  • Spend management: Manage your expenses automatically and visualize your costs with software like BILL Spend & Expense (Formerly Divvy), Ramp , Brex , Airbase , and Spendesk .
  • Strategic sourcing: Automate your sourcing and procurement process with software such as aPriori , Procol , and Anvyl .
  • Vendor management: Review, track, and manage suppliers with solutions from QuickBooks Online , Vanta , SAP Fieldglass , Venminder , Ncontracts , and Tradeshift Pay .

4. Find and evaluate suppliers

Identify vendors for each good, electronic component, service, raw material, or service your business requires. Obtain supply market intelligence using free resources from the U.S. Small Business Association and the U.S. Census Bureau . Also, consider paid services, such as IBIS World , Crain’s , Bloomberg , and Gartner . Consider each vendor’s cost structure, market information, past performance, and commodity profile.

This prescreening process is enough to move to the next stage for some services and goods (office supplies or standard maintenance items like grease). However, you should further evaluate complex parts and essential production components when the products substantially impact your budget and production capacity. The more risk that’s involved, the more time you should dedicate to the vetting process.

Consider criteria such as the following:

  • Location: Review the geographic stability, distance from your company, and supply chain infrastructure.
  • Cultural and language differences: Determine if barriers will cause communication issues during the process.
  • Working conditions: Focus on health and safety practices, child labor usage, and general working conditions.
  • Employee capabilities: See if there is a history of labor disputes or strikes, the turnover rate, and the workforce skill level.
  • Cost structure: Go over the total costs, including production, marketing, material, administrative, and supply chain expenses.
  • Technological capabilities: Consider the company’s approach to technology in design, equipment, processes, methods, and any current or future investments in research and development.
  • Quality control: Look at what system they use and record to ensure consistency for current and anticipated demand.

In the second quarter of 2023, supply chain issues remained a top concern for 23% of small business owners, according to the MetLife and U.S. Chamber Small Business Index.

5. Choose a sourcing strategy

After approving a purchase, your procurement team must select a supplier and either buy directly from them, send an RFP or a request for quote (RFQ), or enter into an agreement.

An RFP solicits bids from suppliers. It should outline your project and provide delivery requirements, financial terms, pricing structure, and product or service details. Alternatively, a company uses an RFQ when they only need a price quote, not information about products or services.

[ Read more: Do You Have a Supply Chain Backup Plan? How to Plan Ahead ]

6. Select suppliers and negotiate

Once you review the documents and choose a supplier, it’s time to negotiate vendor contracts . The agreement should outline the scope of work, delivery dates, budget, contract duration, legalities, terms, and conditions.

It’s important to remember that, ideally, you’re building a long-term relationship. You need to get the best deal possible. At the same time, compromise is part of negotiation.

7. Finalize documents and keep records

The onboarding process begins immediately after signing and approving the contract. Larger organizations often require individuals to complete a purchase requisition (PR). This form requests the procured goods or services and requires approval from an internal department manager or leader.

From there, the business creates a purchase order (PO). This document goes to the supplier and details the services or goods and negotiated terms and conditions.

Small businesses should keep all records on file, whether those records are paper files or digital forms. Doing so helps show your overall ROI and can support you when negotiating future vendor payment terms . Moreover, it’s essential for business tax and audit purposes.

Store the following documents:

  • Supplier invoices.
  • Delivery reports.
  • Company policies.
  • Purchase orders.
  • Packing lists.
  • RFPs and RFQs.
  • Procurement budget approvals.
  • Goods received note.

8. Inspect shipments and pay suppliers

Check out your first shipment to ensure everything is in good condition and in the correct quantity. Also, note if the supplier met the delivery schedule and satisfied the services outlined in the contract. If you have any concerns, contact the vendor for a meeting. Otherwise, you can go over the invoice for payment.

Companies often use the three-way matching method. It compares the purchase order, invoice, and itemized list for accuracy. From there (depending on your payment terms), your financial department will process the payment and send it to the supplier.

9. Review and adjust your procurement strategy

All business strategies are living documents. Nothing, including contracts, is set in stone.

Your procurement KPIs will highlight opportunities for improvement and areas where you could save money by adjusting your process or negotiating better contract terms. Likewise, you may realize inefficient processes are driving up administrative costs. In this case, automated spend management software or vendor management tools can boost productivity while reducing errors and ensuring policy compliance.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here .

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Small Business Trends

How to start a makeup line.

Personal brands play a big role in the cosmetics industry, especially with the rise of social media influencers and beauty gurus. These individuals often leverage their personal brand to launch their own cosmetic line, capitalizing on their loyal followers and unique aesthetic.

Personal makeup brands can bring authenticity, relatability, and a strong connection to consumers, which are invaluable assets in the highly competitive cosmetics market. Read on for a guide on how to start a business in this exciting industry.

The Cosmetics Industry Today

The cosmetics industry in the US is robust, and the beauty industry is continuously evolving. The global beauty industry is driven by factors such as consumer demand for innovative products, increasing emphasis on self-care and personal grooming, and the influence of social media on beauty trends.

With challenges like regulatory scrutiny and market saturation, the US cosmetics industry remains dynamic, with ample opportunities for new entrants to carve out their niche.

how to start a makeup line

Why Start Your Own Makeup Line?

There are several compelling reasons to start a makeup line and establish a beauty brand, including:

  • Passion for beauty and cosmetics: Many entrepreneurs who start cosmetic lines are drawn to the industry due to their love for makeup and skincare products.
  • Creative expression: Launching a makeup line in the cosmetics business allows individuals to express their creativity through product formulation, packaging design, and branding.
  • Business opportunity: The makeup industry offers significant potential for profit and growth, especially with the right combination of innovation, quality, and marketing.
  • Addressing unmet needs: Identifying gaps in the market or specific consumer pain points can inspire entrepreneurs to create unique products that fulfill those needs.

Initial Steps to Starting a Makeup Line

Developing a business plan for your makeup line.

Creating a business plan for a makeup line is one of the essential building blocks for new businesses to succeed . It involves several key components that lay the groundwork for your business’s structure, strategy, and financial planning. Here’s a detailed expansion on each of these components:

Small Business Deals

  • Look into common business structures and choose one that suits your business needs.
  • Analyze current makeup industry trends to identify potential opportunities.
  • Study consumer behavior to understand their preferences and needs.
  • Evaluate competitors to identify their strengths, weaknesses, and market positioning.
  • Identify gaps in the market that your makeup line can fill.
  • Determine the demographics and psychographics of your ideal customer, such as age, gender, lifestyle, and beauty preferences.
  • Develop a brand identity that appeals to your target audience, including your brand’s mission, values, and personality.
  • Choose a brand name, logo, and design theme that reflects your brand identity and resonates with your target market.
  • Decide on the types of makeup products you will offer (e.g., foundations, lipsticks, eyeshadows).
  • Define the formulations for your products, considering aspects like ingredients, benefits, and performance.
  • Design packaging that aligns with your brand identity and appeals to your target audience while also being functional and sustainable.
  • Develop pricing strategies that reflect the value of your products, considering factors like production costs, market positioning, and consumer willingness to pay.
  • Identify the most effective sales channels for your makeup line, such as online platforms, retail partnerships, or direct sales.
  • Develop a marketing strategy that includes a mix of digital marketing, social media, influencer collaborations, and traditional advertising to reach your target audience.
  • Plan promotional activities, such as product launches, events, and special offers, to generate interest and drive sales.
  • Source high-quality suppliers for ingredients and packaging materials, prioritizing reliability, sustainability, and ethical practices.
  • Choose manufacturing partners that can meet your quality standards, production needs, and timelines.
  • Set up distribution channels to efficiently get your products to market, whether through direct-to-consumer shipping, retail partners, or distribution centers.
  • Estimate initial startup costs, including product development, branding, legal fees, and inventory.
  • Project ongoing expenses, such as manufacturing, marketing, staffing, and operational costs.
  • Forecast sales based on market analysis, pricing strategies, and marketing efforts.
  • Plan for contingencies by setting aside a budget for unexpected expenses.

By meticulously planning each of these components, you can create a comprehensive business plan that not only guides the launch of your makeup line but also supports its growth and sustainability in the competitive beauty industry.

how to start a makeup line

Legal Considerations and Brand Protection for Makeup Lines

  • Choose a unique and memorable brand name that is legally available for use and registration.
  • Secure trademarks for your brand name, logos, and product names to protect your intellectual property.
  • Comply with regulatory requirements for cosmetics labeling, ingredient disclosure, and product safety testing.
  • Consider forming a legal entity, such as an LLC or corporation, to protect your personal assets and limit liability.
  • Draft contracts and agreements with suppliers, manufacturers, distributors, and any other business partners.

Funding Your Makeup Business Venture

  • Assess your startup costs, including product development, manufacturing, branding, marketing, and distribution expenses.
  • Explore funding options such as personal savings, loans, investments from family and friends, crowdfunding, or venture capital.
  • Consider bootstrapping or starting small to minimize initial financial risk and prove the viability of your makeup line before seeking external funding.
  • Prepare a comprehensive business plan and financial projections to present to potential investors or lenders.

how to start a makeup line

Starting a Makeup Line: Step by Step

These are foundational steps to consider when starting a makeup line, but each venture will have its unique challenges and requirements based on factors like product niche, target market, and business goals.

Building Your Makeup Line Business Model

Define your unique selling proposition (USP) and pricing strategy to differentiate your products in the market while ensuring profitability.

Identifying Your Target Market in the Cosmetics Industry

Conduct thorough market research to understand the demographics, psychographics, and purchasing behavior of your ideal customers, allowing you to tailor your products and marketing efforts accordingly.

Sourcing Ingredients and Manufacturers

Prioritize quality and consistency when sourcing ingredients and manufacturers, and consider factors like ethical sourcing, production capacity, and regulatory compliance.

how to start a makeup line

Exploring Private Label Options

Evaluate private label options carefully, considering factors like product customization, minimum order quantities, lead times, and the level of control you want over product formulation and branding.

Product Development and Testing

Invest in rigorous product development and testing processes to ensure the safety, efficacy, and quality of your makeup products, including formulation testing, stability testing, and consumer trials.

Creating Your Makeup Line Brand

Develop a cohesive brand identity that reflects your values, resonates with your target audience, and sets you apart from competitors, encompassing elements like brand name, logo, packaging design, and brand messaging.

how to start a makeup line

Marketing and Selling Your Makeup Line

Building an online presence for your cosmetics line.

Utilize an e-commerce platform or website startup guide to create a visually appealing and user-friendly website for your cosmetics line, optimizing it for search engines and incorporating features like product descriptions, images, customer reviews, and secure payment options to enhance the online shopping experience for your customers.

How Makeup Lines Can Leverage Social Media

Leverage social media platforms such as Instagram, TikTok, and YouTube to showcase your makeup products through engaging content like tutorials, product reviews, behind-the-scenes glimpses, and user-generated content, fostering a sense of community and authenticity while driving brand awareness, engagement, and sales.

Launching Your Makeup Line

Generate buzz and excitement around your makeup line launch by implementing a strategic marketing plan that includes teaser campaigns, influencer partnerships, press releases, and social media promotion. Then, create a memorable launch event or online release that captures the attention of your target audience and drives initial sales momentum.

FAQs: How to Start a Makeup Line

How much does it cost to start a makeup line.

The cost to start a makeup line can vary widely depending on factors such as product complexity, manufacturing processes, packaging design, branding, marketing efforts, and distribution channels. For example, developing a skin cream could require initial investments in formulation research, ingredient sourcing, manufacturing equipment, packaging materials, branding, regulatory compliance, and marketing. Costs for launching a single skincare product may range from a few thousand dollars to tens of thousands or more, depending on the quality and scale of the operation.

What are the challenges of entering the makeup business?

Some challenges of starting a makeup line include fierce competition in the cosmetics industry, high upfront costs for product development and manufacturing, stringent regulatory requirements for cosmetics labeling and safety testing, establishing brand credibility and consumer trust, securing retail distribution channels, and navigating market trends and shifts in consumer preferences.

Can a small makeup line compete in the cosmetic industry?

While the cosmetics industry is dominated by large established brands, small makeup lines can still compete by leveraging niche markets, focusing on product innovation and quality, building a strong brand identity and community engagement, utilizing digital marketing and social media channels to reach target audiences directly, offering personalized customer experiences, and cultivating strategic partnerships with retailers or influencers.

How can a new makeup business compete with established beauty brands?

Here’s a business startup checklist for makeup businesses that want to compete with larger brands:

  • Identify a unique niche or target market that is underserved by larger brands.
  • Emphasize product differentiation through innovative formulations, packaging, or branding.
  • Prioritize quality and customer satisfaction to build loyalty and word-of-mouth referrals.
  • Optimize digital marketing efforts to increase online visibility and engage with consumers directly.
  • Seek collaborations or partnerships with influencers, bloggers, or complementary brands to expand reach and credibility.

Can you start a makeup business solely online?

Yes, it is possible to start a makeup line solely as an online business. Launching a cosmetics brand online offers several advantages, including lower startup costs compared to establishing a physical retail presence, global reach and accessibility to a wider audience, flexibility in product offerings and marketing strategies, real-time customer feedback and analytics for informed decision-making, and the ability to scale and adapt quickly in response to market trends and consumer demand.

However, it’s essential to invest in a user-friendly e-commerce platform, effective digital marketing strategies, and exceptional customer service to succeed in the competitive online landscape.

Image: Envato Elements

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