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How to Write a Business Plan, Step by Step
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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. add additional information to an appendix, business plan tips and resources.
A business plan is a document that outlines your business’s financial goals and explains how you’ll achieve them. A strong, detailed plan will provide a road map for the business’s next three to five years, and you can share it with potential investors, lenders or other important partners.
Here’s a step-by-step guide to writing your business plan.
» Need help writing? Learn about the best business plan software .
This is the first page of your business plan. Think of it as your elevator pitch. It should include a mission statement, a brief description of the products or services offered, 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, which should contain 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, it should cover the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.
» MORE: How to write a company overview for a business plan
The third part of a business plan is an objective statement. This section spells out exactly what you’d like to accomplish, both in the near term and over the long term.
If you’re looking for a business loan or outside investment, you can use this section to explain why you have a clear need for the funds, how the financing will help your business grow, and how you plan to achieve your growth targets. The key is to provide a clear explanation of the opportunity presented and how the loan or investment will grow your company.
For example, if your business is launching a second product line, you might explain how the loan will help your company launch the new product and how much you think sales will increase over the next three years as a result.
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.
Your sales strategy.
Your distribution 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.
» 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.
You may also include 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.
» NerdWallet’s picks for setting up your business finances:
The best business checking accounts .
The best business credit cards .
The best accounting software .
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.
List any supporting information or additional materials that you couldn’t fit in elsewhere, such as resumes of key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts and personal and business credit history. If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.
Here are some tips to help your business plan stand out:
Avoid over-optimism: If you’re applying for a business loan at a local bank, the loan officer likely knows your market pretty well. Providing unreasonable sales estimates can hurt your chances of loan approval.
Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors, taking their mind off your business and putting it on the mistakes you made. 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. You can search for a mentor or find a local SCORE chapter for more guidance.
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.
How to write a business plan in 7 steps
With this step-by-step guide, learn how to write a well-written professional business plan that can help you successfully start your business, apply for funding, and grow.
Writing a business plan doesn’t have to be complicated. You don’t need to have a business or accounting degree to put together a viable business plan. Business planning can be simple—even fun!
This guide will show you how to get your plan done without any complexity or frustration. By the time you’re done, you’ll be better prepared to start, run, and grow your business. Here are the 7 steps to write a business plan:
- Executive summary
- Products & services
- Market analysis
- Marketing & sales
- Company organization and management team
- Financial projections
Be sure to download our free business plan template to start writing your own business plan as you work through this guide. For a more detailed guide to writing a business plan, download our free ebook : The Easy Way to Write Your Business Plan.
What is a business plan?
A business plan is a document that describes your business, the products and services you sell, and the customers that you sell to. It explains your business strategy. How you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.
Most business plans also include financial forecasts for the future. Setting sales goals, expense budgets, and predictions for cash flow.
Now, a business plan can be far more than just a static document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. A management tool to analyze results, make strategic decisions, and showcase how your business will operate and grow. In short, if you’re thinking of starting a business or plan to pitch to investors or venture capitalists, writing a business plan can improve your chances of success.
Why do you need a business plan?
You likely already have a good idea of your business strategy in your head. So you may be wondering, “Why should I spend my time making a business plan?” Here are the top reasons why you should invest in planning:
Businesses that plan grow 30% faster.
A surprising amount of research has been done on business planning and has shown that companies that take the time to write a plan and review it regularly grow 30% faster than those businesses that don’t plan. Not only do these companies grow faster, but they perform better and are less likely to fail in the long run.
Lenders and investors need business plans
If you’re growing your business and plan on getting a business loan or raising money from investors, you’ll need a business plan. Most lenders and investors will ask for a plan, but even if they don’t want to see the actual document, they will ask you questions that only a solid business plan will be able to answer.
Business plans reduce risk
Starting and running a business is always risky. Instead of flying by the seat of your pants, you can use a plan to forecast potential cash flow issues and get ahead of any potential roadblocks so you aren’t caught off guard. A business plan will help you reduce your risk and help you navigate the future.
Business planning helps you make smart spending decisions
Before you make a big spending decision for your business, you need to know the potential impacts on your finances. With a business plan in place, you can easily explore different scenarios and see what impacts a new hire or an expansion to a second location will have on your business.
Need more reasons for why you need a business plan? Read our full list of reasons why having a business plan is important for small businesses .
How to write a business plan step-by-step
Whether you’re building a business plan to raise money and grow your business or just need to figure out if your idea will work, every business plan needs to cover 6 essential sections. Here’s an overview of each section:
1. Executive summary
The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. Most people write it last, though.
Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. In fact, it’s very common for investors to ask for only the executive summary when they are evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation, and more in-depth financials.
Your executive summary should include a summary of the problem you are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and your funding requirements (if you are raising money).
Learn more about writing an effective executive summary .
2. Products & services
The products & services chapter of your business plan is where the real meat of your plan lives. It includes information about the problem that you’re solving, your solution, and how your product or service fits into the existing competitive landscape.
Start the products & services chapter by describing the problem that you are solving for your customers and what your solution is. This is a description of your product or service.
Next, you should outline your competition . Who else is providing solutions that try to solve your customers’ pain points? What are your competitive advantages over other businesses?
If you happen to have any competitive advantages, such as specific intellectual property or patents that protect your product—this chapter is a great place to talk about those things.
Finally, review your milestones and metrics. This is an overview of the next steps that you need to accomplish to get your product or service ready to sell, with target dates. If you’ve already achieved some key milestones, such as landing a crucial customer or taking on pre-orders, discuss that here.
3. Market analysis
This section is where you will showcase all of the information about your potential customers. You’ll cover your target market as well as information about the growth of your market and your industry.
First, describe your target market . Your target market is the group of people that you plan on selling to. Try to be as specific as possible. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers.
Next, provide any market analysis and market research that you have. You’ll want to explain how your market is growing over time and also explain how your business is positioned to take advantage of expected changes in your industry.
4. Marketing & sales
The marketing and sales plan section of your business plan details how you plan to reach your target market segments, how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.
Some businesses that distribute their products and reach their customers through stores like Amazon.com, Walmart, Target, grocery store chains, and other retail outlets should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles that the business may have to overcome.
The marketing & sales chapter of your business plan can also be a good place to include a SWOT analysis . This is purely optional but can be a good way to explain how your products and services are positioned to deal with competitive threats and take advantage of opportunities.
5. Company organization and management team
Investors look for great teams in addition to great ideas. Use this chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal structure, location, and history if you’re already up and running.
Include brief bios that highlight the relevant experiences of each key team member. It’s important here to make the case for why the team is the right team to turn an idea into a reality. Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before?
Your company overview should also include a summary of your company’s current business structure. The most common business structures include:
- Sole proprietor
- Partnership
Be sure to provide a review of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.
6. Financial projections
Last, but certainly not least, is your financial plan chapter. This is often what entrepreneurs find most daunting, but it doesn’t have to be as intimidating as it seems. Business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. That said, if you need additional help, there are plenty of tools and resources out there to help you build a solid financial plan.
A typical financial plan will include:
Sales and revenue projections
A monthly sales and revenue forecast for the first 12 months, and then annual projections for the remaining three to five years. Three-year projections are typically adequate, but some investors will request a five-year forecast.
Profit and loss statement
An income statement , also known as the profit and loss (or P&L), is where your numbers all come together and show if you’re making a profit or taking a loss.
Cash flow statement
A cash flow statement . While the income statement calculates your profits and losses, the cash flow statement keeps track of how much cash (money in the bank) you have at any given point.
Balance sheet
A balance sheet lists the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business.
Optional sections to include when seeking funding
If you are raising money from investors, you should include a brief section of your business plan that details exactly how you plan on using your investors’ cash. This is typically just called, “Use of Funds.”
Investors will also want to see a short section on your exit strategy. An exit strategy is your plan for eventually selling your business, either to another company or to the public in an IPO. If you have investors, they will want to know your thoughts on this. If you’re running a business that you plan to maintain ownership of indefinitely, and you’re not seeking angel investment or VC funding, you can skip the exit strategy section.
For more information, read our guide on the different types of exit strategies .
Finally, discuss any assumptions and important risks for your business. Knowing what your assumptions are as you start a business can make the difference between business success and business failure. When you recognize your assumptions, you can set out to prove that your assumptions are correct. The more that you can minimize your assumptions, the more likely it is that your business will succeed.
7. Appendix
An appendix to your business plan isn’t a required chapter by any means. However, it is a useful place to stick any charts, tables, definitions, legal notes, or other critical information that either felt too long or too out-of-place to include elsewhere in your business plan. If you have a patent or a patent-pending, or illustrations of your product, this is where you’d want to include the details. For more details, read about what to include in your business plan appendix .
Business plan writing tips
To help streamline the business plan writing process here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .
Determine why you are writing a business plan
Knowing why you are writing a business plan will determine your approach to your planning project. For example, if you are writing a business plan for yourself or just for use inside your own business, you can probably skip the section about your team and organizational structure.
If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the money you want and exactly how you’re going to use those funds. So, before you start writing your plan, think about why you are writing a business plan and what you’re trying to get out of the process.
Keep things concise
Probably the most important tip is to keep your business plan short and simple . There are no prizes for long business plans. In fact, the longer your plan, the less likely it is to be read.
So, focus on trimming things down to the essentials that your readers need to know. Skip the extended descriptions of your target market and instead focus on creating a plan that is easy to read.
Have someone review your business plan
Writing a business plan in a vacuum is never a good idea. It’s helpful to zoom out from time to time and make sure that your plan is logical and makes sense. You also want to make sure that it’s easy to read and understand. Don’t wait until your plan is “done” to get a second look, though.
Start sharing your plan early and find out from your reader what questions the plan leaves unanswered. This early review cycle will help keep you on track. If you need a more detailed review, you may want to explore hiring a professional plan writer to give it a thorough examination.
Use a free business plan template to get started
Knowing what information you need to cover in a business plan sometimes isn’t quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. If you’re looking for a free downloadable business plan template to get you started, download the template that’s been used by more than 1 million businesses.
Or, if you just want to see what a completed business plan looks like, check out our library of over 500 free sample business plans .
How do I write a simple business plan?
If you’re not ready to work on a detailed business plan and want to start with something shorter and simpler, we recommend starting with a simple one-page business plan . You’ll be able to put together an initial plan in less than 30 minutes. For many businesses, this is a great way to get started. And, if you’re not raising money from investors, this may be all the plan you need.
Next steps for writing your business plan
Whether you’re writing a plan to explore a new business idea, establishing steps to start a business, looking to raise money from investors, seeking a loan, or just trying to run your business better—a solid business plan will help get you there.
Business planning is a continuous process that can help you validate your idea, set goals, manage, and successfully pitch your business. One of the most helpful things you can do to build a successful business is to jump in and start planning. If you’re looking for a more comprehensive step-by-step walkthrough for writing a business plan, check out our Business Planning Guide .
If you need more than a template, we recommend exploring business planning software, such as LivePlan. It features step-by-step guidance that ensures you include only what you need in your plan and reduces the time you spend on formatting and presenting.
You’ll also get help building solid financial models that you can trust, without having to worry about getting everything right in a spreadsheet. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results. This makes it easy to track your progress and make adjustments as you go.
Business plan FAQ
A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investor, and identify areas for growth. Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.
The seven steps to writing a business plan include: 1. Write a brief executive summary. 2. Describe your products and services. 3. Conduct market research and compile data into a cohesive market analysis. 4. Describe your marketing and sales strategy. 5. Outline your organizational structure and management team. 6. Develop financial projections for sales, revenue, and cash flow. 7. Add any additional documents to your appendix.
There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid: 1. Not taking the planning process seriously. 2. Having unrealistic financial projections or incomplete financial information. 3. Inconsistent information or simple mistakes. 4. Failing to establish a sound business model. 5. Not having a defined purpose for your business plan.
Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan. However, these are the key questions you should ask and answer with your business plan: – How will your business make money? – Is there a need for your product or service? – Who are your customers? – How are you different from the competition? – How will you reach your customers? – How will you measure success?
The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place. If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan or a 3-10 page Lean Plan to get all of the necessary information in place.
While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering. Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business. Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.
A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision. However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.
The core elements of business planning are the same for nonprofit organizations and for-profit businesses. The main difference between the two is that nonprofits are primarily driven by a specific mission or purpose. While a for-profit organization is typically driven by growth and improved performance. Additionally, nonprofit organizations will need to intently focus on their promotional, partnership, and fundraising strategies. While some of this is present in for-profit businesses, the need to thoroughly outline how and who you will continue to receive funding is far more important as a nonprofit.
Noah Parsons
Noah is currently the COO at Palo Alto Software, makers of the online business plan app LivePlan. You can follow Noah on Twitter .
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How to get started creating your business plan.
A successful business plan can help you focus your goals and take actionable steps toward achieving them. Here’s what to consider as you develop your plan.
Regardless of whether or not you’re pitching to investors and lenders, starting a business requires a plan. A business plan gives you direction, helps you qualify your ideas and clarifies the path you intend to take toward your goal.
Four important reasons to write a business plan:
- Decision-making: Business plans help you eliminate any gray area by writing specific information down in black and white. Making tough decisions is often one of the hardest and most useful parts of writing a business plan.
- A reality check: The first real challenge after deciding to launch a new venture may be writing the business plan. Through the process, you may realize your business idea is a bit flawed or not yet fully developed. This may feel like extra work, but the effort you put into improving your idea during this step can bolster your chance of future success.
- New ideas: Discovering new ideas, different approaches and fresh perspectives are invaluable parts of the business planning process. Working closely with your concept can lead to unexpected insights, shifting your business in the right direction.
- Developing an action plan: Your business plan is a tool that will help you outline action items, next steps and future activities. This living, breathing document shows where you are and where you want to be, with the framework you need to get there.
Business plan guide: How to get started
Use this exercise to gather some of the most important information. Then follow this traditional business plan guide to expand your plan and add more detailed information. Once your outline is finalized, you can share it with business partners, investors or banks as a tool to promote your concept.
- Vision: Your vision statement sets the stage for everything you hope your business will accomplish going forward. Let yourself dream, pinpointing the ideas that will keep you inspired and motivated when you hit a bump in the road.
- Mission: A mission statement clarifies the purpose of your business and guides your plan, ultimately answering the question, "Why do you exist?"
- Objectives: Use your business objectives to define your goals and priorities. What are you going to accomplish with your business, and in what timeframe? These touchstones will drive your actions and help you stay focused.
- Strategies: Your objectives describe what you’re going to do, while your strategies describe how you’re going to do it. Consider your goals here, and identify the different ways you’ll work to reach them.
- Startup capital: Determine what your startup expenses will be. Having a clear idea will allow you to figure out where the money is coming from and help you spend what you have in the right areas.
- Monthly expenses: What do you estimate your business’ ongoing monthly expenses will be? This may change significantly over time — consider what your expenditure could be immediately after launch, in three months, in six months and in one year.
- Monthly income: In order to cover your expenses (and hopefully make a profit), you will need to estimate your income. What are your revenue streams? It's always wise to diversify your income. That way, you won’t be tied to one stream that might not be lucrative as quickly as you need it to be.
- Goal-setting and creating an action plan: Once you have all the specifics outlined, it's time to set up the step-by-step action items explained in the companion guide, a standard business plan outline. This process will utilize the hard work you've already done, breaking each step down in a way that you can follow.
A business plan isn’t necessarily a static document that you create once and then forget about. You can use it as a powerful tool by referencing it to adjust your priorities, stay on track and keep your goals in sight.
Business plan: An outline
Use this exercise to gather important information about your business.
Answer these questions to start your planning process. Your responses will provide important information about your business, which you can use as an overview to develop your plan further.
- What is your dream?
- What do you feel inspired to do or create?
- What keeps you motivated, even in the face of uncertainty?
- Why does this business exist?
- What purpose(s) or need(s) does it fulfill for customers?
Objectives
- List the goals of your company, then number them in order of importance.
- What will the business accomplish when it’s fully established and successful?
- How much time will it take to reach this point?
- For each goal or objective listed above, write one or more actions required to complete it.
Startup capital
- List any and all startup expenses that come to mind.
- Next to each:
- Estimate the cost of any expenses you can.
- List the most likely source of the funding.
- Circle the high-priority expenses.
- Assess whether your available capital is going toward the high-priority items. If not, reconsider the way you will allocate funds.
Monthly expenses
- If you can, estimate your business’ ongoing monthly expenses immediately after launch, in three months, in six months and in one year.
- If you can’t, what information will you need in order to estimate your expenses?
Monthly income
- What are your revenue streams? Estimate your monthly income accordingly.
- Which revenue sources deliver fast or slow returns? Are there other sources you could consider to diversify assets?
- After completing your outline, reference your responses as you work through a traditional business plan guide. This next step will allow you to expand and add more detailed information to your plan.
- When you’re ready to make your formal plan, reference this companion guide, a standard business plan outline. The article utilizes the hard work you've already done to create a step-by-step plan.
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Business plans
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Business plan templates take your business to the next level
If you’re starting a new business, or changing or expanding an existing one, it’s critical to have a solid plan to guide your decisions. A Microsoft business plan template can help get you started. Business plan templates offer step-by-step instructions and prefabricated slides for your executive summary, company overview, financial plan, and more. You’ll even find a business plan template for specific industries including business plan templates in Word for healthcare providers, professional services, and retail. Enlist your management team, or for a sole proprietor, trusted family and friends, to contribute to your plan using a checklist business plan template in Excel. Assign tasks and deadlines to keep everyone accountable and on track. There are also free business plan templates to help you determine your business’ legal structure, define your target audience, and map out your marketing plan. Explore all the business plan template options to find what suits your needs.
How to Write a Startup Business Plan
A startup business plan is an outline of your ideas and strategies for what you’ll need to do to start, manage, and even complete your startup’s mission. Creating one might sound simple enough, but because it’s a startup’s roadmap for success, it can be a complex document to create.
Writing a business plan can make a world of difference for entrepreneurs who desire external funding. It involves determining your target customers, understanding what makes them tick, and figuring out how to reach them through marketing campaigns.
In this blog post, we’ve explained why you should have a startup business plan, different types of startup business plans, and we’ve included 12 of the most effective tips for writing a startup business plan. If you’re ready to start with now, we have a product launch template to get you started quickly.
What is a startup business plan?
A startup business plan is a written document that outlines your ideas and strategies for launching, managing, and eventually exiting your new venture.
A well-constructed business plan can be crucial to the success of any entrepreneurial endeavor . As you prepare your proposal, keep in mind that it will evolve as you learn more about your market.
To start, create an outline of the most important items you'd like feedback on before writing anything down officially.
Then ask yourself these questions:
- What do I want?
- Why does my company exist?
- How will I make money?
- What are my long-term goals?
A detailed business plan helps you set milestones for measuring success. You can share the plan with investors who may want some reassurance on the viability of their investment in your company.
The best way to create a successful startup business plan is by including everything in an organized and easy-to-read document — marketing strategies, financial projections, team bios, timelines, and more.
What is a lean startup business plan?
A lean startup business plan is a method for developing products that relies on iterative experimentation to reduce uncertainty.
It has been used by companies such as Google , Amazon, and Facebook in the early stages of their development, and involves testing your idea with real customers early in development.
Lean startups are less likely to fail because they have tested their product or service with live feedback from consumers. Doing this allows them to make changes quickly without wasting resources on something no one wants.
The goal is not to build an extensive business plan but rather a "lean" one that can be changed based on customer feedback and then re-evaluated in regular intervals until it reaches market potential — or fails.
A lean startup business plan is a strategy that focuses on getting a product in front of customers as quickly and cheaply as possible. Use the lean startup business plan to validate your ideas before wasting time and resources.
Why do you need a small startup business plan?
A small startup business plan is one of the most important steps in building a company. Apart from helping you to focus on company goals, it aids in obtaining feedback from potential partners and keeps the team on the same page.
The best thing about starting small? You can change course at any time! If you need help developing or tweaking your small startup business plan, use this guide for entrepreneurs to get started.
You've built a product and you're ready to take the next step, but what's your plan? First, you need a strategy in place. Do you know how much money it will cost, or where exactly that funding should come from? What about marketing strategies for getting customers in the door?
You’ll also need to find ways to retain them afterward so they keep coming back again and again (and spending more).
Obtain external funding
If you want to get funding from lenders or investors, you need a startup business plan. Lenders want to make sure they're investing in a company that will last and grow.
A well-organized idea shows passion for its purpose and outlines clear goals for helping customers. At the same time, having an exit strategy is also important.
Making a plan for when things don’t pan out as desired lets investors understand how much value there can be while giving customers (and yourself) peace of mind.
Understand your target market
One key piece of your business plan is knowing how to conduct a market analysis. To do this, consider the industry, target market, and competitors.
Are there any market trends or competitor factors that can affect your business? Review them closely and get ready to make required changes to your business plan.
Prioritize high ROI strategies
In business, ROI is important. Any business that doesn’t generate as much cash as it burns is likely to fail.
With a startup business plan in place, the strategies with the highest ROI become crystal clear. You'll know exactly what to tackle first and how to prioritize the rest of your tasks.
Accelerate financial health
Business plans are not crystal balls, but they can help forecast your financial health. Planning for expenses is vital to keep operations steady and identify problems as soon as possible.
Cash flow projections can help you see if goals are achievable or highlight upcoming issues that need correction before it's too late.
How to write a small startup business plan
Use this guide for entrepreneurs to develop or tweak a startup business plan. By following this easy six-step process, you'll soon have a clear path to startup success.
1. Clarify the startup vision, mission, and values
The first step to writing a startup business plan is understanding the startup itself.
Once you know what your startup does, ask yourself why. What is the startup's mission? What problem will it help customers solve? The startup's mission statement helps define its reason for existing.
It’s usually expressed in a simple sentence, but can also be written as a short paragraph.
Try to answer these questions: What does your startup do? How will it make money? How quickly do you hope it will grow? Are there any significant milestones or deadlines that need to be met?
2. Outline the executive summary
Now that you have an idea for your startup, its mission, and a vision in mind, it's time to write your startup business plan executive summary.
Keep it simple and precise. Begin by writing a one-sentence startup business plan introduction that showcases the core customer need/pain point and how you propose to solve it.
3. Develop startup goals and milestones
Next, write down the milestones and goals for your startup business plan. This is a crucial step that many entrepreneurs forget when they're starting out.
Do you want to focus on getting new customers? Or attaining a specific revenue number? Without clear short-term goals, it can be hard to know how to prioritize startup tasks.
4. Write a company description
Answer the two fundamental questions — who are you and what will you do? Then, give an introduction to why you're in business.
Provide a summary of introspective goals, clarifying intangible aspects such as values or cultural philosophies. Make sure to mention:
- Proposed business structure (limited partnership, sole proprietorship, incorporated company, or a general partnership)
- Business model
- Business vision and mission statement
- Background information of your team members
5. Conduct market analysis
Choosing the right market is crucial to your organization’s success. There are different kinds of products and services that a business can offer and each has particular requirements for a successful market fit.
If you choose one that doesn't have a large enough customer base or is not profitable enough, your company may end up struggling for every sale.
Ensure that there is a clear market niche — an ideal audience of customers with a need or a pain point that your business can help solve.
6. Develop startup partnerships and resources
When you're launching a small startup, one of the most important things that your business needs is capital. There are several ways to get going on this front.
When thinking about sources of funding for startups , consider startup grants, startup loans, startup investors, and startup accelerators.
7. Write a startup marketing plan and startup budget
Your startup business plan is almost complete! All that's left is to create a startup marketing plan and budget. Your startup marketing plan will help you define your company’s target audience and brand image.
The startup budget is an integral part of any startup that helps you take the guesswork out of writing expenses.
Examples of startup business plans
Business plans differ based on the nature of the business, target market, competitive advantage, delivery of product/service, scope, and size.
Though the core business plan template remains the same, the content and flow change. Here is an example of an accounting firm's business plan:
Vision statement
At our company, ABC Accounting Services LLC, we work hard to provide the best service and build a strong team. Our vision is for this brand to be recognized as #1 throughout NYC by both smaller businesses and larger corporations.
Our values are reflected in all that we do: integrity (ethical behavior), service (giving top priority to clients' needs), excellence ("doing it right"), teamwork (working together).
Executive summary
ABC Accounting Services LLC is the premier accounting firm in New York City and will handle various financial services. We specialize in audits, bookkeeping, tax preparation/compliance work, and budgeting assistance with high-quality consulting.
Business structure
ABC Accounting Services LLC will be structured as an LLC — a Limited Liability Company in the state of New York. It will provide accounting, bookkeeping, taxation, auditing, and compliance-related services to small, medium, and large enterprises situated in New York City.
Marketing strategy and competitive advantages
Despite the fact that there are many established accounting services firms in our industry, we have a great chance of becoming successful because of the high demand for financial consulting.
Often, small businesses don't need full-time employees but would rather hire an accounting service provider like us to handle their bookkeeping and tax returns on time every year.
It is best to find a unique niche or carve out your own market in the financial consulting services industry. If you're able to create an identifiable brand identity for your accounting business, then you will likely see less competition from other firms.
Startup milestones
ABC Accounting Services LLC will focus on delivering an exceptional client experience to grow the business and expand market share.
Startup business plan template
Here's a template you can follow when creating your startup business plan:
Top tips for writing a startup business plan
The following tips will help you create a compelling startup business plan without getting overwhelmed.
Know your audience
To write an effective business plan, tailor your language and level of detail to match the audience reading it.
Have a simple and clear goal
If you have a goal of securing funding for your business, it will be an uphill task with lots of work and research.
Simplifying and breaking down bigger goals into smaller, actionable tasks will assist you in getting through them faster.
Spend time researching
Avoid assuming anything about your target audience, product/service, or the market need.
Spending adequate time and effort on research from primary and secondary sources will help you develop an accurate business plan.
Build a startup toolkit
The process of creation becomes easier if you have the right startup tools and software by your side. Pick the right ones that will help you in your journey.
Keep it precise
Short and easy-to-read business plans are best kept within 20 pages. If you have additional documents, consider adding them as appendices or provide a link if available online.
Ensure tonal consistency
Keep the tone consistent by having just one author write your startup business plan. Otherwise, be sure to edit it thoroughly before you finalize it.
Add reference points
All information regarding the market, your competitors, and your customers should reference authoritative data points.
Be ready to pivot
A business plan should be fluid and flexible. Think of it as an evolving document that will continue to change over time.
How to create a business plan with Wrike
A good business plan is a powerful tool and can be a key predictor of future progress, but simply filling in a startup business plan won’t help you achieve success. You need to create action steps with accountability that will help you reach your goals.
Wrike’s project management software can help your organization deliver successful projects and maximize individual and team productivity, and our product launch template can help you turn your startup business plan goals into actionable steps.
Start a free trial of Wrike today to see how it can help to simplify work, showcase progress to stakeholders, and achieve startup success.
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Free Startup Business Plan Templates and Examples
Smartsheet Contributor Joe Weller
May 6, 2020
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
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
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
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
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
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
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
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.
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.
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
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Original text
Do you want to increase the odds that your business startup will be a success? Then download this step-by-step business plan template and use it to lay the groundwork for your new business.
Writing a business plan gives you an opportunity to carefully think through every step of starting your company so you can better prepare and handle any challenges.
While a thorough business plan is essential in the financing process, it's helpful even if you don’t need outside financing.
Creating a business plan can:
- Help you discover any weaknesses in your business idea so you can address them before you open for business
- Identify business opportunities you may not have considered and plan how to take advantage of them
- Analyze the market and competition to strengthen your idea
- Give you a chance to plan strategies for dealing with potential challenges so they don’t derail your startup
- Convince potential partners, customers, and key employees that you’re serious about your idea and persuade them to work with you
- Force you to calculate when your business will make a profit and how much money you need to reach that point, so you can be prepared with adequate startup capital
- Determine your target market and how to reach them
Laying out a detailed, step-by-step plan gives you a blueprint you can refer to during the startup process and helps you maintain your momentum.
What this business plan template includes
Writing a business plan for a startup can sometimes seem overwhelming. To make the process easier and more manageable, this template will guide you step-by-step through writing it. The template includes easy-to-follow instructions for completing each section of the business plan, questions to help you think through each aspect, and corresponding fillable worksheet/s for key sections.
After you complete the 11 worksheets, you will have a working business plan for your startup to show your SCORE mentor .
The business plan sections covered in this template include:
- Executive Summary
- Company Description
- Products and Services
- Marketing Plan
- Operational Plan
- Management and Organization
- Startup Expenses and Capitalization
- Financial Plan
The Appendices include documents that supplement information in the body of the plan. These might be contracts, leases, purchase orders, intellectual property, key managers’ resumes, market research data, or anything that supports assumptions or statements made in the plan.
The last section of the template, “Refining Your Plan,” explains ways you may need to modify your plan for specific purposes, such as getting a bank loan, or for specific industries, such as retail or manufacturing.
Complete the Business Plan Template for a Startup Business to create a working business plan for your startup.
Then, contact your local SCORE mentor to review and refine your plan either online or in person.
For more than 100 years, Deluxe Corporation has sought to create the tools that help shape our economy. Since 1915, Deluxe has recognized the vital role that small business plays in our communities, from job creation to business development. For these reasons, the Deluxe Corporation Foundation provides financial support to nonprofits that help entrepreneurs and small business owners succeed. Our grants to SCORE have totaled more than $1.5M in recent years, with the majority of these funds supporting the creation and updates of online training and certification for SCORE mentors.
Business Planning & Financial Statements Template Gallery Download SCORE’s templates to help you plan for a new business startup or grow your existing business.
An Easier Way to Prepare Your Business Plan -The Business Model Canvas The Business Model Canvas (BMC) is a one-page business plan that allows you to test and validate the key parts of your business in a manageable format.
Copyright © 2023 SCORE Association, SCORE.org
Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.
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How to Create an Alaska LLC: 5 Steps
Need help finding the right llc formation service, after you form your alaska llc, starting an llc in alaska: faq, how to start an llc in alaska, before you create your alaska llc.
There are a few things to consider before you jump into creating an LLC in Alaska. Planning thoroughly can increase your chances of success.
Create a Business Plan
There are both required steps and optional steps you’ll need to consider when launching your LLC. Alaska only mandates certain formation steps, as the state prefers to empower business owners instead of burdening them unnecessarily. With that said, many optional steps in the Alaska LLC formation process are just as consequential as those that are required. As a result, you’ll want to treat these steps with care too.
The first optional step in the formation process is drafting a business plan. The state doesn’t require that you submit one with your articles of organization, so this company roadmap may be treated as an internal document. There is no single correct way to construct a business plan. But, if you plan to share it with lenders and investors when seeking startup funds, make sure that it looks professional. As the goal of a business plan is to chart an actionable vision for the future, you may wish to consider including the following elements in your plan:
- The purpose of your company and the values that will ground it
- How you’ll corner your niche in the marketplace and retain customer loyalty
- How much funding you’ll need to sustain your company for the duration of its startup period
- What steps you’ll take to ensure your business is ultimately successful
Compare Legal Structure Alternatives
There are many reasons to consider forming your business as an Alaska LLC. Advantages include:
- Flexible tax options . Your company can be taxed as a corporation or on the personal tax returns of its members
- Minimal formation and reporting requirements . Unlike corporations, LLCs don’t need to report their activities to the state regularly and in detail
- Flexible management structure and broad operational control . Unlike corporate shareholders, LLC members don’t need to defer to a board of governors
- Personal liability protection . Unlike sole proprietorships and partnerships, LLC structure safeguards the personal assets of members in the event of company lawsuits, fines and debts
It’s important to carefully consider the three primary alternative business structures before committing to forming your company as an Alaska LLC. Forming companies as Alaska corporations makes sense when founders hope to launch large, widespread and complex operations. Sole proprietorships and partnerships are best suited for small, local operations owned by individuals unlikely to need personal liability protection and who don’t mind reporting company financial activity on their personal tax returns.
Featured Partners
Now you’re ready to make your business official. Follow these detailed steps to start your Alaska LLC.
1. Select a Name Worthy of Your Company’s Brand
Do you already have a name in mind for your new Alaska LLC? You’ll need to take a few steps before you can use it. The state won’t allow you to register a name that is already in use by another company authorized to transact business in Alaska. Nor will it allow you to use a name that can’t easily be distinguished from others in use. So, you’ll need to conduct an Alaska LLC search to see if your preferred name is both available and distinguishable, as required by law.
Once you have a name in-hand that has cleared the state search, you’ll want to search for it on the trademark database maintained by the U.S. Patent and Trademark Office. You can reserve your preferred name with the state for up to 120 days while you conduct this broader search. If your preferred name is protected by a federal trademark, using it in Alaska could lead to legal trouble. Instead, keep searching until you have a name choice that clears both the Alaska search and the USPTO trademark search. Then, you can trademark your company’s name to keep others from using it and/or trademarking it for themselves and suing you for trademark infringement.
Naming Requirements
You’ll need to add one of the following required limited liability company designations to the formal name of your Alaska LLC before registering the name with the state:
- Limited Liability Company
- Limited Liability Co.
- Ltd. Liability Company
- Ltd. Liability Co.
Registering a DBA
If you’d like to use a less formal version of your company name in your branding and marketing efforts, you’ll need to register this trade name with the state. A trade name is often referred to as either a fictitious name or a “DBA” name (“DBA” stands for “doing business as”). Make sure to conduct state and national searches for availability and distinguishability before using a trade name and take the time to trademark it for the same reasons you need to trademark your company’s formal name.
2. Choose a Registered Agent for Your Alaska LLC
Before the state will provide your Alaska LLC with authorization to conduct business, you’ll need to provide the secretary of state with your registered agent’s name and physical address.
A registered agent is often referred to as an agent for service of process. Either an adult resident of Alaska or a company authorized to transact business in the state may serve as your LLC’s registered agent. This individual or company will receive legal documents on behalf of the company. Although you or another member of your LLC may serve as its registered agent the business (as a unique entity) may not serve as a registered agent on its own behalf.
Many companies choose to hire registered agent services for a low annual fee. These service providers receive mailings and notify you of important communications. Hiring a service frees you up to leave the office during business hours, take vacation and avoid having legal filings delivered to you in front of customers.
3. File Alaska LLC Articles of Organization
Filing articles of organization paperwork will alert the state to the existence of your new Alaska LLC. Once the state has processed and approved this paperwork, your company will be authorized to commence operations. Along with a filing fee, you’ll need to provide the following information when filing Alaska LLC articles of organization :
- The formal name of your company
- The name and address of your LLC’s registered agent
- A statement outlining the purpose of your company
- Verification of whether your LLC will be member-managed or manager-managed
- The signature of an LLC organizer
The filing fee is $250 and can be paid by check or credit card authorization (this form is included in Alaska’s articles of organization). Articles must be mailed to:
State of Alaska, Corporations Section
P.O. Box 110806
Juneau, AK 99811-0806
4. Formalize an Operating Agreement
The state of Alaska doesn’t require LLC members to submit an operating agreement as part of the company registration process. However, this business formation tool is important for owners of Alaska LLC operations. Operating agreements serve as contracts among LLC members and are treated as legally-enforceable internal documents.
By drafting an operating agreement with the assistance of a small business lawyer, you can better ensure that your interests are protected as your business evolves. Essentially, the drafting process will formalize the understanding you have with your fellow LLC members concerning fundamental elements of your business relationship and your company’s operations. When preparing to draft this document, outline the following operational aspects of your Alaska LLC:
- Taxes . Will your company be taxed as a corporation or on the personal tax returns of its members?
- Responsibilities . What roles, responsibilities, powers and authority will each member assume?
- Finances . How will distributions and losses be divided?
- Ownership . What percentage of the LLC will be owned by each member?
- Procedures . How will membership modification, dissolution and buyouts be managed?
5. Secure a Federal Employer Identification Number (EIN)
When the government, creditors and lenders want to identify who you are, they request that you provide your Social Security number (SSN) or driver’s license number. When these same entities wish to verify the identity of a business, they request the company’s federal employer identification number (EIN). Unless you’re operating a single-member LLC that will not employ any workers, you’ll need to apply for an EIN to file taxes, secure financing, open business bank accounts and hire employees.
Inside Scoop : Even though single-member LLC owners can use their SSNs for tax and banking purposes, it’s still a good idea to secure an EIN. Using an EIN allows for greater privacy and reduces the risk of identity theft.
Now you’ve planned for your LLC and executed the steps to form it. Congratulations! You’re a business owner. Here are some things to consider as you plan what to do next.
Secure Funding for Your Company’s Startup Period
When planning for your company’s financial future, keep in mind that you’ll need enough startup funding to last until your business achieves solvency. It won’t be enough to finance the launch of your Alaska LLC, you’ll need to finance the entire initial period wherein it is operational but not yet generating a self-sustaining profit.
While Alaskan business owners benefit from a favorable tax climate , doing business in the Last Frontier means navigating a unique set of challenges . Get creative when researching your funding options and build a cushion into your bottom-line so that if it takes longer than expected to turn a profit, you’re ready. Take time to research the following:
- Alaska small business loans
- Federal small business loans
- Crowdfunding
- State incentive programs
Keep in mind that you or your business may be eligible for non-traditional funding opportunities available under limited circumstances. For example, you may have luck when researching “rural small business grants” or “financing for Native American small business owners.”
Protect Your Business Interests
At the start of the formation process, you created a business plan designed to ensure that your company is successful. Now, it’s time to safeguard that success. The legal and financial stability of your new Alaska LLC will remain vulnerable until you take steps to protect it. Attorneys, insurance representatives and accountants who regularly work with small business owners can help you shore up your company’s interests.
Invest in Legal Guidance
Working with an attorney proactively can help you to ensure that your company complies with all local, state and federal regulations as its operations evolve. Attorneys can draw up and review contracts, negotiate agreements with vendors and third parties, protect intellectual property and clarify any legal concerns that may arise.
All too often, small business owners only contact law firms when their companies are already in trouble. By developing a working relationship with a lawyer now, you can both prevent certain legal challenges from occurring in the first place and more effectively react to those that do.
Invest in a Solid Accounting Approach
Whether you choose to use reputable accounting software or the services of an accounting agency, keep meticulous track of your company’s finances. Tracking your finances will allow you to make informed decisions about virtually every aspect of your operations.
Keep in mind that while accounting software works well for very small operations, more complex ventures benefit from accounting services. An accountant can help your company develop financial goals and strategies, minimize tax liability and regularly audit your books for patterns and irregularities.
Invest in Business Insurance
Just as health insurance guards against the risk of needing to file for bankruptcy in the event of a catastrophic injury or illness, business insurance guards against the risk of losing your company if it falls on hard times. Speak with a small business insurance company about investing in the kinds of coverage your new company needs. Without insurance, all that you’re working to build will remain vulnerable.
Attract Consumers and Build Brand Loyalty
Alaska is a unique place, so it isn’t surprising that small businesses need to be creative when marketing to Alaskan consumers . When consumers or clients want to find goods or services, they don’t reach for a phonebook anymore. In Alaska, they ask around or they go online. Therefore, creative on-the-ground marketing that will inspire word-of-mouth recommendations will be invaluable, as will a memorable online presence tailored to the needs of your unique market.
Does Alaska require LLCs to obtain a business license?
LLCs in Alaska must be licensed before they can start conducting business. If an LLC member applies for this license online , it can be accessed and printed out immediately.
Don’t be afraid to seek assistance if you run into complex issues. Otherwise, good old-fashioned research should aid in resolving your concerns successfully.
Does my company need to pay an annual Alaska LLC fee?
With very few exceptions, each LLC operating in Alaska must pay a fee every year for renewal of its business license and a fee every two years along with its biennial report. Other than tax obligations, there are no other recurring LLC fees imposed by the state of Alaska.
When do I need to file my company’s Alaska LLC initial report?
You’ll need to complete your LLC’s initial report within six months of its articles of organization filing date. You won’t need to submit a fee with this report and you can complete the filing process online. Make sure to have your LLC’s entity number (provided on your business license) handy when preparing to file your initial report.
Simplify the Process of Registering Your Alaska LLC
Keeping track of so many LLC formation steps can be overwhelming. Streamline your LLC registration process by using an online LLC filing service that will allow you to manage your required documents on a single platform.
Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.
- Service not offered.
- Service included in basic package.
- Service free for one year.
- Service available for additional fee.
Note that formation companies may offer promotional deals or additional free services.
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Business Plan Example and Template
Learn how to create a business plan
What is a Business Plan?
A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .
A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.
Contents of a Business Plan
A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:
1. Title Page
The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.
2. Executive Summary
The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.
3. Industry Overview
The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.
4. Market Analysis and Competition
The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.
Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.
A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.
5. Sales and Marketing Plan
The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.
6. Management Plan
The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.
Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.
7. Operating Plan
The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.
8. Financial Plan
The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.
9. Appendices and Exhibits
The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.
Business Plan Template
Here is a basic template that any business can use when developing its business plan:
Section 1: Executive Summary
- Present the company’s mission.
- Describe the company’s product and/or service offerings.
- Give a summary of the target market and its demographics.
- Summarize the industry competition and how the company will capture a share of the available market.
- Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.
Section 2: Industry Overview
- Describe the company’s position in the industry.
- Describe the existing competition and the major players in the industry.
- Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.
Section 3: Market Analysis and Competition
- Define your target market, their needs, and their geographical location.
- Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
- Give an overview of the estimated sales volume vis-à-vis what competitors sell.
- Give a plan on how the company plans to combat the existing competition to gain and retain market share.
Section 4: Sales and Marketing Plan
- Describe the products that the company will offer for sale and its unique selling proposition.
- List the different advertising platforms that the business will use to get its message to customers.
- Describe how the business plans to price its products in a way that allows it to make a profit.
- Give details on how the company’s products will be distributed to the target market and the shipping method.
Section 5: Management Plan
- Describe the organizational structure of the company.
- List the owners of the company and their ownership percentages.
- List the key executives, their roles, and remuneration.
- List any internal and external professionals that the company plans to hire, and how they will be compensated.
- Include a list of the members of the advisory board, if available.
Section 6: Operating Plan
- Describe the location of the business, including office and warehouse requirements.
- Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
- Describe the manufacturing process, and the time it will take to produce one unit of a product.
- Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
- Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.
Section 7: Financial Plan
- Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.
Section 8: Appendices and Exhibits
- Quotes of building and machinery leases
- Proposed office and warehouse plan
- Market research and a summary of the target market
- Credit information of the owners
- List of product and/or services
Related Readings
Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:
- Corporate Structure
- Three Financial Statements
- NEW CFI Template Marketplace
- See all management & strategy resources
- Share this article
500+ Free business plan examples
Need help writing your business plan? Explore over 500 free real-world business plan examples from a wide variety of industries to guide you through writing your own plan. If you're looking for an intuitive tool that walks you through the plan writing process, we recommend LivePlan . It includes many of these same SBA-approved business plan examples and is especially useful when applying for a bank loan or outside investment.
Find your business plan
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Business plan template: There's an easier way to get your business plan done.
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Example business plan format
Before you start exploring our library of business plan examples, it's worth taking the time to understand the traditional business plan format . You'll find that the plans in this library and most investor-approved business plans will include the following sections:
Executive summary
The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. You should also plan to write this section last after you've written your full business plan.
Your executive summary should include a summary of the problem you are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and your funding requirements (if you are raising money).
Products & services
The products & services chapter of your business plan is where the real meat of your plan lives. It includes information about the problem that you're solving, your solution, and how your product or service fits into the existing competitive landscape.
Describe the problem you're solving, how your offering solves the problem, and who your potential competitors are. You'll want to outline your competitive advantages and the milestones you have in mind to successfully start and grow your business.
Market analysis
Conducting a market analysis ensures that you fully understand the market that you're entering and who you'll be selling to. This section is where you will showcase all of the information about your potential customers. You'll cover your target market as well as information about the growth of your market and your industry. Focus on outlining why the market you're entering is viable and creating a realistic persona for your ideal customer base.
Marketing & sales
The marketing and sales plan section of your business plan details how you plan to reach your target market segments. You'll address how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.
Organization & management
Use this section to describe your current team and who you need to hire. If you intend to pursue funding, you'll need to highlight the relevant experience of your team members. Basically, this is where you prove that this is the right team to successfully start and grow the business. You will also need to provide a quick overview of your legal structure, location, and history if you're already up and running.
Financial projections
Your financial plan should include a sales and revenue forecast, profit and loss statement, cash flow statement, and a balance sheet. You may not have established financials of any kind at this stage. Not to worry, rather than getting all of the details ironed out, focus on making projections and strategic forecasts for your business. You can always update your financial statements as you begin operations and start bringing in actual accounting data.
Now, if you intend to pitch to investors or submit a loan application, you'll also need a "use of funds" report in this section. This outlines how you intend to leverage any funding for your business and how much you're looking to acquire. Like the rest of your financials, this can always be updated later on.
The appendix isn't a required element of your business plan. However, it is a useful place to add any charts, tables, definitions, legal notes, or other critical information that supports your plan. These are often lengthier or our-of-place information that simply didn't work naturally into the structure of your plan. You'll notice that in these business plan examples, the appendix mainly includes extended financial statements.
Types of business plans explained
While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. To get the most out of your plan, it's best to find a format that suits your needs. Here are a few common business plan types worth considering.
Traditional business plan
The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you'll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual.
Business model canvas
The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.
The structure ditches a linear format in favor of a cell-based template. It encourages you to build connections between every element of your business. It's faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations.
One-page business plan
The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . This format is a simplified version of the traditional plan that focuses on the core aspects of your business.
By starting with a one-page plan, you give yourself a minimal document to build from. You'll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan.
The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.
It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it's even easier to convert into a full plan thanks to how heavily it's tied to your financials. The overall goal of Lean Planning isn't to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and remain stable through times of crisis.
It's faster, keeps your plan concise, and ensures that your plan is always up-to-date.
Download a free sample business plan template
Ready to start writing your own plan but aren't sure where to start? Download our free business plan template that's been updated for 2022.
This simple, modern, investor-approved business plan template is designed to make planning easy. It's a proven format that has helped over 1 million businesses write business plans for bank loans, funding pitches, business expansion, and even business sales. It includes additional instructions for how to write each section and is formatted to be SBA-lender approved. All you need to do is fill in the blanks.
How to use an example business plan to help you write your own
How do you know what elements need to be included in your business plan, especially if you've never written one before? Looking at examples can help you visualize what a full, traditional plan looks like, so you know what you're aiming for before you get started. Here's how to get the most out of a sample business plan.
Choose a business plan example from a similar type of company
You don't need to find an example business plan that's an exact fit for your business. Your business location, target market, and even your particular product or service may not match up exactly with the plans in our gallery. But, you don't need an exact match for it to be helpful. Instead, look for a plan that's related to the type of business you're starting.
For example, if you want to start a vegetarian restaurant, a plan for a steakhouse can be a great match. While the specifics of your actual startup will differ, the elements you'd want to include in your restaurant's business plan are likely to be very similar.
Use a business plan example as a guide
Every startup and small business is unique, so you'll want to avoid copying an example business plan word for word. It just won't be as helpful, since each business is unique. You want your plan to be a useful tool for starting a business —and getting funding if you need it.
One of the key benefits of writing a business plan is simply going through the process. When you sit down to write, you'll naturally think through important pieces, like your startup costs, your target market , and any market analysis or research you'll need to do to be successful.
You'll also look at where you stand among your competition (and everyone has competition ), and lay out your goals and the milestones you'll need to meet. Looking at an example business plan's financials section can be helpful because you can see what should be included, but take them with a grain of salt. Don't assume that financial projections for a sample company will fit your own small business.
If you're looking for more resources to help you get started, this guide on how to write a business plan is a good place to start. You can also download our free business plan template , or get started right away with LivePlan .
Think of business planning as a process, instead of a document
Think about business planning as something you do often , rather than a document you create once and never look at again. If you take the time to write a plan that really fits your own company, it will be a better, more useful tool to grow your business. It should also make it easier to share your vision and strategy so everyone on your team is on the same page.
Adjust your plan regularly to use it as a business management tool
Keep in mind that businesses that use their plan as a management tool to help run their business grow 30 percent faster than those businesses that don't. For that to be true for your company, you'll think of a part of your business planning process as tracking your actual results against your financial forecast on a regular basis.
If things are going well, your plan will help you think about how you can re-invest in your business. If you find that you're not meeting goals, you might need to adjust your budgets or your sales forecast. Either way, tracking your progress compared to your plan can help you adjust quickly when you identify challenges and opportunities—it's one of the most powerful things you can do to grow your business.
Prepare to pitch your business
If you're planning to pitch your business to investors or seek out any funding, you'll need a pitch deck to accompany your business plan. A pitch deck is designed to inform people about your business. You want your pitch deck to be short and easy to follow, so it's best to keep your presentation under 20 slides.
Your pitch deck and pitch presentation are likely some of the first things that an investor will see to learn more about your company. So, you need to be informative and pique their interest. Luckily, just like you can leverage an example business plan template to write your plan, we also have a gallery of over 50 pitch decks for you to reference.
With this gallery, you have the option to view specific industry pitches or get inspired by real-world pitch deck examples. Or for a modern pitch solution that helps you create a business plan and pitch deck side-by-side, you may want to check out LivePlan . It will help you build everything needed for outside investment and to better manage your business.
Get LivePlan in your classroom
Are you an educator looking for real-world business plan examples for your students? With LivePlan, you give your students access to industry-best business plans and help them set goals and track metrics with spreadsheet-free financial forecasts. All of this within a single tool that includes additional instructional resources that work seamlessly alongside your current classroom setup.
With LivePlan, it's not just a classroom project. It's your students planning for their futures. Click here to learn more about business planning for students .
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Business Startup Costs: How To Calculate And Budget
Updated: Jan 6, 2022, 9:00am
Starting a business comes with a variety of costs, which may require you to seek external business financing. In fact, entrepreneurs file millions of business applications every year in the U.S. The number of new business applications surged to a record 4.5 million in 2020, according to the Economic Innovation Group.
If you’re working to get your own business up and running, it’s crucial to understand the different costs you might encounter. Knowing potential business startup costs upfront makes you better prepared as an entrepreneur and can improve your odds of success.
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How to Calculate the Cost of Starting a Business
There’s no set cost to start a business —many factors can impact your initial startup expenses. In some cases, you might be able to get a company off the ground with a few thousand dollars. Other small business owners might need to come up with five figures (perhaps several times over) during their first year in operation.
With such a wide range of potential expenses, it’s helpful to start with a business plan. A separate startup cost analysis can help you estimate your costs as well. The U.S. Small Business Administration (SBA) provides free guidance and sample worksheets you can use for both.
- SBA Sample Business Plans
- SBA Startup Cost Worksheet
Taking the time to write out (and add up) your initial startup costs is a smart move. This extra preparation on the front end can lead to more realistic expectations and better long-term results for your new business endeavor.
Common Business Startup Costs
Go through the common business startup costs below to determine which expenses your business might encounter.
Incorporation Fees ($145)
One of the first tasks you’ll need to complete when you form a new business is choosing a business entity. General business structure choices include:
- Sole proprietorship
- Partnership
- Corporation
- Limited Liability Company (LLC)
The average cost to register a business is $145. However, filing fees and other associated costs can differ based on the state where you operate.
Research Expenses ($100–$30,000+)
Researching the market you plan to enter puts your business in a better position to succeed. Some entrepreneurs attempt to do this research on their own. However, hiring a professional market research firm could give you a clearer picture of the industry, your target customers and your competition.
The price of market research can vary depending on the type of report and guidance you require. High-level market overviews might cost a few hundred to a few thousand dollars. A more detailed and personalized project by comparison could cost at least $30,000.
Equipment ($11,000–$125,000)
Regardless of your type of business, it probably needs some type of equipment to operate. Even online microbusinesses need access to a computer or device and an internet connection. Other types of businesses may have much more demanding equipment needs that could cost tens or even hundreds of thousands of dollars.
Below is a look at sample startup equipment costs for several different types of industries. (Your experience could be different.)
- Hotels and restaurants: $125,000
- Real estate and rentals: $75,000
- Insurance and finance: $52,000
- Retail establishments: $32,000
- Health care: $27,000
- Warehousing and transportation: $16,000
- Arts and entertainment: $16,000
- Service-based businesses: $14,000–$18,000
- Construction: $14,000
- Support for other businesses (administrative or janitorial): $11,000
Office Space ($300–$1,230 per Month, per Employee)
With certain types of businesses, you might be able to operate from your home. But if your company requires office space, the cost of renting or buying a facility can add up.
Just like residential rent and mortgage costs, the price of securing office space for your business has a lot to do with your location. The size of your office will of course influence the price you pay as well.
The cost of office space starts around $300 per month (per employee). Yet in high-cost areas like San Francisco or New York, your monthly office space cost could be over $1,230 per person.
Utilities ($2.14 Per Square Foot)
On top of a monthly lease or loan payment for office space, you need to prepare for the added expense of utility services. For commercial buildings, the average utility cost is $2.14 per square foot, according to Building Owners and Managers Association International. The larger your office space and the more employees your business has, the higher its utility costs may climb.
Inventory (25%–35% of Operational Budget)
If your company plans to sell products to its customers, you’ll need to have some inventory on hand to fulfill orders. Inventory costs can require a significant financial investment. But the actual amount your business needs to spend here depends on numerous factors.
Most businesses that require inventory spend between 25% to 35% of their operational budgets on related costs. Initially, it can be hard to gauge how much your business will spend in this category. To estimate potential inventory costs, start by figuring out how much product you expect to sell in a 12-month period. Then, divide that number by 10, aiming to keep 10% of your annual inventory needs in stock.
Let’s say you plan to sell $75,000 in inventory over the next year. If you wanted to keep 10% of that number available to sell to customers, you’d need to purchase $7,500 in inventory.
Marketing and Advertising (Up to 7%–8% of Revenue)
Getting the word out about your business is essential. But you have to be careful not to overdo it on marketing and advertising expenses—especially as a new company.
The SBA advises limiting your marketing expenses to 7% or 8% of your revenue. However, if your profit margins are on the low side (less than 10%), you might want to adjust your marketing budget down until those numbers improve.
Website Development (Up to $10,000)
Creating a professional online presence is essential for most businesses. The question you have to answer as a startup is whether you want to hire someone to create a website for your business or try to tackle the project yourself.
Depending on your skill set and time constraints, you might be able to design your own starter website. Services like Squarespace and WordPress have templates available that can make the job easier and far more affordable. If you hire a professional website designer to develop your website, the cost might run between $2,000 and $10,000. However, website packages often include branding services that could benefit your business as well.
Office Supplies and Furniture ($200–$1,000 per Month, per Employee)
Whether you’re operating your business from home or you have a dedicated outside office space, your business will probably need to spend some money on office supplies. Depending on the type of business, you might need to purchase:
- Chairs and desks
- Computers, tablets and software
- Phones and headsets
- Breakroom furniture and appliances
- Waiting room furniture
- Filing cabinets
- Paper goods
- Ink, toner and other printing supplies
- Pens, paperclips, staples and notebooks
You might spend anywhere from $200 to $1,000 per month (per employee) on office supplies. But these costs can vary widely depending on your budgeting choices and the types of perks you want to offer employees.
Payroll (15% to 50% of Your Budget)
Payroll is one of the biggest expenses most businesses encounter. Yet finding quality team members and providing them with fair and competitive compensation is crucial if you want your company to thrive.
For many companies, payroll costs account for anywhere from 15% to 30% of their overall budget. Some businesses dedicate up to half of their budget to payroll expenses and still generate significant profit margins.
On top of salary and wages, be sure to factor the following costs into your company’s payroll expenses:
- Commissions
- Paid time off
- Overtime pay
Professional Consultants ($75 to $400 per Hour)
As a new business, there may be many tasks that you try to manage on your own to save money. The cost of professional services, after all, can be pricey—running anywhere from $75 to $400 per hour.
For certain jobs, however, hiring a professional could be a wise investment. For legal matters , paying an attorney for advice and guidance can help you avoid potentially costly mistakes. Working with a CPA or bookkeeper could help your business make sure it’s meeting its tax obligations as required.
Insurance ($46–$86 per Month, per Policy)
Insurance is another important cost you should budget for as a new business owner. Depending on the type of business you operate, some types of business insurance coverage may be more important than others.
Below are some of the insurance options you may want to consider, along with the median monthly premium for each.
- Workers’ compensation: $86 per month
- General liability: $53 per month
- Business owners’ policy: $84 per month
- Professional liability: $46 per month
If you take out multiple business insurance policies with the same provider, you might be eligible for a bundle discount that could help you save money.
Taxes (Cost Varies)
Benjamin Franklin once wrote that nothing is certain in this world except death and taxes. So, it shouldn’t come as a surprise that your new business will have tax obligations to pay as well.
Your business structure, revenue and expenses can all influence how much your business has to pay in taxes. Working with a CPA to calculate your tax requirements and look for potential savings strategies is often your best bet.
The corporate tax rate is currently 21%, but there have been recent proposals in Congress to increase that number. In general, saving at least 25% of business profits is advisable, but you should talk to a reputable tax professional for advice.
How to Get Startup Business Financing
Finding the funds to cover startup costs, not to mention other business expenses that may arise, can be a challenge. But the right business financing has the potential to break big expenses down into smaller payments that are easier to manage.
If you’re interested in applying for a business loan, calculate how much you can afford to pay each month so that you don’t overextend yourself. Then, take the time to research and compare available business financing options to make sure you find the best deal available for your company.
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Michelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com, is a leading credit expert and personal finance writer with nearly two decades of experience in the credit industry. She’s an expert on credit reporting, credit scoring, identity theft, and the intersection of credit and financing. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).
Jordan Tarver is the Deputy Editor for Loans at Forbes Advisor. Before joining Forbes Advisor, Jordan was an editor and writer for multiple finance sites, focusing on loans, credit cards and bank accounts. When he is not working on personal finance content, Jordan is a self-help author and recently released his book You Deserve This Sh!t
How to Start a Cargo Van Business
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The hardest part of starting any business is taking the first step. So many questions run through your mind as you consider all the possibilities that it can quickly become an overwhelming process even before you decide to act. Questions like “What should I sell? Who should I hire? What should our slogan be? What are the expenses?” are all likely to crop up. While being reflective about the process of starting a business can help flesh out ideas and answer curiosities, the journey to opening your business’ doors doesn’t have to be an intimidating one.
If you’re looking to start a cargo van business, you’ll need to forge a solid business outline to avoid delays and unexpected road bumps. Luckily, this guide can serve as a North Star to steer your business towards operational success and get your cargo vans up and running on the road.
What is a cargo van?
A cargo van is often mistaken for a box truck, but the two vehicles differ in capacity and convenience. Cargo vans resemble an ordinary passenger van with an elongated structure, void of back windows. The rear cargo space is accessible from the inside of the van and is not a detachable storage unit. You often see these vans used by e-commerce delivery drivers and vocational technicians, such as plumbers, electricians, air conditioning repairers, pool maintenance professionals, painters, and the like. Box trucks , on the other hand, have a separate cargo compartment solely accessible from the outside, with taller and straighter walls that can hold bulkier materials. This makes box trucks best suited for high-volume delivery and moving purposes.
Why start your business with a cargo van?
So what are some perks to choosing a cargo van as your business’s primary form of transportation? Well, if you’re new to owning a business, it’s a fantastic starter vehicle that offers excellent maneuverability because of its standard size and shape. Cargo vans can also squeeze onto side roads and parallel park more easily than larger transport vehicles. For your business’ specific needs, cargo vans range in capacity load, with limits anywhere between 500 lbs and 4,000 lbs and a maximum towing capacity of five tons.
As you can see, cargo vans are compact yet spacious and strong enough to carry significant loads as your business starts out. Then, as your company grows in clientele and demand, you can consider graduating to heftier vehicles for more oversized loads and interstate trips.
Your pre-launch cargo van business checklist
Before you go out and purchase your first cargo van, there are several components you’ll need to consider in advance of hitting the road including finances, insurance, certification, employment, brand identity, and organization.
Financial responsibilities and insurance coverage
Money will run the nascent stages of your business, so pouring what you can into a savings account will be your greatest financial resource. Create a detailed expense sheet to visualize how much you’ll need to spend on each item and tailor your budget accordingly.
Cargo vans will be the lifeblood of your company, which means they’ll be one of your largest expenses when you’re starting out. How large? Truecar estimates that brand-new ones will cost you between $30,000 and $45,000 , depending on the make and model, cargo size, and load capacity. For more budget-friendly alternatives, you can try searching for used vans, leasing vans on a low monthly payment plan, or even securing a loan.
Also, keep in mind that your business will have unique expenses for day-to-day operations. These include tools and supplies, employee salaries, gas and van maintenance expenses, permits, and operational leases — all of which can vary per operation type.
Insurance not only protects you and your business from liabilities and damages — it’s required if you want to be on the road. You should devote a part of your budget to covering primarily liability insurance costs , which, on average, costs $245 per month or $3,300 per year for the $1 million coverage plan that shippers and brokers usually ask for. Of course, payment may be less or more expensive depending on the type of cargo you’re planning on transporting.
You’ll also need to invest in commercial van insurance to protect your business in the case of an accident where medical and property damages occur, as well as cargo insurance to cover what you’ll be transporting. Plans can range anywhere from $3,000 to $6,000 , according to Trucking Insurance.
We know, it’s a lot. That’s why DAT recommends LoadSure to simplify your cargo insurance search, offering per-load rates that can minimize costs by 80 percent. One minute is all it takes to check cargo coverage off your to-do list, but always check your local and state regulations to ensure that your business is equipped with all necessary plans before you begin operations.
Certification requirements and employment protocols
Perhaps the most daunting aspect of starting a new business is the mountain of paperwork waiting for you. From federal and state permits to legal contracts and company registration, certified and verifiable documents are crucial to the validity of your cargo van business — and clear paperwork will save you trouble in the long run.
If you want to make things easier, we suggest trying DAT Authority , where our experts can take care of this for you. For carriers and owner-operators, DAT provides you with everything you’ll need: International Fuel Tax Agreement (IFTA) and International Registration Plan (IRP) permits, your own MC or US DOT number, and stress-free legal guidance to streamline the application process as much as possible.
Unlike box trucks and larger freight carriers, cargo vans don’t require a CDL license to drive, making it easier to recruit drivers. However, because moving large and expensive equipment involves a high degree of risk and responsibility, it’s still essential to establish a set of qualifications when hiring to ensure that you’ll attract candidates that best fit your cargo van business.
All employees in the freight field, including cargo van drivers, must comply with FMCSA Clearinghouse regulations that monitor drug and alcohol violations for commercial drivers. For rapid and reliable drug testing, DAT recommends CleanFleet , which has a 24-hour turnaround rate, rigorous testing standards, and workplace training programs to keep drivers in check.
Internal architecture and brand image
Now comes the more fun part: your cargo van business brand. Once you decide on the type of goods you’d like to transport, begin brainstorming an overall identity that will make your company memorable and iconic. Come up with a sleek and impactful logo, catchy slogan, and welcoming company culture that makes employees and customers feel proud to be a part of your business. If that doesn’t seem like it’s up your alley, find a marketing and design agency that can help you tap into the creativity you need. As your cargo van business gets ready to go live, you should also lay the foundations for a website and social media campaign to boost engagement and intrigue.
As the face of your business takes shape, start thinking about the organization of your internal structure. Ask yourself questions such as:
- How many drivers do I want to begin with?
- Will I be the sole driver at first until business grows?
- Do I want my business to be a limited liability corporation (LLC) or another type of corporation?
- Will my business have a hierarchical or horizontal employee structure?
- Who will be in charge of bookkeeping and accounting?
- How will I manage dispatching?
- Where do I want the office or headquarters of my business to be?
- What interfaces, systems, and programs will I use to document everything and track my drivers?
Write down what you envision your daily operations to look like, including the scope of your cargo van business in its budding months. The more detailed your business plan, the better positioned your company will be to avoid roadblocks commonly caused by insufficient preparation.
For more advice on mapping out a logistical framework for your company, you can also take a look at our Carrier Startup Guide , which provides valuable information about what you’ll need to consider as you build the bones of your cargo van operation.
Keeping your cargo van business running
Now it’s time to pull all the loose ends together and put your business plan to the test. Expect some adjustments as you get your footing in the industry, and take the time you need to get it right early on. To simplify matters and meet your budget, DAT is stocked with a variety of solutions and products trusted by thousands of users.
With the DAT load board, your business can take the guesswork out of scheduling routes and finding the best broker rates. Over 1 million freight listings are posted daily, giving you loads of options depending on your preferences. DAT also offers Carrier TMS to grant transparency while on the road by generating real-time optimal transportation routes, providing constant driver location services, facilitating on-the-road transactions, and delivering around-the-clock customer support.
To grow your cargo van business over time, it’s important to build stellar relationships with the brokers and shippers you work with during trips so that you’re always in mind for future jobs and recommended to others in need of a carrier. As your company gains experience, upload content on social media and on your website to increase your online visibility and presence and better engage with your customers and partners within the field.
Staying on top of industry trends while remaining open to interaction fosters a sense of trust, community, and expertise that will attach itself to your brand and keep your business top of mind every time.
Go the distance with DAT Freight & Analytics
Starting a cargo van business can be intensive, but with DAT, it’s a breeze. Whether helping to solidify your business plan or optimizing your workstream, DAT is ready to help your company at any point in its journey. DAT’s forward-thinking and resourceful freight network solutions have helped kickstart and support businesses from ideation to operation — for carriers, owner-operators, brokers, and shippers.
Get started with us today to see how your business can thrive with DAT as your guide!
Find cargo van loads with the DAT load board!
Finding cargo van loads can be a time-consuming process, but the DAT load board makes it easy. With 1 million listings posted daily and filtering capabilities, finding cargo van loads will be a breeze!
Start finding the right loads at the right time with the DAT load board today!
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60 Small Business Ideas for Anyone Who Wants to Run Their Own Business
Published: October 21, 2022
A good business idea may seem hard to come by, but with some planning and preparation, you can easily launch a small business to supplement your income — or become your own full-time boss.
Maybe you already have an idea of the business you’d like to start. But while you might feel ready for a new venture and passionate about your idea, you might be looking for some direction.
![Download Now: Business Startup Kit [Free Templates]](https://no-cache.hubspot.com/cta/default/53/1a0a4e5a-b3ce-4c8b-bc42-4e24cde930ae.png "start of business plan")
To help get you started, here's a list of small business ideas separated into a few sections:
Best Small Business Ideas
Best businesses to start with little money, home business ideas, easy businesses to start, how to start a small business at home.
The first step to becoming a successful entrepreneur is finding a business idea that works for you. In this article, you’ll find dozens of small business ideas you can start from home and scale up as your clientele grows. Let’s get started.
Free Business Startup Kit
Fill out this form to build your business plan today., what makes a good small business idea.
Not all small business ideas are made equal: Some require more effort and funding than others, while some can be launched with few resources — or resources you already have. As a potential small business owner, you’ll want to save as much money as possible on training, rent, supplies, and other necessities.
Let’s go over what makes a good business idea:
- Requires little to no training . A good small business idea will ideally leverage your existing field of expertise and require little to no training. That will not only shorten your time-to-launch, but also lessen your expenses, since training courses can cost a significant amount of money. Plus, you’ll be more confident offering services that you feel prepared to deliver.
- Requires low setup costs. Your business should be cheap to start. Maybe you only need to purchase a website domain or buy a desk for your garage.
- Requires little hands-on inventory or supply management . A great business idea needs few supplies and little inventory management. If you want to sell physical goods, you can either try drop-shipping and manually make goods in small batches.
- Is based online . The best small business ideas are based online and can be carried out from your personal computer. This will automatically lower your commuting costs and give you greater flexibility over your personal and work life.
- Can sustainably be managed by few people . As a small business owner, you won’t have the funds to hire other people to help you run your business — at least not at first. A good business idea should give you the ability to run your business on your own.
Airbnb Co-founder, Brian Chesky, said, "If we tried to think of a good idea, we wouldn’t have been able to think of a good idea. You just have to find the solution for a problem in your own life."
If you’re like Brian and you’ve already thought about a solution for a problem you encounter in your life — or you’re on the path to doing so — then starting a small business may be in your future. It may also be for you if you dream of clocking out of your nine-to-five job for the last time and becoming your own boss.
Below, we include the absolute best ideas for you to start your small business — with resources and examples to help you get started.
1. Handyman
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Are you always fixing things around the house? Often on-call when friends need small projects completed? Create a website , conduct a competitive analysis to determine what your time and expertise are worth, and turn to the friends you’ve helped before for referrals.
A handyman business is a good idea if you’ve already built a robust set of skills to help others fix up their homes. Consider specializing in what you feel well-prepared to do — for instance, if you know your way underneath a sink and water system, then you might provide sink fixing services to start, then expand your offerings once you earn more skills.
No certifications are needed to become a handyman, and there are no special education requirements. You might need, however, a license if you’re planning to undertake jobs worth more than a certain dollar amount. Some states might not require this license.
To start your handyman business, we recommend the following resources:
- Handyman License Requirements by State
- The Most Requested Handyman Services
- Association of Certified Handyman Professionals
2. Woodworker
Similarly, if you have a passion for crafting beautiful furniture or other home goods out of wood, that could be a small business niche for you. Get started by listing a few of your pieces on sites like Etsy . Once you build a following, consider starting a website, accepting custom orders, or expanding to refinishing work and upholstery.
A woodworker small business is ideal if you already have a passion for woodworking, as well as the tools to begin fulfilling orders as they begin to come in. Since delivering a well-made product is key to keeping your customers happy, you don’t want to be “training” as you create a custom shelf or a custom storage box. It’s recommended to have at least one year of experience as a woodworking apprentice.
To start a woodworking business, there are no special education requirements, but there are a wide range of woodworking training certifications online, so we suggest starting with a certification. The Woodwork Institute , YesTomorrow , and The School of Fine Woodworking are potential places to start.
3. Online Dating Consultant
Dating consultants usually charge for their time. They help people create successful online dating profiles, source possible matches from outside the typical online channels, and offer a level of personalization that a site like Tinder can’t. Think you’ve got a knack for the match? This might be the business for you.
Online dating consultants need to have strong communication and interpersonal skills, as well as heightened levels of empathy. The good news is that there are no special education or licensure requirements, though we recommend getting a certification such as IAP College’s relationship coach certification or Hart Academy’s online dating coach certificate .
To start an online dating consultant business, you’ll need a website that shares all about you and offers free dating resources your customers might benefit from. Once they download a resource, you can loop them in for a free consultation.
4. Sewing and Alteration Specialist
People will always need clothing hemmed and buttons mended — and you could be the person to do it. If you love sewing and have a sewing machine at home, start by offering simple services like those mentioned above and expand your repertoire to dressmaking and design as you build a customer base and demand.
You don’t need a special license or degree to begin a sewing and alterations business, but it’s essential to build your skills so you can take on more complicated projects. High-value clients will want to customize complicated items of clothing such as suits, pants, gowns, and dresses. That’s where you’ll see the highest potential for profits.
Altering these items require special skills, however. A few courses you might consider include:
- International Open Academy's Tailoring Course for Beginners
- Jackson Sewing Academy’s Basic Alterations Course
- American Bespoke Tailoring Academy’s Programs
You’ll also need to shop for sewing supplies of all colors to accommodate your clients.
5. Freelance Developer
From building websites for other small businesses to providing technical support for certain projects, quality web development is in high demand right now. As a web developer, you'll naturally have a technical skill set. Distill your knowledge and expertise so customers who don't have your experience are able to understand what it is you'll be helping them achieve.
To help with this, test your messaging on friends and family who don’t have a firm understanding of the work you do. If they’re able to summarize what you do, your messaging is likely effective among people outside of your industry. You can start finding your first freelance contracts by visiting different freelance websites .
Unlike a few other options in this list, a freelance developer does need some training to launch a successful business and start taking on projects, but if you’re a beginner, don’t worry. There are plenty of boot camps to get you up to speed with either full-stack or front-end web development. Some of these boot camps are even offered through accredited tech schools.
Some boot camps you might consider include:
- Coding Dojo
- Fullstack Academy
- Georgia Institute of Technology Coding Boot Camp
These vary in price, so be sure to do extensive research to find one that fits you and your budget.
6. Personal Trainer
Offer in-home consultations, personalized nutrition and exercise regimens, and community boot camps to get the word out. Don’t forget to populate an Instagram feed with inspirational quotes, free exercise videos, and yummy snack ideas as well — it’s a common way for fitness gurus to build their brands in our digital world.
If you choose to go this route, it’s OK to start small at first, then scale up. For instance, MOURfit is a personal training business in Indianapolis that started in a shared gym, then grew to a private gym that offers group fitness, personal training, and nutrition services.
To start a personal training business, you’ll need a certification. If you already earned a degree in an unrelated discipline, we recommend starting with the NASM-CPT certification , which is nationally accredited and only requires a high school diploma or GED. You can also get a Bachelor’s degree in physical and exercise science — here’s one example from Emory & Henry College .
7. Freelance Graphic Designer
Set your own hours, choose your projects, and build a portfolio and business you’re proud of. From website design to blog graphics and more, many companies seek out experienced graphic designers for support on a variety of projects.
The good news? There are no special education requirements for becoming a freelance graphic designer, though we recommend seeking a credential (like SAIC’s graphic design certificate or RISD’s graphic design certificate ) or an Associate’s degree in design so you can confidently present your portfolio and complete your first few projects.
If you’re just starting out with graphic design, try these tips and tricks that are ideal for beginners. If you’re more experienced but need to build your portfolio to attract clients, these prompts will get your creativity flowing in no time. We also recommend reviewing other people’s work on portfolio websites to get a feel for what is “trendy” and receive feedback as you grow your small business.
8. Life/ Career Coach
If you have experience navigating career, personal, and social transitions successfully, put it to good use as a life or career coach. Many of us are looking for guidance in our careers — and finding someone with the time to mentor us can be tough.
Life/career coaches don’t come cheap, but they are able to offer clients the intense and hands-on training and advice they need to make serious moves in their personal and professional lives. After all, everyone needs some uplifting advice from time to time.
To start your life/career coaching business with confidence, you can look for a certification program (like the Life Coach School’s or Diane Hudson’s ), then apply your skills as you acquire new clients.
A resume writing business is economical, has few overhead costs, and has few educational requirements. We still recommend having an Associate’s or Bachelor’s degree and a few resume samples on hand. If you still feel that you need to brush up on your resume writing skills, you can take a course like Coursera’s or LinkedIn Learning’s .
Once you’ve gotten resume writing down, you can expand your business to include cover letter writing, and even offer career coaching services in conjunction with these services.
10. Freelance Writer
If you have writing skills , there’s someone out there willing to pay you for them. Write blog posts, magazine articles, and website copy galore — just make sure you have a body of work built up to share with potential clients. Even if you create a few sample pieces to have on hand, they’ll help exhibit your work and attract new business.
To become a freelance writer, it’s essential to choose a specialty. For instance, you might choose to only write for publications in the healthcare industry (maybe because you were previously a healthcare worker), or focus on lifestyle publications. Whatever the case, specializing will help you find your niche market and gain confidence as a new freelancer writer.
There are no educational requirements to freelance writing, but you do need strong writing skills. It also helps to enjoy writing. While a certification may beneficial, getting practice and writing every day is more important. Try these writing prompts to start.
11. Landscaper
Mowing, tree-trimming, and seasonal decor are all neighborhood needs. If you have or can acquire the equipment, a landscaping business can be a lucrative affair. It’s also a great choice if you enjoy doing it for your own home and have a good eye for landscape design.
The good news is that you can start small. For instance, you could offer your neighbors seasonal planting services and start with a few perennial plants, or simply offer mulching services.
To grow your landscaping business, you should consider taking some formal training. The following organizations offer courses:
- New York Botanical Gardens
After completing a course and getting enough experience, you can apply for a certificate from a landscaping organization. While a certificate isn’t necessary to work in the field, it can build your credentials and help you make industry connections to take your landscaping business to the next level. The Association of Professional Landscape Designers offers one potential certificate you could pursue.
Some states require licensure, especially if you’ll be using pesticides and fertilizers. Be sure to review the requirements for your state.
Learn some of the basics now with this video on landscape design from Lowe’s:
12. Videographer
Video production requires you to have invested in the equipment up front, which can be quite expensive. But that’s also what makes your services so valuable. Make sure you have a reel of your work to share or create a website with several selections of your work available for interested viewers.
There are no educational or licensure requirements for starting a video production business. As with writing and other creative arts, though, it pays to specialize. Real estate videos differ radically from wedding videos, and wedding videos differ radically from in-studio interviews and testimonials. By specializing, you target a highly specific customer who’ll benefit the most from your services, and you can also skill-up more effectively in one shooting style.
While you can find general classes on videography, you should consider taking a class in the type of videography you’d like to do. For instance, you could take The Complete Wedding Videography Course , if that’s the route you’d like to take.
Hot tip: If you’re interested in specializing in video marketing, check out The Ultimate Guide to Video Marketing and download our starter pack below.
![→ Access Now: Video Marketing Starter Pack [Free Kit]](https://no-cache.hubspot.com/cta/default/53/8f27c677-d952-4663-8787-bf65c6a1ecf2.png "start of business plan")
13. Photographer
Start by conducting photo shoots for your family and friends. As you build a body of work, ask for referrals and reviews. Photography businesses often grow by word of mouth, so create a Facebook page where you can tag recent clients. Photos where you tag those clients will show up in their friends’ newsfeeds, where they can view your work. You can also ask them to leave reviews on your Facebook business page.
Like with a video production small business, you’ll want to specialize. Will you do product shoots or portraits? How about wedding or fashion photo shoots? Once you specialize, you’ll be able to create a body of work that most accurately represents your strengths.
There are no educational or licensure requirements for starting a small photography business, but we recommend investing in a few photography courses, especially if you haven’t used your camera in a while. Some courses you might start with include:
- Cornell’s Digital Photography Certificate Program
- New York Institute of Photography’s Course
From there, seek courses that help you build skills in your chosen specialty.
If you’re not sure where to start with freelance photography, take a look at Erica Clayton’s journey into the business below. Her advice? Give yourself a firm deadline to turn a profit.
14. Bed and Breakfast Owner
This is another business venture that will require you to research the correct licensure from your state, but it will be well worth it to see your dreams come true. Consider what guests will be traveling to your area and create special packages and themed stays that coincide with their interests in your locale.
To start a bed and breakfast business, you’ll need a physical business location and a small staff for maintenance, customer service, and upkeep. For that reason, we recommend it if you have startup funds to start your business. (Don’t have any? Here’s how to start crowdfunding to launch your new business .)
A successful bed and breakfast business will also need an SEO-optimized website with a hotel booking system. If you create your website on the WordPress platform, you can easily create a B&B website using a hotel booking plugin — so there’s no need to code the booking form from scratch.
With Airbnb and hotels stealing market share, the competition is tough in the bed and breakfast space, so we recommend providing a unique angle to the stay. As mentioned, the stays can be themed — maybe your B&B is a vintage home with all original furniture, or maybe you offer traditional fare from your homeland.
15. Clothing Boutique Owner
If you dream of building your own fashion empire, why not start with a local boutique? Build buzz with impressive clothing styles, inspiring social media accounts, and heavy community involvement. While you can open a physical store, you can easily start online — and if that proves profitable, you can open up a local shop.
There are a few ways you can start a clothing boutique. First, you can make the clothes yourself if you already have experience in fashion design or know how to sew, knit, and curate colors and patterns.
Alternatively, you can design certain aspects of the clothing — such as a graphic or a logo — then send it to be printed on-demand at a local print shop when orders come in.
Lastly, you can dropship the items from a warehouse you’ve partnered with. This method is less reliable because there’s less quality assurance for each item, especially if you never visit the warehouses yourself. Regardless of the method you choose, starting a clothing boutique is highly doable, and you don’t need to have a fashion degree (though it certainly helps).
Take some inspiration from Sleep Ova , a luxury loungewear boutique based in Los Angeles, CA.
16. Specialty Food Store Owner
Gourmet foods, cheeses, sake, wine — you name a food, there’s a specialty food store out there for it. Put your passion for exotic olive oils to good use and open a store like American Provisions where you offer the kind of expertise and selection your audience couldn’t dream of getting from their local grocer.
To start your specialty food store, you’ll want to curate and source the items from makers that you love and trust. Ask around your community to find local makers of the food you want to sell, and the makers will likely be open to a partnership, especially if they get a cut of the profits.
When it’s time to sell, you’ll want to find a physical location, but if that investment is too high, you can start by setting up stalls at food festivals and local markets. Or you can go the ecommerce route and sell the products through your website, taking care to carefully pack perishable items.
17. Food Truck Owner
Always dreamt of owning a restaurant but not quite ready to take the plunge? Test out your concepts with a food truck. It’s a great way to become familiar with food and restaurant licensing in your state, see what people like and don’t like, and build a ravenous following before ever opening or investing in a brick-and-mortar location.
Food trucks will require a larger investment, but thankfully, you can rent the truck itself — the Food Truck Group and Roaming Hunger are two potential leasers you could look at. The cost will be high, so we recommend renting one in preparation for an event such as a food festival or concert. There, you’ll get to test out the popularity of your cuisine and see if the food truck business is right for you.
Taco Nganas , a taco truck in Memphis, TN, started with one food truck and expanded to three, building a loyal customer base along the way.
18. Car-detailing Specialist
The devil is in the details, and you can be too. Car-detailing services that travel to the client are convenient for busy people who can’t find the time to run through the car wash. With this business, your clients only have to pay and the service will be done for them before they know it. Just make sure you have the flexibility, transportation, and equipment to take your business on the road.
There are no educational requirements for car detailing, but you should still take a course such as Auto Finesse’s detailing training to learn core concepts and brush up on your skills.
To get your car detailing business off the ground, you’ll need an SEO-optimized website and a way for customers to book online with you. Before you take that step, however, consider listing your services on websites like Angi , Thumbtack , and even Nextdoor.com so you can get your first local clients.
Don’t have a lot of money to start your business? Check out the ideas below.
1. Translator
Speak a foreign language? Start a translation service. Consider specializing in a specific genre of translation, like medical or financial translation, as you might be able to fill a niche need in your community.
2. Garden Designer
Many people have the willingness to do the dirty work in their backyards, but few have the know-how to complete the first part of this process — designing and planning the backyard space. Draw up the designs for your clients’ outdoor spaces and let them do the actual digging.
3. Ecommerce Store Owner
Do you create, collect, or curate anything special? Consider starting an ecommerce store and turning your hobby into a full-time job. Whether you need somewhere to sell all that pottery you’ve been making, or an excuse to search for the sports memorabilia you love tracking down, an ecommerce store can make it financially viable for you to pursue your passion.
4. Travel Planner
The time of the travel agent might be passing, but people are still looking for those with a knack for more nontraditional travel coordination. If you always plan the perfect vacations complete with beautiful hotels, the ideal location, and a bevy of delicious restaurants lined up for every evening, consider advertising your services as a more modern approach to travel planning.
5. Home Inspector
Working as a home inspector requires certification and a great deal of expertise, but it can offer a flexible work schedule and stable income. Confirm the licensing requirements in your state before getting started with this type of small business. You’ll want to make sure you’re providing the best service to your clients by having all of your credentials in order.
6. House Cleaner
With a low barrier to entry, house cleaning can be a great way to start doing what you love — soon. Consider advertising to homes in your neighborhood and get more bang for your buck by earning a few small businesses as clients as well. They’ll usually bring in a higher paycheck for a similar amount of work.
Need some inspiration? This small business cleaning service grew virtually overnight on Instagram after their content went viral during the pandemic.
7. Personal Chef
We all love to eat, but few of us have the time or energy to cook healthy, delicious meals. Advertise your services to local families and businesses alike. To save on start-up costs, consider scheduling certain groups of clients together — say, vegetarians — so you can cook larger quantities of the same dish.
Chef Paul’s mouth-watering dishes are available to clients across the country. His clientele niche consists of athletes, corporate businesses, and local gyms.
8. Property Manager
Many people maintain properties they don’t live in — often based in different cities or states. As a property manager, you can help a property owner ensure their home is being well taken care of, handle small fixes as they arise, and serve as a liaison to renters.
9. Packing Services Facilitator
Moving is always a pain, and many people hire the entire packing process out. Want to have a steady stream of clients? Partner with a local moving service that will refer new clients to you.
10. Massage Therapist
Soothe aching muscles and promote peace for your clients as a massage therapist. Look into training and certification courses in your city and state and invest in a portable bed to take on client visits.
11. Crafter
Creating novelties by hand is a fun and unique way to start a small business. Whether you make jewelry, knitted comfort items, or even custom wigs , there’s probably a market for your products. Tap into your audience with creative marketing on social media and optimize your website for the search engine using keywords that describe the products you make.
12. Interior Designer
Similar to landscape design — there are many people who have the ability to buy the furniture and home decor they need to fill their rooms, but few who know where to start. It might take some time to build a portfolio but documenting your projects and sharing them online can build a fanbase beyond your wildest dreams.
Need inspiration? Check out Sandra Cavallo’s interior design Instagram account.
13. Nonprofit Owner
If you dream of devoting your life to a cause you believe in, it might be time to start a nonprofit. You’ll need to incorporate your business and file for 501(c)(3) tax-exempt status — and then you’ll be required to meet ongoing standards of compliance, but the payoff is making a meaningful impact on a cause you believe in.
14. Tour Guide
Love the local history of your city or state? Consider becoming a tour guide. Sure, you’ll need to conduct plenty of research to be able to do the job well, but that’s half the fun. Set yourself apart by offering tours that speak to a specific niche of your community’s history.
Some tour guides, like the ones at Freedom Trail in Boston , offer historical walking tours of their town’s most haunted spots while others curate guided foodie tours for guests to get a true taste of the city.
Whether you’re a math whiz, piano master, or Shakespeare aficionado, there’s someone out there who needs a little help in your area of expertise and is willing to pay for it. Advertise your services through local schools, community colleges, community centers, and even social media to get the word out and build a customer base.
16. Consultant
If you have significant experience in or knowledge of a specific subject, consider becoming a consultant. Perhaps you’re an expert at hiring practices, have a knack for SEO , or have led multiple sales teams to six-figure success. Identify your expertise and market yourself as a consultant and charge the going rate.
17. Event Planner
You might choose to specialize in a specific type of event — like weddings or company meetings — or set yourself up as an event planner of all trades. If you’re highly organized, are detail-oriented, and have experience planning large events, it might be time others benefit from your skills.
18. Personal Assistant
Again, if you’re an organized, highly-detailed person, the life of a personal assistant might be for you. Don’t want to be tied to one office or person all day, every day? Consider becoming a virtual assistant, which allows you a more flexible work environment.
19. Consignment Shop Owner
If you have an eye for style but don’t want to invest in the inventory of a brand-new boutique, consider going consignment. It will allow you to curate a collection of clothing that matches your goals and aesthetic, without the overhead of a boutique selling entirely new garments.
20. Caterer
If that personal chef gig is too restrictive for your schedule, consider catering instead. Pick your projects, work on fewer but larger events, and hone in on your time management skills.
21. Gym Owner
Kickboxing gyms, yoga studios, CrossFit, oh my! Turn your passion for fitness into a community for others by creating your own gym — start one from the ground up, become an affiliate, or open a franchise location.
22. Boutique Agency Owner
What’s your specialty? Whether it’s marketing, social media, or PR, it might be time to start your own agency. Many other small businesses need this type of help but don’t have the resources or volume to necessitate a full-time position.
Consider building a small team and learn from other entrepreneurs who’ve successfully started their own agencies, like Duane Brown of Take Some Risk .
23. Coffee Shop Owner
Turn your caffeine addiction into something a little more lucrative. Opening a franchise or buying an existing shop are lower-risk entry points to the coffee game but they usually require a little more cash upfront. Starting a shop from scratch requires a little more planning and a lot more work — but it also maximizes your earning potential in the future.
24. Moving Company
A truck, moving equipment, manpower, and the correct permits and insurance are the building blocks of starting your own moving company . Before you buy your first fleet of trucks, however, start small with a moving van and keep your costs low.
Still sound like too much of an initial investment? Consider offering packing services only, which have a much lower financial barrier to entry.
You could even take a niche approach to the industry as Astro International has by offering international moving services.
25. Home Staging
If you have a flair for interior design, a staging service might serve as your creative outlet and professional calling. You can build a portfolio with little initial investment by staging homes using the owner’s existing furnishings and decor. Most stagers eventually build up an inventory of furniture as they become more established and network with area realtors.
26. Makeup Artist
Many people prefer to have a professional do their makeup because they may lack the proper products or just the skills. It may be for a special occasion, photoshoot, or video shoot, or another event. Being able to do a variety of different looks will make your business more attractive to more customers.
27. Professional Organizer
A lot of people struggle with clutter or disorganization in their homes and offices. It can be a large undertaking to create systems and habits that will create continuous organization. Grab a lot of storage bins and a label maker and get started!
Meg Golightly, founder at Gosimplified has made this small business idea into a successful career.
These home business ideas give you a few more business options that are either based at home or online.
Frontend, backend, and every type of code in between, this skill requires no in-person interaction with your clients. But one skill you’ll want to carry over from the in-person world for this type of business is active listening. It can be easy to zone out while building a product, but developing a connection with the client is just as important as developing the code for their website.
If you keep the client top of mind when you can’t be around physically, you can ensure that you’re meeting their development needs with your coding work.
2. Vending Machine Owner
Since 2015, the growth rate for vending machine businesses has increased 1.4%. Even as social distancing restrictions are still in place, this business can still be lucrative if you choose the right locations. High-traffic is key — places like hospitals, schools, and community centers are smart places to start placing your machines to generate enough revenue to cover cost and turn a profit.
3. Social Media Manager
Do you have a knack for social media? As a social media manager, you can use your skills to manage the social media accounts for companies and even individual people. Influencer marketing has become more common and many influencers rely on marketing agencies or employees to help them run their social channels.
![→ Free Download: Social Media Calendar Template [Access Now]](https://no-cache.hubspot.com/cta/default/53/3e56e15d-47bd-46c9-a256-99fde52abfe7.png "start of business plan")
4. Data Entry Clerk
Many businesses seek data entry clerks to help them enter information into their computer systems and spreadsheets. If you have strong computer and typing skills, this might be the business for you.
5. Audio or Video Editor
As of March 2021, there are 1.75 million podcasts available to listeners. For this reason, brands are turning to audio and visual content to connect with consumers. The catch is that many don't have the time to invest in the production of this content, or they don't have the skills to do it. Audio and video editors are in demand when it comes to producing quality content for hungry audiences.
6. Voiceover Artist
Speaking of podcasts and videos, many content creators recognize the value and level of professionalism that great voice talent can bring to a project. There are gigs out there for podcast intros/outros, narration for explainer videos, or even voice work for audiobooks. Learn how to get started with no experience from Kat Theo below:
7. Dog Walker, Groomer, or Trainer
Licensing and insurance will be the two most important factors in opening a dog walking, grooming, or training business, but your canine colleagues will surely make up for the initial red tape. To test the waters before jumping in, consider walking dogs through companies like Rover. Ready to run your own show? Consider a franchise like Dogtopia .
8. Candy Seller
If you grew up in a close-knit, southern neighborhood, you're probably familiar with the " Candy Lady ". This home business can be started by anyone who's trustworthy in the community. Aside from selling the most popular snacks, a candy seller can provide the neighborhood with fresh fruit and produce that may be harder to find if you live in a food desert.
9. Online Class Instructor
Tutoring is often done in person and with one client at a time. Remotely teaching an online class offers more flexibility because you can teach multiple students from home. English is a common subject for online classes because of how many people want to learn it. But anything that you have a mastery over could be translated to a virtual class.
10. Small-Batch Goods Seller
Using organic, all-natural ingredients is more expensive, but worth it. There are many products you can learn how to make at home without any preservatives, chemicals, or toxins. Candles, soaps, shampoos, and moisturizers are some examples of goods you can create and tailor with custom scents. Try starting out making soap with this complete beginner’s guide to soapmaking:
Whether you’re looking to start your venture today or you simply don’t want to jump through the normal hoops of launching a small business, the below ideas are extremely easy to start — so easy, all you’ll need to do is sign up on a website or tell your friends about your services.
1. Vacation Host
Have you ever used a home-sharing service instead of a hotel? You could make a living by hosting visitors in your own home or renting out a room. Consider becoming a host with companies like Airbnb .
2. Pet Sitter
Do you have a passion for pets? Consider becoming a pet sitter. While the pet's owners are away on vacation, either host their pet at your home or make visits to their home. Join a pet sitting service like Wag to get started.
3. Daycare Owner
Childcare continues to be in high demand. While nannies and nanny shares are popular right now, a good daycare is hard to find. Fill a need in your neighborhood by opening your own. And, as always, make sure you’re complying with your city and state’s zoning, licensure, insurance, and inspection requirements.
If there’s a topic you have a heavy interest in, then there’s an audience out there with a heavy interest in it too. A blog can be used to build an online community whose engagement can be monetized. Affiliate marketing , sponsored content , and co-marketing are some ways to make money once your blog develops a following.
5. Home-Baked Goods Seller
Warehouse-made, store-bought chocolate chip cookies will never compare to a batch made with love in someone’s home. Simple desserts can be easily baked and packaged to sell at local events or around your neighborhood. Use custom labels and watch the word spread about your goods!
Is your head buzzing with small business ideas yet? After all that brainstorming, you’ll need a practical plan to get started with your new small business.
- Identify your small business idea.
- Start as a side business or hobby.
- Decide on your software.
- Create a business plan.
- Decide whether you'll be an LLC or sole proprietorship.
- Create a business bank account.
- Determine if your business idea works well from home.
- Set up an office.
- Get to work!
1. Identify your small business idea.
Whether you choose an option from the list above or have another idea up your sleeve, it’s important to have the experience, training, or skills necessary to be successful. Want to run a daycare but have never even visited a successful daycare center? Spend time conducting research to learn whether this is really the right fit for your experience, interests, and target audience.
2. Start as a side business or hobby.
Can you get your business off the ground as something you do in the evenings or on the weekends (a.k.a. a side job)? This allows you to make some mistakes, test the market, and understand whether your idea has legs before you quit your nine-to-five job and lose your primary income.
3. Decide on your software.
You’ve got a lot of things on your plate when first starting up. But one step that’s critical (and often forgotten by first-time entrepreneurs) is deciding on the software that can help you be more efficient as your business grows.
Every business is different — but almost all companies can use software to help with analytics, project management, accounting, bookkeeping, email marketing, and other basic day-to-day tasks.
One of the most important software tools every small business should utilize is a free all-in-one CRM platform to keep track of important customer information in one central database. It will help align your team and make sure you stay organized as your business grows.
4. Create a business plan.
No business plan? No business. Particularly if your small business idea requires investors, you'll need to draft up a business plan to provide an overview of your market positioning, your financial projections, and your unique competitive advantages. You can download HubSpot's free business plan templates for free to get started.
Download Free Business Plan Templates
Your business plan should include the following elements:
- Executive summary — A high-level overview of your company and market placement.
- Business model — Outline what your business does, who your business serves, and how your business is structured. You should include a description of what products and services you offer, and how they meet the needs of your customers.
- Market condition — A summary of pertinent competitor information. Determine the strengths and weaknesses of your closest competitors.
- Products and services — Use this section to describe your products and services in detail, and outline what differentiates your product from others in the market.
- Operations and management — Outline your business’ organizational structure, key roles, and responsibilities.
- Marketing and sales strategy — This section should describe how you will market and sell your product. Include information on your ideal customer, how you plan to position your offering, and your sales strategy.
- Financial plan — Create a detailed outline of your business financials. Include your start-up costs, your initial financial productions, and how you anticipate generating funding.
- Appendix — Once the above pieces are complete, end the document with an appendix summarizing your business plan.
5. Decide whether you’ll be an LLC or sole proprietorship.
Two common legal structures for small businesses are limited liability corporations (LLCs) and sole proprietorships.
An LLC is a more complex business structure than a sole proprietorship and can include individuals, corporations, and other LLCs as members. Additionally, LLCs are not subject to a separate level of tax and offer the business owner liability protection and tax advantages. LLCs are formed on a state-by-state basis.
Sole proprietorships are businesses owned and operated by one person and are not identified as a separate entity from the owner by the government. While a sole proprietorship is the simplest business structure, sole proprietors are personally liable for their business.
Besides an LLC or sole proprietorship, there are a few other options for you to consider.
Sean Flannigan, Sendle's Content Manager, says, "While many small businesses might be best served by choosing an LLC or sole proprietorship, there are a few other options."
"Partnerships are great for businesses operated by several individuals. It hews most closely to a sole proprietorship in that the individuals take on the business liability and pay taxes on a personal level."
He adds, "To completely avoid personal liability, small businesses might choose to incorporate as a corporation, S corporation, or B Corp. S corporations avoid corporate taxation whereas B Corps must meet a threshold for public benefit and accountability."
Additionally, Flannigan says, "There are tons of great reasons to become a B Corp beyond just doing good business. All that said, many small businesses that aren't aimed at super-fast growth choose to go with an LLC to keep things simple while shielding owners from too much liability."
Learn more about choosing the right structure for your business from the Small Business Administration.
6. Create a business bank account.
Once you have a legally formed business and have been issued an Employer Identification Number (EIN), open a bank account specifically for your business. Having a business bank account is essential for keeping your personal and business finances separate which can help you gain an accurate picture of your business’s cash flow and financial health.
Additionally, keeping your personal and business finances separate makes bookkeeping and tax preparation easier.
Many banks offer business checking and savings accounts. Business checking accounts typically do not have a limit on the number of transactions that can take place, and issue a debit card that can be used for making business purchases. However, these checking accounts do not accrue interest.
Business savings accounts typically earn interest over time but have a limited number of transactions that can occur each month. When you’re just starting out, look for a business bank account that does not have a minimum balance requirement so you are not penalized for having low funds as you work to build your business.
7. Determine if your business idea works well from home.
Ask yourself whether your business idea will work well from home. Some businesses simply aren’t suited to be based from home. If you want to run a dog boarding center but live in an apartment without a backyard, you might want to consider a dog walking business instead.
8. Set up an office.
If your business idea is well-suited for being run from home, it’s still important you have a designated workspace. While a home office might not be possible, consider setting aside a corner in your living room or putting a desk in your bedroom for a space that inspires you and creates the conditions for success.
Need a more professional space? If you conduct client-facing work requiring you to be on video calls, no one wants to see your rumpled sheets in the background. Check out local coworking spaces for memberships that earn you access to conference rooms, desk space, and more.
9. Get to work!
You’ve put in the hard work and I’ve got good news — it’s only going to get harder. But most entrepreneurs will agree that the payoff of being your own boss, making your own hours, and working on projects that you’re passionate about will pay dividends for the rest of your life.
Starting a Small Business: FAQ
What are the types of small businesses.
The types of small business structures are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.
Which business type is best?
The best business type is a limited liability company (LLC). Operating as an LLC means that your personal assets are separate from your business assets. If your business goes bankrupt, your personal holdings won’t be affected. That said, it’s also one of the costlier types, requiring a fee paid to the state.
The easiest business type to start is a sole proprietorship. The main downside is that there’s no differentiation between you and your business.
How do I create a business idea?
To create a business idea, determine your skill set, work preferences, startup budget, and available resources. It’s important to strike the right balance between what you can feasibly offer and what you can feasibly afford in the short and long term.
We recommend starting with your skill set so that you can easily determine the niche in which you can effectively compete. For instance, if you have ample experience as a writer, you might consider starting a freelance writing business. But if you know you’d prefer to work with clients face-to-face, you might choose to start a ghostwriting business instead. That’s why it’s so important to take your work preferences into account, as well.
After that, take a look at your budget and determine the type of business you can start based on the resources at your disposal. For instance, you might not be able to afford a physical office or location, so a location-based business will likely not be a good fit. In that case, starting an online business is your best option.
What are some of the most successful small businesses?
Every small business has the potential to be successful and profitable, provided it’s backed by a strong product-market fit and a robust business plan . These two elements are essential. Maybe post-natal services are one of the most successful small businesses to launch, but if you live in an area with declining population or a large elderly population, then that small business idea won’t yield a high return on investment.
Think carefully about the market where you’re launching your business, and you’ll be more than likely to see lasting success.
What are the top growing small businesses?
The top growing industries are healthcare support, technology, personal care, food preparation, and community and social service. As such, launching a small business in any of these fields is bound to yield a high return on investment, but remember to take your target market into account.
Here are some small business ideas for each of those industries:
Healthcare Support
- In-home care assistant
- In-home elderly care provider
- Psychological care provider
- Pre-natal and post-natal support specialist
- Freelance programmer or web developer
- Freelance IT support specialist
- Freelance cybersecurity expert
Personal Care
- Hair stylist
- Nail technician
Food Preparation
- Personal chef
- Food truck owner
- Food delivery
Community and Social Services
- Non-profit owner
- Education specialist
Brainstorm Your Next Small Business Venture
Selecting a small business idea to work on is a personal decision. Money is important, but you’ll need more motivation than that to keep going. Bounce ideas off your friends and family until you reach the perfect idea that works for your schedule, fulfills your life’s passion, and makes financial sense. Don’t be afraid to ask for help throughout this process — and remember to have a little fun while you’re putting in the work.
Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.
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9 templates to help you brainstorm a business name, develop your business plan, and pitch your idea to investors.
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What Is a Business Plan?
Understanding business plans, how to write a business plan, elements of a business plan, special considerations.
- Business Plan FAQs
- Investopedia
Business Plan: What It Is, What's Included, and How To Write One
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
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Investopedia / Ryan Oakley
A business plan is a document that defines in detail a company's objectives and how it plans to achieve its goals. A business plan lays out a written road map for the firm from marketing , financial, and operational standpoints. Both startups and established companies use business plans.
A business plan is an important document aimed at a company's external and internal audiences. For instance, a business plan is used to attract investment before a company has established a proven track record. It can also help to secure lending from financial institutions.
Furthermore, a business plan can serve to keep a company's executive team on the same page about strategic action items and on target for meeting established goals.
Although they're especially useful for new businesses, every company should have a business plan. Ideally, the plan is reviewed and updated periodically to reflect goals that have been met or have changed. Sometimes, a new business plan is created for an established business that has decided to move in a new direction.
Key Takeaways
- A business plan is a document describing a company's core business activities and how it plans to achieve its goals.
- Startup companies use business plans to get off the ground and attract outside investors.
- A business plan can also be used as an internal guide to keep an executive team focused on and working toward short- and long-term objectives.
- Businesses may create a lengthier traditional business plan or a shorter lean startup business plan.
- Good business plans should include an executive summary and sections on products and services, marketing strategy and analysis, financial planning, and a budget.
Want Funding? You Need a Business Plan
A business plan is a fundamental document that any new business should have in place prior to beginning operations. Indeed, banks and venture capital firms often require a viable business plan before considering whether they'll provide capital to new businesses.
Operating without a business plan usually is not a good idea. In fact, very few companies are able to last very long without one. There are benefits to creating (and sticking to) a good business plan. These include being able to think through ideas before investing too much money in them and working through potential obstacles to success.
A good business plan should outline all the projected costs and possible pitfalls of each decision a company makes. Business plans, even among competitors in the same industry, are rarely identical. However, they can have the same basic elements, such as an executive summary of the business and detailed descriptions of its operations, products and services, and financial projections. A plan also states how the business intends to achieve its goals.
While it's a good idea to give as much detail as possible, it's also important that a plan be concise to keep a reader's attention to the end.
A well-considered and well-written business plan can be of enormous value to a company. While there are templates that you can use to write a business plan, try to avoid producing a generic result. The plan should include an overview and, if possible, details of the industry of which the business will be a part. It should explain how the business will distinguish itself from its competitors.
Start with the essential structure: an executive summary, company description, market analysis, product or service description, marketing strategy, financial projections, and appendix (which include documents and data that support the main sections). These sections or elements of a business plan are outlined below.
When you write your business plan, you don’t have to strictly follow a particular business plan outline or template. Use only those sections that make the most sense for your particular business and its needs.
Traditional business plans use some combination of the sections below. Your plan might also include any funding requests you're making. Regardless, try to keep the main body of your plan to around 15-25 pages.
The length of a business plan varies greatly from business to business. Consider fitting the basic information into a 15- to 25-page document. Then, other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and included as appendices.
As mentioned above, no two business plans are the same. Nonetheless, they tend to have the same elements. Below are some of the common and key parts of a business plan.
- Executive summary: This section outlines the company and includes the mission statement along with any information about the company's leadership, employees, operations, and location.
- Products and services: Here, the company can outline the products and services it will offer, and may also include pricing, product lifespan, and benefits to the consumer. Other factors that may go into this section include production and manufacturing processes, any patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
- Market analysis: A firm needs a good handle on its industry as well as its target market. This section of the plan will detail a company's competition and how the company fits in the industry, along with its relative strengths and weaknesses. It will also describe the expected consumer demand for a company's products or services and how easy or difficult it may be to grab market share from incumbents.
- Marketing strategy: This section describes how the company will attract and keep its customer base and how it intends to reach the consumer. A clear distribution channel must be outlined. The section also spells out advertising and marketing campaign plans and the types of media those campaigns will use.
- Financial planning: This section should include a company's financial planning and projections. Financial statements, balance sheets, and other financial information may be included for established businesses. New businesses will include targets and estimates for the first few years plus a description of potential investors.
- Budget: Every company needs to have a budget in place. This section should include costs related to staffing, development, manufacturing, marketing, and any other expenses related to the business.
Unique Business Plans Help
The best business plans aren't generic ones created from easily accessed templates. A company should entice readers with a plan that demonstrates its singularity and potential for success.
Types of Business Plans
Business plans help companies identify their objectives and remain on track to meet goals. They can help companies start, manage themselves, and grow once up and running. They also act as a means to attract lenders and investors.
Although there is no right or wrong business plan, they can fall into two different categories—traditional or lean startup. According to the Small Business Administration (SBA) , the traditional business plan is the most common. It contains a lot of detail in each section. These tend to be longer than the lean startup plan and require more work.
Lean startup business plans, on the other hand, use an abbreviated structure that highlights key elements. These business plans aren't as common in the business world because they're short—as short as one page—and lack detail. If a company uses this kind of plan, it should be prepared to provide more detail if an investor or lender requests it.
Financial Projections
A complete business plan must include a set of financial projections for the business. These forward-looking financial statements are often called pro-forma financial statements or simply the " pro-formas ." They include an overall budget, current and projected financing needs, a market analysis, and the company's marketing strategy.
Other Considerations for a Business Plan
A major reason for a business plan is to give owners a clear picture of objectives, goals, resources, potential costs, and drawbacks of certain business decisions. A business plan should help them modify their structures before implementing their ideas. It also allows owners to project the type of financing required to get their businesses up and running.
If there are any especially interesting aspects of the business, they should be highlighted and used to attract financing, if needed. For example, Tesla Motors' electric car business essentially began only as a business plan.
Importantly, a business plan shouldn't be a static document. As a business grows and changes, so too should the business plan. An annual review of the company and its plan allows an entrepreneur or group of owners to update the plan, based on successes, setbacks, and other new information. It provides an opportunity to size up the plan's ability to help the company grow.
Think of the business plan as a living document that evolves with your business.
A business plan is a document created by a company that describes the company's goals, operations, industry standing, marketing objectives, and financial projections. The information it contains can be a helpful guide in running the company. What's more, it can be a valuable tool to attract investors and obtain financing from financial institutions.
Why Do Business Plans Fail?
Even if you have a good business plan, your company can still fail, especially if you do not stick to the plan! Having strong leadership with focus on the plan is always a good strategy. Even when following the plan, if you had poor assumptions going into your projections, you can be caught with cash flow shortages and out of control budgets. Markets and the economy can also change. Without flexibility built in to your business plan, you may be unable to pivot to a new course as needed.
What Does a Lean Startup Business Plan Include?
The lean startup business plan is an option when a company prefers a quick explanation of its business. The company may feel that it doesn't have a lot of information to provide since it's just getting started.
Sections can include: a value proposition, a company's major activities and advantages, resources such as staff, intellectual property, and capital, a list of partnerships, customer segments, and revenue sources.
Small Business Administration. " Write Your Business Plan ."
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- Crowdfunding: What It Is, How It Works, Popular Websites 13 of 46
- Seed Capital: What It Is, How It Works, Example 14 of 46
- Venture Capital: What Is VC and How Does It Work? 15 of 46
- Startup Capital Definition, Types, and Risks 16 of 46
- Capital Funding: Definition, How It Works, and 2 Primary Methods 17 of 46
- Series Funding: A, B, and C 18 of 46
- Small Business Administration (SBA): Definition and What It Does 19 of 46
- Upper Management 20 of 46
- What is the C Suite?: Meaning and Positions Defined 21 of 46
- Chief Executive Officer (CEO): What They Do vs. Other Chief Roles 22 of 46
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- Brand Loyalty: What It Is, and How to Build It 29 of 46
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- What Is Social Networking? 31 of 46
- Affiliate Marketer: Definition, Examples, and How to Get Started 32 of 46
- What Is Commercialization, Plus the Product Roll-Out Process 33 of 46
- Digital Marketing Overview: Types, Challenges, and Required Skills 34 of 46
- Direct Marketing: What It Is and How It Works 35 of 46
- Marketing in Business: Strategies and Types Explained 36 of 46
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- Researching the Market: How to Conduct Market Research, Types, and Example 38 of 46
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How to Start a Business in Texas in 8 Steps
When it comes to starting a business in Texas, the Lone Star State has a lot of potential. With an average gross domestic product of $1.77 trillion , Texas has one of the largest economies in the United States, second only to California. And it’s not stopping there—Texas’ rapidly expanding economy grew at a healthy rate of 10.1% in the last quarter of 2021, compared to the average national rate of 6.9%.
Texas’s favorable economic climate, paired with low tax and labor costs makes it a promising location for new ventures to thrive. In fact, today it’s home to over 3 million small businesses —running the gamut from health care and educational services to construction companies, entertainment and more.
With all of this in mind, we’ve put together our guide to starting a business in Texas in just 8 steps.
Once you’ve got your business idea, create a website to jumpstart your venture.
Start a business in Texas in 8 steps
Come up with a business idea
Choose a business type
Decide on a business structure
Name your Texas business
Write a business plan
License and register your business in Texas
Secure business funding
Create a business website
01. Come up with a business idea
Every great new venture begins with a great business idea . From the type of business you create, to how you market your product or services—starting a successful business in Texas depends on choosing a concept that’s viable from the get-go. While you may already have ideas you’re considering, keep in mind that the best business ideas are those that solve a specific problem or meet the needs of today’s consumers
Research is crucial to this step, and should be geo specific. Your business idea doesn’t necessarily have to be original—some of the biggest global brands started by selling a product that already existed in the market. What’s more important is to make sure your idea is affordable, marketable and appropriate for your target market in the Lone Star State.
If you’re looking to start a business in Texas, here are some good ideas to kickoff your research:
F ood and beverage : Texas has an abundance of restaurants, wineries and breweries that serve its growing population, evolving foodie culture and the large numbers of tourists who visit every year. Whether it’s a barbeque joint, coffee shop, brewery or catering service, Texas is an ideal location for developing all sorts of food and beverage based businesses.
Tourism and travel : Thanks to its diverse geography and rich cultural heritage, Texas is a popular destination for both local and international tourists. From renting out holiday accommodations, to running boutique tours or selling souvenirs—Texas is a great place to launch into the tourism industry.
Pet related services : Texas has a young population of animal lovers, pet-raising families and farms. With a large (and growing) number of pet owners, starting a pet grooming or sitting service, for example, is a low-cost business idea with potentially high demand in Texas.
Event planning : You can take advantage of Texas's burgeoning art and music scene to start a business related to event planning. With the wide range of music and cultural events taking place each year, this could mean setting up a catering service, an event planning business, or even organizing your own annual event.
Regardless of which business idea you choose to start, make sure to take the time to understand the competitive landscape and market in Texas. Part of having a sustainable business is creating a plan that will bring in a profit.
02. Choose a business type
The type of business you’ll start will vary depending on your interests, goals, skills and resources. Here are some examples of types of businesses that have potential for success in Texas:
Online businesses
With an online business, you can choose to sell almost anything—from any location. This could be products you sell from an online store, or providing a professional online service, such as tutoring or a virtual consultation business.
Tip: Use Wix to create an ecommerce website and grow your online presence.
Service-based businesses
Whether it’s home cleaning, pet grooming or personal training, service businesses are relatively easy to start and require minimal startup costs. They’re also a great way to start a business without needing to hire employees, which can come as you scale its size in the future.
If you have an expert skill that can benefit others—whether its business, marketing, branding or something else altogether—starting a consulting business can be a great way to branch out on your own. Plus, starting a business based on your own expertise can be a way to turn your passion into a profit.
Social media based business
The potential to start and market a business on social media has grown significantly over the last decade. This could be as a social media influencer, or as a social media consultant for other brands and companies.
03. Decide on a business structure
Once you have an idea to run with, you’ll also need to consider which business structure you’ll use. This will practically influence future operations—from registering a business to personal liability, to taxes and accounting.
Here are some of the most basic types of business structures:
Sole proprietorship: A business run and owned by one individual with no legal distinction between the owner and their business.
Partnerships: A legal arrangement between two or more people who agree to operate a business together and share profits and losses.
Corporations: A legal entity that is separate from its owners and is established to conduct business and can be owned by shareholders.
Limited liability companies (LLCs): Combines the advantages of both a corporation and a partnership, providing limited liability to its owners while also allowing for flexibility in management structures.
Nonprofits: An organization that strives to serve a charitable purpose without the intent of making a profit.
04. Name your Texas business
When naming your business in Texas, make sure it’s unique, memorable and Texas-centric (Think: The Lone Star Cleaning Co., Houston Tutors, El Paso Delivery, etc.). Part of this includes choosing a business name that’s easy to spell and pronounce, and accurately reflects the products or services you offer. Consider how your business name will be represented in various marketing or advertising mediums—from printed materials to digital assets, like your logo design .
Once you’ve thought of a catchy business name, it’s a good idea to research if the relevant domain name is available for your website. In addition, check with the Texas Secretary of State for name compliance guidelines and consider trademarking your name in order to prevent others using it in the future.
Tip: Need help finding the perfect business name? Use a business name generator tool for ideas and inspiration.
05. Write a business plan
You can’t start a business without having a comprehensive business plan —it’s an essential part of setting the right foundations. Making a business plan that works in Texas will require you to do detailed market research and analysis in the area.
Your plan should outline the goals and objectives for your venture, provide details on your competitors and outline specific funding plans and financial benchmarks. Be sure to include a clear path to profitability, and any challenges that you might face along the way.
06. License and register your business in Texas
In order to register and operate a business in Texas, you must obtain the necessary licensing. Since these requirements vary depending on the type of business you’re starting, make sure to check the demands of your local county or city offices and determine the specific licensing needed in your industry.
In some cases, you may also need additional licenses from different state agencies, such as the Texas Department of State Health Services or the Texas Commission on Environmental Quality.
Here are some essential steps to keep in mind when registering a business in Texas:
Obtain an EIN from the IRS for tax purposes.
Apply for the necessary permits and licenses depending on your business idea. For example, starting a business in Texas that sells food, alcohol or tobacco requires specific licensing from the Texas Alcoholic Beverage Commission.
Register for state taxes with the Texas Comptroller of Public Accounts and apply for a sales tax permit so you can file sales tax returns.
Register for local taxes with your local county or city government.
Apply for the necessary business insurance. In Texas businesses must carry certain types of insurance, such as workers’ compensation insurance or commercial liability insurance.
For further information and guidance on how to register a business in Texas and obtain the necessary licensing, contact the Business Permit Office licensing office Texas and relevant industry associations.
07. Secure business funding
How you raise capital and secure business funding can make all the difference when starting a business. In Texas, it’s important to research and evaluate the different funding options available before you find the best fit. Keep in mind that over time, your funding needs may change as you begin to expand and scale your business.
There are several ways to fund a business in Texas, including:
Personal assets : Using personal savings is a common way for many entrepreneurs to start and grow their business initially.
Friends and family: Close family are often a source of business funding and support either in the form of loans, investments or gifts.
Bank loans : Many banks offer specific loans to fund small businesses, these may have to be secured by collateral such as real estate or other means.
Small Business Administration (SBA) loans : The SBA provides loan guarantees to small businesses through participating lenders. You can contact the SBA closest to you for further information on their funding options: Fort Worth , West Texas , Houston , San Antonio .
Venture capital : Venture capital firms invest in early-stage or high-growth companies in exchange for an ownership stake.
Incubators and accelerators : Incubators and accelerators provide startups with mentorship, office space, and other resources in exchange for a small equity stake. Capital Factory is an example of an Austin-based accelerator.
Government grants: Both national and state governments may provide grants to businesses that meet certain criteria, such as those involved in research and development. In Texas, these can be accessed through the Texas Enterprise Fund and the Governor's Small Business Assistance Program .
08. Create a business website
Building your online presence with a business website is essential if you want your small business to succeed in Texas. A professional website is a digital marketing asset that will build your brand, showcase your products or services, and connect with potential customers. On top of that, the increasing popularity of eCommerce means that your site is potentially a great place to make sales.
When creating your website, consider how each page should be designed to enhance usability and engagement. Additionally, you should focus on creating high-quality content that is relevant to your brand and engages with your target audience. You can start by choosing a business website template and customizing it to suit your needs. You’ll also need to select a domain name and web host.
Since you want to stand out from competitors in Texas, it's important to consider how your website design will represent your brand and turn new visitors into loyal customers. This includes incorporating the right color schemes and visual imagery, while paying careful attention to the tone of its written content. You can read our full guide on how to make a business website to help get started.
Once you’ve launched your new business website, you need to promote it to relevant audiences. From strategies like email marketing to SEO and social media campaigns—website promotion should be part of the detailed marketing plan for growing your business in Texas.
Business examples in Texas
Ready to start your Lone Star State venture? Check out some of our favorite small business examples in Texas for inspiration. All of the businesses below use a Wix website to help manage their growth and success.
Crazy Wellness Retreat
Located in Mineral Wells, Texas, the Crazy Wellness Retreat is an initiative that brings together health practitioners, wellness experts, local business owners and community organizations to offer holistic health workshops and immersive experiences.
Bingham Spirits
Texas based whiskey distillery Bingham’s Bourbon produces bourbon solely from Texas grown rye, wheat, barley and corn. The bourbon is produced in small batches by Texan native, country music singer and business owner Ryan Bingham.
Resilience Viet Kitchen
Serving up Vietnamese-inspired dishes and craft cocktails in the heart of Texas, Resilience Viet Kitchen uses their restaurant website to draw in new visitors and serve returning ones. Including photos of the restaurant’s interior, an updated version of their menu and table reservation services—it's a great example of how a small business website can satisfy a wide range of customers.
Looking to start a business in another state? Check out how to start a business in California .
By Kylie Goldstein
Business and Branding Expert
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Start Smart
With all the factors to consider when building a business, knowing where to start your planning isn’t always obvious. It can be tempting to take a leap of faith and launch before vetting your business idea properly. To save yourself time and money, we encourage you to Start Smart by attending this webinar on evaluating the potential of your idea before jumping into business.
Anyone who is looking to start a business or has opened one recently is invited to attend this 90-minute virtual class on how to start your business off on the right foot. Attendees will learn about the critical first steps in starting a business and gain the knowledge they need to be successful business owners. Agenda items will include:
• Is Entrepreneurship Right for You? • Business Plan with a Purpose • What “Problem” Does Your Business Solve? • Who Are Your Customers? • Who Are Your Competitors? • What’s Your Industry? • What are the Risks? • Is Your Idea Profitable?
Funded in part through a Cooperative Agreement with the U.S. Small Business Administration.
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Retirement Plan and IRA Required Minimum Distributions FAQs
More in retirement plans.
- Types of Retirement Plans
- Required Minimum Distributions
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Required minimum distributions (RMDs) are the minimum amounts you must withdraw from your retirement accounts each year. You generally must start taking withdrawals from your traditional IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts when you reach age 72 (73 if you reach age 72 after Dec. 31, 2022).
Account owners in a workplace retirement plan (for example, 401(k) or profit-sharing plan) can delay taking their RMDs until the year they retire, unless they're a 5% owner of the business sponsoring the plan.
Roth IRAs do not require withdrawals until after the death of the owner. Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2022 and 2023. However, for 2024 and later years, RMDs are no longer required from designated Roth accounts. You must still take RMDs from designated Roth accounts for 2023, including those with a required beginning date of April 1, 2024.
- You can withdraw more than the minimum required amount.
- Your withdrawals are included in taxable income except for any part that was already taxed (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).
Beginning in 2023, the SECURE 2.0 Act raised the age that you must begin taking RMDs to age 73. If you reach age 72 in 2023, the required beginning date for your first RMD is April 1, 2025, for 2024. Notice 2023-23 PDF permits financial institutions to notify IRA owners no later than April 28, 2023, that no RMD is required for 2023.
If you reach age 73 in 2023, you were 72 in 2022 and subject to the age 72 RMD rule in effect for 2022. If you reach age 72 in 2022,
- Your first RMD is due by April 1, 2023, based on your account balance on December 31, 2021, and
- Your second RMD is due by December 31, 2023, based on your account balance on December 31, 2022.
For defined contribution plan participants or IRA owners who die after December 31, 2019, (with a delayed effective date for certain collectively bargained plans), the entire balance of the deceased participant's account must be distributed within ten years. There's an exception for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person, or a person not more than ten years younger than the employee or IRA account owner.
The new 10-year rule applies regardless of whether the participant dies before, on, or after the required beginning date. The required beginning date is the date an account owner must make take their first RMD.
For more information on IRAs, including required withdrawals and beneficiaries, see:
- Retirement Topics – Beneficiary
- Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)
- Required Minimum Distributions (RMDs)
- Individual Retirement Arrangements (IRAs)
- Required Minimum Distribution Worksheets for IRAs
- Chart of required minimum distributions for IRA beneficiaries
- Publication 560, Retirement Plans for Small Business (SEP, SIMPLE and Qualified Plans)
- RMD Comparison Chart (IRAs vs. Defined Contribution Plans)
The following frequently asked questions and answers provide general information and should not be cited as legal authority.
Q1. What are Required Minimum Distributions? (updated March 14, 2023)
Required Minimum Distributions (RMDs) are minimum amounts that IRA and retirement plan account owners generally must withdraw annually starting with the year they reach age 72 (73 if you reach age 72 after Dec. 31, 2022). Retirement plan account owners can delay taking their RMDs until the year in which they retire, unless they're a 5% owner of the business sponsoring the plan. Owners of traditional IRA, and SEP and SIMPLE IRA accounts must begin taking RMDs once the account holder is age 72 (73 if you reach age 72 after Dec. 31, 2022), even if they're retired.
Retirement plan participants and IRA owners, including owners of SEP IRAs and SIMPLE IRAs, are responsible for taking the correct amount of RMDs on time, every year from their accounts, and they may face stiff penalties for failure to take RMDs.
When a retirement plan account owner or IRA owner dies before January 1, 2020, before their RMDs are required to begin, the entire amount of the owner's benefit generally must be distributed to the beneficiary who is an individual.
- within 5 years of the end of the year following the year of the owner's death, or
- over the life of the beneficiary starting by the end of the year following the year of the owner's death.
For defined contribution plan participants, or IRA owners, who die after December 31, 2019, (with a delayed effective date for certain collectively bargained plans), the SECURE Act requires the entire balance of the participant's account be distributed within ten years. This 10-year rule has an exception for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person or a person not more than ten years younger than the employee or IRA account owner. The new 10-year rule applies regardless of whether the participant dies before, on, or after, the required beginning date. The required beginning date is the date an account owner must take their first RMD.
See Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) , and Retirement Topics – Beneficiary for more information on when beneficiaries must start receiving RMDs.
Q2. What types of retirement plans require minimum distributions? (updated March 14, 2023)
The RMD rules apply to all employer sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs.
The RMD rules do not apply to Roth IRAs while the owner is alive. However, RMD rules do apply to the beneficiaries of Roth 401(k) accounts.
Q3. When must I receive my required minimum distribution from my IRA? (updated March 14, 2023)
You must take your first required minimum distribution for the year in which you reach age 72 (73 if you reach age 72 after Dec. 31, 2022). However, you can delay taking the first RMD until April 1 of the following year. If you reach age 72 in 2022, you must take your first RMD by April 1, 2023, and the second RMD by Dec. 31, 2023.
If you reach age 72 in 2023, your first RMD for 2024 (the year you reach 73) is due by April 1, 2025.
A different deadline may apply to RMDs from pre-1987 contributions to a 403(b) plan (see FAQ 5 below).
Q4. How is the amount of the required minimum distribution calculated?
Generally, a RMD is calculated for each account by dividing the prior December 31 balance of that IRA or retirement plan account by a life expectancy factor that the IRS publishes in Tables in Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) . Choose the life expectancy table to use based on your situation.
Joint and Last Survivor Table II - use this table if the sole beneficiary of the account is your spouse and your spouse is more than 10 years younger than you.
- 2021 RMDs PDF
- 2022 RMDs PDF
Uniform Lifetime Table III - use this if your spouse is not your sole beneficiary or your spouse is not more than 10 years younger
Single Life Expectancy Table I - use this if you are a beneficiary of an account (an inherited IRA)
See the worksheets to calculate required minimum distributions and the FAQ below for different rules that may apply to 403(b) plans.
Q5. Can an account owner just take a RMD from one account instead of separately from each account?
An IRA owner must calculate the RMD separately for each IRA they own, but can withdraw the total amount from one or more of the IRAs. Similarly, a 403(b) contract owner must calculate the RMD separately for each 403(b) contract they own, but can take the total amount from one or more of the 403(b) contracts.
However, RMDs required from other types of retirement plans, such as 401(k) and 457(b) plans, must be taken separately from each of those plan accounts.
Q6. Who calculates the amount of the RMD? (updated March 14, 2023)
Although the IRA custodian or retirement plan administrator may calculate the RMD, the account owner is ultimately responsible for taking the correct RMD amount.
Q7. Can an account owner withdraw more than the RMD?
Q8. what happens if a person does not take a rmd by the required deadline (updated march 14, 2023).
If an account owner fails to withdraw the full amount of the RMD by the due date, the amount not withdrawn is subject to a 50% excise tax. SECURE 2.0 Act drops the excise tax rate to 25%; possibly 10% if the RMD is timely corrected within two years. The account owner should file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts , with their federal tax return for the year in which the full amount of the RMD was required, but not taken.
Q9. Can the penalty for not taking the full RMD be waived?
Yes, the penalty may be waived if the account owner establishes that the shortfall in distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. In order to qualify for this relief, you must file Form 5329 and attach a letter of explanation. See the Instructions to Form 5329 PDF .
Q10. Can a distribution in excess of the RMD for one year be applied to the RMD for a future year?
Q11. how are rmds taxed.
The account owner is taxed at their income tax rate on the amount of the withdrawn RMD. However, to the extent the RMD is a return of basis or is a qualified distribution from a Roth IRA , it is tax free.
Q12. Can RMD amounts be rolled over into another tax-deferred account?
No. Please refer to Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) , for additional information.
Q13. Is an employer required to make plan contributions for an employee who has reached age 72 (73 if you reach age 72 after Dec. 31, 2022) and is receiving required minimum distributions? (updated March 14, 2023)
Yes, you must continue contributions for an employee, even if they are receiving RMDs . You must also give the employee the option to continue making salary deferrals in a plan that permits them. Otherwise, you will fail to follow the plan's terms which may cause your plan to lose its qualified status. You may correct this failure through the Employee Plans Compliance Resolution System (EPCRS) .
Q15. How are RMDs determined in a Defined Benefit Plan? (updated March 14, 2023)
A defined benefit plan generally must make RMDs by distributing the participant's entire interest in periodic annuity payments as calculated by the plan's formula for:
- the participant's life,
- the joint lives of the participant and beneficiary, or
- a "period certain" (see Treas. Reg. §1.401(a)(9)-6, A-3 ).
- Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)
Q16. What are the required minimum distribution requirements for pre-1987 contributions to a 403(b) plan? (updated March 14, 2023)
If the 403(b) plan (including any 403(b) plan that received pre-1987 amounts in a direct transfer that complies with Treas. Reg. Section 1.403(b)-10(b)):
- has separately accounted and kept records for pre-1987 amounts, and
- is for the primary purpose of providing retirement benefits (see the incidental benefit rules in Treas. Reg. Section 1.401-1(b)(1)(I)),
then the pre-1987 amounts (excluding any earnings or gains on such amounts):
- are not subject to the age 72 (73 if you reach age 72 after Dec. 31, 2022) RMD rules of IRC Section 401(a)(9),
- are not used in calculating age 70½ (or age 72 or 73) RMDs from the 403(b) plan, and
- don't need to be distributed from the plan until December 31 of the year in which a participant turns age 75 or, if later, April 1 of the calendar year immediately following the calendar year in which the participant retires.
If the plan includes both pre-1987 and post 1987 amounts, for distributions of any amounts in excess of the age 70½ RMDs, the excess is considered to be from the pre-1987 amounts.
If records are not kept for pre-1987 amounts, the entire account balance is subject to the age 70½ (or age 72 or 73) RMD rules of IRC section 401(a)(9).
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3 reasons student-loan borrowers could start taking on more debt once Biden's plan to lower monthly payments goes into effect
- Biden released a plan in August to reform income-driven repayment plans for student-loan borrowers.
- A CBO report this week found the reforms would cost $230 billion over ten years.
- It also projected the more generous plan would lead to increased borrowing given the lower cost to take on debt.
Monthly student-loan payments might soon be a lot cheaper for borrowers — but it could be a double-edged sword.
Alongside his announcement of up to $20,000 in student debt relief for federal borrowers in August, President Joe Biden also announced his plan to implement reforms to income-driven repayment plans. The plans are intended to give borrowers affordable monthly payments based on their income with the promise of loan forgiveness after at least 20 years. To date, servicer failures in tracking payments accurately have kept borrowers in repayment far longer than they anticipated.
Rather than creating an entirely new plan, Biden's proposal would amend the existing Revised Pay As You Earn (REPAYE) plan, which was created in 2016 to make payments more affordable for borrowers. The changes include ensuring borrowers pay no more than 5% of their discretionary income monthly on their undergraduate student loans — down from the current 10% — and shorten the timeframe for receiving loan forgiveness by allowing those who borrowed $12,000 or less originally to receive debt relief after ten years.
While Democratic lawmakers lauded the proposed improvements to IDR plans, Republican lawmakers criticized the proposal, along with its potential cost. That's why the House Education Committee Chair Virginia Foxx and Senate education committee ranking member Bill Cassidy asked the Congressional Budget Office (CBO) to prepare a report on the costs of Biden's IDR proposal. CBO released its report on Monday. It estimated the reforms would cost $230 billion over ten years, and if Biden's broad debt relief plan falls through, that cost would rise to $276 billion due to an expected increase in borrowing.
"The administration's Income-Driven Repayment rule is nothing more than a backdoor attempt to provide free college by executive fiat," Foxx said in a statement. "Transferring $230 billion from borrowers who willingly took out debt to taxpayers who did not is fiscally irresponsible and morally reprehensible. Make no mistake, I soundly reject this illegal abuse of power."
The CBO noted uncertainty with its estimates, as "it is difficult to anticipate the ways students and postsecondary institutions would respond to the availability of the plan." But it wrote in its report that should the IDR reforms be implemented as they were proposed, borrowing will increase by 12%, or about $10 billion, by fiscal year 2027 for three main reasons:
- Students who would already take out federal loans would borrow even more because the IDR reforms would make payments less expensive
- Some students who wouldn't take out federal loans under current law might borrow under the more generous IDR plan
- And the CBO expects that some schools will raise their tuition due to increased borrowing under the IDR reforms, which would lead to even more borrowing.
The CBO also noted that Biden plans to issue a new gainful employment rule in April, which would cut off federal aid for schools that offer career and certificate programs that leave students with a large of amount of student debt compared to their likely post-graduation earnings. The implementation of that rule would offset some of the increasing borrowing, the CBO said.
Insider has previously reported that Biden's IDR reforms could keep borrowers in the same repayment cycle if it isn't implemented properly. An Urban Institute analysis of the proposal found that the share of borrowers enrolled in IDR who earn a bachelor's degree that fully pay off their loans would fall from the current 59% to around 22%, and the share of those paying no more than half of what they borrowed would rise from 22% to 49%.
"Under current IDR plans, most borrowers can expect to repay some or all their debt," the analysis said. "If the Biden plan is implemented as proposed, fully repaying a student loan will be the exception rather than the rule."
Matthew Chingos, vice president of education and data policy at the think-tank Urban Institute and coauthor of the analysis, previously told Insider that he thinks the reforms will be significant and that Biden's administration has "done the most they can through administrative action to simplify and move us towards a world where there really are basically two options, the standard option and an income-based option."
But it remains to be seen how effectively the reforms will be implemented, and Chingos said he's worried that "it doubles down on a failed system that just has never worked well."
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Retirement plan account owners can delay taking their RMDs until the year in which they retire, unless they're a 5% owner of the business sponsoring the plan. Owners of traditional IRA, and SEP and SIMPLE IRA accounts must begin taking RMDs once the account holder is age 72 (73 if you reach age 72 after Dec. 31, 2022), even if they're retired.
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Getty Images. Biden released a plan in August to reform income-driven repayment plans for student-loan borrowers. A CBO report this week found the reforms would cost $230 billion over ten years ...