what should be in your business plan

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How to Write a Business Plan, Step by Step

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What is a business plan?

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

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

ZenBusiness

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

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

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

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

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

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

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

Your business’s registered name.

Address of your business location .

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

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

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

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

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

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

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

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

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

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

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

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

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

Licenses and permits.

Equipment leases.

Bank statements.

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

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

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

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

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

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

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

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

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How to make a business plan

Table of Contents

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

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

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

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

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

What is a business plan?

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

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

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

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

Business plan vs. business model canvas

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

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

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

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

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

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

Why is a business plan important?

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

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

Helps to define the business goals and objectives

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

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

Guides decision-making

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

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

Attracts investors and secures funding

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

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

Identifies potential challenges and risks

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

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

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

Provides a basis for measuring success

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

Are we where we want to be at this point?

Did we achieve our goals?

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

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

How to make a business plan step by step

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

1. Create an executive summary

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

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

2. Write your company description

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

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

3. Conduct a market analysis

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

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

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

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

4. Describe your products and services

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

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

5. Design a marketing and sales strategy

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

Pricing strategy

Advertising and promotional tactics

Sales channels

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

6. Determine budget and financial projections

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

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

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

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

8. Make an action plan

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

Types of business plans

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

Startup business plan

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

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

Strategic business plan

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

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

Operational business plan

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

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

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

Growth-business plan

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

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

One-page business plan

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

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

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

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

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

Be practical

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

Be specific

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

Be thorough with your research

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

Get input from others

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

Review and revise regularly

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

Create a winning business plan to chart your path to success

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

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

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

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How To Write a Business Plan

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

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

Table of contents

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

By signing up I agree to the Terms of Use and Privacy Policy .

Step 1: Write your executive summary

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

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

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

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

Step 2: Do your market research homework

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

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

Step 3: Set your business goals and objectives

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

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

Step 4: Plan your business strategy

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

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

Step 5: Describe your product or service

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

Step 6: Crunch the numbers

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

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

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

Step 7: Finalize your business plan

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

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

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The takeaway

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

Related content

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

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

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

Bah. Sounds like homework, right?

Yes. Yes, it does.

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

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

Table of Contents

What Is a Business Plan?

Tips to Make Your Small Business Plan Ironclad

How to Write a Business Plan in 6 Steps

Startup Business Plan Template

Business Plan Examples

Work on Making Your Business Plan

How to Write a Business Plan FAQs

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

A business plan is a roadmap that outlines:

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

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

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

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

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

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

Don’t Skip: Business Startup Costs Checklist

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

Be Professional and Legit

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

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

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

Know Your Audience

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

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

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

Invest Time Researching

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

Your audience will want:

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

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

Stay Realistic

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

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

How to Write a Business Plan—6 Essential Elements

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

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

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

1. Executive Summary

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

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

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

2. Business Overview

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

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

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

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

3. Products and Services

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

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

You’ll need to include:

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

4. Market Analysis

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

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

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

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

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

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

5. Competitive Analysis

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

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

6. Financial Strategy

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

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

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

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

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

Read More: 16 Financial Concepts Every Entrepreneur Needs to Know

Startup Business Plan Template (Copy/Paste Outline)

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

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

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

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

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

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

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

5 Frame-Worthy Business Plan Examples

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

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

Get to Work on Making Your Business Plan

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

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

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

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

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

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

Keep Learning: New Product Development Process in 8 Easy Steps

What financial information should be included in a business plan?

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

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

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

Who should review my business plan before I submit it?

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

Ready to Write Your Business Plan?

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

Let us help you get started.

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

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

About Jesse Sumrak

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

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What is a Business Plan? Definition, Tips, and Templates

Published: June 07, 2023

In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?

In this post, we'll explain what a business plan is, the reasons why you'd need one, identify different types of business plans, and what you should include in yours.

What is a business plan?

A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

What is a business plan used for?

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

Business Plan Template [ Download Now ]

Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

Purposes of a Business Plan

Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:

1. Securing financing from investors.

Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.

Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

Free Business Plan Template

The essential document for starting a business -- custom built for your needs.

• Outline your idea.
• Pitch to investors.
• Secure funding.
• Get to work!

Download Free

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Free Business Plan [Template]

Fill out the form to access your free business plan., 3. legitimizing a business idea..

Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in your business class.

Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.

If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?

What does a business plan need to include?

• Business Plan Subtitle
• Executive Summary
• Company Description
• The Business Opportunity
• Competitive Analysis
• Target Market
• Marketing Plan
• Financial Summary
• Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.

5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.

Types of Business Plans

• Startup Business Plan
• Feasibility Business Plan
• Internal Business Plan
• Strategic Business Plan
• Business Acquisition Plan
• Business Repositioning Plan
• Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

2. Feasibility Business Plan

This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

• A detailed product description
• Market analysis
• Technology needs
• Production needs
• Financial sources
• Production operations

According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.

3. Internal Business Plan

Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

• Department-specific budgets
• Target demographic analysis
• Market size and share of voice analysis
• Action plans
• Sustainability plans

Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.

4. Strategic Business Plan

Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

• Relevant data and analysis
• Assessments of company resources
• Vision and mission statements

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan

Investors use business plans to acquire existing businesses, too — not just new businesses.

A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

• How an acquisition will change its operating model
• What will stay the same under new ownership
• Why things will change or stay the same
• Acquisition planning documentation
• Timelines for acquisition

Additionally, the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

• What the new owner will do to turn the business around
• Historic business metrics
• Sales projections after the acquisition
• Justification for those projections

6. Business Repositioning Plan

When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

• Acknowledge the current state of the company.
• State a vision for the future of the company.
• Explain why the business needs to reposition itself.
• Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

• SWOT analysis
• Growth opportunity studies
• Financial goals and plans
• Marketing plans
• Capability planning

These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.

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How to write a business plan in 12 steps (2024 edition)

Updated 18 April 2024 • 12 min read

This guide breaks down how to write a business plan, step-by-step, detailing what your document needs to include and what you need to think about to make your business plan as persuasive as possible.

What is a business plan?

A business plan is an essential document that can provide immense value for new and existing companies of all sizes. It is an overview that includes an outline of your business, its key objectives and plan for achieving important goals.

This information can be used to communicate strategic actions to internal teams and also attract interest from potential partners and investors . However, writing a business plan can be a lengthy and involved process. For many, using a business plan template can be a good way to get started.

For best results, you’ll need to do a lot of thinking and planning before you start writing your business plan. This way you have all the information and resources you need at your fingertips and won’t be under time pressure to come up with something at the last minute. After all, a well-thought-out business plan can help you avoid generic information and set your company up for success.

Download your free business plan template .

Why write a business plan?

Writing your business plan helps to get your strategy nailed down and onto the page. A plan that stays in your head is probably going to be full of unrealistic assumptions and biases, whereas a strategically thought-out and organised approach forces you to notice your blind spots and find a way forward.

If you’re looking for financing, a bank or investor needs to be persuaded by your business proposal and the opportunity to work with you. Therefore, a well-written business plan can help provide potential financial partners with the confidence that your business can become profitable. Your business plan gives them a comprehensive view of all aspects of your business and details your strategy for achieving your goals.

What are the main sections of a business plan?

Whatever your line of work, your business plan will generally need to provide the following:

An executive summary

A business overview

The market opportunity

Your products/services

How to write a business plan

Make sure you cover each of the following steps when preparing your document:

1. Write an executive summary

This section of your business plan should be 1–2 pages in length and enables potential financiers or partners to get an overview of what your business does and – most importantly — what the opportunity is for them. If they’re interested in the opportunity, they’ll conduct their own due diligence - and this will start with going through your business plan and financials.

It’s a good idea to write your executive summary last, when you’ve clarified your thinking around every section of the document. As an overview section, you don’t want to add any new content that isn’t in your business plan. Aim to keep this summary succinct and engaging by using simple, plain language, as this is much more persuasive than complicated or academic wording.

Use sub-headings and bullet points to help your most important information stand out, especially as busy executives may simply scan your executive summary and use this to decide whether they want to find out more.

What to include in an executive summary?

Make sure you include details on:

What your business does

What the opportunity is

What your unique selling points / differentiators are

How much funding you’re looking for

What the funding will be used for

How you'll succeed

Remember, you’re providing the big picture overview of your business - the detail is in the rest of the document and in the appendices.

2. Write your business overview

This section of your business plan needs to be more than just a list of what your business does. Its purpose is to excite those you’re hoping will work with you or help to fund your business.

Information to address includes:

What's the purpose of your business?

What problem does your business’ product or service solve?

What niche could it fill?

What’s different about your offering?

How are you better than anyone else at what you do?

Consider what your customer value proposition is by deciding what you want to achieve and what your number 1 benefit is for your customer.

3. Identify your USP

Think about what your unique selling points (USP) or differentiators are, and what proof-points you can provide to back them up.

For example, you can use terms like “market-leading” but if you don’t provide any evidence to back up your claims, your reader will take them with a big pinch of salt!

You should certainly reference any awards or endorsements that position you as the best person to provide your product or service, as well as any client testimonials. Make sure you include any education or experience that makes you an expert in your field as well.

4. Describe the market opportunity

Show you understand your industry, market and where you fit in it. While no-one can predict the future, offer up where you think the opportunity is for your business and make sales projections based on that. 

For example, imagine your business is selling personalised cookies - there's little competition in your area and you see your market opportunity to create designs for all calendar and holiday events. You expect to increase sales by 30% in one year and 50% in three years, driven primarily by word-of-mouth referrals.

Make sure you also consider macro trends that may create opportunities for you, such as social, environmental, or technological changes that may affect buying behaviour.

5. Include a SWOT analysis

Whatever your business strengths or opportunities, they’ll always be known and unknown weaknesses and threats; there’s no such thing as certainty in business or in life!

However, you can demonstrate that you’ve examined your business through different lenses and have a thorough understanding of it by doing a SWOT (strengths, weaknesses, opportunities, threats) analysis.

Don’t worry about drawing attention to your business’ shortcomings - every opportunity has them and it’ll give investors and partners confidence in you that you won't bury your head in the sand. Naturally, it's important that you specify what you’re going to do to address these weaknesses and counter these threats.

Here are some areas you can think about to get started: reputation, technology, location, experience, staff, overheads, competition, suppliers and price.

6. Present a competitor analysis

Let’s face it, no matter what industry you’re in, or what you’re selling, there’s going to be other businesses offering the same thing. But instead of worrying about the competition, use this as a positive opportunity to up your game and work out the unique advantages you have that will keep you competitive.

Identify your top 3 competitors and analyse what they're doing well and where they’re coming up short. Try to be as objective as possible and identify how to differentiate yourself from them.

You should also look into who the industry leaders are and what the benchmarks are for your industry so that you can set yourself targets for continuous improvement.

7. Create a customer persona

A customer persona is a fictional person who represents your company's ideal customer. Naturally, the persona can be based on a real person - the more you get to know your ideal customer, the more targeted and successful your marketing efforts will be.

To create a customer persona, you need to conduct research into your ideal customer’s age, sex, income, employment, daily activities, interests and hobbies. If you’re feeling unsure about your customer persona, you may need to give your ideal customer further thought and download the customer persona template to get started.

8. Write your marketing strategy

When you’ve created your customer persona, you need to work out how you’re going to reach them. Do they hang out on social media apps, like Facebook, Instagram, Pinterest, Twitter or LinkedIn? Or are they more used to local, traditional marketing like free local papers or high foot traffic areas?

Once you’ve figured where your audience is likely to hang out, you can outline your strategies for promoting and advertising your products or services in the next 12 months.

Make a list of the marketing channels you’ll use to achieve your advertising strategy and be sure to include your budget. How much can you set aside for advertising? And where are you most likely to see a return on your efforts? Paid ads on Facebook? Half or full paid spreads in an industry magazine? Or even a direct mail out? 

For more structured help around this, check out free course: Business 101 | Get social with your business on Facebook . 

9. Design your customer retention strategy

Business success relies heavily on the relationship you’re able to build with your customers. What techniques will you use to keep them coming back? Consider the following:

What can your business do to increase the number of repeat customers? 

Does your business have a referral or loyalty program? 

Do you have a post-purchase follow up in place?

Will you use surveys to track customer satisfaction?

What ways can you continue delivering outstanding service?

Is there a way to continue educating and adding value to your customers?

10. Present your financials

Most people who are looking at investing their time and/or money in your business will want to see your financial statements - your performance to date and your projections over the short and medium term. They'll also want to know how much you’ve received in funding to date and what these other sources of funding are - including your own investment.

Current finances

You need to show how your business has performed financially over the last year, highlighting metrics such as positive cashflow , net profit and assets.

Financial forecasts

You should also provide a balance forecast projecting total assets, total liabilities and net assets over 1, 2 and 3 years, and a profit and loss forecast for the same periods detailing gross profit /net sales, total expenses and net profit/loss. Finally, you should also provide a cash flow forecast month by month over the next year.

It’s also a good idea to speak to an expert like an accountant or bookkeeper about your finances and get advice on how best to present them in this all-important section of your business plan.

11. Detail how much funding is needed

Naturally, you also need to be very clear about how much money you’re looking for and what you plan to do with it. If you’re looking for a loan , you need to detail what it’s for, over what period it’ll be repaid, and what collateral you have to secure it.

12. Propose an exit strategy

Any financial stakeholder in your business will want a return on investment. If you’re pursuing this type of funding, you should include some detail on your proposed exit strategy . For example, do you want to sell the company at some point or go public?

Similarly, you should outline your succession plan so the business can continue to operate if you decide to step away from it. Likewise, you need a plan for what happens if the business loses money and can’t sustain itself. Documenting this means that everyone is on the same page and potential investors have this information upfront.

Frequently asked questions about writing a business plan:

When to write a business plan.

Typically, entrepreneurs write their business plans within the first year of operations. A business plan is a tool that helps business owners refine their strategy, attract partners and financiers, and grow their business.

If a business plan is written too soon, it may lack the substance that comes with time in the market. However, it’s important to note that a business plan isn't a static document - it can and should change as the business evolves.

How long should your business plan be?

There are no hard and fast rules around how long your business plan should be - it just needs to include all the relevant information. Aim for clear, concise sections and build a business plan that is as easy to read and navigate as possible.

Using a business plan template can help you make sure you have everything covered off, while also having a document that looks as professional as possible. Make sure you run a spelling and grammar check too - any sloppy errors can undermine your credibility.

What’s a business plan on a page?

It’s important to write your business plan as it helps to embed your strategy - as well as communicate what you’re about to potential partners or investors. When you have a comprehensive business plan you can easily adapt it to suit different audiences. For example, a full business plan is essential for raising capital but a business plan on a page may be enough for potential partners or employees.

What do venture capitalists look for in a business plan?

Venture capitalists invest money into businesses with the goal of achieving a return on their investment within the short to medium term. As a result, they’re looking for an attractive market opportunity, a clear point of differentiation, a strong management team, a proven track record, solid financials and, importantly, an exit opportunity.

Where to go for help or more information?

There are many great resources out there to help you fine-tune your business strategy and write your business plan. The Australian Government has a comprehensive website dedicated to supporting businesses at all stages of their journey.

You can also get help from Business Enterprise Centres , business advisors, accountants and fellow business owners. MYOB also has a list of business advisors who can give you feedback on your business plan, so your venture has the very best chance of success. 

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What is a Business Plan? Definition and Resources

9 min. read

Updated May 10, 2024

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.

The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.

But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.

• What is a business plan?

A business plan lays out a strategic roadmap for any new or growing business.

Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .

The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .

Reasons for writing a business plan

If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact: 

Companies that commit to planning grow 30% faster than those that don’t.

Creating a business plan is crucial for businesses of any size or stage. It helps you develop a working business and avoid consequences that could stop you before you ever start.

If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.

But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks. 

It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.

Related: 14 of the top reasons why you need a business plan

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What research shows about business plans

Numerous studies have established that planning improves business performance:

• 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
• Companies that clearly define their value proposition are more successful than those that can’t.
• Companies or startups with a business plan are more likely to get funding than those without one.
• Starting the business planning process before investing in marketing reduces the likelihood of business failure.

The planning process significantly impacts business growth for existing companies and startups alike.

Read More: Research-backed reasons why writing a business plan matters

When should you write a business plan?

No two business plans are alike. 

Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.

A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business. 

But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.

Ideal times to write a business plan include:

• When you have an idea for a business
• When you’re starting a business
• When you’re preparing to buy (or sell)
• When you’re trying to get funding
• When business conditions change
• When you’re growing or scaling your business

Read More: The best times to write or update your business plan

How often should you update your business plan?

As is often the case, how often a business plan should be updated depends on your circumstances.

A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals. 

But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.

Related Reading: 5 fundamental principles of business planning

For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .

And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise. 

It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change. 

The planning process is what uncovers those insights.

Related Reading: 10 prompts to help you write a business plan with AI

• How long should your business plan be?

Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan. 

Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.

But there are a few general rules to consider about a plan’s length:

• Your business plan shouldn’t take more than 15 minutes to skim.
• Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.

A good practice is to write your business plan to match the expectations of your audience. 

If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.

The length of your plan may also depend on the stage your business is in. 

For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.

Read More: How long should your business plan be?  

What information is included in a business plan?

The contents of a plan business plan will vary depending on the industry the business is in. 

After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market. 

But there are some common elements that most business plans include:

• Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
• Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
• Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
• Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
• Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
• Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
• Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
• Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
• Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
• Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.

Read More: Use this business plan outline to organize your plan

• Different types of business plans

A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs. 

Here are a few of the most common types of business plans for small businesses:

• One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
• Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
• Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.

Business plan vs. operational plan vs. strategic plan

• What questions are you trying to answer? 
• Are you trying to lay out a plan for the actual running of your business?
• Is your focus on how you will meet short or long-term goals? 

Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.

While a business plan provides the foundation for a business, other types of plans support this guiding document.

An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.

Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.

Read More: How to use a business plan for strategic development and operations

• Business plan vs. business model

If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money. 

The difference may seem subtle, but it’s important. 

Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.

Learn More: The differences between a business model and business plan

• Moving from idea to business plan

Now that you understand what a business plan is, the next step is to start writing your business plan . 

The best way to start is by reviewing examples and downloading a business plan template. These resources will provide you with guidance and inspiration to help you write a plan.

We recommend starting with a simple one-page plan ; it streamlines the planning process and helps you organize your ideas. However, if one page doesn’t fit your needs, there are plenty of other great templates available that will put you well on your way to writing a useful business plan.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• Reasons to write a business plan
• Business planning research
• When to write a business plan
• When to update a business plan
• Information to include
• Business vs. operational vs. strategic plans

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12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

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Martin luenendonk.

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

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

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• Best Startup Business Loans
• Sole Proprietorship: What It Is, Pros & Cons, and Differences From an LLC
• Partnership: Definition, How It Works, Taxation, and Types
• What is an LLC? Limited Liability Company Structure and Benefits Defined
• Corporation: What It Is and How to Form One
• Starting a Small Business: Your Complete How-to Guide
• Starting an Online Business: A Step-by-Step Guide
• How to Start Your Own Bookkeeping Business: Essential Tips
• How to Start a Successful Dropshipping Business: A Comprehensive Guide

Starting a business in the United States involves a number of different steps spanning legal considerations, market research, creating a business plan, securing funding, and developing a marketing strategy. It also requires decisions about a business’ location, structure, name, taxation, and registration. Here are the key steps involved in starting a business, as well as important aspects of the process for entrepreneurs to consider.

Key Takeaways

• Entrepreneurs should start by conducting market research to understand their industry space, competition, and target customers.
• The next step is to write a comprehensive business plan, outlining the company’s structure, vision, and strategy.
• Securing funding in the form of grants, loans, venture capital, and/or crowdfunded money is crucial if you’re not self-funding.
• When choosing a venue, be aware of local regulations and requirements.
• Design your business structure with an eye to legal aspects, such as taxation and registration.
• Make a strategic marketing plan that addresses the specifics of the business, industry, and target market.

Before starting a business, entrepreneurs should conduct market research to determine their target audience, competition, and market trends. The U.S. Small Business Administration (SBA) breaks down common market considerations as follows:

• Demand : Is there a need for this product or service?
• Market size : How many people might be interested?
• Economic indicators : What are the income, employment rate, and spending habits of potential customers?
• Location : Are the target market and business well situated for each other?
• Competition : What is the market saturation ? Who and how many are you going up against?
• Pricing : What might a customer be willing to pay?

Market research should also include an analysis of market opportunities, barriers to market entry, and industry trends, as well as the competition’s strengths, weaknesses, and market share .

There are various methods for conducting market research, and these will vary depending on the nature of the industry and potential business. Data can come from a variety of places, including statistical agencies, economic and financial institutions, and industry sources, as well as direct consumer research through focus groups, interviews, surveys, and questionnaires.

A comprehensive business plan is like a blueprint. It lays the foundation for business development and affects decision-making, day-to-day operations, and growth. Potential investors or partners may want to review and assess it in advance of agreeing to work together. Financial institutions often request business plans as part of an application for a loan or other forms of capital. 

Business plans will differ according to the needs and nature of the company and should only include what makes sense for the business in question. As such, they can vary in length and structure. They can generally be divided into two formats: traditional and lean start-up. The latter is less common and more useful for simple businesses or those that expect to rework their traditional business plan frequently. It provides a vivid snapshot of the company through a small number of elements.

The process of funding a business depends on its needs and the vision and financial situation of its owner.  The first step is to calculate the start-up costs . Identify a list of expenses and put a dollar amount to each of them through research and requesting quotes. The SBA has a start-up costs calculator for small businesses that includes common types of business expenses.  

The next step is to determine how to get the money. Common methods include:

• Self-funding , also known as “ bootstrapping ”
• Finding investors willing to contribute to your venture capital
• Raising money online by crowdfunding
• Securing a business loan from a bank, an online lender, or a credit union
• Winning a business grant from a donor, usually a government, foundation, charity, or corporation

Different methods suit different businesses, and it’s important to consider the obligations associated with any avenue of funding. For example, investors generally want a degree of control for their money, while self-funding puts business owners fully in charge. Of course, investors also mitigate risk; self-funding does not.

Availability is another consideration. Loans are easier to get than grants, which don’t have to be paid back. Additionally, the federal government doesn’t provide grants for the purposes of starting or growing a business, although private organizations may. However, the SBA does guarantee several categories of loans , accessing capital that may not be available through traditional lenders. No matter the funding method(s), it’s essential to detail how the money will be used and lay out a future financial plan for the business, including sales projections and loan repayments . 

Businesses operating in the U.S. are legally subject to regulations at the local, county, state, and federal level involving taxation, business IDs, registrations, and permits.

Choosing a Business Location

Where a business operates will dictate such things as taxes, zoning laws (for brick-and-mortar locations), licenses, and permits. Other considerations when choosing a location might include:

• Human factors : These include target audience and the preferences of business owners and partners regarding convenience, knowledge of the area, and commuting distance.
• Regulations : Government at every level will assert its authority.
• Regionally specific expenses : Examples are average salaries (including required minimum wages), property or rental prices, insurance rates, utilities, and government fees and licensing.
• The tax and financial environment : Tax types include income, sales, corporate, and property, as well as tax credits; available investment incentives and loan programs may also be geographically determined.

Picking a Business Structure

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

Common business structures include:

• Sole proprietorship : A sole proprietorship is an unincorporated business that has just one owner, who pays personal income tax on its profits.
• Partnership : Partnership options include a limited partnership (LP) and a limited liability partnership (LLP) .
• Limited liability company (LLC) : An LLC protects its owners from personal responsibility for the company’s debts and liabilities.
• Corporation : The different types of corporations include C corp , S corp , B corp , closed corporation , and nonprofit .

Getting a Tax ID Number

A tax ID number is the equivalent of a Social Security number for a business. Whether or not a state and/or federal tax ID number is required will depend on the nature of the business and the location in which it’s registered.

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

• Operates as a corporation or partnership
• Pays federal taxes
• Has employees
• Files employment, excise, alcohol, tobacco, or firearms tax returns
• Has a Keogh plan
• Withholds taxes on non-wage income to nonresident aliens
• Is involved with certain types of organizations, including trusts, estates, real estate mortgage investment conduits, nonprofits, farmers’ cooperatives, and plan administrators

An EIN can also be useful if you want to open a business bank account, offer an employer-sponsored retirement plan, or apply for federal business licenses and permits. You can get one online from the Internal Revenue Service (IRS) . State websites will do the same for a state tax ID.

Registering a Business

How you register a business will depend on its location, nature, size, and business structure.  For example, a small business may not require any steps beyond registering its business name with local and state governments, and business owners whose business name is their own legal name might not need to register at all.

That said, registration can provide personal liability protection, tax-exempt status, and trademark protection, so it can be beneficial even if it’s not strictly required. Overall registration requirements, costs, and documentation will vary depending on the governing jurisdictions and business structure.  

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

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

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

Obtaining Permits

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

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

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

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

How Much Does It Cost to Start a Business?

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

What Should I Do Before Starting a Business?

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

What Types of Funding Are Available to Start a Business?

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

Do You Need to Write a Business Plan?

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

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

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

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

U.S. Small Business Administration. " Calculate Your Startup Costs ."

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

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

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

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

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

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

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

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

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

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

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Is Now a Good Time to Start a Business? Here Are 5 Factors You Need to Consider. Starting a small business always feels like a gamble, even in strong economic conditions. With so much uncertainty, is now the right time to start a business?

By Joseph Camberato Edited by Chelsea Brown Jun 3, 2024

Key Takeaways

• Don't let economic fears deter you from starting a business. A well-planned and researched business idea can still succeed even in a challenging economy.
• Before launching your venture, focus on creating a strong business plan, validating market demand for your product or service, and conducting an industry analysis.
• Research funding options, and secure the resources you need to get your business off the ground — including technology and employees.

Opinions expressed by Entrepreneur contributors are their own.

Starting a small business always feels like a gamble, even in strong economic conditions. But right now, many people are concerned about the economy, and 65% believe it's either not going well or doing poorly.

With so much uncertainty, you may wonder whether now is the right time to start a business. But the truth is, there is no right time, and external forces will always threaten your idea.

Learning the "best" time to start a business comes with strategy, research and the right mindset. So if your numbers are solid, don't let economic fears delay your plans. Let's look at five things you should consider before launching a new business venture.

Related: The Best Time to Start Your Dream Business Is Now. Here's Why You Shouldn't Worry About Timing.

1. Business plan

A business plan can help you determine whether starting a business is the right decision. It can also help you identify new opportunities, clarify your strategy and evaluate whether your idea is viable.

If you have many different ideas, writing a business plan will help you evaluate which ones have the highest chance of success. You'll also have to spend time researching your target audience and competitors.

Most importantly, a business plan can help you identify any weaknesses in your business model. It can help you identify potential problems and avoid costly mistakes down the road.

Most investors want to see a business plan before they fund your venture, and you'll need a business plan to qualify for a loan . Writing out a business plan will also help you communicate your vision to new employees, which could help with recruiting.

2. Market demand

Roughly 42% of startups fail because the founders created a product no one wants. That's an avoidable problem, but it's easy to get swept up in the excitement of a new business idea and forget to determine whether there's a product-market fit.

Before you start a new business, you must consider the market demand. Market demand is the amount of a product or service customers are willing to purchase at a specific price. It's driven by many different factors, including the price, economic conditions and customer preferences.

Identifying market demand helps you determine sales and revenue potential. It can also help you develop a pricing strategy, choose your target customer and identify growth opportunities.

If you conduct a market analysis and determine a market demand, you also need to consider the type of demand. For example, you could identify an irregular demand — a demand based on seasonality or short-term economic conditions.

Many companies experienced this during Covid and found the demand waned once the economic conditions changed. Peloton serves as a cautionary tale of this — the company's revenue surged in 2020 and 2021, causing the company to invest heavily in inventory. When demand waned, the company had way too much stock on hand. Instead of seeing the initial skyrocketing sales as a temporary shift, the company acted as if this growth would continue indefinitely.

Related: Most People Have No Business Starting a Business. Here's What to Consider Before You Become an Entrepreneur

3. Your industry

A market analysis involves looking at the customers you will be selling your products or services to. An industry analysis looks at the different companies within that industry. You'll want to look at the state of your industry, its growth patterns and income projections.

For example, are you entering into an emerging industry or one that's well-established? There are pros and cons to both scenarios. For example, emerging industries often have less competition and high growth potential.

However, you'll have to spend more time educating your customers since they'll be unfamiliar with the product or service. Since the industry is new, it's impossible to anticipate the types of government regulations it could get hit with in the future.

If an industry is already well-established, it has a proven track record of success. However, there is usually also more competition and a higher barrier to entry.

4. Resources needed

You can't start a business without resources, though your needs will vary depending on the type of business you're launching. When you're starting out, your most important resource is funding since every business needs money to operate. There are ways to cut costs, but every startup incurs a variety of different expenses . We'll look at how to access the capital you need in the next section.

You'll also need access to the right tech solutions since technology makes your business more flexible and adaptive. Most startups need a responsive website, cloud storage solutions, cybersecurity tools and a way to collect and analyze data.

Finally, you'll need to invest in employees at some point. You may be able to get things off the ground by yourself, but if you want to build a scalable business, you'll need to find and develop the right team of people .

5. Access to capital

There are three primary ways entrepreneurs access capital — by self-funding the venture themselves, looking for outside investors or through small business loans. Self-funding allows you to avoid taking on debt or giving up equity, but it's harder to gain traction this way. You may have to bootstrap your company for years before you can successfully scale.

Outside investors can be a good choice, but this option is becoming less available to startups. VC funds fell by 60% from 2022 to 2023, and startup funding dropped by a third. Interest rates aren't expected to drop substantially in 2024, so this trend will likely continue.

Another option startups can consider is taking out a small business loan . Banks often have strict lending criteria, making non-bank lenders an excellent alternative. Online lenders and lending marketplaces offer a streamlined application process, less rigorous lending requirements, and fast access to capital.

Related: Struggling to Get a Bank Loan for Your Small Business? Try This Flexible Financing Option Instead.

Starting a business in uncertain economic times can be daunting, but with careful planning, strategic thinking and the right mindset , you can position your new venture for success. Remember, there will never be a perfect or "right" time to start a business, and economic challenges are part of the journey. By developing a strong business plan, understanding market demand, analyzing your industry, securing necessary resources and exploring diverse funding options, you can navigate these challenges and turn your entrepreneurial vision into reality.

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How to Update your Business Plan?

Free Business Plan Template

• June 3, 2024

Finally, after a lot of effort, you wrote a business plan. But the journey doesn’t end here!

A business plan is a living document—you need to work on it continuously to keep it relevant and up-to-date according to the market situations.

Your plan should evolve along with your business. This ensures it remains a valuable tool for decision-making. Regular updates can help you adapt to new opportunities, overcome challenges, and maintain a clear path toward your goals.

Let’s explore the hows, whens, and whats of updating a business plan .

Why should you keep updating your business plan?

The first question that arises is why a business plan update is necessary. Is it not possible to have a plan that remains relevant for a longer duration?

Moreover, some might wonder if updating a detailed business plan halfway could have a negative impact. All of these questions may cross your mind when managing a small business.

There are several benefits of updating a business plan, some of them are:

1. Keeping up with the demands of the customer base

The first and most obvious reason is to keep up with the needs of your customers. A business’s one of the key drivers is an increased demand. When you create what people want, it naturally leads to more consumption.

Many businesses make the blunder of never altering products that worked once. However, in the case of businesses, demands change constantly – whether one likes it or not!

For instance, Blackberry phones were considered the go-to phones for professionals in one era, and now they are just nostalgia. So, going with the trends and changing your plan accordingly becomes necessary to stay significant in the industry.

2. Accommodating and expanding market requirements

There are prominent benefits of updating your business with a market expansion strategy. What does this mean?

With ever-increasing products and services in every domain, expanding your product to a new market can help you increase your sales.

For example, a company serving coffee beans to the urban market could expand its reach by offering instant coffee to consumers who don’t have specialized equipment for coffee beans.

3. Keeping up with the competitors

To succeed, businesses need to keep up with their competitors. It means updating your plans and strategies after analyzing your competitors to make your brand stand out.

It includes updating your marketing strategies, pricing models, product offerings, and more to stay relevant for your customers.

4. Tracking your progress

Updating your plan allows you to compare your projections with actual results. It helps you to understand in which areas you are performing well and which needs better performance. It’s like checking the map to make sure your small business is still heading in the right direction.  

How to update your business plan?

The next thing to talk about is what exactly is to update. Is it the strategy that needs a change? Or do the actual technical aspects of the business need to be updated? The answer to that is – both. Some constant checks need to be kept on integral aspects. Let’s move ahead and see the steps for updating a business plan:

1. Review the mission and vision statement

The mission and vision statement of the plan defines the purpose, values, and long-term goals of the business. Therefore, it is necessary to review and update them first.

Check if are they still pertinent to your long-term goals. Think about any changes in your business world or new ideas that might make you need to update these statements to keep them current and motivating.

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2. Conduct industry and market analysis

Research about recent trends & developments going on in the industry. Also, check for any regulatory shifts or changes in consumer behavior.

If there are any changes, then update the sections to reflect current trends and insights that might affect your business strategy.

For instance, let’s say you are running a tech startup. And in your market research, you explored current trends like AI and eco-friendly tech. After knowing the current trends, you might make any changes in your business strategy.

3. Reassess your business strategies

Based on the market and industry analysis, revisit your strategies and determine if all the strategies & business objectives are still up-to-date with the analysis.

Revise your strategy according to the current situation and make sure that your goals are achievable through the new strategies.

For example, you are running a bakery business, and after market analysis, you got to know people are preferring more gluten-free items. So, now you reassess your strategy and include more dishes on your menu that are gluten-free.

4. Update your financial projections

See your current financial situation and match it with financial plan projections to know the difference. Now, update your forecasts (cash flow, profit & loss, & balance sheet statements) to reflect your current financial situation and performance.

Adjust the new forecasts in a way that reflects new assumptions, strategies, and initiatives that have emerged from your reassessment.

At last, review the overall plan thoroughly and make necessary changes where needed in the whole business plan. This way you should make your planning process continuous and smooth.

When to update your business plan?

For a successful business, you need to update your plan yearly or whenever there are any internal or external changes. Some of the situations when you need to alter your plan are:

• It’s been a year since you last reviewed your business plan
• You’re adding any new products or services
• Your direct competitors are changing
• There is a change in the market demand
• If there is any financial change
• For internal changes (supply chain issues, management change, etc)
• If you are applying for funding

Thus, for any significant changes, you need to update your plan and accommodate it as per the current situation.

Update and transform your plan with AI

So, without a doubt, keeping a business plan up-to-date is necessary for your business. But, doing it regularly need a lot more effort.

An AI business plan creator —Upmetrics provides you with AI features that save time. Its AI assistant can automatically write and improve sections of your business plan, and answer all your business-related queries.

Apart from all that, it is efficient and affordable. The plans start from only $7 a month which is great when you want to continuously update your business plan.

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Frequently Asked Questions

Do i need to rewrite my entire business plan when i update it.

No, you don’t have to rewrite your whole plan when you update it. If the changes are small, you can update the parts that need changing. But if the changes affect important parts like your market research or financial plans, then rewrite those sections. Anyway, it’s always a good idea to review your whole plan.

What tools and resources can help me update my business plan?

Updating your plan becomes easy with the help of business planning software like Upmetrics , where you can collaborate in real-time, use AI assistance, and get a step-by-step guide through the entire planning process.

Should business plans be updated annually?

Yes, business plans should be updated annually or when the time feels right. For example, you need to update your business plan when you start using a new tech platform, machinery, or other raw materials. Even an annual review of the plan might lead to minor updates.

Which aspects of a business plan should be updated?

When updating a business plan, key aspects to revise include the executive summary, company description, and market analysis.

Additionally, update the organization and management structure, product or service offerings, financial sections, and marketing strategies based on current performance data.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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How much money should I give my sibling for a wedding gift?

• Published: Jun. 06, 2024, 6:05 p.m.

If your little sister or big brother is getting married, you'll want to give them a gift that's equal parts supportive, thoughtful and significant Canva

• Danielle Halibey | NJ Advance Media for NJ.com

Having a sibling doesn’t always mean you’ll have a built-in best friend, but you still probably know them better than anyone else. So, if you’ll be celebrating their wedding, you can pair your monetary gift with a card offering thoughts on where it’d best be spent!

The closer you are to the couple, the more money you should give, but since sibling and family dynamics, more generally, can be all over the map, the range of appropriate monetary gifts for a brother or sister’s wedding is just as diverse. According to U.S. News & World Report , wedding experts advise starting at $100 and then adjusting “up to $500 based on factors such as your relationship with the couple, your budget, and the cost of your attendance at the wedding.”

Our official cash or check suggestion for immediate family members and siblings is $300 to $600 , which isn’t too far off from the above recommendation, but the final number really is at your discretion.

You may want to tailor your total, up or down, with these considerations in mind:

Your responsibilities in the wedding party. If you’re actively involved in the couple’s future nuptials, such as accepting the role of Best Man, Maid/Matron of Honor, bridesmaid or groomsman, hosting pre-nuptial celebrations or planning bachelor/bachelorette events, it’s completely understandable to feel like you’ve made a significant financial contribution already. As such, you can adjust the monetary gift as a complement to your time and effort — both invaluable gifts in and of themselves.

Your ranking (birth order, that is) in the family. If you’re a younger sibling, still in school or not yet working, you might not be in a position to offer a large sum of money. And that’s perfectly okay because your older sib should know and understand your circumstances. Your presence and love will shine through, regardless of the monetary value, but you can also fete the newlyweds with personal, handmade gifts and the offer to jump in wherever and whenever you’re needed over the course of their engagement.

Your own wedding gift precedent. When you’re gifting a sibling after your own wedding, it’s not uncommon to reciprocate the same amount they gave you. If you have several other siblings in your squad, setting up this ‘Smith Family’ wedding gift benchmark can be helpful for everyone.

Money, but make it even more meaningful

Another way to sweeten your gift is to pool your resources with other siblings. When you combine efforts, you can provide a gift that might be otherwise unattainable!

One such option is to contribute collectively to a designated gift fund, which could go towards the couple’s honeymoon or new home fund. You can choose to make payments either collectively or individually, depending on everyone’s preferences and means.

Additionally, you can consider more specific contributions, such as collectively paying for a particular vendor or wedding professional that the couple may have wanted, but couldn’t afford. For example, if your sibling had their heart set on having a particular photographer, band or DJ, vintage getaway car or next-level guest experience for their reception, and it was beyond their budget, combining resources with your siblings could make this a reality and help create lasting memories that the couple is sure to cherish for a lifetime.

Funding an experience over a material item is wedding gift gold, too. If your sibling loves adventure and new experiences, you could cover the cost of an unforgettable outing on their honeymoon. A hot air balloon ride or an exotic dinner on the beach will earn you that thank you card, and probably come with pics, too!

The Best Wedding Gift Ideas & Etiquette Answers

• 19 graduation gift ideas if you’re stumped on what to buy a new grad
• How much money should I give a friend as a wedding gift?
• How much money should I gift someone for high school graduation?
• How much money do I give a family member as a wedding gift?
• How much money should I gift someone for college graduation?

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Despite AI enthusiasm, Workforce Index reveals workers aren’t yet unlocking its benefits

By the team at Slack June 3rd, 2024

Quick take: Using AI tools at work is associated with a host of positive outcomes, from improved productivity to higher employee satisfaction. But executive urgency to incorporate AI is outpacing its use among employees. A new global survey of desk workers from the Workforce Lab at Slack, a Salesforce company, finds that two-thirds of workers have still not tried AI tools and 93% do not consider AI outputs completely trustworthy for work-related tasks.

Read on to learn about the top AI blockers for workers, the surprising AI gender gap emerging among Gen Z, and why we believe the AI hype cycle is just beginning.

Key findings

• Executive urgency to incorporate AI tools into business operations has increased 7x over the past six months and is now a top concern, above inflation or the broader economy.
• Among desk workers who use AI tools, 81% say it’s improving their productivity. And those who use AI show higher employee engagement and experience scores across the board, including 22% higher overall satisfaction.
• And yet more than two-thirds of desk workers have never used AI at work, and nearly 2 in 5 say their company has no AI usage guidelines.
• Just 7% of desk workers consider the outputs of AI completely trustworthy for work-related tasks , with 35% of desk workers saying AI results are only slightly or not at all trustworthy.
• There’s an AI gender gap emerging, and it’s largest among Gen Z. While young people are most likely to have experimented with AI tools, Gen Z men are 25% more likely to have tried AI tools compared with Gen Z women.
• Desk workers report spending a third of their day on average on tasks they consider low-value. But troublingly, instead of allocating the time saved by AI toward strategic or high-value activities like learning and skill building, employees are likely to spend 37% more of their time on routine administrative tasks.
• Even so, the AI hype cycle shows no signs of slowing. Seventy-three percent of desk workers say that AI hype is warranted and the technology “will have a big impact,” and those who have used AI tools are even more convinced.

See the data: June 2024 Workforce Index

In its latest survey of more than 10,000 desk workers around the globe, the Workforce Lab from Slack, a Salesforce company, finds that nearly all executives (96%) now feel an urgency to incorporate AI into business operations. The share of leaders aiming to do this “in the next 18 months” has grown 7x since September 2023, rising from 5% to 35% of all executives. And AI innovation now tops the list of executives ’ external concerns, above inflation or the broader economy.

At the same time, AI use among desk workers is up 23% since January and 60% since September. Thirty-two percent of desk workers have now experimented with AI tools and half of that group is using AI at work at least weekly.

Most AI users (81%) report that AI tools are improving their productivity. And notably, those using AI show higher scores across the board on all measures of employee engagement and experience, including:

• +13% Level of access to relevant people, files and resources
• +18% Work-life balance
• +23% Ability to manage stress
• +24% Overall satisfaction with work
• +25% Flexibility
• +29% more likely to say they feel highly passionate about their work

“The data shows that employees using AI are having an all-around markedly better time on the job. They’re not just more productive; they’re experiencing greater excitement, fulfillment and pride in their work,” says Christina Janzer, head of the Workforce Lab. “Leaders should take note that using AI at work is correlated with a host of positive associations.”

That said, the data also shows that there’s a gap between executives’ urgency to incorporate AI tools and actual AI use among employees: the majority of desk workers —more than two-thirds—have still not tried AI for work.

So what’s stopping more employees from experimenting with AI tools? Concerns about privacy and data security followed by mistrust of data quality and accuracy top the list of blockers that desk workers cite as limiting factors. Just 7% of desk workers consider the outputs of AI completely trustworthy for work-related tasks, with 35% of desk workers saying AI results are only slightly or not at all trustworthy.

“Companies have urgent, ambitious goals for AI in the enterprise and our research shows there are huge productivity benefits to be gained—but many leaders are still figuring out how to kickstart adoption among employees,” says Denise Dresser, CEO of Slack. “While this is truly a seismic shift in the future of work, there are simple steps every business can take starting today to help onboard employees on AI while maintaining trust.”

What should leaders do to encourage uptake? The PET plan: Permission, education, training

Step one to boost workplace AI use is to clarify permission by establishing clear usage guidelines. This may sound obvious, yet nearly 2 in 5 desk workers (37%) say their company has no AI policy. Desk workers at companies that have established permissions for AI use are nearly 6x as likely to have experimented with AI tools.

The next step is education and training . Only a small percentage of global desk workers (15%) strongly agree that they have the education and training necessary to use AI effectively. Unsurprisingly, the more training and education workers have, the more likely they are to use AI tools, and those who are trained to use AI are up to 19x as likely to report that AI is improving their productivity.

Education and training are fundamental to building trust in AI tools; desk workers who are well trained in AI are 7x as likely to trust AI tools to assist them with work-related tasks compared with desk workers lacking AI training.

Another significant factor in a desk worker’s likelihood to try AI and to consider it trustworthy is whether that worker feels their manager trusts them as an employee. Desk workers who feel trusted by their employers are 94% more likely to have tried AI for work-related tasks, and they’re also more trusting of AI’s accuracy and reliability.

Forecasting the AI future: Three predictions for leaders

The ai hype cycle is far from peaking—it’s just gearing up..

You might think AI couldn’t possibly garner more hype. But sentiment from global desk workers indicates the buzz is just getting started. Today, 47% of global desk workers express enthusiasm for AI to handle tasks from their job (compared with 42% at the start of the year). The majority of desk workers—73%—believe the fanfare around AI is justified, saying they expect it to have a substantial impact on their work lives. This sentiment is even stronger among those who have firsthand experience using AI tools.

This trend is set to intensify as Gen Z and Gen Alpha enter the workforce. The youngest workers show the most enthusiasm for AI, with 55% of workers ages 18 to 29 saying they’re excited for AI and automation to handle parts of their work, compared with 33% of workers over age 60.

Our take: “AI fervor shows no signs of stopping,” says Nathalie Scardino, Salesforce’s Chief People Officer. “At Salesforce, we’ve seen how integrating AI into our workforce strategies can have massive benefits for employees and companies alike. Freeing up employees to focus on more impactful work is good for morale and for business.”

Mind the gap: AI could further marginalize women in the workforce—or give them a competitive edge.

There remains a small but stubborn gender gap in AI uptake, with more men trying AI for work (35% of respondents) compared with women (29% of respondents). Even though younger workers are most likely to have experimented with AI tools, the AI gender gap is largest among Gen Z, with men ages 18 to 29 25% more likely to have tried AI tools compared with women in the same age group.

One bright spot is that AI use is accelerating at a faster clip among workers of color, with 43% of Hispanic/Latinx desk workers, 42% of Black desk workers and 36% of Asian American desk workers having tried AI tools at work, compared with 29% of white desk workers. And there’s little to no gender gap among Hispanic/Latinx or Asian American employees.

Our take: “As we embrace our future with AI, it’s imperative that we continue to provide access to those who have historically been left out of technology shifts,” says Alexandra Legend Siegel, Salesforce’s Chief Equality Officer. “It is encouraging to see some of the findings on workplace AI tools and we’re committed to continuing to upskill and empower every community to leverage this technology for good in their workplace, careers and lives.”

AI is at risk of increasing busywork rather than reducing it.

AI promises to transform our work lives, and the latest Workforce Index survey shows there’s room for improvement: the majority of desk workers (64%) experience burnout once a month or more, about a third say they regularly feel stress about work, and 30% do not feel passion for their job. At the same time, desk workers estimate they spend about a third of their day, on average, on tasks they consider “low-value” and “not meaningful to their job.”

The top three most commonly cited low-value tasks are unnecessary meetings or work events, managing low-value emails, and excessive paperwork or data entry. In a perfect world, we’d minimize these tasks with the help of AI, creating more time to focus on more meaningful work.

But when asked how they would prioritize the time they get back from AI, “more admin” topped the list, while innovating and creating, learning and skill-building, and networking with colleagues fell to the bottom.

Our take: “AI could really open up a lot of time for workers, but it would be a shame if we waste that time on more busywork,” says Janzer. “If we want to make the most of what AI can offer, it’s up to us as leaders to help our people prioritize the most rewarding work.”

AI fast facts

Methodology

The survey included 10,045 workers in the U.S., Australia, France, Germany, Japan and the U.K. between March 6 and March 22, 2024.

The survey was administered by Qualtrics and did not target Slack or Salesforce employees or customers. Respondents were all desk workers, defined as employed full-time (30 or more hours per week) and either having one of the roles listed below or saying they “work with data, analyze information or think creatively”: executive management (e.g. president/partner, CEO, CFO, C-suite), senior management (e.g. executive VP, senior VP), middle management (e.g. department/group manager, VP), junior management (e.g. manager, team leader), senior staff (i.e. non-management), skilled office worker (e.g. analyst, graphic designer).

For brevity, we refer to the survey population as “desk-based” or “desk workers.”

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