home business planning

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How to start a small business at home in 2024

Blair Travers

Sierra Campbell

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

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

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

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

Should you start a business at home?

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

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

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After you complete these steps, Chase will deposit the bonus cash into your new account within 15 days.

Pros of a home business

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

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

Cons of a home business

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

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

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7 steps to start a home business

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

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

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

1. Find your niche

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

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

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

2. Draft a business plan

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

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

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

3. Select a business structure

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

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

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

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

4. Register your business and get an EIN

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

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

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

5. Get any required licenses and permits

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

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

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

6. Obtain funding for your business

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

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

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

7. Launch and market your business

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

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

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

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

Top home business ideas

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

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

Resources to start a business

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

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

Frequently asked questions (FAQs)

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

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

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

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

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

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

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10 Profitable Home Business Ideas to Make Money From Home (2024)

Looking for work-from-home business ideas? Good idea.

Renting commercial real estate, warehousing, or office space can put massive financial strain on a new business. In contrast, many home business opportunities are quick and easy to start.

But there are so many home-based business ideas out there — which one should you consider?

Some work-from-home business ideas require an upfront investment to get the ball rolling — and some require just $39. Also, some home-based businesses are easier to start if you can turn a spare bedroom into an office or workshop — others are easy to run from your dining table.

So, what's the best work-from-home business idea for you? In this article, we'll explore 10 of the best home business ideas that you can start quickly and easily.

(Disclosure: This website is a part of Shopify inc. media properties. Although we strive to publish objective, accurate, and factual content, this article may contain biased opinions.)

Start selling online now with Shopify

10 Profitable Home Business Ideas You Can Start Today

While there are countless ways to start a home-based business, here are 10 of the most approachable home business ideas to consider:

• Sell handmade products
• Purchase products in bulk and sell them online
• Start a dropshipping business
• Start a print-on-demand business
• Purchase an existing ecommerce business
• Start a subscription box business
• Teach online classes
• Start a service-based business
• Sell digital products online
• Build an online following that you can monetize

1. Sell Handmade Products

Do you love to create things at home? If you love crafts or art, why not sell your handcrafted products online? For example, you could:

→ Click Here to Launch Your Online Business with Shopify

• Make candles
• Create jewelry
• Create pieces of art
• Make homemade food
• Design and sew clothing
• Knit clothes and blankets
• Craft wooden furniture

Whatever you like to create, selling handmade products is a great way to turn a passion into a work-from-home business opportunity.

There are two main ways to start selling handmade products online:

• Sell through a marketplace such as Etsy
• Create your own online store using a platform like Shopify

That said, you could also sell via both channels with Shopify's Etsy integration .

If this home business idea has caught your eye, start by writing a list of everything you could create. Then, do some online research to see what other people are selling.

2. Start a Dropshipping Business From Home

If you like the idea of running an online store, but you're not sure what to sell, consider starting a dropshipping business from home. Plus, this is a home business idea with low startup costs.

Dropshipping is a type of ecommerce in which sellers don't need to purchase or store the products they sell. Instead, sellers partner with dropshipping suppliers who manage the inventory and ship products directly to customers on the seller's behalf.

Check out the image below to see the dropshipping business model in action:

Pretty cool, right?

The best part is that starting a dropshipping business from home is as easy as 1-2-3 thanks to dropshipping apps like DSers .

Here's why: You can use DSers to start selling dropshipped products online today — just sign up for Shopify , install the Dsers app , and search for products to add to your store.

3. Start a Print-on-Demand Business From Home

Similarly, if you like to create art and eye-catching designs but don't want to make products yourself, you could start a print-on-demand business from home.

Print-on-demand is a type of dropshipping in which you can sell products that are customized with your designs, such as:

• Apparel: T-shirts, hoodies, leggings, yoga pants, etc.
• Footwear: Sneakers, boots, flip flops, etc.
• Accessories: Jewelry, watches, phone covers, bags, bottles, face masks, notebooks, stationery, etc.
• Homeware: Mugs, towels, bedsheets, cushions, blankets, throws, etc.
• Art: posters, wall hangings, stickers, magnets, etc.
• Electronics: Headphones, speakers, etc.

Check out some common print-on-demand products in the image below from Printful :

To start this work-from-home business idea, sign up for a Shopify account and choose a print-on-demand app to install , such as:

4. Purchase Products in Bulk and Sell Them Online

Another way to sell products online is to buy products in bulk — also known as 'wholesale' — and sell them individually. 

When you purchase products in bulk, you can get a lower cost-per-unit than if you buy them individually. Then, when selling the products one-by-one, you're able to increase the prices to create a profit margin.

So, where can you buy fantastic goods in bulk?

Start by researching products on business-to-business (B2B) ecommerce marketplaces like Alibaba and DHgate.com .

You can then create an online store with Shopify to sell your products to consumers.

Plus, instead of selling products individually to consumers, you could also purchase products in bulk and sell them to retailers in smaller quantities — this is called wholesaling.

5. Purchase An Existing Ecommerce Business

If you don't have the time — or the inclination — to set up a home-based business from scratch, you could always buy an existing home business opportunity via the Exchange marketplace .

This website facilitates the sale of ecommerce businesses in a range of niches. Plus, you can buy an established business or a relatively new business.

This may sound pretty complicated at first, but in practice, it's pretty straightforward.

Start by browsing the home business opportunities listed on Exchange. When you find a business you like, consider reaching out to the buyer to find out more information. Then, if you decide to purchase the business, Exchange will facilitate the… well, exchange.

On the other hand, if you want to start businesses but you're not interested in growing them to their full potential, you could create and sell ecommerce businesses on Exchange. 

It's also possible to 'flip' businesses — or to put it another way, buy a business, improve it, and then sell it for a profit.

6. Start a Subscription Box Business From Home

Why sell one product at a time when you can sell a bundle of products every month to the same person? This is what subscription box businesses like Birchbox do. 

Plus, Google Trends shows how interest in subscription boxes has boomed in recent years:

This home business idea is a fantastic way to grow a sustainable income, thanks to the recurring revenue generated by ongoing purchases.

You can sell almost anything as a subscription box, too, such as:

• Fashion accessories
• Indie records
• Homeware and kitchen gadgets
• Information products (such as up-to-date industry reports)
• Food, such as snacks or sauces

What's more, you don't necessarily have to sell products — you could also rent them. For example, Haverdash rents clothes.

To get started with this home business idea, sign up for Shopify and use the built-in subscription management tools. 

7. Teach Online

If you have in-demand skills or knowledge and a talent for teaching, consider sharing your knowledge via online video calls

Popular subjects taught online include languages, maths, science, and business. But there are no limits to what you can teach, so you could also teach things like music, sewing, or even DIY!

According to PayScale , most online teachers earn between $10.18 and $39.87 per hour, depending on their level of experience.

There are countless online teaching marketplaces that will help you to connect with students and manage your classes, such as:

Plus, there are plenty of feature-rich online teaching platforms to help you create incredible virtual learning experiences, such as:

8. Start a Service-Based Business From Home

The need for digital services is rampant — from designers and developers to digital marketers and doodlers, there's a need for virtually every talent.

If you're wondering what service you can offer, here are 20 service-based home business opportunities to consider:

• Graphic designer
• Web designer
• Transcriber
• Marketing writer
• Resume writer
• Photo or video editor
• Social media manager
• Digital advertising manager
• Data entry clerk
• Virtual assistant
• Career coach
• Marketing consultant
• Management consultant
• Finance consultant
• Calligrapher

Some of these home business ideas offer more income potential than others. So, make sure to do your research to choose the right service-based home business idea for you.

To get started, consider signing up to a freelance marketplace like People Per Hour , Upwork , or Fiverr .

You could also create a website and then find clients independently by networking and pitching.

9. Sell Digital Products Online

If you've mastered a particular skill or subject and don't want to teach online or provide a service, you could package your knowledge and experience in a digital product.

Selling digital products is a fantastic home business idea because — like dropshipping — there's no need to source or manage inventory or ship products to customers. Plus, once you've created a digital product, it doesn't cost anything to replicate.

So, what types of digital products can you sell? Here are 20 to consider:

• Written templates (résumés, scripts, marketing emails, etc.)
• Spreadsheets
• Illustrations
• Graphic templates
• Editing presets (for videos, images, or audio)
• Online tools
• Membership sites
• Audio (music, samples, podcasts, etc.)
• Research (statistics, reports, etc.)

For example, Gabriella and Andrew Morrison sell courses and house plans to help people build tiny houses on their website Tiny House Build .

10. Build An Online Following That You Can Monetize

If you love creating content, you could build an online following around a particular topic or niche and monetize your audience.

If you're interested in this home business idea, you need to choose a way to build an audience. Now, there are many ways to create a following online — for example, you could:

• Grow an Instagram following
• Build a YouTube audience
• Create a blog and grow your readership
• Grow a Twitch following
• Build a TikTok following

Once you have a relatively large following or plenty of website traffic, how can you make money? In essence, there are three ways to monetize an online audience:

• Brand sponsorships: Get paid to promote a company's products (also known as ' influencer marketing .'
• Affiliate marketing: Promote a company's products or services and earn a commission.
• Sell products: Create and sell physical or digital products to your audience.

For example, Adam Enfroy built a blog that reviews many software products. In the image below, you can see his blog post reviewing the Shopify platform:

This blog post contains Adam's affiliate link to Shopify . As a result, whenever someone reads the post, clicks the affiliate link, and signs up for Shopify, Adam will receive a small sales commission.

FAQs About Home Business Ideas

• How do I start a small home business?

Wondering how to start a small home business? Here are 8 steps to starting an online business:

• Choose an online business model that suits your business
• Identify your target market
• Identify the problem that your business is solving
• Know your competitors and how you are different from them
• Choose a sourcing strategy that your customers will love
• Set up your payment system so you can get paid 
• Test your business idea in the simplest way possible
• Create your marketing strategy to start promoting your business
• How do I make money from home business ideas?

There are many ways that online home business ideas make money. You could charge per product, create subscriptions, build affiliate links, and so much more. Once you have decided your business model you can start brainstorming the exact home business idea for you and get started.

Choose A Home-Based Business Idea and Get Started Today 

There are tons of profitable home business ideas out there to choose from. So, if you're wondering, "What business can I start from home?" Here are 10 of the best home-based businesses to consider:

• Sell products you make at home online
• Start dropshipping products with Dsers
• Sell print-on-demand products
• Buy products in bulk and sell them online
• Purchase an existing business on Exchange
• Sell subscription boxes
• Teach online
• Sell digital products
• Build and monetize an online following

When deciding which home business opportunity to pursue, try to capitalize on any skills and experience you have — and consider following your interests or passions.

Which home business idea has caught your eye? Let us know in the comments below!

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• Building Your Business
• Becoming an Owner
• Business Plans

How to Write a Business Plan for Your Home Business

If you fail to plan, you plan to fail. Don't handicap your home business by not taking the steps to create a business plan.

Business Plan

A business plan is a written blueprint for your home business. Business plans are essential for getting a business loan, but even if you don't need outside funding, they are a valuable tool to helping you set goals in your home business, understand what you need to do, and anticipate future growth. 

Types of Business Plans

• Formal business plans : These plans are detailed documents, usually prepared for the primary purpose of securing outside funding for the business.
• Informal business plans : These plans are used primarily by the business owner as a road map to success. It might be so informal as to be handwritten notes, or a bit more comprehensive typed out plan.

Whether formal or informal, when properly written and maintained, business plans provide a means to help you stay focused on the tasks that build a profitable home business.

Do you need a business plan?

If you intend to secure outside funding for your business, you'll need a formal business plan. 

However, even if you're starting small or have your own resources to fund your business, a business plan isn't required, but it can greatly improve the chances that your home business will succeed. 

The U.S. Bureau of Labor Statistics estimates that as many as 30% of all small businesses fail in the first two years. Those statistics can be very frightening. After all, why would you want to spend time and effort, as well as risk your own money, when there is only one chance in ten your business will survive?

There are several reasons why small and home businesses fail, but proper planning can help overcome them all. A business plan can help you:

• Get clear on your goals 
• Develop a deep understanding of your market
• Organize the day-to-day activities of your home business
• Understand your current financial situation
• Make important management and financial decisions about your home business
• Set a starting point to measure growth

Writing a Business Plan

The answer to this question depends on two key factors.

Is the Business Plan for Internal Use or External Use?

If you're not using the business plan to get a loan or find investors, you can write it yourself. If you're trying to secure outside funding, professionals who write business plans for a living bring a lot to the table even if you only get outside help to review the plan to make sure your bases are properly covered in the document. Additionally, business plans need to be edited and proofread for grammar and good sentence structure. Well-written business plans increase the chances of securing needed outside funding.

How Are Your Writing Skills?

If you're a good writer you can probably write a business plan yourself, at least with some assistance. Software and samples are available to help prepare business plans. Additionally, the SBA is a terrific resource for guiding you through the process. If you haven't already, you'll want to take their online Develop a Business Plan Workshop to get started. While you can easily learn how to write a business plan yourself, you will still benefit from having someone else read through your plan and you may still need outside assistance, such as a CPA to create your financial documents and/or a market research firm to develop statistics about your markets.

Whether you decide to hire someone who writes business plans, write it yourself, or use software, you still need to take an active role in the process. Whoever writes your plan needs accurate information for each section of the document and a clear understanding of your business.

Gathering the information is also of great benefit to you because it helps you understand your business and what you need to do in order to succeed, and it gives you a clearer picture of your competitors and your market.

If the business plan's purpose is primarily for your own use you can follow a  simple home business plan  outline.While general guidelines are available, if the plan is being written primarily to secure outside funding, such as a small business loan, it's not a bad idea to see in advance if the financial institution has any specific requirements it likes to see in its loan applications and business plans. The basic outline of the business plan includes:

• Executive Summary – A high-level overview of the document that is placed first in the finished document but that needs to be written last.
• Company Description - A history and description of your company.
• Products or Services - Information on the products or services you plan to offer and how they compare to your competitors products or services.
• Market Analysis – A description of your market, your niche, and the demand for your product or service (supported by documentation). The percentage of market share you envision and conclusions of any marketing research data.
• Marketing and Sales Strategies – How you will promote your business, how you will get your product or service to your customers, the costs for distribution and promotion, and how you will measure the effectiveness of the methods you plan to use.
• Organization and Management – The legal structure of your business ( sole proprietorship , LLC , C corporation , S corporation , etc.), who your key players are, who is responsible for what and how much they will cost your business.
• Financial Data – Your balance sheet , a breakeven analysis, an income statement and a statement of cash flows . You'll want to include both historical financial statements and forward-looking financial statements.
• Funding Request – This is the section when you'll be requesting funding for the business. If you are not seeking outside funds right now, you can leave this section out.
• Appendix – Contains supporting information, such as resumes, details of market research findings, estimates, and all other documentation required to support what's contained in the body of the business plan.

What to do with the business plan once it's done?

Once you've completed the above information, you need to use your business plan as you organize you daily to-dos and make decisions about your business. Note that your business plan isn't a static document carved in stone. As you build your business, you may find that you need to make adjustments or changes depending on the market, your ability to reach your goals, and changing trends in the marketplace. As a result, it doesn't hurt to review and revise, if necessary, your business plan every six months or so.

Keeping your business plan current offers some important benefits, such as:

• If you ever need to apply for additional funding through either SBA loan programs or other sources of private funding, up-to-date information will already be available. When it comes time to submitting updated business plans, you'll save time and money.
• It helps you stay focused the important elements of your business, and avoid getting bogged down in busy work, or shiny objects. 

It can help you identify areas you need to improve in or can expand.

U.S. Bureau of Labor Statistics. " Table 7. Survival of private sector establishments by opening year ." Accessed April 16, 2021.

How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated May 7, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

Download a free SBA-approved business plan template built for small businesses and startups.

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One-page plan template

Download a free one-page plan template to write a useful business plan in as little as 30-minutes.

Sample business plan library

Explore over 500 real-world business plan examples from a wide variety of industries.

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

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

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

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

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
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