500 000 business plan

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

Noah Parsons

24 min. read

Updated April 17, 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

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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.

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

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

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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1. Why is utilizing an example business plan a good idea?

Sample business plans can help you quickly and easily write a business plan for your own business. Business plans are an important tool for any business, but they can be challenging to create. Sample business plan will help you understand business plan format , how to utilize the best business plan template , and more.

Business plan examples may even help you with the different sections of a plan, including market analysis, company description, cash flow statements/business financial statements, and more. Business plans can also show you how a quality plan in your exact business plan category is organized and shows you the appropriate business communications style to use when writing your business plan.

2. Who would benefit from using an example business plan?

Any entrepreneur or business owner who has never written a business plan before can benefit from an example or sample plan. New business owners often start with business plan templates , which are helpful but are sometimes more useful after reviewing other full business plans.

A good sample plan can be a step-by-step guide as you work on your business planning and business idea. Once you have a sense for the flow, specs, and details, etc. that business plans have, utilizing a business plan template will help you pull everything together, helping you create a plan investors and other stakeholders will value. A solid plan will also help you if you need a bank loan, which may require a startup business plan.

3. How do you get started with a sample business plan and maximize its benefit?

First you should read the business plan thoroughly. Study both the type of information provided in key sections like the executive summary, target market analysis, summary, etc., as well as the format and style of the plan. As you read, you may find yourself thinking through things such as improving or evaluating your business planning process, your business idea, or reconsidering who you want to write your business plan for. This is OK and part of the process. In fact, when you start writing a business plan for the first time, it will be much easier because you’ve gone through this process.

After this initial read, outline your business plan and copy in from the sample plan sections that apply to your business. For instance, if the sample plan included public relations in their marketing strategy and sales plan, and you will also use this tactic, you can copy it into your plan and edit it as appropriate. Finally, answer the other questions answered in the sample plan in ways that reflect your unique business and potential customers.

Writing a business plan can seem daunting. Starting your business plan writing process by reviewing a plan that’s already been created can remove a lot of mental and emotional barriers while helping you craft the best plan you can.

4. When should you not use a sample business plan?

If your business is unlike any other, using a sample business plan will not be as effective. In this situation, writing a business plan from scratch utilizing a business plan template is probably your best path forward.

As an example, Facebook’s early business plan was unlike others since it was paving a new path and way of doing business. But, groundbreaking new businesses like Facebook are not the norm, and the vast majority of companies will benefit from utilizing sample business plans.

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The business plan example below is for Shoutmouth, a company that enjoyed much success in the early 2000’s and which was able to raise funding. While the plan’s premise (social networking) is not as unique now as it was then, the format and structure of this business plan still holds.

I. Executive Summary

Business Overview

Launched in late February 2007, Shoutmouth.com is the most comprehensive music news website on the Internet .

Music is one of the most searched and accessed interests on the Internet. Top music artists like Akon receive over 3 million searches each month. In addition, over 500 music artists each receive over 25,000 searches a month.

However, music fans are largely unsatisfied when it comes to the news and information they seek on the artists they love. This is because most music websites (e.g., RollingStone.com, MTV.com, Billboard.com, etc.) cover only the top eight to ten music stories each day – the stories with mass appeal. This type of generic coverage does not satisfy the needs of serious music fans. Music fans generally listen to many different artists and genres of music. By publishing over 100 music stories each day, Shoutmouth enables these fans to read news on all their favorite artists.

In addition to publishing comprehensive music news on over 1200 music artists, Shoutmouth is a social network that allows fans to meet and communicate with other fans about music, and allows them to:

• Create personal profiles
• Interact with other members
• Provide comments on news stories and music videos
• Submit news stories and videos
• Recommend new music artists to add to the community
• Receive customized news and email alerts on their favorite artists

Success Factors

Shoutmouth is uniquely qualified to succeed due to the following reasons:

• Entrepreneurial track record : Shoutmouth’s CEO and team have helped launch numerous successful ventures.
• Affiliate marketing track record : Online affiliate marketing expertise has been cited as one of MySpace’s key success factors. Over the past two years, Shoutmouth’s founders have run one of the most successful online affiliate marketing programs, having sold products to over 500,000 music customers online.
• Key milestones completed : Shoutmouth’s founders have invested $500,000 to-date to staff the company (we currently have an 11-person full-time team), build the core technology, and launch the site. We have succeeded in gaining initial customer traction with 50,000 unique visitors in March, 100,000 unique visitors in April, and 200,000 unique visitors in May 2007.

Unique Investment Metrics

The Shoutmouth investment opportunity is very exciting due to the metrics of the business.

To begin, over the past two years, over twenty social networks have been acquired. The value in these networks is their relationships with large numbers of customers, which allow acquirers to effectively sell to this audience.

The sales price of these social networks has ranged from $25 to $137 per member. Shoutmouth has the ability to enroll members at less than $1 each, thus providing an extraordinary return on marketing expenditures. In fact, during an April 2007 test, we were able to sign-up 2,000 members to artist-specific Shoutmouth newsletters at a cost of only 43 cents per member.

While we are building Shoutmouth to last, potential acquirers include many types of companies that seek relationships with music fans such as music media/publishing (e.g., MTV, Rolling Stone), ticketing (e.g., Ticketmaster, LiveNation) and digital music sales firms (e.g., iTunes, The Orchard).

Financial Strategy, Needs and Exit Strategy

While Shoutmouth’s technological, marketing and operational infrastructure has been developed, we currently require $3 million to execute on our marketing and technology plan over the next 24 months until we hit profitability.

Shoutmouth will primarily generate revenues from selling advertising space. As technologies evolve that allow us to seamlessly integrate music sampling and purchasing on our site, sales of downloadable music are also expected to become a significant revenue source. To a lesser extent, we may sell other music-related items such as ringtones, concert tickets, and apparel.

Topline projections over the next three years are as follows:

II. Shoutmouth Overview

What is Shoutmouth?

Shoutmouth is an operating company of The Kisco Group Inc. (TKG). Since 2003, TKG has capitalized on web-based marketing opportunities via launching targeted websites and generating web-based leads. TKG revenues in 2005 exceeded $1.3 million and grew to $3.5 million in 2006. Shoutmouth is currently the sole focus of TKG; all other TKG business units have been divested.

Development of Shoutmouth began in August 2006 and the site officially launched on February 21, 2007. Shoutmouth (located at www.shoutmouth.com) is the most comprehensive music news community on the Internet. The website covers 1,200 popular bands and music artists and offers more than 100 new music articles each day. In addition to providing news, Shoutmouth is a web community. That is, Shoutmouth members can actively participate on the site, by doing things such as commenting on news stories and submitting their own stories.

The Market Size and Need for Shoutmouth

The music market is clearly vast. According to IFPI, which represents the recording industry worldwide, global music sales were $33.5 billion in 2005, with the U.S. accounting for $12.3 billion of that amount. Importantly, digitally music sales are seeing substantial growth, with IFPI reporting sales of $400 million in 2004, $1.1 billion in 2005 and $2 billion in 2006.

Online, music is the one of the most frequently searched and accessed interests. For example, according to Wordtracker, the music artist Eminem received over 1.7 million web searches in December 2006, while band Green Day received 534,000 searches.

To put these figures in perspective, top celebrities in other entertainment fields receive but a fraction of this search volume. For example, December 2006 search volumes for select sports stars and actors were as follows: Kobe Bryant, 122K; Tiger Woods, 88K; Cameron Diaz, 332K; and Tom Cruise, 82K.

Conversely, 225 music artists received over 100,000 searches in December 2006, and over 500 music artists received over 25,000 searches.

This data is corroborated by Nielsen BuzzMetrics which plots the most popular topics bloggers are posting about. The chart to the right plots September 25, 2006 to March 25, 2007 and shows how music dominates other entertainment sectors online.

When searching for music artists online, fans, which are primarily between the ages of 13 and 35, are looking for news, pictures, lyrics, videos and audio files. In addition, fans enjoy publicly voicing their opinions about music and interacting with other fans.

There is currently no website besides Shoutmouth that provides comprehensive music news. Currently, to get the latest news on their favorite artists, fans must visit the official websites or fan websites of each of the artists they like . Even then, it is unlikely that the fan will get all the news that has occurred. To solve this problem, Shoutmouth scours the web and uncovers news from thousands of web sites.

What Shoutmouth Does and Will Offer

As of May 2007, the site covers the 1,200 most popular music artists (popularity primarily based on the number of web searches over the past 12 months for each artist).

Shoutmouth currently offers members the ability to:

• Read over 500 new music articles each week
• Read special features such as album reviews, interviews, new album release dates, top quotes of the week and other special reports
• Watch and rate music videos
• Listen to select music audio clips
• Comment on news stories and music videos
• Submit news stories that they see/hear of elsewhere
• Suggest new music artists to add to the site
• View articles by music artist or by genre (current genres include Rock, Pop, Rap, R&B, Country, and Electronic)
• Create a user profile that includes their favorite music artists, Shoutmouth friends, news stories submitted to Shoutmouth, and comments made. Members have the ability to find other members based on their favorite artists and via our search functions.
• Receive customized news and email alerts. Members can customize their “My News” page to include only artists they specify. Likewise, they can choose to receive email alerts whenever there is a new story on one of their favorite artists.

While establishing itself as the premier music news community, Shoutmouth will embark on the more aggressive goal of becoming the premier music community online . To accomplish this, Shoutmouth will begin to offer additional content (more videos, audio, pictures, lyrics, etc.) and additional functionality (music compatibility testing (e.g., if you like this, you’ll like this), voting capabilities, member-to-member messaging, etc.). We have already begun mapping out our content and technology growths plans to achieve this goal upon financing.

Importantly, Shoutmouth expects to be able to add massive amounts of relevant content (e.g., lyrics, reviews, pictures, video files, audio files, etc.) via member submissions and moderation. This is the same way that YouTube has been able to quickly add millions of videos and Wikipedia has been able to add millions of articles. Importantly, since established music websites (e.g., MTV, RollingStone.com, Billboard.com, etc.) are not community based, they would have to hire thousands of staff members to rival the content that Shoutmouth will have.

How We Get and Publish Our News

Currently, news stories that appear on Shoutmouth are gathered from numerous online sources. Shoutmouth’s staff writers find these stories by using RSS and News feeds that cover thousands of websites. In addition, Shoutmouth community members have the ability to submit stories they find elsewhere.

Typical stories include factual information plus the insight of the author. Shoutmouth editors ensure that all stories are properly classified by artist and genre, and that duplicate articles are filtered out.

Over the past three months, Shoutmouth has developed a solid infrastructure, which we consider a core competitive advantage, that that allows us to provide comprehensive music news . This infrastructure includes:

• Setting up hundreds of RSS feeds based on comprehensive research regarding sites from which to receive feeds
• Training our editorial team regarding identifying a story and weeding out duplicates
• Assigning music artists among our five-person editorial team to better manage work flow and avoid duplicate articles

We are working on a system to ensure that member-submitted articles are automatically routed to the appropriate member of Shoutmouth’s editorial team to improve our efficiencies further.

Shoutmouth’s Goal to Break News First

The majority (approximately 90%) of Shoutmouth’s articles are currently developed by our in-house editorial team, while the balance is submitted by members. In addition, virtually all of our articles are based on information gleaned from other websites. As such, we are generally not the first to publish news; however we are the first and only site to publish all the news in one easily-accessible place. The one current exception is news which is published on bands’ official MySpace pages; Shoutmouth generally publishes articles on this news 24 to 48 hours before it is reported by other news or music sites (due to our efficiencies in finding news).

Shoutmouth realizes that it will gain a key competitive advantage, and will generate significant market buzz, if it is able to report on music news stories before other media sources . To accomplish this, we have begun contacting publicity departments at record labels to gain direct access to music news. We expect these contacts to enable us to gain immediate and sometimes exclusive access to news which will help further establish Shoutmouth as the canonical source for music news. We also plan to more aggressively solicit member submissions of new, buzzworthy news events and will consider offering rewards for unique substantiated news (much the way paparazzi are compensated).

III. Competition in the Online Music Market

This section of the business plan provides a competitive analysis, which is an overview of the competitive landscape, discusses both indirect and direct competitors and then details Shoutmouth’s competitive advantages.

Because consumer demand for music on the Internet is so great, there are a vast number of music websites. In summary, we consider most sectors of the online music market (which are discussed below) to be indirect competitors and potentially partners, rather than direct competitors, because none of them focus on music news.

The reason we believe that no one focuses on music news is that it is very difficult to do. Because news is very important to music fans, most music websites offer news. However, they primarily get their news from organizations such as CNN, Reuters, the Associated Press and BBC. These large organizations only write about the music stories that have mass appeal, which traditionally amounts to 8-10 music news stories per day. However, since music fans are often zealots when it comes to their favorite artists, they are not merely interested in cover stories. For instance, a U2 fan cares about any U2 news, particularly news that a non-U2 fan might consider insignificant.

In fact, because Shoutmouth is the sole one-stop shop for getting comprehensive music news, there might be an opportunity to license our content to other music websites.

Sectors of the Online Music Market

Shoutmouth specifically comPs in the community-based music news market. While players in this market represent direct competitors, Shoutmouth faces indirect competitors in the following markets:

• Community-Based Sites
• Community-Based News Sites
• Community-Based Music Sites
• Traditional Music Websites
• Official Artist and Fan Sites

Each of these markets is described below.

A. Community-Based Sites

Community-based sites, also known as social networking sites, are websites in which members can create profiles, leave comments throughout the site, and communicate with other members among other features.

A June 2006 report by Piper Jaffray entitled “Silk Road: Social Networking is Here to Stay” effectively sums up the power and longevity of social networking:

“We believe social networking sites have become a permanent part of the fabric of web applications and are rapidly becoming one of the most popular activities online, potentially impacting how other popular services such as email, IM, and maybe even search are accessed.

As a clear indication of the growth rate and scale of social networking, consider this: MySpace monthly page views have now surpassed MSN or AOL in the U.S. and are nearly 75% of the size of Yahoo!. Social networking has filled a gap that was left by all the existing portals and web services and it is fulfilling a very important and basic function for millions of users: allowing them to express themselves and connect with their friends, with the two functions tightly integrated.

The leading sites such as MySpace (News Corp), Facebook, and others are amassing significant power in the new landscape of the Internet and the existing Internet companies are likely to have to work with these newcomers as they may yield material control on the flow of traffic to other applications.”

Social networking sites such as MySpace.com, Facebook.com, Tagged.com, and TagWorld.com have educated consumers regarding the value of these sites and how to use them. Their success has spurred genre-specific social networks such as community-based/social networking news sites and music sites, which are discussed below.

Shoutmouth doesn’t view established social networking sites as competitors since these sites have a general focus. That is, members talk about all aspects of life, from dating to music to movies, etc. Conversely, Shoutmouth is solely focused on music.

B. Community-Based News Sites

Community-based news sites are sites in which members decide what’s newsworthy and what’s not. For instance, on Digg.com, the most prominent community-based news site, members “Digg” stories that they feel are most newsworthy. The stories that the community feels are most important rise to Digg’s homepage, while less important stories get little attention.

Digg’s one million members can submit stories, “digg” stories, and comment on stories. Digg focuses on general news with a slant towards technology, gaming and unique/sensational news. While Digg does have a Music area within its Entertainment section, this receives little focus. In fact, at the time of the writing of this plan, Digg’s music home page only includes one article submitted within the past 48 hours. Furthermore, Digg doesn’t pare down the music category into sub-categories such as Rock and individual music artists. Conversely, these sub-categories are the entire focus of Shoutmouth.

Other sites that are similar to Digg include Newsvine.com, Spotback.com and Gabbr.com. Of most relevance is the Digg-like site for music, Noisetap.com, which was launched by Ticketmaster in January 2007.

Like Digg, Noisetap.com allows members to submit and vote for music stories. Noisetap.com is organized by music genre and not by music artist. This most likely will not satisfy the needs of many music fans since they don’t have the ability to find news on the specific artists they care most about. Likewise, without a full-time staff actively researching and publishing news stories at the artist-level, Noisetap.com will never be able to offer the comprehensive news that Shoutmouth does.

While Shoutmouth is currently similar to community-based news sites in that members can submit stories and comment on the news they find most interesting, no established player in the market provides a comprehensive focus on music. In addition, Shoutmouth sees these sites as marketing partners as we have and will continue to submit our stories on them to increase our readership.

C. Community-Based Music Sites

There are many community-based music websites, although none focuses on music news such as Shoutmouth. Conversely, these sites generally give members the ability to create and listen to song play lists. The community acts to help individual members find new music and new friends based on similarities in their music tastes. Prominent sites in this genre include Last.fm, Finetune, Pandora, RadioBlogClub, MyStrands, iLike[1] and iJigg.

Last.fm is the most prominent community-based music site and is a good model with which to compare Shoutmouth. Likewise, we will benchmark our performance against Last.fm as we reach of goal of becoming the premier music news community and focus on becoming the premier music community.

According to Alexa, Last.fm is the 359th most visited site on the Internet. While Last.fm focuses on allowing members to create customized Internet stations based on their music tastes, the site has much additional content and social networking features. For instance, for each artist, Last.fm includes pictures, a bio, concert dates, discography, fans on Last.fm, and similar artists. Fans are also able to create journals and communicate with other fans. Key features that Last.fm doesn’t currently focus on include news and video.

D. Traditional Music Websites

Traditional music websites such as MTV.com, RollingStone.com, Billboard.com, NME.com, AOL Music, and Yahoo! Music tend to have many features such as news, reviews, pictures, videos and audio. While these sites are generally very well done and extremely popular, they are under-serving visitors in two core areas: music news and community .

These sites’ lack of music news stems from the difficulty in creating this news, specifically that it requires filtering through thousands of articles and websites to find relevant stories. Likewise, as discussed, these firms might wish to license our news content in the future.

Regarding community , none of the top music sites are thriving communities. Rather, either these sites offer no community features or they recently began offering select features (e.g., submitting reviews or commenting on articles). Even when available, the community features on these sites are afterthoughts and are not engrained within the core fabric of the sites.

While they haven’t been able to transform their current sites into communities, top music websites clearly understand the power of online music communities and have an appetite for them. For example, in January 2007, MTV invested in social networking website TagWorld. MTV also acquired RateMyProfessors.com and Quizilla.com (teen social network) in January 2007 and October 2006 respectively.

As mentioned previously, our vision is to build and incorporate additional technologies, and use our “army” of members to publish vast amounts of music content on Shoutmouth, in order to fully satisfy music fans and leapfrog traditional music sites in terms of their music content.

E. Official Artist and Fan Sites

Shoutmouth com’s with official music artist websites and fan websites. These sites often include news about the specific artist as well as pictures, videos and other relevant information.

On one hand, official music artist and fan websites are direct competitors to Shoutmouth. This is because some of these sites offer comprehensive news on the specific artist they cover. In addition, many offer forums, discussion boards or other ways to communicate with other fans.

However, two factors separate Shoutmouth from these types of sites: 1) breadth and 2) sophistication.

• Breadth : Most music fans love more than one artist. As such, in order to get the news they want, they would have to visit/join multiple fan or artist websites rather than getting all of their news from Shoutmouth.
• Sophistication : While some official music artist websites are technologically sophisticated, offering forums, networking and other worthwhile features, the majority of artist and fan websites have limited usability, functionality and networking ability. In fact, this deficiency has lead to the success of MusicToday, which provides front and back-end technology to power artist websites.

Specifically, MusicToday offers web design and hosting, develops sophisticated online stores, builds online fan clubs and offers web ticketing among other services to select top music artists such as Dave Matthews Band, Christina Aguilera, Kenny Chesney, Britney Spears and Usher. While offering sophisticated tools for select music artist websites, MusicToday offers little to no music news nor advanced social networking functions. For instance, the official Dave Matthews Band website offers less than one news story per month.

F. Direct Competitors: Community-Based Music News Sites

Shoutmouth’s direct competitors are other music news websites that have social or community features that allow users to join the site, submit articles, comment on articles, create public profiles and/or communicate with other members. Shoutmouth has identified one significant player who offers this service, AbsolutePunk.net.

AbsolutePunk.net has done a good job of building a user base (the site claims 125,000+ registered members and nearly 500,000 un-registered members). In addition, the user base is very active — the average story on their site receives approximately 20 comments. AbsolutePunk.net offers music news, reviews, pictures and interviews among other features.

On the negative side, AbsolutePunk.net’s articles are generally posted by one staff writer (as opposed to Shoutmouth’s five writers), most articles are simply one sentence posts rather than full articles, and no attempt seems to have been made to cover all news stories. In addition, the site only covers the punk music genre. Although “punk” is broadly defined on the site, the site doesn’t cater to genres such as R&B, rap and country among others, failing to satisfy the broader market.

AbsolutePunk.net is owned by Indieclick, a Los Angeles-based media company. According to the AbsolutePunk.net website, the site:

• Has developed a loyal (72% return rate) reader base
• 5,182,147 Posts
• 163,535 Threads
• 126,448 Members
• 1,711 Artist Profiles
• 20,774 Multimedia Files
• Approx 76,000 visits per day.
• Approx 276,000 pageviews per day.

Shoutmouth’s Competitive Advantage

In addition to being the first to fill the untapped market void for comprehensive music news, Shoutmouth’s competitive advantage in the market primarily includes the following:

Online Marketing Sophistication

Content Development Experience and Expertise

Shoutmouth’s team, primarily team members DL and PF, has operated an affiliate marketing business focusing on music for the past four years. Affiliate marketing is defined as a system of revenue sharing between one site (the affiliate) which features an ad or content designed to drive traffic to another site (the merchant). The affiliate receives a fee based on traffic to the merchant which converts to sales.

Our affiliate business has focused on connecting music fans, primarily aged 13 to 30, with music offers such as iPods and ringtones. Over the past two years, we have successful sold affiliated offers to over 500,000 customers. We have become a significant online advertiser, receiving Google’s “over 1 million leads” award, and are recognized as a major player among the top affiliate networks.

It is important to note that affiliate marketing success has been credited with part of MySpace’s success. This is because effective affiliate marketers understand how to drive and convert on Internet traffic.

Shoutmouth will employ its affiliate marketing techniques to drive traffic to Shoutmouth.com and enroll members. We will utilize technologies and proprietary techniques that allow us to monitor multiple metrics such as the cost per visitor, cost per member sign-up, etc., so that we can set and maintain profitable metrics.

Another venture that Shoutmouth team members, primarily PK and DL, launched was the development of over 3,000 niche websites. To create the content for these websites, we employed a virtual work force of over 90 researchers in India and 30 writers and editors in the US.

This experience taught us how to manage a large workforce, train writers to improve content quality and motivate a large group of people. These skill sets will be critical in allowing Shoutmouth to grow the content of the site, as developed by both staff and members, while maintaining quality standards.

IV. Marketing Plan

Shoutmouth’s marketing plan includes the following:

Online Advertising : Shoutmouth will initiate pay-per-click advertising campaigns on Google and Yahoo! in order to inexpensively drive traffic to the site. Specifically, Shoutmouth believes it can drive qualified traffic to the site for 20 cents per visitor and achieve a 20% member conversion rate, thus generating members at a cost of $1.00 per member.

Keys to Shoutmouth’s success in achieving this metric include:

• Conducting thorough keyword research and advertising on appropriate keywords and keyword groups
• Creating advertising text that maximizes click through rates
• Creating landing pages that maximize conversions while maintaining the highest Google AdWords quality score possible
• Closely monitoring conversions to quickly stop and/or modify unprofitable campaigns
• Getting individuals to enter their email address to join the newsletter is much easier than getting them to join a site where they have to create a username, select a password, etc. As such, step one will be to get visitors to sign up for artist-specific newsletters.
• Once on the newsletter distribution list, members will constantly receive messages (embedded in their daily newsletter) regarding the benefits of participating more on Shoutmouth.
• Active Shoutmouth Membership: the constant reminders regarding Shoutmouth’s value proposition in the daily newsletters will influence members to participate more actively on the site (e.g., customize their profile, visit the site more often, etc.).

Invite-A-Friend : Shoutmouth is in the process of creating an aggressive invite-a-friend/member referral program. In doing so, we are following the lead of social movie community, Flixster, which grew to 5 million members within 10 months. It did this by encouraging members, during their initial registration process, to upload and send an invitation to multiple contacts in their email address books. The technology to develop this process is fairly complex and we expect to be completed with and to rollout this program in June 2007.

Direct Email Marketing : Shoutmouth will directly contact bloggers and prominent music fans we find online to tell them about Shoutmouth, encourage them to join, and encourage them to write about Shoutmouth on their blogs and online journals .

Creating/Distributing Buzzworthy/Viral Content : Shoutmouth plans to have several buzzworthy/viral articles (i.e., content that people would want to email to their friends since it is funny, interesting, etc.) on the site each day. With a single click, visitors will be able to send these articles to social bookmarking sites such as Digg.com or Fark.com, where these articles could receive widespread attention. In addition to our traditional news stories, Shoutmouth will also periodically create special reports/features in order to satisfy our members and visitors and to try to get widespread exposure.

An example of the power of such buzzworthy content, Shoutmouth has already succeeded in having two stories accepted by Fark and Digg, which have brought in over 50,000 unique visitors.

Super Fans/Street Team Development : Shoutmouth also plans to recruit “super fans.” Super fans are individuals who are passionate about a certain music artist/band and actively contribute articles and/or comments on Shoutmouth. We will recruit these fans, reward them with status (e.g., adding a gold Shoutmouth headphones image to their profile page) and encourage them to more aggressively promote the site by:

• Submitting more news to Shoutmouth
• Commenting on more articles on Shoutmouth
• Growing the Shoutmouth community around their favorite artist(s) by actively recruiting new members to join the site (such as actively posting Shoutmouth-related comments on their MySpace pages, on other music forums, etc.)

Public Relations : Upon financing, Shoutmouth will hire a public relations firm to help us get mentions in media sources ranging from magazines, newspapers, radio, television and blogs. To date, we have developed and issued press releases via Billboard Publicity Wire which have been syndicated throughout the web. An effective PR firm will enable Shoutmouth to quickly reach a wide audience.

Widgets : Shoutmouth will create artist-specific and genre-specific music news widgets. For example, our U2 widget (see example on right) would include all of the recent U2 articles published on Shoutmouth. The widget can easily be placed on MySpace pages, blogs, etc. Each story title in the widget links to the full article on Shoutmouth.

Shoutmouth has great expectations for our widget. To begin, no such widget currently exists as there is no one place to get comprehensive news for specific music artists. Secondly, each time someone places a Shoutmouth widget on their blog or social networking page, it will effectively market Shoutmouth to a wide audience at zero cost to us.

V. Technology/Site Development Plan

This section provides a brief roadmap of the initial and future functionality of Shoutmouth.

Initial Site Functionality

The initial Shoutmouth website will include the following features:

• Ability to submit and comment on news stories
• Ability to suggest new music artists to add to the site
• Ability to create user profiles
• Ability to receive customized news and email alerts
• Articles categorized by artist and core genre (e.g., Rock, Rap, Pop, etc.)
• Music artist sections which includes News, Bio and Fans

Future Site Functionality

Shoutmouth will use news and basic functionality as the platform though which we will build a thriving music community. After initial launch, the Shoutmouth technology team will work on incorporating additional features such as:

• Ability to message other members via the site (e.g., members will have an Inbox on the site)
• Event calendars: members will receive online calendars. With the click of a button, the member will be able to add tour dates of their favorite artists/bands to their calendar.
• Articles also categorized by sub-genre (e.g., Alternative Rock, West Coast Rap, etc.)
• Music artist sections to also include videos, audio files, photo galleries, reviews and event calendars to which members can upload files and vote on top content.
• Forums and member blogs
• Music compatibility testing (suggestions on song/artists members might like)
• Trivia quizzes
• Music playlists

VI. Financial Plan

Revenue Model

During the first six months, Shoutmouth will not generate any revenues as it will not sell advertising space nor offer products for sale. This decision has been made to spur the growth of the Shoutmouth community. By initially positioning Shoutmouth more as a non-profit, for-the-people-by-the-people venture, members will be more prone to promote the site and invite their friends than if the site looks too commercial.

Starting in September 2007, Shoutmouth will primarily generate revenues from selling advertising space. As technologies (such as the Snocap music widget) evolve that allow us to seamlessly integrate music sampling and purchasing on our site, sales of downloadable music are also expected to be a significant revenue source. To a lesser extent, we may sell other music-related items such as ringtones, concert tickets, and apparel.

Funding To Date

To date, Shoutmouth’s founders have invested $500,000 in Shoutmouth, with which we have accomplished the following:

• Built the site’s core technology
• Hired and trained our core staff (we currently maintain an 11-person full-time team)
• Populated the website with content (over 10,000 articles and 1,200 artist bios)
• Generated brand awareness among music fans, including driving 50,000 unique visitors in March, 100,000 unique visitors in April, and 200,000 unique visitors in May 2007.

Funding Requirements/Use of Funds

Shoutmouth is currently seeking $3 million to provide funding for the next 24 months. At this point, the site will be profitable and can grow organically, or additional capital may be sought to more aggressively expand our member base.

The capital will be used as follows:

• Execution of Marketing plan : in order for Shoutmouth to grow its visitor and member base, we need to invest dollars in online advertising and public relations. With regards to online advertising, we are confident that we can enroll members at a cost of $1 per member, which is a fraction of the value of the members to an acquirer (minimum $25 per member), thus providing a significant return on our marketing investments.
• Execution of Technology plan : in order to build a thriving community, Shoutmouth needs to offer its visitors a “stickier” website and enhanced features. We currently maintain a vast “wish list” of features, such as members uploading and rating pictures and videos, trivia quizzes, and member-to-member messaging, that will significantly improve the site’s functionality and value proposition.
• Staffing : In order to reach our goals, we will have to hire additional technical and operations personnel.

Financial Projections

Below is an overview of Shoutmouth’s Financial Projections for the next three years. Please see the Appendix for the full financial projections and key assumptions.

Exit Strategy / Valuation Metric

Shoutmouth’s most likely exit strategy is to be acquired by a traditional music website or property (e.g., Viacom/MTV, Ticketmaster, Rolling Stone), an entertainment/media conglomerate (e.g., Yahoo!, IAC/InterActiveCorp, NBC), or a large social networking site (e.g., News Corp/MySpace).

This strategy is supported by the significant M&A activity in the social networking market, which includes the following transactions over the past 24 months:

Regarding valuation, below are the estimated valuations of social networking companies on a per member basis upon exit:

• Del.icio.us: $50 – $100 per member
• MySpace: $25 per member
• Xing (business social network): $137 per member at IPO in 10/06
• Flickr: $56 – $130 per member
• Grouper: $130 per member

Based on this data, not only are social networking sites a promising investment, but sites that can acquire members for less than $25 each (a conservative valuation estimate based on the figures above), should earn a solid return on investment. As discussed above, Shoutmouth’s goal is to acquire members for no more than $1 each.

In addition, per the membership projections above, Shoutmouth’s valuation at the end of 2009, at a $25 valuation per member, is expected to be $239 million. A more conservative, using a 24.4 time EBITDA multiple (the average multiple of tech M&A deals in 2006 according to The M&A Advisor), yields a $121 million valuation in 2009.

Shoutmouth’s founding team includes entrepreneurs and managers with a track record of success and a history of successfully working together.

Management Team

DL, Co-Founder and CEO

D has a history of successfully launching and growing businesses of all sizes. As president and co-founder of an entrepreneurial services firm., D has personally assisted in the launch and development of over 100 ventures.

Over the past three years, D founded and has managed The Kisco Group which includes an affiliate marketing division (2006 revenues exceeded $3 million), a search engine optimization business which includes a network of 3,000 websites (2006 revenues exceeded $500,000) and an e-commerce business (which includes TopPayingKeywords.com and ShowerHeadsEtc.com).

D earned his Bachelors degree from the University of South Carolina.

PK, Co-Founder and Vice President of Operations

For the past two years, P has managed The Kisco Group’s search engine optimization business where he hired, trained and managed nearly 100 employees and a dozen outside firms. During this time, P has honed his management skills with regards to content development, marketing and operations.

P has had a passion for music since childhood and has been a semi-professional drummer for the past 15 years.

P earned his Bachelors of Arts degree, magna cum laude, from Clemson University.

PF, Co-Founder and Vice President of Technology

For the past year, P has managed The Kisco Group’s affiliate marketing business. In addition to setting up and managing widespread marketing campaigns, P has developed sophisticated analytic techniques to precisely analyze web traffic in order to optimize profitability.

Since August 2006, P has shifted his efforts and leveraged his technology skills in developing the Shoutmouth website. P has been instrumental in selecting the Content Management Platform upon which Shoutmouth is built, and finding and managing the technology team.

P earned his Bachelor of Arts degree from Swarthmore College.

AB, Marketing Manager

A’s background in music includes being a singer, songwriter, guitarist and producer. He has also worked on the marketing side of music, having marketed Veritas Records through the development and distribution of promotional materials.

A’s career also includes psychological research and administration, having served as a Research Assistant with the Interpersonal Perception And Communication Laboratory in Cambridge, MA.

A earned his Bachelor of Arts degree in Psychology from Ohio State University.

M, Lead Technology Developer

M is an experienced web programmer with expertise in web design, application development and database development among others.

M’s work experience includes serving as a Senior Developer at Spheres. M has also engaged in multiple, long term freelance projects including serving as a Database Developer Consultant with The Penn Group and a Web Developer Consultant with Volution Media Group and Allied Online Consulting Group.

M earned his Bachelors degree in Computer Science with a minor in Cognitive Science from Rutgers University.

Content Development Team

Shoutmouth’s writing team, managed by PK, includes the following members:

• JS, Editorial Manager: former content manager and copywriter for Scholastic Inc. and Promotions.com.
• TZ: former music intern (Virgin Records and WRRV) and author of the blog, The Tom Z Show .
• ML: former assistant editor for Adventure Publishing; author of the blog Certified Gangsta ; and former editor-in-chief of Fordham University’s newspaper The Paper .
• SB: former staff writer for Paste Magazine , The Clarion Ledger , and Nightclub and Bar Magazine among others.
• CSJ: former editorial intern for Rolling Stone and Editorial Assistant for Psychology Today .

Outsourced Technology Team

Shoutmouth works very closely with 2skies, a technology firm based in Australia with staff in Australia and the United States. 2skies is run by JDN, one of the co-founding developers of XE, the platform upon which Shoutmouth is built.

XE is an extensible, Open Source web application framework written in PHP and licensed under the GNU General Public License. XE delivers the requisite infrastructure and tools to create custom web applications that include fully dynamic multi-platform Content Management Solutions (CMS).

VIII. Appendix: Shoutmouth Financial Projections   3-Year Income Statement

3-Year Balance Sheet

As of December 31

3-Year Cash Flow Statement

• Sources of Business Finance
• Small Business Loans
• Small Business Grants
• Crowdfunding Sites
• How to Get a Business Loan
• Small Business Insurance Providers
• Best Factoring Companies
• Types of Bank Accounts
• Best Banks for Small Business
• Best Business Bank Accounts
• Open a Business Bank Account
• Bank Accounts for Small Businesses
• Free Business Checking Accounts
• Best Business Credit Cards
• Get a Business Credit Card
• Business Credit Cards for Bad Credit
• Build Business Credit Fast
• Business Loan Eligibility Criteria
• Small-Business Bookkeeping Basics
• How to Set Financial Goals
• Business Loan Calculators
• How to Calculate ROI
• Calculate Net Income
• Calculate Working Capital
• Calculate Operating Income
• Calculate Net Present Value (NPV)
• Calculate Payroll Tax

How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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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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Blog Business

15+ Business Plan Examples to Win Your Next Round of Funding

By Jennifer Gaskin , Jun 09, 2021

“If you fail to plan, you are planning to fail,” according to words of wisdom dubiously attributed to Benjamin Franklin. While there’s no solid evidence that Franklin actually coined this phrase, the sentiment rings true for any business.

Not having a solid plan makes it unlikely you’ll achieve the goals you seek, whether the goals are getting your to-do list done or launching a successful organization.

In the early stages of a company, that means developing things like pitch decks, business plans, one-sheeters and more. With Venngage’s Business Plan Builder , you can easily organize your business plan into a visually appealing format that can help you win over investors, lenders or partners.

Learn more about  how to create a business plan  so you can hit the ground running after reading through this list for inspirational examples of business plans.

START CREATING FOR FREE

Click to jump ahead:

Simple business plan example, startup business plan example, small business plan example, nonprofit business plan example, strategic business plan example, market analysis business plan example, sales business plan example, organization and management business plan example, marketing and sales strategy business plan example, apple business plan example, airbnb business plan example, sequoia capital business plan example.

While your business plan should be supported by thorough and exhaustive research into your market and competitors, the resulting document does not have to be overwhelming for the reader. In fact, if you can boil your business plan down to a few key pages, all the better.

CREATE THIS PLAN TEMPLATE

The simple, bold visual aesthetic of this  business plan template  pairs well with the straightforward approach to the content and various elements of the business plan itself.

Use Venngage’s My Brand Kit  to automatically add your brand colors and fonts to your business plan with just a few clicks.

Return to Table of Contents

An essential startup business plan should include a clear and compelling value proposition, market analysis, competitive analysis, target audience identification, financial projections, and a well-defined marketing and operational strategy.

For a typical startup, the need to appear disruptive in the industry is important. After all, if you’re not offering anything truly new, why would an investor turn their attention toward your organization. That means establishing a problem and the ways in which you solve it right away.

CREATE THIS PRESENTATION TEMPLATE

Whether it’s a full-scale business plan or, in this case, a pitch deck, the ideal way for a startup to make a splash with its plans is to be bold. This successful business plan example is memorable and aspirational.

In the Venngage editor, you can upload images of your business. Add these images to your plans and reports to make them uniquely your own.

All businesses start out small at first, but that doesn’t mean their communications have to be small. One of the best ways to get investors, lenders and talent on board is to show that you’ve done your due diligence.

In this small business plan example, the content is spread over many pages, which is useful in making lengthy, in-depth research feel less like a chore than packing everyone on as few pages as possible.

Organizations that set out to solve problems rather than earning profits also benefit from creating compelling business plans that stir an emotional response in potential donors, benefactors, potential staff members or even media.

CREATE THIS REPORT TEMPLATE

Simplicity is the goal for nonprofits when it comes to business plans, particularly in their early days. Explain the crisis at hand and exactly how your organization will make a difference, which will help donors visualize how their money will be used to help.

Business plans are also helpful for companies that have been around for a while. Whether they’re considering new products to launch or looking for new opportunities, companies can approach business plans from the strategy side of the equation as well.

Strategic business plans or strategy infographics should be highly focused on a single area or problem to be solved rather than taking a holistic approach to the entire business. Expanding scope too much can make a strategy seem too difficult to implement.

Easily share your business plan with Venngage’s multiple download options, including PNG, PNG HD, and as an interactive PDF.

One-page business plan example

For organizations with a simple business model, often a one-page business plan is all that’s needed. This is possible in any industry, but the most common are traditional ones like retail, where few complex concepts need to be explained.

This one-page strategic business plan example could be easily replicated for an organization that offers goods or services across multiple channels or one with three core business areas. It’s a good business plan example for companies whose plans can be easily boiled down to a few bullet points per area.

Especially when entering a saturated market, understanding the landscape and players is crucial to understanding how your organization can fit it—and stand out. That’s why centering your business plan around a market analysis is often a good idea.

In this example, the majority of the content and about half the pages are focused on the market analysis, including competitors, trends, pricing, demographics and more. This successful business plan example ensures the artwork and style used perfectly matches the company’s aesthetic, which further reinforces its position in the market.

You can find more memorable business plan templates to customize in the Venngage editor. Browse Venngage’s  business plan templates  to find plans that work for you and start editing.

Company description business plan example

Depending on the market, focusing on your company story and what makes you different can drive your narrative home with potential investors. By focusing your business plan on a company description, you center yourself and your organization in the minds of your audience.

This abbreviated plan is a good business plan example. It uses most of the content to tell the organization’s story. In addition to background about the company, potential investors or clients can see how this design firm’s process is different from their rivals.

With Venngage Business , you can collaborate with team members in real-time to create a business plan that will be effective when presenting to investors.

Five-year business plan example

For most startups or young companies, showing potential investors or partners exactly how and when the company will become profitable is a key aspect of presenting a business plan. Whether it’s woven into a larger presentation or stands alone, you should be sure to include your five-year business plan so investors know you’re looking far beyond the present.

CREATE THIS PROPOSAL TEMPLATE

With Venngage’s Business Plan Builder , you can customize a schedule like this to quickly illustrate for investors or partners what your revenue targets are for the first three to five years your company is in operation.

The lifeblood of any company is the sales team. These are the energetic folks who bring in new business, develop leads and turn prospects into customers. Focusing your energy on creating a sales business plan would prove to investors that you understand what will make your company money.

In this example sales business plan, several facets of ideal buyers are detailed. These include a perfect customer profile that helps to convey to your audience that customer relationships will be at the heart of your operation.

You can include business infographics in your plan to visualize your goals. And with Venngage’s gallery of images and icons, you can customize the template to better reflect your business ethos.

Company mergers and shakeups are also major reasons for organizations to require strong business planning. Creating new departments, deciding which staff to retain and charting a course forward can be even more complex than starting a business from scratch.

This organization and management business plan focuses on how the company can optimize operations through a few key organizational projects.

Executive summary for business plan example

Executive summaries give your business plan a strong human touch, and they set the tone for what’s to follow. That could mean having your executive leadership team write a personal note or singling out some huge achievements of which you’re particularly proud in a business plan infographic .

In this executive summary for a business plan, a brief note is accompanied by a few notable achievements that signal the organization and leadership team’s authority in the industry.

Marketing and sales are two sides of the same coin, and clever companies know how they play off each other. That’s why centering your business plan around your marketing and sales strategy can pay dividends when it comes time to find investors and potential partners.

This marketing and sales business plan example is the picture of a sleek, modern aesthetic, which is appropriate across many industries and will speak volumes to numbers-obsesses sales and marketing leaders.

Do business plans really help? Well, here’s some math for you; in 1981, Apple had just gone public and was in the midst of marketing an absolute flop , the Apple III computer.  The company’s market cap, or total estimated market value,  could hit $3 trillion this year.

Did this Apple business plan make the difference? No, it’s not possible to attribute the success of Apple entirely to this business plan from July 1981, but this ancient artifact goes to show that even the most groundbreaking companies need to take an honest stock of their situation.

Apple’s 1981 business plan example pdf covers everything from the market landscape for computing to the products that founder Steve Jobs expects to roll out over the next few years, and the advanced analysis contained in the document shows how strategic Jobs and other Apple executives were in those early days.

Inviting strangers to stay in your house for the weekend seemed like a crazy concept before Airbnb became one of the world’s biggest companies. Like all disruptive startups, Airbnb had to create a robust, active system from nothing.

As this Airbnb business plan pitch deck example shows, for companies that are introducing entirely new concepts, it’s helpful not to get too into the weeds. Explain the problem simply and boil down the essence of your solution into a few words; in this case, “A web platform where users can rent out their space” perfectly sums up this popular company.

Sequoia Capital is one of the most successful venture capital firms in the world, backing startups that now have a combined stock market value of more than $1 trillion, according to a Forbes analysis .

For young companies and startups that want to play in the big leagues, tailoring your pitch to something that would appeal to a company like Sequoia Capital is a good idea. That’s why the company has a standard business plan format it recommends .

Using Sequoia Capital’s business plan example means being simple and clear with your content, like the above deck. Note how no slide contains much copy, and even when all slides appear on the screen at once, the text is legible.

In summary: Use Venngage to design business plans that will impress investors

Not every business plan, pitch deck or one-sheeter will net you billions in investment dollars, but every entrepreneur should be adept at crafting impressive, authoritative and informative business plans.

Whether you use one of the inspirational templates shared here or you want to go old school and mimic Apple’s 1981 business plan, using Venngage’s Business Plan Builder helps you bring your company’s vision to life.

500+ Clear business plan examples

Need help writing your business plan? Explore over 500 free real-world business plan view from a wide type of our to guide you through writing your own plan. If you're looking for an intuitive tool that walks they through the plan writing process, we recommend LivePlan . It includes many of these same SBA-approved business plan examples additionally is more useful when applying for a store home or outside investment.

Find your store plan

Accounting, Travel & Compliance Business Plans

• View All 25

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• Children's Education & Recreation
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Purifying, Remote & Maintenance Business Maps

• Auto Detail & Repair
• Cleaning Choose
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• Architecture
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Business planning template: There's an easier type to get our business plan done.

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• Film & Watching
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Example business plan format

Before you start exploring our library of business plan examples, it's worth taking the time to understand the tradition business plan format . You'll find that the plans in this library and largest investor-approved business plans will include the following sections:

Executive outline

The executive summaries is an overview of your business also own plans. It comes first in your plan press a ideally only one to double pages. You must also plan to write this section last following you've wrote your full company scheme.

Your executive summarized should include a summary of aforementioned report it are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summery of your financials, and your funding requirements (if she are raising money).

Products & services

The products & services chapter of your business plan is where the real meat to your plot lives. It includes information around the problem that you're solving, your solution, and any traction is proves that it honestly matches the want you identified.

This is your chance up announce why you're in economy or that join maintenance about about you offer. It needs to auf go a simply product or maintenance description and get at who heart of why your business works also benefits your customers. 300+ Great Free Business Plan Examples for 2023 | Growthink

Market analysis

Conducting a market analysis ensures that you whole understand the market that you're ingress and who you'll live selling into. Save section is where you willingly showcase all out the information about yours potential your. You'll cover your target market as fine as information with which growth of your trade and your our. Focus on shape why the market you're entering is viable plus creating ampere really persona for their ideal my base.

Competition

Component of defining your zweck has designation what the competitor advantage could be. To do this inefficient you need to get to know your opponents just more well as your target customers. Every business will possess competition, if you don't then you're either in an super young business or there's a good reason no only exists pursuing this targeted venture.

To succeed, you wanted to be sure him know who is competition be, how your operate, necessary financial benchmarks, and how you're business will remain positioned. Start by identifying which yours rival are or will exist during your market research. Next leverage competitive analysis tools like the competitive die and positioning map to solidify wherever your employment floor in sort to the race.

Marketing & sales

The marketing and sales plan sektionen of your business draft details how you map to arrive autochthonous target market segments. You'll address how you plan on sales to those target markets, what your pricing plan shall, and what guest of activities and partnerships you need to build your business a success.

One operations teilstrecke covers the day-to-day workflows for your work to deliver your product or service. What's included here fully depends on the type of business. Typically you can expectation to add details on your business spot, sourcing and completion, use of technological, and any partnerships or agreement such are in placement.

Milestone & metrics

The milestones section your where you lay out strategic project to reach your business goals.

A good milestone clearly lays out aforementioned parameters of of task at hand and sets outlook fork its execution. You'll want to include a project of the task, a proposed just date, who is responsible, furthermore eventually a budget that's attached. Yourself don't need extensive project planning in aforementioned section, just key occasions that you want until hit and when it plan to hit them. (Former) Business Programming and Marketing Associate. Food & Agricultural Commodity Center. Oklahoma State University. January 2006 ...

You should also discuss key metrics, which are the digits thee will track to determine your track. Some common data points worth tracking include translation daily, customer getting costs, profit, etc. Example business plan format · Executive summary · Products & services · Market analysis · Competition · Marketing & achieved · Operations · Military & indicators · Company ...

Business & team

Use which section to characterize your current team and who you need to hire. If you intend to pursue funding, you'll need to highlight the relevant experience of your team members. Basically, this is show you prove such diese exists the right team to successfully start and grow the business. You will also need to provide a quicker overview of your legal structure press history if you're already up and current.

Financial projections

Your corporate project should include a turnover and income forecast, win real loss statement, pos flow statement, and a balance sheet. You may not have established financials of any kind at those step. Not to worry, rather greater geholt choose of this click washed out, focus on making projections and strategic forecasts for will business. Him can always update thy financial statements as you begin operations and start bringing in real auditing information.

Now, if them intend to pitch to investors or send a loan application, you'll also need a "use of funds" report in this untergliederung. This outlines how you intend to leverage any funding in your business additionally wie greatly you're sounding into acquire. Like the break of your financials, this can always be updated later on. Wherewith to Spell the Business Plan Choose and Services Section

The appendix isn't a essential element of your commercial flat. However, it is a valuable place for add any table, graphics, definitions, legislative notes, or other critic information that supports your plan. These are often lengthier or out-of-place information that simply didn't work naturally into and structure of your plan. You'll notice so in this business floor examples, the appendix mainly includes extended financial statements.

Types of general plans explained

While all business plans cover similar categories, and style and functionality fully depend on how you intend to use your plan. The get the most off of your plan, it's best to seek a format that suits your needs. Here are a some common business plan types worth considering.

Traditional commercial plan

The tried-and-true traditional business plan is adenine formal document meant to be utilized for external purposes. Typically to is the genre of plan you'll needs whenever applying for funding or lurch to investors. It can also be used when training or hiring employees, jobs with vendors, or in any other circumstances where the total details by your business must be understood by another particular.

Economy model canvas

The business model sheet is a one-page master designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, stylish favor of a single-page outline that can help you plus outside celebrations better explore your business idea.

The texture ditches a linear format in favor of a cell-based template. It encourages you to build connections with every ite of your business. It's faster until record outward furthermore update, and great easier for you, your team, press anyone else at visualize your store operations.

One-page trade plan

The real middle ground between the business model painting both a traditional business plan is the one-page business plan . This format is ampere lightened version away the traditional plan that concentration about the core aspects of your business.

By starting with a one-page plan , you give yourself a minimal document to build from. You'll standard stick with bullets points and standalone phrases manufacture it much easier to elaborate or expand sections include a longer-form employment plan.

Growth planning

Growth planning is more than a specific type is business plan. It's a how. It takes one simplicity and styling of the one-page business-related plan and turn it into adenine proceed fork you to continuously plan, prognoses, review, and refine based on your performance.

It waiting entire of this service of the single-page plan, including the potential to complete it in than little as 27 minutes . However, it's even easier to convert into a more detailed plan thanks to how slowly it's tied to your financials. The gesamtansicht object of how planning isn't to just product documents that they use once and shelve. Instead, the growth planning process helps you build a healthier businesses which thrives in ages of economic additionally remain stable though times of crisis.

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

Download a release sample commercial plan template

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This simple, modern, investor-approved business plan screen is designed to make planning basic. It's a proven format that has aided over 1 million organizations write business plans for banks loans, funding pitches, business expansion, and even business sales. E includes additional instruction required as to write anyone section and remains formatted to be SBA-lender approved. All you requirement to do is filler to the bare. 500+ Free Business Layout See and Templates — Bplans

How at how an example business plan to help you write the own

How do you know what items need to is included in your business plan, specifically is you've never written one before? Looking along examples able help you fancy what a full, traditional plan looked like, so you know what you're aiming for before you get started. Here's how to get the of out of a sample business plan.

Choose a shop plan example from a resemble type of company

Him don't what to find an example business plan that's an exact appropriate for your business. Your business-related locality, target market, and even insert particular product or service may not comply up exactly is the plans in our exhibition. But, you don't need an exact match for e to be usable. Instead, look for a plan that's related to aforementioned type of business you're starting. The 7 Best Economy Plan Examples to Inspire Your Own

With example, if you want to start a vegetarian our, adenine plan for one steakhouse can be a great match. While the specifics of your actual startup will differ, the elements you'd want to include in your restaurant's business floor are likely to exist strongly similar.

Use a business plan instance in a travel

Every startup and small business is unique, so you'll want toward avoid copy can example business plan word with word. Itp just won't be as helpful, since each business is unique. You want your plan the be a useful tool for first a economy —and getting fund when to need it.

Single of this key gains of writing a business plan is simply going through the process. When you sit down to write, you'll course think through important pieces, like your startup costs, your target market , both any market analysis or investigation you'll need in do up be successful.

You'll also look at where you stand among your competition (and each has competition), and lay out your goals and the milestones you'll need to meet. Looking at an example business plan's financials division can be helpful because you can see what should can in, but take them equipped a grain of amount. Don't assume that financial projections for an sample company will fit your own small business.

If you're looking for more resources to promote you retrieve started, our business planning guide is a great place at start. You canister also download our release business plan template , with take started right away with LivePlan .

Reckon of business planning how a process, instead of adenine document

Think about business raumordnung as any i does often , much than a document you create once real never looking at again. If you take the time to write an plant that really fits your own company, it will be an better, more advantageous tool to rise yours business. It should also make it easier to share your fantasy and strategy so everyone on your team is on the same page.

Adjust your plan regularly to use it as a business management apparatus

Keep in mind this businesses is use their plan as a managerial tool on help run their business grow 30 percent faster than those businesses so don't. For that to live true available your company, you'll think of a part concerning your company planning process as location your actual befunde against your financial forecast on a regular basics.

If things are left well, your plan will help her suppose about how you can re-invest on your business. If you find that you're not meeting goals, you might need to adjust your budgetary oder your sales forecast. Or way, tracking your progress compared to your design can help you adjust faster whenever them identify challenges and opportunities—it's one of the most powerful things it can accomplish to grow your business. 18 Best Sample Economy Plans & Examples to Help You Write Your Own

Prepare to park your business

If you're planning to shaft your business go investors or seek out any funds, you'll needs a pitch deck to guidance your business plan. A pitch decking is designed to inform people learn your employment. You want your pitch top to be short and lightweight to track, so it's best go keep choose presentation under 20 slides. 7 Business Scheme Examples to Inspire Your Own (2023)

Your play deck press pitch introduction can likely some off the initial things that an investor be see to learn better about your company. Like, you need up be informative plus pique their interest. Luckily, just like they can leverage an real business plan template to start your plan, our also have a gallery of via 50 pitch decks for you till referral.

With this gallery, you can the option to view specific select pitches or get inspired by real-world pitch deck examples. Oder for an modern pitch solution this assist you creation a business plan and pitch beautify side-by-side, you may like to check out LivePlan . It becomes help you build everything required for outside investment and to better control your business.

Get LivePlan in your classroom

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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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That means you have plenty of choices — which is good for variety and competition but can make choosing the best loan for you more complicated. If you’re wondering which lender to go with, how term loans actually work, and what to do next, this guide can help you. Seek Capital’s experts have gathered all the information about term business loans you’ll need so that you can make an educated decision when choosing between lenders.

How Much Can You Borrow with a Term Loan?

In today’s warm lending climate, you can get a business loan for as little as $100 and for upwards of a few million dollars. Most lenders cap their minimums at $500 to$1,000 for a business loan, and you’ll generally find that the maximum you can borrow is around $25,000 to $500,000. Don’t be discouraged if you need more, though, because there are plenty of lenders that will finance a loan of up to $2 million.

The amount that you can borrow with a term loan depends on your business profile and the lender's terms. Businesses with a high credit rating, good borrowing history, strong annual revenue, and clear business plan will be able to borrow more than a business that has only been around for a year and isn’t pulling in much revenue.

How Long Does It Take to Get a Term Loan?

One of the best things about term loans is that you can qualify for them faster than other loan types. Online business lenders have online applications, so you can apply in less than five minutes. Some lenders even have the technology to respond to your application instantly. If you’re approved for the loan, funds can be in your account within as little as 24 hours. In the lending industry, that’s lightning fast.

If you apply for a term loan through your bank, it’ll take longer than that to get your money because you’ll usually have to apply in person or over the phone. Just this step can take hours, as you’ll have to discuss your business needs, go through paperwork and more. Banks also take longer to consider your application and complete the underwriting process. In some cases, however, you can still get a bank-funded business loan within a couple of days.

What Documentation Do You Need to Qualify for Term Loans?

Term loan approval is a lot like the approval process for other types of loans. You'll start by completing the lender's application form. Each lender will have different requirements, but most ask for your business credit score, proof of your time in business, and basic business finance documentation. If you're applying for a secured business loan, like an auto loan or one secured against your equipment, you'll also need to send documentation about the collateral you’re putting down.

You’ll need to provide these documents during the loan application process:

• Profit and loss statement
• Business bank account statements
• Your credit score
• Business and personal tax returns
• Your driver’s license
• A voided business check

Who Can Get a Term Loan?

Every lender has a different set of qualifications for who can get a loan, but generally, you can get a term loan if you have:

• Been in business for more than three years
• A credit score of 720 or higher
• An average annual revenue of $300,000 or more

If you don't meet those requirements, you still might have a chance. Some lenders have more lenient requirements, and some specifically cater to businesses with bad credit or startups that have been in business for less than two years. Other lenders specialize in industries like gambling or medical marijuana, which might have trouble getting traditional bank loans.

If you're a member of a minority group, a woman, or a veteran, you might qualify for a special business term loan that comes with lower rates or offers longer terms.

How Much Does a Term Loan Cost?

The interest rate you pay accounts for the lion’s share of your costs. You’ll get a lower interest rate if your credit and cash flow are both strong and you have been in business for at least three years. You’ll also get a better rate if you put up collateral to get a secured business loan.

Business term loans can have fixed or variable rates. The advantage of fixed-rate loans is that you know exactly how much you’re paying every month. There are no surprises, and you won’t need to worry about having to pay more if the prime rates change.

Variable rates can change every quarter or even every month. Even with a variable rate, however, you'll probably have a fixed margin rate that is added to the benchmark rate. Here’s what that means: The benchmark rate is usually The Wall Street Journal prime rate or the London Inter-Bank Offered Rate (LIBOR). This rate goes up and down frequently, so you’ll be charged a different interest rate (within your payment structure) each time the rate changes. The fixed margin rate doesn’t change. It stays fixed and gets added to the benchmark rate. So, if for example, your business loan has a margin rate of 2.75 percent, and the benchmark rate is 5 percent, you’ll pay a total interest rate of 7.75 percent.

The final cost of your loan is also determined by the fees and penalties the lender charges. Make sure you read the fine print before taking out a business loan because you could end up paying a lot more in fees by going with one lender over another.

Here are some of the most common fees and charges to look out for:

• Origination fee. Typically, 3 percent-5 percent, an origination fee is very common. It covers the cost of processing your loan and includes running a full credit check and confirming your financial information. The origination fee could be added to the overall cost of your loan or taken out of the original loan amount.
• Check processing fee. Typically, this fee is $10 per check. If you repay your loan amounts by check, you might have to pay a fee for every payment. Consider paying online to avoid this fee.
• Late payment, returned payment, non-sufficient funds (NSF) payment. Typically, $10-$35, or 3%-5% of the failed payment. You'll be charged a penalty any time that your payment is late, returned, or doesn't go through as a result of insufficient funds in your account.
• Prepayment penalties. These fees vary. Some lenders will charge you a penalty if you repay your entire loan before the end of the term or overpay at any point. Check if there are any prepayment penalties, especially if you hope to pay your loan off early.
• Legal or closing fees. These fees typically range from $2500 to $5000. If you’re taking out a secured business loan, or your term loan is particularly complex, you might have to pay closing costs or legal fees to cover the cost of writing your loan agreement or associated other legal expenses.

What Are the Payback Terms Like for a Term Loan?

One nice thing about business term loans is that they come with a range of repayment terms. For example:

• Short-term business loans can have a term as short as a few weeks or up to 1-2 years
• Most term business loans need to be repaid in between 1 and 7 years
• Long-term business loans can have a term anywhere between 3 years and 25 years

Usually, lenders will want you to make payments every month, but that can vary depending on the arrangement you make with your lender. Some lenders let you choose between monthly, four-weekly, or two-weekly payments. If you take a short-term loan with a term that’s under a year, you could be making payments every week or even every day. There are also lenders who’ll permit you to skip a payment once a year, or to put off a payment once every six months.

Term Loans Explained

Now that you know all about term loans and more, you can apply for a business loan with confidence. Sometimes, this knowledge is the edge that a company needs to really get out of a tough spot or take off, so apply today and watch your business grow.

All You Need to Know About Business Lines of Credit

Imagine having a super healthy cousin who’s also very giving. Whenever you want, you can walk over to them and say, “Hey buddy, can I borrow $5,000?,” and they’ll say yes. Of course, you’re going to pay back whatever you borrow, but you can ask anytime you want, and the answer will always be yes.

A business line of credit is like your philanthropic cousin. It gives you access to a pre-approved source of funds that you can draw on whenever you want. You’ll only repay the amount that you’ve borrowed, and the rest of it waits, ready to be borrowed when you need it.

Here’s a concrete example: You’re approved for a business line of credit of up to $100,000. That means you have $100,000 that you can use whenever you want. Now, say you withdraw $60,000 for some hardware upgrades in your office. You only need to pay interest on the $60,000 you used. These borrowing and repayment terms differ from a traditional business loan. With a business loan, you’d have to pay back the full $100,000 loan you took out initially, regardless of whether you use it, plus interest on the total amount borrowed.

Business Lines of Credit Explained

Business lines of credit can be secured against some type of collateral or can be unsecured. You can get something called a revolving line of credit or a non-revolving line of credit.

Revolving lines of credit let you borrow from the credit line as soon as you pay it back. So, once you pay back the $60,000 from the last example, you can take out $60,000, $80,000, or even the entire $100,000 if you need it. This option is extremely helpful because it ensures that you always have a source of funding available when you need it as long as you pay it back responsibly.

Be careful. Some lenders will cap the number of times you can make a withdrawal even for revolving lines of credit. For example, you might only be able to take two, three, or four draws on your business line of credit. Other lenders offer unlimited draws.

As the startup generation continues to evolve, so do the ways and methods for obtaining the necessary funding to keep a business running. A business line of credit remains one of the most flexible and variable loan options of all however. There are usually no restrictions; you can use it for payroll gaps, expanding your inventory, or even getting a Nintendo Wii for the office. Businesses generally use these lines of credit for short-term business costs, making up the occasional lull in cash flow or sudden unexpected expenses.

How Much Line of Credit Can You Get

Each lender sets its own minimums and maximums when it comes to lines of credit, but most have a minimum of $1000 to $2,000 for businesses and a maximum of $1 million. How much credit you can get depends on whether you have a revolving or non-revolving line.

Returning to our previous example, say you took out $60,000 from your $100,000 line of credit and paid it back. In doing so, you have basically recharged your line back to $100,000. Now you want to take out the full $100,000 for an all-expenses-paid corporate retreat. If you have a revolving line of credit, that’s not a problem. Essentially, what this means is you have taken out $160,000 worth of credit because the line keeps recharging every time you pay it back. Having a revolving line of credit makes a huge difference. With a non-revolving line of credit, you have to reapply before you can make another withdrawal. However, reapplication is typically a smoother and faster process than your first application.

How Long Does It Take to Get Approved for a Line of Credit?

Approval for a business line of credit is fast by loan standards —faster than getting a traditional business term loan. Online lenders make use of online resources, so it’s possible to get a reply in less than 10 minutes and funds in your account on the same business day. Some banks and even some online lenders take longer — up to two weeks sometimes — to process your application. Generally speaking, the more you want to borrow and the longer the repayment term, the longer it will take to get an answer.

What You Need to Apply for a Line of Credit

Traditional banks usually ask for the same documentation for a line-of-credit application that they would for a term loan application. Online lenders might have a more streamlined approach. You’ll probably need to complete an online application, provide proof of your credit score, show business standings, and supply any borrowing history you have. Some online lenders automatically connect with your bank accounts and online accounting or payment services for faster processing. They’ll just scan your accounts to assess your business performance.

You’ll almost always need to give the lender the following:

• Proof of age and/or citizenship, like your driver’s licens
• Bank statements, profit and loss statements, balance sheet
• Your credit history

If you apply for a secured business line of credit, you’ll also need to provide details about the collateral you’re using, such as business equipment, real estate, or stocks and shares.

Who Can Apply for a Line of Credit?

Anyone can apply for a business line of credit, but your business is more likely to get approved if you have:

• Been in business for over 1 year
• An average annual revenue of over $180,000
• A credit score of 630 or higher

But these are not “make it or break it” requirements. It’s a lot easier to qualify for a business line of credit than for other types of business funding. Startups with as little as six months of business history can get a line of credit, and poor credit won’t deter lenders in this situation. If you’re worried about approval because of a weak profile, you might want to apply for a secured business line of credit. Doing so can increase your odds for approval and bring your rates down.

How Much Does a Line of Credit Cost?

How much a business line of credit will cost you depends on a few things, such as how much you withdraw, whether you have a positive borrower history with that lender, and which lender you use. Watch for these costs when you apply for a business line of credit:

• Maintenance fee: These are usually $10 to $20 per month. Many lenders charge a monthly maintenance fee for your business line of credit. Lots of lenders don't charge this fee or waive the fee if you've made payments on time for six consecutive months, however.
• Origination or application fee. This kind of fee is typically 1 percent-5 percent of the total amount. You could be charged an origination or application fee to cover the cost of processing your business line of credit application.
• Withdrawal fees: You will likely have to pay $1 to $4 per withdrawal. Some lenders charge you each time you make a withdrawal from your business line of credit. Many don’t, however.
• Late payment fees, returned payment fees, NSF fees: You will be charged $10 to $35 each time you miss a payment. If your monthly or weekly payment doesn’t come through for any reason, most lenders will charge you a penalty, so be sure to pay on time.
• Renewal fee: If you have a non-revolving line of credit, you might have to pay a fee every time you renew your credit allowance.

By far, the biggest cost of your business line of credit is the interest that you pay when you repay the money you withdrew. Interest could be anything from 2.9 percent up to 40 percent, depending on your loan terms, with interest calculated at a fixed rate or variable rate. Some lenders don’t charge any interest at all, however. Instead they charge you a fixed maintenance fee plus a certain percentage of your total borrowed amount each month.

What Are the Payback Terms Like for a Business Line of Credit?

Although some lenders allow you up to five years to repay the full amount, most lenders will expect you to repay the loan within six or 12 months. Business line of credit repayments are usually made weekly or monthly.

If you have a revolving line of credit, then once you’ve repaid the amount you borrowed, you can withdraw more money and reset your repayment term again. If you’ve made multiple withdrawals at different points, however, each withdrawal might have its own repayment term, so you could have multiple repayment dates to juggle.

Is a Business Line of Credit Right for You?

A business line of credit can be incredibly useful for making large purchases or covering unexpected expenses. If you can get approved for one, these can be your lifeline when you’re in need. Choose a reliable lender to get the security your business deserves.

What Does Invoice Financing Mean & Is It Right for Your Business?

Starting and maintaining a business can be tough, especially when customers don’t pay you on time. Although there are great options for business financing, including personal business loans, there’s one option that will let you turn those IOU’s into an asset instead of a liability: invoice financing. This guide explains what invoice financing is, how it helps, and what you can do to take advantage of this practice.

Invoice Financing: What Is It?

The world of business primarily runs on credit. A major home improvement retailer isn’t walking into its supplier’s office with a wad of cash for a shipment of lumber. Instead, the company places an order, the supplier ships the order, and then the supplier sends out an invoice with a due date. The company then pays the supplier through whatever payment arrangement it has set up with them.

The supplier doesn’t receive payment for the goods immediately, and this kind of transaction can take a long time to complete. In the meantime, the supplier still needs capital to buy more supplies to keep its customers supplied and happy. Where does the supplier get the money to keep buying goods, pay its employees, grow its operations and invest in its own company? Invoice financing can help.

Invoice financing — also known asaka accounts receivable financing or receivables financing — is best described as short-term borrowing. It’s a way for businesses to get needed funds using the money owed from customers as a form of collateral. This practice can be helpful because businesses can use the money to pay salaries, buy more inventory, pay off suppliers and more. The beauty of invoice financing is that you can take advantage of dividends (customer invoices) that haven't actually paid out yet.

You will, of course, need to pay a small percentage of the actual invoice amount as a profit to the lender, but can be worth it because you get the funds right away rather than having to wait out the full length of the invoice. Lenders, on the other hand, love these types of “loans” because it’s pretty much a sure deal, much more so than a typical line of credit or business loan, because the customer invoice is sort of like a form of insurance on the loan.

How Much Can You Get from Invoice Financing?

There are three basic types of invoice financing: invoice factoring, invoice discounting and asset-based loans. Review each of them to give you a basic understanding of the invoice financing process.

Invoice factoring

• Invoice factoring is the most common form of invoice financing. For example, a lender will pay you 70 percent to 85 percent of the original invoice total. When the customer pays the entire invoice, your company will get the other 15 percent to 30 percent, minus any fees or interest payments due to the lender for the service it has provided. The reason a business might not like this option is that the lender is the one collecting the money from the invoiced client, so your clients know you’ve turned to a lender to take care of these matters.

Invoice Discounting

• Invoice discounting can seem a little more agreeable for businesses because the customer doesn’t know you’ve turned to a lender for the upfront cash. Instead, the lender forwards you up to 95 percent of the total invoice amount, and you collect the invoice, so it’s business as usual. Then when the customer pays you, you repay the lender.

Asset-based loans

• An asset-based loan is another form of invoice financing. This financing option lets you put up some of your assets, such as machinery, supplies, or in this case, invoices, as the financing tool. It's kind of the happy medium between invoice factoring and a bank line of credit. Unlike other types of invoice financing, however, asset-based loans require a much larger monthly accounts receivables tab (more than $1 million, for example). You must have a good financial background, solid financial statements, and assets that aren't going anywhere. So, if you’re a small or startup business, you probably won’t qualify.

Depending on the type of financing you apply for, you can get 70 percent to 95 percent of the total invoice.

How Long Does It Take to Get Invoice Financing?

There are two stages of invoicing factoring. In the first stage, the lender will transfer around 80 percent of the invoice total to your account, typically within one business day. in the second stage, the deposit of the other 20 percent of the invoice, minus whatever fees you owe the lender, only happens after the customer pays the invoice.

The only time-consuming step in this process is the verification stage, when the lender verifies the invoice before sending you the cash. Lenders want to make sure there’s nothing wrong with the invoice, there are no chargebacks, there are no disputes, payments are received, and everything can be processed correctly. Verification can take a little while, but generally, if everything is on the up and up, it won’t take that long.

What Documentation Do You Need to Qualify for Invoice Financing?

Another nice thing about invoice financing is that you don’t need all of the documentation that is required for other types of loans, such as many years in business, a thorough business plan, or a detailed list of how you’re going to spend the money. For invoice financing, lenders will generally ask you for proof of the invoice for their verification process. If you can prove the invoice is in good standing, you don’t need much else to qualify.

Who Can Apply for Invoice Financing?

Technically, anyone with open accounts receivable can apply for invoice financing. Of course, the more reliable your company is and, more importantly, the more reliable your clients are, the easier it is to get approved. Moreover, the better and more often you sell to credit-positive customers, the more likely a lender will be to pick up your invoices.

Another benefit of this type of business financing is that it is open to more businesses than the average business loan. Because the client invoice acts as collateral, lenders are more willing to take a chance on even small businesses with little experience or startups. Businesses most likely to get approved for invoice financing include those with invoices that:

• Are free from any legal issues
• Aren’t weighed down by tax problems
• Won’t be tied down by liens
• Are from reliable customers that pay back invoices within 90 days

Invoice Financing: How Much Will It Cost You?

How much invoice financing will cost you depends on the lender you’re working with, the size of the invoice you’re selling, and the creditworthiness of the client holding the invoice. The average rates can vary from 1.15 percent to 3.5 percent per month. But the better the creditworthiness of the invoice, the lower the rate you’ll get.

What Payback Terms Can You Get for Invoice Financing?

In most cases, how long you are given to pay back the lender will depend on how long your clients take to pay off their invoices. Some types of invoice financing will allow you to collect the invoice yourself and only ask you to pay the service fee once you've collected the money from your clients.

Invoice Financing: The Easiest Option There Is

Invoice financing is an easy way for businesses large and small to get the upfront capital they need during slow seasons and drawn out invoice payouts. It can be a great option for most businesses because it gets you the money fast, offers a more fluid cash flow, and even allows you to offer a faster service and longer payment options to your clients.

If you have clients that like to take their time paying off their balances (but always do eventually), you are a candidate for this type of business financing. Fill in your financial gaps using this smart and easy-approval option for your business.

Small Business Startup Loans

The small business startup loan primer.

The startup generation is arguably more adaptable, tech-savvy, and internet-equipped than any previous generation. But, as everyone’s favorite web-slinging superhero will attest, with great power comes great responsibility.

Creating a startup isn’t that big of a challenge. Keeping a startup, on the other hand, is a major undertaking. One thing that separates the survivors from the ones that didn't make it is their ability to grab an opportunity when they see it. A small business startup loan is one such opportunity. Will you grab yours or just let the opportunity pass you by?

Here’s everything you need to know about small business startup loans.

What Is a Small Business Startup Loan?

There are different types of loans that will help small businesses and even startups succeed. SBA loans, invoice financing, and business lines of credit are all available, depending on the borrower’s type of business and other factors.

A small business startup loan is any of several types of financial assistance specifically geared toward new businesses and startups that could use that extra bit of help to kickstart their endeavors. Because most financial assistance requires a minimum of three years in business to apply, a small business startup loan intentionally caters to businesses with little or no business history. Here’s a short list of the funding possibilities for startups:

• SBA startup loans, such as an SBA 7 (a), CDC/504 or SBA microloan
• Community advantage loans
• Equipment financing
• Invoice financing
• Business lines of credit
• Business credit cards
• Crowdfunding

There are alternative options, but these are the most viable, reliable and feasible financial options for most startups. If you want to fund your budding business, research each of these types of funds and find the one that best fits your bill, literally.

How Much Can You Borrow with a Small Business Startup Loan?

How much you can get from a small business startup loan will really depend on what type of funding you are looking for. From SBA microloans to small business grants and even crowdfunding, each option opens up new possibilities and opportunities. You can get anything from $500 to $250,000, depending on the type of loan, the business you are starting, your business plan and many other factors. Things like your own personal credit history, what type of business you’re opening, and your financial record will factor into the overall amount a lender will let you borrow.

Calculate your startup costs based on a well-written business plan. This should include all essentials and beginners' basics for running a business, like:

• Office space rentals
• Inventory purchasing
• Equipment purchasing
• Building and maintaining a website
• Advertising and marketing

Once you have an approximation of how much you'll need — it's always a good idea to round up on this total figure — start applying to see what options are available to you.

How Long Does It Take to Get a Small Business Startup Loan?

Startup loans can take a while to complete. From start to finish, the process could take 30 to 45 days. That sounds like a lot of time if you need the money right now, but if you look at some other financing options, it's not that bad. Besides, if the lender is willing to work with someone who doesn't have any business plan or credit history to show for themselves, a little patience isn’t much to ask.

If you need capital in a hurry, online lenders are typically faster than brick-and-mortar banks. They can often be more economical as well, but not always. If timing is your main concern, online lenders are your best option. The application process is all online, so there is no time wasted waiting in lines, sitting in offices and listening to sales pitches. Apply online in a few minutes, and you could receive an answer on the spot from some lenders. Others will take a bit longer, but most will respond within a day or so.

Once you’ve been approved for a loan, again, depending on the lender, you could have the funds in your account within one or two business days. All of these circumstances vary by lender and situation, but it doesn't have to be a month-long process every time. And, if you have the time to invest, it's worth it to search for a small business startup loan with better terms.

What Documentation Do You Need to Qualify for a Small Business Startup Loan?

Although each lender will differ depending on their self-governed rules, most will require the following documentation:

• Income tax returns (business and personal)
• Business balance sheets
• Bank statements (business and personal)
• Driver's license or another valid photo ID
• Business license, if applicable
• Some sort of business plans for future projections

Not all lenders will require all of these documents, especially when you’re dealing with online lenders, but it’s always a good idea to have as much as possible readily available before applying in case it is requested. For some financial assistance like a business credit card, you’ll only need a basic tax ID number and Social Security number.

Who Can Apply for a Small Business Startup Loan?

Every lender will have their own requirements and rules about who can apply for their loans, so shop around to see what the market has to offer. The younger your business is, though, the better. Six months or less is a good fit for small business startup loans. By the time your business reaches its first birthday, other lines of financial assistance become available, so take advantage of startup loan options while you have the chance.

Want to give your small business startup loan application its best shot? Check off these boxes before you apply:

• Build up your credit score, personal and business. The better your personal credit score is, the better are your chances.
• Know what the requirements are before applying. Different lenders have different qualifications, so do your homework. For example, to apply for a small business loan, you’ll usually have to make less than a certain amount of net revenue per year to qualify; you must be a for-profit business; and you really shouldn’t have bankruptcies on your record.
• It's also a good idea to have some form of collateral, an asset you can use as an insurance plan against the loan. It builds lender confidence and makes getting approved easier.

Having a diverse business plan, wide customer audience, and a winning business model will just open you up to more options and greater possibilities.

Small Business Startup Loans: How Much Do They Cost?

There is no telling how much a small business startup loan will cost you until you’ve applied. You can typically expect the following, however:

• The smaller your loan, the higher the interest will usually be.
• The better your credit score, the lower your interest rates will be.
• The longer your repayment terms, the higher your interest rates will be

You could find rates ranging anywhere from 2.25 percent up to 5.32 percent for SBA loan options, for example.

What Payback Terms Can You Get for Your Small Business Startup Loan?

Lenders set their own repayment terms, and these can vary from biweekly payments up to 25 years for larger business loans. A great thing about small business startup loans is that you can get exceptional terms. Sometimes, you’ll find amazing offers like interest-free payments for the first year to 15 months. Some lenders will waive the prepayment penalty as an act of good faith. Every lender has different rules, but overall, you’ll find lenders willing to be more flexible and even generous when dealing with startups. Discuss your repayment options with each lender you are considering and use an online tool to help compare your offers.

Small Business Startup Loan: The Only Way to Fly

Startups are the future. Check out your options for financial assistance and see how, with a little backing, your new business can build a new tomorrow.

How Equipment Financing Works & How to Make It Work for You

Equipment financing is one of the many ways a business can get funding for its business operations. Basically, anything that provides a company with the capital it needs to purchase equipment is considered equipment financing, such as leasing the equipment, government loans like SBA loans, or other funding options.

The upsides to equipment financing are that it is a quick and easy way to access cash, doesn't require loads of paperwork to apply, and uses the equipment itself as collateral. The downside is that your equipment might be outdated before you've even paid back the loan, so you're essentially paying for a piece of machinery that is an older model or may even become obsolete quickly. This concern is particularly an issue for high-tech businesses. The pros generally outweigh the cons of equipment financing, however. Just keep this in mind when considering one model over another and opt for the newer model to ensure you get your money's worth.

Need a new piece of equipment for your office, warehouse or factory but don’t have the upfront cash to make the purchase? Check out how equipment financing works, who is eligible to apply, and what you can do to improve your chances of approval today.

How Much Can You Get Through Equipment Financing?

The beauty of equipment financing is that the equipment you buy acts as your collateral. That means that if you can’t repay the loan, the lender can come take the equipment instead of waiting an extended period for repayment. Although it might make you a little antsy to think about that possibility, this stipulation makes lenders more willing to offer equipment financing loans, even to smaller businesses with less history to show for themselves.

With such odds in their favor, lenders are willing to give you a lot more than they would with a standard loan. In fact, some lenders will enthusiastically extend the full amount for the cost of new or used equipment purchases. You won’t always find highly agreeable loan terms, but it is common to get as much as $500,000 from an equipment financing loan, and you can almost always get at least 80 percent without any issues.

At times a lender will still ask for some other form of collateral, such as a blanket lien — a legal statement that gives the lender claims to your business assets if you foreclose on the loan — or a personal guarantee in case your business isn’t able to pay back the loan.

How Long Does It Take to Get Equipment Financing?

Because lenders understand that when a business needs a piece of equipment, they need it now, equipment financing is set up to be a fast process. You can get the requested funds wired to your business account in as little as two business days. Considering some business loans can take a month to process, two days is a real relief to most business owners. Having your required documentation ready will make the process go faster. If you're not prepared, you could be looking at a few weeks’ delay.

Another thing that’ll help move things along faster is working with an online lender. Traditional banks have more red tape to deal with, so the whole process can take longer. Online lenders, on the other hand, have fewer costs and requirements — and fewer regulations in some cases — to deal with.

What Documentation Do You Need to Qualify for Equipment Financing?

Because equipment typically includes big-ticket items, lenders are thorough when it comes to reviewing equipment financing loans. You'll need to prove good creditworthiness, so be ready to hand over documents like:

• Bank statements
• Income tax returns

Lenders, particularly banks, will want to see both personal and business statements. Personal documentation is asked for because, at the end of the day, the name behind the business might be responsible for paying back the loan if the business folds and can't afford to pay it back.

Who Can Apply for Equipment Financing?

Anyone in business can apply for equipment financing, but not everyone will get approved. Many businesses that get approved for equipment financing loans have more than $130,000 in annual revenue, credit scores that are 630 or higher (or at the very least 600) and have been in business for at least two years. You stand a better chance of getting approved if you have:

• Good personal and business credit history/scores
• Solid annual revenues
• Been in business for a couple years or at least one year

How much you’re asking for and what type of repayment terms you’re asking for will also factor into the overall decision. The type of equipment you want to buy is also a factor. Because equipment financing uses the equipment being purchased as a form of collateral, the lender is essentially investing in that equipment. For that reason, if you are investing in high-end, high-quality, or value-retaining equipment, a lender is more likely to approve your loan request and even work with you for more flexible terms. If you are trying to purchase an outdated model, niche machinery, or less useful piece of equipment, however, you might have a harder time getting approved.

Financing: How Much Will It Cost You?

Interest on equipment financing loans can be significantly more than for other types of loans. You can expect to pay anywhere from 8 percent to 30 percent, depending on the lender, type or cost of equipment, and your own creditworthiness. How much interest you pay will also depend on whether you have taken a fixed or variable rate loan. Some lenders will also ask for a 20 percent down payment for the loan. A down payment is a good thing if you can afford it because it means you’re taking out a smaller loan, so you pay less interest overall.

If you can’t afford equipment financing, leasing equipment can be a more affordable option because it doesn’t require a down payment, guarantee or collateral. Just be careful to do the math beforehand because leasing can also work be more expensive if you plan to lease the equipment for a long time. Generally, if you want a piece of equipment you’re going to use for the long haul, it’s worth purchasing it instead of leasing. Leasing, however, is typically easier to get approved for if you have a short or spotty credit history.

What Payback Terms Can You Get for Equipment Financing?

Equipment financing loans aren't like most other business loans. Rather than setting a fixed repayment date and breaking up your overall debt into equal monthly payments like you normally would with a business term loan or SBA loan, equipment financing calculates the expected lifespan of the equipment you are buying and uses this as a baseline for your loan repayment time frame. In general, you can expect a three- to seven-year term for most types of equipment, though more than 10 years is not unheard of.

Equipment Financing for Everything, Even the Kitchen Sink

Whether you need new computers for your office, a job-specific piece of machinery, or a professional-grade vehicle to get the job done, equipment financing can help you buy equipment that you couldn’t afford otherwise. The perfect solution for new businesses or companies looking to grow, equipment financing can open new doors for your business right away.

Short Term Loans

Small businesses: short-term loans explained.

Short-term loans are an ideal solution for most small businesses and startups. They're easier to get than typical loans; they come in faster so that you have the money right away when you need it; they are extremely flexible. Plus, this funding option is paid back quickly, so you don’t have debt hanging over your head for years.

That’s short-term loans in a nutshell. Now, here is everything else you need to know about this smart business financing option.

Short Term Business Loans: How Do They Work?

New businesses and smaller businesses usually need upfront capital right away for immediate use like paying salaries, buying equipment or purchasing supplies to get started, which makes short-term loans a great financing option.

Here’s a good scenario that’ll help you see how this type of business financing works: You’re a small business owner, and it’s the beginning of the month. You need to buy supplies to service your customers with but you don’t have the money to make those kinds of purchases because you haven’t made any sales yet. You know the money will come in once the business is up and running, so you only need to borrow the initial cash flow for a short amount of time. This kind of scenario is exactly what short-term loans are meant for.

Here’s a look at how short-term business loans work to help business operations:

• You get the working capital you need to get the ball rolling
• Once sales revenue starts to build, you pay back the loan
• You can avoid a loan stretching out for years, forcing you to make substantial interest payments. Instead, you take care of the loan quickly and easily.

Short-term loans are fast, easy, and don’t come with the complications that other loans do.

How Much Can You Get from a Short-Term Loan?

If you are looking for a huge sum, short-term loans might not be your best option. That's because in general, short-term loans are approved for much smaller amounts than your typical business loans. Some lenders even offer minimum loan amounts of $50.

You can get higher amounts many lenders too. It’s not unusual to even get a short-term loan for as much as $250,000. The average short-term loan is usually in the range of $100-$2,000.

How Long Does It Take to Get a Short-Term Loan?

Short-term loans are one of the fastest financing options for businesses. If you’re taking out a short-term loan for an emergency or so that you can get the supplies you need to start your business, you want the money now. Assuming all your paperwork checks out and you are approved for the loan, money from your lender can be in your account within 24 to 48 hours, or two business days.

What Documentation Do You Need to Qualify for a Short-Term Loan?

Every lender, from traditional banks to credit unions and online lenders, will ask for specific documentation when you apply for a short-term loan. Details might vary from one lender to the next, but the general requirements include:

• Bank statements and other business cash flow documentation
• Previous loan repayment history documentation
• Income tax statements (personal and business)

Who Can Apply for a Short-Term Loan?

If you own a business, you can apply for a short-term business loan, but these loans are most helpful for:

• New businesses
• Cyclical businesses
• Companies going through a bit of a rough patch
• Service providers that are seasonal

For example, a holiday season boutique needs the upfront capital to buy supplies and get the business up and running before the holiday shoppers come calling. With a short-term loan, this business owner can purchase everything they need to get started and then pay back the loan quickly with the season’s income.

The beauty of short-term loans is that they are fast and easy. Most lenders are even willing to work with startups or businesses with little history because the risk for this loan type is lower. The loan repayment is coming in a relatively short amount of time, so lenders are more willing to hand out these types of loans.

In terms of qualifications, most short-term lenders will be pretty flexible. Some places will lend money to businesses that have been running for just three months, though most lenders will require a year in business. Business owners with credit scores as low as 500 can apply, but the higher your score, the more likely you are to get approved.

Short-Term Loans: How Much Will the Loan Cost You?

The overall cost of a short-term loan will be the total of any fees the lender charges plus the interest rate you are given. In most cases, interest rates will be higher for short-term loans than for long-term loans. Generally, interest rates are calculated by taking the base prime interest rate and adding a premium to that. The premium is calculated by factoring in the amount you are asking for and the risk the lender is taking in giving you a loan.

Take the following steps to save yourself money on a short-term loan:

• Improve your credit score Better credit scores will receive better interest rates from any lender, so the more attractive your report is, the less you’ll pay in the long run
• Take a Shorter Repayment Plan The longer you are given to pay back your loan, the more interest you will end up paying over the life of the loan. Paying off your loan faster means fewer payments. A word of caution here, though: Make sure your interval payments are doable. Don’t set up your repayment terms so that you are being forced to pay more than you can afford. For example, if you take out a loan of $2,000 and split it up into four weekly payments, you’ll be finished paying off your loan in one month. Just make sure you have $500 per week to make those payments.
• Shop around Explore numerous online, traditional and crowdfunding options for borrowing money. Don’t just settle on the first offer you receive. Check out several services, see what they have to offer, compare terms, and go for the one that is the most appealing.

What Payback Terms Can You Get for a Short-Term Loan?

Short-term loans are usually no longer than a year — often less — so the whole business is done within a short amount of time. But even though most short-term loans are paid back within a year, you can find repayment terms for as long as three years. On the other end of the spectrum, some loans can be paid back within three months or even two weeks. It is not uncommon to find short-term loan repayment terms that are paid back daily.

Short-Term Loan: Your Lifeline When You Need It

If you need a big sum of money that you want to pay back slowly over several years, short-term loans are not the best option for your business needs. If, on the other hand, you need fast cash, don't have a long business history, and want to be done with the whole business of borrowing quickly, short-term loans could be the best solution for you.

Whether you’re dealing with an unexpected crisis at work, need the upfront cash to buy inventory for your seasonal business, or are waiting for customers who work on credit to come through, short-term loans can be the resource your business needs to keep going during a lull in revenue flow.

Merchant Cash Advance: How to Know If It’s Right for Your Business

A merchant cash advance might be your best business financing option if you’ve been rejected for a loan or aren’t able to get other forms of help. Not as straightforward as a typical bank loan, merchant cash advances can make your head spin if you don’t know much about the topic. Here’s a step-by-step guide to this confusing subject so you can understand exactly what a merchant cash advance is, how it works, when it can help (or hurt), and what you can do to get one fast.

Merchant Cash Advance: How Does It Work?

A merchant cash advance is when the lender gives you money upfront, and, in exchange, you agree to give them a percentage of your future sales, like this:

• You and the lender sign a contract
• You receive the cash advance into your business bank account
• Each day (or other agreed-upon time period), a given percentage of your daily revenues will be taken from your business bank account and deposited into the lender’s account. This is the repayment method for your merchant cash advance.
• This holdback payment continues until you’ve paid back the entire amount you borrowed, plus whatever fees or interest the lender charges you.

A merchant cash advance is not a loan. A loan gives you money, and you pay back the loan plus fees and interest according to a certain arrangement you make with the lender. With a merchant cash advance, you also get the money upfront and have to pay it back at specified intervals, but the same rules don’t apply. Keep reading to learn about the specific differences, but for now just realize you’re playing a totally different ballgame here.

Though this type of borrowing is available for different industries, a merchant cash advance works best for businesses that work primarily with credit or debit card payments, such as restaurants and retail stores.

How Much Can You Get from a Merchant Cash Advance?

How much you can get from a merchant cash advance depends on your business. The lender will look at your average credit card sales and, based on these figures, tell you how much they’re willing to advance you. They’ll usually look at three to six months’ worth of receipts to make this decision. For some businesses, lenders are willing to give anywhere from 50 percent to 250 percent of your average credit card revenues. What’s more, the upper limit on a merchant cash advance is as high as $1,000,000 from some lenders, so you can help your business if you have good sales.

How Long Does It Take to Get a Merchant Cash Advance?

The other good thing about a merchant cash advance is that you can get an answer within a few hours. You’ll see the money within a day or three at most once approval has been given. So, if you need the money fast, this can be an obvious solution.

What Documentation Do You Need to Qualify for a Merchant Cash Advance?

You don’t need much to apply for an MCA. All you'll need are your books and credit card receipts for the last few months. Lenders rarely look at much else for this type of financing.

Who Can Apply for a Merchant Cash Advance?

Merchant cash advances are much easier to process than traditional business loans. They’re not subject to the same regulations, so there’s no need for a personal guarantee, and bad credit is welcome.

Instead of business history, a structured business plan, and sterling credit record, an MCA lender will look most closely at your daily credit card transactions to assess the risk of lending to you. Because you’re essentially selling off a piece of your future business, sales records are what’s important here. The good news is that even if your business was rejected for a loan, you can still apply and get approved for an MCA if you have a steady flow of credit card transactions.

Merchant Cash Advances: How Much Will They Cost You?

How much you’ll pay for a merchant cash advance is calculated by multiplying the loan amount by the risk factor your business poses to the lender. It’s usually on a scale of 1.2 to 1.5 (with 1.5 being the riskiest type of business). So, if you multiply a cash advance of $50,000 by a risk factor of 1.4, you’ll get a $70,000 repayment total (that’s the total amount you’ll have to pay back by the end of your repayment plan including the fees incurred).

Because there’s no guarantee on merchant cash advances, this form of financing tends to come with higher costs than others. Merchant cash advance fees vary from month to month because of the way the payments are structured.

Here’s how this works: Your business takes out a merchant cash advance. Each month, you pay a percentage of the sales you made that month. In slower months, you pay less because your revenue was lower. In better months, you pay more because your revenue was higher.

The amount that you pay fluctuates based on your sales. The percentage never changes — that’s a fixed rate — but the amount you pay will change as your monthly sales revenue changes.

Here’s an example: Your merchant cash advance holdback percentage (aka retrieval rate) is 10 percent. In January, you make $10,000 in sales. You’ll pay $1,000 toward your merchant cash advance. In February, sales dip to a low $6,000. So, in February, you will only pay $600.

You can expect to pay somewhere between 20 percent and 40 percent of the cash advance as a repayment fee. The repayment fee is not the same percentage as the holdback percentage, which can be anywhere from 5 percent to 20 percent

For example, a lender gives you $10,000, arranges a 10 percent holdback, and takes 20 percent as a repayment fee. Each day, you’ll give the merchant 10 percent of your credit card earnings (regardless of what that is each day). The overall repayment that you’ll need to make is $10,000 plus 20 percent, or $2,000, for a total of $12,000. So, you have to pay back $12,000, and that is spread out over the amount of time it takes you by making daily payments of 10 percent of your credit card receipt revenue.

The benefits of this system are:

• If you have a slow month, your repayments won’t cripple you because they are always just the percentage of the sales you made (so you aren’t owing $1,000 every month when you make less than that, for example).
• When business is better, you can pay off your debt faster.

What Payback Terms Can You Get for Your Merchant Cash Advance?

Merchant cash advance repayments depend on how much business you do each day because the payments are usually based on your credit card charges, though this is not always the case. In general, MCAs have a range of repayment terms, spanning from 90 days to as long as 18 months, depending on how much you take out and your lender’s terms.

You can structure your repayments in two ways:

• Percentage-Based Payments With this type of repayment plan, you will hand over a slice of your earnings pie from every credit or debit card sale you make.
• Fixed-Rate Payments Alternatively, you can agree upon a fixed amount that you pay via a direct withdrawal system that uses the Automated Clearing House. This option is directly connected to your bank account, and ACH payments are usually structured to be made daily or weekly. This process is more like a traditional loan.

Fixed-rate payments are popular with businesses that don’t work frequently with credit cards. The downside to the fixed payments is that they have to be made regardless of your revenue. If you’re having a dry spell, coughing up weekly or even daily payments could set you back or even put you in the hole. For this reason, many business advisors suggest looking into other forms of business financing like short-term loans or lines of credit before exploring a fixed-rate merchant cash advance

Merchant Cash Advance: Is it the Right Choice for You?

Merchant cash advances can be complicated. On the one hand, it could be easy to let payments swallow you up if you aren’t careful. On the other hand, they’re more flexible in terms of repayment. Plus, there’s no collateral necessary because the lender is attached to your bank account. It’s easier to get approved for this type of financing. Weigh your options, know your current business finances to make an informed decision.

All You Need to Know About SBA Loans

Small Business Administration loans can be a great way for new businesses to get much-needed startup funding. SBA loans are backed by the government, so you actually have Uncle Sam covering your loss if you default on your loan. It’s a lot more reliable and gives new businesses the assurance and financial capital they need to focus on launching a new venture.

Getting an SBA loan isn’t as easy as walking into a bank and applying, however. You have to qualify for these loans. These loans are easier to get approved for than others, however. When banks or other lenders are deciding whether to offer you a loan, they look at several factors to see how likely it is that you’ll be able to repay the loan in full. Assessing the risk of the loan helps them avoid losing massive amounts of money on bad loans. With an SBA loan, however, the government promises to repay up to 85 percent of the loan amount if you can’t pay it back, so banks and other lenders feel a lot safer approving these loans.

If you're considering an SBA loan for your new business, here's everything you need to know about how this type of loan works.

SBA Loan Terms: How Much Can You Get?

Different types of SBA loans allow you to take out different amounts of money. There are three options types of SBA loans:

• SBA 7(a) loans These loans are the most popular type of SBA loan. You can use an SBA 7(a) loan for a lot of different purposes, like paying off existing debt, working capital, leasing equipment, or renovating your office space. You can borrow anywhere from $500 to $5 million through an SBA 7(a) loan. There’s also an Express 7(a) SBA loan, but this loan type is capped at $350,000.
• SBA 504 loans SBA 504 loans can be used only for buying major fixed assets like real estate or fixed equipment. The maximum you can get through an SBA 504 loan is $5.5 million.
• SBA Microloans SBA microloans are small business loans up to $50,000. They can be used for working capital, buying inventory or supplies, or investing in furniture, fixtures, machinery, or equipment for your business.

Know your business needs, financial parameters and industry requirements to get a better understanding of which SBA loan is right for you.

How Long Does SBA Loan Approval Take?

The one downside to SBA loans is that it can take a long time to qualify for the loan and receive the money. It is not uncommon for the full process to take 45 days to three months. Some applications are processed and accepted in just three weeks, however. You should still expect it to take more than a month in most cases. SBA Express loans take less time, but even these can take a few weeks to go through.

The reason for this time frame is that your loan requires double the work to process. Both the lender and the SBA have to review your application, business documents and financial statements. Once you’ve been approved for an SBA loan, it can still take another few weeks before the funds clear in your account. Bottom line: SBA loans take time, but the low rates and reassurance of government backing make them worth the wait.

What Documentation Do You Need to Qualify for an SBA Loan?

Applying for an SBA loan can be a lot of work. You’ll need to prepare a substantial amount of documentation, including information about your current financial situation, your business history and your plans. No matter which lender you go through, you'll have to complete a loan application that asks about your average revenue, what collateral you’ll be using and why you need this loan. You’ll need to prove that you can repay the loan and that you intend to use it according to the SBA loan guidelines, too.

A typical SBA loan application will require the following documents:

• A detailed business plan that shows how you’ll use the loan money
• A business debt schedule to show how you’re going to pay off the debt
• Your personal and business tax returns
• Business documents, including your balance sheet and profit and loss statements
• Recent business bank account statements
• A copy of your driver’s license

If you’re applying for an SBA 504 loan or most types of SBA 7(a) loans, you’ll also need to make a down payment. For an SBA 504 loan, that’ll be 10 percent of the total loan amount. For an SBA 7(a) loan, it could be between 10 percent and 20 percent of the loan amount.

Who Can Get an SBA Loan?

Lenders look for businesses with a strong credit score, realistic business plan, and a proven ability to repay the loan when considering SBA loan applicants. If you want to qualify for an SBA loan, make sure your business can check off these boxes:

• Has a credit score of 720 or higher
• Has more than $180,000 in annual revenue
• Has been around for at least four years

To apply for an SBA loan, you need to:

• Be defined as a small business — that means fewer than 500 employees, an average net income of less than $5 million, net worth of less than $15 million, and an average yearly revenue of less than $7.5 million
• Operate primarily in and have a physical location in the U.S.
• Have no bankruptcies, defaults or government debts
• Be a for-profit business
• Have invested personal funds into your business
• Not have previously received an SBA loan
• Have been running your business for at least three years
• Be able to prove that you need the loan

How Much Does an SBA Loan Cost?

The cost of your SBA loan will depend on which type of loan you get and how much money you ask for. For example, if you get an SBA 7(a) loan, you can generally expect to pay between 0 percent and 3.5 percent of the total dollar amount, depending on the amount you borrow and the loan’s maturity. This fee is charged by the SBA, and some banks pass it on to the borrower. For an SBA 504 loan, you’ll usually pay around 3 percent of the total amount, but this fee could be absorbed into the total cost of your loan. SBA microloans don’t come with any fees.

The main cost of your SBA loan depends on your interest rate. Interest rates for SBA 7(a) loans can be fixed or variable, but either way, they are limited by the SBA. The SBA has a cap on the interest rates for SBA 7(a) loans, allowing a maximum of 2.25 percent above the base interest rate, or a maximum of 2.75 percent if your loan term is over seven years. This makes average interest rates for SBA 7(a) loans 6 percent to 13 percent.

Interest rate calculations for SBA 504 loans are more complicated, but you can expect to pay between 5 percent and 6 percent in interest. With microloans, the lender is the one who sets the interest rates without any regulations from the SBA. These rates are usually higher, typically between 8 percent and 13 percent.

Watch out for loan origination fees that some banks charge. Check out bank policies and compare fees from different lenders before you sign.

What Are the Payback Terms Like for SBA Loans?

The repayment term for your SBA loan depends on which type of loan you have.

SBA 7(a) loans have monthly repayment requirements for the following loan terms:

• 7 years for working capital loans
• 10 years for equipment loans
• 25 years for commercial real estate loans

SBA 504 loans have terms of 10 or 20 years. SBA microloans vary, up to six years.

SBA loans are giving startups the financial foundation they need to launch new ideas, products and services. Apply for an SBA loan today to enable your business to change the world tomorrow.

Personal Loans For Business

When & when not to use personal loans for business purposes.

A personal loan can be one of the best ways to fund a budding business of your own, but it also can have drawbacks. I When is it the right idea to use a personal loan for business instead of applying for a traditional business loan? How are the two different? What do you need in order to apply and get approved for a personal loan? Keep reading to learn about the pros and cons of using personal loans for business purposes and how to get the loan you need.

Personal Loans vs. Business Loans: What's the Difference? Personal and business loans are similar at their core. Here’s how their pros and cons differ:

Business Loans

Limited uses: Business loans are designated for specific business purposes only. That means if you have some extra cash left over, you can’t use it to go on vacation to Tahiti. The parameters for business expenses are wide-ranging, but you must stay within them. It can include business lunches with anyone who is a prospective client, any equipment you use for any business purpose, salaries, supplies, business investments, or anything else you need to grow your business.

Bigger payouts: Business loans also come in bigger amounts than personal loans because businesses usually have big expenses.

Harder application and approval processes: The downside to business loans is that they can be harder to get than personal loans. Because you’re dealing with bigger numbers, lenders are more particular about who they lend to. Also, there’s a lot more paperwork involved in these applications. Lenders want to see your business plan, your income tax returns, your bank statements, your driver’s license and much more.

Time in business requirements: One of the primary issues lots of people have with business loans is the required time in business needed for approval. Many lenders won’t approve these loans unless you have been in business for at least a year (sometimes three or five years minimum). That requirement rules out a lot of startups and small businesses that are would otherwise be prime candidates for business loans.

Personal Loans

Flexible: Personal loans are more flexible in how you can use them and who can get them. For example, you will have the flexibility to use the money as you please, no questions asked. You can spend it on your business and on anything else you want.

Lower APRs: Sometimes, personal loans can come with lower annual percentage rates than business loans but not always. Look at the terms you qualify for and compare them with business loans you could get.

Easier qualifications: This is without a doubt one of the biggest perks of personal loans. Only about 25 percent of businesses are approved for a business loan from a bank. You might have a hard time obtaining a business loan if:

• You haven’t started your business yet
• You want a small amount, less than $25,000, without high interest rates.
• You don’t have any collateral.

Personal loans, however, can be easier to get. You don’t need to have any business history (because it’s not a business loan); you can have lower a credit score; and you can ask for a smaller amount without getting hit with high rates. Moreover, you don’t need collateral to make these loans happen.

Fees and taxes may apply: On the other hand, you might have to pay a prepayment penalty if you finish paying off your loan earlier than the repayment date. Often you won’t get a tax credit for your interest payments on a personal loan like you would with a business loan.

Personal loans make you the guarantor: Personal loans put your own personal assets in danger because if you're unable to pay back the loan, your assets will be seized as payment.

All that said, using personal loans for business purposes can be a big help and can work out well for most business owners. Now that you’ve decided you want to consider personal loans for business purposes, here are more details you need to know before applying.

How Much Can You Get from a Personal Loan?

Personal loans are usually given in smaller amounts, generally from around $1,000 up to $50,000. Some lenders offer up to $100,000, but you’ll need to have some impressive qualifications to get approved for that amount. The typical personal loan amount is $50,000.

How Long Does It Take to Get a Personal Loan?

When working with online lenders, the process of getting a personal loan can be fast. It can take up to a week for the entire process to go through, but sometimes you can receive the funds in as little as one day. The loan processing time will depend on the papers you provide, the lender you are working with and your creditworthiness.

What Documentation Do You Need to Qualify for a Personal Loan?

Personal loans are easier to qualify for than business loans. Whereas business loans applications require an extensive amount of documentation, personal loan applications only ask for a few things. Requirements vary depending on the lender, but you can expect most to ask for:

• Proof of ID, such as a driver’s license or passport.
• Proof of residence
• A few bank statements

That’s it. Like we said, a lot simpler than a business loan.

Who Can Apply for a Personal Loan?

Personal loans are designed for the average person. That means that anyone can apply for this type of loan. You’ll stand a much better chance of getting approved for the loan if you have good credit and a long credit history, but there are several lenders that cater to people with no credit or low credit scores. To get the best rates, you’ll want a credit score of 720 or better.

How Much Will It Cost You?

Personal loan APRs can range from 4.08 percent to 36 percent, depending on your creditworthiness, the amount you borrow and the lender. In general, though, if you have good credit, your APR will average in the 10 percent range. The longer you stretch out your repayment plan, the more you’ll end up paying in interest over time. So, if you can afford to, make your monthly payments larger to avoid long repayment terms.

What Payback Terms Can You Get?

Personal loans offer some of the most flexible repayment terms of any loan type. The average small personal loan will require repayment in one to five years, but there’s a lot more flexibility built into this financing option. In some cases, you can get a personal loan repayment plan that spans 10 years.

Personal Loans for Businesses of Every Shape & Size

Ready to launch your business but need some capital? Getting a personal loan for business expenses might be the best choice for you. Compare your business financing and loan options, select reliable lenders, and equip your business to be successful.

Paycheck Protection Program (PPP) Loans

What you need to know about ppp loans for small businesses.

Paycheck Protection Program loans, or PPP loans, are a special type of SBA loan issued specifically to keep small business workforces employed as the world faces the coronavirus, or COVID-19, crisis. A large portion of PPP loans can be forgiven if terms are followed correctly, which has incentivized many small businesses in need to apply and retain employees.

In order for the loan to be forgiven, at least 75% of the loan amount must be used towards payroll costs of full-time employees for an 8-week period after the loan is issued. Additionally, businesses must maintain the number of employees on payroll to qualify for forgiveness. Like other SBA loans, you apply and receive a government-backed PPP loan through a traditional lender like your bank or credit union and when the time comes, you will submit documents and information to your lender to receive loan forgiveness.

PPP loans can be used for other costs such as mortgage interest, rent and utilities under certain conditions, however if you want the loan forgiven, 75% of the loan amount must go towards payroll while 25% of the loan amount can go towards the other costs listed. Keep in mind, costs for independent contractors do not count as payroll costs.

For each round of PPP loans, the SBA has a set amount of total funds it can lend out and once that’s happened, no more loans will be reissued unless a new round of funding is announced. What does this mean for you? Act fast. The sooner you apply, the better your chances are of getting the loan you need.

How Much Can You Get from a PPP Loan?

The maximum loan amount you can apply for and be approved for is based on your existing company numbers. Loan amounts are calculated based on your average monthly payroll costs in 2019. You can apply for 2.5x your average monthly payroll amount up to a maximum of $10 million so loan amounts will vary for every business. According to the SBA, you can only receive one PPP loan even though there may be multiple rounds of PPP lending so consider applying for the maximum amount when you apply as you’ve only got one shot.

How Long Does It Take to Get a PPP Loan?

How quickly can you get a PPP loan? The short answer is: it varies. PPP loan applicants have been approved anywhere from a few hours to a few weeks after applying, according to USA Today. Once approved, borrowers are supposed to receive funds within 10 days. Inquire with your lender for details.

What Documentation Do You Need to Qualify for PPP Loans?

To apply for a PPP loan, you’ll need to submit a detailed application with information in regards to your payroll costs, mortgage or rent payments, utility payments, among other financial documents.

The real document work happens when you apply for loan forgiveness — that is after the loan has already been dispersed and used. You’ll need to provide documents such as:

• Bank account statements
• Payroll reports
• Payment receipts
• Documentation showing that the number of full-time employees did not change during a defined period of time
• Business mortgage interest payment (if applicable)
• Business rent or lease payments
• Business utility payments

For a full list of documents required to submit for PPP loan forgiveness, review page 10 of the PPP loan forgiveness application. Businesses are required to maintain additional records that they do not have to submit unless specifically requested, also detailed in the forgiveness application.

Good recordkeeping is critical for any business’s success, but these circumstances make diligent accounting and recordkeeping more important than ever.

Who Can Get a PPP Loan?

If any of the following apply to you, then you will be automatically disqualified from getting a PPP loan, according to the website Workest:

• You have previously defaulted on an SBA loan
• You have a felony on your record from the last 5 years
• You are currently incarcerated, on parole or probation or “are subject to arraignment or indictment for any criminal charges.”
• A federal agency has suspended you from participating

PPP loans do not require a traditional credit check, according to Nav. That said, your lender may still pull your credit to confirm your identity, Womply reports. Some small business owners who applied for PPP loans have reported that their lenders did do a “hard pull” on their credit. Hard inquiries can cause a credit score to drop temporarily.

“Since the Paycheck Protection Program is intended to get emergency business funding into the hands of as many of America’s struggling business owners as quickly as possible, the SBA has apparently temporarily suspended the requirement of a credit check for this type of loan,” Womply reports.

This means those with less-than-stellar credit may qualify for a PPP loan with favorable terms and rates (and may even have the loan forgiven); it’s an opportunity that doesn’t often present itself to those with subpar credit so it may be worth pursuing.

How Much Does a PPP Loan Cost?

The reason PPP loans are so appealing is that 100% of the loan can be forgiven if you meet the criteria so if you approach the process correctly the cost could be absolutely nothing. That said, even if you don’t end up qualifying for loan forgiveness, the terms are quite favorable. Eligible small businesses can borrow up to the maximum amount they qualify for (2.5x its average monthly payroll up to $10 million) at a fixed interest rate of 1% over a two-year term. If funds are not used according to the program terms, which you will have to prove, then your loan will have to be repaid with interest.

What Are the Payback Terms Like for a PPP Loan?

As stated previously, the big draw here is that your loan can be entirely forgiven if you qualify, meaning you’d have no payback terms of any kind. That said, not every business will qualify for loan forgiveness. In that case, they have two years to repay the loan with a fixed interest rate of 1%, which is about as favorable of terms one can find in the current business lending landscape.

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Taking out a loan for your small business? Congratulations! Getting a small-business loan opens up all sorts of opportunities for business growth, making it an exciting financial milestone for many businesses.

Of course, that exciting milestone could become a shocking and disappointing one when you find out that your $100,000 loan will cost you $152,000 by the time you pay it back.

So before you borrow, use a financial, or loan calculator to figure out the actual cost of your small-business loan. It will save you from nasty sticker shock and help you find the right loan for your small business.

Use our best small business loans guide to discover the best lender for you.

How to use a small-business loan calculator

To get the most accurate total cost estimate, you’ll need to gather a little information before you use a business loan calculator:

• Loan amount (how much you’re borrowing)
• Interest rate
• Loan term (the time you have to repay the loan, which affects your number of monthly payments)
• Extra monthly loan payment amount (if you plan to pay more than the minimum)

You don’t need to have the exact numbers—after all, you probably won’t know your final interest rate until you get approved for your loan—but more accurate numbers will give you more accurate results (obviously).

Once you put in all those numbers, click the button to have the calculator do the math for you. And there you go—the total cost of your loan.

You can also use a loan calculator to see how different rates, terms, or payments would affect the total cost of your loan. So if you’re deciding between a loan with a longer repayment term and a lower rate and a loan with a shorter repayment term and a higher rate, you can use a calculator to find out which one offers the better deal.

But that’s not the only thing a loan calculator can show you.

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How to get the most out of a loan calculator

Like we said, a loan calculator can show you the total cost of your loan (the loan principal plus any interest you’ll owe). And that’s great for seeing how much a loan will cost your business in the long run (because boy, interest can add up quickly).

But a loan calculator can give you plenty of other useful information―information that can help you make smarter, more informed decisions before you take out a loan.  

A loan calculator should show you the following:

• Total loan payback amount
• Estimated monthly payment
• Percentage of total repayment that goes to principal vs. interest
• Principal vs. interest amount for each payment (an amortization table)

So if, for example, you’re trying to decide between a loan with a longer repayment term and a lower interest rate (say, 10 years and 5%) and a loan with a shorter repayment term and a higher interest rate (like 7 years and 8%), the loan calculator can help you decide which to go with―whether you want the lower total payoff amount or the lower monthly payment. 

Likewise, a loan calculator can see if your monthly loan payment will fit in your business budget, or if it’s worth shopping around for a better interest rate.

Of course, you need to remember that a loan calculator only gives you estimates. So make sure you ask a lender for hard numbers before committing to a loan. 

Thankfully, a calculator’s estimates can give you plenty of information to help you choose the best loan for your business .

To apply for a loan, you’ll need to provide plenty of information. Expect to be asked for your credit score , personal and business tax returns, business financial statements, any collateral you have to offer, and a business plan.

Loan cost factors

As you compare and apply for the best small-business loans, you should know how various factors affect your total loan cost. In this section, we'll take a quick look at some of the biggest factors.

Loan amount

The most significant factor in your total loan cost is the size of the loan you take out. For example, a $500,000 loan will cost you more than a $10,000 loan because, obviously, it requires you to pay back $500,000 and not just $10,000.

But that’s not the only reason. Other loan costs, like interest rates and fees, often get calculated as a percentage of your loan amount. As a hypothetical example, if your interest and fees are 10% of your loan amount, a $100,000 loan would cost you $10,000 in fees, while a $50,000 loan would only cost $5,000 in fees.

So as you apply for a small-business loan, make sure you’re applying for the right size loan. You want enough money to cover your needs—whether you’re using it to purchase equipment or hire an employee or revamp your marketing strategy—but don’t assume that bigger is better. Because in this case, a bigger loan comes with bigger fees.

In 2017, the average business loan extended by commercial banks was $663,000. 1 Alternative lenders have a much lower average loan size, though. The average loan through Lendio, for example, was a much more modest $26,873. 2

Interest rates

The interest rate on your loan also has a huge effect on your total loan cost.

To illustrate, think about a $50,000 five-year loan. With a 6% interest rate, your monthly payment would be $966.64 for a total cost of $57,998.40. With a 12% interest rate, your monthly payment goes up to $1,112.22 for a total cost of $66,733.34. (You can try it for yourself on a business loan calculator.)

While the obvious solution is to get a low-interest rate, whether you are getting a U.S. Small Business Administration (SBA) loan or a cash advance loan, that’s not always easy. Several factors affect the interest rate you’re offered, including your credit score , loan size, term length, cash income, and business revenue. Generally speaking, better credit history and business health lead to lower interest rates.

Even the lender you use can change your interest rate; alternative lenders typically offer higher rates than traditional lenders (but alternative lenders also have less strict application requirements).

We haven’t found any substantiated stats on the average loan rate, but we can tell you some typical rates. Traditional lenders offer business term loan rates as low as 5% and as high as mid-20%. Loan rates from alternative lenders start around 7% and go as high as 36%.

Of course, the impact of your interest rate will depend on your loan’s term, or the number of payments you make. A longer term will accrue more interest, while a shorter term will accrue less.

Closely related is your payment schedule. For example, if you have an amortizing loan, each payment goes toward both the interest and the principal ( the loan amount ), but your interest payments decrease as your principal decreases. So you might start off with a payment that goes 90% toward interest and 10% toward the principal, but eventually you’ll make payments that go 90% toward the principal and 10% toward interest.

Since this interest is calculated according to your remaining principal, you can make prepayments (payment submitted before your payments are due) to reduce the amount of interest you end up owing—and consequently, your overall cost.

(If you get an amortizing loan, you can ask your lender for an amortization table that shows you the details of how prepayment affects your total cost.)

Many lenders charge fees when you borrow a loan. For example, you might have an origination fee, a processing fee, or a packaging fee. Depending on the lender, these may be flat fees or a percentage of your loan amount.

Keep in mind that many loan providers take the cost of your loan fees out of the loan they give you. So if you get approved for $10,000, but $500 of that amount is in fees, you’ll only get $9,500. In that case, fees shouldn’t affect the total amount you pay for your loan (though it could cause problems if you expected to use the full amount). But not all lenders do this, so definitely ask about fees before committing to your loan.

Then there are the fees that come when you pay back the loan. You probably already know that lenders don’t like it when you pay late, so most have a late payment fee when you miss your monthly payments. But some lenders also don’t like it when you pay early, so they charge prepayment penalties.

While you might see them used interchangeably as you look at lending, interest and APR are not the same thing. Your APR includes not only your interest rate but also any fees you have to pay for the loan. In theory, this makes it more descriptive of the actual loan cost.  Learn more in our guide to APR .

Additional resources

And for everything else, there’s our Ultimate Guide to Small-Business Loans .

Interested in learning more about choosing a business loan and finding the right loan for your business? Good—we have plenty of other loan resources to help you do just that.

First, we suggest you take a look at the types of business loans available from alternative lenders. While brick-and-mortar banks offer some of the best deals, alternative loans are often easier (and sometimes faster) to get.

Next, you can peruse our resources on specific kinds of business loans. If, for example, you want to pay off your small-business loan in less than two years, you can check out the best short-term business loans . If you’re interested in loans that don’t require any collateral, we have a list of the best unsecured business loans . And if you’re concerned about your credit history affecting your eligibility, you can explore options with our business loans for bad credit .

The takeaway

Whether you’re using your small-business loan to get some additional working capital, help your cash flow, or hire a new employee, your financing choices can have a big impact on your business’s financial health.

So before you become a borrower, make sure you clearly understand the total cost of your loan. Don’t be afraid to ask your lender plenty of questions about things like your term, rates, and fees. And once you have that information, use a business loan calculator to get a clear picture of your loan’s true price.

Buying real estate with your business loan? Check out a commercial loan calculator to get a more accurate total cost.

Related reading

• SBA Business Loan Calculator: Estimate Your SBA Term Loan Costs
• 5 Best Business Loans for Bad Credit in 2023
• The 5 Best Startup Business Loans of 2023
• How to Get a Small Business Loan in 7 Simple Steps
• The Most Common Business Loan Fees: Extra Costs to Watch Out For

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

• Board of Governors of the Federal Reserve System, “ Survey of Terms of Business Lending - E.2 .” Accessed December 6, 2022.
• Lendio, “ Lendio Surpasses $500 Million in Business Loans Originated through Its Online Marketplace .” Accessed December 6, 2022.

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Business loan and interest rate calculator

Before applying for a small business loan, make sure you know how much financing you can afford. Bankrate’s business loan calculator can help you estimate what your loan will cost and how much you’ll pay each month. Just enter a loan amount, loan term and interest rate.

What to know about business loans

What if my loan uses a factor rate, types of business lenders, types of business loans.

• What to consider when shopping

Alternatives to fund your business

A  business loan gives you a lump sum of money or a revolving line of credit that you can use to cover business-related expenses. These funds can help you start or grow a business and keep up with day-to-day expenses. You can also use a business loan to consolidate debt  if needed. 

The cost of a business loan or line of credit is determined by four factors: 

• Principal:  The total amount your business borrows.
• Interest:  The cost of borrowing a business loan. 
• Annual percentage rate (APR):  The annual cost of a loan expressed as a percentage. The APR includes both interest and fees.
• Loan term:  The time it takes to pay back the loan. 

A business loan could help your business succeed, but you should only consider taking one out if you are sure you can afford to pay it back.

Factor rates are expressed as a decimal rather than a percentage. They're often used on short-term business loans that are accessible to borrowers with bad credit . This includes merchant cash advances and some business lines of credit.

To find the cost of a loan that uses factor rates, multiply the factor rate by the principal to determine how much you pay back.

For example, if you have a factor rate of 1.30 on a loan of $10,000, your business will pay back $13,000 — the original $10,000 and $3,000 in loan costs. This doesn't include any additional fees the lender might tack on, like origination fees.

Loans with factor rates tend to cost more and have shorter repayment periods. Before accepting one of these loans, convert the factor rate to an interest rate . This will make it easier to compare with other loan rates. You should also use a business loan calculator to see how much you could save if you had a loan with a comparable interest rate.

Business loans are offered by banks (both traditional and online), credit unions and online lenders — although the amounts and repayment period vary widely among options. 

Bank loans are generally best suited for business owners with an established banking relationship. Online lenders, such as financial services companies, tend to be a better option for newer businesses and those with poor credit . Because of the variety of online lenders, more lending options and flexible repayment terms exist.

There are countless options out there, but these are the most common  types of business loans .

• Installment loan:  Installment loans — also known as term loans — allow your business to borrow a lump sum and pay it back in monthly payments. These are some of the most common options, and you can find them offered by both banks and online lenders.
• Line of credit:  A  business line of credit  functions like a credit card. You can draw funds from it as needed and only pay interest on what you borrow. As you pay back what you’ve borrowed, your credit limit resets and you can borrow more as needed. 
• Commercial real estate loan:  If your business is ready to open a brick-and-mortar location, a  commercial real estate loan gives you the funding to buy property or sign a lease.
• Equipment loan:   Equipment loans are term loans secured by the equipment your business needs to buy. Because the equipment acts as collateral, they tend to have lower rates than unsecured installment loans.
• SBA loan: The Small Business Administration (SBA) backs loans for businesses. While it doesn’t offer loans itself, it can help your business qualify for lower rates and better repayment terms. The SBA backs term loans, commercial real estate loans and other ways to borrow to expand your business.

What to consider when shopping for a business loan

Before taking out a loan, consider your business needs and the total cost of borrowing.

• Assess your business’s overall financial picture to give you a better idea of what you may be able to qualify for — and what type of loan would best suit your needs.
• Compare lenders to find the lowest possible rate . But you should also consider borrowing limits, fees, eligibility requirements and funding speed.
• Apply for preapproval to see what terms and rates you are eligible for before committing. Some lenders will let you pre-qualify without hurting your credit.
• Business credit cards  allow you to borrow what you need when you need it up to a credit limit. Credit cards also may come with perks like rewards programs, sign-up bonuses and an introductory period with 0 percent APR. 
• Personal loans  are generally easier to qualify for but may have higher rates and shorter repayment terms. And while many can be used for business expenses, not all lenders allow it — so check the fine print before you apply.
• Business grants are awarded to certain types of businesses, like those owned by minorities , veterans and  women . You don’t have to pay back what you receive, but grants are extremely competitive and involve a lengthy application process.
• Home equity loans  can be used for business expenses, but this should be a last resort. If you have a lot of equity in your home, this option could give you quick access to the cash you need. However, using a home equity loan puts you at risk of losing your home if you are unable to pay it back. 

Business Loan Calculator

The Business Loan Calculator calculates the payback amount and the total costs of a business loan. The calculator can also take the fees into account to determine the true annual percentage rate, or APR for the loan. The APR gives borrowers a more accurate assessment of a loan's actual cost.

View Amortization Table

Related Loan Calculator | Interest Calculator

Business loans, like the name implies, are loans intended for business purposes. Like other loans, the terms require the borrower to pay back both the principal and the interest. Most business loans will require monthly repayments, though some may call for weekly, daily, or interest-only payments. A select few can require repayment when the loans mature.

Business loans also come in many different forms. The following is a list of common loan options for U.S. businesses:

Small Business Administration (SBA) loans, or loans federally regulated by the U.S. Small Business Administration, are designed to meet the financing needs of many different business types. Depending on the type of SBA loan, borrowers can use them for various purposes, including:

• Business start-ups
• Acquisitions
• Working capital
• Real estate
• Franchise financing
• Debt refinancing
• Improvements
• Renovations

The actual SBA loan funds are not provided by the government, but by banks, local community organizations, or other financial institutions. The SBA guarantees these lenders 75% to 90% of the loan amount in case of default. This encourages loans by reducing lender risk. However, SBA loans require additional paperwork and extra fees. Moreover, approval may take longer, and their strict regulations tend to give business owners less freedom. Additionally, maximum loan limits may fall short of covering the more costly needs of some businesses.

SBA Loan Types

The SBA offers four types of small business loans:

This is the primary small business loan offered by the SBA, and it is usually what one means when referring to an "SBA loan."

7(a) loans make up more than 75% of all SBA loans, and borrowers utilize them for varied purposes. These may include working capital or different types of purchases. Such acquisitions may consist of machinery, equipment, land, or new buildings. Borrowers can also use the funds for debt financing. They may take out loans as large as $5 million for up to 10 years for working capital or 25 years for fixed assets.

These loans are intended for new or growing small businesses. Borrowers can utilize microloans for everything covered under 7(a) loans except paying off existing debt or purchasing real estate. Lenders can approve microloans for as much as $50,000, though the average of these loans is no more than $15,000. The maximum allowable term is six years.

Real Estate & Equipment Loan (CDC/504)

Borrowers typically take out CDC/504 Loans for long-term fixed-rate financing of real estate or equipment and debt refinancing. Due to their limited scope, they cannot utilize these loans for working capital or inventory. The maximum loan amount is $5.5 million with possible terms of 10, 20, or 25 years.

Disaster Loan

Business owners can use these loans to repair machinery, property, equipment, inventory, or business assets damaged or destroyed by a declared disaster. The maximum loan amount is $2 million, and possible disasters can include earthquakes, storms, flooding, fires (natural or man-made), or civil unrest.

Other Loan Types

Conventional Loans

Most conventional business loans come from banks or other financial institutions. Unlike SBA loans, conventional loans do not offer governmental insurance for lenders. They typically involve higher rates and shorter terms. Hence, borrowers with lower credit scores or a lack of available funding may find SBA loans more attractive. However, personal loans may carry low interest rates for borrowers with excellent credit. Moreover, such loans involve a quicker, less regulated process, increasing their appeal to some borrowers.

Banks offer conventional loans in many different forms, such as mezzanine financing, asset-based financing, invoice financing, business cash advances, and cash flow loans.

Personal Loans

Borrowers can sometimes use personal loans for small business purposes. In some cases, new businesses without established histories and reputations may turn to such loans to avoid the high interest rates on business loans. Refer to the Personal Loan Calculator for more information or to run calculations involving personal loans.

Interest-Only

An interest-only loan differs from standard loans in that borrowers pay only interest for the duration of the loan. The entire principal balance comes due at the loan's maturity date. An interest-only loan allows for lower payments during the loan term and might make sense when borrowers expect higher income in the future.

Business Loan Fees

Like many other types of loans, business loans usually involve fees besides interest. Banks typically charge these fees to cover the costs of verifying the borrower's information, filling out paperwork, and other loan-related expenses. The most common fees are the origination fee and the documentation fee.

Origination Fee

Banks charge this fee for the processing and approval of a loan application, a process that may include verification of a borrower's information. Banks may apply a flat fee or a percentage of the loan amount, generally between 1% and 6%. They often roll the origination fee into the cost of the loan.

Documentation Fee

This is a common fee associated with loans that banks charge to cover the cost of processing paperwork.

Besides the origination fee and documentation fee, some lenders may also charge an application fee upfront to review the application.

Banks may also charge other fees over the course of the loan. These may include:

• Monthly administrative fees
• Annual fees
• Service or processing fees
• Prepayment penalties
• Referral fees
• Late payment fees
• Wire transfer fees

Not all lenders charge these fees. Also, some expenses, such as the late payment fee or the prepayment penalty, will only apply in certain situations.

The Bottom Line

All these fees can make the actual cost or rate of the loans higher than the interest rate given by the lenders. The calculator above can account for these expenses and compute the loan's actual cost with fees included, allowing borrowers to understand the full implications of taking out such a loan.

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The family home where Captain Sir Tom Moore walked 100 laps to raise nearly £40m for the NHS during the first COVID lockdown is up for sale for £2.25m.

The Grade II-listed Old Rectory is described as a "magnificent seven-bedroom property" by estate agents Fine & Country.

In a video tour of the house, a sculpture of Captain Tom with his walking frame can be seen in the hallway, while a photo of the fundraising hero being knighted by the Queen is on a wall in the separate coach house building.

Introducing the property, an estate agent says in the tour video: "I'm sure you'll recognise this iconic and very famous driveway behind me as it was home to the late Captain Sir Tom Moore who walked 100 laps of his garden, raising over £37m for NHS charities."

It comes less than three months after the demolition of an unauthorised spa pool block in the grounds of the property in Marston Moretaine, Bedfordshire.

Speaking at an appeal hearing over that spa, Scott Stemp, representing Captain Tom's daughter Hannah Ingram-Moore and her husband, said the foundation named after the fundraising hero "is to be closed down" following a Charity Commission probe launched amid concerns about its management.

For the full story, click here ...

"Status symbol" pets are being given up by owners who get scared as they grow up, an animal charity has said, with the cost of living possibly paying a part in a rise in separations.

The Exotic Pet Refuge, which homes parrots, monkeys, snakes and alligators among others, says it receives referrals across the country, including from zoos and the RSPCA.

"They're a status symbol. People will say, 'OK, I'll have an alligator or a 10ft boa constrictor'," co-owner Pam Mansfield told the BBC.

"But when the animal gets big, they will get too frightened to handle them, and then the pet has to go."

She added people who want to get rid of the pets sometimes call zoos for help, which then call on her charity.

In some cases, owners don't have licences to own dangerous animals, she says, blaming a "lack of understanding" for what she says is a rise in the number of exotic animals needing to be rehomed.

She says people "just don't have the space" for some snakes, for example, with some growing to as much as 12ft and needing their own room.

The cost of living crisis has also forced owners to give their pets away, she says.

Her charity has also been affected by those increased costs, with the electricity bill rising to £10,000 a month at their highest, to fund things like heated pools for alligators.

Private car parks are accused of "confusing drivers" after introducing a new code of conduct - despite "doing all they can" to prevent an official government version.

The code of practice launched by two industry bodies - British Parking Association and the International Parking Community - includes a ten-minute grace period for motorists to leave a car park after the parking period they paid for ends.

It also features requirements for consistent signage, a single set of rules for operators on private land and an "appeals charter".

Private parking businesses have been accused of using misleading and confusing signs, aggressive debt collection and unreasonable fees.

That comes after a government-backed code of conduct was withdrawn in June 2022, after a legal challenges by parking companies.

RAC head of policy Simon Williams said: "We're flabbergasted that the BPA and the IPC have suddenly announced plans to introduce their own private parking code after doing all they can over the last five years to prevent the official government code created by an act of Parliament coming into force.

"While there are clearly some positive elements to what the private parking industry is proposing, it conveniently avoids some of the biggest issues around caps on penalty charges and debt recovery fees which badly need to be addressed to prevent drivers being taken advantage of."

BPA chief executive Andrew Pester said: "This is a crucial milestone as we work closely with government, consumer bodies and others to deliver fairer and more consistent parking standards for motorists."

IPC chief executive Will Hurley said: "The single code will benefit all compliant motorists and will present clear consequences for those who decide to break the rules."

Sky News has learnt the owner of Superdry's flagship store is weighing up a legal challenge to a rescue plan launched by the struggling fashion retailer.

M&G, the London-listed asset manager, has engaged lawyers from Hogan Lovells to scrutinise the restructuring plan.

The move by M&G, which owns the fashion retailer's 32,000 square foot Oxford Street store, will not necessarily result in a formal legal challenge - but sources say it's possible.

Read City editor Mark Kleinman 's story here...

NatWest says its mortgage lending nearly halved at the start of the year as it retreated from parts of the market when competition among lenders stepped up.

New mortgage lending totalled £5.2bn in the first three months of 2024, the banking group has revealed, down from £9.9bn the previous year.

The group, which includes Royal Bank of Scotland and Coutts, also reported an operating pre-tax profit of £1.3bn for the first quarter, down 27% from £1.8bn the previous year.

An unexplained flow of British luxury cars into states neighbouring Russia continued into February, new data shows.

About £26m worth of British cars were exported to Azerbaijan, making the former Soviet country the 17th biggest destination for UK cars - bigger than long-established export markets such as Ireland, Portugal and Qatar.

Azerbaijan's ascent has coincided almost to the month with the imposition of sanctions on the export of cars to Russia.

Read the rest of economics and data editor Ed Conway 's analysis here...

Rishi Sunak has hailed the arrival of pay day with a reminder his government's additional National Insurance tax cut kicks in this month for the first time.

At last month's budget, the chancellor announced NI will be cut by a further 2p - so some workers will pay 8% of their earnings instead of the 12% if was before autumn.

The prime minister has repeated his claim this will be worth £900 for someone on the average UK salary.

While this additional cut - on top of the previous 2p cut in January - does equate to £900 for those on average full-time earnings of £35,000, there are two key issues with Mr Sunak's claim:

• Once the effect of all income tax changes since 2021 are taken into account, the Institute for Fiscal Studies reports an average earner will benefit from a tax cut of £340 - far less than £900;
• Moreover, anyone earning less than £26,000 or between £55,000-£131,000 will ultimately be worse off.

In short, this is because NI cuts are more than offset by other tax rises.

We explain below how this is the case...

Tax thresholds

This is partly down to tax thresholds - the amount you are allowed to earn before you start paying tax (and national insurance) and before you start paying the higher rate of tax - will remain frozen. 

This means people end up paying more tax than they otherwise would, when their pay rises with inflation but the thresholds don't keep up. 

This phenomenon is known as "fiscal drag" and it's often called a stealth tax because it's not as noticeable immediately in your pay packet.

That low threshold of £12,570 has been in place since April 2021. 

The Office for Budget Responsibility says if it had increased with inflation it would be set at £15,220 for 2024/25.

If that were the case, workers could earn an extra £2,650 tax-free each year.

Less give, more take

Sky News analysis shows someone on £16,000 a year will pay £607 more in total - equivalent to more than three months of average household spending on food. 

Their income level means national insurance savings are limited but they are paying 20% in income tax on an additional £2,650 of earnings.

In its analysis , the IFS states: "In aggregate the NICs cuts just serve to give back a portion of the money that is being taken away through other income tax and NICs changes - in particular, multi-year freezes to tax thresholds at a time of high inflation."

Overall, according to the institute, for every £1 given back to workers by the National Insurance cuts, £1.30 will have been taken away due to threshold changes between 2021 and 2024.

This rises to £1.90 in 2027.

The UK could face a shortage of cava due to a drought in the sparkling wine's Spanish heartlands.

The Penedes area of Catalonia is dealing with its worst drought on record, with vineyards across the region so parched the roots of 30-year-old vines have died.

It's left shrivelled red and green grapes languishing under intense sun, fuelled by fossil-fuel driven climate change.

Cava is an increasingly popular drink in the UK, with 17.8 million bottles sold in 2023 - an increase of 5% from the previous year, when Britons stocked up on 16.8 million bottles, according to the Cava Regulatory Board.

That makes the UK the fourth-biggest buyer, behind only the US, Belgium and Germany.

Workforce slashed

The problems have been compounded after Catalonia-based cava producer Freixenet announced it will temporarily lay off 615 workers, almost 80% of its workforce.

Under Spanish law, companies facing exceptional circumstances can lay off staff or reduce working hours.

This measure is expected to take effect from May and it is not known how long it will last.

Price rises

One industry source told retail publication The Grocer  that cava shortages would push up prices "certainly for next year" if there isn't enough supply.

This could last for years if the drought persists, they added.

Consumer expert Helen Dewdney told MailOnline the staff cuts at Freixenet can only mean one thing - price rises.

However, she added, supermarkets say they are not experiencing any issues right now.

Parents are being hammered by rising childcare costs, according to a new study that suggests they may spend more than £160,000 raising their child to the age of 18.

Research by Hargreaves Lansdown has found that parents with children pay £6,969 a year more than couples without.

Over 18 years and assuming an annual inflation rate of 3%, that amounts to a whopping £163,175, the investment platform said.

Its study also found that parents were less likely to have money left at the end of the month.

Single parents carry the biggest burden, with the research suggesting they have just £85 left on average compared to £365 for couples with children.

Hargreaves Lansdown also found just 23% of single parents reported having enough emergency savings to cover at least three months' worth of essential expenses, compared to 63% of couples with children.

Parents are also at a slight disadvantage when it comes to pensions, the research found, with only 43% of couples with children on track for a moderate retirement income, compared to 47% without. Only 17% of single parents have a decent projected pension fund.

Sarah Coles, head of personal finance at the firm, said "having children is one of the most expensive decisions a person can make".

She adds that as a result of having a child, "financial resilience suffers across the board", and added: "For single parents, life is even tougher, and they face far lower resilience on almost every measure.

"It means we need all the help we can get."

By Daniel Binns, business reporter

One of the top stories shaking up the markets this morning is that UK-based mining company Anglo American has rejected a major $38.8bn (£31bn) takeover bid.

Details of the attempted buyout by Australian rival BHP emerged yesterday  - sending Anglo American shares soaring.

The deal would have created the world's biggest copper mining company - with the news coming as the price of the metal hit record highs this week.

However, Anglo American has now dismissed the proposal as "opportunistic" and said BHP had undervalued the company.

Anglo's shares are slightly down by 0.8% this morning - suggesting investors may not have given up hopes that a deal could eventually be agreed.

However, overall the FTSE 100 is up around 0.4% this morning, buoyed by strong reported earnings from US tech giants Microsoft and Google owner Alphabet.

It's helped the index, of the London Stock Exchange's 100 most valuable companies, hit yet another intraday (during the day) record of 8,136 points this morning.

The winning streak comes after a week of all-time highs on the index - including a record close of 8,078 points yesterday. The score is based on a calculation of the total value of the shares on the index.

Among the companies doing well this morning is NatWest - despite the bank reporting a fall in pre-tax profits of nearly 28% for the first quarter of the year.

Shares in the lender are up more than 3% after its results were better than expected by analysts.

On the currency markets, £1 buys $1.25 US or €1.16, almost on a par with yesterday.

Meanwhile, the price of a barrel of Brent crude oil has crept up slightly to $89 (£71).

Self-checkouts - they're like marmite, people seem to either love them or hate them.

But the boss of Sainsbury's has claimed that his customers do  enjoy using self-checkouts, despite criticism that that machines don't always provide the convenience promised.

Simon Roberts told The Telegraph that there are more of them in Sainsbury's stores "than a number of years ago" as shoppers like the "speedy checkout".

But despite this, he said there won't be a time when they'll replace cashiers completely.

"Over the last year, where we've put more self-checkouts in, we're always making sure that the traditional kind of belted checkout is there," he said.

His comments come after northern supermarket Booths ditched self-checkouts at all but two of its sites after customer feedback. 

Walmart and Costco in the US have also scaled back on the systems.

Let us know in the comments - do you love or hate self-checkouts?

We've all heard consumer advice that's repeated so often it almost becomes cliché. So, every Friday the Money team will get to the bottom of a different "fact" and decide whether it's a myth or must.

This week it is...

'Smart meters save you money'

For this one, we've enlisted the help of Dr Steve Buckley, also known as the Energy Doctor and head of data science at Loop...

So do smart meters help you save? 

"The short answer is both yes and no," Steve says.

"Installing a smart meter by itself won't magically reduce your energy consumption. But, by giving you easy access to your energy usage data, smart meters pave the way for savings that you couldn't achieve otherwise."

Before smart meters, most households only found out how much energy they had used when the bill arrived. 

By that stage it's too late to address wasteful usage, leading to what's known as "bill shock". 

"With a smart meter, you can see your usage and costs in real-time through an in-home display or an app provided by your supplier," Steve says. 

"This immediate feedback encourages you to use less energy. If you measure it, you can control it."

In 2022, the Department for Energy Security and Net Zero found that homes with smart meters used about 3.4% less electricity and 3% less gas. 

"This might not seem like a lot, but it adds up to a saving of over £50 per household annually," Steve says.  

If all homes in the UK made similar cuts, that would amount to savings of around £1.5bn and a potential reduction in CO2 emissions by about 2.7m tonnes each year. 

"Good for individual households but also great for the planet," Steve says. 

Smart meters are often installed at no extra cost to the consumer - it's effectively free data for households. 

Limitations

Smart meters are more or less what you make of them - a simple, free tool that allows you to see headline figures. 

However, "without detailed analysis, it's tough to identify and eliminate" where you could be wasting money, Steve says. 

Apps like Utrack, Loop and Hugo Energy can help you work out where you might be losing money by offering a more detailed breakdown if connected to your smart meter. 

Those tools are often free, but you may need to register your card details as proof of address. 

The tools give a number of useful insights, including looking at consumption in other households of similar size or monitoring where chunks of your money are going, such as to a faulty boiler or the "phantom load" (energy wasted by devices left on unnecessarily).

Myth or must?

Although smart meters alone don't reduce energy bills, they are a vital tool to help energy efficiency and cost savings. 

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A California woman bought a vacant lot in Hawaii and discovered a $500,000 house was built on it without her permission

• Anne Reynolds purchased a vacant lot in Hawaii in 2018 from a tax auction.
• A developer in Hawaii accidentally built a house on it instead of the neighboring lot.
• She wanted the house to be removed and the flora and fauna to be restored. Instead, she got sued.

Annaleine "Anne" Reynolds had big plans for a vacant lot she purchased in 2018. Unfortunately, she was beaten to the punch when a developer built a house on it.

Reynolds bought a one-acre plot of land in Hawaiian Paradise Park, a nearly 15,000-person subdivision on Hawaii's Big Island, for $22,500 at a tax auction. Now, a house — worth just over $500,000, according to the real-estate marketplace Trulia — sits vacant on the land.

"It was so sad — I cried when I saw it," Reynolds told Business Insider. "It didn't look like that when I bought it."

Reynolds, who lives in California, had grand visions for the land and was disappointed to realize those plans would have to wait a little longer while things get sorted out in court.

But she's in court as a defendant.

"It feels like I did something wrong," she said.

Documents verified by BI show that Reynolds is being sued by the developer, Keaau Development Partnership LLC. The lawsuit claims Reynolds was "unjustly enriched" by the property built on her land.

Now she's fighting in court to maintain possession of her land and to have the house that sits on it removed and the flora and fauna restored.

How the mistake happened

Reynolds planned to build a home for her two children on the property and use some of the space to host women's retreats.

Reynolds is an energy healer and a relationship coach , and for her, the perfect plot of land was more than just the view or the peace she felt from hearing the waves crashing nearby.

"It needs to align with me with my zodiac sign, basically," she said. "Also, the position of the land in relation to the stars and north, south, east, and west coordinates, the sun rising and setting — all these things go into consideration."

Others view these one-acre plots differently.

Dana Kenny, principal broker of Savio Realty Ltd., has been selling property in Hawaii for over 40 years. He told BI that parcels in Paradise Park are identical unless they're right near the ocean or the highway.

Related stories

"There are 8,000 one-acre lots in Paradise Park," Kenny said. "If I blindfolded you and I drove you to Paradise Park and I put you on a street in front of a lot — I'll give you $10,000 if you could figure out where you were."

That may be how the mistake happened.

Keaau Development Partnership could not be reached for comment, but according to a court document prepared by the developer's lawyer, Peter Olson, the untouched plots in Paradise Park are identified by telephone poles. There are two lots between each telephone pole, and in this case, the house was constructed on the wrong one.

"The mistake was an accident and not intentional," the document says. "It was discovered after construction was complete and during the process of selling."

The document also says that Keaau Development Partnership offered Reynolds an exchange of lots: She would get the undeveloped lot next door, and they would keep the one with the house.

She said no.

"The land was special to her," James DiPasquale, Reynolds' attorney, told BI. "Its placement was special to her, and she simply wants it back."

A complete restoration would take a lot of time and money

In a motion for preliminary injunction and temporary restraining order filed by DiPasquale, Reynolds requested that the home on her lot be removed and that the land be restored to its "natural state prior to the wrongful construction."

That's easier said than done, according to Kenny.

He said that if he tore the house down, he'd then have to "rip up the slab. There's a water catchment system with a foundation for it — I've got to rip that up. Then I've got to dig into the ground and pull up the septic tank system and the leach field that was installed.

"I've got to remove the cinder that was laid out on top of the ground down to where the lot was bulldozed to the actual rock on the bottom," Kenny continued. "Then I've got to undo the bulldozer job. Now that's impossible, but let's say she says that's OK. She wants me to put the foliage and fauna back. Well, this is a one-acre lot. It's 135-feet wide, 325-feet deep. Where were the trees?"

Kenny estimated a project like that would cost close to $1 million to execute. The home cost about $300,000 to build, but Reynolds is footing the bill for higher property taxes.

Property records show that the taxes on the lot grew from $299.20 in 2018, the year Reynolds purchased the property, to $2,019.60 in 2023. Taxes on the neighboring, undeveloped lot were $654.50 in 2023.

Reynolds just wants her land back

While not intentional, DiPasquale believes that this mistake could set a harmful precedent for similar cases in the future.

"Do I think that we're going to have a situation where developers start bullying and basically seeing random swaths of land and say, 'Hey, listen, I'm going to go ahead and try and develop it.' I doubt that's going to necessarily happen," he said. "But I think a more common violation would be something along the lines of encroachment, or basically claiming that they were unaware of where their boundary lines fell — they built well over into another property and they're basically just saying it was an accident."

Reynolds remembers the lush greens, beautiful flowers, and the proud Ohia Lehua trees that have since been removed from her land. She's hopeful that one day they'll return as they once were.

"It felt like when you go into a sanctuary — it was really gorgeous and I could really feel the land. It was just calling out to me," she said. "I know that for Hawaiians the land is sacred — there's a sanctity to the land, and it must be revered and respected. We showed the same reverence and respect for the land."

Watch: Filling Cambodian lakes with sand creates pricey new land. It also displaces families.

• Main content

Whirlpool Slashing 1,000 Jobs as Part of Cost-Cutting Plan (1)

By Leslie Patton

Whirlpool Corp. , the owner of the Maytag and Amana appliance brands, is cutting about 1,000 salaried positions worldwide to reduce costs as slow US home sales limit demand.

The company has completed its first wave of layoffs of office staff and is planning to start another soon, Chief Financial Officer Jim Peters said in an interview. Earlier this year, the company said it was cutting jobs without saying how many. Whirlpool employed 59,000 workers worldwide as of the end of 2023.

Whirlpool stock sank as much as 9.6% in Thursday trading, the biggest drop since October. The company’s shares ...

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South Carolina Senate wants accelerated income tax cut while House looks at property tax rebate

South Carolina Senate Finance Committee Chairman Harvey Peeler, R-Gaffney, talks about the Senate’s budget plan on Thursday, April 18, 2024, in Columbia, S.C. (AP Photo/Jeffrey Collins)

South Carolina Senate Finance Committee Chairman Harvey Peeler, R-Gaffney, right, talks to Quentin Hawkins on the committee about the Senate’s budget plan on Tuesday, April 23, 2024, in Columbia, S.C. (AP Photo/Jeffrey Collins)

South Carolina Sen. Mike Fanning, D-Great Falls, prays before the start of the Senate session on Tuesday, April 23, 2024, in Columbia, S.C. (AP Photo/Jeffrey Collins)

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COLUMBIA, S.C. (AP) — The South Carolina Senate started debating a budget Tuesday that accelerates a planned income tax cut instead of the House plan to use $500 million to give homeowners a one-time property tax rebate.

Once the spending plan passes the Senate, a group of three House members and three senators — likely including the leaders of each chamber’s budget committee — is going to have to sort out the differences over the next month or so with the tax break and other items in South Carolina’s $15.4 billion spending plan for next budget year.

Republican Senate Finance Committee Chairman Harvey Peeler has called the competing tax breaks a wonderful problem to have in the 2024-25 fiscal year budget, which again left lawmakers with a substantial pot of additional money to spend.

But Peeler has left little doubt he thinks spending $100 million to knock the income tax rate most people pay in the state from 6.3% to 6.2% is the right move, saying it lasts forever compared to a one-year drop in property tax. The state is in the middle of a five-year effort to cut its top income tax rate from 7% to 6%.

The money involved comes from an account meant to provide property tax relief. Sales tax goes into the fund, and a boom in spending during and after the COVID-19 pandemic has left the account flush with cash.

The House budget suggested giving the money back as a property tax rebate. But county officials worry property tax bills will snap back next year and homeowners will be angry at them.

Along with $100 million in income tax cuts, the Senate plan spends the $500 million on roads and bridges, local water and sewer system repairs, and other items.

Another item the budget conference committee will have to resolve is how much of a raise state employees get. The Senate plan would give state employees making less than $50,000 a raise of $1,375 a year. Workers making more than that would get a 2.75% boost in pay. The House plan gives a $1,000 raise to workers making less than $66,667 and a 1.5% raise to those who make more.

Last year, there was a monthlong showdown over the differences in the budget about how much money should be given to start work on a new veterinary school at Clemson University. It led to a tense meeting and accusations of who cared about people and education more before a compromise was reached in early June.

One point both chambers agreed on is raising teacher pay. Both spending plans set aside about $200 million. Every teacher would get a raise and the minimum salary for a starting teacher would be increased to $47,000 a year. The budget also would allow teachers to get a yearly raise for each of their first 28 years instead of their first 23.

Other items in the Senate plan include $36 million to the Department of Juvenile Justice for security and prison improvements, as well as $11 million to put technology to find unauthorized cellphones in maximum security prisons and have providers block those numbers likely being used by inmates.

There is $175 million to finish work on the new school for veterinary medicine at Clemson University and $100 million for a new medical school at the University of South Carolina.

Senators set aside nearly $5 million for a forensic audit and other help to determine where $1.8 billion in a state Treasurer’s Office account came from and where it was supposed to go.

There is $11.5 million to protect the integrity of the 2024 election and $12.5 million to upgrade election systems.

The Senate budget is “balanced not only in arithmetic; it’s balanced on the needs of the state of South Carolina,” Peeler said. “First tax relief, second public education and third infrastructure.”