capital dans business plan

Small Business Trends

How to create a business plan: examples & free template.

Table of Contents

How to Write a Business Plan

Executive summary, overview and business objectives, company description, define your target market, market analysis, swot analysis, competitive analysis, organization and management team, products and services offered, marketing and sales strategy, logistics and operations plan, financial projections plan, income statement, cash flow statement.

Tips on Writing a Business Plan

Free business plan template, what is a business plan, why you should write a business plan, what are the different types of business plans.

Using Business Plan Software

Business Plan FAQs

What is a good business plan, what are the 3 main purposes of a business plan, can i write a business plan by myself, is it possible to create a one-page business plan, how long should a business plan be, what is a business plan outline, what are the 5 most common business plan mistakes, what questions should be asked in a business plan, what’s the difference between a business plan and a strategic plan, how is business planning for a nonprofit different.

Business Plan Example and Template

Learn how to create a business plan

What is a Business Plan?

A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .

A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.

Contents of a Business Plan

A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:

1. Title Page

The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.

2. Executive Summary

The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.

3. Industry Overview

The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.

4. Market Analysis and Competition

The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.

Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.

A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.

5. Sales and Marketing Plan

The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.

6. Management Plan

The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.

Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.

7. Operating Plan

The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.

8. Financial Plan

The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.

9. Appendices and Exhibits

The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.

Business Plan Template

Here is a basic template that any business can use when developing its business plan:

Section 1: Executive Summary

• Present the company’s mission.
• Describe the company’s product and/or service offerings.
• Give a summary of the target market and its demographics.
• Summarize the industry competition and how the company will capture a share of the available market.
• Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.

Section 2: Industry Overview

• Describe the company’s position in the industry.
• Describe the existing competition and the major players in the industry.
• Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their needs, and their geographical location.
• Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
• Give an overview of the estimated sales volume vis-à-vis what competitors sell.
• Give a plan on how the company plans to combat the existing competition to gain and retain market share.

Section 4: Sales and Marketing Plan

• Describe the products that the company will offer for sale and its unique selling proposition.
• List the different advertising platforms that the business will use to get its message to customers.
• Describe how the business plans to price its products in a way that allows it to make a profit.
• Give details on how the company’s products will be distributed to the target market and the shipping method.

Section 5: Management Plan

• Describe the organizational structure of the company.
• List the owners of the company and their ownership percentages.
• List the key executives, their roles, and remuneration.
• List any internal and external professionals that the company plans to hire, and how they will be compensated.
• Include a list of the members of the advisory board, if available.

Section 6: Operating Plan

• Describe the location of the business, including office and warehouse requirements.
• Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
• Describe the manufacturing process, and the time it will take to produce one unit of a product.
• Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
• Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.

Section 7: Financial Plan

• Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.

Section 8: Appendices and Exhibits

• Quotes of building and machinery leases
• Proposed office and warehouse plan
• Market research and a summary of the target market
• Credit information of the owners
• List of product and/or services

Related Readings

Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:

• Corporate Structure
• Three Financial Statements
• Business Model Canvas Examples
• See all management & strategy resources
• Share this article

Create a free account to unlock this Template

Access and download collection of free Templates to help power your productivity and performance.

Already have an account? Log in

Supercharge your skills with Premium Templates

Take your learning and productivity to the next level with our Premium Templates.

Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI's full course catalog and accredited Certification Programs.

Already have a Self-Study or Full-Immersion membership? Log in

Access Exclusive Templates

Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.

Already have a Full-Immersion membership? Log in

How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

Featured Partners

ZenBusiness

$0 + State Fees

Varies By State & Package

On ZenBusiness' Website

Northwest Registered Agent

$39 + State Fees

On Northwest Registered Agent's Website

Tailor Brands

$0 + state fee + up to $50 Amazon gift card

Varies by State & Package

On Tailor Brands' Website

$0 + State Fee

On Formations' Website

Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

• Best VPN Services
• Best Project Management Software
• Best Web Hosting Services
• Best Antivirus Software
• Best LLC Services
• Best POS Systems
• Best Business VOIP Services
• Best Credit Card Processing Companies
• Best CRM Software for Small Business
• Best Fleet Management Software
• Best Business Credit Cards
• Best Business Loans
• Best Business Software
• Best Business Apps
• Best Free Software For Business
• How to Start a Business
• How To Make A Small Business Website
• How To Trademark A Name
• What Is An LLC?
• How To Set Up An LLC In 7 Steps
• What is Project Management?
• How To Write An Effective Business Proposal

What Is SNMP? Simple Network Management Protocol Explained

What Is A Single-Member LLC? Definition, Pros And Cons

What Is Penetration Testing? Definition & Best Practices

What Is Network Access Control (NAC)?

What Is Network Segmentation?

How To Start A Business In Louisiana (2024 Guide)

Julia is a writer in New York and started covering tech and business during the pandemic. She also covers books and the publishing industry.

Harris breaks with Biden on capital gains tax in plan to spur small business growth

Vice president provides some details on plan to increase new small businesses.

Vice President and Democratic presidential nominee Kamala Harris on Wednesday unveiled a vastly expanded $50,000 tax benefit for new small businesses and a lower long-term capital gains tax than that was proposed by President Joe Biden in his budget blueprint , one of her clearest breaks yet with Biden.

Speaking to a crowd of supporters in Portsmouth, New Hampshire, Harris said, “And while we ensure that the wealthy and big corporations pay their fair share, we will tax capital gains at a rate that rewards investment in America's innovators, founders, and small businesses,” Harris said before proposing a 28% long-term capital gains tax on people making $1 million a year or more.

Biden previously called for a 39.6% tax rate on capital gains. It is unclear where Harris stands on the additional 5% tax. While Harris' presidential rival former President Donald Trump has not explicitly outlined a position this cycle , in 2016 he supported capping capital gains taxes at 20%, and the Heritage Foundation’s Project 2025 calls for a 15% capital gains tax.

A source familiar with the plan told ABC News that Harris believes a more moderated approach toward capital gains taxes will balance with other measures she supports to crack down on billionaires and big corporations. Harris said on Wednesday that she supported a minimum tax rate on billionaires. The source said she also supports raising the corporate tax rate and quadrupling taxes on stock buybacks.

However, the move comes as Harris and Trump seek to sharpen their economic messages to voters before facing off in their first debate on ABC News in Philadelphia next week. Trump is scheduled to give his own economic policy address on Thursday.

Harris’ announcement is part of a broader effort to generate a record-breaking 25 million new small business applications in her first term if elected, and her tax plan would represent a tenfold expansion of a $5,000 deduction already available to entrepreneurs to help cover startup costs.

An official familiar with Harris' plans said the $50,000 benefit would help offset the $40,000 it costs on average to start a small business. The terms of the proposal would also allow eligible enterprises operating at a loss to delay utilizing the benefit until they turn a profit.

Some profitable businesses could also defer the full benefit, opting to instead use it across multiple years by deducting only earnings from the first year of business and utilizing the remainder of the total $50,000 in future years, according to literature circulated to reporters from the Harris campaign.

MORE: Harris and Biden make pro-labor pitch on Labor Day in Pittsburgh

Harris said her administration would also seek to develop a standard deduction for small businesses to reduce the burden and cost of filing taxes, and remove barriers around occupational licensing, which inhibits workers from working across state lines.

While the literature circulated to reporters did not estimate the program's cost, Harris told the crowd that the the plan would provide access to venture capital, support “innovation hubs and business incubators,” and increase the number of federal contracts with small businesses.

Many aspects of Harris' proposed tax program would likely require congressional approval. The current 2017 Tax Cuts and Jobs Act, signed into law by Trump, is set to expire next year.

Harris also said that her administration would provide low- and no-interest loans to already existing small businesses. The campaign’s literature detailed a fund that would enable community banks and Community Development Financial Institutions to cover interest costs as small businesses expand in historically underinvested regions.

“We will have a particular focus on small businesses in rural communities, like right here in New Hampshire,” she said.

MORE: Can you guess how Americans feel about Harris's platform?

Both Trump and Harris have repeatedly sought to strike populist economic tones in their messaging, promising to provide relief to middle-class earners and even finding agreement on a proposed phase-out of federal income taxes on tipped wages.

Under pressure to define aspects of her policy agenda, Harris unveiled a slew of additional economic priorities last month that included, among other policies, restoring the American Rescue Plan's expanded Child Tax Credit, proposing $25,000 in down payment assistance to qualifying first-time home buyers, capping prescription drug prices and a federal ban on price gouging in the food sector.

Meanwhile, Trump has advocated for broader reforms to U.S. economic policy, which have included tax cuts for businesses and wealthy individuals alongside an across-the-board tariff hike on imports to the U.S., generally, with tax rates as high as 60% to 100% on Chinese goods.

Related Topics

• Kamala Harris
• President Biden
• Economy 2024

Popular Reads

How do Americans feel about Harris’s platform?

• Sep 4, 4:35 PM

Jackson says Harris nomination 'gives people hope'

• Sep 4, 2:07 PM

How early voting has reshaped elections

• Sep 4, 4:11 PM

John McCain's son backs Harris

• Sep 4, 1:55 PM

GOP lawmakers oppose state's trans care ban

• Sep 4, 1:40 PM

ABC News Live

24/7 coverage of breaking news and live events

How to Write a Business Plan for a Small Business

Noah Parsons

24 min. read

Updated September 2, 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 writing a business plan

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

You understand that writing a business plan helps you: 

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

As you start to write your business 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 writing your business 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

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

• 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

When writing a business plan, the produces and services section 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

When writing a business plan, 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

The last section of your business plan is your financial plan and forecasts. 

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 to write a 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

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 writing 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.

Writing 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 writing a business plan?

The seven steps to writing a business plan include:

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

What are the 5 most common business plan mistakes?

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

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

What questions should be answered in a business plan?

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

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

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

How long should a business plan be?

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

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

What are the different types of business plans?

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

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

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

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

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

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

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

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

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

Table of Contents

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

Related Articles

7 Min. Read

How to Write a Bakery Business Plan + Sample

1 Min. Read

How to Calculate Return on Investment (ROI)

5 Min. Read

How To Write a Business Plan for a Life Coaching Business + Free Example

3 Min. Read

What to Include in Your Business Plan Appendix

The LivePlan Newsletter

Become a smarter, more strategic entrepreneur.

Your first monthly newsetter will be delivered soon..

Unsubscribe anytime. Privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

Kamala Harris Tax Plan Ideas: Details and Analysis

Topline preliminary estimates.

• 10-Year Revenue (Billions) +$1,697
• Long-run GDP -2.0%
• Long-Run Wages -1.2%
• Long-Run FTE Jobs -786,000

Tax Foundation General Equilibrium Model, September 2024.

With less than two months left in the 2024 presidential campaign, Vice President Kamala Harris has sketched out sufficient details of her fiscal and economic agenda for us to provide a preliminary analysis of the budgetary, economic, and distributional effects. On tax A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. policy, Harris carries forward much of President Biden’s FY 2025 budget, including higher taxes aimed at businesses and high earners. She would also further expand the child tax credit A tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. (CTC) and various other tax credits and incentives while exempting tips from income tax.

On a gross basis, we estimate that Vice President Harris’s proposals would increase taxes by about $4.1 trillion from 2025 to 2034. After taking various credits and tax cuts into account, Harris would raise about $1.7 trillion over 10 years on a conventional basis, and after factoring in reduced revenue from slower economic growth, the net revenue increase comes to $642 billion. We estimate the proposed tax changes would reduce long-run GDP by 2.0 percent, the capital stock by 3.0 percent, wages by 1.2 percent, and employment by about 786,000 full-time equivalent jobs.

We find the tax policies would raise top tax rates on corporate and individual income to among the highest in the developed world, slowing economic growth and reducing competitiveness. The tax credits and other carveouts would complicate the tax code, run more spending through the IRS, and, together with various price controls, fail to improve affordability challenges in housing and other sectors.

Many tax policies remain unspecified, including how Harris might deal with next year’s expiration of the Tax Cuts and Jobs Act (TCJA). Harris has not clearly indicated if or how her spending priorities align with the FY 2025 budget proposals. Depending on where she lands on these issues, the deficit impacts could be large.

In a possible scenario in which she extends the TCJA for all those earning under $400,000 and adopts all the spending proposals specified in the FY 2025 budget, we estimate the net effect of her policies would increase deficits by $1.5 trillion over the next decade, measured on a conventional basis. Including the economic impacts of the tax increases, the net effect could increase deficits by roughly $2.6 trillion over the next decade.

The wide range of possibilities reflects considerable uncertainty about her fiscal policy stance at this point, leaving a large void regarding how she might deal with the already unprecedented , dangerous, and unsustainable federal debt trajectory.

Detailed Harris Tax Proposals

Harris’s tax plan relies on higher taxes on businesses and high earners to raise new revenues as outlined in President Biden’s FY 2025 budget with some revisions (to capital gains taxes, as noted), combined with several tax credits. All provisions are modeled as starting in calendar year 2025 unless otherwise noted.

Major business provisions modeled:

• Increase the corporate income tax A corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses , with income reportable under the individual income tax . rate from 21 percent to 28 percent
• Increase the corporate alternative minimum tax introduced in the Inflation Inflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “ hidden tax ,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power. Reduction Act from 15 percent to 21 percent
• Quadruple the stock buyback tax implemented in the Inflation Reduction Act from 1 percent to 4 percent
• Make permanent the excess business loss limitation for pass-through businesses
• Further limit the deductibility of employee compensation under Section 162(m)
• Increase the global intangible low-taxed income (GILTI) tax rate from 10.5 percent to 21 percent, calculate the tax on a jurisdiction-by-jurisdiction basis, and revise related rules
• Repeal the reduced tax rate on foreign-derived intangible income (FDII)

Major individual, capital gains, and estate tax An estate tax is imposed on the net value of an individual’s taxable estate, after any exclusions or credits , at the time of death. The tax is paid by the estate itself before assets are distributed to heirs. provisions modeled:

• Expand the base of the net investment income tax (NIIT) to include nonpassive business income and increase the rates for the NIIT and the additional Medicare tax to reach 5 percent on income above $400,000
• Increase top individual income tax An individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment . Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. rate to 39.6 percent on income above $400,000 for single filers and $450,000 for joint filers
• Tax long-term capital gains and qualified dividends at 28 percent (as opposed to 39.6 percent as in the Biden budget) for taxable income Taxable income is the amount of income subject to tax , after deductions and exemptions . For both individuals and corporations, taxable income differs from—and is less than—gross income. above $1 million and tax unrealized capital gains at death above a $5 million exemption ($10 million for joint filers)
• Limit retirement account contributions for high-income taxpayers with large individual retirement account (IRA) balances
• Tighten rules related to the estate tax
• Tax carried interest as ordinary income for people earning more than $400,000
• Limit 1031 like-kind exchanges to $500,000 in gains
• Exempt tipped income from income taxation for occupations where tips are currently customary
• Expand the Section 195 deduction limit for startup expenses from $5,000 to $50,000.

Major tax credit provisions modeled:

• Revive and make permanent the American Rescue Plan Act (ARPA) child tax credit (CTC) and increase the CTC for newborns to $6,000 in the first year of life
• Permanently extend the ARPA earned income tax credit (EITC) expansion for workers without qualifying children
• Provide a $25,000 tax credit for first-time homebuyers over four years

We also modeled various miscellaneous provisions for corporations, pass-through businesses, and individuals, including several energy-related tax hikes largely pertaining to fossil fuel production. While the Biden budget improperly characterized fossil fuel provisions as subsidies, many are deductions for costs (or approximations of costs) incurred.

Major provisions not modeled by us, but included in total fiscal impacts based on Biden administration estimates:

• Repeal the base erosion and anti-abuse tax (BEAT) and replace it with an undertaxed profits rule (UTPR) consistent with the Organisation for Economic Co-operation and Development (OECD)/G20 global minimum tax model rules
• Replace FDII with unspecified research and development (R&D) incentives
• Create a 25 percent “billionaire minimum tax” to tax unrealized capital gains of high-net-worth taxpayers
• Permanently extend the ARPA premium tax credits (PTCs) expansion (we do include PTCs in our distributional analysis)
• Changes to tax compliance and administration

Long-Run Economic Effects of Vice President Harris’s Tax Proposals

We estimate the tax changes in Harris’s tax proposals would reduce long-run GDP by 2.0 percent, the capital stock by 3.0 percent, wages by 1.2 percent, and employment by about 786,000 full-time equivalent jobs. Harris’s tax proposals would decrease American incomes (as measured by gross national product, or GNP) by 1.8 percent in the long run, reflecting offsetting effects of increased taxes and reduced deficits, as debt reduction reduces interest payments to foreign owners of the national debt.

Raising the corporate income tax rate to 28 percent is the largest driver of the negative effects, reducing long-run GDP by 0.6 percent, the capital stock by 1.1 percent, wages by 0.5 percent, and full-time equivalent jobs by 125,000.

Our economic estimates likely understate the effects of the Harris tax plan since they exclude two novel and highly uncertain yet large tax increases on high earners and multinational corporations, namely a new minimum tax on unrealized capital gains and a UTPR consistent with the OECD/G20 global minimum tax model rules. Nor do we include the proposed unspecified R&D incentives that would replace the lower tax rate on foreign-derived intangible income FDII.

Revenue and Debt Effects of Vice President Harris’s Tax Proposals

Across the major provisions modeled by Tax Foundation, we estimate that Harris’s tax plan would raise $2.2 trillion of tax revenue from corporations and $1.2 trillion from individuals from 2025 through 2034.

For tax proposals from the Biden FY 2025 budget, we relied on estimates from the White House Office of Management and Budget (OMB) for provisions we did not model, including the billionaire minimum tax, UTPR, various international tax changes for oil and gas companies, smaller international tax changes, improvements to tax compliance and administration, and unspecified R&D incentives to replace FDII.

In total, accounting for all provisions, we estimate the budget would raise just over $4.1 trillion in gross revenue from tax changes over the 10-year budget window.

Tax cuts, like the tax exemption A tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the Internal Revenue Service ( IRS ), preventing them from having to pay income tax. for tip income, the expanded deduction for startup expenses, and the unspecified incentive to replace FDII, reduce gross revenue by $235 billion, while expanded tax credits reduce the revenue by another $2.2 trillion. This results in a net tax increase of about $1.7 trillion over 10 years on a conventional basis.

On a dynamic basis, factoring in reduced tax revenues resulting from the smaller economy, we estimate Harris’s tax plan would raise about $642 billion over 10 years.

The economic harm from Harris’s tax hikes would also greatly reduce the ability to address an emerging debt crisis. Under current law, the debt-to-GDP ratio will hit 201 percent in 40 years, while the Harris tax plan on a conventional basis would reduce the debt-to-GDP ratio to 189 percent. However, after factoring in reduced tax collections and a smaller economy, the debt-to-GDP ratio would decline only slightly, to 200 percent.

Adding more uncertainty and potentially increasing deficits substantially, Harris may extend the TCJA for people making under $400,000, as the FY 2025 budget mentions but does not formally include in the budget accounting. Harris could accomplish TCJA extension in many ways, but all possibilities would likely have a high fiscal cost, given that about 98 percent of taxpayers earn less than $400,000.

For instance, the Committee for a Responsible Federal Budget has estimated the cost of TCJA permanence for people earning less than $400,000 could range from about $1.5 trillion to $2.5 trillion over 10 years.

Nor has Vice President Harris specifically outlined her proposed changes to federal spending. While we do not assume a specific spending plan as part of our formal score, Harris has proposed investing in affordable childcare and long-term care programs , among other unspecified spending proposals, which would reduce net revenue collection further.

To tally up the range of potential deficit impacts from Harris’s proposals, we include as a proxy for potential spending the net change in spending under the FY 2025 budget of $1.18 trillion covering childcare and early learning, health care, drug pricing, education, and housing; paid leave and home care; public health; and some additional savings from other reductions in discretionary spending (note that we only include the spending changes over the 10-year budget window).

Assuming $1.18 trillion of additional spending and a $2 trillion revenue loss for TCJA extension, Harris’s combined fiscal policies could add as much as $1.5 trillion to deficits over the next decade on a conventional basis.

Under this scenario, and after accounting for the economic effects of the tax increases, we estimate deficits could increase by roughly $2.6 trillion over the next decade on a dynamic basis.

Alternatively, Harris could specify additional tax increases to offset the cost of TCJA extension, which would have additional negative impacts on the economy, or Harris could simply allow the TCJA to expire. Harris could also abandon part or all of the FY 2025 spending proposals.

Distributional Effects of Vice President Harris’s Tax Proposals

Vice President Harris’s tax plan would raise marginal income tax rates faced by higher earners and corporations while expanding tax credits for lower-income households, resulting in substantially increased redistribution of income through the tax code. Our modeling of the distributional effects on after-tax income After-tax income is the net amount of income available to invest, save, or consume after federal, state, and withholding taxes have been applied—your disposable income. Companies and, to a lesser extent, individuals, make economic decisions in light of how they can best maximize their earnings. only includes specified tax proposals and does not include the impact of drug pricing provisions, the 25 percent billionaire minimum tax, the undertaxed profits rule, miscellaneous tax credits, IRS enforcement, or spending program changes.

The Harris tax plan would redistribute income from high earners to low earners. The bottom 60 percent of earners would see increases in after-tax income in 2025, while the top 40 percent of earners would see decreases. After-tax income for the bottom quintile would increase by 16.5 percent, largely from expanded tax credits. In contrast, the top 1 percent of earners would experience a 9.5 percent decrease in after-tax income.

The bottom quintile would see a slightly smaller 13.6 percent increase in after-tax income in 2034 on a conventional basis, while the top two quintiles would see decreases in their after-tax incomes. The top 1 percent would see a 7.3 percent decrease in after-tax income.

On a long-term dynamic basis, the smaller economy would reduce after-tax incomes relative to the conventional analysis. On average, tax filers in the top three quintiles would experience a drop in after-tax incomes, while the bottom quintile would still see an increase, albeit reduced to 11.8 percent, driven by the permanent changes to the CTC, EITC, and PTC.

Analysis of Harris’s Tax Credit and Tax Cut Proposals

Like the Biden administration, Harris’s tax plan puts a heavy emphasis on tax credits. Harris would restore the CTC expansion under the 2021 American Rescue Plan Act, which increased the credit from $2,000 under current law to $3,000 for older children and $3,600 for younger children for 2021 only. She would further increase the credit amount for newborns to $6,000, resulting in a CTC that provides $6,000 for children under one year old, $3,600 for children two through five, and $3,000 for children six and older. The ARPA expansion also removed work and income requirements to claim the credit, providing the maximum credit to qualifying individuals regardless of whether they had earned income, thus much of the expansion is technically spending administered by the IRS.

Tax Foundation estimates Harris’ CTC expansion would cost about $1.6 trillion over 10 years on a conventional basis. The expansion would shrink long-run economic output by about 0.1 percent by removing the credit’s phase-in and lengthening the credit’s phaseout, thus raising marginal tax rates for workers along both ranges. The smaller economy would result in further revenue losses for the federal government, increasing the fiscal cost to $1.7 trillion over the next decade.

Harris would extend or make permanent the expansion of health insurance PTC subsidies enacted under ARPA, which are set to expire at the end of 2025, and expand the EITC for single and joint filers who do not claim children on their tax returns. Over 10 years, permanence for the PTCs would cost about $238 billion, and the EITC expansion about $160 billion.

Harris also proposes several new housing tax incentives and penalties. For housing construction, she would expand the low-income housing tax credit (a similar proposal in the FY 2025 budget would cost $37 billion over a decade) and create a tax credit for the construction of starter homes. However, Harris would limit deductions for interest and depreciation Depreciation is a measurement of the “useful life” of a business asset, such as machinery or a factory, to determine the multiyear period over which the cost of that asset can be deducted from taxable income . Instead of allowing businesses to deduct the cost of investments immediately (i.e., full expensing ), depreciation requires deductions to be taken over time, reducing their value and discouraging investment. for large property investors.

Expanding a proposal in the FY 2025 budget, the Harris campaign proposes providing an average of $25,000 for all eligible first-time homebuyers, with additional support for first-generation homebuyers. Depending on how the subsidy is structured and limited, the fiscal cost would be about $100 billion over four years, based on the plan’s aim of reaching 4 million first-time homebuyers. Other housing credits and related subsidies specified in the FY 2025 budget would cost approximately another $100 billion over the next decade.

While the details are unclear, Harris has announced she would end taxes on tips for service and hospitality workers and work with Congress to establish guardrails on the policy. The exemption itself, and any safeguards added, would add to the complexity of the tax code overall while failing to benefit many low-income earners, given the small share of the population working in tipped occupations. We estimate that an exemption could cost around $118 billion over the 10-year budget window on a conventional basis.

Harris has proposed expanding the Section 195 deduction for business startup costs from its current level of $5,000 to $50,000. Based on past revenue estimates of similar proposals from the Joint Committee on Taxation, we estimate the change would reduce revenue by about $24.5 billion over the 10-year budget window on a conventional basis. The economic impacts are uncertain but small given the revenue impact; to the extent the policy allows more businesses to recover costs, it will boost business investment and potentially economic dynamism.

Subsidies and Price Controls Likely to Backfire

Many, but not all, of Harris’s housing policy proposals flow through the tax code. In terms of non-fiscal policy levers, the Harris plan includes regulatory streamlining to make construction easier, a crackdown on certain pricing tools in rental property management, and a new fund for public housing.

Harris’s reliance on subsidies for supply-constrained housing would be economically harmful for families, as it would boost demand and lead to higher housing prices. While some of her policies do target supply, like the expanded low-income housing tax credit and the credit for starter homes, these boutique tax breaks have not been effective historically .

Subsidies for different niches of the housing market are a poor substitute for better tax treatment of housing investment broadly. Multifamily housing construction still has not recovered to 1986 levels, as the Tax Reform Act of 1986 reduced the deductibility of investment.

Instead of reversing that poor tax treatment, the Harris package would further penalize rental housing construction by peeling back depreciation and interest deductions for certain large property investors, reducing investment incentives. These penalties would be in addition to a Biden-Harris administration proposal aimed at capping rent increases by disallowing certain deductions for depreciation.

Harris would deploy economically ruinous price controls in several other ways. Harris would cap the cost of insulin at $35 and out-of-pocket expenses for prescription drugs at $2,000 for all households, accelerate the speed of Medicare negotiations for prescription drug prices as part of the Inflation Reduction Act, and ban certain price increases for food and groceries.

Price controls harm consumers by reducing incentives to produce price-controlled goods. For example, the price controls on prescription drugs are likely deterring new drug development, resulting in up to 135 fewer drugs brought to market through 2039. Harris’s proposed price controls for groceries poorly address a problem that does not exist, as grocery profit margins are much lower than average across industries.

Top Tax Rates Would Be among the Highest in the Developed World

Harris’s subsidies would largely be funded by raising top tax rates on corporate and individual income to levels far above international norms.

The current top combined corporate tax rate—including the average of state rates—is 25.6 percent. Harris would increase it to 32.2 percent, the second-highest corporate tax rate in the OECD (behind Colombia ’s 35 percent).

The current top combined personal tax rate is 42.5 percent, consisting of the top federal rate (37 percent) and the average of state and local rates. This is about equal to the OECD average. Under Harris, the top combined rate would rise to 45.1 percent before accounting for the proposed 5 percent additional Medicare tax, half of which falls on the employer. Including the employee-side portion would raise the top rate to 47.6 percent.

The current top combined capital gains tax A capital gains tax is levied on the profit made from selling an asset and is often in addition to corporate income taxes, frequently resulting in double taxation. These taxes create a bias against saving, leading to a lower level of national income by encouraging present consumption over investment. rate is 29.1 percent, consisting of the 20 percent capital gains tax rate, the 3.8 percent NIIT, and the average of state and local income tax rates on capital gains. By taxing high earners’ capital gains at 28 percent and raising the NIIT to 5 percent, Harris’s proposals would raise the top tax rate on capital gains to 38.3 percent—the second highest in the OECD (behind Denmark ’s 42 percent). Similarly, under Harris’s proposals, the top tax rate on dividends would be nearly the highest in the OECD.

The combined integrated rate on corporate income reflects the two layers of tax corporate income faces: first at the entity level through corporate taxes and again at the shareholder level through capital gains and dividends taxes. Currently, the top combined integrated tax rate on corporate income distributed as capital gains is 47.2 percent. Under Harris’s proposals, it would rise to 58.1 percent—the highest in the OECD.

By placing a higher burden on work, saving, and investment, the Harris tax plan would reduce competitiveness and weaken key drivers of US economic growth, shrinking GDP by about 2.0 percent over the long run.

Where Do the Candidates Stand on Taxes?

Tax policy has become a significant focus of the US 2024 presidential election.

Modeling Notes

We use the Tax Foundation General Equilibrium Tax Model to estimate the impact of tax policies, including recent updates allowing detailed modeling of US multinational enterprises . The model produces conventional and dynamic revenue and distributional estimates of tax policy. Conventional estimates hold the size of the economy constant and attempt to estimate potential behavioral effects of tax policy. Dynamic revenue estimates consider both behavioral and macroeconomic effects of tax policy on revenue. The model also produces estimates of how policies impact measures of economic performance such as GDP, GNP, wages, employment, capital stock, investment, consumption, saving, and the trade deficit.

Note, however, that our conventional and dynamic estimates for the stock buyback tax do not account for behavioral shifting from buybacks to dividends, which would also shift the individual income tax base The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. from capital gains to dividends.

Regarding Vice President Harris’s proposed changes to the GILTI regime, we modeled most of the major changes, including the 75 percent GILTI inclusion rate, country-by-country application, the reduction in the foreign tax credit (FTC) haircut to 5 percent, elimination of the qualified business asset investment (QBAI) exemption, and elimination of the foreign oil and gas extraction income (FOGEI) exclusion. We did not model the changes allowing carryforward of GILTI foreign tax credits (FTCs) and losses, repeal of the high-tax exemption for subpart F, or the tax increases on dual capacity taxpayers.

Stay informed on the tax policies impacting you.

Subscribe to get insights from our trusted experts delivered straight to your inbox.

• 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

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

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

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

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

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

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

Let’s get started.

Why Are Business Plans Important?

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

1. Proves Your Business Viability

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

2. Guides You Throughout the Business Cycle

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

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

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

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

3. Helps You Make Better Business Decisions

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

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

4. Eliminates Big Mistakes

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

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

5. Secures Financing and Attracts Top Talents

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

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

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

Key Elements of Business Plan

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

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

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

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

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

1. Executive Summary

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

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

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

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

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

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

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

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

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

Components of an Executive Summary

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

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

2. Business Description

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

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

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

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

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

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

Components of a Business Description

Your business description needs to contain these categories of information.

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

3. Market Analysis

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

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

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

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

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

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

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

Market Analysis Factors

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

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

Components of the Market Analysis Section

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

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

4. Marketing Plan

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

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

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

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

5. Sales Strategy

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

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

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

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

6. Competitive Analysis

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

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

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

This section should define the following:

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

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

7. Management and Organization

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

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

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

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

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

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

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

8. Products and Services

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

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

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

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

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

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

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

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

9. Operating Plan

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

The operating plan for your business should include:

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

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

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

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

10. Financial Projections and Assumptions

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

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

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

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

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

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

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

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

11. Request For Funding

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

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

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

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

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

12. Exhibits and Appendices

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

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

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

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

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

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

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

Was This Article Helpful?

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.

• Go to our main website ⟶

Writing a Business Plan

Team sequoia.

When Brian, Joe and Nate founded Airbnb, they had an air mattress, entrepreneurial passion, and a vision for reinventing travel and hospitality, but no clear idea how to approach VCs or how to craft a pitch deck.

They came across Sequoia’s guide for how to write a business plan and the rest is history . They made a great deck.

But it wasn’t really the slides we liked—it was their ideas, the clarity of their thinking, and the scope of their ambition. We love partnering with founders hell-bent on bringing an idea to life that conventional wisdom deems impossible. And we love to partner early— when an idea is newly formed and has the maximal room to grow.

You can find our guide to pitching below (with a few refinements from years of use).

Company purpose Start here: define your company in a single declarative sentence. This is harder than it looks. It’s easy to get caught up listing features instead of communicating your mission.

Problem Describe the pain of your customer. How is this addressed today and what are the shortcomings to current solutions.

Solution Explain your eureka moment. Why is your value prop unique and compelling? Why will it endure? And where does it go from here?

Why now? The best companies almost always have a clear why now? Nature hates a vacuum—so why hasn’t your solution been built before now?

Market potential Identify your customer and your market. Some of the best companies invent their own markets.

Competition / alternatives Who are your direct and indirect competitors. Show that you have a plan to win.

Business model How do you intend to thrive?

Team Tell the story of your founders and key team members.

Financials If you have any, please include.

Vision If all goes well, what will you have built in five years?

How to Write a Business Plan (Plus Examples & Templates)

Have you ever wondered how to write a business plan step by step? Mike Andes, told us: 

This guide will help you write a business plan to impress investors.

Throughout this process, we’ll get information from Mike Andes, who started Augusta Lawn Care Services when he was 12 and turned it into a franchise with over 90 locations. He has gone on to help others learn how to write business plans and start businesses.  He knows a thing or two about writing  business plans!

We’ll start by discussing the definition of a business plan. Then we’ll discuss how to come up with the idea, how to do the market research, and then the important elements in the business plan format. Keep reading to start your journey!

What Is a Business Plan?

A business plan is simply a road map of what you are trying to achieve with your business and how you will go about achieving it. It should cover all elements of your business including: 

• Finding customers
• Plans for developing a team
•  Competition
• Legal structures
• Key milestones you are pursuing

If you aren’t quite ready to create a business plan, consider starting by reading our business startup guide .

Get a Business Idea

Before you can write a business plan, you have to have a business idea. You may see a problem that needs to be solved and have an idea how to solve it, or you might start by evaluating your interests and skills. 

Mike told us, “The three things I suggest asking yourself when thinking about starting a business are:

• What am I good at?
• What would I enjoy doing?
• What can I get paid for?”

If all three of these questions don’t lead to at least one common answer, it will probably be a much harder road to success. Either there is not much market for it, you won’t be good at it, or you won’t enjoy doing it. 

As Mike told us, “There’s enough stress starting and running a business that if you don’t like it or aren’t good at it, it’s hard to succeed.”

If you’d like to hear more about Mike’s approach to starting a business, check out our YouTube video

Conduct Market Analysis

Market analysis is focused on establishing if there is a target market for your products and services, how large the target market is, and identifying the demographics of people or businesses that would be interested in the product or service. The goal here is to establish how much money your business concept can make.

Product and Service Demand

A search engine is your best friend when trying to figure out if there is demand for your products and services. Personally, I love using presearch.org because it lets you directly search on a ton of different platforms including Google, Youtube, Twitter, and more. Check out the screenshot for the full list of search options.

With quick web searches, you can find out how many competitors you have, look through their reviews, and see if there are common complaints about the competitors. Bad reviews are a great place to find opportunities to offer better products or services. 

If there are no similar products or services, you may have stumbled upon something new, or there may just be no demand for it. To find out, go talk to your most honest friend about the idea and see what they think. If they tell you it’s dumb or stare at you vacantly, there’s probably no market for it.

You can also conduct a survey through social media to get public opinion on your idea. Using Facebook Business Manager , you could get a feel for who would be interested in your product or service.

 I ran a quick test of how many people between 18-65  you could reach in the U.S. during a week. It returned an estimated 700-2,000 for the total number of leads, which is enough to do a fairly accurate statistical analysis.

Identify Demographics of Target Market

Depending on what type of business you want to run, your target market will be different. The narrower the demographic, the fewer potential customers you’ll have. If you did a survey, you’ll be able to use that data to help define your target audience. Some considerations you’ll want to consider are:

• Other Interests
• Marital Status
• Do they have kids?

Once you have this information, it can help you narrow down your options for location and help define your marketing further. One resource that Mike recommended using is the Census Bureau’s Quick Facts Map . He told us,  

“It helps you quickly evaluate what the best areas are for your business to be located.”

How to Write a Business Plan

Now that you’ve developed your idea a little and established there is a market for it, you can begin writing a business plan. Getting started is easier with the business plan template we created for you to download. I strongly recommend using it as it is updated to make it easier to create an action plan. 

Each of the following should be a section of your business plan:

• Business Plan Cover Page
• Table of Contents
• Executive Summary
• Company Description
• Description of Products and Services

SWOT Analysis

• Competitor Data
• Competitive Analysis
• Marketing Expenses Strategy 

Pricing Strategy

• Distribution Channel Assessment
• Operational Plan
• Management and Organizational Strategy
• Financial Statements and/or Financial Projections

We’ll look into each of these. Don’t forget to download our free business plan template (mentioned just above) so you can follow along as we go. 

How to Write a Business Plan Step 1. Create a Cover Page

The first thing investors will see is the cover page for your business plan. Make sure it looks professional. A great cover page shows that you think about first impressions.

A good business plan should have the following elements on a cover page:

• Professionally designed logo
• Company name
• Mission or Vision Statement
• Contact Info

Basically, think of a cover page for your business plan like a giant business card. It is meant to capture people’s attention but be quickly processed.

How to Write a Business Plan Step 2. Create a Table of Contents

Most people are busy enough that they don’t have a lot of time. Providing a table of contents makes it easy for them to find the pages of your plan that are meaningful to them.

A table of contents will be immediately after the cover page, but you can include it after the executive summary. Including the table of contents immediately after the executive summary will help investors know what section of your business plan they want to review more thoroughly.

Check out Canva’s article about creating a  table of contents . It has a ton of great information about creating easy access to each section of your business plan. Just remember that you’ll want to use different strategies for digital and hard copy business plans.

How to Write a Business Plan Step 3. Write an Executive Summary

An executive summary is where your business plan should catch the readers interest.  It doesn’t need to be long, but should be quick and easy to read.

Mike told us,

How long should an executive summary bein an informal business plan?

For casual use, an executive summary should be similar to an elevator pitch, no more than 150-160 words, just enough to get them interested and wanting more. Indeed has a great article on elevator pitches .  This can also be used for the content of emails to get readers’ attention.

It consists of three basic parts:

• An introduction to you and your business.
• What your business is about.
• A call to action

Example of an informal executive summary 

One of the best elevator pitches I’ve used is:

So far that pitch has achieved a 100% success rate in getting partnerships for the business.

What should I include in an executive summary for investors?

Investors are going to need a more detailed executive summary if you want to secure financing or sell equity. The executive summary should be a brief overview of your entire business plan and include:

• Introduction of yourself and company.
• An origin story (Recognition of a problem and how you came to solution)
• An introduction to your products or services.
• Your unique value proposition. Make sure to include intellectual property.
• Where you are in the business life cycle
• Request and why you need it.

Successful business plan examples

The owner of Urbanity told us he spent 2 months writing a 75-page business plan and received a $250,000 loan from the bank when he was 23. Make your business plan as detailed as possible when looking for financing. We’ve provided a template to help you prepare the portions of a business plan that banks expect.

Here’s the interview with the owner of Urbanity:

When to write an executive summary?

Even though the summary is near the beginning of a business plan, you should write it after you complete the rest of a business plan. You can’t talk about revenue, profits, and expected expenditures if you haven’t done the market research and created a financial plan.

What mistakes do people make when writing an executive summary?

Business owners commonly go into too much detail about the following items in an executive summary:

• Marketing and sales processes
• Financial statements
• Organizational structure
• Market analysis

These are things that people will want to know later, but they don’t hook the reader. They won’t spark interest in your small business, but they’ll close the deal.

How to Write a Business Plan Step 4. Company Description

Every business plan should include a company description. A great business plan will include the following elements while describing the company:

• Mission statement
• Philosophy and vision
• Company goals

Target market

• Legal structure

Let’s take a look at what each section includes in a good business plan.

Mission Statement

A mission statement is a brief explanation of why you started the company and what the company’s main focus is. It should be no more than one or two sentences. Check out HubSpot’s article 27 Inspiring Mission Statement for a great read on informative and inspiring mission and vision statements. 

Company Philosophy and Vision

The company philosophy is what drives your company. You’ll normally hear them called core values.  These are the building blocks that make your company different. You want to communicate your values to customers, business owners, and investors as often as possible to build a company culture, but make sure to back them up.

What makes your company different?

Each company is different. Your new business should rise above the standard company lines of honesty, integrity, fun, innovation, and community when communicating your business values. The standard answers are corporate jargon and lack authenticity. 

Examples of core values

One of my clients decided to add a core values page to their website. As a tech company they emphasized the values:

•  Prioritize communication.
•  Never stop learning.
•  Be transparent.
•  Start small and grow incrementally.

These values communicate how the owner and the rest of the company operate. They also show a value proposition and competitive advantage because they specifically focus on delivering business value from the start. These values also genuinely show what the company is about and customers recognize the sincerity. Indeed has a great blog about how to identify your core values .

What is a vision statement?

A vision statement communicate the long lasting change a business pursues. The vision helps investors and customers understand what your company is trying to accomplish. The vision statement goes beyond a mission statement to provide something meaningful to the community, customer’s lives, or even the world.

Example vision statements

The Alzheimer’s Association is a great example of a vision statement:

A world without Alzheimer’s Disease and other dementia.

It clearly tells how they want to change the world. A world without Alzheimers might be unachievable, but that means they always have room for improvement.

Business Goals

You have to measure success against goals for a business plan to be meaningful. A business plan helps guide a company similar to how your GPS provides a road map to your favorite travel destination. A goal to make as much money as possible is not inspirational and sounds greedy.

Sure, business owners want to increase their profits and improve customer service, but they need to present an overview of what they consider success. The goals should help everyone prioritize their work.

How far in advance should a business plan?

Business planning should be done at least one year in advance, but many banks and investors prefer three to five year business plans. Longer plans show investors that the management team  understands the market and knows the business is operating in a constantly shifting market. In addition, a plan helps businesses to adjust to changes because they have already considered how to handle them.

Example of great business goals

My all time-favorite long-term company goals are included in Tesla’s Master Plan, Part Deux . These goals were written in 2016 and drive the company’s decisions through 2026. They are the reason that investors are so forgiving when Elon Musk continually fails to meet his quarterly and annual goals.

If the progress aligns with the business plan investors are likely to continue to believe in the company. Just make sure the goals are reasonable or you’ll be discredited (unless you’re Elon Musk).

You did target market research before creating a business plan. Now it’s time to add it to the plan so others understand what your ideal customer looks like. As a new business owner, you may not be considered an expert in your field yet, so document everything. Make sure the references you use are from respectable sources. 

Use information from the specific lender when you are applying for lending. Most lenders provide industry research reports and using their data can strengthen the position of your business plan.

A small business plan should include a section on the external environment. Understanding the industry is crucial because we don’t plan a business in a vacuum. Make sure to research the industry trends, competitors, and forecasts. I personally prefer IBIS World for my business research. Make sure to answer questions like:

• What is the industry outlook long-term and short-term?
• How will your business take advantage of projected industry changes and trends?
• What might happen to your competitors and how will your business successfully compete?

Industry resources

Some helpful resources to help you establish more about your industry are:

• Trade Associations
• Federal Reserve
• Bureau of Labor Statistics

Legal Structure

There are five basic types of legal structures that most people will utilize:

• Sole proprietorships
• Limited Liability Companies (LLC)

Partnerships

Corporations.

• Franchises.

Each business structure has their pros and cons. An LLC is the most common legal structure due to its protection of personal assets and ease of setting up. Make sure to specify how ownership is divided and what roles each owner plays when you have more than one business owner.

You’ll have to decide which structure is best for you, but we’ve gathered information on each to make it easier.

Sole Proprietorship

A sole proprietorship is the easiest legal structure to set up but doesn’t protect the owner’s personal assets from legal issues. That means if something goes wrong, you could lose both your company and your home.

To start a sole proprietorship, fill out a special tax form called a  Schedule C . Sole proprietors can also join the American Independent Business Alliance .

Limited Liability Company (LLC)

An LLC is the most common business structure used in the United States because an LLC protects the owner’s personal assets. It’s similar to partnerships and corporations, but can be a single-member LLC in most states. An LLC requires a document called an operating agreement.

Each state has different requirements. Here’s a link to find your state’s requirements . Delaware and Nevada are common states to file an LLC because they are really business-friendly. Here’s a blog on the top 10 states to get an LLC.

Partnerships are typically for legal firms. If you choose to use a partnership choose a Limited Liability Partnership. Alternatively, you can just use an LLC.

Corporations are typically for massive organizations. Corporations have taxes on both corporate and income tax so unless you plan on selling stock, you are better off considering an LLC with S-Corp status . Investopedia has good information corporations here .

There are several opportunities to purchase successful franchises. TopFranchise.com has a list of companies in a variety of industries that offer franchise opportunities. This makes it where an entrepreneur can benefit from the reputation of an established business that has already worked out many of the kinks of starting from scratch.

How to Write a Business Plan Step 5. Products and Services

This section of the business plan should focus on what you sell, how you source it, and how you sell it. You should include:

• Unique features that differentiate your business products from competitors
• Intellectual property
• Your supply chain
• Cost and pricing structure 

Questions to answer about your products and services

Mike gave us a list  of the most important questions to answer about your product and services:

• How will you be selling the product? (in person, ecommerce, wholesale, direct to consumer)?
• How do you let them know they need a product?
• How do you communicate the message?
• How will you do transactions?
• How much will you be selling it for?
• How many do you think you’ll sell and why?

Make sure to use the worksheet on our business plan template .

How to Write a Business Plan Step 6. Sales and Marketing Plan

The marketing and sales plan is focused on the strategy to bring awareness to your company and guides how you will get the product to the consumer.  It should contain the following sections:

SWOT Analysis stands for strengths, weaknesses, opportunities, and threats. Not only do you want to identify them, but you also want to document how the business plans to deal with them.

Business owners need to do a thorough job documenting how their service or product stacks up against the competition.

If proper research isn’t done, investors will be able to tell that the owner hasn’t researched the competition and is less likely to believe that the team can protect its service from threats by the more well-established competition. This is one of the most common parts of a presentation that trips up business owners presenting on Shark Tank .

SWOT Examples

Examples of strengths and weaknesses could be things like the lack of cash flow, intellectual property ownership, high costs of suppliers, and customers’ expectations on shipping times.

Opportunities could be ways to capitalize on your strengths or improve your weaknesses, but may also be gaps in the industry. This includes:

• Adding offerings that fit with your current small business
• Increase sales to current customers
• Reducing costs through bulk ordering
• Finding ways to reduce inventory
•  And other areas you can improve

Threats will normally come from outside of the company but could also be things like losing a key member of the team. Threats normally come from competition, regulations, taxes, and unforeseen events.

The management team should use the SWOT analysis to guide other areas of business planning, but it absolutely has to be done before a business owner starts marketing. 

Include Competitor Data in Your Business Plan

When you plan a business, taking into consideration the strengths and weaknesses of the competition is key to navigating the field. Providing an overview of your competition and where they are headed shows that you are invested in understanding the industry.

For smaller businesses, you’ll want to search both the company and the owners names to see what they are working on. For publicly held corporations, you can find their quarterly and annual reports on the SEC website .

What another business plans to do can impact your business. Make sure to include things that might make it attractive for bigger companies to outsource to a small business.

Marketing Strategy

The marketing and sales part of business plans should be focused on how you are going to make potential customers aware of your business and then sell to them.

If you haven’t already included it, Mike recommends:

“They’ll want to know about Demographics, ages, and wealth of your target market.”

Make sure to include the Total addressable market .  The term refers to the value if you captured 100% of the market.

Advertising Strategy

You’ll explain what formats of advertising you’ll be using. Some possibilities are:

• Online: Facebook and Google are the big names to work with here.
• Print : Print can be used to reach broad groups or targeted markets. Check out this for tips .
• Radio : iHeartMedia is one of the best ways to advertise on the radio
• Cable television : High priced, hard to measure ROI, but here’s an explanation of the process
• Billboards: Attracting customers with billboards can be beneficial in high traffic areas.

You’ll want to define how you’ll be using each including frequency, duration, and cost. If you have the materials already created, including pictures or links to the marketing to show creative assets.

Mike told us “Most businesses are marketing digitally now due to Covid, but that’s not always the right answer.”

Make sure the marketing strategy will help team members or external marketing agencies stay within the brand guidelines .

This section of a business plan should be focused on pricing. There are a ton of pricing strategies that may work for different business plans. Which one will work for you depends on what kind of a business you run.

Some common pricing strategies are:

• Value-based pricing – Commonly used with home buying and selling or other products that are status symbols.
• Skimming pricing – Commonly seen in video game consoles, price starts off high to recoup expenses quickly, then reduces over time.
• Competition-based pricing – Pricing based on competitors’ pricing is commonly seen at gas stations.
• Freemium services –  Commonly used for software, where there is a free plan, then purchase options for more functionality.

HubSpot has a great calculator and blog on pricing strategies.

Beyond explaining what strategy your business plans to use, you should include references for how you came to this pricing strategy and how it will impact your cash flow.

Distribution Plan

This part of a business plan is focused on how the product or service is going to go through the supply chain. These may include multiple divisions or multiple companies. Make sure to include any parts of the workflow that are automated so investors can see where cost savings are expected and when.

Supply Chain Examples

For instance, lawn care companies  would need to cover aspects such as:

• Suppliers for lawn care equipment and tools
• Any chemicals or treatments needed
• Repair parts for sprinkler systems
• Vehicles to transport equipment and employees
• Insurance to protect the company vehicles and people.

Examples of Supply Chains

These are fairly flat supply chains compared to something like a clothing designer where the clothes would go through multiple vendors. A clothing company might have the following supply chain:

• Raw materials
• Shipping of raw materials
• Converting of raw materials to thread
• Shipping thread to produce garments
• Garment producer
• Shipping to company
• Company storage
• Shipping to retail stores

There have been advances such as print on demand that eliminate many of these steps. If you are designing completely custom clothing, all of this would need to be planned to keep from having business disruptions.

The main thing to include in the business plan is the list of suppliers, the path the supply chain follows, the time from order to the customer’s home, and the costs associated with each step of the process.

According to BizPlanReview , a business plan without this information is likely to get rejected because they have failed to research the key elements necessary to make sales to the customer.

How to Write a Business Plan Step 7. Company Organization and Operational Plan

This part of the business plan is focused on how the business model will function while serving customers.  The business plan should provide an overview of  how the team will manage the following aspects:

Quality Control

• Legal environment

Let’s look at each for some insight.

Production has already been discussed in previous sections so I won’t go into it much. When writing a business plan for investors, try to avoid repetition as it creates a more simple business plan.

If the organizational plan will be used by the team as an overview of how to perform the best services for the customer, then redundancy makes more sense as it communicates what is important to the business.

Quality control policies help to keep the team focused on how to verify that the company adheres to the business plan and meets or exceeds customer expectations.

Quality control can be anything from a standard that says “all labels on shirts can be no more than 1/16″ off center” to a defined checklist of steps that should be performed and filled out for every customer.

There are a variety of organizations that help define quality control including:

• International Organization for Standardization – Quality standards for energy, technology, food, production environments, and cybersecurity
• AICPA – Standard defined for accounting.
• The Joint Commission – Healthcare
• ASHRAE – HVAC best practices

You can find lists of the organizations that contribute most to the government regulation of industries on Open Secrets . Research what the leaders in your field are doing. Follow their example and implement it in your quality control plan.

For location, you should use information from the market research to establish where the location will be. Make sure to include the following in the location documentation.

• The size of your location
• The type of building (retail, industrial, commercial, etc.)
• Zoning restrictions – Urban Wire has a good map on how zoning works in each state
• Accessibility – Does it meet ADA requirements?
• Costs including rent, maintenance, utilities, insurance and any buildout or remodeling costs
• Utilities – b.e.f. has a good energy calculator .

Legal Environment

The legal requirement section is focused on defining how to meet the legal requirements for your industry. A good business plan should include all of the following:

• Any licenses and/or permits that are needed and whether you’ve obtained them
• Any trademarks, copyrights, or patents that you have or are in the process of applying for
• The insurance coverage your business requires and how much it costs
• Any environmental, health, or workplace regulations affecting your business
• Any special regulations affecting your industry
• Bonding requirements, if applicable

Your local SBA office can help you establish requirements in your area. I strongly recommend using them. They are a great resource.

Your business plan should include a plan for company organization and hiring. While you may be the only person with the company right now, down the road you’ll need more people. Make sure to consider and document the answers to the following questions:

• What is the current leadership structure and what will it look like in the future?
• What types of employees will you have? Are there any licensing or educational requirements?
• How many employees will you need?
• Will you ever hire freelancers or independent contractors?
• What is each position’s job description?
• What is the pay structure (hourly, salaried, base plus commission, etc.)?
• How do you plan to find qualified employees and contractors?

One of the most crucial parts of a business plan is the organizational chart. This simply shows the positions the company will need, who is in charge of them and the relationship of each of them. It will look similar to this:

Our small business plan template has a much more in-depth organizational chart you can edit to include when you include the organizational chart in your business plan.

How to Write a Business Plan Step 8. Financial Statements 

No business plan is complete without financial statements or financial projections. The business plan format will be different based on whether you are writing a business plan to expand a business or a startup business plan. Let’s dig deeper into each.

Provide All Financial Income from an Existing Business

An existing business should use their past financial documents including the income statement, balance sheet, and cash flow statement to find trends to estimate the next 3-5 years.

You can create easy trendlines in excel to predict future revenue, profit and loss, cash flow, and other changes in year-over-year performance. This will show your expected performance assuming business continues as normal.

If you are seeking an investment, then the business is probably not going to continue as normal. Depending on the financial plan and the purpose of getting financing, adjustments may be needed to the following:

• Higher Revenue if expanding business
• Lower Cost of Goods Sold if purchasing inventory with bulk discounts
• Adding interest if utilizing financing (not equity deal)
• Changes in expenses
• Addition of financing information to the cash flow statement
• Changes in Earnings per Share on the balance sheet

Financial modeling is a challenging subject, but there are plenty of low-cost courses on the subject. If you need help planning your business financial documentation take some time to watch some of them.

Make it a point to document how you calculated all the changes to the income statement, balance sheet, and cash flow statement in your business plan so that key team members or investors can verify your research.

Financial Projections For A Startup Business Plan

Unlike an existing business, a startup doesn’t have previous success to model its future performance. In this scenario, you need to focus on how to make a business plan realistic through the use of industry research and averages.

Mike gave the following advice in his interview:

Financial Forecasting Mistakes

One of the things a lot of inexperienced people use is the argument, “If I get one percent of the market, it is worth $100 million.” If you use this, investors are likely to file the document under bad business plan examples.

Let’s use custom t-shirts as an example.

Credence Research estimated in 2018 there were 11,334,800,000 custom t-shirts sold for a total of $206.12 Billion, with a 6% compound annual growth rate.

With that data,  you can calculate that the industry will grow to $270 Billion in 2023 and that the average shirt sold creates $18.18 in revenue.

Combine that with an IBIS World estimate of 11,094 custom screen printers and that means even if you become an average seller, you’ll get .009% of the market.

Here’s a table for easier viewing of that information.

The point here is to make sure your business proposal examples make sense.

You’ll need to know industry averages such as cost of customer acquisition, revenue per customer, the average cost of goods sold, and admin costs to be able to create accurate estimates.

Our simple business plan templates walk you through most of these processes. If you follow them you’ll have a good idea of how to write a business proposal.

How to Write a Business Plan Step 9. Business Plan Example of Funding Requests

What is a business plan without a plan on how to obtain funding?

The Small Business Administration has an example for a pizza restaurant that theoretically needed nearly $20k to make it through their first month.

In our video, How to Start a $500K/Year T-Shirt Business (Pt. 1 ), Sanford Booth told us he needed about $200,000 to start his franchise and broke even after 4 months.

Freshbooks estimates it takes on average 2-3 years for a business to be profitable, which means the fictitious pizza company from the SBA could need up to $330k to make it through that time and still pay their bills for their home and pizza shop.

Not every business needs that much to start, but realistically it’s a good idea to assume that you need a fairly large cushion.

Ways to get funding for a small business

There are a variety of ways to cover this. the most common are:

• Bootstrapping – Using your savings without external funding.
• Taking out debt – loans, credit cards
• Equity, Seed Funding – Ownership of a percentage of the company in exchange for current funds
• Crowdsourcing – Promising a good for funding to create the product

Keep reading for more tips on how to write a business plan.

How funding will be used

When asking for business financing make sure to include:

• How much to get started?
• What is the minimum viable product and how soon can you make money?
• How will the money be spent?

Mike emphasized two aspects that should be included in every plan, 

How to Write a Business Plan Resources

Here are some links to a business plan sample and business plan outline. 

• Sample plan

It’s also helpful to follow some of the leading influencers in the business plan writing community. Here’s a list:

• Wise Plans –  Shares a lot of information on starting businesses and is a business plan writing company.
• Optimus Business Plans –  Another business plan writing company.
• Venture Capital – A venture capital thread that can help give you ideas.

How to Write a Business Plan: What’s Next?

We hope this guide about how to write a simple business plan step by step has been helpful. We’ve covered:

• The definition of a business plan
• Coming up with a business idea
• Performing market research
• The critical components of a business plan
• An example business plan

In addition, we provided you with a simple business plan template to assist you in the process of writing your startup business plan. The startup business plan template also includes a business model template that will be the key to your success.

Don’t forget to check out the rest of our business hub .

Have you written a business plan before? How did it impact your ability to achieve your goals?

80% of businesses fail... Learn how not to.

Learn from business failures and successes in 5 min or less. The stories, frameworks, and tactics that will make you a 10x better founder.

Brandon Boushy

Related articles

Monday.com Review: Pros & Cons, Ratings & More

How to Resell Shoes (And Make $350K/Month)

How to Register a Business (in 5 Easy Steps)

nice work https://binarychemist.com/

My Name is PRETTY NGOMANE. A south African female. Aspiring to do farming. And finding a home away from home for the differently abled persons in their daily needs.

Become a business owner in less than 90 days

Start your 10-day free trial of the UpFlip Academy and learn how to start your own business from scratch.

Get business advice straight to your   Inbox 

• Capital Planning

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on July 12, 2023

Are You Retirement Ready?

Table of contents, what is capital planning.

Capital planning is a critical process that businesses undertake to allocate financial resources to long-term investments and projects, such as acquiring new equipment, launching new products, or expanding operations.

The primary aim of capital planning is to ensure that a company's investments generate the highest possible return, contribute to its long-term growth and success, and minimize financial risks.

A well-designed capital plan can help a company identify the most beneficial investment opportunities, create a balanced portfolio of projects, and allocate resources strategically.

Effective capital planning is crucial for a business's long-term success and financial stability.

It allows organizations to make strategic decisions about where to invest resources to achieve their growth objectives, maximize shareholder value, and maintain a competitive edge in the marketplace.

By carefully evaluating potential investments, companies can ensure that they are putting their money into projects that align with their overall strategy and have the potential to deliver significant returns.

Furthermore, capital planning helps businesses minimize investment risks by identifying potential threats and developing strategies to mitigate them.

Capital Planning Process

Identifying capital needs.

This step involves assessing a company’s current assets , forecasting future growth, and analyzing industry trends.

It includes evaluating the organization's existing infrastructure, equipment, and technology to determine if they are adequate to meet its short and long-term objectives.

Additionally, companies should assess their growth potential by analyzing market trends, customer demand, and competition to identify areas where investment may be required.

Forecasting future growth is critical to identifying capital needs, as it provides valuable insights into the company's potential revenue streams and resource requirements.

Companies should utilize historical data, market research, and industry analysis to create accurate growth projections.

Understanding industry trends is essential for identifying opportunities for investment and potential challenges that may impact the organization's financial performance.

Evaluating Capital Projects

Evaluating a company’s potential capital projects is done to determine their financial feasibility, strategic alignment, and associated risks. Financial feasibility refers to the project's ability to generate a return on investment (ROI) that exceeds its cost of capital .

This can be assessed using various capital budgeting techniques , such as net present value (NPV) , internal rate of return (IRR) , and payback period.

Strategic alignment is essential in the evaluation process, as it ensures that the proposed project aligns with the company's overall business strategy and objectives.

This may involve analyzing the project's potential impact on market share , competitive positioning, and long-term growth potential.

Risk assessment is another critical aspect of project evaluation, as it involves identifying potential risks associated with the investment and developing strategies to mitigate them.

Prioritizing Capital Investments

This involves ranking projects according to their potential for financial return, considering factors such as projected cash flows, payback period, and NPV. Balancing risk and reward is also a critical aspect of prioritizing investments.

Companies should aim to create a balanced portfolio of projects that offers an optimal mix of potential returns and risk exposure.

Resource availability is another important factor to consider when prioritizing capital investments.

Companies must ensure they have the financial, human, and technological resources to support the successful implementation of their chosen projects. This may require reallocating resources from other business areas or seeking external financing to fund the investment.

Budgeting Techniques for Capital Planning

Payback period.

The payback period is a simple capital budgeting technique that calculates the amount of time it takes for an investment to recoup its initial cost through cash inflows.

It is calculated by dividing the initial investment cost by the annual cash inflow generated by the project.

The payback period is useful for comparing investment options with similar risk profiles , as it provides a straightforward measure of how quickly an investment will start generating positive returns.

However, the payback period must account for the time value of money or cash flows generated after the initial investment has been recouped, which may limit its usefulness in evaluating long-term projects.

Net Present Value

NPV is a more sophisticated capital budgeting technique that accounts for the time value of money by discounting future cash flows to their present value.

The NPV is calculated by subtracting the present value of cash outflows (initial investment) from the present value of cash inflows generated by the project over its life.

A positive NPV indicates that the project is expected to generate a return greater than the cost of capital, making it a potentially worthwhile investment.

In contrast, a negative NPV suggests that the project's returns are unlikely to cover its costs. NPV is widely used by businesses to compare investment opportunities and determine their financial viability.

Internal Rate of Return

The IRR calculates the discount rate at which the net present value of a project's cash flows becomes zero. In other words, the IRR represents the annualized rate of return at which the investment breaks even.

The IRR can be used to compare the profitability of different investment options, with higher IRRs generally indicating more attractive opportunities.

It is important to note that the IRR assumes that all future cash flows are reinvested at the same rate, which may only sometimes be the case in practice.

Profitability Index (PI)

The profitability index measures the relative profitability of an investment by dividing the present value of its future cash flows by the initial investment cost.

A PI greater than 1 indicates that the project is expected to generate a positive net present value. In contrast, a PI of less than 1 suggests that the investment may not be financially viable.

The PI is useful for comparing the relative profitability of different investment options, as it takes into account both the size of the investment and the potential returns.

Modified Internal Rate of Return (MIRR)

The modified internal rate of return (MIRR) is a variation of the IRR that addresses some of its limitations by considering the cost of capital and the reinvestment rate of cash flows separately.

The MIRR calculates the annualized rate of return at which the present value of a project's cash inflows, discounted at the reinvestment rate, equals the present value of its cash outflows, discounted at the cost of capital.

The MIRR provides a more realistic measure of a project's profitability, accounting for the actual reinvestment opportunities available to the company.

Risk Management in Capital Planning

Risk identification and assessment.

Risk management is a critical aspect of capital planning, as it helps businesses identify and assess potential risks associated with their investments.

This involves analyzing various factors, such as market conditions, economic trends, competitive dynamics, and regulatory developments, to determine the likelihood and potential impact of various risks on the company's financial performance.

Risk assessment should be an ongoing process, as new risks may emerge over time, or existing risks may change in magnitude or probability.

Risk Mitigation Strategies

Once risks have been identified and assessed, businesses should develop strategies to mitigate their potential impact on capital investments. This can involve a range of approaches, such as diversification, hedging , and insurance.

Diversification is spreading investments across a range of projects or asset classes to reduce the portfolio's overall risk exposure. Hedging involves using financial instruments, such as options or futures contracts , to offset potential losses from an investment.

Insurance can be used to transfer certain types of risk to a third party, such as property and casualty insurers or credit risk insurers, in exchange for a premium.

Contingency Planning

Contingency planning is an essential component of risk management. It involves developing alternative plans or strategies to address potential risks that may materialize during a capital investment.

This can include identifying backup suppliers or contractors, establishing alternative financing arrangements, or developing plans to scale back or modify the project if necessary.

Contingency planning helps businesses to be better prepared for unexpected events and to minimize the potential impact of risks on their capital investments.

Capital Planning Best Practices

Involving stakeholders.

One of the best practices in capital planning is involving all relevant stakeholders in the process. This includes the company's management and financial teams and employees, shareholders, customers, and suppliers.

By engaging stakeholders in the planning process, businesses can gain valuable insights, identify potential risks and opportunities, and build a shared understanding of the company's strategic objectives and investment priorities.

Aligning With Overall Business Strategy

Capital planning should be closely aligned with a company's overall business strategy, ensuring investments are directed toward projects supporting the organization's long-term goals and objectives.

To achieve this alignment, businesses should regularly review and update their strategic plans and ensure that capital planning is integral to their strategic decision-making process.

Regularly Reviewing and Updating the Plan

Capital planning is an ongoing process that requires regular review and updating to reflect changes in the company's financial position, market conditions, and strategic priorities.

By periodically revisiting their capital plan, businesses can ensure that their investment decisions remain aligned with their objectives, respond to new opportunities or risks, and adapt to changing circumstances.

Ensuring Transparency and Accountability

Transparency and accountability are essential for effective capital planning, as they help build trust among stakeholders and ensure that investment decisions are made in the company's best interests.

Businesses should establish clear processes for evaluating and prioritizing capital projects, involve stakeholders in decision-making, and regularly report on the progress and outcomes of their investments.

Capital planning is an essential process that drives a company's long-term growth and financial success.

It involves identifying capital needs by assessing current assets and forecasting future growth, evaluating potential investments using capital budgeting techniques like NPV and IRR, and prioritizing projects based on expected returns , risks, and resource availability.

Effective capital planning also incorporates risk management strategies, such as risk identification, mitigation, and contingency planning, to minimize potential investment threats.

Adhering to best practices, such as involving stakeholders, aligning capital planning with overall business strategy, regularly reviewing and updating plans, and ensuring transparency and accountability, further enhances the effectiveness of capital planning.

By adopting a comprehensive and strategic approach to capital planning, businesses can maximize shareholder value and secure long-term success in a competitive market.

Capital Planning FAQs

What is capital planning.

Capital planning is the process of determining how an organization will allocate and invest its financial resources to fund long-term projects, acquisitions, or expansions.

Why is capital planning important?

Capital planning is essential because it helps organizations prioritize and make informed decisions about allocating funds to projects that will generate the most significant returns or strategic advantages.

How does capital planning support financial stability?

Capital planning helps organizations maintain financial stability by ensuring that sufficient funds are available for strategic investments, managing debt and equity ratios, and minimizing the risk of financial distress.

What role does risk assessment play in capital planning?

Risk assessment is a crucial component of capital planning as it helps identify potential risks associated with investment projects. By evaluating risks, organizations can make informed decisions, develop mitigation strategies, and allocate resources more effectively.

How often should capital planning be reviewed and updated?

Capital planning should be reviewed and updated regularly to account for changes in market conditions, business priorities, and financial goals. Typically, organizations conduct annual or periodic reviews to ensure the relevance and accuracy of their capital plans.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

Related Topics

• Business Continuity Planning (BCP)
• Business Exit Strategies
• Business-to-Business (B2B)
• Business-to-Consumer (B2C)
• Change-In-Control Agreements
• Corporate Giving Programs
• Corporate Philanthropy
• Cross-Purchase Agreements
• Crowdfunding Platforms
• Employee Retention and Compensation Planning
• Employee Volunteer Programs (EVPs)
• Endorsement & Sponsorship Management
• Enterprise Resource Planning (ERP)
• Entity-Purchase Agreements
• Equity Crowdfunding
• Family Business Continuity
• Family Business Governance
• Family Business Transition Planning
• Family Limited Partnerships (FLPs) and Buy-Sell Agreements
• Human Resource Planning (HRP)
• Jumpstart Our Business Startups (JOBS) Act
• Request for Information (RFI)
• Request for Proposal (RFP)
• Revenue Sharing
• SEC Regulation D
• Sale of Business Contract
• Security Token Offerings (STOs)
• Shareholder Engagement and Proxy Voting
• Social Engagements

Ask a Financial Professional Any Question

Meet top certified financial advisors near you, our recommended advisors.

Claudia Valladares

WHY WE RECOMMEND:

Fee-Only Financial Advisor Show explanation

Bilingual in english / spanish, founder of wisedollarmom.com, quoted in gobanking rates, yahoo finance & forbes.

IDEAL CLIENTS:

Retirees, Immigrants & Sudden Wealth / Inheritance

Retirement Planning, Personal finance, Goals-based Planning & Community Impact

Taylor Kovar, CFP®

Certified financial planner™, 3x investopedia top 100 advisor, author of the 5 money personalities & keynote speaker.

Business Owners, Executives & Medical Professionals

Strategic Planning, Alternative Investments, Stock Options & Wealth Preservation

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.

Fact Checked

At Finance Strategists, we partner with financial experts to ensure the accuracy of our financial content.

Our team of reviewers are established professionals with decades of experience in areas of personal finance and hold many advanced degrees and certifications.

They regularly contribute to top tier financial publications, such as The Wall Street Journal, U.S. News & World Report, Reuters, Morning Star, Yahoo Finance, Bloomberg, Marketwatch, Investopedia, TheStreet.com, Motley Fool, CNBC, and many others.

This team of experts helps Finance Strategists maintain the highest level of accuracy and professionalism possible.

Why You Can Trust Finance Strategists

Finance Strategists is a leading financial education organization that connects people with financial professionals, priding itself on providing accurate and reliable financial information to millions of readers each year.

We follow strict ethical journalism practices, which includes presenting unbiased information and citing reliable, attributed resources.

Our goal is to deliver the most understandable and comprehensive explanations of financial topics using simple writing complemented by helpful graphics and animation videos.

Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications. Our work has been directly cited by organizations including Entrepreneur, Business Insider, Investopedia, Forbes, CNBC, and many others.

Our mission is to empower readers with the most factual and reliable financial information possible to help them make informed decisions for their individual needs.

How It Works

Step 1 of 3, ask any financial question.

Ask a question about your financial situation providing as much detail as possible. Your information is kept secure and not shared unless you specify.

Step 2 of 3

Our team will connect you with a vetted, trusted professional.

Someone on our team will connect you with a financial professional in our network holding the correct designation and expertise.

Step 3 of 3

Get your questions answered and book a free call if necessary.

A financial professional will offer guidance based on the information provided and offer a no-obligation call to better understand your situation.

Where Should We Send Your Answer?

Just a Few More Details

We need just a bit more info from you to direct your question to the right person.

Tell Us More About Yourself

Is there any other context you can provide.

Pro tip: Professionals are more likely to answer questions when background and context is given. The more details you provide, the faster and more thorough reply you'll receive.

What is your age?

Are you married, do you own your home.

• Owned outright
• Owned with a mortgage

Do you have any children under 18?

• Yes, 3 or more

What is the approximate value of your cash savings and other investments?

• $50k - $250k
• $250k - $1m

Pro tip: A portfolio often becomes more complicated when it has more investable assets. Please answer this question to help us connect you with the right professional.

Would you prefer to work with a financial professional remotely or in-person?

• I would prefer remote (video call, etc.)
• I would prefer in-person
• I don't mind, either are fine

What's your zip code?

• I'm not in the U.S.

Submit to get your question answered.

A financial professional will be in touch to help you shortly.

Part 1: Tell Us More About Yourself

Do you own a business, which activity is most important to you during retirement.

• Giving back / charity
• Spending time with family and friends
• Pursuing hobbies

Part 2: Your Current Nest Egg

Part 3: confidence going into retirement, how comfortable are you with investing.

• Very comfortable
• Somewhat comfortable
• Not comfortable at all

How confident are you in your long term financial plan?

• Very confident
• Somewhat confident
• Not confident / I don't have a plan

What is your risk tolerance?

How much are you saving for retirement each month.

• None currently
• Minimal: $50 - $200
• Steady Saver: $200 - $500
• Serious Planner: $500 - $1,000
• Aggressive Saver: $1,000+

How much will you need each month during retirement?

• Bare Necessities: $1,500 - $2,500
• Moderate Comfort: $2,500 - $3,500
• Comfortable Lifestyle: $3,500 - $5,500
• Affluent Living: $5,500 - $8,000
• Luxury Lifestyle: $8,000+

Part 4: Getting Your Retirement Ready

What is your current financial priority.

• Getting out of debt
• Growing my wealth
• Protecting my wealth

Do you already work with a financial advisor?

Which of these is most important for your financial advisor to have.

• Tax planning expertise
• Investment management expertise
• Estate planning expertise
• None of the above

Where should we send your answer?

Submit to get your retirement-readiness report., get in touch with, great the financial professional will get back to you soon., where should we send the downloadable file, great hit “submit” and an advisor will send you the guide shortly., create a free account and ask any financial question, learn at your own pace with our free courses.

Take self-paced courses to master the fundamentals of finance and connect with like-minded individuals.

Get Started

To ensure one vote per person, please include the following info, great thank you for voting., get in touch with a financial advisor, submit your info below and someone will get back to you shortly..

Finding Investors

How Funding Works

Idea Validation Bootcamp

Pitch Deck Bootcamp

Pitching Investors

Product MVP

Product/MVP

Idea Validation

Customer Acquisition

Emotional Support

How To Write A Business Plan: A Comprehensive Guide

The Startups Team

How To Write A Business Plan: A Comprehensive Guide

A comprehensive, step-by-step guide - complete with real examples - on writing business plans with just the right amount of panache to catch an investor's attention and serve as a guiding star for your business.

Introduction to Business Plans

So you've got a killer startup idea. Now you need to write a business plan that is equally killer.

You fire up your computer, open a Google doc, and stare at the blank page for several minutes before it suddenly dawns on you that,  Hm…maybe I have no idea how to write a business plan from scratch after all.

Don't let it get you down. After all, why would you know anything about business planning? For that very reason we have  4 amazing business plan samples  to share with you as inspiration.

For most founders,  writing a business plan  feels like the startup equivalent of homework. It's the thing you know you have to do, but nobody actually wants to do.

Here's the good news: writing a business plan doesn't have to be this daunting, cumbersome chore.

Once you understand the fundamental questions that your business plan should answer for your readers and how to position everything in a way that compels your them to take action, writing a business plan becomes way more approachable.

Before you set fingers to the keyboard to turn your business idea into written documentation of your organizational structure and business goals, we're going to walk you through the most important things to keep in mind (like company description, financials, and market analysis, etc.) and to help you tackle the writing process confidently — with plenty of real life business plan examples along the way to get you writing a business plan to be proud of!

Keep It Short and Simple.

There's this old-school idea that business plans need to be ultra-dense, complex documents the size of a doorstop because that's how you convey how serious you are about your company.

Not so much.

Complexity and length for complexity and length's sake is almost never a good idea, especially when it comes to writing a business plan. There are a couple of reasons for this.

1. Investors Are Short On Time

If your chief goal is using your business plan to secure funding, then it means you intend on getting it in front of an investor. And if there's one thing investors are, it's busy. So keep this in mind throughout writing a business plan.

Investors wade through hundreds of business plans a year. There's no version of you presenting an 80-page business plan to an investor and they enthusiastically dive in and take hours out of their day to pour over the thing front to back.

Instead, they're looking for you to get your point across as quickly and clearly as possible so they can skim your business plan and get to the most salient parts to determine whether or not they think your opportunity is worth pursuing (or at the very least initiating further discussions).

You should be able to refine all of the key value points that investors look for to 15-20 pages (not including appendices where you will detail your financials). If you find yourself writing beyond that, then it's probably a case of either over explaining, repeating information, or including irrelevant details in your business plan (you don't need to devote 10 pages to how you're going to set up your website, for example).

Bottom line: always be on the lookout for opportunities to “trim the fat" while writing a business plan (and pay special attention to the executive summary section below), and you'll be more likely to secure funding.

2. Know Your Audience

If you fill your business plan with buzzwords, industry-specific jargon or acronyms, and long complicated sentences, it might make sense to a handful of people familiar with your niche and those with superhuman attention spans (not many), but it alienates the vast majority of readers who aren't experts in your particular industry. And if no one can understand so much as your company overview, they won't make it through the rest of your business plan.

Your best bet here is to use simple, straightforward language that's easily understood by anyone — from the most savvy of investor to your Great Aunt Bertha who still uses a landline.

How To Format Your Business Plan

You might be a prodigy in quantum mechanics, but if you show up to your interview rocking cargo shorts and lime green Crocs, you can probably guess what the hiring manager is going to notice first.

In the same way,  how  you present your business plan to your readers equally as important as what you present to them. So don't go over the top with an extensive executive summary, or get lazy with endless bullet points on your marketing strategy.

If your business plan is laden with inconsistent margins, multiple font types and sizes, missing headings and page numbers, and lacks a table of contents, it's going to create a far less digestible reading experience (and totally take away from your amazing idea and hours of work writing a business plan!)

While there's no one  right  way to format your business plan, the idea here is to ensure that it presents professionally. Here's some easy formatting tips to help you do just that.

If your margins are too narrow, it makes the page look super cluttered and more difficult to read.

A good rule of thumb is sticking to standard one-inch margins all around.

Your business plan is made up of several key sections, like chapters in a book.

Whenever you begin a section (“Traction” for example) you'll want to signify it using a header so that your reader immediately knows what to expect from the content that follows.

This also helps break up your content and keep everything nice and organized in your business plan.

Subheadings

Subheadings are mini versions of headings meant to break up content within each individual section and capture the attention of your readers to keep them moving down the page.

In fact, we're using sub-headers right now in this section for that very purpose!

Limit your business plan to two typefaces (one for headings and one for body copy and subheadings, for example) that you can find in a standard text editor like Microsoft Word or Google Docs.

Only pick fonts that are easy to read and contain both capital and lowercase letters.

Avoid script-style or jarring fonts that distract from the actual content. Modern, sans-serif fonts like Helvetica, Arial, and Proxima Nova are a good way to go.

Keep your body copy between 11 and 12-point font size to ensure readability (some fonts are more squint-inducing than others).

You can offset your headings from your body copy by simply upping the font size and by bolding your subheadings.

Sometimes it's better to show instead of just tell.

Assume that your readers are going to skim your plan rather than read it word-for-word and treat it as an opportunity to grab their attention with color graphics, tables, and charts (especially with financial forecasts), as well as product images, if applicable.

This will also help your reader better visualize what your business model is all about.

Need some help with this?

Our  business planning wizard  comes pre-loaded with a modular business plan template that you can complete in any order and makes it ridiculously easy to generate everything you need from your value proposition, mission statement, financial projections, competitive advantage, sales strategy, market research, target market, financial statements, marketing strategy, in a way that clearly communicates your business idea.

Refine Your Business Plans. Then Refine Them Some More.

Your business isn't static, so why should your business plan be?

Your business strategy is always evolving, and so are good business plans. This means that the early versions of your business plans probably won't (and shouldn't be) your last. The details of even even the best business plans are only as good as their last update.

As your business progresses and your ideas about it shift, it's important revisit your business plan from time to time to make sure it reflects those changes, keeping everything as accurate and up-to-date as possible. What good is market analysis if the market has shifted and you have an entirely different set of potential customers? And what good would the business model be if you've recently pivoted? A revised business plan is a solid business plan. It doesn't ensure business success, but it certainly helps to support it.

This rule especially holds true when you go about your market research and learn something that goes against your initial assumptions, impacting everything from your sales strategy to your financial projections.

At the same time, before you begin shopping your business plan around to potential investors or bankers, it's imperative to get a second pair of eyes on it after you've put the final period on your first draft.

After you run your spell check, have someone with strong “English teacher skills” run a fine-tooth comb over your plan for any spelling, punctuation, and grammatical errors you may have glossed over. An updated, detailed business plan (without errors!) should be constantly in your business goals.

More than that, your trusty business plan critic can also give you valuable feedback on how it reads from a stylistic perspective. While different investors prefer different styles, the key here is to remain consistent with your audience and business.

Writing Your Business Plan: A Section-By-Section Breakdown

We devoted an entire article carefully breaking down the  key components of a business plan  which takes a comprehensive look of what each section entails and why.

If you haven't already, you should check that out, as it will act as the perfect companion piece to what we're about to dive into in a moment.

For our purposes here, we're going to look at a few real world business plan examples (as well as one of our own self-penned “dummy” plans) to give you an inside look at how to position key information on a section-by-section basis.

1. Executive Summary

Quick overview.

After your Title Page — which includes your company name, slogan (if applicable), and contact information — and your Table of Contents, the Executive Summary will be the first section of actual content about your business.

The primary goal of your Executive Summary is to provide your readers with a high level overview of your business plan as a whole by summarizing the most important aspects in a few short sentences. Think of your Executive Summary as a kind of “teaser” for your business concept and the information to follow — information which you will explain in greater detail throughout your plan. This isn't the place for your a deep dive on your competitive advantages, or cash flow statement. It is an appropriate place to share your mission statement and value proposition.

Executive Summary Example

Here's an example of an Executive Summary taken from a sample business plan written by the Startups.com team for a fictional company called Culina. Here, we'll see how the Executive Summary offers brief overviews of the  Product ,  Market Opportunity ,  Traction , and  Next Steps .

Culina Tech specializes in home automation and IoT technology products designed to create the ultimate smart kitchen for modern homeowners.

Our flagship product, the Culina Smart Plug, enables users to make any kitchen appliance or cooking device intelligent. Compatible with all existing brands that plug into standard two or three-prong wall outlets, Culina creates an entire network of Wi-Fi-connected kitchen devices that can be controlled and monitored remotely right from your smartphone.

The majority of US households now spend roughly 35% of their energy consumption on appliances, electronics, and lighting.  With the ability to set energy usage caps on a daily, weekly or monthly basis, Culina helps homeowners stay within their monthly utility budget through more efficient use of the dishwasher, refrigerator, freezer, stove, and other common kitchen appliances.

Additionally, 50.8% of house fires are caused in the kitchen — more than any other room in the home — translating to over $5 billion in property damage costs per year.  Culina provides the preventative intelligence necessary to dramatically reduce kitchen-related disasters and their associated costs and risk of personal harm.

Our team has already completed the product development and design phase, and we are now ready to begin mass manufacturing. We've also gained a major foothold among consumers and investors alike, with 10,000 pre-ordered units sold and $5 million in investment capital secured to date.

We're currently seeking a $15M Series B capital investment that will give us the financial flexibility to ramp up hardware manufacturing, improve software UX and UI, expand our sales and marketing efforts, and fulfill pre-orders in time for the 2018 holiday season.

2. Company Synopsis

Your Company Synopsis section answers two critically important questions for your readers: What painful  PROBLEM  are you solving for your customers? And what is your elegant  SOLUTION  to that problem? The combination of these two components form your value proposition.

Company Synopsis Example

Let's look at a real-life company description example from  HolliBlu * — a mobile app that connects healthcare facilities with local skilled nurses — to see how they successfully address both of these key aspects.  *Note: Full disclosure; Our team worked directly with this company on their business plan via Fundable.

Notice how we get a crystal clear understanding of why the company exists to begin with when they set up the  problem  — that traditional nurse recruitment methods are costly, inconvenient, and time-consuming, creating significant barriers to providing quality nursing to patients in need.

Once we understand the painful problem that HolliBlu's customers face, we're then directly told how their  solution  links back directly to that problem — by creating an entire community of qualified nurses and directly connecting them with local employers more cost-effectively and more efficiently than traditional methods.

3. Market Overview

Your Market Overview provides color around the industry that you will be competing in as it relates to your product/service.

This will include statistics about industry size, [growth](https://www.startups.com/library/expert-advice/the-case-for-growing-slowly) rate, trends, and overall outlook. If this part of your business plan can be summed up in one word, it's  research .

The idea is to gather as much raw data as you can to make the case for your readers that:

This is a market big enough to get excited about.

You can capture a big enough share of this market to get excited about.

Target Market Overview Example

Here's an example from HolliBlu's business plan:

HolliBlu's Market Overview hits all of the marks — clearly laying out the industry size ($74.8 billion), the Total Addressable Market or TAM (3 million registered nurses), industry growth rate (581,500 new RN jobs through 2018; $355 billion by 2020), and industry trends (movement toward federally-mandated compliance with nurse/patient ratios, companies offering sign-on bonuses to secure qualified nurses, increasing popularity of home-based healthcare).

4. Product (How it Works)

Where your Company Synopsis is meant to shed light on why the company exists by demonstrating the problem you're setting out to solve and then bolstering that with an impactful solution, your Product or How it Works section allows you to get into the nitty gritty of how it actually delivers that value, and any competitive advantage it provides you.

Product (How it Works) Example

In the below example from our team's Culina sample plan, we've divided the section up using subheadings to call attention to product's  key features  and how it actually works from a user perspective.

This approach is particularly effective if your product or service has several unique features that you want to highlight.

5. Revenue Model

Quite simply, your Revenue Model gives your readers a framework for how you plan on making money. It identifies which revenue channels you're leveraging, how you're pricing your product or service, and why.

Revenue Model Example

Let's take a look at another real world business plan example with brewpub startup  Magic Waters Brewpub .*

It can be easy to get hung up on the financial aspect here, especially if you haven't fully developed your product yet. And that's okay. *Note: Full disclosure; Our team worked directly with this company on their business plan via Fundable.

The thing to remember is that investors will want to see that you've at least made some basic assumptions about your monetization strategy.

6. Operating Model

Your Operating Model quite simply refers to how your company actually runs itself. It's the detailed breakdown of the processes, technologies, and physical requirements (assets) that allow you to deliver the value to your customers that your product or service promises.

Operating Model Example

Let's say you were opening up a local coffee shop, for example. Your Operating Model might detail the following:

Information about your facility (location, indoor and outdoor space features, lease amount, utility costs, etc.)

The equipment you need to purchase (coffee and espresso machines, appliances, shelving and storage, etc.) and their respective costs.

The inventory you plan to order regularly (product, supplies, etc.), how you plan to order it (an online supplier) and how often it gets delivered (Mon-Fri).

Your staffing requirements (including how many part or full time employees you'll need, at what wages, their job descriptions, etc.)

In addition, you can also use your Operating Model to lay out the ways you intend to manage the costs and efficiencies associated with your business, including:

The  Critical Costs  that make or break your business. In the case of our coffee shop example, you might say something like,

“We're estimating the marketing cost to acquire a customer is going to be $25.  Our average sale is $45.  So long as we can keep our customer acquisition costs below $25 we will have enough margin to grow with.”

Cost Maturation & Milestones  that show how your Critical Costs might fluctuate over time.

“If we sell 50 coffees a day, our average unit cost will be $8 on a sale of $10.  At that point we're barely breaking even. However as we scale up to 200 coffees a day, our unit costs drop significantly to $4, creating a 100% increase in net income.”

Investment Costs  that highlight strategic uses of capital that will have a big Return on Investment (ROI) later.

“We're investing $100,000 into a revolutionary new coffee brewing system that will allow us to brew twice the amount our current output with the same amount of space and staff.”

Operating Efficiencies  explaining your capability of delivering your product or service in the most cost effective manner possible while maintaining the highest standards of quality.

“By using energy efficient Ecoboilers, we're able to keep our water hot while minimizing the amount of energy required. Our machines also feature an energy saving mode. Both of these allow us to dramatically cut energy costs.”

7. Competitive Analysis

Like the Market Overview section, you want to show your readers that you've done your homework and have a crazy high level of awareness about your current competitors or any potential competitors that may crop up down the line for your given business model.

When writing your Competitive Analysis, your overview should cover  who  your closest competitors are, the chief  strengths  they bring to the table, and their biggest  weaknesses .

You'll want to identify at least 3 competitors — either direct, indirect, or a combination of the two. It's an extremely important aspect of the business planning process.

Competition Analysis Example

Here's an example of how HolliBlu lays out their Competitive Analysis section for just one of their competitors, implementing each of the criteria noted above:

8. Customer Definition

Your Customer Definition section allows you to note which customer segment(s) you're going after, what characteristics and habits each customer segment embodies, how each segment uniquely benefits from your product or service, and how all of this ties together to create the ideal portrait of an actual paying customer, and how you'll cultivate and manage customer relationships.

Customer Definition Example

HolliBlu's Customer Definition section is effective for several reasons. Let's deconstruct their first target market segment, hospitals.

What's particularly successful here is that we are explained why hospitals are optimal buyers.

They accomplish this by harkening back to the central problem at the core of the opportunity (when hospitals can't supply enough staff to meet patient demands, they have to resort on costly staffing agencies).

On top of that, we are also told how  big  of an opportunity going after this customer segment represents (5,534 hospitals in the US).

This template is followed for each of the company's 3 core customer segments. This provides consistency, but more than that, it emphasizes how diligent research reinforces their assumptions about who their customers are and why they'd open their wallets. Keep all of this in mind when you are write your own business plan.

9. Customer Acquisition

Now that you've defined who your customers are for your readers, your Customer Acquisition section will tell them what marketing and sales strategy and tactics you plan to leverage to actually reach the target market (or target markets) and ultimately convert them into paying customers.

marketing Strategy Example

Similar to the exercise you will go through with your Revenue Model, in addition to identifying  which  channels you're pursuing, you'll also want to detail all of relevant costs associated with your customer acquisition channels.

Let's say you spent $100 on your marketing plan to acquire 100 customers during 2018. To get your CAC, you simply divide the number of customers acquired by your spend, giving you a $1.00 CAC.

10. Traction

This one's huge. Traction tells investors one important thing: that you're business has momentum. It's evidence that you're making forward progress and hitting milestones. That things are happening. It's one of the most critical components of a successful business plan.

Why is this so important? Financial projections are great and all, but if you can prove to investors that your company's got legs before they've even put a dime into it, then it will get them thinking about all the great things you'll be able to accomplish when they do bankroll you.

Traction Example

In our Culina Traction section, we've called attention to several forms of traction, touching on some of the biggest ones that you'll want to consider when writing your own plan.

Have I built or launched my product or service yet?

Have I reached any customers yet?

Have I generated any revenue yet?

Have I forged any strategic industry relationships that will be instrumental in driving growth?

The key takeaway here: the more traction you can show, the more credibility you build with investors. After all, you can't leave it all on market analysis alone.

11. Management Team

Here's what your Management Team section isn't: it's not an exhaustive rundown of each and every position your team members have held over the course of their lives.

Instead, you should tell investors which aspects of your team's experience and expertise directly translates to the success of  this  company and  this  industry.

In other words, what applicable, relevant background do they bring to the table?

Management Team Example

Let's be real. The vast majority of startup teams probably aren't stacked with Harvard and Stanford grads. But the thing to home in on is how the prior experience listed speaks directly to how it qualifies that team member's current position.

The word of the day here is relevancy. If it's not relevant, you probably don't need to include it in your typical business plan.

12. Funding

Funding overview.

The ask! This is where you come out and, you guessed it,  ask  your investors point blank how much money you need to move your business forward, what specific milestones their investment will allow you to reach, how you'll allocate the capital you secure, and what the investor will get in exchange for their investment.

You can also include information about your  exit strategy  (IPO, acquisition, merger?).

Funding Example

While we've preached against redundancy in your business plan, an exception to the rule is using the Funding section to offer up a very brief recap that essentially says, “here are the biggest reasons you should invest in my company and why it will ultimately benefit you.”

13. Financials

Spreadsheets and numbers and charts, oh my! Yes, it's everybody's “favorite” business plan section: Financials.

Your Financials section will come last and contain all of the forecasted numbers that say to investors that this is a sound investment. This will include things like your sales forecast, expense budget, and break-even analysis. A lot of this will be assumptions, or estimates.

The key here is keeping those estimates as realistic as humanly possible by breaking your figures into components and looking at each one individually.

Financials Example

The balance sheet above illustrates the business' estimated net worth over a three-year period by summarizing its assets (tangible objects owned by the company), liabilities (debt owed to a creditor of the company), and shareholders' equity (source of financing used to fund the assets).

In plain words, the balance sheet is basically a snapshot of your business' financial status by laying out what you own and owe, helping investors determine the level of risk involved and giving them a good understanding of the financial health of the business.

If you're looking to up your game from those outdated Excel-style spreadsheets,  our business planning software  will help you create clean, sleek, modern financial reports the modern way. Plus, it's as easy to use as it is attractive to look at. You might even find yourself enjoying financial projections, building a cash flow statement, and business planning overall.

You've Got This!

You've committed to writing your business plan and now you've got some tricks of the trade to help you out along the way. Whether you're applying for a business loan or seeking investors, your well-crafted business plan will act as your Holy Grail in helping take your business goals to the next plateau.

This is a ton of work. It's not a few hours and a free business plan template. It's not just a business plan software. We've been there before. Writing your [business plan](https://www.startups.com/library/expert-advice/top-4-business-plan-examples) is just one small step in startup journey. There's a whole long road ahead of you filled with a marketing plan, investor outreach, chasing venture capitalists, actually getting funded, and growing your business into a successful company.

And guess what? We've got helpful information on all of it — and all at your disposal! We hope this guides you confidently on how to write a business plan worth bragging about.

Ronald Calderon

Great info for feedback my current business plan!

Upgrade to join the discussion.

Home > Business > Business Startup

How To Write a Business Plan

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .

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

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

Table of contents

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

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

Step 1: Write your executive summary

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

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

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

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

Step 2: Do your market research homework

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

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

Step 3: Set your business goals and objectives

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

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

Step 4: Plan your business strategy

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

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

Step 5: Describe your product or service

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

Step 6: Crunch the numbers

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

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

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

Step 7: Finalize your business plan

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

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

Compare the Top Small-Business Banks

Data effective 1/10/23. At publishing time, rates, fees, and requirements are current but are subject to change. Offers may not be available in all areas.

The takeaway

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

Related content

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

Best Small Business Loans

5202 W Douglas Corrigan Way Salt Lake City, UT 84116

Accounting & Payroll

Point of Sale

Payment Processing

Inventory Management

Human Resources

Other Services

Best Inventory Management Software

Best Small Business Accounting Software

Best Payroll Software

Best Mobile Credit Card Readers

Best POS Systems

Best Tax Software

Stay updated on the latest products and services anytime anywhere.

By signing up, you agree to our Terms of Use  and  Privacy Policy .

Disclaimer: The information featured in this article is based on our best estimates of pricing, package details, contract stipulations, and service available at the time of writing. All information is subject to change. Pricing will vary based on various factors, including, but not limited to, the customer’s location, package chosen, added features and equipment, the purchaser’s credit score, etc. For the most accurate information, please ask your customer service representative. Clarify all fees and contract details before signing a contract or finalizing your purchase.

Our mission is to help consumers make informed purchase decisions. While we strive to keep our reviews as unbiased as possible, we do receive affiliate compensation through some of our links. This can affect which services appear on our site and where we rank them. Our affiliate compensation allows us to maintain an ad-free website and provide a free service to our readers. For more information, please see our  Privacy Policy Page . |

© Business.org 2024 All Rights Reserved.

• Updated Terms of Use
• New Privacy Policy
• Your Privacy Choices
• Closed Captioning Policy

Quotes displayed in real-time or delayed by at least 15 minutes. Market data provided by  Factset . Powered and implemented by  FactSet Digital Solutions .  Legal Statement .

This material may not be published, broadcast, rewritten, or redistributed. ©2024 FOX News Network, LLC. All rights reserved. FAQ - New Privacy Policy

Harris breaks with Biden on capital gains tax; calls for top rate of 28%

Harris scales down capital gains tax proposal, compared to biden's plan for 39.6% top rate.

Kamala Harris' whole background is ‘spend, tax’: Gary Kaltbaum

Gary Kaltbaum of Kaltbaum Capital Management weighs in on Vice President Kamala Harris' economic agenda as she looks to hike capital gains tax and whether he's still wary on technology.

Democratic presidential nominee and Vice President Kamala Harris is calling for increasing the capital gains tax for high earners to 28%, a much smaller increase than the nearly 40% top rate President Biden previously proposed.

Vice President Kamala Harris speaks on stage during the final day of the Democratic National Convention at the United Center in Chicago on Aug. 22.  (Justin Sullivan/Getty Images / Getty Images)

Harris revealed the plan in a speech on Wednesday in New Hampshire , telling the audience, "If you earn a million dollars a year or more, the tax rate on your long-term capital gains will be 28 percent under my plan, because we know when the government encourages investment, it leads to broad-based economic growth, and it creates jobs, which makes our economy stronger."

TRUMP VOWS TO CUT BUSINESS TAX RATE TO 15%, CREATE GOVERNMENT EFFICIENCY COMMISSION LED BY ELON MUSK

Harris' proposal for a lower top tax rate on capital gains suggests she wants to appeal to a broader base of voters, even as she sticks with most of President Biden's plans to strengthen the middle class. Harris became the Democratic nominee after Biden stepped aside on July 21.

President Biden points to Vice President Kamala Harris in the overflow room at Prince George's Community College in Largo, Maryland, on Aug. 15. (Brendan Smialowski/AFP via Getty Images / Getty Images)

In his fiscal 2025 budget, Biden had proposed raising the tax rate on long-term capital gains — the profits made from selling or trading an asset held for more than a year — to 39.6% for those earning over $1 million annually, from the current rates, which range up to 20%, depending on income.

THE KAMALA HARRIS TAX PLAN

Harris said she also plans to offer low- and no-interest loans to small businesses, cut the red tape they face and expand access to venture capital.

Kamala Harris' unrealized capital gains tax proposal has been a ‘disaster’: Kelly Jane Torrance.

New York Post elections editor Kelly Jane Torrance and Kingsview Asset Management partner Mario Veneroso compare Trump's and Harris’ economic agenda.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Harris said she supported a minimum tax for billionaires proposed by Biden, adding, "It is not right that those who can afford it are often paying a lower tax rate than our teachers and our nurses and our firefighters."

Reuters contributed to this report.

Advertisement

Harris Tells the Business Community: I’m Friendlier Than Biden

The vice president on Wednesday proposed an increase on the capital gains tax that was far less than what President Biden has floated, one of several moves meant to win over business owners.

• Share full article

By Nicholas Nehamas Andrew Duehren and Reid J. Epstein

Nicholas Nehamas reported from North Hampton, N.H., and Andrew Duehren and Reid J. Epstein from Washington.

• Sept. 4, 2024

Vice President Kamala Harris on Wednesday sought to put daylight between herself and President Biden on tax policy, making it the first issue on which she is trying to stand apart from an administration in which she holds a key role.

Stepping up her efforts to win over the business community, Ms. Harris announced that she would increase the capital gains tax at a far lower rate than what Mr. Biden had proposed — a move that came after pressure from her campaign’s biggest donors to back off some of its most aggressive tax proposals.

Ms. Harris’s proposal, which she introduced at a campaign event in New Hampshire, was directed squarely at business owners and wealthier Americans who are skeptical of Democrats and have gravitated toward former President Donald J. Trump. In the same speech, she rolled out her new plan for an expanded tax break for start-ups .

Mr. Biden had proposed taxing capital gains at 39.6 percent for Americans who make more than $1 million a year. Ms. Harris said on Wednesday that she would tax investment income for those Americans at a rate of 28 percent, a reversal from her earlier support for the tax increases included in the White House budget released this spring .

“If you earn a million dollars a year or more, the tax rate on your long-term capital gains will be 28 percent under my plan,” Ms. Harris said at a brewery in North Hampton, N.H. “Because we know when the government encourages investment, it leads to broad-based economic growth and it creates jobs, which makes our economy stronger.”

Ms. Harris’s proposed rate of 28 percent does not include an additional surtax on investment income, according to two people familiar with the campaign’s proposal. One of those people said a 5 percent surtax would apply on top of the 28 percent, bringing the total rate to 33 percent. With the surtax, Mr. Biden’s proposal would have raised the top capital-gains rate to 44.6 percent. The top capital-gains tax rate now is 23.8 percent, inclusive of a 3.8 percent surtax.

We are having trouble retrieving the article content.

Please enable JavaScript in your browser settings.

Thank you for your patience while we verify access. If you are in Reader mode please exit and  log into  your Times account, or  subscribe  for all of The Times.

Thank you for your patience while we verify access.

Already a subscriber?  Log in .

Want all of The Times?  Subscribe .

• Newsletters
• Best Industries
• Business Plans
• Home-Based Business
• The UPS Store
• Customer Service
• Black in Business
• Your Next Move
• Female Founders
• Best Workplaces
• Company Culture
• Public Speaking
• HR/Benefits
• Productivity
• All the Hats
• Digital Transformation
• Artificial Intelligence
• Bringing Innovation to Market
• Cloud Computing
• Social Media
• Data Detectives
• Exit Interview
• Bootstrapping
• Crowdfunding
• Venture Capital
• Business Models
• Personal Finance
• Founder-Friendly Investors
• Upcoming Events
• Inc. 5000 Vision Conference
• Become a Sponsor
• Cox Business
• Verizon Business
• Branded Content
• Apply Inc. 5000 US

Inc. Premium

Business 101: Capitalization Plans

Guidlines for projecting your company's capital needs

Some business owners conduct their capital searches along the philosophical lines of "Whatever I can raise, I can use." Others rely on their business plans for a rough sense of what they'll need and how they'll use it. But there's a better way: a capitalization plan that projects your company's future capital requirements. Here are some basic guidelines:

Focus on what your company needs, not on what you believe you can raise. A. Gordon Tunstall, a financing consultant and intermediary based in Tampa, advises, "If your document makes compromises and isn't realistic, you'll lose credibility with the lenders and investors you approach for funds."

Think in terms of your company's stages of growth: each will have specific capital requirements. A detailed needs schedule will force you to apply discipline. Knowing how much money you'll need and when can help you avoid certain extremes. If you raise too much money too quickly, for example, or receive it in one big infusion, the temptation will be to burn right through it. If you raise less than you know your company will need, on the other hand, you'll have to adjust your spending plans and warn your backers and investors that you will be needing more money, all of which means an earlier-than-expected return to the capital markets.

Once you've defined and scheduled your capital needs, figure out the best source of funding for each stage of development. If, for example, you envision a series of big-ticket equipment purchases over the next couple of years, don't just finance them with a leasing company on an item-by-item basis. Instead, approach banks or nonbank lenders (such as investment houses or credit-card companies) that will allow you to move from equipment-financing deals to a general credit-line arrangement as you build a good track record. To minimize potential conflict among your backers down the road, write down for them the various sources of capital for each stage of growth and the likely payback schedules.

Schedule your activities accordingly. Do you foresee a need for venture capital in three years? If so, start some early networking now. Are you relying on excessively pricey sources of capital right now to get your growth plan off the ground? Then schedule a date on which to replace that high-cost money with a less costly alternative. If you can't make the switch when the date arrives, it's probably a warning sign that your company's development is off course.

Monitor your fund-raising progress and the accuracy of your capital-requirement projections. The sad truth is, as difficult as it is to persuade someone to lend you money or make an investment the first time, it gets even tougher each time you go back asking for more. All the more reason to have a plan that you can adjust as experience dictates.

The Daily Digest for Entrepreneurs and Business Leaders

Privacy Policy

Proposals to tax unrealized capital gains would 'kill the stock market,' billionaire investor Mark Cuban says

• Mark Cuban said that taxing unrealized capital gains would "kill the stock market."
• President Joe Biden proposed taxing unrealized gains for people worth over $100 million.
• Kamala Harris is unlikely to endorse Biden's plan, Cuban said.

Any proposal to tax unrealized capital gains would "kill the stock market," the billionaire investor Mark Cuban said in a CNBC interview on Thursday.

As part of his wide-ranging tax proposals, President Joe Biden has suggested taxing unrealized capital gains for people with a net worth of more than $100 million.

While Vice President Kamala Harris has not endorsed or dismissed Biden's proposal on unrealized capital gains, Cuban said, it's dead on arrival.

"If you tax unrealized gains, you're going to kill the stock market, and it's going to be the ultimate employment plan for private equity because companies are not going to go public because you can get whipsawed," Cuban said.

Cuban's "whipsaw" comment alluded to the main question investors have surrounding proposed taxes on unrealized capital gains: What happens if those unrealized capital gains eventually turn into unrealized capital losses in a volatile stock market?

But according to Cuban, who said he'd been talking with the Harris campaign often in recent weeks, Harris is highly unlikely to endorse such a plan.

"They realize that's the issue," he said, adding of Harris: "Even though she is not directly conflicting the Biden tax plan, to her, her value proposition is we need to tax everybody fairly, starting from the Biden plan as a starting point. But that's not necessarily her ending point."

Harris has already rejected some aspects of Biden's tax proposals, offering her own vision of what she would propose as president.

While Biden proposed to move the long-term capital-gains tax rate to 39.6% for households with taxable income of more than $1 million, Harris says that's too high and has proposed raising it to 28% instead.

"The point I'm really trying to convey is: She's open-minded. She's not an ideologue. She wants to do what's best for business," Cuban said.

Cuban defended the Democratic presidential nominee despite criticism that Harris has yet to unveil a slew of detailed economic-policy proposals with the November election fast approaching.

"Like any good CEO trying to turn around a battleship, there's only so much you can do every single day," Cuban said. "Like any good CEO, you've got to do it when you get it right."

• Main content

Revue belge de géographie

Accueil Numéros 1 Russian regional capitals as new ...

Russian regional capitals as new international actors: the case of Yekaterinburg and Rostov

The authors consider theoretical approaches to the evaluation of international functions of large regional centres. They analyse the factors determining this activity and propose a number of quantitative and qualitative indicators helping to estimate its efficiency. A special attention is paid to the role of local governments in the development of foreign contacts. It is shown that Russian metropolitan centres have become highly involved in international contacts, but they find themselves in very different stages. A comparison of Yekaterinburg and Rostov demonstrates that cultural factors of internationalisation are as important as economic restructuring.

Les auteurs examinent les approches théoriques de l’évaluation des fonctions internationales des grands centres régionaux. Ils en analysent les facteurs déterminants et proposent certains indicateurs, tant quantitatifs que qualitatifs, pour évaluer leur efficience. Une attention particulière est accordée au rôle des gouvernements locaux dans le développement de contacts extérieurs. Les auteurs démontrent que les centres métropolitains en Russie sont aujourd’hui très impliqués dans les contacts internationaux, bien qu’à des stades très différents. Une comparaison de Yekaterinburg et Rostov montre que les facteurs culturels d’internationalisation ont autant de poids que les restructurations économiques.

Entrées d’index

Mots-clés : , keywords: , texte intégral, inroduction.

1 Russia, which for over 75 years had developed as part of an isolated, self-sufficient Soviet state and society, since 1991 has been undergoing a difficult process of adaptation to the realities of an open and globalised world. The process of becoming integrated into the world economy has affected the different parts of Russian territory in very diverse ways. The transition to an open and liberal economy has resulted, in particular, in the formation of a highly polarised spatial structure, in which the main cities have gained a privileged position. Russia has 13 cities with populations in the millions (including Moscow and Petersburg), accounting for 20% of the entire population (Census 2002). This well-developed metropolitan system emerged within the quite specific context of the centralised Soviet system, in a period characterised by booming urban growth. In the first post-Soviet decade, some of these cities benefited from the relative decline of the influence of the centralised state, at the same time that the regions (which became “subjects of the Federation”) have become the major political actors at the sub-federal scale.

2 Many scholars have emphasised the fact that Moscow, in particular, became rapidly integrated into the world-city system, concentrating wealth and monopolising intermediate functions between Russia and the rest of the world economy. The capital is by far the most significant node of financial flows in the country (Kolossov and Vendina, 1997; O’Loughlin and Kolossov, 2002; Kolossov and O’Loughlin, 2004; Eckert, 2004), and its contribution to national GDP doubled between 1994 (10,2%) and 2004 (19,0%). In a well-known classification of world cities, promoted at the end of the 1990s by a group of scholars (Beaverstock, Smith and Taylor, 1999; Taylor, 2000), and based on the importance of a given set of international corporate services, Moscow received the highest rank among all post-socialist cities in Central and Eastern Europe. Taylor and Hoyler, in particular (2000), in studying the main 53 European cities, included Moscow in the “beta” cluster of Europe’s world cities, i.e. immediately after the leading “alpha” group (London, Paris, Frankfurt, Milan) and far ahead of Saint Petersburg and Kiev, the only cities of the former Soviet Union included in the ranking.

3 But how have the other big metropolises managed? Did 11 other major cities follow Moscow – and Petersburg – along the same path? Did they place well in the growing competition between territorial units to attract key resources – information, technologies, capital, labour – in order to guarantee their economic and social development, as defined by Harvey (1989)? Are they becoming a part of the post-Westphalian international system that has allegedly arisen, a system in which major urban regions are called upon to play a growing role (Scott, 2000), organising economic and cultural flows in the context of the supposed decline of centralised states, and do they develop their own specific policy on relations with foreign economic and political actors, in the way Western European cities have gradually been doing, as emphasised by P. Le Galès (2002)? Is it possible to apply to regional cities the general model regarding the growing internationalisation of world cities (Terhorst, 2005)?

4 The initial conditions of these cities were not so favourable to internationalisation as may have been expected. The overwhelming majority were industrial centres, serving mainly the needs of the domestic market and of the military. However, they proved to be much better adapted to market reforms and to post-industrial development than smaller towns. The relative diversity of their functions and a more highly skilled labor force have made them attractive for investment and have contributed to the rapid development of tertiary functions. They are, to a growing extent, affected by the process of economic internationalisation. It is therefore relevant to study emerging international functions of large regional Russian cities as new actors on the international political scene.

5 In this paper, we focus on political aspects of the internationalisation in large regional cities whose political elite has had to create a veritable international policy, in order to meet the needs of an opening urban society and to stimulate the economic growth as well. The goal of this paper is two-fold. First, we shall discuss a theoretical framework used to analyse the development of international functions in large regional centres and examine its appropriateness for studying the realities of large Russian cities. Secondly, we shall apply this approach to the cases of Yekaterinburg and Rostov.

• 1 This paper reports the results of two projects: 1) “Large cities and metropolisation in Russia and (...)

6 The study is based on some results of an international comparative project (2003-2006) dedicated to the post-Soviet evolution of 11 major regional urban centres of the country (Novosibirsk, Nizhni-Novgorod, Yekaterinburg, Samara, Omsk, Kazan, Chelyabinsk, Rostov-on-Don, Ufa, Volgograd, Perm) 1 . The cities of Yekaterinburg (Urals) and Rostov-on-Don (South) were choosed for in-depth research, because both of them, situated in different economic and cultural environments, have taken on, since 2000, the functions of federal district centres. A study of a city’s international functions in Russia can result only from a field research because statistical data are extremely limited. Such research was conducted in February and September 2005 and included, in particular, dozens of interviews with regional and city officials and experts in each town (businessmen, academics, NGO representatives, etc.).

Basic notions and approaches

7 Many authors inspired by the pioneer book by Harvey (1989) have argued that growing internationalisation supposedly allowed a given city to ensure its future prosperity, in a world where classical location factors seemed to matter less than connectivity. Globalisation implies simultaneously deterritorialisation and reterritorialisation of economic space. Globalisation of production and capital is accompanied with the increasing role of place specific factors like geographical location, urbanisation economies, cultural and human capital accumulated in earlier historical periods, particular formal and informal structures of local economic regulation. Globalisation involves a necessary transition from centralised bureaucratic decision making to a plurality of networks and partnerships between government, businesses, and other non-governmental agents. It also involved the rescaling of both economy and governance: the growing importance of the local and urban and the supra-national levels (such as European Union or the NAFTA). As a result, not only the capitals and the world cities but also regional centres gradually escape from the national regulation and compete for investments and capitals with similar places within the country and abroad, as is argued in the literature on global city networks (Sassen, 2002; Taylor, 2000, etc.). This process of rescaling known as “glocalisation” is related with the growing pressure to create more competitive local economies.

8 For this reason, political leaders are called upon to define and construct an international strategy to help cities improve their “competitiveness”. This explains why city actors look abroad not only for investors and new markets, but also for efficient models of urban development, for inspiring cultural and societal experiments to possibly replicate. A variety of diverse parameters make up the life of large cities that are influenced by internationalisation and international actors – from finances to infrastructure, technical co-operation to “third sector” activity paradiplomacy, policy learning, and citizen involvement in urban governance. Numerous institutional possibilities exist, associating several political levels – from municipal to national: city to city (twin cities, etc.), city to international entity (agency, NGO, transnational company, etc.), city to international organisation via mediation by the country’s political centre, or by a foreign city, or by a municipal association, etc. Each city has its own particular combination of such relationships, depending on many factors: the strength of the central state, the degree of decentralisation, the structure of the economy, the institutional organisation, etc. (Makarychev, 2000; Sluka, 2005).

9 Urban networks is one of the basic notions in the studies of world cities having by definition important international functions. Taylor (2005) distinguishes the following kinds of interactions: 1) inter-state being realized between or via the mediation of central governments; 2) supra-state operating above states; 3) trans-state operating across or beyond states without any participation of central governments. States determine a political space of places, while cities represent an economic space of flows. E. Shane (2005) defines urban networks as the conduits through which municipal and extra-municipal (regional, national and supranational) institutional and social relationships were negotiated, information exchanged, expertise and technical innovations disseminated and social capital realised. World cities competing with each other and inter-connected sometimes better than with other cities of their countries are supposed to be the main actors of globalization. Network processes are closely associated with globalization and challenge the reproduction of the Westphalian system of modern states (Scott, 2000). Taylor stresses that great cities can be interpreted as the organizational nodes of global governance and global society (Taylor, 2005, p. 706).

10 But P. Terhorst (2005) recently warned against an excessive focus on the study of the interplay between the global and the local levels, stressing that the national level still plays an extremely important role, with the central state as a key bargaining partner, even in local development policies. Terhorst also stressed that it was difficult to assume that all countries, regions and cities followed more or less the same trajectory in the transition from nationally embedded fordism towards glocalised post-fordism.

11 It is impossible to identify the involvement of regional centres in global networks without suggesting some parametres which could define the international activity of a city and its impact on its development. In case of Russia, do its regional centres really already compete with comparable foreign cities? Do they follow the general trajectory of internationalisation, to what extent it is specific and determined by national and regional factors? We propose to distinguish three groups of parameters for evaluating the intensity of a city’s international activity:

Institutional co-operation • foreign diplomatic and commercial representations in the city and representations of the given region abroad • international agreements signed at all levels of power – from the central government to the municipality itself • the size and importance of departments in charge of international contacts in the city’s administration.

Activity The second set of data includes information on permanent and temporary exhibitions and fairs with foreign participation, exchange of delegations, place marketing, tourism development policy.

Efficiency This aspect is usually measured using quantitative parameters, such as: turnover of foreign trade; the number of joint ventures and foreign-owned companies as well as their contribution to GDP and employment; the number of international transportation facilities; and the number of facilities specific to the needs of resident communities of foreign officials and business leaders, etc., the involvement of the city in global and national productive and distribution networks.

12 It is very difficult to find reliable quantitative or qualitative variables allowing to provide a full comparative picture of Russian regional centres’ international activity. In the following sections, we will focus mainly on some aspects of their institutional cooperation with foreign partners and indicators of its efficiency based on “hard” (statistics and documents) and “soft” (interviews) information that we found mainly during our field studies. But first we start with a description of general and specifically Russian factors of international activity.

Key factors for Russian regional capital’s international activity

Historical heritage, geopolitical location and territorial diversity.

13 Two specific factors were determinant for Russian cities’ international activity: the nature and the radical change of the political regime, and the extreme geographical, economic, social and ethnic diversity of the country . Other factors are not peculiar only to Russia but their impact is often strongly modified by a high polarization of territory.

14 Relations with foreign countries were controlled by the State for decades. Many large cities, the main foci of the military-industrial complex, including such major centres with over one million inhabitants as Nizhny Novgorod or Yekaterinburg, were closed to foreigners. As a result, they had little skilled staff prepared for co-operation with foreign partners and remained terra incognita abroad. The impact of the sudden opening of Soviet/Russian international boundaries in the late 1980s – the early 1990s on economy and society widely varied depending on the geographical location, historical traditions and cultural potential of large cities . In the far eastern part of the country, the formerly isolated city of Vladivostok (the main military port on the Pacific) became deeply involved in foreign trade, mainly with neighbouring China. The ratio of the trade turnover of the Maritime territory (Vladivostok is its centre) with China to the GDP is about 23%. In the neighbouring territory of Khabarovsk it approaches 30 %. It means that China can impose an economic specialisation she needs (Kolossov and Borisova, 2007).

15 Several other cities situated near new post-Soviet boundaries managed to turn a previously problematic border location to their advantage, as was the case in Belgorod, which became a main trading and logistic centre between Russia and Ukraine. Due to it, the per capita trade with Ukraine in Belgorod region is the highest in Russia (Kolossov, 2002).

Economic factors

16 The prerequisites for international activity in Russian cities are strongly linked to their human capital and economic structure. It reflects the relationship between transnational, national and regional/local business and economic specialisation, which determines the involvement and the place of a city in international networks and its international competitiveness. Besides Moscow and Saint Petersburg, with their diversified post-industrial economy and rich human capital, or the main export areas (oil-and-gas cities or sea ports), only the large regional centres may be considered islands of globalisation (Zubarevich, 2005). They alone are able to develop a sufficient infrastructure (business facilities, services), adapted to the needs of an international activity.

Urban Society and Culture

17 A city’s willingness to open itself up internationally is also determined by the political and social interests of individual groups articulated by political parties, social movements and lobbies . Therefore, internationalisation depends on a city’s social and ethnic structure . Capitals of “ethnic” republics have particular premises for internationalization due to contacts with compatriots living in post-Soviet states and in other countries and/or with kin ethnic groups, like, for instance, Finnish-Ugrian peoples. The formation of immigrant communities also contributes to build international connections . Significant artistic and scientific activity transforms former industrial centres into “creative” cities (Florida, 2002), where the population develops intense international contacts. One may note, for instance, that the Russian scientific elite, concentrated mainly in the largest cities, succeeded in internationalising its activity during the 1990s, despite a spectacular crisis in state funding (Milard and Grossetti, 2006). Finally, the cities disposing of important historical and cultural heritage are normally more attractive for international tourism , which can be a powerful factor of urban transformations.

Institutional roles of cities and regions

18 Administrative status and the division of responsibilities between the federal, regional and municipal authorities have traditionally particularly strongly affected international functions of Russian cities. In this country, the status has always been particularly important condition of successful urban development and economic restructuring. For example, the cities of Belgorod or Lipetsk were no more than small and dormant towns before 1954, when they became regional capitals. They got important investments and were transformed into big industrial centres. Nowadays their population is almost 10 times more than at the eve of World war two, while in neighbouring medium and small towns it did not increase.

19 Regional ( oblast ) administrations have much more competences in the field of international contacts than the municipalities of large cities (with the exception of Moscow and Saint Petersburg, the subjects of the Russian Federation). The creation of 7 federal districts in May 2000 transformed the capitals of these districts into macro-regional centres, improving the administrative centrality of Khabarovsk, Rostov, Novosibirsk, Yekaterinburg, Nizhny Novgorod and Saint Petersburg and attracting various foreign representative missions intended to serve a given part of the country. A great variety of institutional arrangements exist within regional administrations, but, in general, international activity lacks sufficient coordination.

20 As for municipalities, the new law on local self-government adopted in late 2003, which should be gradually implemented in 2006-2009, does not specify the areas for which they are responsible. It simply grants municipalities the right to establish international contacts (article 17, p. 8). But federal legislation developing this point does not exist yet. De facto , city authorities often co-operate with foreign diplomatic and business representations, joint ventures, and NGOs, helping them find a proper location for their activities and acting as mediators between foreign missions and the local milieu .

Place marketing

21 The construction and promotion of a city’s image (place marketing) is a relatively new activity in Russian cities. It requires specific know-how and the help of PR agencies. Not all municipalities have realised the importance of image construction. Although most cities attempt to reinstate old traditions, fairs, holidays, historical monuments and other symbols, these efforts are rarely incorporated into a strategy not only encouraging domestic consumption, but also oriented toward a foreign target audience (tourists, businessmen). The lack of openness and of transparency in international activity matches the low interest of citizens to foreign contacts.

International strategies

22 The purposeful planning of international activity is characteristic of only the largest and most advanced cities, which take steps in order to define their objectives, key branches and geographical priorities and to avoid a chaotic exchange of delegations, or so-called bureaucratic tourism. An international strategy is usually an integral part of the urban strategic plan.

23 In the following sections we compare the influence of these factors on the development of the international activity of two large regional centres of Russia – Yekaterinburg and Rostov on the Don. They have comparable populations (1.32 mill. inhabitants in Yekaterinburg and 1.08 mill. in Rostov). In the early 1990s, Yekaterinburg may have appeared more vulnerable under market economy conditions as a result of its industrial structure, dominated by heavy machinery and metallurgy. A large part of its economy (research institutes and industry) belonged to the military-industrial complex. Rostov, on the other hand, apparently benefited from its geographical location in the south of the country, at the centre of a fertile agricultural area, close to the Black Sea resorts. Though it also became necessary to restructure its enormous machinery plants, such as Rostselmash, at that time the world largest producer of harvesting machines (in the 1980s it employed 55,000 people), Rostov’s economic structure was more flexible – the production of consumer goods and food industry played a more important role, and there was more evidence of an entrepreneurial spirit. Unlike Yekaterinburg, the city has never been closed to foreigners. With this in mind, the questions arise: How have both cities adapted to this new context? How have their international functions developed ?

Yekaterinburg – Rostov: a comparative analysis of international activity

Historical heritage and location.

24 Both cities experienced a severe demographic crisis (natural decrease), compensated by an increasing inflow of immigrants. Rostov was one of few cities with over one million inhabitants, whose population increased between the 1989 and 2002 censuses, mostly due to the inflow of migrants from North Caucasus and Transcaucasia. Over the same period, Yekaterinburg lost several thousand inhabitants. The city’s economy began to employ cheap labour from Kazakhstan and Central Asia, particularly in construction work. It is expected that, in the immediate future, immigration from Former Soviet Union countries and non-Russian areas in general will increase considerably (Vishnevsky, 2004), thereby diversifying the ethnic structure of such cities and contributing to the spontaneous internationalisation of city life.

25 Both Yekaterinburg and Rostov are situated in exceptional geographical locations. Rostov is located a few kilometres from the mouth of the Don and possesses a sea-river port open to ships coming from the Black Sea. It is also connected to the Volga-Don canal system. Finally, Rostov is the main railway hub in Southern Russia. It is situated in only 200-300 km from the most developed regions of Ukraine. Yekaterinburg is situated in the main international transportation corridor which leads from Central Russia to the Far East and is the node of the Urals railway system. It has the largest number of direct railway connections of any big regional centre and is third in terms of the number of flights. It also has better direct international accessibility than Rostov (cf. Table 1).

• 2 The calculation took into account: 1) international travel (direct flights and trains to foreign ci (...)

Table 1. Centrality of 16 regional centres of Russia 2 .

26 Local experts estimate that in both Yekaterinburg’s and Rostov’s the non-regional capital controls 70 to 80% of GDP (mostly from Moscow). The purchase of a large taxpayer by a Moscow company often means that financial flows are diverted to its headquarter, which often provokes the resistance of regional governments. At the same time, economic rise of any region is impossible without external investments. Regional administrations try to get some benefits from large business and put different conditions to potential investors.

27 According to the estimations of the leading Russian consulting consortium “Expert RA – AK&M”, the Sverdlovsk region (with Yekaterinburg at its centre) was fourth among 89 regions of Russia in terms of investment potential in 2004. The Rostov region also placed among the top regions but only in 12 th position.

28 This ranking has been confirmed by the international performance of the economy. Both regions and cities now contribute significantly to national foreign trade, but, once again, Yekaterinburg and its region come ahead (2:1 ratio). The Sverdlovsk region (foreign trade turnover in 2004: 6.2 billion dollars) runs fourth among the subjects of the Russian Federation. Moreover, its foreign trade is rapidly increasing: in 2004, it grew by 45% (the national average was +27%). In 2004, foreign companies invested 600 million dollars in the region’s economy, mostly in the form of credit to large industrial holdings. The UK, Germany and the Virgin Islands are the leading investors (in the latter case, this means the repatriation of Russian capital, of course). The main export destinations (35%) are Taiwan, the USA and the Netherlands. Ferrous and non-ferrous metals make up 60% of exports; chemicals, 20%; machines and industrial equipment, 11%.

29 Foreign trade turnover in the Rostov region is lower – about 3.2 billion dollars in 2004. The main trading partner is neighbouring Ukraine, constituting 31.3% of the total turnover (and not countries from “far abroad”, as in the Yekaterinburg case). The city profited from large transit flows of goods, estimated at 930 million dollars (2003). Besides Ukraine, the main export destinations were Algeria, Greece, Italy, Turkey and Egypt; the bulk of imports came from Germany, Greece, Turkey, China and France. The Rostov region exports food products and agricultural raw materials (45%); machines, industrial equipment and vehicles (24%); and rolled metals (18%).

30 The most difficult economic problem for both cities but especially for Yekaterin­burg is the restructuring of the military-industrial complex and of large industrial plants, the development of small and medium business applying new technologies. The realization of this task is very capital consuming: the government of Sverdlovsk region estimates the yearly need in investments in 5 billion dollars: despite of the economic rise since 2000, it receives only 2.5 billion a year. Therefore, foreign investments and banks are very welcome.

Urban society and culture, institutional roles of cities and regions

31 According to sociological polls, Yekaterinburg’s inhabitants see as its particularity the fact that it aspires towards a certain political autonomy from the central authorities. Historical traditions and a high level of education make Yekaterinburg culturally self-sufficient and able for innovations not depending on capitals. For Soviet/Russian and foreign musicians and artists going on tour over Russia Yekaterinburg has always been the third most prestigious destination after Moscow and Petersburg because of its educated audience. The city has nationally famous theatres and is origin of a number of well known musicians and rock bands (Sotsium, 2005).

32 The Sverdlovsk region traditionally is among the most liberal regions, while the Rostov region as a whole can be classified as an “average” or centrist region (Kolossov and Zubov, 1995; Belov, 2005), with a mixed political culture of personal freedom and ethnic diversity and tolerance, but also of a solid conservatism (the latter perhaps inherited from the Cossack culture).

• 3 This index was calculated via the point-based evaluation of a series of variables describing: 1) th (...)

33 The Moscow Centre of Carnegie Endowment for International Peace ranked the Sverdlovsk region (and respectively, Yekaterinburg as its major centre) first in Russia in their 2005 regional rating of the degree of democratisation 3 (Petrov, 2005). Economic, social and political openness as well as democratisation are critically important conditions for the successful development of a region’s international activity. Typically, the Rostov region has never reached the top ten in this rating.

4 The three major cities of the Southern federal district are Rostov, Volgograd and Krasnodar.

34 Rostov, whose situation is not as favourable as that of Yekaterinburg, has beyond a doubt the best cultural infrastructure in the Southern federal district 4 . Even though neighbouring Krasnodar comes close in certain fields, Rostov is far ahead in terms of education, research and culture (Vendina and Kolossov, 2004). Its image is related with the heritage of Ancient Greece and inter-cultural interactions (between Russians and Armenians, Ukrainians, Jews, etc.).

35 In terms of research, the trajectories of the two cities are also significantly different. Between 1992 and 2003, the Rostov region accounted for a stable 1.20% of Russian scientific publications in international journals, while the amount produced by Yekaterinburg and Sverdlovsk oblast grew from 2.60% to 3.20% – a clear sign of successful internationalisation strategies. Yekaterinbourg can be identified as an up-and-coming major scientific centre, only behind Moscow, Petersburg and Novosibirsk (Milard and Grossetti, 2006).

36 Both Rostov and Yekaterinburg are now capitals of federal districts and accommodate the regional headquarters for a great number of federal agencies. For more than 14 years, Yekaterinburg has been the arena of a permanent political war between the mayor A. Chernetsky and the governor E. Rossel. Experts say that this never-ending competition is useful to the city and stimulates the elites. In Rostov, there were no serious conflicts between the governor and the mayor, nor between the main political institutions, but this situation did nothing to stimulate a dynamic international policy. Local conservatism has contributed to the creation of a milieu which seems to be less open to international initiatives.

37 Yekaterinburg authorities were among the first to realise the importance of a favourable image. They pay a great attention to its construction – still unusual even in large cities, except Moscow and Petersburg. The municipality created a PR agency called “Capital of the Urals”, which plans out promotional campaigns, city symbols, slogans, etc.

38 This image-making policy is designed to promote several slogans. “ Yekaterinburg is the third capital of Russia ” (Moscow and Petersburg are traditionally called “the two capitals”). It means that the city does not live in the shadow of Moscow like most provincial cities west of the Urals and possesses an autonomous and outstanding cultural and scientific potential of international dimension.

39 Second, it is the capital of the Urals . Indeed, Yekaterinburg is certainly better located and equipped for this role than the two other largest cities – Cheliabinsk and Perm (Zotova, 2007) – and has become the administrative capital of the Urals Federal District. However, the superiority of Yekaterinburg is less evident in a number of fields – above all, in terms of its economy.

40 Third, Yekaterinburg also tries to sell its image as a city on the borderline between Europe and Asia (the boundary between Europe and Asia follows the watershed of the Ural Mountains, 40 km west of the city). This geographical particularity supposedly bears a wide variety of positive connotations: Yekaterinburg is a necessary link between continents, a tolerant city at the borders of two civilisations (Christian and Muslim, Slavic and Turcic, etc.). But a milestone erected in the 1860s on the road from Yekaterinburg to Moscow to mark the Eurasian border was located far from the city. It proved to be too difficult for the municipality to use this site as a tool to promote tourism or for its image construction. Eventually, the municipality made the decision to “re-locate” the boundary between continents and to build a new monument closer to the city and within its administrative territory. This new monument was the first step in the construction of a tourist complex, including various stores, souvenir shops, restaurants, etc. (Strategichesky proekt..., 2005).

41 Fourth, the promotion of the city is based on its image as a major site in Russia’s tragic history: the place where the last tsar’s family was assassinated in 1918. A large cathedral was recently (2003) built at the exact location of this event. It quickly became one of the main symbols of the city (Eckert, 2005). A monastery was also built in the woods, not far from the city, in the area where the remains of Nicolas II and his family were discovered in the late 1980s.

42 The development of such an active policy is quite impressive. As a result, 94% of the city’s inhabitants and 87% of its visitors, according to a poll by Sotsium (2004), consider Yekaterinburg to be the capital of the Urals (cfr. table 2). Not surprisingly, 92% of citizens do not like to leave it firmly, and only 2% liked to use the nearest opportunity to quit it.

Table 2. Reactions of the city’s inhabitants, visitors and experts to the statement “Yekaterinburg is the capital of the Urals” (Sotsium 2004).

43 All the same, changing popular representations and adapting them to the realities of a post-industrial urban economy means a lot of work for city leaders. For most respondents – both the city’s inhabitants and visitors, Yekaterinburg still projects the image of a large industrial centre, one which, though still positive in the eyes of former Soviet citizens, is hardly compatible with the pretensions of a regional capital and its potential international role. For one thing, it would be difficult to promote such an image abroad.

44 Rostov is far behind Yekaterinburg in the promotion of a positive city image. Its recent Development Strategy includes not one paragraph about image construction (Strategichesky plan..., 2004). Never­theless, this does not mean that there is no activity in this field or that authorities do not care at all about the image of Rostov. The main branding is more or less similar to that in Yekaterinburg and uses the same word “capital”: “Rostov is the southern capital of Russia” and “Rostov is the capital of the Don”. As the city stretches along the right bank of the Don, the river is becoming its main symbol. Its image is also closely tied to the history of the Don Cossacks, even though Rostov has never been their capital. There is no obvious international component in popular representations of Rostov.

45 One of the main obstacles for the development of the international activity of both municipalities of Yekaterinburg and Rostov is the lack of funding. This problem has become critical in recent years due to re-centralisation and to the cities’ growing financial and political dependence on regional and federal authorities.

46 The Strategic Plan of Yekaterinburg (Strategia.. . , 2003; Strategichesky..., 2003) appears more elaborate, socially oriented and concrete than the strategy of Rostov. It is the result of long discussions during sessions of the special council, which included not only public officials, but also representatives of the business community, the “third sector” and academic experts. The Yekaterinburg document announces the city’s intention to become integrated into the world economy and to become a “multifunctional post-industrial centre with elements of a world city” (Strategichesky..., 2003, p. 12).

47 On the other hand, the Strategic Plan of Rostov (2004) recognised that the municipality had no reliable or comprehensive information on its international role and contacts and only announced its intention to build up an overarching programme (Strategichesky..., 2004, p. 212). The authors put forward the objective of creating an adequate urban environment and infrastructure for international business. Before the adoption of this plan, the municipality’s official international activity was limited to cultural relations and contacts with twin cities.

The results and efficiency of internationalisation policies in Yekaterinburg and Rostov

Inter-state activities.

48 Eight general consulates work in Yekaterinburg (USA, Great Britain, Germany, Czech Republic, Azerbaijan, etc.). Four new consulates should open in 2006, and authorities expect there to be 17 consulates in the city before the end of this decade. This is, of course, to a large extent a result of the role of Yekaterinburg as the centre of a federal district: all consulates serve the Urals as a whole. The Sverdlovsk region has a single representative mission abroad, located in the Netherlands.

49 The inter-state activity of Rostov is significantly more modest: it accommodates the consulates of Armenia and of neighbouring Ukraine (there is a large Ukrainian minority in the region, and 40% of Rostov’s inhabitants have family in Ukraine). Two other countries of the Black Sea basin plan to open their consulates in Rostov: Bulgaria and Romania.

50 The Yekaterinburg municipality has decided to concentrate its efforts on relations with a selected panel of twin cities: Guangzhou (China), Genoa, Birmingham and Frankfurt. Guangzhou maintains intense trade relations with Yekaterinburg. Co-operation with European twin cities focuses on the realisation of social programmes (for instance, “Talented children” and “Family” with Birmingham), as well as on the promotion of the positive image of Yekaterinburg. Regular business missions travel in both directions. The municipality has established particularly good relations with the British Consulate, which participated in its co-operation with Birmingham as well as in discussions on the Strategic Plan.

51 Yekaterinburg tries to become the “capital of regional capitals”. This political task strengthen the positions of the Yekaterinburg’s mayor A.Chernetsky, who chairs the Association of Russian Cities, and matches his official claim to make the city the third national capital. Every two year the municipality of Yekaterinburg helds a conference of all Russian cities with more than one million dwellers (except Moscow and Petersburg).

Trans-state activities

52 Approximately 200 branches of foreign companies are now active in Yekaterinburg, including those of the Dresdner Bank and the Raiffeisen Bank . Many joint ventures are being undertaken, The consulting agency Ernst and Young has been active in the city since 1997. Every year, 20 new representative missions or branches of foreign companies are registered, and the city ranks third in terms of the number of foreign diplomatic and commercial representative offices, after Moscow and Saint Petersburg.

53 One of the most obvious manifestations of globalisation is the development of international distribution (sales) networks . National and international networks are currently booming in Russia. The rapid expansion of hyper- and supermarkets is particularly impressive. Yekaterinburg has developed this kind of retail trade much more quickly than Rostov. Many international brands are already represented on the markets of both Yekaterinburg and Rostov: Baskin and Robbins , Rostiks , Subway, Naf-Naf, Zara, H & M and many others. Despite the generally greater willingness of Yekaterinburg to open up to external influence, it seems that Rostov authorities and local businesses are more accepting of Moscow-based and foreign retail trade networks. It took, for instance, many months for the Yekaterinburg authorities to agree to the opening of Metro (2005) and IKEA (2006) . Besides Moscow and Petersburg, by late 2004 only Novosibirsk was ahead of Yekaterinburg by the number of stores belonging to networks, while Rostov was the tenth (figure 1). As a city with a relatively high per capita income, Yekaterinburg, as well as other large cities situated eastward from Moscow (Nizhny Novgorod, Samara, Perm, Ufa) was one of the first destinations for Moscow, Petersburg and foreign companies expanding in the province.

Figure 1. The largest cities of Russia.

54 A great number of international organisations have focused their activity on Yekaterinburg, a city formerly closed to such intervention. Its administration has been actively supporting and participating in international projects since 1992 (funded by US Aid, USIA, TACIS , the Know How Foundation , etc.). American aid, in particular, was granted to support the construction of condominiums. Altogether, the municipality participated in more than 50 large-scale projects. Several NGO’s that were created temporarily as a result of these projects have continued their activity as municipal or independent institutions ( Centre for Energy-Saving, Centre of Environmental Education, Centre for Civil Initiatives, etc.). The work on international projects shaped a community thinking in a new way and prepared for international cooperation.

55 Rostov is also involved in such activity with 27 foreign branches of international organisations and projects: in particular, TACIS, the Global Environmental Foundation, the “Eurasia” Foundation . IBRD , for example, supported a programme for renovating real estate for the city’s health care and educational system, completed in 2003.

56 An important element of Yekaterinburg’s international ambitions is making the city “a meeting point for consumers and producers” and to transform it in a centre for frequent exhibitions and conferences . The city hosts international events, though its possibilities are limited for the moment by its inadequate infrastructure. Plans currently exist to build an international exhibition complex at the entrance to the city, near the Koltsovo airport, itself under reconstruction. A project is also underway for an international conference centre able to seat 3,000. The city bears special hopes in its partnership with Italian municipalities and companies (in particular, from its twin-city of Genoa). They works out the project of the so called Italian bloc , which will include small shoes and furniture plants, fashion centres, storage capacities, hotels and housing. In addition, plans exist to build the first part of the so-called Yekaterinburg City (a business district) around the Hyatt Hotel . 35 hotels should be built in 2006-2010, and international networks like Accor, Park Inn, and Mariott are expected to arrive. These ambitious projects are based on the booming oil and gas industry in the neighbouring regions of West Siberia, now a part of the Urals Federal District. Their financial resources stimulate economic activity in the city, especially in the very speculative real estate market.

57 There are no large new hotels and conference centres in Rostov. Local experts believe that new small, one to three star, private hotels and renovated old hotels suffice. On average, 41 to 45% of rooms are occupied, which is considered a satisfactory result (the national average is 38%) (Dolzhenko, 2005).

• 5 Source: Zotova M.S. (2007) Krupnye goroda RF kak tsentry razvitia otechestvennykh i inostrannylh se (...)

Figure 2. Trading networks in the largest regional centres of Russian Federation by origin (except Moscow and Saint Petersburg) 5 .

58 Starting from almost nothing fifteen years ago, Russian metropolitan centres have become highly involved in international contacts, yet the various cities now find themselves in very different stages. It is thus necessary to distinguish between the objective processes of globalisation, leading to the internationalisation of urban economies, and the purposeful policy-making of local authorities in the hope of improving their cities’ international status, to use them more efficiently as a resource of the socio-economic development. Municipal policy varies greatly from one large city to another. Unlike Yekaterinburg, Rostov’s authorities have not yet worked out an efficient international strategy and have not fully realised its systemic character and significance.

59 A comparison of Yekaterinburg and Rostov demonstrates that cultural factors of internationalisation are equally as important as economic restructuring. In the early 1990s, Yekaterinburg and Rostov had similar prerequisites for becoming involved in international economic and cultural relations, but the city in the Urals managed to exploit them more thoroughly due both to its more open, competitive and democratic governance and to its more diverse and qualified human capital.

60 The involvement of Russian regional centres in globalisation is still relatively week as compared with the cities of the same rank in West Europe or North America. It can be explained by the recent Soviet past but also by the size of the country. Even the cities with over one million inhabitants assume mostly intra-regional functions within the administrative boundaries of the regions they are the centres. This is also certainly a result of a high political centralisation. Since 2000 Russia is experiencing a new wave of re-centralisation officially aimed to restore the governance and the priority of the federal legislation over regional laws. Moscow has always been suspicious toward the activity of regional and urban governments on the international scene. The same tendency is reproduced at the regional level, in the relations between governors and mayors of large cities. Respectively, the central state has by far more bargaining power in relations with foreign economic and other partners than a region or a city. We did not find obvious evidences of a real competition of Russian regional centres with foreign cities. At least, most municipalities do not participate yet directly in this competition. In this part of the world, it can be hardly presumed that transnational relations are gradually replacing the classical West­phalian model of international links. It confirms the conclusion of P. Terhorst that there is no general model of globalisation and its trajectories are very different.

Bibliographie

Beaverstock J.V., Smith R.G. & Taylor P.J. (1999), “A Roster of World Cities”, Cities, 16 , 6, pp. 445-458.

Belov A. (2005) Faktory territorialnoi differentsiatsii elektoralnogo povedenia naselenia Rossii (Factors of the territorial differentiation of the electoral behaviour of Russian population) , Doctoral thesis. Moscow, Faculty of Geography, Moscow State University.

Dolzhenko G.P. (2005), “Turizm v Donskom regione (Tourism in the Don Region)”, Trudy Akademii turizma , 6 , pp. 123-133.

Eckert D. (2004), Le Monde russe , Paris, Hachette.

Eckert D. (2005), “Un nouveau haut-lieu commémoratif en Russie : l’Église sur le Sang Versé d’Ékatérinbourg”, Mappemonde , 77 , 1, http://mappemonde.mgm.fr/actualites/ekaterinbourg.html .

Florida R. (2002), The rise of the creative class and how it’s transforming work, leisure community and everyday life , New York, Basic Books.

Harvey D. (1989), The Condition of Post-Modernity , Oxford, Basil Blackwell.

Kolossov V. (2002), Internationaliza­tion or Adaptation ? Historical Legacy, Geopolitics and Border Cooperation in Belgorod Oblast. Regionalization of Russian Foreign and Security Policy , Working Paper, 15 , Zurich, Swiss Federal Institute of Technlogy.

Kolossov V.A. & Borisova N.A. (2007, forthcoming), Mezhregionalnoe i prigranichnoe sotrudnichestvo mezhdu Rossiei i Kitaem kak faktor uvelichenia tovarooborota (Inter-Regional and Crossboundary Cooperation between Russia and China as a mean to increase the turnover of trade), Mir peremen.

Kolossov V. & Vendina O. (1997), Moscou : Retour à la Route Mondiale – Métropolisation et Politique, sous la di­rec­tion de Paul Claval, Paris, L’Harmattan, pp. 135-153.

K olossov V. & Zubov A. (1995), “Value Orientations of Russian Voters”, Russian Politics and Law , 3, 5, pp. 25-58.

Kolossov V. & O’Loughlin J. (2004), “How Moscow is becoming a capitalist mega-city”, International Social Science Journal , 181 , pp. 413-428.

Lefevre C. (2005), Paris, an international strategy , Paper submitted to CITTA-ESF meeting, Zürich.

Makarychev A.S. (2000), Islands of Globalization: Regional Russia and the Outside World , Regionalization of Russian Foreign and Security Policy, Project organized by The Russian Study Group at the Centre for Security Studies and Conflict, Research, Working paper, 2, Zürich, Eidgenössische Technische Hochschule, 58 p.

Milard B., Grossetti M. (2006), “L’évolution de la recherche scientifique dans les régions de Russie : déclin ou déconcentration ?”, Mappemonde , 81 , http://mappemonde.mgm.fr

O’Loughlin J. & Kolossov V. (eds.) (2002), “Moscow as an Emergent World City”, Special Issue of Eurasian Geography and Economics, 23 , 3, pp. 161-270.

Petrov N. (2005), Demokratichnost’ regionov Rossii (Degree of democracy development in the regions of Russia), Moscow Centre of Carnegie Endowment for International Peace, Briefings, 7 , 9.

Sassen S. (ed.) (2002), Global Networks, Linked Cities . Routledge, N.Y.

Shane E. (2005), The history of city networking: a Birmingham tale , Paper submitted to CITTA-ESF meeting, Zürich.

Sluka N.A. (2005), Gradotsentiches­kaya model’ mirovogo khoziaistva (An Urban Model of World Economy) , Moscow, Press-Solo, 167 p.

Sotsialno-ekonomicheskii pasport Rostova (Socio-Economic Passport of Rostov) (2005), http://www.rostov-gorod.ru/index/docs/mms:/phpBB2/index.php?id=2409

Sotsium. Data of surveys (2004), Personal communication, interview with Dr. Olga Rybakova, director of the Urals Regional Foundation of Socio-Economic studies “Sotsium”, February 16, 2005.

Strategia razvitia krupneishego goroda: vzgliad v budushchee (The Strategy of the Development of a Large City: A View to the Future) (2003), Yekaterinburg, Uralsky rabochii, 455 p.

Strategichesky plan Yekaterinburga (The Strategic Plan of Yekaterinburg) (2003) , Municipality of Yekaterinburg, 192 p.

Strategichesky plan sotsialno-ekonomicheskogo razvitia goroda Rostova-na-Donu (The strategic Plan of the Development of the city of Rostov on the Don) (2004) , Rostov, Infoservice.

Strategichesky proekt “Granitsa mezhdu Evropoi i Aziei” (The Strategic Project “The Boundary between Europe and Asia”) (2005), http://ekburg.ru/adm/adm/255 _40706_0_1

Taylor P.J. (2000), “World Cities and Territorial States Under Conditions of Contemporary Globalization”, Political Geography, 19 , 1, pp. 5-32.

Taylor P.J. (2005), “New political geographies: Global civil society and global governance through world city networks”, Political Geography, 24 , 6, pp. 703-730.

T aylor P.J. & Hoyler M. (2000), “The Spatial Order of European Cities Under Conditions of Contemporary Globaliza­tion”, Tidjschrift voor Economische en Sociale Geografie, 91 , 2, pp. 176-189.

Terhorst P. (2005), On the Articulation of Sectoral Policy Networks and Urban Development Strategies: the Strengthe­ing of Amsterdam as a Gateway to Europe , Paper submitted to CITTA-ESF meeting, Zürich.

V endina O. & Kolossov V. (2004), “Gde nakhoditsia stolitsa Rossii?” (Where is the capital of Russia’s South?), Politia , 2 (33), pp. 52-78.

Vishnevsky A. (2004), “Demograficheskoe budushchee Rossii” (The Demographic Future of Russia), Otechestvennye zapiski , 4 , pp. 131-149.

Zotova M.S. (2007, forthcoming), “Stolitsa Urala : odna ili tri ?” (The Capital of Urals: One or Three?), Social-Political Studies .

Zubarevch N. (ed.) (2005), Rossia regionov: v kakom sotsialnom prostranstve my zhivem? (Russia of regions: in What Social Space Do We Live?) , Moscow, Independent Institute of Social Policy.

1 This paper reports the results of two projects: 1) “Large cities and metropolisation in Russia and Western Europe” supported by the French National Centre for Scientific Research. Grant reference: PICS 2098; 2) “Large Cities of Russia: Potential for Development and Competition for Inter-regional Influence” supported by the Russian Foundation for Social Sciences. Grant reference: N 04-02-00168a. Both projects were backed by collaboration within a special international network which included the Centre for Geopolitical Studies, Moscow (Russian Academy of Science); Interdisciplinary Centre for Urban Studies, Toulouse (CNRS); Centre for Municipal Economy, Yekaterinburg (State Economic University; Centre for Regional Policy, Rostov (State University). The authors express their gratitude to their colleagues Pr N. Vlasova (Yekaterinburg) and Pr A. Druzhinin (Rostov).

2 The calculation took into account: 1) international travel (direct flights and trains to foreign cities); 2) national centripetal travel (flights and trains to Moscow); 3) inter-regional first-rank travel (flights and trains to other cities situated outside the respective federal district, except Moscow); 4) inter-regional second-rank travel (flights and trains to the cities situated in the same federal district, but outside the respective region); 5) intra-regional travel. The number of flights and direct trains in each category was weighted: the number of connections in the first category was multiplied by 1.5; in the second category, by 1; in the third category, by 0.75; in the fourth category, by 0.5; and in the fifth category, by 0.25. The index represents the sum of these weighted variables. Data were collected from current schedules by M. Goryunova.

3 This index was calculated via the point-based evaluation of a series of variables describing: 1) the regional balance of power, the autonomy of the judicial system?, violations of civil rights, etc.; 2) the accessibility and diversity of political life; 3) electoral procedures; 4) political pluralism; 5) the autonomy of the mass media; 6) corruption; 7) economic liberalism; 8) the development of civil society; 9) the quality and rotation of the political elite; and 10) the autonomy and activity of local governments.

5 Source: Zotova M.S. (2007) Krupnye goroda RF kak tsentry razvitia otechestvennykh i inostrannylh setevykh struktur (Large Cities of Russian Federation as Centres of the Development of National and Foreign Networks). Izvestia Rossiiskoi Akademii nauk, ser. Geograficheskaya, 2007, N 1.

Table des illustrations

Pour citer cet article

Référence papier.

Vladimir Kolossov et Denis Eckert , «  Russian regional capitals as new international actors: the case of Yekaterinburg and Rostov  » ,  Belgeo , 1 | 2007, 115-132.

Référence électronique

Vladimir Kolossov et Denis Eckert , «  Russian regional capitals as new international actors: the case of Yekaterinburg and Rostov  » ,  Belgeo [En ligne], 1 | 2007, mis en ligne le 09 décembre 2013 , consulté le 14 septembre 2024 . URL  : http://journals.openedition.org/belgeo/11686 ; DOI  : https://doi.org/10.4000/belgeo.11686

Vladimir Kolossov

Centre of Geopolitical Studies, Institute of Geography, Russian Academy of Sciences, [email protected]

Articles du même auteur

• Selected conceptual issues in border studies [Texte intégral] Questions conceptuelles dans les recherches sur les frontières Paru dans Belgeo , 1 | 2013

Denis Eckert

Interdisciplinary Centre for Urban Studies, CNRS/University of Toulouse-le Mirail, [email protected]

Droits d’auteur

Le texte seul est utilisable sous licence CC BY 4.0 . Les autres éléments (illustrations, fichiers annexes importés) sont « Tous droits réservés », sauf mention contraire.

Numéros ouverts

• 2024 1  | 2  | 3  | 4

Numéros en texte intégral

• 2023 1  | 2  | 3  | 4
• 2022 1  | 2  | 3  | 4
• 2021 1  | 2  | 3  | 4
• 2020 1  | 2  | 3  | 4
• 2019 1  | 2  | 3  | 4
• 2018 1  | 2  | 3  | 4
• 2017 1  | 2-3  | 4
• 2016 1  | 2  | 3  | 4
• 2015 1  | 2  | 3  | 4
• 2014 1  | 2  | 3  | 4
• 2013 1  | 2  | 3  | 4
• 2012 1-2  | 3  | 4
• 2011 1-2  | 3-4
• 2010 1-2  | 3  | 4
• 2009 1  | 2  | 3-4
• 2008 1  | 2  | 3-4
• 2007 1  | 2  | 3  | 4
• 2006 1-2  | 3  | 4
• 2005 1-2  | 3  | 4
• 2004 1  | 2-3  | 4
• 2003 1  | 2  | 3  | 4
• 2002 1  | 2  | 3  | 4
• 2001 1-2  | 3  | 4
• 2000 1-2-3-4

Tous les numéros

Compléments électroniques.

• Dossiers & archives
• Comité de rédaction
• Evaluateurs / Referees
• Announcement
• Libre accès aux revues de géographie belges / Free access to Belgian geography journals
• Instructions aux auteurs – Notes for authors

Informations

• Mentions légales et crédits
• Politiques de publication

Appels à contribution

• Appels en cours
• Appels clos

Suivez-nous

Lettres d’information

• La Lettre d’OpenEdition

Affiliations/partenaires

ISSN électronique 2294-9135

Voir la notice dans le catalogue OpenEdition  

Plan du site  – Mentions légales et crédits  – Flux de syndication

Politique de confidentialité  – Gestion des cookies  – Signaler un problème

Nous adhérons à OpenEdition Journals  – Édité avec Lodel  – Accès réservé

Vous allez être redirigé vers OpenEdition Search