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The business plan should be prepared by:

Correct answer: (A) Entrepreneurs

Related MCQs

• ? Which one of the following theory has the attribute of moderate risk taking as a function of skill, not chance?
• ? Foundation companies are formed from:
• ? All of the following are the broad categories of External forces EXCEPT:
• ? A ______________ is a professional money manager who makes risk investment from a pool of equity capital to obtain a high rate of return on investment...
• ? Members of distribution channels are excellent sources for new ideas because:
• ? Which of the following geographical area is having least interest to U.S. entrepreneurs?
• ? Andrew Carnegie is an example of entrepreneur of which century:
• ? The activity which occurs when the new venture is started are called:
• ? The business plan should be prepared by:
• ? What is the primary concern of founders who trade equity for capital for their growing venture?

Entrepreneurship Management

1. Which one of the following theory has the attribute of moderate risk taking as a function of skill, not chance?

• Need for independence
• Need for achievement
• Need for affiliation
• Need for authority

2. Foundation companies are formed from:

• Research and development
• Most popular business
• winding up company

3. All of the following are the broad categories of External forces EXCEPT:

• Economic forces
• S Socioeconomic forces
• Technological forces
• Competitive forces

4. A ______________ is a professional money manager who makes risk investment from a pool of equity capital to obtain a high rate of return on investments.

• venture capitalist
• entrepreneur
• businessman

5. Members of distribution channels are excellent sources for new ideas because:

• They are familiar with the needs of the market
• They earn a handsome profit from new business
• They do not bother if entrepreneur bears a loss
• They have well-developed sales force

6. Which of the following geographical area is having least interest to U.S. entrepreneurs?

• The Far East
• Central Asia
• Transition economies

7. Andrew Carnegie is an example of entrepreneur of which century:

• Earliest period
• 19 th and 20 th century
• Middle ages
• 17 th century

8. The activity which occurs when the new venture is started are called:

• Business skills
• Departure point
• Goal orientation

9. The business plan should be prepared by:

• Entrepreneurs
• Consultants
• Small business administration services

10. What is the primary concern of founders who trade equity for capital for their growing venture?

• Capitalization
• Investor capabilities

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Business Planning MCQs

Answer these 100+ Business Planning MCQs and assess your grip on the subject of Business Planning. Scroll below and get started!

1: Financial Statements Include

A.   Income Statement

B.   Balance Sheet

C.   All of the above

D.   Cash Flow Statement

2: Which should NOT be included in an executive summary?

A.   Exhibits

B.   Name of founders

C.   Dates

D.   Current investors

3: Estimating capital requirements is important for the:

A.   Break-even analysis

B.   Product management

C.   Product design

D.   Marketing

4: The 4Ps are also known as:

A.   Promotions

B.   Marketing trends

C.   Market demographics

D.   Marketing mix

5: How long should a typical business plan project for?

A.   8-10 years

B.   6 months

C.   12 months

D.   3-5 years

6: What is the first section in a traditional business plan?

A.   Marketing plan

B.   Financials

C.   Management profile

D.   Executive summary

7: What does Market Share mean?

A.   Ownership stake in a public company

B.   Opportunities to share in greater market profits

C.   The portion of a market controlled by a particular company or product.

8: True or False: Narrowing the target for potential clients helps because it concentrates sales efforts to a selective group that is most likely to be most profitable.

A.   True

B.   False

9: In a competitor analysis, what should you focus on?

A.   Barriers to entry

B.   All of these

C.   Component costs

D.   Prime customer motivators

10: New funds can be put toward which of the following?

A.   All of the above

B.   Debt retirement

C.   Working capital

D.   Acquisitions

11: What should organizational structures include?

A.   All of these

B.   Management résumés

C.   Forms of ownership

D.   Percentage of ownership

12: In the financial forecasting, operating profit margin should be:

A.   Negative

B.   Positive

C.   Unchanged

13: Who are the most important readers of a business plan?

A.   Employees

B.   Customers

C.   Competitors

D.   Investors

14: True or False: Start-up companies are almost always succesful in the first few years.

15: true or false a business plan should only focus on short term objectives, 16: potential creditors will often be interested in gaining collateral before lending. true or false, 17: true or false you should have concise bulleted lists in a business plan..

A.   False

B.   True

18: An appendix may include:

B.   Résumés

C.   Letters of reference

D.   Building permits

19: True or False: A partnership is normally run by one entreprenuer

20: legal issues like non-disclosure agreements and patents are not important considerations for the business., 21: it is common for creditors to want historial financial statements, true or false, 22: true or false a business plan should state a value proposition., 23: which of these is an example of a competitive strategy.

B.   Promotion

C.   Pricing

D.   Distribution

24: True or False: The Market Analysis of your business plan should illustrate your industry and market knowledge as well as any of your research findings and conclusions.

25: true or fales: an organization chart is a diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs., 26: ratio and trend analysis can help to create a better picture of profitability and growth potential. true or false, 27: what is the executive summary of a business plan.

A.   Summary Provided To Bank Executives

B.   A snapshot of your business plan as a whole and touches on your company profile and goals.

C.   Plan of Executive Orders

28: Sales targets should be:

A.   Measurable

B.   Specific

C.   Lofty

D.   Both specific and measurable

29: SWOT Stands for

A.   (none of these)

B.   Strengths, Weakness, Origination, Targets

C.   Strengths, Weaknesses, Opportunities, Threats

D.   Simple While On Target

30: When requesting funding it's important to be clear on:

A.   Time period funding is for

B.   Timing of funds

C.   Type of funding (Equity vs Debt)

D.   All of these

31: What should the prospective financial data include?

A.   Cash flow statements

B.   Income statements

C.   Balance sheets

32: What does the 'T' stand for in SWOT analysis?

A.   Target

B.   Trends

C.   Threat

D.   Technology

33: One common method for selecting prices is called Cost Pricing Strategy. This means:

A.   Calculating the Costs of Production/Service per unit and adding a per unit profit margin

B.   Comparing to market norms and adding/subtracting premium based on perceived quality

C.   Estimating price consumers wish to pay

34: A Business Plan should not include a section about regulatory issues since this is out of the business owners hands. True or False

35: the main reason that business fail is due to not having enough.

B.   Sales Leads

C.   Cash-flow

D.   Inventory On Hand

36: The Purpose of the Company Description in the Business Plan is:

A.   Describe the nature of your business and list the marketplace needs that you are trying to satisfy.

B.   List the specific consumers, organizations or businesses that your company serves or will serve.

C.   (all of these)

D.   Explain how your products and services meet these needs.

37: Financial Projections are done before Market Analysis and objectives are set. True or False.

38: true or false it is acceptable to use business jargon or pop culture references in a business plan., 39: the use of exhibits are intended for:.

A.   Breaking up the writing

B.   Showing your graphing skills

C.   Visual information that is easier to interpret than words

40: What is not included in variable costs?

A.   Technology

B.   Supplies

C.   Direct sales

D.   Packaging

41: In the Competitive Analysis It's important to include:

A.   Potential Barriers to the Market

B.   SWOT Analysis

C.   Financial Statements

42: A pricing strategy where you set your prices high for quick cash and little emphasis on market penetration is called:

A.   Luxury illusion

B.   Top shelf pricing

C.   Market saturation

D.   Price skimming

43: A good way to analyze the external environment is with a(n):

A.   PEST Analysis

B.   VRIO Framework

C.   None of these

D.   SWOT Analysis

44: What is the post-money valuation for a $1.5 million round of investment when the equity stake offered is 25%?

A.   $6 million

B.   $375,000

C.   $4.5 million

D.   $1.5 million

45: In a business plan the Funding Requests portion should include:

A.   Expected Employee Retention

B.   All of the above

C.   Competitors Product Cycle

D.   Strategic Financial Situations

46: What will a VRIO framework help distinguish?

A.   Organizational structure

B.   Financial potential

C.   Competitive potential

D.   Size of the target market

47: The first thing to assess in your market analysis is the:

A.   Competitive analysis

B.   Industry outlook

C.   Target market

D.   Size of primary target market

48: The section of your business plan that is similar to an "elevator pitch" is the:

A.   Market Analysis

B.   Appendix

C.   Company Description

D.   Executive Summary

49: For a typical executive summary, what is the maximum length?

A.   Half a page

B.   2 paragraphs

C.   1 page

D.   3 pages

50: What is meant by Value Proposition?

A.   The same as by marketing strategy

B.   How a company plans to raise capital

C.   How a company plans to price their product

D.   A promise of value to be delivered and a belief from the customer that value will be experienced.

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How to Prepare and Write the Perfect Business Plan for Your Company Here's how to write a business plan that will formalize your company's goals and optimize your organization.

By Matthew McCreary • May 5, 2021

Are you preparing to start your own business but uncertain about how to get started? A business plan ought to be one of the first steps in your entrepreneurial journey because it will organize the ideas that have been spinning around in your brain and prepare you to seek funding, partners and more.

What is a business plan?

A business plan is a detailed document that outlines a company's goals and how the business, well, plans to achieve those goals over the next three or more years. It helps define expected profits and challenges, providing a road map that will help you avoid bumps in the road.

Stever Robbins writes in an Entrepreneur article titled, "Why You Must Have a Business Plan," that a business plan "is a tool for understanding how your business is put together…. Writing out your business plan forces you to review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan." But, a business plan is about more than just reviewing the past state of your business or even what your business looks like today.

Robbins writes that a well-written business plan will help you drive the future by "laying out targets in all major areas: sales, expense items, hiring positions and financing goals. Once laid out, the targets become performance goals."

The business plan can help your company attract talent and funding, because when prospects ask about your business, you already have an articulated overview to offer them. How they react can allow you to quickly understand how others see your business and pivot if necessary.

What should you do before you write your business plan?

It might sound redundant, but you actually need to plan your business plan. Business plans can be complicated, and you'll be held accountable for the goals you set. For example, if you plan to open five locations of your business within the first two years, your investors might get angry if you only manage to open two.

That's why it's essential that, before writing your business plan, you spend some time determining exactly which objectives are essential to your business. If you're struggling to come up with a list of goals on your own, Entrepreneur article "Plan Your Business Plan" offers some questions you can ask yourself to spark some inspiration.

How determined am I to see this venture succeed?

Am I willing to invest my own money and work long hours for no pay, sacrificing personal time and lifestyle, maybe for years?

What's going to happen to me if this venture doesn't work out?

If it does succeed, how many employees will this company eventually have?

What will be the business's annual revenue in a year? What about in five years?

What will be the company's market share in that amount of time?

Will the business have a niche market, or will it sell a broad spectrum of goods and services?

What are my plans for geographic expansion? Should it be local or national? Can it be global?

Am I going to be a hands-on manager, or will I delegate a large proportion of tasks to others?

If I delegate, what sorts of tasks will I share? Will it be sales, technical work or something else?

How comfortable am I taking direction from others? Can I work with partners or investors who demand input into the company's management?

Is the business going to remain independent and privately owned, or will it eventually be acquired or go public?

It's also essential to consider your financial goals. Your business might not require a massive financial commitment upfront, but it probably will if you're envisioning rapid growth. Unless you're making your product or service from scratch, you'll have to pay your suppliers before your customers can pay you, and as "Plan Your Business Plan" points out, "this cash flow conundrum is the reason so many fast-growing companies have to seek bank financing or equity sales to finance their growth. They are literally growing faster than they can afford."

How much financing will you need to start your business? What will you be willing to accept? If you're desperate for that first influx of cash, you might be tempted to accept any offer, but doing so might force you to either surrender too much control or ask investors for a number that's not quite right for either side.

These eight questions can help you determine a few financial aspects of your planning stages:

What initial investment will the business require?

How much control of the business are you willing to relinquish to investors?

When will the business turn a profit?

When can investors, including you, expect a return on investment?

What are the business's projected profits over time?

Will you be able to devote yourself full-time to the business?

What kind of salary or profit distribution can you expect to take home?

What are the chances the business will fail, and what will happen if it does?

You should also consider who, primarily, is going to be reading your business plan, and how you plan to use it. Is it a means of raising money or attracting employees? Will suppliers see it?

Lastly, you need to assess the likelihood of whether you actually have the time and resources to see your plan through. It might hurt to realize the assumptions you've made so far don't actually make a successful business, but it's best to know early on, before you make further commitments.

Related: Need a Business Plan Template? Here Is Apple's 1981 Plan for the Mac.

How to Write a Business Plan

Once you've worked out all the questions above and you know exactly what goals you have for your business plan, the next step is to actually write the darn thing. A typical business plan runs 15 to 20 pages but can be longer or shorter, depending on the complexity of the business and the needs of your venture. Regardless of whether you intend to use the business plan for self-evaluation or to seek a seven-figure investment, it should include nine key components, many of which are outlined in Entrepreneur 's introduction to business plans:

1. Title page and contents

Presentation is important, and a business plan should be presented in a binder with a cover that lists the business's name, the principals' names and other relevant information like a working address, phone number, email and web address and date. Write the information in a font that's easy to read and include it on the title page inside, too. Add in the company logo and a table of contents that follows the executive summary.

2. Executive summary

Think of the executive summary as the SparkNotes version of your business plan . It should tell the reader in as few words as possible what your business wants and why. The executive summary should address these nine things:

The business idea and why it is necessary. (What problem does it solve?)

How much will it cost, and how much financing are you seeking?

What will the return be to the investor? Over what length of time?

What is the perceived risk level?

Where does your idea fit into the marketplace?

What is the management team?

What are the product and competitive strategies?

What is your marketing plan?

What is your exit strategy?

When writing the executive summary, remember that it should be somewhere between one-half page to a full page. Anything longer, and you risk losing your reader's attention before they can dig into your business plan. Try to answer each of the questions above in two or three sentences, and you'll wind up with an executive summary that's about the right length.

Related: First Steps: Writing the Executive Summary of Your Business Plan

3. Business description

You can fill anywhere from a few paragraphs to a few pages when writing your business description, but try again to keep it short, with the understanding that more sections will follow. The business description typically starts with a short explanation of your chosen industry, including its present outlook and future possibilities. Use data and sources (with proper footnotes) to explain the markets the industry offers, along with the developments that will affect your business. That way, everyone who reads the business description, particularly investors, will see that they can trust the various information contained within your business plan.

When you pivot to speaking of your business, start with its structure. How does your business work? Is it retail, service-oriented or wholesale? Is the business new or established? Is the company a sole proprietorship, partnership or corporation? Who are the principals and who are your customers? What do the distribution channels look like, and how can you support sales?

Next, break down your business's offerings. Are you selling a physical product, SaaS or a service? Explain it in a way that a reader knows what you're planning to sell and how it differentiates itself from the competition (investors call this a Unique Selling Proposition, or USP, and it's important that you find yours). Whether it's a trade secret or a patent, you should be specific about your competitive advantage and why your business is going to be profitable. If you plan to use your business plan for fundraising, you can use the business description section to explain why new investments will help make the business even more profitable.

This, like everything else, can be brief, but you can tell the reader about your business's efficiency or workflow. You can write about other key people within the business or cite industry experts' support of your idea, as well as your base of operations and reasons for starting in the first place.

4. Market strategies

Paint a picture about your market by remembering the four Ps: product, price, place and promotion.

Start this section by defining the market's size, structure and sales potential. What are the market's growth prospects? What do the demographics and trends look like right now?

Next, outline the frequency at which your product or service will be purchased by the target market and the potential annual purchase. What market share can you possibly expect to win? Try to be realistic here, and keep in mind that even a number like 25% might be a dominant share.

Next, break down your business's plan for positioning, which relates to the market niche your product or service can fill. Who is your target market, how will you reach them and what are they buying from you? Who are your competitors, and what is your USP?

The positioning statement within your business plan should be short and to the point, but make sure you answer each of those questions before you move on to, perhaps, the most difficult and important aspect of your market strategy: pricing.

In fact, settling on a price for your product or service is one of the most important decisions you have to make in the entire business plan. Pricing will directly determine essential aspects of your business, like profit margin and sales volume. It will influence all sorts of areas, too, from marketing to target consumer.

There are two primary ways to determine your price: The first is to look inward, adding up the costs of offering your product or service, and then adding in a profit margin to find your number. The second is called competitive pricing, and it involves research into how your competitors will either price their products or services now or in the future. The difficult aspect of this second pricing method is that it often sets a ceiling on pricing, which, in turn, could force you to adjust your costs.

Then, pivot the market strategies section toward your distribution process and how it relates to your competitors' channels. How, exactly, are you going to get your offerings from one place to the next? Walk the reader step by step through your process. Do you want to use the same strategy or something else that might give you an advantage?

Last, explain your promotion strategy. How are you going to communicate with your potential customers? This part should talk about not only marketing or advertising, but also packaging, public relations and sales promotions.

Related: Creating a Winning Startup Business Plan

5. Competitive analysis

The next section in your business plan should be the competitive analysis, which helps explain the differences between you and your competitors … and how you can keep it that way. If you can start with an honest evaluation of your competitors' strengths and weaknesses within the marketplace, you can also provide the reader with clear analysis about your advantage and the barriers that either already exist or can be developed to keep your business ahead of the pack. Are there weaknesses within the marketplace, and if so, how can you exploit them?

Remember to consider both your direct competition and your indirect competition, with both a short-term and long-term view.

6. Design and development plan

If you plan to sell a product, it's smart to add a design and development section to your business plan. This part should help your readers understand the background of that product. How have the production, marketing and company developed over time? What is your developmental budget?

For the sake of organization, consider these three aspects of the design and development plan:

Product development

Market development

Organizational development

Start by establishing your development goals, which should logically follow your evaluation of the market and your competition. Make these goals feasible and quantifiable, and be sure to establish timelines that allow your readers to see your vision. The goals should address both technical and marketing aspects.

Once the reader has a clear idea of your development goals, explain the procedures you'll develop to reach them. How will you allocate your resources, and who is in charge of accomplishing each goal?

The Entrepreneur guide to design and development plans offers this example on the steps of producing a recipe for a premium lager beer:

Gather ingredients.

Determine optimum malting process.

Gauge mashing temperature.

Boil wort and evaluate which hops provide the best flavor.

Determine yeast amounts and fermentation period.

Determine aging period.

Carbonate the beer.

Decide whether or not to pasteurize the beer.

Make sure to also talk about scheduling. What checkpoints will the product need to pass to reach a customer? Establish timeframes for each step of the process. Create a chart with a column for each task, how long that task will take and when the task will start and end.

Next, consider the costs of developing your product, breaking down the costs of these aspects:

General and administrative (G&A) costs

Marketing and sales

Professional services, like lawyers or accountants

Miscellaneous costs

Necessary equipment

The next section should be about the personnel you either have or plan to hire for that development. If you already have the right person in place, this part should be easy. If not, then this part of the business plan can help you create a detailed description of exactly what you need. This process can also help you formalize the hierarchy of your team's positions so that everyone knows their roles and responsibilities.

Finish the development and design section of your business plan by addressing the risks in developing the product and how you're going to address those risks. Could there be technical difficulties? Are you having trouble finding the right person to lead the development? Does your financial situation limit your ability to develop the product? Being honest about your problems and solutions can help answer some of your readers' questions before they ask them.

Related: The Essential Guide to Writing a Business Plan

7. Operations and management plan

Want to learn everything you'll ever need to know about the operations and management section of your business plan, and read a real, actual web article from 1997? Check out our guide titled, "Writing A Business Plan: Operations And Management."

Here, we'll more briefly summarize the two areas that need to be covered within your operations and management plan: the organizational structure is first, and the capital requirement for the operation are second.

The organizational structure detailed within your business plan will establish the basis for your operating expenses, which will provide essential information for the next part of the business plan: your financial statements. Investors will look closely at the financial statements, so it's important to start with a solid foundation and a realistic framework. You can start by dividing your organizational structure into these four sections:

Marketing and sales (including customer relations and service)

Production (including quality assurance)

Research and development

Administration

After you've broken down the organization's operations within your business plan, you can look at the expenses, or overhead. Divide them into fixed expenses, which typically remain constant, and variable, which will change according to the volume of business. Here are some of the examples of overhead expenses:

Maintenance and repair

Equipment leases

Advertising and promotion

Packaging and shipping

Payroll taxes and benefits

Uncollectible receivables

Professional services

Loan payments

Depreciation

Having difficulty calculating what some of those expenses might be for your business? Try using the simple formulas in "Writing A Business Plan: Operations And Management."

8. Financial factors

The last piece of the business plan that you definitely need to have covers the business's finances. Specifically, three financial statements will form the backbone of your business plan: the income statement, the cash-flow statement and balance sheet . Let's go through them one by one.

The income statement explains how the business can make money in a simple way. It draws on financial models already developed and discussed throughout the business plan (revenue, expenses, capital and cost of goods) and combines those numbers with when sales are made and when expenses are incurred. When the reader finishes going through your income statement, they should understand how much money your company makes or loses by subtracting your costs from your revenue, showing either a loss or a profit. If you like, you or a CPA can add a very short analysis at the end to emphasize some important aspects of the statement.

Second is the cash-flow statement, which explains how much cash your business needs to meet its obligations, as well as when you're going to need it and how you're going to get it. This section shows a profit or loss at the end of each month or year that rolls over to the next time period, which can create a cycle. If your business plan shows that you're consistently operating at a loss that gets bigger as time goes on, this can be a major red flag for both you and potential investors. This part of the business plan should be prepared monthly during your first year in business, quarterly in your second year and annually after that.

Our guide on cash-flow statements includes 17 items you'll need to add to your cash-flow statement.

Cash. Cash on hand in the business.

Cash sales . Income from sales paid for by cash.

Receivables. Income from collecting money owed to the business due to sales.

Other income. The liquidation of assets, interest on extended loans or income from investments are examples.

Total income. The sum of the four items above (total cash, cash sales, receivables, other income).

Material/merchandise . This will depend on the structure of your business. If you're manufacturing, this will include your raw materials. If you're in retail, count your inventory of merchandise. If you offer a service, consider which supplies are necessary.

Direct labor . What sort of labor do you need to make your product or complete your service?

Overhead . This includes both the variable expenses and fixed expenses for business operations.

Marketing/sales . All salaries, commissions and other direct costs associated with the marketing and sales departments.

Research and development . Specifically, the labor expenses required for research and development.

General and administrative expenses. Like the research and development costs, this centers on the labor for G&A functions of the business.

Taxes . This excludes payroll taxes but includes everything else.

Capital. Required capital for necessary equipment.

Loan payments. The total of all payments made to reduce any long-term debts.

Total expenses. The sum of items six through 14 (material/merchandise, direct labor, overhead, marketing/sales, research and development, general and administrative expenses, taxes, capital and loan payments).

Cash flow. Subtract total expenses from total income. This is how much cash will roll over to the next period.

Cumulative cash flow . Subtract the previous period's cash flow from your current cash flow.

Just like with the income statement, it's a good idea to briefly summarize the figures at the end. Again, consulting with a CPA is probably a good idea.

The last financial statement is the balance sheet. A balance sheet is, as our encyclopedia says, "a financial statement that lists the assets, liabilities and equity of a company at a specific point in time and is used to calculate the net worth of a business." If you've already started the business, use the balance sheet from your last reporting period. If the business plan you wrote is for a business you hope to start, do your best to project your assets and liabilities over time. If you want to earn investors, you'll also need to include a personal financial statement. Then, as with the other two sections, add a short analysis that hits the main points.

9. Supporting documents

If you have other documents that your readers need to see, like important contracts, letters of reference, a copy of your lease or legal documents, you should add them in this section.

Related: 7 Steps to a Perfectly Written Business Plan

What do I do with my business plan after I've written it?

The simplest reason to create a business plan is to help people unfamiliar with your business understand it quickly. While the most obvious use for a document like this is for financing purposes, a business plan can also help you attract talented employees — and, if you share the business plan internally, help your existing employees understand their roles.

But it's also important to do for your own edification, too. It's like the old saying goes, "The best way to learn something is to teach it." Writing down your plans, your goals and the state of your finances helps clarify the thoughts in your own mind. From there, you can more easily lead your business because you'll know whether the business is reaching the checkpoints you set out to begin with. You'll be able to foresee difficulties before they pop up and be able to pivot quickly.

That's why you should continue to update your business plan when the conditions change, either within your business (you might be entering a new period or undergoing a change in management) or within your market (like a new competitor popping up). The key is to keep your business plan ready so that you don't have to get it ready when opportunity strikes.

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

May 24, 2021

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?

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How to Start a $188K/Year Pig Farm Business (2024)

How to Get Started with a Pig Farming Business

1. get experience and tour a piggery, 2. start making local connections, 3. consider the expenses of farming pigs.

Animal Costs

Equipment costs.

Other Costs

• Soil preparation products
• Veterinary costs- PetPigWorld estimates you can expect to $20-500 per visit depending on the care needed.
• Storage and cooling

4. Build a Business Plan and Make Things Legal

5. search for funding sources.

6. Start Producing Pork

7. get products to market.

• Acquire and verify needed permits- Go to NASDA.org for requirements for your state
• Create packaging for the products or buy some from Berlin Packaging
• Choose prices for the items- USDA has a guide on costs and returns
• Select possible buyers
• Do market research
• Make sure you can meet production needs
• Talk to stores and show them your products

Consider Farmer’s Markets

Get creative with other options, 8. market your hog farm brand.

Use Social Media and a Website

• Squarespace

Invest in Good Branding

9. consider expanding.

Top Influencers

• Jerod McDaniel
• Julie Robinson

Not Everyone Succeeds at Pig Farming, but It’s Possible If You Treat It Like a Business

How to Run a Successful Small Business (2024)

Why Do Businesses Fail?

• Poor financial decisions
• Failure to grow sales
• Inability to manage inventory and growth
• Lack of Experience

How to Run a Business Well

#1. use a business plan.

• Purpose of the company
• Business goals
• Mission statement and values
• Industry outlook including major and local competitors
• Identify the target audience
• Identify ways to reach your ideal customers
• Identify the customer acquisition costs
• Marketing plan 
• Financial projections for one year, three years, five years, and ten years
• Funding needed and how the company will get it
• Necessary roles
• Employee benefits
• How to build company culture

#2. Use Profit Goals as Benchmarks for Success

• Look up the net income ratio for your industry on NYUs Margins by Sectors chart.
• Divide your profit target by the net income ratio.
• That’s how much revenue you’ll need unless you can figure out ways to get a higher profit margin.

#3. Mission Statement

#5. key performance indicators (kpis).

#6. Show an Interest in Your Customers’ Problems (and a Desire to Solve Them)

#7. providing a reliable service is crucial, #8. deliver more than is promised to every customer.

• Providing worst-case time and price estimates and delivering for less.
• Throw in a small gift like a sticker, a coupon, or pieces of candy.
• Provide free bread or chips & salsa at restaurants.
• Fix something small that you can do quickly without charging.

#9. Reward Customer Loyalty

#10. handle customer complaints immediately.

• Hear them out.
• Apologize for the inconvenience.
• Ask what you can do to make it right.
• Do what they ask (within reason).

#11. Operate Lean

• Limiting the amount of inventory and equipment you buy to what is currently needed
• Finding ways to remove waste
• Focusing on continuous improvement
• Making everything easier for employees and the business owner

#12. Avoid Unnecessary Loans 

#13. manage your margins.

#14. Cut Underperforming Lines

#15. outsource as many functions as possible.

• Bookkeeping
• Administrative work

#16. Offer Industry-Leading Pay and Benefits

#17. hire passionate employees , #18. maintain a marketing budget.

#19. Hire an Agency 

• High-quality content marketing specialists.
• Social media management specialists.
• Graphic designers create content such as infographics, videos, and memes.
• People who specialize in optimizing search engines.
• Paid ads experts.
• Google My Business Experts.

#20. A Successful Business Tells a Story

#21. stop wasting time and money on marketing that doesn’t work.

Closing Thoughts on How to Run a Business 

Selling on Amazon: 2024 Beginners Guide

Selling on Amazon is a lucrative field. The tech behemoth has so many ways to create an Amazon store and generate sales.

We talked to leading pet supplies seller Casey Walters, who started ShedDefender to protect his friends' couches from pet messes. From there, he appeared on Shark Tank and is currently making $1.5 million in yearly revenue.

He makes two-thirds of his revenue from selling on Amazon, which gives you a good idea of how important Amazon is when you sell online.

We’ll share tips about creating an Amazon store, the importance of using Fulfillment by Amazon (also known as Amazon FBA), and how to encourage reviews without violating the Amazon Seller agreement.

[su_note note_color="#dbeafc"] Click on any of the links below to jump ahead.

How much money do you need to start selling on Amazon?

Is it good to sell on amazon with fba, how to sell on amazon.

• Ready to start selling on Amazon? [/su_note]

Get ready to sell on Amazon!

Jungle Scout, a leader in Amazon analytics, did research that found most new sellers start selling on Amazon with less than $5K. This covers their product costs, Amazon fees, and other required costs.

That’s consistent with how Casey Walters started selling ShedDefender on Amazon FBA:

[su_quote] My mom sewed the first product. We kinda went viral overnight. I had a seamstress making five per month. Then, I had to borrow $30K from my parents to create 2,000 of them in the first two months. Then $140K over the first year. [/su_quote]

Hear more in our exclusive interview:

Selling on Amazon is highly beneficial to new businesses. Some of the benefits of becoming an Amazon seller include the ability to:

Increase sales

Simplify operations, grow your business.

Want to know how?

Casey used Fulfilment by Amazon to deliver orders with the speed and reliability of Amazon Prime. Customers love the speed of delivery, which will help you increase sales and encourage repeat purchases.

In fact, Casey sells twice as many products on Amazon as he does on his own website, and it means he’s earning an extra $100K per month!

When you sell on Amazon, you can have Amazon manage your shipping. Amazon gets huge discounts because of its purchasing power and delivery network. That’s why FBA saves 30% off standard shipping and up to 70% on premium shipping options.

Selling on Amazon FBA means Amazon handles payment and order processing, customer inquiries, returns, and review software. Free up your time to focus on product development , marketing, and delighting customers.

Selling on Amazon gives you access to a global network with hundreds of fulfillment centers to sell products globally without figuring out the logistics.

Starting an Amazon business has never been easier. There are so many ways Amazon sellers can sell on Amazon. You’ll want to follow this easy 15-step process to selling on Amazon:

1. Start with market research 2. Find your niche 3. Create a business plan 4. Identify product suppliers 5. Place orders 6. Set up seller account     a. Configure your account     b. Enroll your brand 7. List products     a. Take good photos     b. Be descriptive 8. Research the right selling price 9. Package items with care 10. Select a fulfillment method     a. Amazon FBA     b. Self Fulfillment     c. Dropshipping     d. Amazon Print-on-Demand 11. Manage your inventory 12. Promote products 13. Get product reviews 14. Optimize listings 15. Grow with tools

Get ready to learn how to sell on Amazon.

Start with market research

You'll want to decide what to sell online. The best way to do that is to establish what kind of eCommerce store you want to be. A good Amazon store will offer something people will pay for, and you won’t mind spending your time becoming an expert on the subject.

Once you have an online business idea, you’ll want to establish its potential to grow into a profitable business. That requires market research.

Find your niche

The key to selling on Amazon is finding product categories to buy products at a competitive price, markup, and generate sales. Check out our blog about the best products to sell on Amazon. We discuss considerations about product categories including:

• Games and Toys
• Health & Household
• Beauty Products & Personal Care
• Grocery & Gourmet Food
• Clothing, Shoes, and Jewelry
• Baby Products
• Home & Kitchen
• Kitchen & Dining
• Tools & Home Improvement
• Pet Supplies
• Sports & Outdoors
• Patio, Lawn, and Garden

Next, you’ll want to write a business plan that outlines your approach to selling on Amazon.

Create a business plan

Your business plan can be as straightforward or as complicated as you want to make it. The more detailed the business plan you write, the more accessible selling products will be. Those with a plan have a 19% higher success rate .

That doesn’t mean you have to be confident you’ll achieve success from Day 1. As Casey told us,

[su_quote] This all started ’cause my friends didn’t like my dog shedding all over their house. [/su_quote]

At this point, you have a successful sales performance target, so it’s time to start finding the products to sell in your eCommerce store.

Identify product suppliers

Next, you’ll want to find manufacturers that can create the products you need and ship products to you. You’ll want to look for quality manufacturers that won’t ship counterfeit products.

You might need to find a manufacturer—or check out Amazon Merch to see if they carry the products you want to sell.

Place orders

Once you have found a manufacturer or wholesaler for your products, you must place an order and get the products shipped to you. Before you order, ensure the products aren’t on the restricted product list.

Alternatively, you may be able to have them shipped to an Amazon warehouse, though you’ll probably want to check your own products to ensure they meet quality control standards before shipping them to the Amazon warehouse (especially if you’re just getting started).

Next, it’s time to start your Amazon Seller Account.

Create an Amazon Seller Account

All Amazon sellers will need an Amazon Seller Account before they can open their Amazon store and create product listings.

You’ll need to choose a selling plan . There are two options: Individual and Professional. The individual selling plan is free to start and $0.99 per item sold.

Meanwhile, the Professional selling plan is $39.99 and offers lots of tools to boost sales and manage items in bulk.

Configure your account

To become an Amazon seller, you’ll need to configure your account following the steps below:

• Gather your personal and business information (including bank account routing number and credit card that allows international charges).
• Choose to apply for either an Individual or Professional seller account.
• Enter your email address and password.
• Add your business location and type.
• Enter your personal and business details.
• Enter your payment method.
• Hover over the gear icon.
• Click “User Permissions”.
• Enter contact information for new account users.
• Optionally: Manage settings for existing users.

You can create your account using the email address associated with your Amazon customer account or opt to set it up using a separate business email address.

Note that receiving approval to open an Amazon Seller Account can take a few days to a few months.

Enroll in the Amazon Brand Registry

You’ll want to enroll in brand protection through the Amazon Brand Registry . When you have a trademarked brand image, you can sign up, and Amazon will help protect your brand's intellectual property and provide tools for a more creative brand experience.

Create a product detail page

You can create a product detail page once your Amazon account is set up. You’ll need a product detail page for each product you offer, but product pages allow for variations (different color and size combinations) on a single page.

Two of the most critical features of a product detail page include the photos and the text, which we’ll discuss to help you create a beautiful Amazon store.

Take good photos

Many sellers emphasize the importance of beautiful pictures to help sell their products on Amazon and other eCommerce stores.

Amazon sellers should follow Amazon photo requirements precisely for the most success. Some types of products have additional requirements, but the main requirements are:

• Use a pure white background (255,255,255 is the color code if you do your own editing).
• Show the whole product.
• Fill 85% of the picture.
• Name the image the same as the Product Identifier for books and some other products.
• The long side should be between 1,000 and 10,000 pixels.
• Files should be JPEG (.jpg or .jpeg), TIFF (.tif), PNG(.png), or GIF (.gif) file formats.

Any other photos should follow the exact technical requirements, but you are not required to use a white background or the product identifier as the title. You can include videos, infographics, and models, except for babies.

Pro Tip: Review specific product category requirements before adding pictures to your product detail page.

Be descriptive

An Amazon store with compelling titles and descriptions on the product detail page will have more product visibility. Both the title and the description should have relevant keywords to highlight the particular product features that Amazon shoppers are searching for.

Amazon allows up to 200 characters in the product title, so you might use them to target as many search results as possible. Shed Defender, for example, uses the following title:

Shed Defender Original Dog Onesie – Seen On Shark Tank, Contains Shedding of Dog Hair for Home, Car, Travel, Anxiety Calming Shirt, Surgery Recovery Body Jumpsuit, E Collar Alternative

Generally speaking, this is borderline keyword-stuffing (adding many keywords for SEO purposes), and some search engines penalize pages in search results when you stuff too many keywords in a small space. It seems to work alright for the Shed Defender Amazon Store, though.

I’d be interested to see what happens with search results if they cut the title to:

Shed Defender Original Dog Onesie – Seen On Shark Tank

Once you come up with a great product title, you’ll want to include the following information in your product descriptions:

• Sizes offered
• Colors offered
• Product category-specific information requested by Amazon.
• Bullet point list of the essential features.
• Sizing guide to help people choose the right size for garments.
• Answers to frequently asked questions.

Pro Tip: Look at top-performing product pages in your product category to understand what they do. Then, use Jungle Scout to research the keywords people are using to search for products in your category. You can also check search engine optimization tools like Semrush , SurferSEO , or Google Trends.

Research the right selling price

Amazon shoppers are going to compare prices and deals online. You should, too. A dynamic pricing tool is a cost-effective way to provide competitive prices. Amazon includes a built-in option with a Professional selling plan, but you might want external dynamic pricing software that you can use on your own website, too.

These tools make it so that third-party sellers can match or beat the best pricing online, but you need to include minimum pricing so that you don’t drop below the costs of replacing the product, Amazon shipping costs, and additional selling fees.

Package items with care

Whether you are shipping items directly to customers or to Amazon fulfillment centers, you’ll want to have the products in packaging that protects them from the damage that occurs during shipping.

Check out the Amazon Seller Guide sections below to learn more about how Amazon expects you to ship products that participate in Fulfillment by Amazon (FBA).

• Sending and Replenishing Inventory : Provides information on how to pack
• Shipping and Routing : Summarizes packing expectations and expands on shipping requirements

Select a fulfillment method

You’ll need to select a method of fulfillment for each product. The primary options include:

• Amazon FBA (Fulfillment by Amazon)

Self Fulfillment

Dropshipping, amazon merch.

Next, let's look at these approaches to selling on Amazon.

When you start selling on Amazon with Amazon FBA, you must ship your products to an Amazon fulfillment center. We’ll discuss why you might want to use Amazon FBA and its associated costs.

Why choose Amazon FBA

When you use Amazon FBA, you benefit from Amazon Prime shipping, which means Amazon provides customer service and handles customer returns to Prime members.

According to Statista , 71% of Amazon customers are Prime members, which means you gain access to the customer service standards their customer base expects. You are more likely to get positive reviews if you meet their expectations when you sell on Amazon.

Fulfillment costs

The sales costs on Amazon start at $2.45 per item and increase based on the product type, weight, dimensions, and time of year. You will pay 1.5% to 8% more for holiday packing and shipping.

Costs of storage space

You’ll also pay for storing the products, which is substantially more during the holidays than the rest of the year.

Some sellers prefer to handle fulfillment, especially if they profit from their own website or run multiple product shipping businesses.

Pro Tip: I strongly recommend seeking out the input of a shipping and fulfillment specialist before you try to sell this way. The decisions you make when you are managing fulfillment can make or break the company. It impacts both pricing and customer service, which can cause you to lose money when you sell. (It’s happened to me on a couple of products I tried selling before I created and started implementing various helpful calculators for selling on platforms.)

Dropshipping is similar to Amazon FBA, but a third-party fulfillment center or distributor will ship the product after you sell it on Amazon. You may have shipping delays when you sell using this method if there is a lag between when the customer pays and when the dropshipper gets paid.

The main benefit of this strategy is you don’t need as much inventory to sell on Amazon.

Amazon Merch is a print-on-demand offering that allows you to sell on Amazon by submitting your designs for products. Every time you sell an item, Amazon prints the product, ships it, and gives you a royalty.

Manage your inventory

You’ll need to keep your inventory available when you sell on Amazon. This might mean ordering in bulk and having shipments sent to the nearest Amazon fulfillment center or staying updated on unavailable products through your dropshipper.

Pro Tip: You might need to invest in more sophisticated inventory management tools to update your channels’ inventory when you start selling on multiple sales channels.

Promote products

There are numerous ways to promote your products both on and off Amazon. You can use strategies like:

• Sponsored brand campaigns: Invest in cost-per-click (CPC) ads featuring your logo, headline, and multiple products. These ads appear at the top, bottom, and inside of mobile and desktop shopping searches.
• Stores: You can customize your Amazon store to highlight your brand, emphasize product listings or categories, and generate sales.
• Sponsored display ads: Amazon has a huge network of affiliate websites that earn a commission for advertising projects. Show ads on and off Amazon with display ads.
• Posts: Create content to help people understand your product listing more. Then highlight it on your Amazon shop.
• Sponsored products: Show a specific product detail page when an Amazon customer searches for relevant keywords. These work similar to brand ads.
• Amazon Live: Create a video to highlight products and sell on Amazon.

Selling on Amazon has evolved to allow you to do most aspects of social media marketing and content marketing directly on Amazon.

Get product reviews

Selling on Amazon requires positive reviews. The more positive online reviews you have, the better. Amazon allows you to automate review requests, but be careful not to break their rules. If you need to solicit reviews for a new product, try Amazon Vine .

Optimize product listings

We’ve already talked about Amazon SEO some, but I cannot emphasize this enough. Consumer behaviors shift, and you have to adjust to them. Use the Amazon Seller app to track your sales and adjust product SEO when you see a drop in sales.

Grow with tools

Selling on Amazon comes with numerous benefits. Because it is the largest eCommerce platform on the planet, they have many Amazon seller tools , plus thousands of approved service providers and apps to choose from.

Ready to start selling on Amazon?

Now, you understand the key strategies to start selling on Amazon. It’s up to you to find the products you are most comfortable selling.

Have you created an Amazon Store before? What parts of selling on Amazon did you find most challenging? Let us know in the comments.

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General Business Planning MCQs

1. Financial Statements Include

2. Which should NOT be included in an executive summary?

3. Estimating capital requirements is important for the:

4. The 4Ps are also known as:

5. How long should a typical business plan project for?

6. What is the first section in a traditional business plan?

7. What does Market Share mean?

8. True or False: Narrowing the target for potential clients helps because it concentrates sales efforts to a selective group that is most likely to be most profitable.

9. In a competitor analysis, what should you focus on?

10. New funds can be put toward which of the following?

11. What should organizational structures include?

12. In the financial forecasting, operating profit margin should be:

13. Who are the most important readers of a business plan?

14. True or False: Start-up companies are almost always succesful in the first few years.

15. True or False? A business plan should only focus on short term objectives

16. Potential creditors will often be interested in gaining collateral before lending. True or False

17. True or False? You should have concise bulleted lists in a business plan.

18. An appendix may include:

19. True or False: A partnership is normally run by one entreprenuer

20. Legal issues like non-disclosure agreements and patents are NOT important considerations for the business.

21. It is common for creditors to want historial financial statements, True or False

22. True or False? A business plan should state a value proposition.

23. Which of these is an example of a competitive strategy?

24. True or False: The Market Analysis of your business plan should illustrate your industry and market knowledge as well as any of your research findings and conclusions.

25. True or Fales: An Organization Chart is a diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs.

26. Ratio and Trend Analysis can help to create a better picture of profitability and growth potential. True or False

27. What is the Executive Summary of a Business Plan?

28. Sales targets should be:

29. SWOT Stands for

30. When requesting funding it's important to be clear on:

31. What should the prospective financial data include?

32. What does the 'T' stand for in SWOT analysis?

33. One common method for selecting prices is called Cost Pricing Strategy. This means:

34. A Business Plan should not include a section about regulatory issues since this is out of the business owners hands. True or False

35. The main reason that business fail is due to not having enough?

36. The Purpose of the Company Description in the Business Plan is:

37. Financial Projections are done before Market Analysis and objectives are set. True or False.

38. True or False? It is acceptable to use business jargon or pop culture references in a business plan.

39. The use of exhibits are intended for:

40. What is not included in variable costs?

41. In the Competitive Analysis It's important to include:

42. A pricing strategy where you set your prices high for quick cash and little emphasis on market penetration is called:

43. A good way to analyze the external environment is with a(n):

44. What is the post-money valuation for a $1.5 million round of investment when the equity stake offered is 25%?

45. In a business plan the Funding Requests portion should include:

46. What will a VRIO framework help distinguish?

47. The first thing to assess in your market analysis is the:

48. The section of your business plan that is similar to an "elevator pitch" is the:

49. For a typical executive summary, what is the maximum length?

50. What is meant by Value Proposition?

51. Would you ever consider talking to your competitors directly?

52. What market segment is an airline offering no frills targeting?

53. What section of the financial forecast would expenditure on telephones be forecasted under?

54. Which of the following factors would be used in estimating revenue?

55. How detailed should a business plan be?

56. Which of the following would be a value proposition?

57. What is meant by Target Marketing?

58. What is a "Pay Per Click" marketing campaign?

59. What are core competencies?

60. What best describes a cost-leadership strategy?

61. Would a company that produces a complementary product to yours be considered a competitor (e.g. a tennis ball maker and a tennis racket maker)?

62. How might a company learn more about its market and what drives the customers to purchase their product?

63. Why is it important to hire intelligently early on?

64. What is the purpose of creating a valuation statement of the company?

65. What would a Market Follower strategy be distinguished by?

66. In which section of a business plan would the company's mission statement be located?

67. Why is it important to track your competitors?

68. Where would the Financial Projections typically be located in a business plan?

69. What strategy should a new company wanting to enter a market employ?

70. What is a characteristic of a market leader strategy?

71. Why are companies able to stay in business during turbulent financial market times?

72. What is meant by Relationship Marketing?

73. What is a competitive advantage?

74. How does a company assess the performance of its marketing efforts?

75. What has been the trend in marketing in the last few decades?

76. In which section of a business plan would you talk about the CEO?

77. What would sending coupons to prior customers directly be considered?

78. What are the minimum financial statements that should be included in a business plan?

79. Why is it important to know the entire potential market even if your company can only focus on a small segment?

80. What best describes a differentiation strategy?

81. Where might a potential competitor come from?

82. Which of the following would be a mistake in forecasting?

83. What is the purpose of a cash flow forecast?

84. Why is it important to talk about market timing?

85. How could a video rental outlet stand out above their competitors in a positive way?

86. What is meant by "top down" budgeting?

87. Which of the following would not typically be a section in a business plan?

88. Which of the following strategies has warehouse reseller Costco taken?

89. What is meant by Market Demographics?

90. What is the purpose of a what-if analysis?

91. What policy should be followed regarding employees and the company strategy?

92. What should be the minimum length of a business plan?

93. Why would a company's website be considered a part of its marketing effort?

94. What should a company do if they do not have a marketing plan?

95. What is one of the ways to track your competitors?

96. How is "distribution and delivery" defined?

97. What is Blockbuster Videos business model?

98. What is one of the criteria that a flower delivery company could distinguish itself by on the market?

99. Why is it important to have an executive summary?

100. Why is it important to talk about competition?

101. What marketing method is a gas station most likely to use?

102. Which of the following is one of the groups a business plan is meant to inform?

103. Why would a new company spend most of their budget on marketing?

104. Where would company valuation be discussed?

105. What section would SWOT analysis typically be in?

106. What should be considered while deciding a firm's strategy?

107. What is one of the reasons for the failure of companies?

108. Which of the items below is NOT a purpose of a business plan?

109. What is the DuPont formula?

110. What is one of the ways to establish who your competitors are?

111. What is meant by "market segments"?

112. Which of the following is a traditional method of marketing?

113. What is a business model?

114. What role does marketing play in a company's business life?

115. Which of the following could be a core competency of a company?

116. Which of the following terms best describes how a company can make itself stand out from the competitors?

117. What type of company would never need a business plan?

118. What is meant by vertical integration?

119. What would be the best methodology to follow while creating a forecast?

120. How far into the future should revenue be projected in a business plan?

121. Which of the following would you factor into long term liabilities?

122. What is an advantage of making a competitor analysis?

123. Why is it okay to let some competitors' moves go unanswered?

124. Why is it important to identify your market segments?

125. Why would a company with a very rigid business plan possibly face trouble?

126. What is meant by Mass Marketing?

127. Why should a business plan be revisited annually?

128. What is a value chain?

129. What is a way to segment the market?

130. Customer share is sometimes referred to as _____.

131. The way you want to spend your time, money, and resources in the future are your _____.

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Chapter 7 The Business Plan: Creating and Starting the...

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