what is micro business plan

• Coaching Team
• Investor Tools
• Student Success
• Real Estate Investing Strategies

Real Estate Business

• Real Estate Markets
• Real Estate Financing
• REITs & Stock Investing

What Is A Micro Business? Examples & FAQs

What is a micro business? | Micro business vs. small business | Pros and cons of micro businesses | How to start a micro business | Challenges of micro businesses |

In the age of the side hustle , most people can name at least one or two business owners in their social circles. Platforms like Etsy, eBay, Upwork, and more have made it easier than ever to monetize skills and hobbies, and these platforms are only the beginning. Many entrepreneurs have their own websites and social media profiles selling goods and services. Did you know each of these gigs could be classified as its own micro business ?

Micro businesses are an increasingly common way for people to break out of traditional work environments. Running a micro business is no easy feat, but the benefits can make this an attractive opportunity for those with the time and the drive to succeed. If you are interested in becoming your own boss , selling your own products or services, or even supplementing your regular income: it may be time to consider starting a business. Continue reading to learn what a micro business is and how you can start one today.

What Is A Micro Business?

A micro business is a type of small business that employs less than ten people and earns less than $250,000 annually. It is common for micro businesses to operate as sole proprietorships, which consist only of the business owner. The Small Business Administration (SBA) also defines micro businesses as those requiring less than $50,000 to start. A few examples of micro businesses include freelance writers, Etsy shop owners, consultants, and many other self-employed workers. The business structure typically revolves around a smaller consumer market and allows owners to have a close relationship with their clientele.

Types Of Micro Businesses

Micro businesses can operate in any sector of the economy, though they are particularly common in retail, creative work, food service, and real estate. For example, someone operating an Airbnb may be considered a micro business owner. Similarly, your local bakery owner could also be considered a micro business. Many states have their own set of classifications for what makes a micro business, though they generally follow the same guidelines.

Micro Business Vs. Small Business

Micro businesses fall under the small business designation, though they are even smaller in structure. A small business can refer to any company with 500 employers or fewer, or $6 million or less in annual revenue (depending on the industry). There is a lot of room between micro vs. small businesses in terms of startup costs, revenue, and legal structure. These designations are important to consider as they directly impact how businesses are taxed.

Micro businesses are typically operated as sole proprietorships, while small businesses generally register as LLCs or corporations. Sole proprietors are taxed according to the owner’s tax rate, and business-related expenses can be deducted on a personal tax return. Single-member LLCs are taxed similarly; however, things get different with larger LLCs and corporate tax rates. Understanding these differences can help micro business owners choose the best legal designation when starting their own business.

Advantages Of A Micro Business

Many aspiring entrepreneurs are drawn to the idea of a micro business because they can provide supplemental income; in some cases, they can even replace your full-time job. There are some other advantages of a micro businesses to consider:

Flexibility: Micro businesses can offer owners a degree of flexibility that is not typically associated with an office job. Owners can set their working hours and decide how many projects or clients to take on.

Independence: Do you prefer to work alone? Starting your own business is a perfect opportunity to create the company of your dreams. Many people enjoy the foundational steps of starting a business as they have full creative control over the direction of the company.

Market Opportunity: Many micro businesses offer a specialized product or skill, such as graphic design work or even homemade bread. By offering a unique service, you can build a consistent network of clients. Eventually, this can help you expand your business and increase your overall profits.

Low Business Costs: Micro business owners also enjoy lower overhead expenses when compared to larger business structures. There is often not a designated office space to pay for (as many micro business owners work from home), and there are fewer employees on the payroll.

Disadvantages Of A Micro Business

There are a few disadvantages of micro businesses to consider before starting your own. Most notably, micro businesses require a high level of involvement from owners. Here are a few things to think about before starting a micro business:

High Risk: Your success as a micro business owner will depend entirely on your ability to market yourself and your product to clients over time. This could result in busy spells or periods without a lot of work. It can be risky to quit your full-time job to start a micro business for this reason.

Lack Of Support: The work of a micro business often demands diverse skill sets from everyone involved. If you are the sole employee, you will be directly responsible for marketing, financing, selling, and managing any other aspects of the business.

High Level Of Involvement: There is a lot of responsibility necessary to be a successful micro business owner. Oftentimes, you will be the only person holding yourself accountable for work and time management. Micro business owners need to be self-starters.

Difficult To Attract Talent: After you spend time building your micro business the way you want, it can be challenging to find the right employees to help with the job. Some business owners may struggle to attract talented workers who fit the hiring budget, while others struggle with relinquishing control over certain responsibilities.

How To Start A Micro Business In 6 Steps

Do you have a product or service in mind that you think you could effectively market? If you are interested in creating your own micro business, here are a few steps you can follow to get started:

Create Your Mission & Vision Statement

Plan Business Operations

Assess Financials

Create A Marketing Plan

Research & Test Your Product

File Your LLC

1. Create Your Mission & Vision Statement

With your product or service in mind, you first need to establish your business’ purpose. What are your core values and business goals? Think through your intentions when starting this business and document them appropriately. Not only can this help you get focused, but later on can help you attract investors and clientele.

2. Plan Business Operations

The next thing you need to work on is planning business operations. What services will you provide, and how much will they cost? Write out your products and a general business model you want to follow. Identify what type of resources you need to get started and set a schedule for yourself. This is also a great time to get organized. Consider the following resources as you plan out business operations:

Project Management Software: Look up software that will help you track your projects and business progress. Examples include Asana, Trello, and Kissflow Project.

Online Calendars: Organization is key, especially in the early stages of starting a business. Consider using Google Calendars, Doodle, or Calendly.

Accounting Programs: Before you fully plan out your finances, research a few programs that might help you with a business budget. A few popular options are Scoro, QuickBooks, or BillQuick.

3. Assess Financials

Before you begin searching for your first customer, it is important to establish a baseline for your business finances. Look at how much money you need to cover upstart costs and plan out a budget with your ideal revenue numbers. This will help you identify how many projects you need to take on to begin turning a profit. Assessing your finances is also crucial if you want to apply for a micro business loan, as lenders will request this information upfront.

4. Create A Marketing Plan

Now it’s time to develop a marketing strategy and begin planning how you will attract customers. This step will look different depending on your industry, but it is crucial to seek low-cost options when starting out. Research similar businesses for ideas to help you get started and write out your target audience. Again, marketing will vary from industry to industry, but here are a few places to help you get started:

Build a Business Website: Almost every micro business owner could benefit from a dedicated website. This will help clients gather information about your services and brand. Several platforms offer templates and monthly plans for small business owners. Review these options and customize a website based on your business.

Start Networking: Networking is also crucial for small business owners. Reach out to people in your area and let them know what services you provide. You can also join local business groups, Facebook pages, and more to build connections with other business owners. Word-of-mouth marketing is key for micro businesses, so always remember the importance of networking.

Establish Social Media Accounts: Create a social media page on every platform that might be relevant to your business. In today’s world, social media is often the first place prospective clients go to learn more about a business. It’s okay if you don’t have a regular posting schedule yet, but make sure your contact information and business services are clear.

5. Research & Test Your Product

While you already have a good idea of your product or service, there is no harm in extra market research. Fine-tune your offerings by researching similar businesses. Also, don’t be afraid to ask for feedback from early customers about your website or marketing strategies. These insights could be gathered in a quick online survey or through an exit phone call after you are done working with them. Use this information to improve your offerings, and don’t be afraid to test out new ideas.

6. File Your LLC

After establishing the foundation of your micro business, formalize your hard work and file for an LLC in your state. This process will look a little different depending on where you live. Still, for the most part, it will involve filing articles of organization along with an application fee to your state’s corporate filing office. If you are interested in learning more about the benefits of an LLC , be sure to read this guide.

What Challenges Do Micro Businesses Face?

While micro businesses enjoy many unique advantages, they also face some challenges. Here are the top three challenges to be aware of before you launch your micro business.

Securing Financing

Because micro businesses operate on a small financial scale, securing business financing can be tricky. Lenders often view small operations as unstable and unable to handle debt.

If you own a micro business and require funding, look to online lenders. While you may not qualify for a traditional small business loan, you can find working capital through micro loans, even if you have a low credit score .

Attracting Customers

Because you’re working with a smaller budget, you may have a harder time attracting potential customers. Small businesses often have a budget dedicated to marketing, advertising, and networking, while micro businesses don’t.

Luckily, there are plenty of digital marketing tools that are free or inexpensive to implement. In this digital age, commit to building a presence on at least one social media platform. Instagram and Facebook are great places to start. YOu may also consider expanding to Twitter, Pinterest, YouTube, TikTok, or LinkedIn, depending on your bandwidth and target market.

Don’t forget to tap into your personal and local networks. Word-of-mouth marketing is crucial for micro businesses. Send emails from your business email account to your contacts to announce your business and the products or services you offer. Encourage supporters to follow your business’s social media accounts and subscribe to your newsletter.

Multitasking

Although a business made up of 10 employees is still considered a micro business, most are owned and operated by one person. A solopreneur either cannot or will not hire employees, meaning that they wear many hats. They are on their own when it comes to marketing, taxes, operations, and sales.

Some of these tasks can be outsourced to subcontractors, while others can be streamlined using digital tools. Expect to spend a significant amount of time “on” your business rather than “in” your business.

Examples of Micro Businesses

Here are some examples of common micro businesses:

Freelancers: Are you a writer, editor, merchandiser, or consultant? You can build your career as a freelancer or independent contractor. You would take on clients as a micro business rather than as an employee of a company. This means that you would work independently and be in charge of your own business operations.

Event Specialists: Event designers, wedding florists, makeup artists, and musicians are a few examples of independent contractors that work in the event industry. These are micro businesses that market themselves independently to clients for their event needs.

Food truck owners: Food vendors using a food truck or cart typically employ just one or two employees to take food orders, prepare food, and handle point-of-sale transactions.

General Labor: Plumbers, carpenters, and independent mechanics are all examples of micro businesses in the general labor industry. These independent contractors may work with one or two employees who handle the administrative aspect of their micro businesses.

Coaches: The coaching industry is booming right now. You can find a coach for anything, such as relationships, health and wellness, or business. The majority of coaches are solopreneurs who spend just as much time marketing themselves as they do coaching.

How To Get A Microloan For Your Business

As you walk through the steps of creating a micro business, you may notice you need extra capital to get started. There are two main ways to get a microloan for your business. First, you can apply for a loan with a traditional financial institution. Research which banks in your area offer micro loans for small business owners. Look up loan amounts and interest rates before meeting with a potential lender. Be aware that not all banks provide loans in such small amounts, and you may need to seek out multiple options.

The other main option for receiving a microloan is to apply with the Small Business Administration (SBA). The SBA works with intermediary lenders to provide loans up to $50,000 for micro business owners. Find out if there is an SBA office in your area by searching online, or go ahead and research a list of potential intermediary lenders to work with. This will provide you with more information on the application process and potential loan details.

Microlending In Certain Areas

Small businesses are crucial to many local economies, and because of this, private lenders are often available to help micro business owners get started. Private lenders may be able to accommodate special circumstances for business owners in traditionally underserved communities. The U.S. Chamber of Commerce website has an excellent list of resources available for private microloans. These loans could help cover payroll costs, marketing campaigns, seasonal expenses, and supplies.

Micro Businesses Help From Your State

In addition to federal help, there are also state-specific programs that may be available to you. These could provide loans for upstart costs, inventory, and more as you create your micro business. For example, the California Infrastructure and Economic Development Bank offers both jump-start loans and financial relief programs for micro business owners. Look up micro loans in your state online to see what programs you may be eligible for, then compare interest rates and loan terms to find the right lender for your needs.

Starting your own business can be extremely rewarding. Not only can this accomplishment give you a sense of pride, but it can also help you establish financial security. That being said, owning a successful business will take time and dedication on your part. Research the numerous resources available to help you get started and begin marketing your unique product or service today. You may find that owning your own micro business turns into a fulfilling, lifelong career.

Click the banner below to take a 90-minute online training class and get started learning how to invest in today’s real estate market!

NAR Settlement: What It Means For Buyers And Sellers

What is the assessed value of a property, what is bright mls a guide for agents and investors, how to pass a 4 point home inspection, defeasance clause in real estate explained, what is the federal funds rate a guide for real estate investors.

Everything that you need to know to start your own business. From business ideas to researching the competition.

Practical and real-world advice on how to run your business — from managing employees to keeping the books

Our best expert advice on how to grow your business — from attracting new customers to keeping existing customers happy and having the capital to do it.

Entrepreneurs and industry leaders share their best advice on how to take your company to the next level.

• Business Ideas
• Human Resources
• Business Financing
• Growth Studio
• Ask the Board

Looking for your local chamber?

Interested in partnering with us?

Start » startup, micro businesses : what are they and how do you start one.

Discover the differences between small and micro businesses, and explore practical tips for starting and running a successful compact business.

Small businesses versus micro businesses: What’s the difference, you may ask. While all micro businesses are small businesses, making up 99.9% of all U.S. organizations, not all small businesses are micro businesses. However, these compact operations are instrumental in driving the economy, delivering specialized services to niche markets, and opening doors for budding entrepreneurs.

What are micro businesses?

Micro businesses are found nationwide, ranging from freelance professionals to mom-and-pop shops. Defined by the U.S. Small Business Administration as any company with nine or fewer employees, these small-scale operations typically provide specialized services or cater to specific market segments. Micro businesses generate less than $250,000 in annual revenue and require little startup capital to establish, making them accessible for those just entering the industry.

The advantages of having a micro business

Operating within specific niches, micro businesses offer unique services or products, serving as a significant differentiator for those aiming to establish a market presence. Plus, their low overhead costs result in reduced expenses for things like office space, staffing, and business operations.

The small scale of micro businesses also allows for easier management without needing external intervention. For example, if a business needs to adjust its operations due to underperformance, there's no need for a lengthy approval process through an internal hierarchy; businesses can make adjustments promptly. This flexibility can be freeing for employees, who can typically set their own schedules and working conditions.

[Read more: Why Hot Startups Like Pura Vida and Cure Hydration Are Getting Big Results From Micro-Influencers ]

The challenges

Despite needing less capital than larger enterprises, micro businesses often struggle to secure funding due to their limited history or brand recognition, with entrepreneurs frequently resorting to risky self-financing. Funding problems can impact consumers too, as smaller entities often struggle to set competitive prices and adapt to fluctuating demand.

Another hurdle for micro businesses is attracting customers due to brand recognition issues. While carving out a niche can appeal to consumers, micro businesses often operate with limited resources, potentially leaving them with too few staff members or needing more technological expertise to attract new customers as effectively as their larger counterparts.

Types of micro businesses

Micro businesses are prevalent across the country and vary widely, ranging from e-commerce storefronts and startups to independent contractors, retailers, and street vendors. These businesses can function from a commercial location, a retail storefront, or be home-based.

Qualifying as a micro business largely depends on staff size, encompassing many private practices including doctors' offices, financial professionals, and law firms. Local small businesses also qualify, as do retail businesses operating on online platforms with low overhead and few employees.

Operating within specific niches, micro businesses offer unique services or products, serving as a significant differentiator for those aiming to establish a market presence.

How to start a micro business

While starting a micro business is a much smaller undertaking than establishing a larger corporation, it still requires ample planning to be successful. Here are some tips to get you started.

Choose an industry

Begin developing your business idea by considering the areas you excel in. If you possess specialized skills or have a profitable hobby, it can steer you toward an industry where you're likely to thrive. Research the industry to confirm the need for your business, as well as a potential customer base, and ensure it suits your lifestyle.

Develop a business plan

Draft a business plan that encompasses details ranging from your business model to financial projections to your intended hiring strategies. Include information about your target market and define your marketing plan, along with goals you’d like to achieve and a corresponding timeline.

[Read more: Writing a Business Plan? Here’s How to Do It, Step by Step ]

Register your business

For most businesses, registering with local and state authorities is essential in order to obtain a state tax ID and Employer Identification Number (EIN). An EIN is necessary for various operations, including opening business bank accounts, filing taxes, or processing employee payroll.

Research and test your product

Conduct studies to test your product or service in your target market and determine areas of improvement. Gather feedback, whether it's from a small sampling of people during a soft launch or a wide range encompassing family and friends, focus groups, and other local vendors and businesses, to refine your product to be market-ready.

Secure financing

A financial plan is essential to getting your business off the ground. Secure capital through microloans and credit from banks, or explore funding options from external lenders or investors who believe in and support your business idea.

Attract customers

Micro businesses need a comprehensive marketing strategy to attract customers. Investigate your target market and competitors to guarantee that your business effectively communicates its value proposition. Employ marketing techniques, such as social media promotion and paid advertisements, and develop a website that reflects your business's core values to reach your audience.

[Read more: A New Selling Strategy? How to Create Virtual Micro-Experiences ]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Applications are open for the CO—100! Now is your chance to join an exclusive group of outstanding small businesses. Share your story with us — apply today .

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here .

Subscribe to our newsletter, Midnight Oil

Expert business advice, news, and trends, delivered weekly

By signing up you agree to the CO— Privacy Policy. You can opt out anytime.

For more startup tips

How to change your ein, or how to fix an incorrect ein, micro-business vs. startup: what’s the difference, micro businesses: what are they and how do you start one.

By continuing on our website, you agree to our use of cookies for statistical and personalisation purposes. Know More

Welcome to CO—

Designed for business owners, CO— is a site that connects like minds and delivers actionable insights for next-level growth.

U.S. Chamber of Commerce 1615 H Street, NW Washington, DC 20062

Social links

Looking for local chamber, stay in touch.

Nice to meet you.

Enter your email to receive our weekly  G2 Tea newsletter  with the hottest marketing news, trends, and expert opinions.

What Is a Micro Business? Build One From the Ground Up

March 28, 2024

by Sagar Joshi

In this post

Micro business examples, micro business vs. small business.

• Micropreneur vs. entrepreneur

Benefits of a micro business

Challenges of operating a micro business, how to start a micro business: a step-by-step guide.

Micro businesses are a subset of the small business world. They’re made up of one person or a few people who have different roles at a time. They run operations on a small scale and focus on building robust relationships with their limited customer base. Young or new professionals often start micro enterprises as they emerge into the business world. 

If you’re one of them, consider creating a guide for yourself with business plan software to secure funds from investors and set a roadmap.

What is a micro business?

A micro business, or microenterprise, is run by up to nine people who make less than $250,000 annually. They’re popular with beginner entrepreneurs because they don’t require substantial money to start and maintain operations.

A micro business costs less than $50,000 to start. It’s often a sole proprietorship with the owner running the show. Examples of micro business work include freelance writers, small e-commerce owners, consultants, and other self-employed professionals from any field. They focus on a small market and strong relationships with their customers and colleagues.

People start a micro business as a side hustle or a hobby. They might operate on their own or with the help of a small team. And although micro businesses aren’t huge, they play a significant role in the US economy and the job market.

You likely come across micro businesses almost daily without realizing it. These small operations exist in multiple forms, such as: 

• Freelancer services. Some freelancers run their businesses as sole proprietors, meaning they and their businesses are the same. This arrangement means the freelancer takes some responsibility for any company debts or obligations. To get protection, they can set up a single-member limited liability company (LLC).
• Small e-commerce businesses. Digital stores sell handmade crafts, clothes, and many other one-of-a-kind products. The owners use e-commerce platforms to easily run their online stores. 
• Small retailers. Small shops, coffee houses, or restaurants are micro businesses led by only a few people. 
• Professional services. Professionals, like lawyers, accountants, doctors, or dentists, practice privately as micro businesses. They have clinics and small offices, and these days, some run their operations digitally with virtual offices.

People use “micro business” and “small business” interchangeably without realizing that micro businesses are a subset of small business .

Small businesses have a headcount between 100 and  1500. On the contrary, micro businesses have a maximum of nine employees. This implies that all micro businesses are small businesses, but the reverse isn’t necessarily true.

Micro businesses focus on a specific niche, like technical writing, marketing consulting, or web design. 

However, small businesses usually offer a range of services and products for their target market. When it comes to loans or financing, they’re subject to various guidelines related to their size and scope. The US Small Business Administration (SBA) classifies a business as small if its revenue ranges from $1 million to over $40 million. The sizing parameter is set by The North American Industry Classification System (NAICS) codes. 

Micropreneur vs. entrepreneur 

Both micropreneurs and entrepreneurs have unlimited earning potential and flexible work schedules, but their paths diverge beyond these similarities. 

Entrepreneurs aim for rapid expansion, while micropreneurs focus on catering to their clients while making optimal operational and staffing investments. Micropreneurs opt for a more contained approach. They often work alone, unlike entrepreneurs who build big teams to scale. 

Freelance content writing or online store management are two common micro-preneurial ventures. On the other hand, entrepreneurs develop products and services meant to serve a bigger market and drive more revenue. 

You don’t need a lot of cash to start a micro business, making it an excellent option for many aspiring professionals. It also comes with flexibility. For example, a small restaurant can add new beverages or menu items more quickly than at a chain. 

Below are some notable benefits a micro business offers for their owners. 

• Niche product or skill. Micropreneurs focus on specific skills to make their product or services special, like a cupcake from Mama’s Little Bakery. This uniqueness attracts customers. 
• Flexibility. Micropreneurs can set their hours and decide how much work they want to take on. It provides complete control over what they do. 
• Smaller capital investment. Micro businesses cost much less to start and run, and they don’t have to run payrolls for big teams. 
• Adaptability. Micro businesses have a fast decision-making process, which lets them adapt to mitigate risk or take on new opportunities. 

Despite their benefits, micro-businesses bring some challenges, too. Lending institutions often view small-scale operations as less stable, and their ability to handle risk or debt is perceived as much lower than it is. This makes it difficult for micro business owners to secure loans at a decent interest rate. 

Moreover, since micro businesses operate on a small scale, they often don’t invest that much into marketing or looking into a bigger market. This limits their scope and their ability to compete against small businesses that put a lot into marketing and working on building their sales funnel . 

Lastly, micro businesses employees often end up juggling several tasks at once. It’s usually a super lean team where responsibilities overlap easily. Everyone ends up with a heavy workload, making managing sales, marketing, finance, and operations overwhelming.

Businesses address these challenges in a number of ways, including some listed here. 

• Look for online lending agencies. Micro businesses may not qualify for small business loans, but many online lenders provide working capital when urgent funding needs arise. The money can help your business through tough times, but pay attention to higher-than-average interest rates.
• Stick to low-cost marketing plans. Consider content marketing to attract potential buyers organically. You can do search engine optimization (SEO) if you’re seeking customers nearby. Build your brand on social media platforms and attract customers through social networking. 
• Delegate work to software. Look for ways you can automate simple, time-consuming tasks. Onboard project management software or Pomodoro timer to keep things organized while you do your deep work. 

You can build your micro business with these foundational steps. They’re here to help you navigate the challenges you’ll face on this path. 

1. Write a mission and vision statement 

Define your core purpose and aspirations through clear mission and vision statements. Articulate your company’s values, commitment to customers, and long-term goals. 

This document guides your business and draws in customers and investors with similar values. 

2. Plan your operations 

Break down business operations into achievable goals and milestones. Try anticipating and addressing potential challenges while planning and forecasting. Consider your location, resources, business structure, and customer needs. 

Make sure the business model is sustainable by outlining cost structures and potential revenue streams. 

3. Assess your financials 

Gather or create financial documents like balance sheets, income statements, and cash flow statements to get a clear overview of your expected performance. To secure funding, make a well-researched plan that explains your viability and profitability.

4. Create a marketing plan 

A strong marketing plan is essential, especially for micro businesses with limited resources. Understand your target market and how to serve them best. Use this research to inform your strategy and execute online marketing campaigns by using social media , email, content, and SEO . 

5. Research and test your product 

Test your product or service with potential customers before launching it. To gather feedback, create a pre-launch website, use surveys, or try direct outreach. 

This feedback helps you refine your product and service, offering a way to improve customer experience. Be ready for some rejections. They’re opportunities to learn and iterate on your offerings.

Start small, but start right 

Starting a micro business is a journey of learning, growth, and opportunities. Understand your capacity and take on projects and work you can deliver. Otherwise, you might get overworked when you lack resources or assistance. With a clear mission and vision, you can live your tiny, entrepreneurial dreams. 

Learn more about the Ansoff matrix to plan carefully for your growth and the risks that lie on their way. 

No business is too small

Find the right business plan software to create, manage, and share plans for new companies and investments.

Sagar Joshi is a former content marketing specialist at G2 in India. He is an engineer with a keen interest in data analytics and cybersecurity. He writes about topics related to them. You can find him reading books, learning a new language, or playing pool in his free time.

Recommended Articles

Contributor Network

How to Conduct Small Business Financial Planning Effectively

As a small business owner, financial planning can feel overwhelming.

by Joanne Camarce

What Is Bookkeeping? (+ How to Do It)

One of the most important aspects of running a business is keeping track of company finances.

by Michael Gigante

Creating the Perfect Project Plan Template

Having a plan helps you reach your goals, stay under budget, and meet your deadlines.

by Grace Pinegar

Never miss a post.

Subscribe to keep your fingers on the tech pulse.

By submitting this form, you are agreeing to receive marketing communications from G2.

bizee powered by incfile

• How It Works
• Resource Center
• Form an LLC
• Form a C Corporation
• Form an S Corporation
• Form a Non Profit
• Company Name Change
• Registered Agent
• Virtual Address
• Certificate of Good Standing
• ‘Doing Business As’ Name (DBA)
• Foreign Qualifcation
• Change of Registered Agent
• Business License or Permit
• Submit an Annual Report
• Get a Free Tax Consultation
• Get a Trademark
• Order a Corporate / LLC Kit
• Finances and Accounting
• Dissolve Your Company
• Get Reinstated
• Compare Business Entities
• Business Name Generator
• Business Industry Guides
• Business Name Search Tool
• Business Startup Guide
• What is an LLC?
• LLC Information By State
• Corporation Information By State
• State Filing Times
• Do I Need a Business License?
• Free Business Tools
• What To Do After Forming Your LLC
• Financial Management
• Growth Tips
• Get Bizee Podcast
• Why Choose Us
• Testimonials
• Incfile is now Bizee
• Bizee vs. LegalZoom
• Visit the Blog
• New Clients

Small Business Not for You? Here's How to Create a Micro Business Plan

Please note: This post contains affiliate links and we may receive a commission if you make a purchase using these links.

TABLE OF CONTENTS

Get the guide: How to Start a Micro Business

Do good things really come in small packages? If micro businesses are anything to judge by, then the answer is "no — they come in tiny ones." With a micro business, you can sidestep many of the headaches that come with small business ownership while still pursuing your entrepreneurial goals and running your own business.

So if you're ready to join the micro side, stick around to find out how to create a micro business plan.

Put your brilliant business ideas into action with Bizee’s Free DIY Course

What is a micro business.

By now, you've probably guessed that a micro business is even smaller than a small business. But what is a micro business exactly ?

In truth, it depends on who you ask. Some of the various definitions include:

• Businesses started with less than $50,000. While this makes sense at first glance, consider that Hewlett-Packard was founded with just $538 in 1939 or about $10,000 in today's money. The tech giant now employs over 50,000 people and earns tens of billions of dollars per year, and you'd be hard-pressed to find anyone who considers it a micro business. So, this definition has too much room for error.
• Businesses that earn less than $250,000 per year. Again, this definition seems sound at first. But when you remember that heavily investor-funded companies like Uber sometimes exist for many years before finally turning a profit , its practical use becomes much murkier.
• Business with less than 10 employees. OK, now we're getting somewhere. Even on Forbes ' annual Small Giants roundup , a list of 25 outstanding small businesses, it's difficult to find companies with less than 20 employees, let alone 10. As such, this is one of the most solid definitions so far, and it also happens to be the one used by the U.S. Small Business Administration (SBA) .

So which definition is the best one? There is no single agreed-upon answer, but for the sake of simplicity, we'll use the same one as the SBA and say that a micro business is any with less than 10 employees . If the business was started with less than $50,000 and/or earns less than $250,000 per year, that just contributes to its micro business status.

What are examples of micro businesses? In short, the sky's the limit. That's because any and every business with less than 10 employees can be considered a micro business, including:

• A brick-and-mortar retail shop with one owner and three sales associates
• A tax consultation company owned by two people who occasionally meet with clients
• A freelance writing business consisting of one person who works exclusively from home
• A real estate company with one owner and five employees who all work out of the same office

Those are just a few of many possible examples, but suffice it to say that there are myriad micro businesses across every industry and niche.

Micro Businesses by the Numbers

You've probably heard that small businesses are the backbone of the economy, and that's certainly accurate. But if we're getting really specific, the truth is that micro businesses form the foundation of the U.S.'s wealth.

As the SBA explained, they're the most common type of employer firm. And in 2016, the country's 3.8 million micro business employers made up nearly 75 percent of all private-sector employers:

And remember, those statistics don't even account for micro businesses that don't have any employees, i.e., those consisting only of one person. The U.S. Census Bureau pointed out that in that same year, only about 24 percent of the country's establishments had paid employees, meaning that 75 percent don't have any employees at all.

In other words, the majority of the U.S.'s businesses are micro businesses whose only employee is their owner. So if you're more interested in starting a micro business than you are in starting a small business destined for growth, you're far from being the only one.

How to Create a Micro Business Plan

So you want to start your own micro business, you're brimming with entrepreneurial energy and you're ready to go. Now, it's time to start planning. But what is a micro business plan?

In many regards, a micro business plan is very similar to a small business plan in that it:

• Provides a roadmap for starting and managing your business
• Plans for up to five years in the future
• Details what your business will do, how it will earn money and who it will sell to

Where micro business plans differ from other business plans, however, is in their scope. For example, all of these elements can be included in standard business plans but may be unnecessary in micro business plans:

• Overview of management structure/corporate hierarchy: Since most micro businesses only employ their owner, there's no need to dedicate a section to detailing the business's leaders and key staff members. And even if a micro business does have employees, it will have so few that this section can remain short and sweet.
• Funding requests: Larger businesses may need to include funding requests or investor information in their business plan. But with a micro business, your startup costs can likely be covered by your own funds (seriously — there are many businesses you can start for under $1,000 ).
• Growth goals and scalability: For businesses whose ultimate goal is to achieve as much growth as possible, it's important to detail how much they want to grow, when they want to achieve that growth and how their business will scale. But for micro businesses that are more focused on self-sufficiency than scalability, this isn't typically a concern.

But the question still remains, how do you write a mini business plan of your own? While there is no one right way to create a business plan, your micro business plan could look something like this:

• Business overview: A brief description of what your business will do, as well as your broader vision and goal.
• Market summary: A breakdown of your target audience, the value you're offering to them, your main competitors and your competitive edge.
• Marketing strategy: An outline of the marketing channels you'll use to find and connect with customers (this can include social media, content marketing, email marketing and the like), as well as the strategies you'll use to make the most of those channels (such as by posting one new blog post per week and one new Facebook post per day).
• Expected costs: An estimation of your business's costs, including those that you'll only have to pay once (such as state fees for filing an LLC ) and those that you'll have to pay on a regular basis (such as software subscriptions).
• Expected revenue: An estimation of how much money your business will earn from each sale and how frequently you expect sales to occur. Also note how many sales you'll need to make (and how often) in order to generate a profit.
• Key objectives: A summary of your next steps and when you want them to be completed. For instance, form an LLC within one month, make five sales within three months and break-even within six months.

In the end, what's most important is that your micro business plan helps you form a clearer idea of what you want your business to do and how you plan to do it. You don't need a 10-page essay in order to succeed — just as with micro businesses themselves, bigger isn't necessarily better.

Creating a business plan is just one piece of the puzzle, though. If you want a guide that walks you through every step of starting a micro business on your own, Bizee's DIY Business Course can help.

Carrie Buchholz-Powers

Carrie Buchholz-Powers is a Colorado-based writer who’s been creating content since 2013. From digital marketing to ecommerce to land conservation, she has experience in a wide range of fields and loves learning about them all. Carrie is fond of history, animals and beauty in equal measure. In her free time, she enjoys knitting, playing video games and exploring Colorado's prairies and mountains with her husband.

like what you’re reading?

Get Fresh Monthly Tips to Start & Grow Your LLC

Related Articles

Follow Bizee on:

• Search Search Please fill out this field.
• Building Your Business

What Is a Microbusiness?

Definition and Examples of Microbusiness

• How a Microbusiness Works

State Aid for Microbusinesses

 jacoblund / Getty Images

A microbusiness is a subcategory of a small business, defined specifically by its small number of employees, annual revenue, and startup costs.

Key Takeaways

• A microbusiness is a type of small business that has under 10 employees (according to the SBA), meets specific annual revenue criteria set by state authorities, and has small startup needs.
• Identifying an organization as a microbusiness is key to sustaining growth and applying for resources and loans particular to microbusiness owners. 

Loans from the microloan program can be used to fund working capital, inventory or supplies, furniture or fixtures, or lastly, machinery and equipment. 

A microbusiness is an entity defined by its small number of employees, annual revenue, and startup costs . The U.S. Census Bureau and the Small Business Administration (SBA) define microbusinesses as companies with fewer than 10 employees. However, there is technically no universal definition, and each state tends to set its own standards for the size and scope of a microbusiness.

Examples of state regulation include Connecticut, which further identifies microbusinesses as making under $500,000 in annual revenue. California, on the other hand, defines a microbusiness as one with annual gross revenue of $2.5 million or less over the three previous years, or a business with 25 or fewer employees.

You can think of a microbusiness as a subset of a small business, though it operates and has very different challenges than a small business does. A microbusiness owner needs to create operations, capital needs, and scaling measures that are specific to a microbusiness entity. 

A microbusiness is often run by a sole proprietor , meaning the owner must spread themselves across various roles or departments to keep the business functioning. Further, dollars to invest in marketing and growing a customer base are more limited with a microbusiness, pushing an owner to get creative when it comes to building an active clientele.

Microbusinesses often fall within the industries of retail, construction, and health care. Many independently owned creative shops fall within this scope too, such as businesses on Etsy. According to 2017 data, microbusiness employers account for 74.8% of all private-sector employers.

Supporting microbusinesses in local economies is crucial to creating employment opportunities and building a sense of community in local neighborhoods. Selecting a solopreneur owned cafe over a big-brand coffee shop can make a difference for economic and employment diversity. 

• Alternate name: Microenterprise

How a Microbusiness Works 

A microbusiness is one of the smallest business entities, categorized as having much lesser annual revenue and employees than the average small business. 

To maintain status as a microbusiness according to the SBA, a company must:

• Employ one to nine employees, including the owner
• Make below specific annual revenue numbers set by state and local governments, such as Vermont’s regulation of $25,000 in annual revenue
• Have small startup costs and capital needs, aligned with the small scale operations necessary to keep the business running

As mentioned, microbusinesses often operate with a small team and slim resources. Keeping a business operational could mean a need for expansion, and expansion takes additional capital to ensure success. To lump microbusinesses into the same category as small businesses would create unfair challenges and competition for microbusiness owners seeking funding opportunities.

Just like a small business has specific loan programs available to help them thrive, so do microbusinesses. The SBA offers a microloan program that provides loans of up to $50,000 to help businesses and certain nonprofit child care centers startup and grow. The average microloan, though, is generally about $13,000.

The SBA provides funds to specifically chosen intermediary lenders, such as nonprofit organizations with lending experience, that then distribute the loans to eligible borrowers. Each lender has its own credit and lending requirements, and they generally require collateral and a personal guarantee of the business owner.

It can be very competitive for small businesses, including microbusinesses, to receive small business grants from the SBA. As a result, there are many state and local programs that provide aid for microbusinesses too.

Vermont, for example, offers a Micro Business Development Program to companies that have less than five employees and generate less than $25,000 in annual revenue. Through this program and others like it, microbusiness owners have the opportunity to:

• Network with other entrepreneurs
• Take relevant courses on topics like building your credit score and record-keeping
• Gain access to technology resources
• Work one-on-one with an experienced business counselor

Also keep in mind that many microbusinesses operate as sole proprietorships, not going as far to register as an LLC or corporation as many small businesses do. As a result, a microbusiness owner is taxed according to the tax rate on their personal tax return , as opposed to filing business taxes separately.

U.S. Small Business Administration Office of Advocacy. " Small Business Facts: The Role of Microbusiness Employers in the Economy ." Accessed Nov. 19, 2021.

Connecticut General Assembly. " Statutory Definitions of Small Businesses and Microenterprises. " Accessed Nov. 19, 2021.

California State Legislature. " Government Code - GOV Title 2. Government of the State of California [8000 - 22980] (Title 2 Enacted by Stats. 1943, Ch. 134.) Division 3. Executive Department [11000 - 15986] (Division 3 Added by Stats. 1945, Ch. 111.) Part 5.5. Department of General Services [14600 - 14985.11] (Part 5.5 added by Stats. 1965, Ch. 371.) Chapter 6.5. Small Business Procurement and Contract Act [14835 - 14847] (Chapter 6.5 Added by Stats. 1973, Ch. 1198.) Article 1. General Provisions [14835 - 14843] (Article 1 Heading Added by Stats. 1998, Ch. 917, Sec. 1.) 14837 ." Accessed Nov. 19, 2021.

 Vermont Agency for Human Services. " Micro Business Development Program ." Accessed Nov. 19, 2021.

U.S. Small Business Administration. " Loans and Grants Microloan Program ." Accessed Nov. 19, 2021.

Vermont Agency of Human Services Department for Children and Families. " Micro Business Development Program (MBDP) ." Accessed Nov. 19, 2021.

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

Published: June 07, 2023

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

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

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

What is a business plan?

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

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

What is a business plan used for?

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

Business Plan Template [ Download Now ]

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

Purposes of a Business Plan

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

1. Securing financing from investors.

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

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

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

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

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

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

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

Free Business Plan Template

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

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

You're all set!

Click this link to access this resource at any time.

Free Business Plan [Template]

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

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

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

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

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

4. Getting an A in your business class.

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

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

What does a business plan need to include?

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

1. Business Plan Subtitle

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

2. Executive Summary

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

3. Company Description

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

4. The Business Opportunity

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

5. Competitive Analysis

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

6. Target Market

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

7. Marketing Plan

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

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

8. Financial Summary

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

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

10. Funding Requirements

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

Types of Business Plans

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

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

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

1. Startup Business Plan

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

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

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

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

2. Feasibility Business Plan

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

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

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

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

3. Internal Business Plan

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

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

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

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

4. Strategic Business Plan

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

These types of business plans may include:

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

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

5. Business Acquisition Plan

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

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

A business plan for an existing company will explain:

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

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

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

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

6. Business Repositioning Plan

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

This plan will:

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

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

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

7. Expansion or Growth Business Plan

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

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

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

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

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

Getting Started With Your Business Plan

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

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

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

Don't forget to share this post!

Related articles.

How to Write an Executive Summary Execs Can't Ignore [+ 5 Top Examples]

20 Free & Paid Small Business Tools for Any Budget

24 of My Favorite Sample Business Plans & Examples For Your Inspiration

Maximizing Your Social Media Strategy: The Top Aggregator Tools to Use

The Content Aggregator Guide for 2024

7 Gantt Chart Examples You'll Want to Copy [+ 5 Steps to Make One]

The 8 Best Free Flowchart Templates [+ Examples]

16 Best Screen Recorders to Use for Collaboration

The 25 Best Google Chrome Extensions for SEO

Professional Invoice Design: 28 Samples & Templates to Inspire You

2 Essential Templates For Starting Your Business

Marketing software that helps you drive revenue, save time and resources, and measure and optimize your investments — all on one easy-to-use platform

• Credit cards
• View all credit cards
• Banking guide
• Loans guide
• Insurance guide
• Personal finance
• View all personal finance
• Small business
• Small business guide
• View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

How to Write a Business Plan, Step by Step

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

What is a business plan?

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

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

ZenBusiness

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

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

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

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

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

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

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

Your business’s registered name.

Address of your business location .

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

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

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

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

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

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

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

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

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

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

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

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

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

Licenses and permits.

Equipment leases.

Bank statements.

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

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

How much do you need?

with Fundera by NerdWallet

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

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

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

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

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

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

On a similar note...

Find small-business financing

Compare multiple lenders that fit your business

VIEW BY TOPIC

• Budgeting and Financial
• Finding and Retaining Employees
• How to close more sales
• Keys to Business Success
• Latest News

Marketing Your Business

• Recession Proof Your Business
• Results and Case Studies
• Testimonials
• Time Management Strategies
• Trending Business Growth Article
• Finding Customers
• Business Systems
• Managing Employees
• Managing Money

Get Weekly Coaching Tip

Related posts, real estate portfolios: landlords consider office franchising, shipping oversized loads: 5 common business challenges, a small business guide to business phone systems, how to handle leadership stress throughout the day, serp rankings became easy: top 5 qualities of a seo agency, how to become better at writing product advertisements, enhancing customer insights with advanced data append services, how to win more deals with proposal management, mobile app and store development on shopify, the 5 best crm for digital marketing agency, user-generated content (ugc) and its role in marketing, ready to grow your business fast.

Here’s How I Grew Five Businesses, and Eventually Sold One to a Fortune 500 Company.

MICRO BUSINESSES

Micro businesses operate similarly to small businesses but with some differences in terms of funding and expansion. However, they can be a profitable venture to pursue. In this article, we will look at microbusinesses and all the details required to start and run one. So, let’s get started.

What Is a Micro business?

A micro business is a small enterprise that typically has fewer than five employees. It is usually owned and operated by a single person or family with limited capital investment. Micro businesses provide goods and services that meet the needs of their local communities and often specialize in niche markets. They are frequently based in home offices or storefronts, using innovative technologies and methods to deliver quality products and services.

Micro businesses are commonly powered by entrepreneurs who would rather take their own path than work in a large corporation. Having these small business owners, drives creativity and new ideas while bringing helpful products and services to smaller areas. By staying flexible and agile, micro businesses are able to adapt to changing market conditions and customer needs quickly. They also offer consumers greater choice, as well as the opportunity to shop locally and support their own community.

The success of a micro business depends on its owner’s ability to identify potential opportunities within the local market, build relationships with customers, manage cash flow effectively, and develop long-term strategies for growth and sustainability.

With careful planning, hard work, and determination, a micro business can be an effective way to create financial stability and pursue personal passions.

In today’s digital world, it is also possible to launch a successful online micro business with relatively low startup costs. By utilizing various digital platforms and tools , entrepreneurs can create robust ecommerce operations that have the potential to reach a global customer base. This is an attractive option for many people who wish to maintain a certain degree of flexibility and autonomy in their business endeavors.

No matter what type of micro business you start, it is important to remember that success does not happen overnight. It requires hard work, dedication, and resilience. With the right plan in place and a positive attitude, you can create a successful small business that will bring financial stability and personal satisfaction.

How Does a Microbusiness Work? 

A micro business is a small-scale business that typically consists of one to five employees or less. It usually requires minimal upfront investment, such as office space, equipment and supplies.

Micro businesses operate in a similar fashion to much larger businesses with regards to:

•         Deciding on a legal business structure, e.g., LLC, corporation, or partnership
•         Structuring financial, management, marketing, and operations
•         Getting business permits and licenses

Taxes for micro businesses largely depend on the formal business legal structure used – sole proprietorship, corporation, partnership, or LLC. These taxes may include:

•         Income taxes
•         Payroll taxes
•         Sales taxes
•         Property taxes etc.

Here are the main components of how a micro business works:

– Establishing the Business : This involves researching the target market, developing a business plan , registering the business, obtaining any necessary permits and licenses, and choosing the appropriate legal structure.

– Financing : Microbusinesses typically rely on personal funds or small loans to cover start-up expenses.

– Supplies & Equipment : Different types of businesses require different supplies and equipment. Research into what is required to run the business should be conducted prior to purchasing anything.

– Marketing : This is a key component of any successful microbusiness. It involves strategizing and implementing an effective plan to reach potential customers.

– Operations : Operations are the day-to-day activities that maintain the business, such as accounting and record keeping, customer service, and employee management.

– Expansion : Once the business is established and running smoothly, it may be time to consider expansion options. This could include additional locations or products/services.

Entrepreneurs can create a successful small business by understanding how a micro business works and applying the necessary steps. With hard work and dedication, microbusinesses can become the backbone of the economy.

Micro Businesses vs. Small Businesses

Small businesses and micro businesses might appear to be interchangeable, but they actually aren’t. Micro businesses can more accurately be defined as a small subset of the term “small business.”

Small businesses, like micro businesses, don’t have a standard definition across the board, as the definition varies among different industries. For example, in the manufacturing industry, a small business includes less than or equal to 500 employees. Simultaneously, in the retail and service domain, the average annual revenue should be less than or equal to $6 million. SBA standards allow for small businesses to have easier access to loans and government contracts than micro businesses.

State Intervention Programs for Micro businesses

Like small businesses, micro businesses may benefit from intervention (aid) programs from the government; the degree of such intervention may vary from region to region.

For example, there is a Micro Business Development Program for low-to-moderate-income start-ups to help such micro businesses start and grow in Vermont. This aid covers networking, seminars and workshops, counseling, and networking for the micro business.

Mecklenburg County, Pennsylvania also has a micro businesses aid structure set up with financial support of up to $10,000 to help qualifying businesses navigate through an economic slump.

Consult with your local government structure for specific loan and aid programs for micro businesses.

Types of Micro Businesses

Micro businesses are typically small-scale operations that can be run by a single person or a group of people. Some common types of micro businesses include home-based businesses, freelance services, and consulting firms.

Home-based businesses offer convenience as they enable entrepreneurs to work from the comfort of their own homes. This type of business usually involves products or services that do not require a lot of overhead expenses and can be managed with minimal resources. Examples of home-based businesses include online stores, pet sitting services, and tutoring.

Freelance services are another type of micro business. Freelancers typically work on a contract basis for different clients and provide specialized services such as writing, graphic design, web development, and data entry.

This type of business is ideal for those who want to work on their own terms and have the flexibility to choose the projects they want to work on.

Consulting firms are also considered micro businesses. They provide advice and guidance to companies on a variety of different topics, such as marketing, finance, and operations. Consulting firms can also help businesses develop strategies for growth and success.

No matter what type of micro business you choose to pursue, it is important to understand the basics of running a business and know how to effectively manage your time , resources, and finances. With the right skills and dedication, any micro business can be successful.

These are just a few of the many types of micro businesses available to entrepreneurs. There are countless options, so it is important to do research and find the right fit for you. With dedication and hard work, any micro business can be successful.

Pros and Cons of a Micro business

Like any other venture, micro businesses have advantages and disadvantages.

Let’s explore some of the most significant advantages of running a micro business.

1. There is room for specialization in a specific niche

It is a common trend for businesses to start out trying to supply various goods and services. They start out with extensive teams and anticipate and invest hefty sums of money. Only with time do they start realizing which specific aspects of the business are sustainable and which should be suspended. The end result to this a trimming of the unnecessary workforce and more efficient operations

Some other companies take a different route to those mentioned earlier, starting out with a niche and quickly expanding the business to a more significant market only to end up with very little interest in the specific goods/services rendered. Of course, such start-ups could have been better served with a smaller area focus like a community.

Now, these are two polar ends of common business scenarios, and micro businesses can allow you to have the best of both worlds. A Micro business allows for a great deal of specialization in the market and remains profitable as the market expands. A niche allows for a greater degree of focus and dominance over the competition concerning the specific goods and services rendered.

2. Greater adaptability and flexibility to change

When it comes to start-ups, it is common to have start-ups pivoting business ideas to accommodate changing tastes. To do this, considerable changes must be made to the organization and the nature of the company’s products and services. This was the situation with well-known social media platforms like Instagram and Twitter, which underwent pivots and are now unmistakably on a soaring trend.

Now, the challenge with achieving a pivot in the midst of changing tastes and preferences in consumers is the team’s size. In the above example, teams constituted behemoths of friends and relatives who pursued their dreams and aspirations in doing what they loved. For such small teams, pivotal changes were a lot easier. With a team of over 40 members, however, not so much. It would take months to achieve a pivot.

This is where micro businesses shine. Their small teams allow adaptive changes within small time gaps. It also means whenever there is a shift in industry standards or consumer preferences, they can easily band together ideas and take advantage of new opportunities. Think of it regarding warfare: a small unit of elite warriors is better suited for hazardous or unchartered terrain than a large battalion of soldiers with diverse skills.

3. Lower overhead costs and fewer expenses

Increased business size means higher operational costs. Even with a shift from traditional to remote working setups, there is still the matter of comprehensive HR oversight and payroll management. It is an irrefutable fact that many businesses can’t fully operate remotely, necessitating the need for office spaces and other facilities.

In this dilemma, micro businesses present another advantage – the small team sizes allow for lower overhead costs as modern automation systems can be leveraged efficiently without the need for larger team sizes. There is also less need for oversight, especially with side-hustle start-ups like freelance marketing. It’s as simple as putting up campaigns, setting them in motion, and reviewing them seasonally.

Training and workshops are important for company success, but they can be costly. Company-wide sessions should be implemented rather than departmental or per-team sessions to save money. This will reduce costs while still allowing the company to reinvest in things like employee wages, advertisement campaigns, and better infrastructure–all of which help the micro business grow.

4. Independence for the Non-Committed

There is great liberty to choose a business path with micro businesses and determine the future you want as an entrepreneur. This freedom not only applies to the business owner but sips to the employees as well.

Having looked at some of the most significant advantages of running a micro business, let’s look at some of the disadvantages to running micro businesses. Here are a few to consider:

1. More significant workload on fewer employees.

There is the prevalence of more responsibilities for fewer people to manage .

Running a business is hard enough, but you have to contend with content marketing and reputation management in the modern age. A single negative review on social media can be disastrous, and you must constantly generate new content to keep up a healthy online presence.

Now, outsourcing some tasks can be a really decent and yet inexpensive way to get things done. However, it will still require time to outline the tasks, energy to manage communications and ensure deadlines are met in delivering results. Handling everything in-house could be the way to go, but it brings up another problem – the few members on the team means there may not be available the necessary skill needed at the time.

One of the main reasons more prominent companies hire new employees regularly is to stock up enough skills to get things done efficiently. For example, they may hire a graphic designer to aid in branding and publicity adverts, thus improving the company’s overall productivity. With micro businesses, the fewer employees mean much is left to the charge of fewer individuals. Though it may be fun at first, it can quickly degenerate into a grievous and strenuous venture.

2. Higher risk of failure and funding challenges

Surely you’ve heard the phrase, “Too big to fail”, often associated with financial institutions that have had a hand in major financial crises. But since they are heavily relied upon to the point that the collateral damage upon their dissolution would be irreparable, the government instead chooses to encourage and promote them.

So, what’s the point of all this? Well, size sometimes does matter, and a company can survive through some hardship and challenges simply because of its size. The larger the company, the stronger its brand, the greater its turnover, the more recognition it accrues. In the event of a challenge or difficulty, they can fall back to savings, downscale, or even relinquish some assets to ensure survival. Also, more prominent companies would have a lot less of a hassle getting loans or investments since they’d have more significant financial records.

In contrast, micro businesses are much smaller and face difficulties when getting loans or appealing to outside investors. Even if they try to attract investments, their lack of size makes them seem risky, and potential investors will only see a few opportunities for profit if the business puts in the effort.

3. Limited access to valuable resources

Companies that are widely recognized usually have an easier time getting favors and discounts because other industry leaders want to support them. Most of the time, companies give each other bigger discounts when trying to attract a profitable contract.

Micro businesses have neither the considerable name recognition nor the size to attract such bonuses and discounts. Since they usually won’t be able to pay for large contracts, concessions on their rates would hardly be made in their favor. As such, it holds that the bigger the business, the better the prices you’d get for goods and services from other service providers. Additionally it will be easier to convince others to value a potential business relationship. Such leverage is hard to deny and is indeed farfetched for many micro businesses.

How to Start a Micro Business in 6 Steps

So, are you interested in starting a micro business? The advantages are, no doubt, significant and, like any other type of business, there are challenges to it. But I dare say those with the will to succeed can surely set up and succeed with a micro business. Here’s a step-by-step approach to starting a micro business.

Step 1: Establish a mission, vision and values statement.

It is essential to develop and clearly state the intents and purpose of the business. This is the foundation of the business and surmounts the mission and vision statement. When there isn’t a clear vision, mission and values statement, growth will be hindered as the path to realizing the business’s more detailed plans will be blurred.

Well-structured vision, values and mission statements also reveal what the business stands for and will attract customers and investors who are interested in the business’s core values.

Step 2: Draw up a good business plan

Your business plan is a document that explains and outlines the goals, estimated costs, and strategies for running your micro business. If you want to attract investors or acquire loans, then you need a formal business plan.

Research shows that people who write up great business plans are more likely to start up the business. Writing up a business plan also triggers critical question for the success of the business like:

•         What market is available for my product or service, and what is its current outlook?
•         Who would be my market competition, and how would I stand out from the crowd?
•         Who are my potential customers?
•         How will I reach them?
•         What will it cost me to survive my first year in the micro business?
•         Where will the needed money come from?

A business plan would typically include financial details—projections of sales, expenses, assets, and cash flow. The financial documents needed for a formal business plan include:

•         Balance sheet, showing what you own and what you owe
•         Profit and loss (or income) statement summarizing revenues and expenses every three months (quarterly) and annually (each year).
•         Cash flow statement (or forecast), showing working capital for better expenditure predictions.

Step 3: Decide micro business structure

Setting up a successful business is essential to establish the business structure – legal entity –to run the business.

Sole proprietorships (which are single-owner businesses) and partnerships (having two or more owners of the business) are the least costly business structures. In these setups, owners have all the power in business decisions. They also are obliged to make reports detailing income and losses and are, thus, personally liable for any and all business-related debts.  In the event of business failure, they may file for bankruptcy, which may allow them to abandon debts, but damage personal credit history in the process.

A corporation is a legal business structure that is legally separate from the people who own it under state or federal law. Like people, corporations can also own property, incur debt, sue, and be sued. Most corporations exclude members from personal liability with corporation dealings or lawsuits.

A Limited Liability Company (LLC) is a business structure that combines a corporation’s features and those of a sole proprietorship or partnership. An LLC offers some protection of personal assets and from personal liability and is a suitable option for both one-owner or multi-owner micro businesses.

LLCs also require more legal documentation than much simpler sole proprietorships or partnerships, but the legal requirements are fewer than corporations.

Step 4: Establish detailed operation plans for the business

The next step is to outline plans of operation for the business clearly. There are numerous moving parts in a company, but it all simplifies well-structured goals and milestones with timelines to organize day-to-day activities. And to make things easier, there are diverse technological tools today like business model canvases or one-pagers to address any potential issues that may arise in the running of the business

To achieve an effective plan of action , you should ask yourself the following questions:

•         Who are my key partners and suppliers?
•         Where does my micro business function?
•         What facilities do I need, and how much do they cost?
•         What is my business structure?
•         Who are my target customers?
•         What ways can I possibly use to meet the needs of my target customers?
•         What is my cost structure/revenue stream?

Step 5: Anticipate financial needs

Creating a financial plan is the best way to pitch your business to potential investors and lenders. A well-researched and comprehensive plan will give you the best chance of success.

Many businesses fail primarily because of lack of funding, and it is imperative to assess financial needs before setting up a micro business carefully.

Such funding anticipations should include operating costs for at least a year. Having reliable predictions of the micro business’s running cost will enable you to prepare a reasonable budget better to accommodate your business plan.

The estimates should include:

•         Your salary needs: This is the money from the micro business you’ll live on if you’re quitting a salaried job.
•         Initial (start-up) costs: This will include the cost of equipment, installations, remodeling, professional and legal fees, licenses, etc.
•          Direct costs : This will cover the cost of raw materials or inventory
•         Overhead Cost: This will include rent, office supplies, utilities, and maintenance
•         Recurring costs: This will include salary payments, tax payments, advertising and promotion costs, as well as micro business insurance costs .

In many cases, micro businesses start with the founder’s savings, so it follows that having a saving will bail you out of tight corners in your micro business. However, even without saving to start up with, you could still borrow the needed capital. Taking loans requires a good credit history, a means of repaying the debt, and, in the case of larger loans, collateral.

Here are some familiar sources of people use to start micro businesses:

•         Use money from savings
•         Form a partnership
•         Applying for a Small Business Administration loan.
•         Tapping individual life insurance.
•         Leasing equipment, rather than buying it.
•         Bartering—or exchanging—property or services directly

Step 6: Organize a marketing strategy

Marketing strategy is an indispensable requirement for a successful micro business and is especially important seeing the small team sizes with micro businesses. You must understand your customers and develop ways on how to reach them, backed by proper research. Such information will enable you to launch online campaigns like Google ads, social media ads, email marketing, and content marketing/SEO.

Step 7: Research and test your product

Prototyping is an excellent strategy to better your micro business from consumers’ viewpoints. Some research examples for microbusinesses include:

•         Surveys
•         A templated, pre-launched, or preview website
•         Offers to build an email list
•         Calling vendors and potential customers

When there is resistance or opposition from people to test your product or service, jump on it as an opportunity to request feedback on how to improve your product or customer service.

Step 8: File your micro business and Start

After establishing an operational mission and vision statement, operation plans, financial plans, marketing plans, legal framework, and adequate research on the product you’re marketing, it’s time to officially file your micro business with the government for the legal backup to operate.

With the above steps, you’re sure to start up a micro business effectively .

So, there you have it, folks! Check out these blogs on 51 Best Start-up Ideas and a Business Startup Checklist !

© 2024 Small Business Coach All rights reserved.

• Terms of Use

• 1300 249 268
• [email protected]

Micro business – definition, benefits, challenges, tips for getting started

• Small Business Tips
• Jul 03, 2023
• By deependra

What is a micro business?

A micro business operates on a very small scale with fewer than 10 employees. As an entrepreneur, you may have toyed with the idea of starting your own business . If you’re new to business ownership, starting a micro business might be the right move for you.

Tiny but mighty, micro businesses can be a great way to kickstart your entrepreneurial career; you can even set up shop from the comfort of your home. They can be a great way to turn your hobby into a business.  

A micro-business, unlike a side hustle, is a fully functioning business which operates on a smaller scale. This can be a great option for those who have other jobs or want to grow their business slowly. So, let’s dive into all things micro business and explore what’s involved in starting your own.

Does that pique your interest? If so, Learn more about what exactly a micro business is, the pros and cons of starting a micro business, and the crucial steps for starting one.

Micro business vs small business: What’s the difference?

All micro businesses are small businesses. The key difference is the number of employees you have, your start-up costs, and your annual earnings. When compared to a small business, a micro business consists of fewer employees and generally generates less revenue.

Other guidelines, like requiring less than $50,000 in startup costs or not having access to traditional capital loans, would put you under the micro business.

Are you a micro business or a small business?

Generally speaking, if you are self-employed, a sole trader, and/or have just a few employees, you are very likely running a micro business.

Is a micro business right for you?

If you are considering starting a micro business, it’s worth noting that there are certain advantages and disadvantages that come with micro business ownership. You can benefit from being aware of these pros and cons before you commit to starting your own micro business. To help you decide if starting a micro business is the right move for you, here is a pros and cons list for starting your own micro business below.

The Pros of starting a micro business

1. Flexibility

A larger business may require several levels of approvals before a decision can be made – even if it’s only a small change. However, micro businesses have the advantage of freedom to make decisions fast and implement change fast. When combined, this can lead to quicker turnaround times when big decisions are on the table, such as pivoting the business. changing direction.

2. Simpler operation

With fewer employees, there will be fewer departments to oversee and fewer processes to maintain. This could mean more streamlined workflow and communication throughout your business.

3. Skill specialisation

As a micro business, you will likely focus on less services and product offerings than large corporations, which can enable you to be an expert in the services and products that you do offer.

4. Lower costs

Micro business owners maintain lower business costs since there are fewer salaries to pay and less operating expenses due to the simplicity of the business. And if you operate as a remote or home-based micro business, you’ll also save on property rental costs for a working space or office space.

The cons of a micro business

1. More responsibility on your employees

In a micro business you only have very few employees, which means each employee will hold more responsibility and ownership for their day-to-day tasks. That means you’ll have to hire high quality, talented employees that you can trust.

2. Higher risk

Although you can start a micro business as a side hustle, there will still be a level of risk associated with starting your new business. Micro businesses can often be denied funding because of their inability to turn a profit in their early years.

3. Limited resources

Smaller companies tend to have less financial or promotional resources to put into marketing activities and sales promotions to attract new customers to their business. This can be a big challenge as successful businesses need a loyal customer base to thrive.

4. Hiring disadvantages

Limited resources could also make it challenging to get your name out there to attract top-notch employees that you can depend upon.

Five critical steps for successfully starting a micro business

It’s never too late to start a business; in fact, a compelling argument can be made that the later you start your business, the better off it may turn out. If you are ready to get going with your shiny new microbusiness.

1. Identify the right business for you

If a new business venture idea doesn’t stumble upon you, lean into what you know or what you’re passionate about. Is there a special skill set you have or a creative hobby that brings you joy? Jotting down the answers to these questions is a great place to start. It’s also a good idea to do research before diving into a new business to learn if it’s really the right fit for your experience and interests and if there’s a viable consumer base that you can target.

2. Create a business plan

There’s way more to a business than just coming up with a business name . Once you’ve solidified your micro business idea, it is time to develop a business plan for how you will run your new micro business. Your business plan may include the following:

• an executive summary;
• your business model;
• market analysis;
• product offerings/services;
• operations or organisational structure;
• marketing and sales strategy;
• Financial plan; and
• an appendix.

Your business plan may also include a clear outline of your vision and business goals. You can use this for reference as you develop your business and introduce your business to investors (if you intend to seek them).

3. Get your funds in order

Having a thoroughly researched and prepared financial plan will assist you when pitching to outside investors and lenders. Understanding exactly how much money you need to get started and be successful is also important before diving into a new business venture, as a lack of sufficient capital is one of the most common reasons why small businesses fail .

4. Research and test your product

After you’ve come up with a product or prototype, test your product to see how consumers respond to it. You can get your product in front of a study group, local vendors and business owners, or even your friends and family. Then conduct a survey to gather feedback or constructive criticism on your product before its official launch.

You could even start with a soft launch, or soft opening, for a sample of consumers to preview your product before it’s released to the wider general public. This can be a great way to gather valuable data and insights ahead of your official launch date.

5. Protect your business with business insurance*

Launching and growing a business – even a micro business – is no walk in the p ark. There will be challenges to face and obstacles to overcome as you build your business. You wouldn’t want to go to all of that effort only to see your business come undone, would you? Well, this is where business insurance can have your back. Business insurance can save your microbusiness from worst-case scenarios in the event of an insured event.

Experience business insurance the BizCover way

There are many, many fantastic microbusiness ideas out there – some of which may not even exist yet. If you can think of it and can build a business plan around it, and there’s demand for it, there’s no reason why your microbusiness idea can’t be successful.

Whether yours is a starter business or a low risk business, or perhaps you are onto your second or third business; no matter how ‘micro’ your micro business may be, it’s not too micro to benefit from reducing its exposure to risk via business insurance.

Explore your business insurance options with BizCover and discover just how fast, easy, and hassle-free business insurance can be when you choose BizCover. Compare competitive business insurance quotes onlin e or call us on 1300 920 868 and enjoy a better business insurance experience today.

*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2023 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769.

Compare multiple quotes online in minutes

Trusted by over 220,000 Australian small businesses.

Popular Searches

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

Noah Parsons

24 min. read

Updated May 7, 2024

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

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

• The basics of business planning

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

You understand that planning helps you: 

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

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

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

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

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

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

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

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

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

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

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

• What to include in your business plan

Executive summary

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

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

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

Your executive summary should include:

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

Dig Deeper: How to write an effective executive summary

Products and services description

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

This is usually called a problem and solution statement .

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

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

Market analysis

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

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

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

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

Related: Target market examples

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

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

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

Dig Deeper: Learn how to write a market analysis

Competitive analysis

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

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

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

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

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

Marketing and sales plan

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

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

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

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

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

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

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

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

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

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

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

Business operations

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

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

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

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

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

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

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

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

Key milestones and metrics

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

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

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

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

Possible milestones might be:

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

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

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

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

Dig Deeper: How to use milestones in your business plan

Organization and management team

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

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

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

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

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

• Sole proprietor
• Partnership

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

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

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

Financial plan

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

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

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

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

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

Dig Deeper: How to create financial forecasts and budgets

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

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

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

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

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

Your cover page should be simple and include:

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

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

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

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

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

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

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

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

• Writing tips and strategies

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

Determine why you are writing a business plan

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

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

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

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

Keep things concise

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

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

Have someone review your business plan

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

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

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

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

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

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

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

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

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

Common pitfalls and how to avoid them

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

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

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

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

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

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

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

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

Use your business plan to manage your business

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

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

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

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

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

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

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

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

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

Learn More: How to run a regular plan review

Free business plan templates and examples

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

Free business plan template

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

Download Template

One-page plan template

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

Sample business plan library

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

View Sample Plans

How to write a business plan FAQ

What is a business plan?

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

What are the benefits of a business plan?

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

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

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

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

What are the 5 most common business plan mistakes?

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

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

What questions should be answered in a business plan?

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

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

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

How long should a business plan be?

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

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

What are the different types of business plans?

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

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

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

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

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

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

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

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

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

Table of Contents

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

Related Articles

3 Min. Read

What to Include in Your Business Plan Appendix

7 Min. Read

How to Write a Bakery Business Plan + Sample

5 Min. Read

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

1 Min. Read

How to Calculate Return on Investment (ROI)

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our privacy policy .

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

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

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

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

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

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

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

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

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

Let’s get started.

What Do You Need A Business Plan For?

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

1. Secure Funds

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

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

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

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

2. Monitor Business Growth

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

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

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

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

3. Measure Business Success

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

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

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

4. Document Your Marketing Strategies

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

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

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

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

How to Write a Business Plan Step-by-Step

1. create your executive summary.

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

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

A good executive summary should do the following:

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

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

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

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

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

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

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

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

2. Add Your Company Overview

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

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

Your company overview should contain the following:

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

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

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

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

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

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

• Mission Statement

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

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

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

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

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

Business Objectives

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

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

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

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

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

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

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

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

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

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

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

Market Analysis

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

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

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

• Market Research

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

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

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

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

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

How to Quantify Your Target Market

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

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

What Does a Good Market Analysis Entail?

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

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

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

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

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

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

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

Competitive Analysis

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

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

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

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

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

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

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

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

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

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

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

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

Direct vs Indirect Competition

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

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

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

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

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

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

Factors that Differentiate Your Business from the Competition

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

1. Cost Leadership

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

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

2. Product Differentiation

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

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

3. Market Segmentation

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

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

4. Define Your Business and Management Structure

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

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

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

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

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

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

Management Team

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

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

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

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

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

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

Key Questions to Answer When Structuring Your Management Team

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

Additional Tips for Writing the Management Structure Section

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

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

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

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

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

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

Organizational Chart

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

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

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

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

5. Describe Your Product and Service Offering

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Avoid Technical Descriptions and Industry Buzzwords

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

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

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

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

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

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

3. Long or Short Products or Services Section

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

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

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

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

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

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

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

4. Describe Your Relationships with Vendors or Suppliers

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

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

5. Your Primary Goal Is to Convince Your Readers

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

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

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

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

Key Questions to Answer When Writing your Products and Services Section

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

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

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

6. Show and Explain Your Marketing and Sales Plan

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

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

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

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

Outline Your Business’ Unique Selling Proposition (USP)

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

Target Market and Target Audience

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

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

Creating a Smart Marketing and Sales Plan

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

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

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

Your Positioning Statement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Basic Rules to Follow When Pricing Your Offering

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

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

Pricing Strategy

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

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

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

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

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

Advertising

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

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

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

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

Public Relations

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

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

Content Marketing

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

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

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

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

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

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

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

Social Media

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

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

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

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

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

Strategic Alliances

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

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

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

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

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

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

2. Evaluate Your Competition

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

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

These questions can help you know your competition.

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

3. Consider Your Brand

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

4. Focus on Benefits

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

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

5. Focus on Differentiation

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

Key Questions to Answer When Writing Your Marketing and Sales Plan

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

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

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

7. Clearly Show Your Funding Request

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

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

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

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

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

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

Funding Request: Debt or Equity?

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

Case for Equity

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

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

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

Case for Debt

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

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

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

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

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

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

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

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

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

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

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

8. Detail Your Financial Plan, Metrics, and Projections

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

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

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

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

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

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

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

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

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

Use Graphs and Charts

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

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

Address the Risk Factors and Show Realistic Financial Projections

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

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

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

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

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

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

1. Sales Forecast

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

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

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

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

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

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

2. Personnel Plan

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

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

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

3. Income Statement

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

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

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

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

4. Cash Flow Statement

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

5. Balance Sheet

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

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

6. Exit Strategy

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

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

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

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

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

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

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

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

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

9. Add an Appendix to Your Business Plan

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

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

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

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

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

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

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

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

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

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

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

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

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

Tips and Strategies for Writing a Convincing Business Plan

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

1. Know Your Audience

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

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

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

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

2. Get Inspiration from People

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

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

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

3. Avoid Being Over Optimistic

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

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

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

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

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

4. Keep it Simple and Short

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

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

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

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

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

5. Make an Outline and Follow Through

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

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

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

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

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

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

6. Ask a Professional to Proofread

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

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

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

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

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

1. hubspot's one-page business plan.

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

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

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

2. Bplan’s Free Business Plan Template

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

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

3. HubSpot's Downloadable Business Plan Template

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

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

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

4. Business Plan by My Own Business Institute

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

The comprehensive template consists of a whopping 15 sections.

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

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

5. Score's Business Plan Template for Startups

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

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

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

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

6. Minimalist Architecture Business Plan Template by Venngage

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

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

7. Small Business Administration Free Business Plan Template

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

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

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

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

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

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

9. PandaDoc’s Free Business Plan Template

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

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

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

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

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

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

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

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

Alternatives to the Traditional Business Plan

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

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

Business Model Canvas (BMC)

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

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

Segments of the Business Model Canvas

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

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

Lean Canvas

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

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

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

Startup Pitch Deck

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

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

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

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

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

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

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

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

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

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

Business Plan FAQ

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

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

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

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

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

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

Exlore Further

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

Was This Article Helpful?

Martin luenendonk.

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

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

What is Micro Planning: How to Plan and Execute Tasks with Ease

Micro planning is a great way to plan and execute tasks with ease. It is a simple process that can be used for any type of project, large or small. In this blog post, we will discuss what micro planning is and how you can use it to improve your productivity.

What is micro planning?

Micro planning is the process of creating a detailed plan of action to achieve a specific goal. This type of planning is often used in businesses and organizations to reach desired goals.

The process of micro planning involves breaking down a goal into smaller, more manageable pieces. And then creating a timeline and specific tasks for each step. This type of planning can be extremely helpful in ensuring that complex goals are achieved efficiently and effectively.

However, it is important to note that micro planning can also be very time-consuming and may not be suitable for all types of goals.

The benefits of using this approach to task management

Micro planning is a task management approach that breaks down projects into small, manageable steps. This can be an effective way to improve productivity and focus, as it allows you to break complex tasks into small, achievable goals .

Micro planning can also help to increase efficiency by allowing you to better divide your time and resources. This approach is useful when working on deadlines, as it can help you to avoid last-minute scrambling and ensure that each task is given the attention it deserves.

Micro planning can help to reduce stress levels by providing a clear roadmap for completing a project.

Difference between micro planing and macro planning

Micro-planning is at the individual project level, where detailed task lists and timelines are created. Macro-planning is a strategic planning process that looks at the big picture and sets goals for an organization or individual.

The main difference between micro and macro planning is the level of detail and the time frame involved. Micro-planning is concerned with the day-to-day details of a project. Macro-planning takes a longer-term view, setting goals and objectives for an organization or individual.

While both processes are important, micro-planning is often seen as the more immediate and pressing concern, as it deals with the day-to-day tasks that need to be completed to keep a project on track.

For this reason, micro-planning is often given priority over macro-planning. However, both processes are essential for ensuring that a project runs smoothly and achieves its objectives.

How to add micro planning to your planning process

Here are a few tips on how to incorporate micro planning into your planning process:

1. Define the scope of the project. Before you can start breaking down the project into smaller tasks, you need to have a clear understanding of its scope. What are the overall goals and objectives? What are the deliverables? What are the timelines? Once you have answers to these questions, you can start mapping out the details of the project.

2. Create a task list . Once you have defined the scope of the project, it’s time to create a list of all the tasks that need to be completed. Be as specific as possible, and include deadlines for each task. This will give you a clear overview of what needs to be done and when.

3. Assign responsibility for each task. Once you have a list of all the tasks that need to be completed, it’s important to assign responsibility for each one.

How to break down larger tasks into manageable micro tasks

Any large project can be daunting, but by breaking it down into smaller micro-tasks, it becomes much more manageable.

For example, if your goal is to write a book, your micro tasks might be to come up with a list of potential topics, research those topics, outline the book, write a chapter, etc.

Tips for successfully implementing a micro planning strategy in your own life

Developing and sticking to a micro planning strategy is the key to success in achieving any sort of personal or professional goal. By breaking down a goal into smaller, more manageable steps, it becomes much easier to chart a path towards completion. Here are a few tips to help you put in place a micro planning strategy in your own life:

1. Be realistic in your goal setting. It’s important to remember that micro planning is all about taking small steps towards a larger goal. As such, set realistic goals that can be achieved within a reasonable timeframe. Trying to do too much at once will only lead to frustration and setbacks.

2. Make use of technology. Many apps and software programs are available to track your progress and plan each step of your journey. Utilizing these tools can help you stay organized and on track.

3. Stay flexible . Life is full of surprises, and sometimes the best-laid plans need to be adjusted. Don’t be afraid to make changes to your strategy as needed to accommodate new developments.

4. Persevere when faced with setbacks. Everyone encounters bumps in the road from time to time. The key is not to let these setbacks derail your entire plan. Stay focused on your goals and continue moving forward, one step at a time.

5. Use your available resources efficiently. Time, energy, and money are all limited resources. It’s important to use them wisely to have a good micro plan.

6. Delegate tasks . Mentally and physically, you can’t do everything yourself. Trying to do so will only lead to burnout. Learn to delegate tasks to others who can help you accomplish your goals.

Micro planning may seem like a lot of work, but following these simple tips can help make the process easier and more effective.

Examples of how micro planning can be used in various areas of life

Micro planning is used in various areas of life to help achieve goals and objectives.

For example, micro planning can be used to plan for a vacation, a wedding, or a project at work. When micro planning for a vacation, individuals can use it to map out their travel route, plan where they will stay each night, and choose activities that fit within their budget and schedule.

When planning for a wedding, couples can use micro planning to create a budget, choose a venue, select vendors, and design their invitations.

And when micro planning for a project at work, employees can use micro planning to create a timeline, assign tasks, and establish deadlines.

The importance of flexibility and adjusting your micro plan as needed

In any type of planning, keep in mind that the plan is not set in stone and may need changes as circumstances arise.

This is especially true when it comes to micro planning, which involves mapping out specific actions to achieve a goal. Because micro planning is so reliant on specific details, it can be easy to get caught up in the plan and lose sight of the bigger picture.

By remaining flexible and adjusting the plan as needed, you can ensure that it remains effective and relevant. Micro plans are an essential tool for achieving success, but they must be used with care to yield the best results.

How to troubleshoot any issues with a micro plan

Micro plans are an essential part of any business, providing a roadmap for daily operations and ensuring that everyone is on the same page. But as with any complex system, micro plans can sometimes encounter issues. Fortunately, there are a few simple steps you can take to troubleshoot any problems.

First, check that all the components of the micro plan are in place and accounted for. This includes everything from the overall structure and goals to the individual tasks and deadlines. If any elements are missing or unclear, that could be the source of the problem.

Next, take a look at how the micro plan is being implemented. Are people following the intended timeline and procedures? Are there any bottlenecks or disruptions in the workflow? If so, that could be causing issues down the line.

Finally, consider whether the micro plan itself is realistic and achievable. Are the goals too ambitious or unrealistic? Are the timelines too tight? If so, that could be putting unnecessary pressure on everyone involved and leading to mistakes or missed deadlines.

Create your own micro plan

Micro planning is an approach to task management that can be incredibly helpful in keeping you on track and organized. By breaking down your tasks into smaller, more manageable pieces, you can streamline your workflow and achieve greater productivity.

We hope these tips for successfully implementing a micro plan have been helpful for you. And most importantly, have fun with it! Planning doesn’t have to be a chore – it can actually be quite enjoyable when you find the system that works best for you. What strategies do you use for micro planning?

Related articles: How to write a great business plan

What Is a Quarterly Business Review and Why You Should Do One

What is Delegation? The Benefits and How to Do It

You may like

Recent posts.

• Best Healthcare Time Tracking Software for Employees
• 60+ Tips on How to Work From Home Effectively
• 7 Best Time Clock Apps with GPS For Employees
• 7 Free Time Tracking Apps for Freelancers
• What is PTO? Guide for Employers and Employees

Popular posts

What does WIIFM Mean (and Why is it Important?)

WIIFM is a term used in marketing and advertising to describe what the audience will get out of using or...

25 Cool Skills to Learn and Level up Your Life

The best thing about life is that there are no limits to what you can learn. If you want to...

The 8 Best Invoicing Software for Freelancers

Invoicing software is a tool that helps freelancers create and send invoices to their clients, track payments, manage expenses, and...

9 Best Employee Management Tools in 2024

Managing your employees requires more than just spreadsheets and human resources personnel. It demands precision, empathy, and efficiency—all made possible...

50+ Best Gifts for Small Business Owners

Running a business isn’t easy. All business owners are grateful for the help from their friends and family. If you...

16 Amazon Leadership Principles for Success in Business

Amazon is one of the most successful companies in the world. They had a revenue of $574 billion in 2023....

11 Best Sales Books for Beginners: Master the Art of Selling

We’re reader-supported. When you buy through links on our site, we may earn a commission at no cost to you....

50 Powerful and Inspirational Quotes for Small Businesses

Running your own small business can be tough, but it’s also incredibly rewarding. There are so many challenges and obstacles...

200 Creative Online Shop Names and How to Choose the Right One

The 48 Laws of Power List: Controversial Laws for Influence

The 10 Most Common Logical Fallacies in Advertising and How to Spot Them

RRP Meaning: What is it And How to Set the Right Price in Retail?

13 Powerful Leadership Symbols and Their Meanings

Privacy Overview

• Share full article

Advertisement

Supported by

Fixing Social Security Is an Election Issue Nobody Talks About

A small tax increase would make the essential national retirement program secure for decades, our columnist says, but lawmakers would have to take action.

By Jeff Sommer

Jeff Sommer writes Strategies , a weekly column on markets, finance and the economy.

Millions of Americans worry about Social Security — whether they will get the full retirement paychecks promised to them in years to come. And many younger people believe — incorrectly, in my view — that by the time they are ready to retire, Social Security will no longer be there for them.

The issue is deemed so thorny in Washington that most politicians dance gingerly around it. The latest annual Social Security Trust Funds report in May said that unless action was taken, benefit cuts of roughly 20 percent would have to start in 2033.

Yet when you stop and really look at the problem, it turns out that what’s required for fixing Social Security is no big deal.

This isn’t a bold claim. It’s based on hard numbers calculated by Alicia Munnell , a Boston College economics professor who is among the nation’s premier experts on Social Security.

An increase in the 12.4 percent Social Security payroll tax of 3.5 percentage points — half borne by employers and half by employees — is all that’s needed to keep full Social Security benefits flowing in the 2030s and beyond, Professor Munnell explained in a telephone conversation.

She also stressed that even if Congress did nothing at all to fix Social Security, you would still get most of your promised benefits. That’s because most of the money financing Social Security checks comes from the payroll taxes being paid regularly by working people. Income from the system’s trust funds, which are dwindling, supplements it. Enough money will be going into the system from taxes to pay about 80 percent of benefits even if the trust funds run down to zero. But Professor Munnell doesn’t expect that to happen.

Why a Fix Is Coming, Eventually

The benefits for people who are already retired — or about to be — aren’t likely to be cut, because older people vote in large numbers. Taking away money that they have been promised would be political dynamite, as President Ronald Reagan discovered in the 1980s when his administration favored such a move, only to rapidly backpedal .

At some point, the political class will find a way to avoid that calamity. Millions of people already feel distress and confusion about retirement. It would be a lot better for everyone if the repair job happened sooner rather than later. Because of deficiencies in the rest of the nation’s retirement system, preserving Social Security benefits — not trimming them — is critical for the well-being of current and future retirees, Professor Munnell said.

Nonetheless, a tax increase for Social Security will never be a popular move. It isn’t even being discussed openly by presidential candidates, though both the Biden and Trump campaigns say they are committed to keeping Social Security intact.

In an election year, candidates aren’t rushing to solve a problem that won’t hurt people financially until the next decade and that will involve a tax increase, even only a fairly small one.

“It’s going to be a hard thing to do because you have to raise people’s taxes before they will see anything concrete,” Professor Munnell said. “You have to raise their taxes so they can get what they already think they should be getting. And so I do worry that, politically, in this country, we tend to go right up to the abyss and only act after we’ve reached it. That’s what we did in 1983,” when Social Security last received a major overhaul.

Numbers, Big and Small

Professor Munnell, 81, has been doing serious research on Social Security since the 1960s. As assistant secretary of the Treasury for policy issues from 1993 to 1995, she dealt with Social Security on an official basis. She has headed the Center for Retirement Research at Boston College since its founding 26 years ago, producing her own lucid annual report s on the state of the Social Security Trust Funds, soon after the Social Security trustees issue theirs.

While she’s immersed in the complexities of Social Security, she takes a common-sense approach and comes up with easy-to-understand answers.

How big of a problem is the Social Security funding gap? It can look large or small, depending on how you frame the numbers.

If you want to scare people, she said, point to the total estimated size of the gap between costs and income over the next 75 years: $22.6 trillion. That’s big!

But the U.S. economy is huge and growing. As a fraction of the entire economy over the next 75 years, the Social Security funding gap is tiny: just 1.2 percent of gross domestic product.

The crucial factor to keep your eye on is the payroll tax, since it provides the bulk of Social Security’s funding. As a fraction of the total amount of money collected through the payroll tax, the funding gap is about 3.5 percent.

That’s why Professor Munnell recommends an additional 3.5 percentage points of payroll tax, which would be paid on top of the 6.2 percent that employers and employees are each responsible for now. (The self-employed pay the whole 12.4 percent tax themselves.)

Raise taxes just that much without changing anything else, she said, and much of the problem is gone.

Roots of the Problem

People in my generation, the baby boomers, are retiring in droves. At the same time, because of a long-term decline in the fertility rate, comparatively few people of working age are paying taxes to keep the system fully funded. Immigration has helped bolster the work force, and much more immigration would solve the problem, but given American politics, it wouldn’t be prudent to count on that.

These demographic issues were well understood in 1983, during the Reagan administration. That’s when a bipartisan commission led by Alan Greenspan, the future Federal Reserve chair, came up with the rudiments of a legislative package that put the system on a firm financial footing for a while.

Congress and the president ultimately agreed on a few key changes. They included increasing payroll taxes to their current rate, cutting benefits in subtle ways and building a surplus in the trust funds, which have fluctuated in size since Social Security’s founding in 1935 . The idea was that when the baby boom generation retired and more money flowed out of Social Security than came in every year, the trust funds would make up the difference.

In congressional testimony last year, Stephen C. Goss, chief actuary for the Social Security Administration, said that in 1983 officials expected the trust funds to last until the mid-2050s. “It was known that further action would be needed by that time,” he said.

Instead, the day of reckoning is coming roughly 20 years earlier.

Two things went wrong, Mr. Goss said. The first was the deep recession of 2007-9, which threw off the long-term projections.

Second, and more important, is that income inequality in the United States rose far more rapidly than economists expected. Earnings for the top 6 percent “rose much faster than the overall average,” Mr. Goss said. In 1983, the Social Security payroll tax was imposed on 90 percent of the country’s wage income. Now, with taxable wages capped at $168,600 , only about 82.5 percent of the nation’s wage income is taxed for Social Security, he said. The cap would need to be raised above $300,000 to get us back to the 90 percent coverage of the Reagan administration.

Raising the cap that way — taxing affluent people more and everyone else less — would reduce the 3.5-point tax increase needed to fully fund Social Security to as little as 2.45 points, the Social Security system estimated.

Many Options

Professor Munnell’s fix is simple and straightforward. She would add an automatic circuit breaker — which might temporarily freeze cost-of-living adjustments or tweak taxes or benefits — to prevent the system’s finances from ever getting way out of whack again.

Her proposals make sense to me, though I’d take the increase in income inequality into account, raise the wage cap and reduce the general payroll tax increase. That’s hardly a radical idea. It would be a return to the bipartisan spirit of Social Security reform endorsed by President Reagan, a famously conservative Republican, along with Speaker Thomas P. (Tip) O’Neill Jr., the Massachusetts Democrat.

There are infinite ways of fixing the system, and once an earnest effort is underway, many will be discussed.

Cutting benefits, though, ought to be ruled out, Professor Munnell said. Only about half the workers in the United States are covered by any retirement plan aside from Social Security. Even for those covered by workplace retirement plans, the overall picture of retirement readiness isn’t pretty. The financial services industry is more than willing to step in with solutions, but always for a fee.

The reality is that for most people, Social Security is as important now as it was 40 or 50 years ago.

The White House and Congress can wait until the 2030s, when benefit cuts will be imminent and general anxiety about retirement will be soaring.

Yet there’s no doubt at all that millions of people would be better off if Social Security was fixed, and benefits were assured, and it happened right now.

Jeff Sommer writes Strategies , a weekly column on markets, finance and the economy. More about Jeff Sommer

Let Us Help You Plan for Retirement

The good news is that we’re living longer. the bad news is you need to save for all those future retirement years. we’re here to help..

For a growing number of older Americans, signing up for a mortgage that is most likely to outlive them makes good economic sense. But there are risks to consider .

If you’re on Medicare, you could save money on prescription drugs this year — in many cases, by thousands of dollars. Here’s why .

Entering your 40s can throw you into an emotional tailspin — one that may lead you to spend more and jeopardize your nest egg. Here is how to avoid that .

It’s difficult to know when to get help managing finances after you retire . Communicating with loved ones, even when you don’t want to, is the first step.

These days, many Americans thinking about retiring feel the stakes are higher than ever. We sought the advice of financial planners  on some of the most pressing questions.

Retirement plan administrators are noting an uptick in 401(k) hardship withdrawals . But taking that money out can harm your future financial security.

• My View My View
• Following Following
• Saved Saved

Glencore's climate action plan wins more support from shareholders

• Medium Text

• Company Glencore PLC Follow
• Company Teck Resources Ltd Follow

Sign up here.

Reporting by Clara Denina; Editing by Sriraj Kalluvila

Our Standards: The Thomson Reuters Trust Principles. New Tab , opens new tab

Markets Chevron

Stocks rebound while dollar, Treasury yields fall after US data

Hopes for a cut in euro-zone borrowing costs remain intact.