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How to start a business in Arizona
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
Published 12:23 a.m. UTC Nov. 6, 2023
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Starting a business in Arizona is relatively straightforward and cost-friendly. Ultimately, registering a new business in Arizona takes eight steps:
- Start with a business plan.
- Select a business entity.
- Choose a business name.
- Choose your statutory agent.
- Form your business.
- Apply for an employer identification number (EIN).
- Register your business with the Arizona Department of Revenue.
- Apply for business licenses.
- Open a business bank and other financial accounts.
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9 steps to register your business in Arizona
1. start with a business plan.
A business plan is an essential starting point for creating a successful business. The Small Business Administration (SBA) provides a number of resources for creating a business plan that will be useful to you on your business journey. While your business plan can legally follow any format that works for you, there are two main types of business plans: traditional and lean.
A traditional business plan takes longer to write but is more detailed and organized, addressing how you’ll handle your business at every stage. As a result, many creditors and investors require this more detailed business plan. So, it’s worth considering starting with the traditional business plan. However, if you don’t have enough information to complete this type of plan, at least start with a lean one.
As you write your business plan, you’ll see that the SBA recommends conducting market research . It also offers a list of online resources to help you do so successfully. Market research can feel like an extra step as you file your paperwork but is a key component to setting your business up to succeed.
In addition to understanding your competitors, market research can offer a better understanding of what you should charge for your products or services and who your ideal customers are. This can save you time and effort, allowing you to hone who you target based on their likelihood to buy.
2. Select a business entity
Like many states, Arizona recognizes several business types, though it recognizes fewer options than some other states. The types of entities Arizona recognizes include:
- Nonprofit corporations.
- Limited liability companies (LLC) .
Most businesses in Arizona will not be nonprofit corporations, as those are typically reserved for entities that are not looking to generate a profit.
A limited liability company (LLC) is often used by businesses looking to keep ownership among a limited number of members who do not plan to take the business public. On the other hand, corporations are more readily able to raise capital, go public and expand nationally or globally because they can issue shares to shareholders.
3. Choose a business name
Your business name should be unique to your business within the state of Arizona and not infringe on national trademarks. The state of Arizona recommends googling your preferred business name to determine if it is in use by other businesses and if the website URL you’d prefer is available. It also recommends using the Arizona business name search tool before choosing your business name to ensure it’s unique and available in the state of Arizona.
Once you’ve chosen an available and marketable name, you can reserve it for 120 days or submit your business formation documents to officially register your name. If you choose to reserve your business name, it will cost you $45 for either an LLC or a corporation. You can reserve the name online on the Arizona Corporations Division website .
To learn more about how to ensure your name is available for use, not nationally protected and is marketable, read our business naming guide .
4. Choose your statutory agent
Businesses in Arizona are required to have a named statutory agent. A statutory agent, commonly known as a registered agent, is the primary person or entity responsible for receiving and managing legal and tax documents on your business’s behalf. A statutory agent must be available to receive mail at a physical address in the state of Arizona during all regular business hours.
Due to the demands and strict requirements for fulfilling this role in-house, many businesses opt to hire a registered agent service provider. Read our list of best registered agent services to find the best provider for your business needs.
5. Form your business
You are now ready to submit your business formation application . To start, you’ll register with AZCC and submit an articles of organization form if you are forming an LLC or an articles of incorporation form if you are starting a corporation. You must submit a $50 filing fee for an LLC and a $60 filing fee for a corporation, plus a $35 online (expedited) filing fee for each. If your business is approved, you’ll receive a letter with additional instructions.
6. Apply for an EIN
To operate your business in Arizona, you’ll need an employer identification number (EIN) . This is a tax identification number issued to businesses by the IRS.
An EIN is required to file taxes at the federal, state and local levels. It is also required for payroll processing, by most banks when opening business accounts and for obtaining a credit card or opening a line of credit.
Businesses organized in any state can request an EIN through the IRS website for free between 7 a.m. and 10 p.m. Monday through Friday. You will receive your EIN immediately upon submission of the application.
7. Register your business with the Arizona Department of Revenue
The Arizona transaction privilege tax (TPT) is a tax on vendors for the privilege of doing business in the state. Most businesses have to register their businesses with the Arizona Department of Revenue to pay this tax. Any number of business activities require you to fill out a TPT application in Arizona, including:
- Hosting events.
- Paying unemployment insurance for workers.
- Collecting and remitting transaction privilege tax (commonly known as a sales tax).
- Paying use taxes.
8. Apply for business licenses
In addition to the TPT application, you’ll need to determine if your business needs a license based on its activities and industry. In Arizona, not all businesses are required to have a license. However, some may require more than one. For instance, if your business activities involve liquor, tobacco or bingo, it will need a license. If it involves any combination of the three, it may require multiple licenses.
Additionally, businesses that engage in activities that are supervised or regulated by government agencies may require additional business licenses . These business activities include but are not limited to:
- Construction contracting.
- Massage therapy.
- Adult home care or childcare.
- Home inspections.
- Pest control.
If you are unsure if your business requires licenses, contact the Arizona Licensing Compliance Program to ensure your business is able to operate legally.
9. Open a business bank and other financial accounts
Opening a separate bank account for your business allows you to:
- Keep your business revenue and liabilities separate from your personal assets.
- Enhance your limited liability protection.
- File end-of-year taxes (both for your business and personally).
- Demonstrate the level of professionalism your clients expect.
Similarly, having a separate business credit card for your business provides you with the same benefits.
While each bank is different, in general, to open a business bank account in Arizona, you’ll need to have:
- Your business name.
- Your entity’s EIN.
- Your business formation documents.
- Any business ownership agreements.
- Relevant business licenses.
Read our best business bank account and best business credit cards lists to find the right financial solutions for your business needs.
Find the best company formation services for Arizona: Best LLC services of 2023
Our top recommended company formation service for Arizona
Best llc service, rocket lawyer.
What you should know
Rocket Lawyer is a well-known, reputable company that offers online legal services to individuals and businesses. With a membership, you can access hundreds of customizable legal documents, attorney services, a proprietary document signing tool and discounts on professional services like tax filing and business incorporation.
If you purchase a new membership with Rocket Lawyer, you can snag a great deal on your LLC formation as it’s included for free. Without membership, the LLC formation service costs $99 plus state filing fees.
Read our full Rocket Lawyer review .
Pros and cons
- Free LLC formation for new members.
- Great customer reviews.
- Membership provides ongoing legal support.
- Customer support is lacking.
- Only one LLC service plan.
- Limited LLC plan add-ons.
If you’re looking for a deal on an LLC organization, Rocket Lawyer is best for those who don’t yet have a membership and want an affordable way to get legal help on an ongoing basis. The large library of customizable legal documents makes it easy to DIY agreements and contracts, a directory of lawyers will be on-call if you need advice and the LLC formation will be free (plus state filing fees).
In the state of Arizona, you’ll pay $50 to start an LLC and $60 to start a corporation. If filing online, you’ll need to cover a $35 expedited filing fee as well. If you reserve your business’ name in advance of filing your formation paperwork, you’ll pay another $10 for either LLCs or corporations. Other costs to start your business include fees to hire a registered agent, business licensing fees, initial deposit fees for opening a business bank account and legal consultation fees.
Starting a business in Arizona takes roughly one week for expedited services and three weeks for non-expedited services. If you’d like more details, Arizona maintains a full list of document processing times .
Arizona requires all businesses organized in the state of Arizona to have a statutory agent who can receive business legal and tax documents on the business’s behalf. This requires a set physical location where they can receive the documentation in Arizona. If you do not have a physical location for your Arizona business, you can hire a registered agent service provider that will provide a physical location for you.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy . The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
As a former small business owner who has worked with organizations of all sizes, from mom-and-pop through Fortune 10, Kristin focuses on technology and financial solutions that work for your business and enable you to grow.
Bryce Colburn is a USA TODAY Blueprint small business editor with a history of helping startups and small firms nationwide grow their business. He has worked as a freelance writer, digital marketing professional and business-to-business (B2B) editor at U.S. News and World Report, gaining a strong understanding of the challenges businesses face. Bryce is enthusiastic about helping businesses make the best decisions for their company and specializes in reviewing business software and services. His expertise includes topics such as credit card processing companies, payroll software, company formation services and virtual private networks (VPNs).
How to start a small business: A step-by-step guide
Business Eric Rosenberg
What is credit card processing?
Business Michelle Black
Small Business Trends
How to start a welding business.
Starting a business always comes with its set of challenges and rewards, and understanding how to start a welding business is no different. The welding industry presents a unique opportunity due to the high demand for welding services across various sectors, including construction, manufacturing, and automotive repair. With the right skill set, you could enter a flexible career path with significant profit potential.
The Welding Industry
Welding is not just about joining two pieces of metal; it’s an art, a science, and a continually evolving field that touches everything from the cars we drive to the buildings we live and work in. For those who are new to this field, understanding the basics, such as choosing a welding helmet can be very important.
- Construction: Here, welding is vital for creating everything from high-rise buildings to bridges, ensuring they are strong and durable. This sector offers a wide range of welding projects to make money .
- Automotive repair: Vehicles often require parts to be welded or re-welded, from small components to larger sections of the bodywork.
- Manufacturing: Welding is integral in the production of a vast array of products, from household appliances to heavy machinery.
What Does a Successful Welding Business Look Like?
Successful business owners in the welding industry hinge on more than just technical skills. What separates the leaders from the followers in this field? Before starting, you should consider how to start a business effectively along with a business startup checklist , which can be a helpful tool in this phase.
- Expertise and Quality: Top welding small business owners showcase unmatched expertise and deliver quality that clients can trust. They’re not just welders but problem-solvers who understand the science behind the perfect join.
- Customer Service: Successful welding companies build a loyal customer base by ensuring each client is satisfied and their needs are met promptly.
- Versatility: The best businesses can handle a variety of projects, adapting to challenges with ease. They’re as comfortable fixing a delicate piece of jewelry as they are joining steel beams.
The potential in this industry extends to both stationary businesses with a dedicated workshop and mobile welding businesses that deliver services directly to clients’ locations. For those who are new, a website startup guide can provide valuable tips.
Small Business Deals
Key advantages of running your own welding business.
Embarking on the journey of establishing your new welding business comes with a host of appealing benefits. Imagine the fulfillment that comes from seeing a structure stand strong because of your welds!
- Diverse Projects: As a welding business owner, no two days are the same. One day, you could be repairing machinery, and the next, working on a custom automotive project. This variety keeps work exciting and allows continuous learning.
- Flexible Hours: As the welding company boss, you have the privilege of setting your hours and balancing work with other life commitments.
- Pride in Ownership: There’s a unique sense of pride and accomplishment in building your own successful company from the ground up and watching it thrive.
Starting a Welding Business: Essential Steps
This section will walk you through the crucial stages of getting your business off the ground. For instance, this could serve as a blueprint if you’re pondering how to start a concrete business.
Identifying Your Welding Niche
Welding encompasses a range of techniques, each suited to different tasks. Whether it’s TIG, MIG, stick welding, or others, each method has its own applications and specialties. While some businesses offer general welding services, others specialize in underwater, automotive, or structural steel welding. Consider your interests and the needs of your local market to find your niche.
Crafting a Welding Business Plan
Your welding business plan is your roadmap, outlining your business’ goals, potential challenges, and ways to overcome them. It is also just as important to understand common business structures’ before you start. Key components include:
- Executive Summary: An overview of your business’s structure, services, and objectives
- Market Analysis: Insights into your local market, competition, and target demographic
- Organization and Management: Your business setup, ownership details, and information on key personnel
- Service Line: Detailed descriptions of your welding services
- Marketing and Sales Strategies: How you plan to attract and retain clients
- Funding Request and Financial Projections: Your investment needs, expected expenses and revenues, and break-even analysis
Legalities, Licensing, and Insurance for Welding Businesses
Operating a legitimate welding business requires particular certifications, including, but not limited to, a Certified Welder (CW) credential from the American Welding Society. Joining professional associations can also enhance credibility. Business insurance protects your venture from unforeseen circumstances, including liability, property, and workers’ compensation.
Essential Tools and Equipment for Welders
Starting a welding business demands an upfront investment in welding equipment. Essential welding gear includes:
- Welding machine
- Safety equipment (helmets, gloves, and protective clothing)
Remember, regular maintenance extends the life of your equipment and ensures safety.
Setting Up Your Welding Workspace
Whether you opt for a stationary workshop or a mobile operation, your workspace must prioritize safety and efficiency. Ensure proper ventilation, organized tools, and adhere to all safety regulations. Mobile welders need a reliable vehicle outfitted with equipment and supplies.
Marketing Your Welding Business
Word-of-mouth is gold in the welding industry, but don’t overlook the power of a strong brand and online presence. Create a visually appealing portfolio of past projects, use social media to connect with your community, and consider developing a website to showcase your services and expertise. Happy clients are your best promoters, so quality workmanship is your top marketing strategy!
Starting a Mobile Welding Business
Venturing into mobile welding can be an exciting pivot or expansion. This model lets you bring your services directly to clients, providing convenience and flexibility. However, transitioning to a mobile operation has its set of challenges and requires some adjustments regarding equipment and logistics.
- Accessibility for Clients: You can offer on-site services, which are especially convenient for clients unable to transport what needs welding.
- Low Overhead Costs: Avoid the business expenses of maintaining a physical shop.
- Expanded Market: Reach clients beyond your immediate location.
- Logistical Considerations: You must plan routes and schedules meticulously to ensure timely service.
- Weather Dependence: Outdoor jobs might be affected by weather conditions.
Equipment Considerations: Invest in a reliable vehicle and secure storage solutions for transporting equipment. Portable welding machines and generators are must-haves, along with a comprehensive toolset that can handle a range of on-site tasks.
FAQs: How to Start a Welding Business
Is a welding business profitable.
Yes, a welding business can be very profitable. Like any business, profitability depends on a range of factors including the scope of services offered, operational efficiency, and market demand. With the right business plan and execution, a welding business has substantial profit potential.
What’s the initial investment for a welding shop?
The initial investment for a welding business can vary widely depending on location, size, and services offered. Costs to consider include leasing a space, purchasing equipment and insurance, and marketing your business. On average, startup costs can range from $15,000 to over $50,000.
How much do welding businesses make?
Income for welding business can vary significantly based on factors like location, the scale of operations, and the number of clients. A successful small welding business can make between $50,000 to $150,000 in profits per year, while larger operations or those in high-demand areas can make significantly more.
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A fifth of Britons start planning for Christmas in November, John Lewis says
Retailer’s research also says outdoor lights are becoming the norm and a third of homes decorate more than one tree
The 12 days of Christmas have stretched to more like 45, according to research into the nation’s changing festive habits that also suggests outdoor lights are becoming the norm while – for a third of homes – one tree is no longer enough.
Unlike the Christmas carol, which describes 12 days of festivities, a fifth of people – mostly women – begin planning for the holiday in November, according to the John Lewis festive traditions tracker report, which is based on analysis of its sales as well as YouGov polling.
Kathleen Mitchell, its commercial director, said the longer timeframe was explained by customers getting excited for Christmas but also planning ahead to spread the cost.
“While we see a spike in searches for Christmas trees immediately after the summer holidays, people begin shopping in earnest on 10 November – a 45-day run-up to the big event,” she said.
Britons are expected to buy fewer and cheaper items this Christmas as the cost of living crisis forces many to rein in the celebrations. While total spending will rise by 3.4% to almost £110bn in the final three months of 2023, according to retail analysts at GlobalData, higher prices mean household budgets are under huge pressure.
However, after a tough year John Lewis said shoppers were looking forward to the holiday and getting organised even earlier than usual, with sales of its Christmas ranges 10% higher in October than in the same month last year. The number of visitors to its dedicated departments was also up 13%.
Researchers found more thought going into gifts, with homemade presents “one of the biggest trends for 2023”, illustrated by a big increase in demand for candle-, soap- and pottery-making kits.
Established traditions like sending Christmas cards are in decline – the rising cost of postage has resulted in almost a third of people posting fewer of them – but the research found six in 10 plan to buy decorations for the outside of their homes.
The emphasis is on creating a “Chic-mas” scene – think grazing stag not flashing Santa – with the department store chain’s sales of outdoor decorations almost double last year’s level.
Britons are keeping light show costs down with energy-efficient bulbs but the extra cost incurred is deemed “worth it to dazzle neighbours and passersby”.
Decorating the Christmas tree is still the No 1 tradition for many households and many Britons now have two or more to dress. A third of us put up a second “show tree” for the hallway or home office, a figure that rises to almost 40% for households with children.
However, after the huge lifestyle changes ushered in by the pandemic, the nation has been left suffering a fashion crisis at Christmas.
While 43% of people say it is a time for “sparkles, bright colours and bold clothing”, younger Britons do not agree. More than half of the 25-34-year-olds surveyed plan to wear comfy casuals while a third of 18-24-year-olds intended to stay in pyjamas all day.
But after the long buildup, once the presents have been opened and the turkey eaten, even Christmas lovers are eager to dispense with paraphernalia. The tradition of waiting until the Twelfth Night – 6 January – to take down decorations is now ignored by one in three, with almost a fifth taking them down between Christmas and New Year’s Day.
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Production Planning Integration – Synchronized Planning for Production Using Key Figure Integration and the New Flexible Constraint Heuristic
For production planning integration we now offer an integration of key figures from SAP Integrated Business Planning (SAP IBP) into the new flexible constraint framework available in SAP S/4HANA Production Planning and Detailed Scheduling (PP/DS).
Note: This blog is about key figure integration using SAP Cloud Integration for data services (CI-DS) as integration technology. For order integration, the standard way of production planning integration is using real-time integration (RTI). For more information on this process see the product assistance on the SAP Help Portal .
What is it about?
Have you seen my blog for the key figure integration which is mainly based on note 3255350 ? Now we have great news for you. With SAP S/4HANA 2023, a new heuristic is available in PP/DS which allows planning with flexible constraints out of the box without having to implement a Business Add-In (BAdI).
This allows you to integrate selected key figures from the global supply plan as constraints into PP/DS. The new heuristic creates a local feasible plan considering these constraints created by the integration.
The integration is based on a loosely coupled integration. ”Loosely coupled” in that context means that in both systems different constraints exists: For example, in tactical supply planning no specific setup times are maintained, whereas PP/DS uses precise setup times, or short-term downtimes are only known in PP/DS and not in SAP IBP.
The planning process is cyclic as the results from PP/DS are also respected in SAP IBP tactical supply planning. This means, planners get feedback on the production planning results from PP/DS and can directly analyze the effects on their supply plan.
Figure 1: Cyclic planning Process between tactical supply planning in SAP IBP and PP/DS
This is how the process would look like:
A supply planner creates a supply plan based on key figures to cover demand. By using CI-DS, key figure quantities are extracted and sent to PP/DS.
Figure 2: Supply plan shown in the planner workspace of SAP IBP
For the integration to PP/DS, CI-DS templates are delivered for the following elements:
- transport receipts and production receipts as flexible constraints into target supply
Note: The templates are delivered on level location – product – source of supply. These setting as well as the key figures themselves can of course be exchanged based on your business needs.
A new transaction is available in PP/DS which allows you to display and change the constraints.
Figure 3: Flexible constraints in PP/DS
After the integration, the Planning of Std. Lots (Flex. Constr.) heuristic is using the constraints to create orders, while respecting quantities, availability dates, and the sources of supply defined in the constraint tables. Of course, a planner can also adjust the supply plan if necessary.
In addition to planned orders, also stock transfer requisitions, purchase requisitions or subcontracting requisitions are created by the flexible constraint heuristic dependent on the sources of supply defined for the location products.
Figure 4: Product planning table including flexible constraints per period
When the production plan is final, the results are sent back to SAP IBP and can be validated there. This can be done shortly before the next supply planning cycle is executed, or more frequently, because the integration uses a delta function to monitor deviations from the last plan.
But not only orders can be integrated on an aggregated level from PP/DS: Starting with SAP IBP 2311 and SAP S/4HANA 2023, five additional selected PP/DS key figures from the PP/DS plan monitor can now be integrated to key figures in SAP IBP. These KPIs give you more information on resource capacity usage and on delays of orders.
Figure 5: Analytics view on capacity supply and capacity usage in SAP IBP
As before with the BAdI-based key figure integration, you can transfer not only the baseline version to PP/DS but also different simulation versions.
With the next feature pack of SAP S/4HANA, we plan to provide the capability to use minimum and maximum constraints in addition to the target supply constraint, and a SAP Fiori app to manage flexible constraints. We also plan to allow additional KPIs to be extracted from PP/DS.
For more information on the business process check out the application help .
For a quick introduction you can watch this video.
Let us know if you tried out the new process – we are looking forward to your feedback!
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Best Books for Starting a Business
If you’ve recently started a business, or you’re thinking about becoming an entrepreneur, you may feel overwhelmed by your long checklist. You need an HR structure, a marketing plan, a plan for employee morale, and, of course, a strategy to win despite your competitors.
Whether you’re a serial entrepreneur or a fresh business owner, there is much to learn from subject matter experts. Consider reading these books for starting a business and invigorating it.
1. From GED To Harvard Then Inc. 500
In this read, Jane Wolfe & Scott Wolfe detail their journey from earning their GEDs and building the fastest growing business in New Orleans. At the young age of 17 and 19, Jane and Scott began their business dreams and bought a run-down market.
Throughout the years, and the destruction from hurricane Katrina, the Wolf’s reemerged to support their community and build Melba’s PoBoys. The Wolfe’s have founded multiple companies in their careers, generating millions of dollars in revenue.
Why Read It: If you’re looking to learn about persevering through difficulty and creating unlikely opportunities in business, is From GED To Harvard Then Inc. 500 is for you.
2. The Authority Advantage
In The Authority Advantage , you’ll discover how you can use your personal branding to gain authority-status and earn more followers. Adam Witty and Rusty Shelton have decades of experience working with entrepreneurs to grow their brand and business by sharing their business and media insights.
In this read, you’ll learn how to create a following, engage with your audience base, and grow your business and name recognition. With practical steps on leveraging owned, earned, and rented media, you will emerge empowered with next steps to help you and your business shine in a competitive marketplace.
Why Read It: The Authority Advantage will help business leaders expand their following and increase their brand recognition. Read Witty and Shelton’s book to attract influential clients, customers, and followers to your side.
3. The Power of Remote
Cynthia Watson, Executive Chair, and Shane Spraggs, CEO, share their experience in building and managing remote teams at Virtira. Create a successful remote work environment with their comprehensive roadmap.
The Power of Remote can help you lower costs and boost productivity in your business.
Why Read It: This book is ideal for you if you’re considering a “remote-first” business model, or if you’re looking for guidance on transitioning to remote.
4. Beyond the Superhero
Jason Randall reveals how to free yourself from unrealistic expectations and pressure as an executive leader. If you’re spearheading your business, you need a handbook to help you find an alternate path to success — where both you and your business can thrive.
In Beyond the Superhero, you’ll find both a memoir and a roadmap to support your business initiatives and become the leader you want to be.
Why Read It: Whether you have decades or experience, or it’s your first time in leadership, there’s always room to improve as a leader. If you’re looking to relieve the pressure of leadership while gain practical insights, Beyond the Superhero is worth a read.
5. How Teams Triumph
A business is much more than offering a product or service for a profit. Your team, workflow, and employee communication all affect how successful your business will be — and whether you retain your employees. Team dynamics can become stumbling blocks for your company as silos grow and dysfunction creeps in.
Clinton M. Padgett offers a proven framework to ensure your team works together to achieve goals. Padgett creates positive work environments to motivate employees by improving team dynamics.
Why Read It: If you’re looking for advice on how to structure your teams and create a positive company culture that breeds success, you’ll benefit from How Teams Triumph .
6. Competing With Giants
As a small startup, you may wonder if you can ever compete with industry giants. Phuong Tran shares the story of her family-owned business that her parents built up to become the forefront beverage company in Vietnam. Phuong Tran shares how a family-owned business built itself into a coveted industry giant. After walking away from a $2.5 billion offer from Coca – Cola, Phuong Tran wrote Competing With Giants to help others follow suit.
Why Read It: Find the insight and encouragement you need in this underdog story of success. If you want a pick-me-up with practical application, give Competing With Giants a read.
Sr. marketing copywriter.
Lissie Kidd is a Sr. Copywriter with several hundred articles in her portfolio and even more edited and published under her supervision. Lissie holds a MA in Communications from Grand…
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How to Write a Business Plan: Business Planning Best Practices
Every company needs a plan to determine how it will operate and position itself in the market. This is known as a business plan, which is one of the most important business management documents.
What Is a Business Plan?
A business plan is a document that describes a business in detail. In a business plan, you’ll find the information you need to understand how a business works and how it plans to grow in the long term. Most business plans explain the business model, mission, vision, objectives, operational plan and financial plan of a company, among other important elements.
Creating a thorough business plan that outlines a business can seem like daunting work. In reality, the job can be done using common project planning methods and tools.
A business plan defines your business mission, vision and overall strategy, but that’s only the start. To turn those things into a successful business, you’ll need to assemble a team and start your business operations. ProjectManager has planning, scheduling and tracking tools that can help you track all your business processes and workflows. Get started with ProjectManager today for free.
When Should You Create a Business Plan?
You should always write a business plan before starting a business because it’ll help you set the stage for your strategic planning and operations management . In addition, writing a business plan helps you find any potential business planning issues, omissions or opportunities for improvement, so your business has a solid start.
Business plans are also very important for business funding. For example, if you’re just starting a business and need a business loan, you’ll need to write a detailed business plan for banks and investors, who will require you to include certain things on your business plan so they can better assess the feasibility of your business model.
What Does a Business Plan Include?
As a business owner or entrepreneur, you can decide on the level of detail for your business plan. However, in most cases, it’s advisable to include as many details as you can because your stakeholders will want to know as much as possible about your business.
Here’s a sample business plan with some of the most commonly used elements. You can customize it to fit your particular business planning needs.
Sample Business Plan Outline
While business plans might differ from one organization to another, there are key elements that should be included in all business plans.
The purpose of an executive summary is to compile the most important information about your business plan so that stakeholders can quickly get the idea without having to go over the whole document.
Also called a company overview, a business description simply defines what your business purpose is, as well as general information such as your company background and your mission and vision statements. This part can also include other basic details you might want to share about your business such as your company principles and core values.
This section provides information on the market for the product or service offered. A basic market analysis section should include three key elements: an industry analysis that addresses the sector at large, a competitor analysis that identifies direct and indirect competitors and a SWOT analysis that helps business managers understand the current competitive environment of a business.
Marketing & Sales Strategy
You should use the insights from your market analysis to create a marketing and sales strategy that helps you use your business strengths to position your brand in the market and establish your business as a leader in your industry. To create an effective marketing and sales strategy, you should consider these key elements.
- Business proposition: Your business proposition or value proposition explains how you differentiate yourself from your competitors by better addressing the needs of your target market.
- Target market: The market segment that includes your ideal customers. There are many qualitative and quantitative research techniques you can use to identify the ideal audience for your product or service.
- Products and services: Your business plan should explain your product or service portfolio. Include a general description, profit margins and any other relevant information such as substitute or complementary products in the market.
- Distribution channels: The distribution channels refer to the supply chain and logistics methods that your business uses to transport and distribute products or services to customers.
- Pricing: Pricing is a key element of your marketing and sales strategy. Make sure to understand your competitive landscape, as well as the socio-economic conditions of your market to choose a price that benefits both your customers and your business.
The operational plan describes how your business operates to achieve its long-term goals and objectives, highlighting key areas such as inventory control, supply chain, production planning , human resources and business process management.
This area demands specific information. Financial plans and projections should include income statements, cash flow statements and balance sheets. The purpose of this section is to establish both the current financial state of a business as well as its budget and projections about the future.
Organization and Management
This section shows exactly how the business is organized, from day-to-day operations to its leadership team. For example, you may include c-suite executives, managers and possibly even interns. It can also delve into the roles and responsibilities of different individuals.
Your business plan should specify the legal structure of your business. You can choose to establish a sole proprietorship, partnership, corporation, limited liability company (LLC) and other structures, depending on the business owner and stakeholders’ preference.
Best Practices for Writing a Business Plan
No matter which type of business plan you’re writing, there are tips and tricks that’ll keep you on track to create a successful roadmap, such as using business templates . Following these five best practices helps ensure the information in your business plan is thorough, easy to understand and engaging to audiences. This way, you get your point across loud and clear, while keeping the audience interested.
1. Create a Business Plan Immediately
It’s a common mistake to wait until the last minute to write a business plan. However, if you have the information and are ready for presentation before operations even begin, you can rest reasonably assured that your business is prepared for anything. This “living document” should be written before the business begins and should be updated every step of the way.
2. Write for Your Audience
Before writing your business plan, consider who will be reading it. The audience determines which type of business plan you choose. It may also call for adjustments to tone and style. For example, if you’re writing a business plan to inform employees, the tone might be more casual than it would be for potential investors.
3. Keep It Logical: Focus on Facts, Not Emotions
No matter the audience, a business plan must be logical, not emotional. Passion is important, but the facts are key. For example, when writing financial projections, refer to hard numbers from past quarters about sales, expenses and profits—rather than just writing what you think the future will look like.
4. Remain Concise
Being concise is one of the most important rules of thumb when creating a project plan of any kind. A business plan aims to outline an entire operation, but it must convey the facts as simply as possible. Always keep in mind that this information will be presented to an audience, and it must capture and keep their attention.
5. Remember Your Goal
Avoid tangents and unnecessary information. Each section should tie into the main objective of the business plan, whether that be to inform stakeholders, obtain funding or anything else.
How to Use ProjectManager to Execute Your Business Plan
ProjectManager is award-winning project management software that helps create, execute and track your business plan to ensure that it results in success. With it, you can lay out the day-to-day operations of your business and invite members of your team to collaborate and manage your resources.
Gantt Charts to Plan
On our Gantt view, you can add tasks, their duration and their priority and this information automatically populates the project timeline. With this powerful tool, you’ll be able to get a bird’s-eye view of your entire business plan, laid out in chronological order.
Dashboards to Track
As you work your way to making your business plan a reality, you’ll need a tool to ensure that you’re on the right track. With our real-time dashboard , you can view updates on the status of your tasks. Our dashboard also automatically calculates costs and other important KPIs and displays them in scannable graphs and charts.
Plus, ProjectManager has unlimited file storage, so you can collect all the important documents for your business plan in a central hub.
ProjectManager is award-winning project management software that offers businesses the tools they need to manage projects. Complete with Gantt charts, task lists, dashboards and more, ProjectManager gives teams the ability to plan, launch and report on projects from anywhere. This makes creating and collaborating on documents like a business plan easier than ever before. Try ProjectManager for yourself with our free 30-day trial offer.
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How to Start a Planner Business in 9 Steps
Starting a planner business can be an exciting undertaking for anyone passionate about organization, design, and creativity. With the rise in popularity of bullet journaling, digital planners, and paper planners, there is a growing demand for unique and personalized planning tools. However, launching a successful planner business requires more than just an innovative idea and…
Need to save time? Hire doola to turn your dream idea into your dream business, today. You can start a business in minutes.
Starting a planner business can be an exciting undertaking for anyone passionate about organization, design, and creativity. With the rise in popularity of bullet journaling, digital planners, and paper planners, there is a growing demand for unique and personalized planning tools.
However, launching a successful planner business requires more than just an innovative idea and artistic skills. In this guide, we will explore the essential steps to starting a planner business, from identifying your target market and creating a brand to sourcing materials, designing products, and marketing your business effectively.
Whether you are a seasoned planner enthusiast or a budding entrepreneur, we’ll provide you with the foundational knowledge and resources to turn your planner business dreams into a reality.
Why Start a Planner Business
There are several reasons why someone might choose to start a planner business. Here are the most common motivations:
Passion for Planner Books
Starting a planner business is a way to share your passion with others and potentially make a career out of something you enjoy doing. Running a planner business allows you to immerse yourself in the world of planners, explore new planning techniques and tools, and help others achieve their organizational goals.
A planner business can provide a great deal of flexibility, especially if you run it from home. You can set your own schedule and work as much or as little as you want, depending on your other commitments. This flexibility is especially attractive to those who want to balance their work with their personal life, such as parents with young children or individuals with other part-time jobs.
Designing and developing planner products can be a fun and rewarding creative outlet. As a planner business owner, you have the opportunity to create unique and personalized planner books that can help people achieve their goals and express their individuality. This creativity can extend beyond just the design of the planner itself, but also to the packaging, branding, and marketing of your products.
Demand for Planners
With the rise of digital tools and the constant distractions of modern life, many people are looking for ways to simplify their lives and improve their productivity. This has resulted in a growing demand for planners, both paper and digital. The planner market is diverse and offers many opportunities to cater to specific niches, such as academic planners, fitness planners, or wedding planners.
When starting a planner business, it can be a challenging but rewarding entrepreneurial venture. It requires a lot of hard work, dedication, and perseverance, but it can also offer great rewards. You get to be your own boss, make your own decisions, and potentially make a significant impact in this industry. With the right mindset, skills, and resources, you can turn your passion for planning into a successful and fulfilling career.
10 Steps to Starting a Planner Business
With the increasing popularity of planners, it is no wonder that many people are considering developing their own planner business. However, you’ll need the right guidance if you’re going to make an impact. Take a look at the following steps to starting a planner business .
1. Identify Your Target Market
Before you start designing your planner, you need to determine who your target market is. Who will be using your planner? Is it for busy professionals, college students, or stay-at-home parents?
Your target market is the group of people who are most likely to buy your planner. It’s important to identify your target market early on, as it will guide your product design, marketing strategy, and overall business plan. Consider factors such as age, gender, occupation, lifestyle, and purchasing behavior when identifying your target market.
2. Conduct Market Research
You’ll need to conduct market research to ensure that there is demand for your product and to identify any gaps in the market. Research your competitors and the broader planner market to understand what products are already available and what unique features you can offer. Look for opportunities to differentiate yourself from the competition and provide value to your target market.
Another important aspect of researching the planner market is understanding pricing strategies. Take a look at how much similar planners are selling for, and determine whether you want to position your product as a budget option, a premium choice, or somewhere in between.
3. Create a Brand
Your brand is the face of your business, and it’s essential to create a strong and memorable brand that resonates with your target audience. Choose a business name , logo, and color scheme that aligns with your brand values and reflects the personality of your business. Your brand should be consistent across all of your marketing materials, including your website, social media profiles, and packaging.
4. Develop a Business Plan
Developing a business plan is an essential step when starting a planner business. Your business plan will serve as a roadmap for your business, outlining your goals, marketing strategy, financial projections, and other important details.
When developing your business plan, it’s important to consider the following:
Your business plan should include specific, measurable goals for your planner business. This can include revenue targets, customer acquisition goals, and other Key Performance Indicators (KPIs) that align with your overall business objectives.
Your business plan should outline your marketing strategy, including how you plan to reach your target market, the channels you will use, and the budget you have allocated for marketing. Your marketing strategy should be based on research and data and should be flexible enough to adapt to changes in the market.
Your business plan should include financial projections for your planner business, including revenue, expenses, and profit margins. This will help you understand the financial feasibility of your business and make informed decisions about pricing, production costs, and other key financial considerations.
Your business plan should also include operational details, such as production processes, distribution channels, and staffing needs. It’s important to ensure that you have a clear understanding of the logistics involved in producing and selling your planner, and that you have a plan in place to manage these processes effectively.
5. Source Materials
You’ll need to source materials for your planner, such as paper, binding, covers, and inserts. Look for high-quality materials that align with your brand values and budget.
6. Design your Planner
Create a planner design that meets the needs of your target market and aligns with your brand values. This can include everything from page layouts to covers and color schemes.
Your planner design should also be functional, aesthetically pleasing, and aligned with the needs and preferences of your target market. Consider factors such as page layouts, covers, and color schemes when designing your planner. It’s also important to ensure that your planner is easy to use and provides value to your customers.
7. Set Up Your Website and E-Commerce Platform
Your website is your online storefront, and it’s essential to create a professional and user-friendly website that reflects your brand and makes it easy for customers to purchase your planner. Choose an e-commerce platform that suits your needs and budget, such as Shopify or Squarespace, and ensure that your website is optimized for search engines and mobile devices.
You’ll also want to explore and compare various e-commerce platforms to sell your new planners. Amazon, Etsy, Walmart, eBay, and more are just a few potential ideas.
8. Decide on Your Business Structure
When starting your planner business, one of the most important decisions you will make is determining the legal structure. Your choice of business structure can impact everything from taxes to legal liability, and ownership structure. The type of structure you choose should fit your vision and long-term goals for your business.
This is the simplest form of business ownership. As a sole proprietor, you own and manage the business yourself. You’re responsible for paying taxes on all profits that the business earns. While it may seem easier and less expensive to start as a sole proprietorship , take into consideration that you will be personally liable for all debts and obligations of the business.
A partnership is similar in structure to a sole proprietorship. However, instead of one owner, there are two or more partners who share in the profits and losses of the business. Partnerships can be split equally, or they can be split according to a predetermined agreement. While partnerships can be a great way to forge a business relationship and split responsibilities, you are still responsible for each other’s actions.
Limited Liability Company (LLC)
An LLC offers members the protection of personal assets from business debts or liability. It is a hybrid between a corporation and a partnership. The members of an LLC are not responsible for the debts or obligations of the company. It is a popular choice for small business owners who want the protection and tax benefits of a corporation but still want the flexibility of a partnership.
A corporation is an independent legal entity separate from its owners. It’s the most complex business structure, but it also offers the most protection. Corporations can be made up of multiple shareholders and offer the ability to sell stock to raise capital. However, corporations are also subject to more regulation and higher taxes and can be more expensive to manage.
Open a Business Bank Account
Opening a business bank account is an essential step for any entrepreneur starting a new business. A business bank account is a separate account from your personal bank account that is used exclusively for your business finances. This helps to keep your personal and business finances separate and makes it easier to track your business expenses and revenue. When opening a business bank account, you will typically need to provide proof of identity and business registration documents, such as your business license or Articles of Incorporation. You will also need to choose a bank that offers the features and services you need, such as online banking, mobile check deposit, and merchant services.
9. Market Your Business
Marketing is essential for getting your planner business in front of your target audience. Some effective marketing tactics for a planner business may include social media marketing, influencer marketing, email marketing, and content marketing. It may also be worthwhile to consider attending trade shows, hosting events, and collaborating with other businesses to reach new audiences.
Remember, you’ll want to continuously track your marketing efforts and measure the effectiveness of each tactic so that you can make informed decisions about where to focus your marketing budget and resources. With a strategic and targeted marketing plan, you can increase brand awareness, attract new customers, and build a loyal following for your planner business.
Creating Your Own Planner Business
With a clear vision, a solid business plan, and a commitment to providing high-quality products and exceptional customer service, you can create a successful planner business that meets the needs of your target market.
By following the steps outlined in this guide, you can navigate the various stages of starting a planner business, from market research and product development to marketing and sales. With perseverance and a willingness to adapt and innovate, you can build a thriving planner business that helps people stay organized, focused, and inspired.
For help along the way, turn to doola for small business resources. Get help with banking, bookkeeping, entity formation, taxes, and more. Explore how doola can help you launch your planner business toward success.
How can I attract customers to my planner business?
You can attract customers by offering unique designs, marketing your business on social media, offering promotions or sales, collaborating with other businesses or influencers, and providing top-notch customer service.
What kind of planners should I create?
There is no one-size-fits-all answer to this question, as everyone’s planning needs and preferences are different. Consider creating a range of planners, including daily, weekly, and monthly options, as well as specialized planners for goal setting, meal planning, fitness tracking, and more.
How should I price my planners?
When pricing your planners, it’s important to factor in the cost of materials, printing, and shipping, as well as your time and labor. Research your competition and consider what your target market is willing to pay.
How can I market my planner business?
There are many ways to market your planner business, including social media advertising, influencer partnerships, and attending trade shows and events. You can also reach out to bloggers and media outlets to request reviews and features.
Do I need to have a website to sell my planners?
While having a website can help sell your planners and reach a wider market, it’s not necessary. You can also sell your planners through social media platforms like Instagram and Etsy, or in person at markets and events.
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Top 10 most effective business analysis techniques, business intelligence analyst salary, digital transformation and future of tech jobs in india: a simplilearn report 2020, highest paying careers after mba, top 10 mba skills that employers look out for.
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Business analyst interview questions, career masterclass: discover how to launch your business analyst career in 2024, 10 major leadership theories every manager should master in 2024, business planning: it’s importance, types and key elements.
Table of Contents
Every year, thousands of new businesses see the light of the day. One look at the World Bank's Entrepreneurship Survey and database shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.
According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.
Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.
Several other statistics expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.
This isn’t surprising at all.
Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%) don't have a formal business plan in place.
Become The Highest-Paid Business Analysis Expert
It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.
But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.
Now before we begin with the details of business planning, let us understand what it is.
What Is a Business Plan?
No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.
More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.
A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained.
However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes.
Before getting into learning more about business planning, let us learn the advantages of having one.
The Advantages of Having a Business Plan
Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.
- Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals.
- Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
- Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
- Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
- Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
- Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest.
Now let's look at the various types involved in business planning.
The Types of Business Plans
Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.
Here’s an overview of a few fundamental types of business plans.
- Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
- Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments.
- Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
- Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
- Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.
The Key Elements of a Business Plan
There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them.
Here are the key elements of a good business plan:
- Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.
- Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
- Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
- Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time.
- Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.
Best Business Plan Software
The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:
- Business Sorter
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Common Challenges of Writing a Business Plan
The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:
- Create a business plan to determine your company's direction, obtain financing, and attract investors.
- Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
- Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
- You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.
Become an Expert Business Planner
Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success.
Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.
While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.
Simpliearn’s Post Graduate Program in Business Analysis will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive training program combined with the latest tools and methods can pave the way for you and equip you with the skills and the know-how to tackle any real-world challenges that may arise. Completing this industry-recognized course also earns you a valued certification as tangible proof of your talent.
What Is Meant by Business Planning?
Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.
What Are the 4 Types of Business Plans?
The following are the four types of business plans:
This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.
Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.
Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.
When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.
What Are the 7 Steps of a Business Plan?
The following are the seven steps required for a business plan:
If your company is to run a viable business plan and attract investors, your information must be of the highest quality.
Have a Goal
The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.
Create a Company Profile
Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.
Describe the Company in Detail
Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.
Create a marketing plan ahead of time.
A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.
Be Willing to Change Your Plan for the Sake of Your Audience
Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.
Incorporate Your Motivation
Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.
What Are the Basic Steps in Business Planning?
These are the basic steps in business planning:
Summary and Objectives
Briefly describe your company, its objectives, and your plan to keep it running.
Services and Products
Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.
Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.
Operations are the process of running your business, including the people, skills, and experience required to make it successful.
How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.
Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.
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How to Start an Event Planning Service Want to be an event planner but not sure how to start your own event planning service? Discover how to start this business in our step-by-step guide.
Feb 22, 2001
Some people get a lot of personal and professional joy out of making big events and special days even better for their attendees. If you have the hosting itch, and if you love to tackle complex problems and make big days go smoothly, you might have a future as a professional event planner.
But whether you choose to work alone or with a small team, starting an event planning service is no small task. Today, let's break down how to start an event planning service step-by-step.
What are the basics of event planning?
Event planning is the art (and sometimes science) of event ideation, planning, coordination and operation. When a big, important event needs to go smoothly, it's time to call an event planning service or coordinator.
Event planners are key service providers who can ensure event production and execution happens smoothly. They perform these duties for trade shows, senior events, nonprofit galas and much more.
Related: Find Your Event-Planning Niche
Event planning is most often used for purposes like:
- Big educational meetings, like graduations or conferences.
- Major promotions, like marketing events, product launches and fashion shows.
- Corporate events, like after-work cocktail hours, galas, etc.
- Celebrations and social events like parades, weddings, birthdays, reunions, etc.
Event planning is highly important to make sure the above and other major events go off without a hitch, especially so that the most important guests can enjoy themselves.
The primary duties of full-time or part-time, on-site event planner jobs include:
- Doing research prior to the big event.
- Event design and team-building for project management.
- Finding the appropriate site for the event.
- Creating event budgets and running fundraisers if necessary.
- Arranging for decor, entertainment and food for the event.
- Sending invitations to potential attendees.
- Planning transportation for attendees to and from the event.
- Arranging any other necessary accommodations, like seating.
- Coordinating activities for event personnel, like caterers or entertainers.
- Supervising activities at the event site.
The events industry, both for wedding planning and other events, requires good communication skills. Additionally, obtaining a bachelor's degree in public relations or related areas can be helpful but is not absolutely required. Let's look closer at this job type and business.
Why do people hire event planning services?
People primarily hire event planning services for two reasons:
- So that event-goers and guests of honor can enjoy themselves without focusing on the event.
- So that the event in question goes smoothly.
Imagine a typical example of a wedding. Many engaged couples hire event planners or event planning services to coordinate, organize and carry out their wedding plans. In this way, the couples can enjoy their special days and focus on getting married rather than worrying about things like catering, parking and kicking out rowdy guests. Instead, the wedding planner takes care of that stuff.
Furthermore, some events are so complex – particularly those with hundreds of guests or more – that it's almost impossible to properly plan and organize them without the help of a specialist. Knowledgeable, experienced event planners know how to organize groups of people, how much food to provide and other details that can make or break an important event.
Related: The Price Is Right: Turning a Profit in the Event Planning Business
Who should become an event planner?
You might consider becoming an event planner if you love hosting parties and the thrill of organizing a complex event and running it without an issue. Planners often have to handle many moving parts at once. Many event planners have histories as managers or coordinators in other industries. You should become an event planner or start your own event planning service if you feel that you would enjoy this kind of work.
It's also worth noting that event planning often requires you to work on weekends or holidays (since these are the days when people have free time to schedule and hold events), as well as handle chaotic, sometimes confusing work and competing agendas. You should also consider acquiring certification for your event planning service, as it can help you acquire relevant professional skills and attract more job opportunities . Meeting Professionals International (MPI) is an association that offers a list of degrees and certificates from colleges and universities. The right degree or certification can lead to more job opportunities and even pave the way to a higher salary.
Alternatively, try to become a CSEP or Certified Special Events Professional or CMP or Certified Meeting Planner. Both of these are given out by the MPI or the ISES (International Special Events Society), which also highlight your skills and designate you as an expert event coordinator.
Now that we've covered the basics, let's get into the steps you need to take to start an event planning service:
Step 1: Make your company
Your first step involves making your company and filing the right paperwork. You should first draw up a business plan, which will include details like:
- The business's name.
- The business's tax structure (like a sole proprietorship, LLC, etc.).
- How you'll make a profit.
Related: Check out these business plan templates to get started.
You'll also want to get an EIN, or employer identification number. This will allow you to hire employees for your event planning service if you desire later down the road.
Step 2: Choose your target market
Next, do market research and pick the target market you want to work for. For instance, if you want to primarily work with weddings, you need to research that target market to know how much to charge for your services, what's involved and what you need to be experienced in.
By doing some research ahead of time, you won't find running your first events to be too overwhelming. You'll also know how much to advertise your event planning service to be competitive relative to other services in the area.
Step 3: Consider startup costs
When you start an event planning business, you'll have to consider startup costs. Working from home or primarily by yourself will keep costs low as opposed to hiring employees (who will require salaries).
However, if you want to expand your event planning business, you'll eventually need extra equipment, business premises like an office or warehouse and more. All of these things can add up, impacting the kind of business you begin.
Note that you can always scale your business after acquiring steady work. For instance, you can start off as a one-man event planning service that only provides services to small events you can tackle by yourself. After you save up some money from some successful jobs, you can hire a few more employees and rent out a warehouse for your equipment, like cameras, chairs and more.
Step 4: Understand the work involved and hire employees (optional)
For your event planning service to be successful , you need to fully grasp the nature of the work involved and understand whether you should hire employees.
Planning and executing an excellent event generally involves:
- Designing the event, which means sketching out the feel or look of the event in question. Some clients will have very specific ideas you'll need to incorporate into the design.
- Putting together a proposal for your clients so they can improve your plans.
- Organizing the event, which involves almost everything else, like renting the site for the event, hiring vendors, hiring entertainers, organizing caterers and much more.
There's a ton of work that goes into planning even the smallest event. Fortunately, as you acquire experience, you'll be more adept at anticipating and completing this work.
Related: The Event Planning Recipe for Success
Generally, the larger the events you want to manage and coordinate, the more employees you need to hire. At a certain point, you can't be everywhere at once! Consider hiring employees when you have the cash to do so; this will allow you to plan events for larger groups of people and make more of a profit.
Step 5: Settle on a price structure and fee basis
How you price your event planning business will impact how often you get requests. You can determine your pricing structure and fee basis by things like:
- The market segment you serve: For instance, social events usually have different fee structures than corporate events.
- Your geographic location: If you have a higher cost of living, you are justified in charging your clients more to plan their events.
- Your experience and reputation: As your business gets a reputation for success, you'll be able to charge a higher premium for your services.
Step 6: Start marketing your event planning service
Once you have all of your ducks in a row and you know how to charge your clients, you can start marketing your event planning service. Do this online through Google PPC (pay-per-click) ads, social media marketing and other efforts. Don't hesitate to use in-person marketing materials, like posters or TV ads, as well.
Related: 8 Savvy Ways to Promote Your Event Planning Business
As you can see, starting an event planning service is a matter of preparation and deep consideration. If you plan everything properly, your event planning service will launch smoothly, and you'll get your first batch of clients in no time.
Check out Entrepreneur's other guides and resources today!
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How to Write a Startup Business Plan
By Yuvika Iyer , May 28, 2022 - 10 min read
A startup business plan is an outline of your ideas and strategies for what you’ll need to do to start, manage, and even complete your startup’s mission. Creating one might sound simple enough, but because it’s a startup’s roadmap for success, it can be a complex document to create.
Writing a business plan can make a world of difference for entrepreneurs who desire external funding. It involves determining your target customers, understanding what makes them tick, and figuring out how to reach them through marketing campaigns.
In this blog post, we’ve explained why you should have a startup business plan, different types of startup business plans, and we’ve included 12 of the most effective tips for writing a startup business plan. If you’re ready to start with now, we have a product launch template to get you started quickly.
What is a startup business plan?
A startup business plan is a written document that outlines your ideas and strategies for launching, managing, and eventually exiting your new venture.
A well-constructed business plan can be crucial to the success of any entrepreneurial endeavor . As you prepare your proposal, keep in mind that it will evolve as you learn more about your market.
To start, create an outline of the most important items you'd like feedback on before writing anything down officially.
Then ask yourself these questions:
- What do I want?
- Why does my company exist?
- How will I make money?
- What are my long-term goals?
A detailed business plan helps you set milestones for measuring success. You can share the plan with investors who may want some reassurance on the viability of their investment in your company.
The best way to create a successful startup business plan is by including everything in an organized and easy-to-read document — marketing strategies, financial projections, team bios, timelines, and more.
What is a lean startup business plan?
A lean startup business plan is a method for developing products that relies on iterative experimentation to reduce uncertainty.
It has been used by companies such as Google , Amazon, and Facebook in the early stages of their development, and involves testing your idea with real customers early in development.
Lean startups are less likely to fail because they have tested their product or service with live feedback from consumers. Doing this allows them to make changes quickly without wasting resources on something no one wants.
The goal is not to build an extensive business plan but rather a "lean" one that can be changed based on customer feedback and then re-evaluated in regular intervals until it reaches market potential — or fails.
A lean startup business plan is a strategy that focuses on getting a product in front of customers as quickly and cheaply as possible. Use the lean startup business plan to validate your ideas before wasting time and resources.
Why do you need a small startup business plan?
A small startup business plan is one of the most important steps in building a company. Apart from helping you to focus on company goals, it aids in obtaining feedback from potential partners and keeps the team on the same page.
The best thing about starting small? You can change course at any time! If you need help developing or tweaking your small startup business plan, use this guide for entrepreneurs to get started.
You've built a product and you're ready to take the next step, but what's your plan? First, you need a strategy in place. Do you know how much money it will cost, or where exactly that funding should come from? What about marketing strategies for getting customers in the door?
You’ll also need to find ways to retain them afterwards so they keep coming back again and again (and spending more).
Obtain external funding
If you want to get funding from lenders or investors, you need a startup business plan. Lenders want to make sure they're investing in a company that will last and grow.
A well-organized idea shows passion for its purpose and outlines clear goals for helping customers. At the same time, having an exit strategy is also important.
Making a plan for when things don’t pan out as desired lets investors understand how much value there can be while giving customers (and yourself) peace of mind.
Understand your target market
One key piece of your business plan is knowing how to conduct a market analysis. To do this, consider the industry, target market, and competitors.
Are there any market trends or competitor factors that can affect your business? Review them closely and get ready to make required changes to your business plan.
Prioritize high ROI strategies
In business, ROI is important. Any business that doesn’t generate as much cash as it burns is likely to fail.
With a startup business plan in place, the strategies with the highest ROI become crystal clear. You'll know exactly what to tackle first and how to prioritize the rest of your tasks.
Accelerate financial health
Business plans are not crystal balls, but they can help forecast your financial health. Planning for expenses is vital to keep operations steady and identify problems as soon as possible.
Cash flow projections can help you see if goals are achievable or highlight upcoming issues that need correction before it's too late.
How to write a small startup business plan
Use this guide for entrepreneurs to develop or tweak a startup business plan. By following this easy six-step process, you'll soon have a clear path to startup success.
1. Clarify the startup vision, mission, and values
The first step to writing a startup business plan is understanding the startup itself.
Once you know what your startup does, ask yourself why. What is the startup's mission? What problem will it help customers solve? The startup's mission statement helps define its reason for existing.
It’s usually expressed in a simple sentence, but can also be written as a short paragraph.
Try to answer these questions: What does your startup do? How will it make money? How quickly do you hope it will grow? Are there any significant milestones or deadlines that need to be met?
2. Outline the executive summary
Now that you have an idea for your startup, its mission, and a vision in mind, it's time to write your startup business plan executive summary.
Keep it simple and precise. Begin by writing a one-sentence startup business plan introduction that showcases the core customer need/pain point and how you propose to solve it.
3. Develop startup goals and milestones
Next, write down the milestones and goals for your startup business plan. This is a crucial step that many entrepreneurs forget when they're starting out.
Do you want to focus on getting new customers? Or attaining a specific revenue number? Without clear short-term goals, it can be hard to know how to prioritize startup tasks.
4. Write a company description
Answer the two fundamental questions — who are you and what will you do? Then, give an introduction to why you're in business.
Provide a summary of introspective goals, clarifying intangible aspects such as values or cultural philosophies. Make sure to mention:
- Proposed business structure (limited partnership, sole proprietorship, incorporated company, or a general partnership)
- Business model
- Business vision and mission statement
- Background information of your team members
5. Conduct market analysis
Choosing the right market is crucial to your organization’s success. There are different kinds of products and services that a business can offer and each has particular requirements for a successful market fit.
If you choose one that doesn't have a large enough customer base or is not profitable enough, your company may end up struggling for every sale.
Ensure that there is a clear market niche — an ideal audience of customers with a need or a pain point that your business can help solve.
6. Develop startup partnerships and resources
When you're launching a small startup, one of the most important things that your business needs is capital. There are several ways to get going on this front.
When thinking about sources of funding for startups , consider startup grants, startup loans, startup investors, and startup accelerators.
7. Write a startup marketing plan and startup budget
Your startup business plan is almost complete! All that's left is to create a startup marketing plan and budget. Your startup marketing plan will help you define your company’s target audience and brand image.
The startup budget is an integral part of any startup that helps you take the guesswork out of writing expenses.
Examples of startup business plans
Business plans differ based on the nature of the business, target market, competitive advantage, delivery of product/service, scope, and size.
Though the core business plan template remains the same, the content and flow change. Here is an example of an accounting firm's business plan:
At our company, ABC Accounting Services LLC, we work hard to provide the best service and build a strong team. Our vision is for this brand to be recognized as #1 throughout NYC by both smaller businesses and larger corporations.
Our values are reflected in all that we do: integrity (ethical behavior), service (giving top priority to clients' needs), excellence ("doing it right"), teamwork (working together).
ABC Accounting Services LLC is the premier accounting firm in New York City and will handle various financial services. We specialize in audits, bookkeeping, tax preparation/compliance work, and budgeting assistance with high-quality consulting.
ABC Accounting Services LLC will be structured as an LLC — a Limited Liability Company in the state of New York. It will provide accounting, bookkeeping, taxation, auditing, and compliance-related services to small, medium, and large enterprises situated in New York City.
Marketing strategy and competitive advantages
Despite the fact that there are many established accounting services firms in our industry, we have a great chance of becoming successful because of the high demand for financial consulting.
Often, small businesses don't need full-time employees but would rather hire an accounting service provider like us to handle their bookkeeping and tax returns on time every year.
It is best to find a unique niche or carve out your own market in the financial consulting services industry. If you're able to create an identifiable brand identity for your accounting business, then you will likely see less competition from other firms.
ABC Accounting Services LLC will focus on delivering an exceptional client experience to grow the business and expand market share.
Startup business plan template
Here's a template you can follow when creating your startup business plan:
Top tips for writing a startup business plan
The following tips will help you create a compelling startup business plan without getting overwhelmed.
Know your audience
To write an effective business plan, tailor your language and level of detail to match the audience reading it.
Have a simple and clear goal
If you have a goal of securing funding for your business, it will be an uphill task with lots of work and research.
Simplifying and breaking down bigger goals into smaller, actionable tasks will assist you in getting through them faster.
Spend time researching
Avoid assuming anything about your target audience, product/service, or the market need.
Spending adequate time and effort on research from primary and secondary sources will help you develop an accurate business plan.
Build a startup toolkit
The process of creation becomes easier if you have the right startup tools and software by your side. Pick the right ones that will help you in your journey.
Keep it precise
Short and easy-to-read business plans are best kept within 20 pages. If you have additional documents, consider adding them as appendices or provide a link if available online.
Ensure tonal consistency
Keep the tone consistent by having just one author write your startup business plan. Otherwise, be sure to edit it thoroughly before you finalize it.
Add reference points
All information regarding the market, your competitors, and your customers should reference authoritative data points.
Be ready to pivot
A business plan should be fluid and flexible. Think of it as an evolving document that will continue to change over time.
How to create a business plan with Wrike
A good business plan is a powerful tool and can be a key predictor of future progress, but simply filling in a startup business plan won’t help you achieve success. You need to create action steps with accountability that will help you reach your goals.
Wrike’s project management software can help your organization deliver successful projects and maximize individual and team productivity, and our product launch template can help you turn your startup business plan goals into actionable steps.
Start a free trial of Wrike today to see how it can help to simplify work, showcase progress to stakeholders, and achieve startup success.
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Why Open Your Own Firm?
- Growing Demand
Veterans and Client Base Retention
Rookies and client base building, #1. start-up costs, #2. licensing and training, #3. business plan creation, #4. business model and services.
- #5. Professional Relationships
- #6. Risks and Liabilities
#7. Reaping the Rewards
The bottom line.
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Tips on Starting a Financial Planning Firm
Whether you're a veteran financial planner looking to get out from under a tyrannical boss or a rookie just out of college, the dream of starting your own financial services firm is probably an aspiration that gets you out of bed on even the rainiest of days. Money, autonomy, convenient office hours, and recognition within the community all come as part of the package, at least in our dreams. In reality, starting a financial services firm is a lot of hard work. Those who fail are often those who fail to plan.
Read on as we explore what you need to know to turn your dream into a thriving business reality. We will go over seven crucial factors to keep in mind when starting your own practice.
Growing Demand for Financial Planners
The age of your average financial planner is increasing, along with the ages of their client base. With that, more planners are leaving their practices while more potential clients are entering their retirement years.
This changing demographics in the American population is rapidly opening up new areas of specialization, such as long-term care and alternative investments. The most recent generation of financial products and services also allows advisors to meet the needs of clients in ways that could not have been anticipated even a few years ago. These factors have increased the need for qualified financial planners.
If you're a veteran in this business trying to go independent, you're probably tired of the constant sales pressure, office politics, and other corporate restrictions placed upon you now. At this point in your career, you have probably developed your own personal investment philosophy that may differ from the methods espoused by your current employer. You may also be concerned about managing your book of business and feel that your client base would be better served in a more independent setting.
While having an established client base is a huge advantage for anyone starting their own financial planning practice, it also creates its own set of issues. Think about how you will achieve client retention and still be able to service key customers when moving those accounts from one company to another.
Newcomers to the business will face much bigger obstacles on the path to success. In addition to the normal start-up issues that must be dealt with, rookies must also build up a client list from scratch, as well as learn the mechanics of the business, which can be considerable. But, like many entrants into this field, you may see financial planning as a way to make a real difference in other people's lives.
If you are an entrepreneurial spirit, you may be enticed by the possible prestige, freedom, and high compensation enjoyed by many financial planners. But regardless of your background or motives, establishing your own financial planning firm will likely be one of the most difficult—and satisfying—things you've ever done.
Starting a financial planning firm entails many of the same start-up costs as any other business. These include furniture, rent, advertising, technology, utilities, and perhaps an earnest deposit with the new broker-dealer (if one is to be used). Licensing and training costs must be taken into account for those who need them as well. Veterans with a book of business will also need to factor in any possible loss of revenue resulting from the changeover to a new company.
In addition to obtaining the necessary licenses, rookies should consider earning a professional designation or two, such as the Certified Financial Planner or Chartered Life Underwriter. Credentials like these can help provide much-needed credibility and academic training for those who are new to the business or looking to expand their repertoire.
If you're a veteran in the business, however, licensing and training may not be a critical issue unless you are getting into a new line of work. For example, if you have an insurance business and plan to add investments or comprehensive financial planning to your practice, then you will need to be licensed (and perhaps certified) accordingly.
As with any other business, it is vital that independent financial planners begin with a sound written business plan . This plan should include:
- The goals of the business
- Specific strategies on how to achieve these goals
- The current state of the financial markets
- The demographics of clients and prospects
- How to differentiate your firm from the competition
- A flexible marketing plan
- All probable costs (these should be clearly defined)
- A realistic estimate of the amount of time it will take to accomplish the plan's objectives
Determining what kind of financial planning practitioner, you will be is an important decision. This choice involves both the type of services you will provide your clients as well as your method of compensation. Financial planners who work on commission tend to earn much more (on average) than fee-based planners.
Customers who specifically desire unbiased advice, however, usually seek out fee-based planners . Your personality type may play a role in making this choice; if you have an analytical mind and don't enjoy high-pressure sales, you may feel more at home with just running numbers and making recommendations.
On the other hand, if you are a Type-A personality who likes working with people, then you may have more success using a sales-based approach. The type of business model you decide to employ may also determine which licenses you will need to obtain.
#5. Build Professional Relationships
Establishing professional relationships is crucial for any budding financial planner, especially one without an established book of business. Finding an attorney or CPA who is willing to partner with you may be the best thing you could do for your business. A mentor can be equally important, particularly for newcomers to the business. Having someone to ask the advice of who can guide you through the difficult early stages is invaluable for those who are still learning the business.
If you both need and can afford it, then you will have to find and build an effective support team around you, whether it is a single assistant or an actual team of people. Making certain all of these pieces fit correctly will take some time and adjustment, but the end result should be a streamlined, efficient staff that allows the business to run smoothly and profitably.
#6. Know the Risks and Liabilities
Starting any business involves a certain amount of risk. There is the risk the business will generate insufficient revenue to survive, as well as risk from liability and other fiduciary responsibilities. All financial planners need indemnity insurance . Errors and omissions (E&O) insurance will guard against malpractice suits, but remember that ensuring regulatory compliance in your business will ultimately be your responsibility. All client complaints and problems must be dealt with in a professional manner to ensure the stability of the business.
Successful planners enjoy high (sometimes very high) compensation, virtual autonomy, and convenient office hours, as well as recognition within the community. But the best reward of all can be the sense of accomplishment that comes from helping a client achieve peace of mind by resolving a complex financial issue. Regardless of which type of reward you desire, the financial planning profession may well offer what you seek.
While starting a private financial planning practice undoubtedly involves a significant amount of work and risk, those who desire to do so should not let fear prevent them from realizing their dream. Many private and even corporate practitioners will readily tell you that financial planning is the best business in the world.
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401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000
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IR-2023-203, Nov. 1, 2023
WASHINGTON — The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2024 has increased to $23,000, up from $22,500 for 2023.
The IRS today also issued technical guidance regarding all of the cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2024 in Notice 2023-75 PDF .
Highlights of changes for 2024
The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan is increased to $23,000, up from $22,500.
The limit on annual contributions to an IRA increased to $7,000, up from $6,500. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2024.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan remains $7,500 for 2024. Therefore, participants in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan who are 50 and older can contribute up to $30,500, starting in 2024. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2024.
The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver's Credit all increased for 2024.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer's spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase‑out ranges for 2024:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $77,000 and $87,000, up from between $73,000 and $83,000.
- For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $123,000 and $143,000, up from between $116,000 and $136,000.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $230,000 and $240,000, up from between $218,000 and $228,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $146,000 and $161,000 for singles and heads of household, up from between $138,000 and $153,000. For married couples filing jointly, the income phase-out range is increased to between $230,000 and $240,000, up from between $218,000 and $228,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The income limit for the Saver's Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $76,500 for married couples filing jointly, up from $73,000; $57,375 for heads of household, up from $54,750; and $38,250 for singles and married individuals filing separately, up from $36,500.
The amount individuals can contribute to their SIMPLE retirement accounts is increased to $16,000, up from $15,500.
Additional changes made under SECURE 2.0 are as follows:
- The limitation on premiums paid with respect to a qualifying longevity annuity contract to $200,000. For 2024, this limitation remains $200,000.
- Added an adjustment to the deductible limit on charitable distributions. For 2024, this limitation is increased to $105,000, up from $100,000.
- Added a deductible limit for a one-time election to treat a distribution from an individual retirement account made directly by the trustee to a split-interest entity. For 2024, this limitation is increased to $53,000, up from $50,000.
Details on these and other retirement-related cost-of-living adjustments for 2024 are in Notice 2023-75 PDF , available on IRS.gov.
12 Things You Must Do Before Starting a Business
Table of contents.
When it comes to launching a new business venture, the intrepid American spirit hasn’t suffered in the wake of the COVID-19 pandemic. According to the U.S. Census Bureau , a record 5.4 million new business applications were filed in 2021. It may be the right time for you, too, to embark on starting a new company. Before doing this, however, there are essential steps entrepreneurs need to take.
1. Identify a creative idea.
The most successful businesses all started from the same place: an idea. Think of a business idea as the seed of your company. You need that before you can begin adding fertilizer, watering and growing complementary plants. In other words, before you can do all the steps below, make sure you have a solid idea for your new company – it’s what your business hinges on. What is a unique service you can provide? Where is there a gap in the marketplace that you can fill? Consider these cheap business ideas for inspiration.
2. Write a business plan.
After identifying a business idea, experts agree that writing a business plan is the next step you should take. Creating a business plan displays a genuine level of commitment, but it also forces prospective business owners to answer essential and sometimes challenging questions at the start of the development process. A business plan is also the first thing any potential investor will request. It will give them a detailed overview of your proposed business venture, your level of industry expertise and understanding of the opportunity, and the financial requirements and potential upside. [Read related article: How to Find and Attract Business Investors ]
Identifying a solid idea for your new company and then writing a business plan are the critical first steps in the process of starting a business.
3. Choose a legal structure.
Selecting the proper legal structure for your business at the outset is critical, especially since it’s not an easy change to make after the fact. Each type of legal entity comes with specific requirements and restrictions, and only certain types of corporations may apply to your particular business needs. If you need help, a corporate attorney or experienced business accountant can offer timely and accurate advice for creating the proper legal structure for your proposed company.
4. Get your business registration, licenses and tax identification.
Once your business structure is in place, you need to register your business and obtain the correct licenses, taxpayer identification number (TIN) and employer identification number (EIN). There are various resources to assist with business names, filing incorporation paperwork, obtaining necessary licenses and registrations with your local municipality, and getting your federal tax information squared away. Aside from the IRS for federal tax matters, regional corporation commissions (typically at the county level) can assist any new business owner with meeting the regulatory requirements for each locale around the country. If you’re planning on hiring staff to help run your business, you’ll also need to apply for a federal tax ID or an EIN. Having an EIN will protect you and your identity, allow you to file business taxes separate from your personal taxes and help establish credit for your business.
5. Know your competition and the marketplace.
There’s nothing wrong with a bit of competition. It allows business owners to innovate and evolve their products and services continuously. Knowing your business’s market, what your competition is doing and how your company fits into this landscape is critical in establishing your business. Including this information in your business plan will showcase your thorough knowledge of the industry for your proposed company. Without this information, no serious investor will rise to the occasion, and it will be hard to stand out in the marketplace. Know your industry, know your competition and understand how your business will become a differentiator in the market.
6. Finance your business.
Unless you’re an accountant, have a degree in finances or are a sophisticated investor, you’ll need some help nailing down this part of your pre-launch planning. Investors will want to know how much money your company will have to begin with and how much it will need in the future. Regardless of where your revenue will come from, list it in your business plan. Will you use your credit cards and home equity to start? Will you need a loan to get started? Are you willing to give up a percentage of your ownership in exchange for cash? Will you have sales the day you open your door? These are all critical questions to address.
Find out the best business loan and financing options so you can make an educated decision on how to finance your new business.
No matter how you plan to finance your business, include that information in your business plan. There are many investors out there, and they’ve seen it all. Don’t assume that no one will invest just because you aren’t also bringing some capital to the table. Investors typically want to know three things:
- For how long?
- What is the exit strategy?
Answer these three things to an investor’s satisfaction, and you’re very likely to strike a deal. [Read related article: How to Know an Investor Is Offering You a Good Deal ]
7. Identify and secure a location.
Whether it’s a home office or an entire building in an industrial park, you need to know where your business will be located before you launch it. Prior to your first day of operations, you’ll want to have the following in place:
- Phone and internet service
- Business directory listings
- Lease or purchase agreement for your workspace
If you haven’t identified or secured a location for your business before meeting with investors, don’t fret. Investors, bankers and legal counsel generally don’t see the lack of a specific location early on as a dealbreaker or red flag.
8. Get proper insurance.
Selecting the right business insurance for your company is not a decision to make lightly. There are several types of insurance to consider, including health, auto, directors and officers, liability, performance bond, travel (including AD&D) and life. In addition to understanding the differences between the available options, it’s important to identify any local regulations that might require your type of business to carry certain types of insurance. For example, if you’re starting a carpentry or plumbing company, you’ll need liability insurance, which typically isn’t necessary for businesses in other industries. Learn what else you need to keep in mind when choosing business insurance .
9. Obtain legal counsel.
Whether you want to have in-house counsel or hire an attorney as needed, your business needs to have access to legal advice. You may need legal representation specializing in corporate, tax, intellectual property, labor, or international law. Wherever regulatory requirements demand compliance, asking a lawyer to review and sign off on this part of your business will save you time and money and protect you from potential legal ramifications.
10. Establish a web presence.
In addition to securing your business’s physical location, you’ll also need to establish a virtual presence on the web. First, you’ll want to register a domain name that matches your business’s name so you’re ready to build your website when the time comes. Then, once you’re ready to develop your website, research the options available to ensure you’re selecting the best website builder that will meet your immediate needs and be able to support your desired functionality in the future, such as online ordering capabilities. Enlist the help of an SEO expert before starting so that they can ensure your website’s design and content are fully optimized. You may also want to consider the cost of starting an online business when deciding which kind of company to start.
In addition to a website, set up accounts to build a social media presence for your business . A consistent username across all of your preferred social channels will build credibility for your business. Read more about the importance of social media for small businesses .
11. Use local and national business resources.
There are plenty of local, county and national resources to make sure your business name is available, verify the legal structure you’ve chosen is correct and in compliance with location-specific ordinances, and advise on the different business loan options and other funds available to entrepreneurs. You can also refer to resources provided by your local corporation commission, the Small Business Administration and the IRS throughout the planning process.
12. Create a marketing plan.
Writing a marketing plan that complements your overall business plan will help ensure your new business’s success. A fully optimized website should be at the center of your marketing plan, even if you’re planning a brick-and-mortar business. Review these additional tips for creating a marketing strategy for your business.
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Electric Planes, Once a Fantasy, Start to Take to the Skies
How a small plane’s 16-day trip from Vermont to Florida might foreshadow a new era of battery-powered air travel long considered implausible.
By Niraj Chokshi
Photographs and Video by Tony Cenicola
Niraj Chokshi covers the aviation industry and reported from Burlington, Vt.
- Published Nov. 3, 2023 Updated Nov. 4, 2023
Chris Caputo stood on the tarmac at Burlington International Airport in Vermont in early October and looked to the clouds in the distance. He had piloted military and commercial aircraft over a long career, racking up thousands of flight hours, but the trip he was about to take would be very different.
That’s because the airplane Mr. Caputo would fly runs on batteries. Over the next 16 days, he and his colleagues flew the plane, a CX300 built by their employer, Beta Technologies, down the East Coast. They would make nearly two dozen stops to rest and recharge, flying through congested airspace over Boston, New York, Washington and other cities.
When the journey came to an end in Florida, Beta handed the plane over to the Air Force, which will experiment with it over the next few months. The trip offered a vision of what aviation could look like years from now — one in which the skies are filled with aircraft that do not emit the greenhouse gases that are dangerously warming up the Earth.
“We’re doing some really meaningful work for our state, our country and the planet,” Mr. Caputo said. “It’s hard not to want to be a part of it.”
A Flurry of Activity
For most of aviation history, electric aircraft have been little more than a fantasy. But technological advancements, particularly in batteries, and billions of dollars of investment have helped make short-distance electric air travel feasible — and, its backers hope, commercially viable.
Beta, which is privately held, has raised more than $800 million from investors like Fidelity, Amazon’s Climate Pledge Fund and the private equity firm TPG Capital. The company employs about 600 people, mostly in Vermont, and recently finished building a factory in Burlington where it plans to mass produce its aircraft, which have yet to be certified by the Federal Aviation Administration.
The first will be the CX300, a sleek, futuristic plane with a 50-foot wingspan, large curved windows and a rear propeller. That plane is designed to carry about 1,250 pounds of cargo and will be followed soon after by the A250, which shares about 80 percent of the CX300’s design and is outfitted with lift rotors to take off and land like a helicopter. Both aircraft, which Beta markets as the Alia, will eventually carry passengers, the company says.
Beta is one of many companies working on electric aviation. In California, Joby Aviation and Archer Aviation are developing battery-powered aircraft capable of vertical flight that, they say, will ferry a handful of passengers short distances. Those companies have backers like Toyota, Stellantis, United Airlines, Delta Air Lines and large investment firms. Established manufacturers like Airbus, Boeing and Embraer are also working on electric aircraft.
The U.S. government has mobilized behind the industry, too. The F.A.A. aims to support operations of aircraft that use new means of propulsion at scale in one or more places by 2028. And the Air Force is awarding contracts and testing vehicles , including Beta’s CX300 and an aircraft that Joby delivered to Edwards Air Force Base in California in September.
‘Almost One With the Plane’
Beta’s plane is not as large and powerful as the jets that Mr. Caputo flew for the Air Force, Air National Guard or Delta. But what it lacks in heft, it makes up for in charm, he said, noting that the airplane is incredibly quiet and responsive, making it a pleasure to fly.
“You’re almost one with the plane,” Mr. Caputo said, adding later: “You can kind of hear and feel the air going across the flight control surfaces. We wear helmets right now because it’s experimental and safety is paramount, but we can literally take the helmets off in the aircraft and just talk to one another.”
Mr. Caputo said the CX300 and other electric aircraft could open up new opportunities, like better connecting rural areas that have little or no direct air service.
Beta’s airplane has flown as far as 386 miles on a single charge, but the company said it expected its customers to generally use it to carry out trips of 100 to 150 miles. The plane’s journey to Florida was allowed under limited authority granted by the F.A.A.
In addition to producing no emissions, electric aircraft are designed to be simpler to operate and maintain than conventional helicopters and planes. But they are not expected to take to the skies in large numbers for years. Initially, their trips are likely to be short — from Manhattan to Kennedy International Airport, for example, or Burlington to Syracuse, N.Y.
Modern batteries can support limited range and weight. As a result, the aircraft that they power can generally carry only a handful of passengers, or the equivalent load in cargo.
Early on, electric aircraft are expected to compete mainly with helicopters and cars and trucks. In cities, widespread flights won’t be possible without expanded infrastructure like vertical landing and takeoff sites and public support. The cost of producing such aircraft will also be high to start, limiting their use to the well-heeled and to critical services like medical evacuations, experts said.
In some ways, the challenge and the promise of electric aviation today are like those of the automobile at the turn of the 20th century, said Kevin Michaels, managing director of AeroDynamic Advisory, an aviation consulting firm.
“You had several hundred manufacturers around the world, all with their own unique approaches to making these machines, but you didn’t have the roads, you didn’t have traffic lights, you didn’t have insurance,” he said. But, he added, the industry eventually found its way. “Things settled down 20 years later, and eventually costs fell, and winners emerged. And it changed the way things were done, the way people lived.”
Aiming to Earn Trust
Kyle Clark, Beta’s founder, is attuned to those concerns, which is why, he said, Beta has taken a more methodical approach.
“I get it, the industry has a trust issue,” he said. “It’s too much change, too quick, in an industry that has an exceptionally high standard of safety.”
The company plans first to win F.A.A. certification next year for a motor it has developed, followed by approvals of its first and second aircraft in subsequent years. The CX300 will use runways to move cargo, avoiding the need for new infrastructure, Mr. Clark said.
That approach has been endorsed by several customers, according to Beta, including the shipping giant UPS and United Therapeutics, which plans to use the vehicles to transport organs for transplant. Bristow Group, another customer, plans to use the aircraft the way it uses helicopters today, to transport goods and people to offshore energy installations, run search and rescue missions for governments, and for other purposes.
Bristow, which is working with eight companies developing next-generation aircraft, expects the vehicles to create new opportunities because they are quieter than helicopters and are expected to be 60 to 70 percent cheaper to operate, according to David Stepanek, an executive vice president at Bristow.
In addition to building aircraft, Beta is establishing a network of chargers that can power its aircraft as well as cars, trucks and other vehicles. More than a dozen have been set up, including one at the Air Force site in Florida, making it the military’s first electric aircraft charging station .
The company also built a prototype landing site for aircraft capable of vertical flight, which sits atop repurposed shipping containers, which house energy storage and a small living space for pilots to rest between trips.
The day that Beta’s aircraft left Burlington in October, Mr. Caputo flew it on two legs, arriving at sunset at Griffiss International Airport in the foothills of the Adirondack Mountains, near where he grew up. He ordered Italian food for the Beta team from a restaurant he used to frequent with his family, and his mother drove out to see the aircraft in person for the first time. The next morning, he flew the plane to Syracuse, N.Y., and handed it over to colleagues who would fly it the rest of the way.
Much of the popular discussion about electric aircraft revolves around the idea that they will effectively be used as flying cars to whiz people around big cities. In the near future, though, they may just as likely be used to ferry goods and passengers outside dense urban areas, in places like upstate New York and Vermont.
“To me, it’s going to have a really meaningful impact on how we move organs and goods and services,” he said, “and reconnect the rural parts of America that I think get often forgotten.”
Niraj Chokshi writes about aviation, rail and other transportation industries. More about Niraj Chokshi
Tony Cenicola has been a photographer with The Times since 1999. More about Tony Cenicola
Home > Business > Business Startup
How to Start a Small Business: Must-Have Checklist to Spark Success
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If you’re reading this page, you’ve probably got an idea of what you want your business to be. Whatever your great business idea is, you can improve your chances of success if you take the time to map out its creation step by step. Here you’ll find resources and articles to help walk you through building your business—from the idea phase to hiring employees and filing taxes.
1. Identify a business idea
So many people have great ideas. But, they never take the time to find out if these ideas have the potential to become businesses.
- Most Successful Small Business Ideas
- 6 Tips to Turn Your Hobby Into Income
- Launch a Business on a Budget: 10 Small Business Ideas Under $1,000
- The Complete Guide To Starting An Online Business
- How to Start a Dropshipping Business
- How to Start a Consulting Business: Paula Zamarra Shares 8 Tips
2. Conduct market research
Before you get invested in your idea financially and emotionally, you must find out if there are buyers for your product. Are you providing a service that is in demand? Is this service viable financially? Do you have a way of accessing your customers?
- Breaking Down Business Startup Costs
- 5 Essentials to Know Before Marketing Your Startup
- What You Need to Know to Start Selling Products
- What is the 4P Marketing Matrix?
- 4Cs Marketing Model & Why It’s Good for Business
3. Write a business plan/pitch
Most experts recommend that new entrepreneurs create a business plan—but what is a business plan, exactly? And do you really need one?
Although writing a business plan isn’t a surefire path to success, studies show that people who create business plans tend to also become successful entrepreneurs, so it can’t hurt.
Our advice? Whether you write a formal business plan, construct a mental plan, or discuss a plan with a partner, make an effort to create a business plan.
How To Write a Business Plan
- 5 Best Business Plan Software and Tools for Your Small Business
- Best Business Name Generators
4. Choose a business structure
Every entrepreneur must decide how to structure their business for several reasons. What you choose affects your liability and taxes, as well as which laws and regulations you’re subject to.
There are many business legal structures. But which one is right for you? That depends on how many employees you have, how comfortable you are with taking on personal liability for business operations, and how you want to pay taxes on money earned by the business.
- How to Make an Organizational Chart
- How to Incorporate a Business: Everything You Need to Know
5. Choose a location
While conducting market research, you will notice that there are locations where your business is in high demand and other locations that just don't need your product or service. For instance, ski equipment would be hard to sell in New Orleans, Louisiana, where it barely snows and the nearest mountain is two states away. In Utah, the demand is high but the market might be oversaturated.
In addition to demand, there are also states and cities that make it easier to launch a company. Lower taxes, lower labor costs, and less traffic make some cities more attractive than others. These are the best small cities for small businesses in each state, according to Verizon.
Best Bank for Small Businesses in Your State
Business Loan Amounts by State, Industry, and More: How Much Do You Need?
How Many Jobs Do Small Businesses Create in Your State?
6. Get a federal tax id
You’ll likely need a federal Employer Identification Number (EIN) to do business no matter where you’re located. The IRS says to get an EIN if any of the following apply:
- You have employees.
- You operate as a corporation or partnership.
- You file tax returns for employment; excise; or alcohol, tobacco, and firearms.
- You withhold non-wage taxes on income you pay to a “non-resident alien” (IRS definition).
- You have a Keogh plan, which is a retirement plan for some small businesses and self-employed people.
- Your business has relationships with certain organizations like estates, farmers’ cooperatives, nonprofit organizations, plan administrators, real estate and mortgage organizations, or trusts.
To get an EIN, complete and submit an application with the IRS. You’re eligible for an EIN as long as the person who applies has a valid Social Security number (SSN) or other Taxpayer Identification Number (TIN).
- How to Get a Business Tax ID
7. Open a bank account
First, you need a place to put the money your business earns. Although it’s not always required to open a separate bank account for business income, we recommend doing so for several reasons. These include (but are not limited to) credit and capital, liability protection, professional services and taxes.
- Small-Business Bank Accounts: Your Ultimate Guide
- Types of Business Bank Accounts
- How to Open a Business Bank Account
Set your business up for success with a checking account that has no monthly or overdraft fees and earns you up to $5,000 in interest each year.
8. Secure financing
Capital is the money you need to roll out your entrepreneurial goal. But how do you get your hands on it? If your brilliant business idea needs tons of cash to start up, you may need to ask investors to pitch in for your fledgling organization. But that’s not your only option. You can fund your business yourself, ask family and friends, get a loan, contact capital investors, try crowdsourcing or go to the government.
- Best Small Business Funding Options
- How to Get a Small Business Loan in 7 Simple Steps
- Guide to Startup Business Grants: Get Free Money for Your Business
Best Small Business Loans
- Best Crowdfunding for Startups: How to Fund Your Small Business
- Best Startup Business Line of Credit
Lendio partners with over 75 lenders, which improves your odds and efficiency to get the funding you need.
$50k in revenue
6 mos. in business
560 credit score
9. Build a website
Websites have become more and more important in marketing and brand awareness. From WordPress to Squarespace, there are a ton of options in how to stamp your brand into the world wide web.
- Best Website Builders for Small Businesses
- Best Domain Registrars for Small Businesses
- Best Free Website Builders for Small Business
- How to Design a Website for Your Business
- Best Ecommerce Website Builders for Small Businesses
- How to Secure a Website
10. Financial software
It is critical to be able to streamline your systems in how you track finances, pay employees, invoice vendors, bill customers, and secure tax records.
- What is Payroll Software?
- 12 Surprising Benefits Business Owners Found Using Payroll Software
- Best Small Business Management Software
- Best Payroll Software for Small Business
- The 9 Best Small-Business Accounting Software
- The 7 Best Free Accounting Software
- The Best Bookkeeping Software for Small Business
SurePayroll is an affordable and straightforward payroll software that offers automatic payroll runs, tax filing, and exceptional customer service.
11. Hire employees
As your business grows, your employees will as well. You need software to both manage your employees and help them grow.
- What Is Human Resource Software?
- 10 Best Workforce Management Software 2022
- 10 Best Human Resource Software for Small Business 2022
- 9 Best Scheduling Software for Small Business 2022
- Best Small Business Management Software 2022
12. File your taxes
There is nothing more stressful than filling out government forms without confidence about what you are supposed to write. Filing taxes is no joke, but there are systems and software that can help ease this annual burden.
- How to File Taxes If You’re Self-Employed
- How to File Small-Business Taxes
- How to File Taxes as an Independent Contractor
- How to Calculate Payroll Taxes
Whether you are at the beginning of your entrepreneurial journey or somewhere in the middle, solutions can seem difficult to find. There are systems and software that are made to simplify this kind of stuff for you.
Bottom line: you are not alone and we are here to help find you the solutions that fit best for your problems.
Want some ideas for your HR software pick? Check out our favorite human resource software for small businesses .
- Startup Costs Calculator for Small Business Owners
- Types of Startup Business Loans
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- 7.4 Start Your Own Business
- 1.1 What Do Managers Do?
- 1.2 The Roles Managers Play
- 1.3 Major Characteristics of the Manager's Job
- Summary of Learning Outcomes
- Chapter Review Questions
- Management Skills Application Exercises
- Managerial Decision Exercises
- Critical Thinking Case
- 2.1 Overview of Managerial Decision-Making
- 2.2 How the Brain Processes Information to Make Decisions: Reflective and Reactive Systems
- 2.3 Programmed and Nonprogrammed Decisions
- 2.4 Barriers to Effective Decision-Making
- 2.5 Improving the Quality of Decision-Making
- 2.6 Group Decision-Making
- 3.1 The Early Origins of Management
- 3.2 The Italian Renaissance
- 3.3 The Industrial Revolution
- 3.4 Taylor-Made Management
- 3.5 Administrative and Bureaucratic Management
- 3.6 Human Relations Movement
- 3.7 Contingency and System Management
- 4.1 The Organization's External Environment
- 4.2 External Environments and Industries
- 4.3 Organizational Designs and Structures
- 4.4 The Internal Organization and External Environments
- 4.5 Corporate Cultures
- 4.6 Organizing for Change in the 21st Century
- 5.1 Ethics and Business Ethics Defined
- 5.2 Dimensions of Ethics: The Individual Level
- 5.3 Ethical Principles and Responsible Decision-Making
- 5.4 Leadership: Ethics at the Organizational Level
- 5.5 Ethics, Corporate Culture, and Compliance
- 5.6 Corporate Social Responsibility (CSR)
- 5.7 Ethics around the Globe
- 5.8 Emerging Trends in Ethics, CSR, and Compliance
- 6.1 Importance of International Management
- 6.2 Hofstede's Cultural Framework
- 6.3 The GLOBE Framework
- 6.4 Cultural Stereotyping and Social Institutions
- 6.5 Cross-Cultural Assignments
- 6.6 Strategies for Expanding Globally
- 6.7 The Necessity of Global Markets
- 7.1 Entrepreneurship
- 7.2 Characteristics of Successful Entrepreneurs
- 7.3 Small Business
- 7.5 Managing a Small Business
- 7.6 The Large Impact of Small Business
- 7.7 The Small Business Administration
- 7.8 Trends in Entrepreneurship and Small-Business Ownership
- 8.1 Gaining Advantages by Understanding the Competitive Environment
- 8.2 Using SWOT for Strategic Analysis
- 8.3 A Firm's External Macro Environment: PESTEL
- 8.4 A Firm's Micro Environment: Porter's Five Forces
- 8.5 The Internal Environment
- 8.6 Competition, Strategy, and Competitive Advantage
- 8.7 Strategic Positioning
- 9.1 Strategic Management
- 9.2 Firm Vision and Mission
- 9.3 The Role of Strategic Analysis in Formulating a Strategy
- 9.4 Strategic Objectives and Levels of Strategy
- 9.5 Planning Firm Actions to Implement Strategies
- 9.6 Measuring and Evaluating Strategic Performance
- 10.1 Organizational Structures and Design
- 10.2 Organizational Change
- 10.3 Managing Change
- 11.1 An Introduction to Human Resource Management
- 11.2 Human Resource Management and Compliance
- 11.3 Performance Management
- 11.4 Influencing Employee Performance and Motivation
- 11.5 Building an Organization for the Future
- 11.6 Talent Development and Succession Planning
- 12.1 An Introduction to Workplace Diversity
- 12.2 Diversity and the Workforce
- 12.3 Diversity and Its Impact on Companies
- 12.4 Challenges of Diversity
- 12.5 Key Diversity Theories
- 12.6 Benefits and Challenges of Workplace Diversity
- 12.7 Recommendations for Managing Diversity
- 13.1 The Nature of Leadership
- 13.2 The Leadership Process
- 13.3 Leader Emergence
- 13.4 The Trait Approach to Leadership
- 13.5 Behavioral Approaches to Leadership
- 13.6 Situational (Contingency) Approaches to Leadership
- 13.7 Substitutes for and Neutralizers of Leadership
- 13.8 Transformational, Visionary, and Charismatic Leadership
- 13.9 Leadership Needs in the 21st Century
- 14.1 Motivation: Direction and Intensity
- 14.2 Content Theories of Motivation
- 14.3 Process Theories of Motivation
- 14.4 Recent Research on Motivation Theories
- 15.1 Teamwork in the Workplace
- 15.2 Team Development Over Time
- 15.3 Things to Consider When Managing Teams
- 15.4 Opportunities and Challenges to Team Building
- 15.5 Team Diversity
- 15.6 Multicultural Teams
- 16.1 The Process of Managerial Communication
- 16.2 Types of Communications in Organizations
- 16.3 Factors Affecting Communications and the Roles of Managers
- 16.4 Managerial Communication and Corporate Reputation
- 16.5 The Major Channels of Management Communication Are Talking, Listening, Reading, and Writing
- 17.1 Is Planning Important
- 17.2 The Planning Process
- 17.3 Types of Plans
- 17.4 Goals or Outcome Statements
- 17.5 Formal Organizational Planning in Practice
- 17.6 Employees' Responses to Planning
- 17.7 Management by Objectives: A Planning and Control Technique
- 17.8 The Control- and Involvement-Oriented Approaches to Planning and Controlling
- 18.1 MTI—Its Importance Now and In the Future
- 18.2 Developing Technology and Innovation
- 18.3 External Sources of Technology and Innovation
- 18.4 Internal Sources of Technology and Innovation
- 18.5 Management Entrepreneurship Skills for Technology and Innovation
- 18.6 Skills Needed for MTI
- 18.7 Managing Now for Future Technology and Innovation
- What are the first steps to take if you are starting your own business?
You have decided that you’d like to go into business for yourself. What is the best way to go about it? Start from scratch? Buy an existing business? Or buy a franchise? About 75 percent of business start-ups involve brand-new organizations, with the remaining 25 percent representing purchased companies or franchises. Franchising may have been discussed elsewhere in your course, so we’ll cover the other two options in this section.
The first step in starting your own business is a self-assessment to determine whether you have the personal traits you need to succeed and, if so, what type of business would be best for you. Table 7.6 provides a checklist to consider before starting your business.
Finding the Idea
Entrepreneurs get ideas for their businesses from many sources. It is not surprising that about 80 percent of Inc. 500 executives got the idea for their company while working in the same or a related industry. Starting a firm in a field where you have experience improves your chances of success. Other sources of inspiration are personal experiences as a consumer; hobbies and personal interests; suggestions from customers, family, and friends; industry conferences; and college courses or other education.
An excellent way to keep up with small-business trends is by reading entrepreneurship and small-business magazines and visiting their websites. With articles on everything from idea generation to selling a business, they provide an invaluable resource and profile some of the young entrepreneurs and their successful business ventures ( Table 7.7 ). 14
These dynamic individuals, who are already so successful in their 20s and 30s, came up with unique ideas and concepts and found the right niche for their businesses.
Interesting ideas are all around you. Many successful businesses get started because someone identifies a need and then finds a way to fill it. Do you have a problem that you need to solve? Or a product that doesn’t work as well as you’d like? Raising questions about the way things are done and seeing opportunity in adversity are great ways to generate ideas.
Choosing a Form of Business Organization
A key decision for a person starting a new business is whether it will be a sole proprietorship, partnership, corporation, or limited liability company. As discussed earlier, each type of business organization has advantages and disadvantages. The choice depends on the type of business, number of employees, capital requirements, tax considerations, and level of risk involved.
Developing the Business Plan
Once you have the basic concept for a product or service, you must develop a plan to create the business. This planning process, culminating in a sound business plan , is one of the most important steps in starting a business. It can help to attract appropriate loan financing, minimize the risks involved, and be a critical determinant in whether a firm succeeds or fails. Many people do not venture out on their own because they are overwhelmed with doubts and concerns. A comprehensive business plan lets you run various “what if” analyses and evaluate your business without any financial outlay or risk. You can also develop strategies to overcome problems well before starting the business.
Taking the time to develop a good business plan pays off. A venture that seems sound at the idea stage may not look so good on paper. A well-prepared, comprehensive, written business plan forces entrepreneurs to take an objective and critical look at their business venture and analyze their concept carefully; make decisions about marketing, sales, operations, production, staffing, budgeting and financing; and set goals that will help them manage and monitor its growth and performance.
The business plan also serves as the initial operating plan for the business. Writing a good business plan takes time. But many businesspeople neglect this critical planning tool in their eagerness to begin doing business, getting caught up in the day-to-day operations instead.
The key features of a business plan are a general description of the company, the qualifications of the owner(s), a description of the products or services, an analysis of the market (demand, customers, competition), sales and distribution channels, and a financial plan. The sections should work together to demonstrate why the business will be successful, while focusing on the uniqueness of the business and why it will attract customers. Table 7.8 describes the essential elements of a business plan.
A common use of a business plan is to persuade lenders and investors to finance the venture. The detailed information in the plan helps them assess whether to invest. Even though a business plan may take months to write, it must capture potential investors’ interest within minutes. For that reason, the basic business plan should be written with a particular reader in mind. Then you can fine-tune and tailor it to fit the investment goals of the investor(s) you plan to approach.
But don’t think you can set aside your business plan once you obtain financing and begin operating your company. Entrepreneurs who think their business plan is only for raising money make a big mistake. Business plans should be dynamic documents, reviewed and updated on a regular basis—monthly, quarterly, or annually, depending on how the business progresses and the particular industry changes.
Owners should adjust their sales and profit projections up or down as they analyze their markets and operating results. Reviewing your plan on a constant basis will help you identify strengths and weaknesses in your marketing and management strategies and help you evaluate possible opportunities for expansion in light of both your original mission and goals, current market trends, and business results. The Small Business Administration (SBA) offers sample business plans and online guidance for business plan preparation under the “Business Guide” tab at https://www.sba.gov .
Financing the Business
Once the business plan is complete, the next step is to obtain financing to set up your company. The funding required depends on the type of business and the entrepreneur’s own investment. Businesses started by lifestyle entrepreneurs require less financing than growth-oriented businesses, and manufacturing and high-tech companies generally require a large initial investment.
Who provides start-up funding for small companies? Like Miho Inagi and her Tokyo bagel shop, 94 percent of business owners raise start-up funds from personal accounts, family, and friends. Personal assets and money from family and friends are important for new firms, whereas funding from financial institutions may become more important as companies grow. Three-quarters of Inc . 500 companies have been funded on $100,000 or less. 15
The two forms of business financing are debt , borrowed funds that must be repaid with interest over a stated time period, and equity , funds raised through the sale of stock (i.e., ownership) in the business. Those who provide equity funds get a share of the business’s profits. Because lenders usually limit debt financing to no more than a quarter to a third of the firm’s total needs, equity financing often amounts to about 65 to 75 percent of total start-up financing.
One way to finance a start-up company is bootstrapping, which is basically funding the operation with your own resources. If the resources needed are not available to an individual, there are other options. Two sources of equity financing for young companies are angel investors and venture-capital firms. Angel investors are individual investors or groups of experienced investors who provide financing for start-up businesses by investing their own money, often referred to as “seed capital.” This gives the investors more flexibility on what they can and will invest in, but because it is their own money, angels are careful. Angel investors often invest early in a company’s development, and they want to see an idea they understand and can have confidence in. Table 7.9 offers some guidelines on how to attract angel financing.
Venture capital is financing obtained from venture capitalists, investment firms that specialize in financing small, high-growth companies. Venture capitalists receive an ownership interest and a voice in management in return for their money. They typically invest at a later stage than angel investors. We’ll discuss venture capital in greater detail when discussing financing the enterprise.
Buying a Small Business
Another route to small-business ownership is buying an existing business. Although this approach is less risky, many of the same steps for starting a business from scratch apply to buying an existing company. It still requires careful and thorough analysis. The potential buyer must answer several important questions: Why is the owner selling? Does he or she want to retire or move on to a new challenge, or are there problems with the business? Is the business operating at a profit? If not, can this be corrected? On what basis has the owner valued the company, and is it a fair price? What are the owner’s plans after selling the company? Will he or she be available to provide assistance through the change of ownership of the business? And depending on the type of business it is, will customers be more loyal to the owner than to the product or service being offered? Customers could leave the firm if the current owner decides to open a similar business. To protect against this, many purchasers include a noncompete clause in the contract of sale, which generally means that the owner of the company being sold may not be allowed to compete in the same industry of the acquired business for a specific amount of time.
You should prepare a business plan that thoroughly analyzes all aspects of the business. Get answers to all your questions, and determine, via the business plan, whether the business is a sound one. Then you must negotiate the price and other terms of purchase and obtain appropriate financing. This can be a complicated process and may require the use of a consultant or business broker.
Running your own business may not be as easy as it sounds. Despite the many advantages of being your own boss, the risks are great as well. Over a period of five years, nearly 50% percent of small businesses fail according to the Kauffman Foundation. 16
Businesses close down for many reasons—and not all are failures. Some businesses that close are financially successful and close for nonfinancial reasons. But the causes of business failure can be interrelated. For example, low sales and high expenses are often directly related to poor management. Some common causes of business closure are:
- Economic factors—business downturns and high interest rates
- Financial causes—inadequate capital, low cash balances, and high expenses
- Lack of experience—inadequate business knowledge, management experience, and technical expertise
- Personal reasons—the owners may decide to sell the business or move on to other opportunities
Inadequate early planning is often at the core of later business problems. As described earlier, a thorough feasibility analysis, from market assessment to financing, is critical to business success. Yet even with the best plans, business conditions change and unexpected challenges arise. An entrepreneur may start a company based on a terrific new product only to find that a larger firm with more marketing, financing, and distribution clout introduces a similar item.
The stress of managing a business can also take its toll. The business can consume your whole life. Owners may find themselves in over their heads and unable to cope with the pressures of business operations, from the long hours to being the main decision maker. Even successful businesses have to deal with ongoing challenges. Growing too quickly can cause as many problems as sluggish sales. Growth can strain a company’s finances when additional capital is required to fund expanding operations, from hiring additional staff to purchasing more raw material or equipment. Successful business owners must respond quickly and develop plans to manage its growth.
So, how do you know when it is time to quit? “Never give up” may be a good motivational catchphrase, but it is not always good advice for a small-business owner. Yet, some small-business owners keep going no matter what the cost. For example, Ian White’s company was trying to market a new kind of city map. White maxed out 11 credit cards and ran up more than $100,000 in debt after starting his company. He ultimately declared personal bankruptcy and was forced to find a job so that he could pay his bills. Maria Martz didn’t realize her small business would become a casualty until she saw her tax return showing her company’s losses in black and white—for the second year in a row. It convinced her that enough was enough and she gave up her gift-basket business to become a full-time homemaker. But once the decision is made, it may be tough to stick to. “I got calls from people asking how come I wasn’t in business anymore. It was tempting to say I’d make their basket but I had to tell myself it is finished now.” 17
- How can potential business owners find new business ideas?
- Why is it important to develop a business plan? What should such a plan include?
- What financing options do small-business owners have? What risks do they face?
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- Authors: David S. Bright, Anastasia H. Cortes
- Publisher/website: OpenStax
- Book title: Principles of Management
- Publication date: Mar 20, 2019
- Location: Houston, Texas
- Book URL: https://openstax.org/books/principles-management/pages/1-introduction
- Section URL: https://openstax.org/books/principles-management/pages/7-4-start-your-own-business
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