creating a business plan reddit

Our goal is to generate approximately $50,000 in monthly revenue within the first six months. We expect to reach a break-even point around this time. As we scale, we project significant growth, aiming for $200,000 in monthly revenue by the end of the first year."

10. Appendix

A detailed and well-developed business plan can range anywhere from 20 to 50 pages, with some even reaching upward of 80.

In many cases, the appendix is the longest section.

Because it includes the supportive materials mentioned in previous sections.

To avoid disrupting the flow of the business plan with visuals, charts, and spreadsheets, business owners usually add them in the last section, i.e., the appendix.

Aside from what I've already mentioned — marketing plan, sales plan, department budgets, financial documents — you may also want to attach the following in the appendix:

• Marketing materials.
• Market research data.
• Licensing documentation.
• Branding assets .
• Floor plans for your location.
• Mockups of your product.
• Renderings of your office space or location design.

Adding these pieces to the appendix enriches the reader‘s understanding of your business and proves you’ve put the work into your business plan without distracting from the main points throughout the plan.

Example of Appendix

How to Calculate Your Lead Generation Goals [Free Calculator]

What Are Direct Costs & How Do They Differ From Indirect Costs?

How to Write a Business Plan: A Step-by-Step Guide [Examples + Template]

9 Handy Business Calculators That’ll Make Your Life Easier

The Definition of CAC [In Under 100 Words]

How to Calculate the Value of Your Social Media Followers [CALCULATOR]

How to Calculate & Track a Leads Goal That Sales Supports

2 Essential Templates For Starting Your Business

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• Build your business

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The 7 Best Business Plan Examples (2024)

As an aspiring entrepreneur gearing up to start your own business , you likely know the importance of drafting a business plan. However, you might not be entirely sure where to begin or what specific details to include. That’s where examining business plan examples can be beneficial. Sample business plans serve as real-world templates to help you craft your own plan with confidence. They also provide insight into the key sections that make up a business plan, as well as demonstrate how to structure and present your ideas effectively.

Example business plan

To understand how to write a business plan, let’s study an example structured using a seven-part template. Here’s a quick overview of those parts:

• Executive summary: A quick overview of your business and the contents of your business plan.
• Company description: More info about your company, its goals and mission, and why you started it in the first place.
• Market analysis: Research about the market and industry your business will operate in, including a competitive analysis about the companies you’ll be up against.
• Products and services: A detailed description of what you’ll be selling to your customers.
• Marketing plan: A strategic outline of how you plan to market and promote your business before, during, and after your company launches into the market.
• Logistics and operations plan: An explanation of the systems, processes, and tools that are needed to run your business in the background.
• Financial plan: A map of your short-term (and even long-term) financial goals and the costs to run the business. If you’re looking for funding, this is the place to discuss your request and needs.

7 business plan examples (section by section)

In this section, you’ll find hypothetical and real-world examples of each aspect of a business plan to show you how the whole thing comes together. 

• Executive summary

Your executive summary offers a high-level overview of the rest of your business plan. You’ll want to include a brief description of your company, market research, competitor analysis, and financial information. 

In this free business plan template, the executive summary is three paragraphs and occupies nearly half the page:

• Company description

You might go more in-depth with your company description and include the following sections:

• Nature of the business. Mention the general category of business you fall under. Are you a manufacturer, wholesaler, or retailer of your products?
• Background information. Talk about your past experiences and skills, and how you’ve combined them to fill in the market. 
• Business structure. This section outlines how you registered your company —as a corporation, sole proprietorship, LLC, or other business type.
• Industry. Which business sector do you operate in? The answer might be technology, merchandising, or another industry.
• Team. Whether you’re the sole full-time employee of your business or you have contractors to support your daily workflow, this is your chance to put them under the spotlight.

You can also repurpose your company description elsewhere, like on your About page, Instagram page, or other properties that ask for a boilerplate description of your business. Hair extensions brand Luxy Hair has a blurb on it’s About page that could easily be repurposed as a company description for its business plan. 

• Market analysis

Market analysis comprises research on product supply and demand, your target market, the competitive landscape, and industry trends. You might do a SWOT analysis to learn where you stand and identify market gaps that you could exploit to establish your footing. Here’s an example of a SWOT analysis for a hypothetical ecommerce business: 

You’ll also want to run a competitive analysis as part of the market analysis component of your business plan. This will show you who you’re up against and give you ideas on how to gain an edge over the competition. 

• Products and services

This part of your business plan describes your product or service, how it will be priced, and the ways it will compete against similar offerings in the market. Don’t go into too much detail here—a few lines are enough to introduce your item to the reader.

• Marketing plan

Potential investors will want to know how you’ll get the word out about your business. So it’s essential to build a marketing plan that highlights the promotion and customer acquisition strategies you’re planning to adopt. 

Most marketing plans focus on the four Ps: product, price, place, and promotion. However, it’s easier when you break it down by the different marketing channels . Mention how you intend to promote your business using blogs, email, social media, and word-of-mouth marketing. 

Here’s an example of a hypothetical marketing plan for a real estate website:

Logistics and operations

This section of your business plan provides information about your production, facilities, equipment, shipping and fulfillment, and inventory.

Financial plan

The financial plan (a.k.a. financial statement) offers a breakdown of your sales, revenue, expenses, profit, and other financial metrics. You’ll want to include all the numbers and concrete data to project your current and projected financial state.

In this business plan example, the financial statement for ecommerce brand Nature’s Candy includes forecasted revenue, expenses, and net profit in graphs.

It then goes deeper into the financials, citing:

• Funding needs
• Project cash-flow statement
• Project profit-and-loss statement
• Projected balance sheet

You can use Shopify’s financial plan template to create your own income statement, cash-flow statement, and balance sheet. 

Types of business plans (and what to write for each)

A one-page business plan is a pared down version of a standard business plan that’s easy for potential investors and partners to understand. You’ll want to include all of these sections, but make sure they’re abbreviated and summarized:

• Logistics and operations plan
• Financials 

A startup business plan is meant to secure outside funding for a new business. Typically, there’s a big focus on the financials, as well as other sections that help determine the viability of your business idea—market analysis, for example. Shopify has a great business plan template for startups that include all the below points:

• Market research: in depth
• Financials: in depth

Your internal business plan acts as the enforcer of your company’s vision. It reminds your team of the long-term objective and keeps them strategically aligned toward the same goal. Be sure to include:

• Market research

Feasibility 

A feasibility business plan is essentially a feasibility study that helps you evaluate whether your product or idea is worthy of a full business plan. Include the following sections:

A strategic (or growth) business plan lays out your long-term vision and goals. This means your predictions stretch further into the future, and you aim for greater growth and revenue. While crafting this document, you use all the parts of a usual business plan but add more to each one:

• Products and services: for launch and expansion
• Market analysis: detailed analysis
• Marketing plan: detailed strategy
• Logistics and operations plan: detailed plan
• Financials: detailed projections

Free business plan templates

Now that you’re familiar with what’s included and how to format a business plan, let’s go over a few templates you can fill out or draw inspiration from.

Bplans’ free business plan template

Bplans’ free business plan template focuses a lot on the financial side of running a business. It has many pages just for your financial plan and statements. Once you fill it out, you’ll see exactly where your business stands financially and what you need to do to keep it on track or make it better.

PandaDoc’s free business plan template

PandaDoc’s free business plan template is detailed and guides you through every section, so you don’t have to figure everything out on your own. Filling it out, you’ll grasp the ins and outs of your business and how each part fits together. It’s also handy because it connects to PandaDoc’s e-signature for easy signing, ideal for businesses with partners or a board.

Miro’s Business Model Canvas Template

Miro’s Business Model Canvas Template helps you map out the essentials of your business, like partnerships, core activities, and what makes you different. It’s a collaborative tool for you and your team to learn how everything in your business is linked.

Better business planning equals better business outcomes

Building a business plan is key to establishing a clear direction and strategy for your venture. With a solid plan in hand, you’ll know what steps to take for achieving each of your business goals. Kickstart your business planning and set yourself up for success with a defined roadmap—utilizing the sample business plans above to inform your approach.

Business plan FAQ

What are the 3 main points of a business plan.

• Concept. Explain what your business does and the main idea behind it. This is where you tell people what you plan to achieve with your business.
• Contents. Explain what you’re selling or offering. Point out who you’re selling to and who else is selling something similar. This part concerns your products or services, who will buy them, and who you’re up against.
• Cash flow. Explain how money will move in and out of your business. Discuss the money you need to start and keep the business going, the costs of running your business, and how much money you expect to make.

How do I write a simple business plan?

To create a simple business plan, start with an executive summary that details your business vision and objectives. Follow this with a concise description of your company’s structure, your market analysis, and information about your products or services. Conclude your plan with financial projections that outline your expected revenue, expenses, and profitability.

What is the best format to write a business plan?

The optimal format for a business plan arranges your plan in a clear and structured way, helping potential investors get a quick grasp of what your business is about and what you aim to achieve. Always start with a summary of your plan and finish with the financial details or any extra information at the end.

Want to learn more?

• Question: Are You a Business Owner or an Entrepreneur?
• Bootstrapping a Business: 10 Tips to Help You Succeed
• Entrepreneurial Mindset: 20 Ways to Think Like an Entrepreneur
• 101+ Best Small Business Software Programs 

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

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

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

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

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

What Is a Business Plan?

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

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

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

Get a Business Idea

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

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

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

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

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

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

Conduct Market Analysis

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

Product and Service Demand

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

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

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

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

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

Identify Demographics of Target Market

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

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

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

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

How to Write a Business Plan

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

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

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

SWOT Analysis

• Competitor Data
• Competitive Analysis
• Marketing Expenses Strategy 

Pricing Strategy

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

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

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

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

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

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

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

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

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

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

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

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

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

Mike told us,

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

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

It consists of three basic parts:

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

Example of an informal executive summary 

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

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

What should I include in an executive summary for investors?

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

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

Successful business plan examples

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

Here’s the interview with the owner of Urbanity:

When to write an executive summary?

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

What mistakes do people make when writing an executive summary?

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

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

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

How to Write a Business Plan Step 4. Company Description

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

• Mission statement
• Philosophy and vision
• Company goals

Target market

• Legal structure

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

Mission Statement

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

Company Philosophy and Vision

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

What makes your company different?

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

Examples of core values

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

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

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

What is a vision statement?

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

Example vision statements

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

A world without Alzheimer’s Disease and other dementia.

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

Business Goals

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

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

How far in advance should a business plan?

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

Example of great business goals

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

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

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

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

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

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

Industry resources

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

• Trade Associations
• Federal Reserve
• Bureau of Labor Statistics

Legal Structure

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

• Sole proprietorships
• Limited Liability Companies (LLC)

Partnerships

Corporations.

• Franchises.

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

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

Sole Proprietorship

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

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

Limited Liability Company (LLC)

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

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

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

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

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

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

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

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

Questions to answer about your products and services

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

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

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

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

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

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

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

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

SWOT Examples

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

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

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

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

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

Include Competitor Data in Your Business Plan

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

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

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

Marketing Strategy

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

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

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

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

Advertising Strategy

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

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

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

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

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

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

Some common pricing strategies are:

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

HubSpot has a great calculator and blog on pricing strategies.

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

Distribution Plan

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

Supply Chain Examples

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

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

Examples of Supply Chains

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

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

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

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

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

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

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

Quality Control

• Legal environment

Let’s look at each for some insight.

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

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

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

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

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

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

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

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

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

Legal Environment

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

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

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

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

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

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

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

How to Write a Business Plan Step 8. Financial Statements 

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

Provide All Financial Income from an Existing Business

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

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

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

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

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

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

Financial Projections For A Startup Business Plan

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

Mike gave the following advice in his interview:

Financial Forecasting Mistakes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ways to get funding for a small business

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

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

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

How funding will be used

When asking for business financing make sure to include:

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

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

How to Write a Business Plan Resources

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

• Sample plan

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

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

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

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

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

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

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

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

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

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

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

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

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

Let’s get started.

What Do You Need A Business Plan For?

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

1. Secure Funds

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

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

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

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

2. Monitor Business Growth

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

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

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

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

3. Measure Business Success

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

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

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

4. Document Your Marketing Strategies

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

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

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

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

How to Write a Business Plan Step-by-Step

1. create your executive summary.

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

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

A good executive summary should do the following:

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

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

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

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

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

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

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

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

2. Add Your Company Overview

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

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

Your company overview should contain the following:

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

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

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

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

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

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

• Mission Statement

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

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

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

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

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

Business Objectives

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

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

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

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

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

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

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

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

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

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

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

Market Analysis

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

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

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

• Market Research

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

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

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

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

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

How to Quantify Your Target Market

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

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

What Does a Good Market Analysis Entail?

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

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

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

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

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

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

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

Competitive Analysis

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

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

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

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

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

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

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

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

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

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

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

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

Direct vs Indirect Competition

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

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

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

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

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

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

Factors that Differentiate Your Business from the Competition

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

1. Cost Leadership

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

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

2. Product Differentiation

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

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

3. Market Segmentation

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

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

4. Define Your Business and Management Structure

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

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

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

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

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

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

Management Team

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

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

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

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

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

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

Key Questions to Answer When Structuring Your Management Team

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

Additional Tips for Writing the Management Structure Section

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

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

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

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

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

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

Organizational Chart

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

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

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

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

5. Describe Your Product and Service Offering

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Avoid Technical Descriptions and Industry Buzzwords

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

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

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

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

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

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

3. Long or Short Products or Services Section

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

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

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

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

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

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

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

4. Describe Your Relationships with Vendors or Suppliers

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

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

5. Your Primary Goal Is to Convince Your Readers

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

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

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

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

Key Questions to Answer When Writing your Products and Services Section

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

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

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

6. Show and Explain Your Marketing and Sales Plan

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

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

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

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

Outline Your Business’ Unique Selling Proposition (USP)

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

Target Market and Target Audience

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

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

Creating a Smart Marketing and Sales Plan

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

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

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

Your Positioning Statement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Basic Rules to Follow When Pricing Your Offering

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

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

Pricing Strategy

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

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

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

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

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

Advertising

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

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

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

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

Public Relations

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

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

Content Marketing

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

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

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

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

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

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

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

Social Media

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

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

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

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

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

Strategic Alliances

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

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

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

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

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

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

2. Evaluate Your Competition

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

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

These questions can help you know your competition.

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

3. Consider Your Brand

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

4. Focus on Benefits

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

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

5. Focus on Differentiation

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

Key Questions to Answer When Writing Your Marketing and Sales Plan

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

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

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

7. Clearly Show Your Funding Request

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

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

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

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

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

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

Funding Request: Debt or Equity?

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

Case for Equity

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

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

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

Case for Debt

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

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

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

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

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

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

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

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

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

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

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

8. Detail Your Financial Plan, Metrics, and Projections

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

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

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

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

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

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

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

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

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

Use Graphs and Charts

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

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

Address the Risk Factors and Show Realistic Financial Projections

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

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

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

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

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

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

1. Sales Forecast

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

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

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

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

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

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

2. Personnel Plan

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

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

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

3. Income Statement

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

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

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

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

4. Cash Flow Statement

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

5. Balance Sheet

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

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

6. Exit Strategy

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

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

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

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

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

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

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

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

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

9. Add an Appendix to Your Business Plan

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

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

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

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

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

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

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

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

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

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

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

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

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

Tips and Strategies for Writing a Convincing Business Plan

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

1. Know Your Audience

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

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

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

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

2. Get Inspiration from People

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

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

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

3. Avoid Being Over Optimistic

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

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

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

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

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

4. Keep it Simple and Short

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

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

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

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

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

5. Make an Outline and Follow Through

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

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

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

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

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

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

6. Ask a Professional to Proofread

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

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

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

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

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

1. hubspot's one-page business plan.

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

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

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

2. Bplan’s Free Business Plan Template

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

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

3. HubSpot's Downloadable Business Plan Template

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

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

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

4. Business Plan by My Own Business Institute

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

The comprehensive template consists of a whopping 15 sections.

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

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

5. Score's Business Plan Template for Startups

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

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

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

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

6. Minimalist Architecture Business Plan Template by Venngage

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

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

7. Small Business Administration Free Business Plan Template

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

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

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

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

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

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

9. PandaDoc’s Free Business Plan Template

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

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

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

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

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

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

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

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

Alternatives to the Traditional Business Plan

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

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

Business Model Canvas (BMC)

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

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

Segments of the Business Model Canvas

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

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

Lean Canvas

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

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

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

Startup Pitch Deck

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

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

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

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

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

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

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

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

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

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

Business Plan FAQ

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

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

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

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

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

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

Exlore Further

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

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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

Step-by-Step Guide to Writing a Simple Business Plan

By Joe Weller | October 11, 2021

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A business plan is the cornerstone of any successful company, regardless of size or industry. This step-by-step guide provides information on writing a business plan for organizations at any stage, complete with free templates and expert advice. 

Included on this page, you’ll find a step-by-step guide to writing a business plan and a chart to identify which type of business plan you should write . Plus, find information on how a business plan can help grow a business and expert tips on writing one .

What Is a Business Plan?

A business plan is a document that communicates a company’s goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered.

A business plan can highlight varying time periods, depending on the stage of your company and its goals. That said, a typical business plan will include the following benchmarks:

• Product goals and deadlines for each month
• Monthly financials for the first two years
• Profit and loss statements for the first three to five years
• Balance sheet projections for the first three to five years

Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.

While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors. In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.

For more information, visit our comprehensive guide to writing a strategic plan or download free strategic plan templates . This page focuses on for-profit business plans, but you can read our article with nonprofit business plan templates .

Business Plan Steps

The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:

• Executive summary
• Description of business
• Market analysis
• Competitive analysis
• Description of organizational management
• Description of product or services
• Marketing plan
• Sales strategy
• Funding details (or request for funding)
• Financial projections

If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference. For an in-depth description of each step listed above, read “ How to Write a Business Plan Step by Step ” below.

Broadly speaking, your audience includes anyone with a vested interest in your organization. They can include potential and existing investors, as well as customers, internal team members, suppliers, and vendors.

Do I Need a Simple or Detailed Plan?

Your business’s stage and intended audience dictates the level of detail your plan needs. Corporations require a thorough business plan — up to 100 pages. Small businesses or startups should have a concise plan focusing on financials and strategy.

How to Choose the Right Plan for Your Business

In order to identify which type of business plan you need to create, ask: “What do we want the plan to do?” Identify function first, and form will follow.

Use the chart below as a guide for what type of business plan to create:

Is the Order of Your Business Plan Important?

There is no set order for a business plan, with the exception of the executive summary, which should always come first. Beyond that, simply ensure that you organize the plan in a way that makes sense and flows naturally.

The Difference Between Traditional and Lean Business Plans

A traditional business plan follows the standard structure — because these plans encourage detail, they tend to require more work upfront and can run dozens of pages. A Lean business plan is less common and focuses on summarizing critical points for each section. These plans take much less work and typically run one page in length.

In general, you should use a traditional model for a legacy company, a large company, or any business that does not adhere to Lean (or another Agile method ). Use Lean if you expect the company to pivot quickly or if you already employ a Lean strategy with other business operations. Additionally, a Lean business plan can suffice if the document is for internal use only. Stick to a traditional version for investors, as they may be more sensitive to sudden changes or a high degree of built-in flexibility in the plan.

How to Write a Business Plan Step by Step

Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.

Step 1: Executive Summary

The executive summary will always be the first section of your business plan. The goal is to answer the following questions:

• What is the vision and mission of the company?
• What are the company’s short- and long-term goals?

See our  roundup of executive summary examples and templates for samples. Read our executive summary guide to learn more about writing one.

Step 2: Description of Business

The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:

• What business are we in?
• What does our business do?

Step 3: Market Analysis

In this section, provide evidence that you have surveyed and understand the current marketplace, and that your product or service satisfies a niche in the market. To do so, answer these questions:

• Who is our customer? 
• What does that customer value?

Step 4: Competitive Analysis

In many cases, a business plan proposes not a brand-new (or even market-disrupting) venture, but a more competitive version — whether via features, pricing, integrations, etc. — than what is currently available. In this section, answer the following questions to show that your product or service stands to outpace competitors:

• Who is the competition? 
• What do they do best? 
• What is our unique value proposition?

Step 5: Description of Organizational Management

In this section, write an overview of the team members and other key personnel who are integral to success. List roles and responsibilities, and if possible, note the hierarchy or team structure.

Step 6: Description of Products or Services

In this section, clearly define your product or service, as well as all the effort and resources that go into producing it. The strength of your product largely defines the success of your business, so it’s imperative that you take time to test and refine the product before launching into marketing, sales, or funding details.

Questions to answer in this section are as follows:

• What is the product or service?
• How do we produce it, and what resources are necessary for production?

Step 7: Marketing Plan

In this section, define the marketing strategy for your product or service. This doesn’t need to be as fleshed out as a full marketing plan , but it should answer basic questions, such as the following:

• Who is the target market (if different from existing customer base)?
• What channels will you use to reach your target market?
• What resources does your marketing strategy require, and do you have access to them?
• If possible, do you have a rough estimate of timeline and budget?
• How will you measure success?

Step 8: Sales Plan

Write an overview of the sales strategy, including the priorities of each cycle, steps to achieve these goals, and metrics for success. For the purposes of a business plan, this section does not need to be a comprehensive, in-depth sales plan , but can simply outline the high-level objectives and strategies of your sales efforts. 

Start by answering the following questions:

• What is the sales strategy?
• What are the tools and tactics you will use to achieve your goals?
• What are the potential obstacles, and how will you overcome them?
• What is the timeline for sales and turning a profit?
• What are the metrics of success?

Step 9: Funding Details (or Request for Funding)

This section is one of the most critical parts of your business plan, particularly if you are sharing it with investors. You do not need to provide a full financial plan, but you should be able to answer the following questions:

• How much capital do you currently have? How much capital do you need?
• How will you grow the team (onboarding, team structure, training and development)?
• What are your physical needs and constraints (space, equipment, etc.)?

Step 10: Financial Projections

Apart from the fundraising analysis, investors like to see thought-out financial projections for the future. As discussed earlier, depending on the scope and stage of your business, this could be anywhere from one to five years. 

While these projections won’t be exact — and will need to be somewhat flexible — you should be able to gauge the following:

• How and when will the company first generate a profit?
• How will the company maintain profit thereafter?

Business Plan Template

Download Business Plan Template

Microsoft Excel | Smartsheet

This basic business plan template has space for all the traditional elements: an executive summary, product or service details, target audience, marketing and sales strategies, etc. In the finances sections, input your baseline numbers, and the template will automatically calculate projections for sales forecasting, financial statements, and more.

For templates tailored to more specific needs, visit this business plan template roundup or download a fill-in-the-blank business plan template to make things easy. 

If you are looking for a particular template by file type, visit our pages dedicated exclusively to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates.

How to Write a Simple Business Plan

A simple business plan is a streamlined, lightweight version of the large, traditional model. As opposed to a one-page business plan , which communicates high-level information for quick overviews (such as a stakeholder presentation), a simple business plan can exceed one page.

Below are the steps for creating a generic simple business plan, which are reflected in the template below .

• Write the Executive Summary This section is the same as in the traditional business plan — simply offer an overview of what’s in the business plan, the prospect or core offering, and the short- and long-term goals of the company. 
• Add a Company Overview Document the larger company mission and vision. 
• Provide the Problem and Solution In straightforward terms, define the problem you are attempting to solve with your product or service and how your company will attempt to do it. Think of this section as the gap in the market you are attempting to close.
• Identify the Target Market Who is your company (and its products or services) attempting to reach? If possible, briefly define your buyer personas .
• Write About the Competition In this section, demonstrate your knowledge of the market by listing the current competitors and outlining your competitive advantage.
• Describe Your Product or Service Offerings Get down to brass tacks and define your product or service. What exactly are you selling?
• Outline Your Marketing Tactics Without getting into too much detail, describe your planned marketing initiatives.
• Add a Timeline and the Metrics You Will Use to Measure Success Offer a rough timeline, including milestones and key performance indicators (KPIs) that you will use to measure your progress.
• Include Your Financial Forecasts Write an overview of your financial plan that demonstrates you have done your research and adequate modeling. You can also list key assumptions that go into this forecasting. 
• Identify Your Financing Needs This section is where you will make your funding request. Based on everything in the business plan, list your proposed sources of funding, as well as how you will use it.

Simple Business Plan Template

Download Simple Business Plan Template

Microsoft Excel |  Microsoft Word | Adobe PDF  | Smartsheet

Use this simple business plan template to outline each aspect of your organization, including information about financing and opportunities to seek out further funding. This template is completely customizable to fit the needs of any business, whether it’s a startup or large company.

Read our article offering free simple business plan templates or free 30-60-90-day business plan templates to find more tailored options. You can also explore our collection of one page business templates . 

How to Write a Business Plan for a Lean Startup

A Lean startup business plan is a more Agile approach to a traditional version. The plan focuses more on activities, processes, and relationships (and maintains flexibility in all aspects), rather than on concrete deliverables and timelines.

While there is some overlap between a traditional and a Lean business plan, you can write a Lean plan by following the steps below:

• Add Your Value Proposition Take a streamlined approach to describing your product or service. What is the unique value your startup aims to deliver to customers? Make sure the team is aligned on the core offering and that you can state it in clear, simple language.
• List Your Key Partners List any other businesses you will work with to realize your vision, including external vendors, suppliers, and partners. This section demonstrates that you have thoughtfully considered the resources you can provide internally, identified areas for external assistance, and conducted research to find alternatives.
• Note the Key Activities Describe the key activities of your business, including sourcing, production, marketing, distribution channels, and customer relationships.
• Include Your Key Resources List the critical resources — including personnel, equipment, space, and intellectual property — that will enable you to deliver your unique value.
• Identify Your Customer Relationships and Channels In this section, document how you will reach and build relationships with customers. Provide a high-level map of the customer experience from start to finish, including the spaces in which you will interact with the customer (online, retail, etc.). 
• Detail Your Marketing Channels Describe the marketing methods and communication platforms you will use to identify and nurture your relationships with customers. These could be email, advertising, social media, etc.
• Explain the Cost Structure This section is especially necessary in the early stages of a business. Will you prioritize maximizing value or keeping costs low? List the foundational startup costs and how you will move toward profit over time.
• Share Your Revenue Streams Over time, how will the company make money? Include both the direct product or service purchase, as well as secondary sources of revenue, such as subscriptions, selling advertising space, fundraising, etc.

Lean Business Plan Template for Startups

Download Lean Business Plan Template for Startups

Microsoft Word | Adobe PDF

Startup leaders can use this Lean business plan template to relay the most critical information from a traditional plan. You’ll find all the sections listed above, including spaces for industry and product overviews, cost structure and sources of revenue, and key metrics, and a timeline. The template is completely customizable, so you can edit it to suit the objectives of your Lean startups.

See our wide variety of  startup business plan templates for more options.

How to Write a Business Plan for a Loan

A business plan for a loan, often called a loan proposal , includes many of the same aspects of a traditional business plan, as well as additional financial documents, such as a credit history, a loan request, and a loan repayment plan.

In addition, you may be asked to include personal and business financial statements, a form of collateral, and equity investment information.

Download free financial templates to support your business plan.

Tips for Writing a Business Plan

Outside of including all the key details in your business plan, you have several options to elevate the document for the highest chance of winning funding and other resources. Follow these tips from experts:.

• Keep It Simple: Avner Brodsky , the Co-Founder and CEO of Lezgo Limited, an online marketing company, uses the acronym KISS (keep it short and simple) as a variation on this idea. “The business plan is not a college thesis,” he says. “Just focus on providing the essential information.”
• Do Adequate Research: Michael Dean, the Co-Founder of Pool Research , encourages business leaders to “invest time in research, both internal and external (market, finance, legal etc.). Avoid being overly ambitious or presumptive. Instead, keep everything objective, balanced, and accurate.” Your plan needs to stand on its own, and you must have the data to back up any claims or forecasting you make. As Brodsky explains, “Your business needs to be grounded on the realities of the market in your chosen location. Get the most recent data from authoritative sources so that the figures are vetted by experts and are reliable.”
• Set Clear Goals: Make sure your plan includes clear, time-based goals. “Short-term goals are key to momentum growth and are especially important to identify for new businesses,” advises Dean.
• Know (and Address) Your Weaknesses: “This awareness sets you up to overcome your weak points much quicker than waiting for them to arise,” shares Dean. Brodsky recommends performing a full SWOT analysis to identify your weaknesses, too. “Your business will fare better with self-knowledge, which will help you better define the mission of your business, as well as the strategies you will choose to achieve your objectives,” he adds.
• Seek Peer or Mentor Review: “Ask for feedback on your drafts and for areas to improve,” advises Brodsky. “When your mind is filled with dreams for your business, sometimes it is an outsider who can tell you what you’re missing and will save your business from being a product of whimsy.”

Outside of these more practical tips, the language you use is also important and may make or break your business plan.

Shaun Heng, VP of Operations at Coin Market Cap , gives the following advice on the writing, “Your business plan is your sales pitch to an investor. And as with any sales pitch, you need to strike the right tone and hit a few emotional chords. This is a little tricky in a business plan, because you also need to be formal and matter-of-fact. But you can still impress by weaving in descriptive language and saying things in a more elegant way.

“A great way to do this is by expanding your vocabulary, avoiding word repetition, and using business language. Instead of saying that something ‘will bring in as many customers as possible,’ try saying ‘will garner the largest possible market segment.’ Elevate your writing with precise descriptive words and you'll impress even the busiest investor.”

Additionally, Dean recommends that you “stay consistent and concise by keeping your tone and style steady throughout, and your language clear and precise. Include only what is 100 percent necessary.”

Resources for Writing a Business Plan

While a template provides a great outline of what to include in a business plan, a live document or more robust program can provide additional functionality, visibility, and real-time updates. The U.S. Small Business Association also curates resources for writing a business plan.

Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.

How a Business Plan Helps to Grow Your Business

A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships. 

Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.

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Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

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Building anything from scratch is a worthwhile challenge.

Baking bread, assembling a bookcase, shaping your career, forming a family—all start with next-to-nothing and end in marvelous works of art. It’s not easy to create something from scratch, but it’s oh-so rewarding.

Building a business is no different. You start with diddly-squat, throw in a bit of hard work and ingenuity, and bring a life-changing idea to existence.

But, where do you begin?

Ah, that’s a good question. Fortunately, you’ve come to the right place. Our CEO, Nathan Chan, built Foundr from the ground up 10 years ago, so we know a little something-something about building a successful startup with nothing but a seed of an idea and perspiration.

Below, we’ll walk you step by step through how to start a business from scratch. While it’s possible just to wing it and stumble upon success, we believe following a proven roadmap will lead to better odds of triumph—there’s a reason 90% of startups fail .

You won’t be part of that statistic, though, because you’re going to do things the right way. And we’re going to help.

How to Start a Business from Scratch: 10-Step Process

10 steps might sound like a bit much to learn how to start a business from scratch but bear with us. You’ll already know some of this information, and other parts will be brand-new. Feel free to skip around or take it step by step.

We link out to other robust pieces of content (blog posts, videos, and podcasts) to help you learn and absorb everything you need to know to get started. Consider this the go-to resource center for starting your business—we’ll direct you to every tool, lesson, and best practice you need, regardless of where you are in the process.

Use the table of contents below to jump to the right resources faster. Plus, bookmark this article so you can find what you need (when you need it) every step of the way.

Table of Contents

1. Find a Need

2. validate your idea, 3. identify your target market, 4. build your audience, 5. launch an mvp, 6. create a business plan, 7. secure your business and brand, 8. market your products, 9. sell like a boss, 10. scale efficiently.

AI Tools to Start a Business

How to Start a Business From Scratch FAQ

Most businesses fail because they start with a product, service, or brilliant idea. Scratch that and take a step back.

Forget about any innovative solutions or game-changing notions. First, you need to find a problem. It could be your problem, a neighbor’s problem, or a near-and-dear community’s problem. Find it.

Try out these 4 strategies to find inspiration for your business idea:

• Write Down Your Current Problems and Interests: What issues and concerns keep you up at night? What would you pay good money to have someone else fix for you?
• Check Out Product Review Blogs: Have you noticed an under-performing product with potential? What are customers complaining (and praising) about the product? Could you create something better?
• Explore Niche Communities on Reddit: Reddit is a gold mine of customer research. Browse around niche subreddits to see what’s generating hype. Notice any trends?
• Browse Consumer Marketplaces: Best-selling products on Amazon , Etsy, and eBay made it to the top spot for a reason. Analyze what they’re doing right, identify gaps, and see where you might fit in.

These are all just starting points. You’ll still need to validate these ideas to ensure they solve problems for a larger customer base and that they’re willing to pay for a solution. Once you’ve zeroed in on the problem, start brainstorming a product or service that solves it.

Here are a few characteristics of product ideas (that don’t suck) :

• Provides a Strong USP: Your product’s unique selling proposition (USP) makes it stand apart from the competition.
• Delivers Profit Potential: A product idea isn’t good if it can’t be scaled for profit. Think about pricing, expenses, supply and demand, and your audience to determine your product’s long-term profitability.
• Makes Customers Pay: Not every seemingly good idea is worth paying for—Snapchat Spectacles, anyone?
• Satisfies Demand: Some problems aren’t worth solving.
• Doesn’t Confuse Customers: If you can’t explain it to your mom in 60 seconds, it probably needs to go back to the drawing board.

Now that you have a solid business idea, it’s time to justify it. You’re going to be spending a lot of time, money, and energy on your business—it’s best to ensure it has a chance from the get-go before you invest too many resources.

Fortunately, validation isn’t too tricky. The hardest part is listening to feedback and analyzing your business idea objectively. Do that, and you’ll be fine.

Use the following methods to validate your idea. You don’t need to use all of them. Find one that works best for you, your industry, and your situation:

• Foundr’s 3-Step Validation Process: First, launch a survey to your target audience to ask them a few questions. Second, analyze the responses and look for trends and pain points. Lastly, pre-sell your product or service at a discounted rate to see if customers will put their money where their mouth is.
• Smoke Test: We use this method to validate all our online course ideas. Set up a landing page and drive traffic (using social media, email marketing, and pay-per-click (PPC) advertisements). You don’t even need a completed product yet—just market your idea and see how many people click the big red “Buy Now” button.
• Harry’s Consumer Research: Jeff Raider and Andy Katz-Mayfield used insights research, focus groups, customer surveys, dummy brands, and live testing to validate Harry’s razors.
• Digital Tools: While these tools are used to validate blog post ideas, they can also substantiate your business. Post ideas on Quora, Instagram, TikTok, and Reddit to see if there’s an appetite. If no one is interested in an idea, there’ll probably be crickets when you launch the actual product, too.

Your target market is the lifeblood of your business. You can’t succeed if you don’t come to know every teeny-tiny aspect of their wants, needs, fears, desires, problems, and aspirations.

How do they spend their day? Do they have kids? Are they lactose intolerant? Do they ride a bike or drive a car to work?

Use our Guide to Defining Your Target Market to help establish your audience and learn more about them. Here’s the TLDR:

• Start Specific, Then Broaden: Instead of starting broad with “Who is my target market,” begin narrow with “Who will be drawn to this product or service?”
• Analyze the Overall Market: Identify what’s trending and what might hurt or help your business. Other market factors will impact your target market, so it’s best to get ahead of the curve.
• Reference Your Competitors: Who are your competitors targeting? How do they approach their marketing? Have they left out any key niches?
• Use Your Social Media Data: Social media platforms (for better or worse) already collect tons of data about your followers. Reference this data to learn about their demographics and psychographics.

Once you’ve narrowed down your target market, it’s time to do additional segmentation. For example, if your audience is male soccer players, you’ll want to break that group down into smaller subsections. You might have:

• Recreational male soccer players
• High school male soccer players
• Competitive male soccer players
• Male soccer players who watch more than they play
• Male soccer players who coach

Your target market isn’t one homogenous blob. These segmented groups would likely respond to different marketing and sales approaches. The further you segment your audience, the more equipped you’ll be to create personalized messaging.

OK, now you have a validated idea and a framed portrait of your target market—that’s a great start! Next, you need to begin building an audience.

Your audience comprises social media followers, email subscribers, podcast listeners, phone numbers, blog readers, and interested shoppers—basically, anyone familiar with your brand that’s primed and ready to convert when your product launches.

Let’s start with building brand awareness. 8 Foolproof Strategies to Increase Brand Awareness walks you through plenty of budget-friendly ways to make your brand recognizable. Here are a few highlights:

• Tell a Story: People don’t remember products—they remember stories. Make your brand larger than life by making it about more than just money, products, and features.
• Solve a Problem: Solutions market themselves better than products. Your customer should be daydreaming about how your brand could improve their lives.
• Win the Right Keywords: Make your brand show up wherever your audience spends their digital time.

Check out the following guides for more channel-specific audience building:

• Build an Email List From the Ground Up (The Right Way)
• 16 Ways to Find (and Win) Your Dream Customers
• Facebook Ad Targeting: Find Customers Like a Marketing Eagle Eye
• How to Get More Views on YouTube
• Build a Podcast Audience

Time to make your idea a reality. Instead of spending months or years polishing the perfect product, launch fast and light with a minimum viable product (MVP) .

An MVP is the most basic version of your product that a customer can use. Take Facebook, for example. Facebook’s MVP was the original dumbed-down version that didn’t have a marketplace, groups, video, stories, gaming, or news—it was just a rudimentary social media network with friends and updates (imagine that).

Here are 3 ways to launch better MVPs :

• Shift to an MLP Mindset: MLP stands for minimum loveable product. Don’t just launch a product that works—launch something your customers love.
• Go Live with a Soft Launch: You don’t need a press release and fireworks when you first roll out your product. Keep things light and casual at first.
• Test Your Ideas First: Your MVP isn’t the validation. You should have already validated your idea before producing the product .

Writing a business plan might feel old-school and outdated, but it has a few data-backed benefits for businesses , including:

• Higher average annual growth
• Greater chances of success
• Improved business performance

Get out a pencil and some notepad and get to work. A business plan will keep you on track and ensure you’re headed in the right direction. It outlines your processes, goals, budgets, market research, financing strategy, and more.

Include these 6 essential elements in your business plan :

• Executive Summary: Summarizes your entire plan in a concise one-pager.
• Business Overview: Outlines the business details: structure, ownership, location, products, and mission statement.
• Products and Services: Breaks down your solutions in minute detail.
• Market Analysis: Describes the state of the market and key opportunities (and threats).
• Competitive Analysis: Analyzes competitors’ strengths and weaknesses.
• Financial Strategy: Explains projected revenue, expenses, profits (or losses), and financing strategies.

Now that you have a product MVP, business plan, and target audience, you need to make your business official. The first step is to create a brand around your idea. A brand includes the name, logo, website, and social imagery, but it’s a continual practice you’ll need to focus on as much as product development, finding customers, and leading your team.

Here’s a list of brand-building guides to get you started:

• Coming up with a Business Name That Shines
• How to Choose the Right Color for Your Logo: The Ultimate Cheat Sheet
• What’s the Best Website Builder for Small Business?
• How to Set Up a Website in Less than 60 Minutes
• 3 Small Business Branding Tips to Rise Above the Competition
• 8 Foolproof Strategies to Increase Brand Awareness 

Making your business secure is more than buying a website URL and securing social handles (which are important). It’s about legally securing the necessary information to ensure your idea, logo, and name aren’t stolen. Plus, filing the correct tax information (depending on your business origin) can protect you from legal actions or owing on taxes.

Here’s a list of things you need to do to secure your business legally and make it official:

• Register your business with the state
• Get a tax ID number
• Create a business bank account
• Official licenses or certifications (if necessary)
• Obtain business insurance (if necessary)

At foundr, we always suggest consulting a tax professional in regard to registering your business.

Finally, we’ve made it to the marketing portion. For many entrepreneurs, this is the best part—and it’s a heck of a lot better than the next stage: selling.

Marketing includes the strategies and tactics ( not the same, by the way ) you use to get your brand in front of potential buyers. It includes elements like content marketing, advertising, social media marketing, video marketing, and ecommerce marketing.

Before you get too into the weeds, take a step back and approach your marketing strategy step by step with our guide: How to Create a Marketing Plan (Outline + Examples) . It’ll help you focus and ensure your strategy is cohesive and goal-driven.

Once you’ve identified the channels you want to use, check out the following guides and interviews to put your plan into action:

• Content Marketing: The Ultimate Content Marketing Strategy for Startups
• Social Media Marketing: Increase Social Media Reach
• Video Marketing: 5 Steps to a Successful YouTube Marketing Strategy
• Ecommerce Marketing: How to Start an Ecommerce Business
• Affiliate Marketing: Ultimate Guide to Affiliate Marketing
• Influencer Marketing: Influencer Marketing 101
• Podcast Marketing: Podcast Marketing Guide

Sales. Would-be entrepreneurs, don’t panic. You can do this.

Validating your idea, finding your niche, producing your product, and building brand awareness means nothing in the end if you can’t make money. Fortunately, selling your product doesn’t have to feel like an awkward encounter with a door-to-door solar panel representative.

Don’t worry—we hate cringe-worthy sales tactics, too. Check out these resources to help you monetize everything from your email list to your Instagram following (without selling your soul):

• How to Write a Sales Email That Converts
• 5 Best Sales Funnel Software Tools to Power Your Business
• How to Get B2B Leads for Your Online Business
• Need Shopify Help? Here Are 5 Ways to Increase Your Shopify Sales
• How to Create a Video Sales Letter (Tips and Tricks from a 7-Figure Copywriter)
• 12 Upselling Tips and Best Practices to Boost Your Sales

Once you’ve started making money, it’s time to scale your business. Scale looks different for everyone based on their goals, expectations, and bandwidth.

Scale for one entrepreneur could be launching new products, while scale for another might be reducing costs and maximizing profits for existing goods.

Remember why you wanted to start your business from scratch. Did you want to make more money, or did you want more free time? Did you want to control your career, or did you want to help your community with a problem?

At Foundr, we’re all about empowering would-be-business owners with scalable strategies. Here’s how our interviewees and students scaled their businesses:

• GrubHub Founder Mike Evans is Back to Fix the Home Repair Industry
• How Jessica Sepel Built JSHealth’s Women-Run Brand 
• How Zeb Evans Built ClickUp from Life-Threatening Moments 
• Why Kendra Scott Risked Everything on the Customer Experience
• How April Scott Started a Luxury Sleepwear Brand From Scratch
• How Samantha Brett Built Naked Sundays into Australia’s #1 SPF Skincare Brand

Use AI Tools to Help Start Your Business

AI tools give your startup the advantage it needs to compete with the big dogs. It’s no longer a nice-to-have—it’s a necessity in today’s fast-paced and technology-driven business world.

These AI tools can streamline various aspects of launching and managing a startup, from ideation and market research to branding and customer engagement. Below, we’ll show you some of our favorite AI tools for starting and growing your business.

1. Ideating

• GravityWrite : Assists in brainstorming and ideation processes, providing creative suggestions and inspiration.
• Copy.ai : Utilizes AI to generate high-quality copy for various purposes, ideal for marketing, product descriptions, and more.
• Spin Rewriter : An AI-powered tool that rephrases existing content to enhance readability and uniqueness.
• Claude : Offers sophisticated editing and language enhancement features to refine your written content.
• ChatGPT : Provides versatile assistance in editing and improving text, from emails to business proposals.

3. Graphic Design

• Color Mind : AI tool for color scheme generation, perfect for branding and web design.
• Looka : Combines AI with design principles to create professional logos and brand assets.
• Booth AI : Offers automated photo editing and enhancement, suitable for product images and marketing materials.

4. Video/Audio

• Runway ML : An AI platform for video editing and motion graphics, simplifying complex video production tasks and letting you create video from text.
• Descript : Provides audio and video editing capabilities using AI, with features like auto transcription.
• Dall-e : AI tool for generating custom, high-quality images and artwork, useful for video thumbnails and visual content.

5. Ecommerce and Marketing

• Short Script : Assists in creating concise, compelling scripts for marketing and promotional videos.
• Rizz : An AI-driven tool for optimizing marketing strategies and customer engagement.
• Printful : Integrates AI in print-on-demand services, aiding in product customization and ecommerce operations.

6. Business Assistants

• Browse AI : Automates web data extraction and analysis, useful for market research and competitor analysis.
• Mem : AI-powered memory tool that helps organize and recall important business information.
• Rapidely : A versatile AI assistant designed to streamline various business operations, including scheduling and task management.

How to Start a Business from Scratch FAQ

How much of my business should i be involved in.

It's easy to get caught micro-managing every nitty-gritty component of your business, but you have bigger fish to fry. Outsource your trivial to-do list (invoicing, calendaring, procurement, and the like) to a full-time hire or a freelancer.

What's the best time to start a business from scratch?

There's no perfect time to start a business from scratch. The important thing is to start and stay persistent through all the steps.

Should I start my business alone?

Nobody truly starts a business alone. You need a support system to help you along your entrepreneurship journey, even if that's a friend, spouse, or parent. Many of the iconic businesses you know today began with a cohort of co-founders, but having one is not necessary. What is essential are trusted people around you to help bring your vision to life.

Exclusive Training to Help Launch Your Business

Congratulations! If you follow the 10-step process above, you’ll start a business from scratch that’s ready to join the 10% of startups that don’t fail.

Don’t worry—we’re still here to help. We won’t throw you into the deep end and expect you to figure everything out on your own.

That’s why we built foundr+, an all-access pass of training courses that will teach you everything you need to start and grow your business—whether you need to finance your startup, grow your Instagram following, or launch a profitable ecommerce store.

About Jesse Sumrak

Jesse Sumrak is a writing zealot focused on creating killer content. He’s spent almost a decade writing about startup, marketing, and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped business. A writer by day and a peak bagger by night (and early early morning), you can usually find Jesse preparing for the apocalypse on a precipitous peak somewhere in the Rocky Mountains of Colorado.

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How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

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

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

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Drafting the Summary

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

Ask for Help

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

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

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

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

Numbers-based Goals

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

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

Intangible Goals

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

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

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

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

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

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

Business Operations Costs

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

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

Other Costs

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

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

How do I write a simple business plan?

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

What are some common mistakes in a business plan?

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

What basic items should be included in a business plan?

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

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How To Start A Business In Louisiana (2024 Guide)

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

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The Ultimate Way to Use Reddit For Your Small Business

When you think of starting a business, creating a marketing plan, or building a content strategy, Reddit isn’t usually the first platform that comes to mind. People often forget about Reddit as a social media platform because it’s so different from Facebook, Instagram, Twitter, and LinkedIn. You aren’t posting as a business or promoting your company, but it’s still an extremely beneficial resource.

Instead of building your brand name, Reddit should be used to gather research and insights about your industry, competitors, and target market .

What is Reddit?

Reddit, often called “ The Front Page of the Internet ,” is essentially a massive collection of forums where people can share, comment, or post news and content. It focuses primarily on communities based on specific topics, which makes it stand out from other social channels. As of October 2018, it is the fifth most popular website in the United States, with a total worldwide monthly user base of more than 330 million people. So, Reddit is not a channel to ignore!

Who uses Reddit?

93% of Reddit users are between the ages of 18-49, and two-thirds are male.  64% are between the ages of 18 and 29. So, most likely, your target market is on Reddit. Find Subreddits that appeal to your target market and save them to your feed.

Learn how to identify your target market before heading to Reddit. Start today.

Why is it so important.

Users of Reddit are highly engaged and spend about 15 minutes per day on the site participating in their Subreddit communities. The anonymity of Reddit gives users the ability to provide honest (sometimes too honest) opinions and feedback on topics and brands. However, there are some pros and cons to Reddit that you need to know before jumping in.

As a brand, you can follow Subreddits that are very specific to interests and topics that your target market is participating in on Reddit. By listening in to the conversations, posing questions, and even commenting, you can get some fantastic insight into the minds of your target market – likes, dislikes, interests, ideas, thoughts, etc. You can use these insights to influence your:

• Marketing strategy
• Communication with your target market

Market / Competitive Research

Reddit isn’t just a place to listen to what members are saying about your brand; you can also hear what they are saying about your competitors.

• What are their pain points?
• What do they like most about their offerings?
• What don't they like about their offerings?

This information can be used to differentiate yourself and create your marketing plan . You can also use it to build ad campaigns based on real user insights.

Real Opinions

This can be a pro and con, depending on your mindset. On Reddit, you can pose questions to receive feedback from the community. By doing this, you may receive some honest feedback. It can be beneficial, but at times it can be a bit harsh.  Because of the anonymity of the site, the users usually don’t hold back. So, be prepared! However, it’s a great place to test some ideas with your target market before launching a campaign, a new product, or a feature. You can receive instant feedback from a small group within your target market before you roll it out to everyone. 

Don’t Market Your Business

The one rule for Reddit is to never outright market your company. Reddit users hate being marketed to. It is a place for social listening and posing questions, but it is not a place to be promoting your product or service. If you do, you will definitely hear it from the users. If there is an opportunity to answer a question and suggest your product, be sure to mention you work for the company. Being upfront is appreciated.

A Rabbit Hole

You can get stuck for hours in the rabbit hole of Reddit. The amount of content available on Reddit is overwhelming. So, you definitely need to go into the site with a plan.

• What do you want to learn?
• How long do you want to spend on the site?
• Who do you want to target for insights?

Without a plan, you can easily get lost and come out with little insights.

Steer your marketing strategy in the right direction. Our Ultimate Guide for Small Business Marketing will lead the way.

Dive into the “front page of the internet”.

With an understanding of how Reddit can help build your small business plan , it’s time to try it out. Start by doing some social listening and then decide on how you can apply what you learned to your business. It’s never too late to get feedback on your business, for free.

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Start your free trial with Shopify today—then use these resources to guide you through every step of the process.

How To Use Reddit for Business

Using Reddit for business can be a profitable decision. Learn how to use the underrated social media platform effectively for your business today.

Reddit is a website with two reputations.

For Redditors (as its users are called), it's a good way to keep your finger on the pulse of the internet, participate in open discussions around shared interests, get answers from highly engaged niche communities, and, of course, perpetuate memes.

For outsiders who haven’t learned how to use Reddit, though, it might seem like a haven for snark and sarcasm, where anonymity runs rampant and users commit to weird inside jokes and try to one-up each other for upvotes.

Reddit is an entirely different world compared to TikTok , Instagram, Twitter or wherever else you might spend your time online. So in a way, Snoo—Reddit’s iconic alien pictured in this post’s header—is a fitting mascot for this strange, wildly popular community-based website. 

But there are plenty of reasons to put some time into learning how to use Reddit.

With 52 million daily active users and a $10 billion valuation, Reddit is the 16th most popular social media platform and considers itself “the front page of the internet.”

Reddit is also where a lot of viral content gets early traction, where celebrities and interesting people open up and tell the world to “ask me anything,” and people come together to talk about every topic under the sun.

There is a subreddit for (almost) everything—from r/Fitness for exercise and nutrition enthusiasts to r/CatsStandingUp which is literally just a bunch of pictures of cats … standing up.

This subreddit isn’t even among the top 100 weirdest things you’ll find on Reddit.

Once you get past the complicated-looking interface, understand the basics of how “sharing” works on the platform, and get to know its nuances, Reddit can add a lot of value to your life and—despite being generally averse to marketing—to your business.

Understanding the basics of Reddit

The first thing you need to understand is that Reddit thrives on anonymity, but it's kept in check by transparency.

Reddit thrives on anonymity, but its kept in check by transparency.

Using your real name or birth year in your username is strongly discouraged unless you plan to invest in your own personal brand. Speaking and engaging freely with others is how you get the most out of Reddit. That’s because other users can easily see your entire posting/commenting history, which makes it easy for the community to police itself and gauge how authentic a person is based on past behavior on the site.

Creating an account is easy enough. All you need is a username and password—you only need to enter your email if you want to verify your account for long-term use.

For this reason, it’s not uncommon for users to have one or two “main” accounts that they rely on and several “throwaway accounts” that are only used once or in certain situations.

Once you’ve signed up, you'll be automatically subscribed to several popular subreddits, like r/videos and r/gifs , but should also search for and subscribe to other subreddits you want to be a part of based on your interests.

Subreddits are niche communities within Reddit—each with its own rules, subscribers, and posts—indicated by r/ subreddit (based on the URL structure: reddit.com/r/ subreddit) .

You can sort all the posts within a subreddit by Hot, New, Rising, Controversial, and Top submissions.

If you’re interested in handcrafts, you might join r/somethingimade or r/crafts .

If you run your own business, maybe you’ll weigh in at r/Entrepreneur or r/smallbusiness .

If you’re into cooking, you’ll probably check out r/Cooking or r/AskCulinary . 

If there’s a subreddit you want that doesn’t exist (though that’s unlikely), you can even create your own subreddit.

Learning the language of Reddit

On Reddit, people tend to be fluent not only in “internet speak” but also terminology that’s specific to the platform. There are a whole host of terms and abbreviations you’ll end up learning over time.

Here’s a glossary of commonly used Reddit terms to help you navigate this strange new world—many of which will be covered in greater detail throughout this post:

A glossary of Reddit terms

Upvote: A positive vote that indicates a post or comment contributes value to the subreddit or discussion.

Downvote: A negative vote that indicates a post or comment is irrelevant, promotional, or doesn’t contribute any value.

Karma: There’s post karma and comment karma, both of which reflect the quality of your account on Reddit. These points are awarded based on the upvotes you get from your actions on Reddit, and only exist to give the community a sense of your legitimacy and experience as a Redditor. 

Reddit Gold: A premium Reddit membership with additional features that can be bought for yourself or awarded to users who you think have made a significant contribution to Reddit.

OP (original poster): Referring to the person who shared the post that the comment is made on.

Mod (moderator): An account that polices the subreddit to make sure its rules are being followed, with special permissions to ban and remove users, posts, and comments as they see fit.

TL;DR (too long; didn’t read): A short summary briefly describing a large body of text, usually in a lengthy text post.

X-post (cross post): Sharing a post from one subreddit to another by submitting the URL of the original submission on Reddit and adding to the title that it’s an “X-post from [original subreddit].” This is considered the proper way to share something across multiple subreddits. 

Repost: Posting something that has already been posted in that subreddit. Try to avoid this by searching the subreddit to see if your link has already been shared.

Lurking: Actively consuming a subreddit, but not actively contributing to it. Many people use Reddit this way.

Throwaway account: A Reddit account that isn’t a user’s main account and wasn’t made for long-term use. A user can have several accounts made for different occasions.

OC (original content): Content that is deemed original to Reddit and isn’t reposted from elsewhere, but is something a user has created themselves.

IRL (in real life): Synonymous with the offline world and refers to your actual experiences outside of your online Reddit identity.

NSFW (not safe for work): Explicit or inappropriate content you might not want to open in a public place. This is usually found in the post’s title to warn people before they click the link.

FTFY (fixed that for you): A correction made regarding a typo or factual error, or sometimes used as a tongue-in-cheek comment.

TIL (today I learned): Something the user didn’t know before, but now knows (probably) because of the internet. There’s an entire subreddit for these lessons in r/todayilearned .

AMA (ask me anything): An invitation for Redditors to ask any questions they may have with the promise that the user will answer. It usually starts with “I am a [something unique/interesting about you], ask me anything.” Visit r/AMA for examples.

Shadow banning: Since a person with a banned account can just go make another one, "shadow banning” is a special punishment where the user is unaware that they are banned because, instead of having their account shut down, all of their future posts are essentially made invisible to everyone else.

Flair: Added as part of your display name within a specific subreddit (some are defined by the mods, and some let you create your own). Sometimes the subreddit’s rules will require you to use a flair to indicate you are a specific type of poster.

By no means is this a comprehensive list, nor should you expect to grasp it all right away, but it's a good resource to refer back to as you get to know Reddit.

Reddiquette: Understanding the rules of Reddit

Online etiquette is important wherever you post online. But it’s even more important on Reddit, where it’s easy to hide behind anonymity and engage in bullying, spam, and sneaky self-promotion.

You can read up in full about Reddit’s own guidelines, or Reddiquette, but it boils down to one simple rule:

Aim to contribute value with every action and consider the community first.

When you post something, ask yourself if it’s relevant to the subreddit and do a quick search to see if it’s already been posted there.

When you upvote, downvote, or comment on someone’s post, consider how it’s benefiting the greater good of the subreddit.

You’ll quickly realize that commenting and sharing on Reddit is very different from, say, Facebook.

Posts and comments need to add value—posting the same thing someone else has posted or commenting with “That’s hilarious” or “Cute dog” won’t get you upvotes, but something new, witty, insightful, or educational will. 

Each subreddit also has its own rules and guidelines, which you can find on the right sidebar.

These rules are enforced through a combination of:

• Manual moderation via the subreddit’s moderators 
• Automation via moderator “bots” that flag posts that break certain rules
• The subreddit’s community via the downvoting and reporting system

It’s best to assume each subreddit is different from the next and to take some time to get to know the rules and posting behavior of each one before contributing. Ignoring the rules can get your post deleted or get you banned from the subreddit.

Posting and commenting on Reddit

Posting and commenting on Reddit is how you get upvotes that lead to karma, which is Reddit’s way of quantifying the contributions of each user.

There are two types of submissions you can make on Reddit (although certain subreddits might limit themselves to just one or the other):

• Post : Expand into a text-based post that you can format and add links to to provoke a discussion.
• Image: Share pictures with a title to convey an idea. 
• Link : Take visitors directly to a webpage or piece of content when they click through on your post.
• Poll: Get an opinion on anything and encourage Redditors to vote. 
• Talk : Host events, AMAs, hangout, and connect with other Redditors through live audio.

You can submit these from the “Create a post” page on your subreddit and clicking Post when you’re ready to publish. 

Before you submit, however, be sure to use Reddit’s search feature to make sure you’re not reposting an existing post (Redditors frown upon this). You can find tips here on how to get specific with your searches.

Timing, the text you write, and the subreddit you submit to all play a role in gaining traction on Reddit. Get enough upvotes and comments in a short amount of time and your post could end up at the top of the subreddit and then eventually the front page of Reddit, where millions of people will see it.

How to build up your Reddit karma quickly

Since Reddit embraces anonymity and having multiple accounts is common among users, the karma system is how Reddit establishes credibility. The more karma you have, the more seriously Reddit will take you. But there are two kinds: post karma and comment karma.

You get post karma for the upvotes you receive on posts, and comment karma for the upvotes you receive on your comments, so it’s a good idea to be active in the comments of your own submissions and in posts by others. You can also lose karma if your individual posts or comments are irrelevant and get enough downvotes for the count to fall below zero.

There’s no easy way to build karma on Reddit. You’ll need to consistently contribute to the platform in meaningful ways.

However, there are strategies to help you get going: 

• Make a list of very niche subreddits that you’re in a good position to contribute to because you’re an expert or enthusiast. Then go to the New tab and see if there are any relevant questions you can answer.
• Go to r/AskReddit and ask or answer questions for post and comment karma.
• Make an effort to incorporate Reddit submissions into your regular day-to-day browsing. When you find something worth sharing, post it on one of the highly active subreddits on this list , wherever it would be most relevant.

Free tools to improve your Reddit experience

To help you see more success with your posting on Reddit, I highly recommend the following free tools to up your Reddit game.

Reddit Enhancement Suite . (A must!) This Chrome extension improvesReddit, making it easier to format posts and letting you quickly check up on specific users. It basically gives you some of the features of the premium Reddit Gold membership and more for free.

Notifier . This app helps you reach mentions on Reddit. Get alerts when someone mentions your brand name or related product terms. Once you receive an alert, you can quickly respond to the conversation and change the way Redditors see your brand. 

RedditMetis . A Reddit user analysis tool. Analyze your Reddit accounts statistics, including top posts and activity. 

Later for Reddit . Find the best time and day to post to a specific subreddit and schedule your posts to go out at that time. This is invaluable insight for giving your posts the best chance of getting seen.

Redditlist . Discover the best subreddits for your business based on recent activity, subscriber count, and 24-hour growth. 

Together, these tools will make it easier for you to do well on Reddit.

Read more: Driving Growth: 11 Best Marketing Strategies Any Small Business Can Execute

How to use Reddit for businesses

Reddit’s community puts a lot of effort into protecting its integrity. Users will go out of their way to vet suspicious activity by browsing an account’s posting history to gauge its authenticity.

Reddit generally hates shameless marketing, self-promotion, URL shorteners, and anything that makes you seem like you’re only using Reddit as a place to sell your products or services. If you want to understand the level of disdain Redditors have toward this behavior, just look at r/HailCorporate .

But that doesn’t mean Reddit can’t be useful for business owners. Redditors trust the platform when it comes to helpful information about products. Some 90% of people who use Reddit for research reportedly trust the product information they find more than information they find on other sites. 

While you might be tempted to use your anonymity to drop a sneaky link to your products in, say, r/shutupandtakemymoney , there’s a chance this could backfire on you and harm your company’s reputation.

Once you’ve built up some karma and a decent posting history, you can begin harnessing Reddit to grow and improve your business. Let’s look at what types of content you can publish on the platform, whether you’re a startup or an established business. 

1. Pay for Reddit ads

Recent data revealed that Reddit purchase journeys result in deeper research sessions, nine times faster purchase decisions, and 15% more spending compared to other social platforms. 

Advertising on Reddit is probably among one of the safest ways to market your products on Reddit. With Reddit ads, you can target people based on the subreddits they’ve subscribed to, which lets you get in front of some very specific, super-passionate niches. 

Keep in mind that Reddit advertising operates on a cost-per-impression (CPM) basis rather than cost-per-click (CPC), which you might be used to with Facebook ads or Google Ads.

2. Promote deals in the right subreddits

There's a subreddit for everything , and that includes deals. If you've got a discount code or are running a sale, you can share it in communities such as r/deals , where savvy shoppers tend to hang out.

3. Customer service and community management

Brands both small and large should consider monitoring Reddit for brand mentions and replying to them. There are a lot of people on Reddit asking about potential purchases, airing complaints about companies, and talking about other things you’ll want to keep an eye out for. A community management plan can lead to higher engagement with Redditors and more sales. 

4. Post something interesting (that happens to do with your business)

Reddit might not like marketing, but it does like authenticity. For a lot of entrepreneurs, their business is an extension of their life and it won’t come across as inauthentic to share it in certain contexts.

Take a look at how Findlay Hats did it (and as a result made $28,000 ).

5. Do an AMA if you have a compelling story

You can raise your company's profile and build your personal brand by doing an AMA on Reddit. Post in r/AMA , or find a relevant post and comment on it with “I am the CEO of ______. Ask me anything.”

AMAs are conducted by regular folks, like this car salesman , all the way up to Steve Wozniak , the co-founder of Apple. As long as you can position yourself as someone with unique insight, Reddit will have some good questions to ask. 

6. Curate viral content

Reddit is an endless source of good content. By subscribing to the subreddits that relate to the niche you’re selling in, you’ll get a steady stream of top quality content to curate: articles, videos , GIFs, and more.

7. Hire local or remote talent

Like any social network , you can also use Reddit to find and hire specific talent. If you’re looking for someone who lives near you to hire full time, you can post about the job in your city or region’s subreddit (e.g., r/Toronto , if you're hiring in Toronto). Or you can post in the subreddits dedicated to the skills you need (e.g., r/copywriting , if you’re looking for a copywriter).

8. Market research and feedback

Depending on the subreddit, you can ask its subscribers to give you feedback about your website or product idea. Be careful and transparent about doing this in non-business-related subreddits, especially when you are a new user.

When in doubt, ask for feedback in business-related subreddits such as r/Entrepreneur .

9. Run a contest in a subreddit

Running a content can engage a subreddit in a way that contributes value. If you want to run a contest or giveaway, you can reach out to the mods of a subreddit (you can find them in the sidebar) and work out an arrangement.

Prizes could be your products, Reddit Gold, or some combination of the two.

Reddit marketing examples

Sport sock manufacturer Thirty 48 is a great example of brands using Reddit with respect for their users. The brand posted a giveaway in r/Fitness, a physical fitness subreddit, which offered participants a free pair of its socks of choice, chosen at random.

Thirty 48 got pre-approval from the subreddit moderator, a volunteer who manages each community, and ended up giving everyone in the subreddit 15% off. Giveaways are common on Reddit. If you choose to run one, be sure the moderator approves before launch. Otherwise, they can remove your post and shut down the giveaway. 

Another common way brands use Reddit is to get feedback. You can ask for feedback about your store, products, or branding. D2C German retailer degardo simply posted in the r/ecommerce subreddit asking for feedback on its Shopify store. 

This was a simple ask that garnered useful responses. Redditors quickly commented with their thoughts on degardo’s Scandinavian look and products. They even left advertising tips and asked thought-provoking questions about shipping and sales. 

For new entrepreneurs, feedback from peers in the ecommerce space is invaluable. It can help you make strategic changes to your store that can result in more leads and sales. 

British fitness apparel and accessories brand Gymshark decided in 2015 to create its own subreddit, r/Gymshark . In the thread, people have posted to talk about the brand’s products, sizing recommendations, fitness training centers, and other support questions. 

Reddit is a great place for Gymshark to create a community of fans. The channel is authentic. You can view both good and bad reviews about products. If a potential customer sees a gleaming review about a Gymshark product, they may even buy it online. 

Noom is an award-winning weight-loss app designed by psychologists. It’s scientifically proven to create sustainable results and change your eating habits for the better. When choosing a place to advertise, it choose the r/Fitness subreddit, which has over 9.2 million members. 

Using Reddit ads, Noom can reach a passionate, targeted audience and promote its product. The brand uses relatable copy, focusing on community members’ desire for healthy habits, and an eye-catching graphic that encourages users to act with a Take the Quiz CTA. 

Crypto hardware wallet Ledger has a branded subreddit (r/ledgerwallet), similar to Gymshark. However, the brand uses its subreddit, with over 84,000 users, as a customer support channel. The team responds to product questions, posts updates about crypto scams and  cyber attacks , and more in its subreddit.

Besides responding to queries, Ledger’s customer success team also hosts Q&A sessions and leaves the audio recording for newcomers to hear anytime. 

Reddit is best when you put the community first

When I first gave Reddit a try, I was put off because I didn't “get it” and couldn’t find any substance on it because I didn’t know how to find it.

But once you’ve subscribed and contributed to a few subreddits and understand how to find the discussions you want, it becomes a great source of value in your life, where you can freely ask your questions to a community of enthusiasts, learn new things every day, and contribute front-page-worthy posts.

Hopefully you now have a better understanding of how to use Reddit.

Reddit won’t always make sense. It can be hard to familiarize yourself with the site when every subreddit has its defined rules and inside jokes, each carving out its own unique corner of the web. But that’s what makes it so great.

Using Reddit for business FAQ

Is reddit good for business, can a business have a reddit account, what are the benefits of businesses using reddit, can companies post on reddit.

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• Artificial Intelligence (AI)
• Web Scraping
• For Small Business

50 Remarkable Reddit-Powered Business Ideas For Ambitious Entrepreneurs

• November 27, 2023
• by Tom Wells

With over 250 million users and more than 50,000 vibrant communities, Reddit represents an underutilized hotbed brimming with business opportunities.

As a small business consultant who has successfully started and grown several side hustles into full-time ventures, I‘ve witnessed firsthand Reddit‘s incredible yet often overlooked potential for ambitious entrepreneurs.

In this comprehensive guide, I distill decades of hands-on experience into 50 Reddit-based business ideas you can launch quickly, often for less than $500.

Capitalizing on Reddit‘s Passionate Communities

81% of Reddit users visit the platform daily, spending an average of 30 minutes per visit. This deep engagement and the sheer diversity of topics powering over 2 million active communities offer targeted market access most platforms could only dream of.

By participating actively within these hyper-focused subgroups aligned with your expertise, entrepreneurs can establish credibility, understand consumer needs, validate ideas, and even find business partners.

Turning Your Skills into Scalable Services

Reddit‘s audience presents opportunities for entrepreneurs to monetize existing skills, be it graphic design, writing, coding or even obscure talents like yodeling!

By scoping offerings to high-demand skills mentioned across subgroups, you gain instant market validation and access to an abundant client pool.

As a tip, ideas requiring minimal overhead like service-based businesses make excellent launch pads to test ideas before pursuing capital intensive ventures.

Now, let‘s explore 50 business ideas with traction, scalability and profit potential you can unlock starting today!

1. Resume Optimization Specialist

With over 500,000 monthly resume and career-related Google searches, resume writing is a recession-proof opportunity. As a specialist, tap into your experience optimizing resumes for specific industries and roles. Participate actively within Reddit‘s 20+ career communities like r/resumes, r/careerguidance and r/jobs to establish yourself as an expert. Offer tailored resume makeovers as a freelancer or provide webinars to coach clients.

2. Kindle Publishing Expert

Self-publishing has spawned many million-dollar media empires. With over 90% of Amazon‘s eBook sales concentrated on Kindle, carve yourself a slice of this $1 billion niche. Launch and promote your writing guides, fiction eBooks and memoirs on this platform. Leverage Reddit for market research during creation and drive visibility upon launch using subreddits like r/kindle, r/selfpublish and r/books.

3. Shopify Consultant

As Shopify powers over 1 million merchants globally, sellers seek guidance launching and scaling eCommerce stores. Drawing from your Shopify mastery, create customized store setup blueprints, offer marketing fundamentals webinars and optimize existing stores to increase conversions. Participate in r/shopify and r/ecommerce to demonstrate expertise. Consider paid ads to promoted content and locking select material behind a membership paywall.

4. Video Editor

Live and animated explainers help businesses simplify complex messaging. By mastering editing software and honing stylistic flair, provide clients professional video post-production services like color correcting footage or splicing clips for concise messaging. Showcase samples within related communities like r/videoediting to attract small business clients on tight budgets.

5. Launch Marketing Strategist

Orchestrating memorable launch campaigns can set ventures up for success. Drawing from past launch coordination experience, help startups craft targeted media pitches, launch parties and influencer partnerships for maximum exposure. Summarize successful case studies on Reddit for credibility. Consider running contests on related subreddits to demonstrate traction.

6. Amazon FBA Mastermind

From sourcing manufactuers to managing inventory, selling on Amazon can be daunting without guidance. Leverage your Amazon success sharing step-by-step coaching for finding profitable niches, navigating account setup, creating listings for higher conversions and expanding into international markets. Top subreddits include r/fulfillmentbyamazon. Consider paid communities or video courses monetizing your hard-won expertise.

7. Messenger Chatbot Developer

Chatbots boost customer engagement and sales. With messaging apps boasting over 5 billion active users, an opportunity exists helping businesses incorporate chatbots. Stay updated on platforms like ManyChat and MobileMonkey to develop tailored automations aligning with client needs from lead generation to customer service.

8. LinkedIn Growth Specialist

With 80% of B2B leads originating from LinkedIn, mastering presence on this platform is non-negotiable. If expanding networks and establishing thought leadership come naturally, formalize your services helping professionals showcase credibility through optimized profiles, strategic content creation and savvy messaging tactics for increased visibility.

9. Nutrition Consultant

Support Redditors struggling with restrictive diets or hoping to get in shape by sharing science-backed guidance tailored to individual objectives and constraints. Demonstrate expertise by participating in forums like r/nutrition, r/loseit and r/gainit. Consider offering paid meal planning and macro tracking services, blogging about achievements or selling informational eBooks/courses.

10. Email Marketing Specialist

Email generates $44 for every $1 spent, making it the highest ROI channel today. Drawing from past email campaign success, help fellow marketers increase sales through strategies like dynamic segmentation, compelling newsletters and automation based on customer behavior. Consider paid communities sharing more advanced tactics or troubleshooting common issues identified by clients.

Additional Niche Service-Focused Ideas

Alongside more extensive service propositions, numerous bite-sized opportunities exist serving Reddit‘s diverse user base. From personalized styling assistance and translation services to mobile app development and graphic design, niche specializations aligning with your inherent strengths make ideal starting points.

Here are some additional options leveraging your experience while minimizing risk:

• Instagram Caption Writer
• Web/Mobile UI Designer
• Swift/React Native App Developer
• Spanish/French Translator
• eBay Listing Optimizer
• WordPress Specialists
• Voice Over Artist
• Instagram Ad Expert
• Insurance Consultant -`,Personal Finance Planner

Traction Tips

• Establish credibility by commenting constructively within related subgroups before promoting services
• Understand pain points by regularly engaging with target customers
• Offer free sample deliverables illustrating work quality to build trust
• Limit niches early on to deeply understand specific customer challenges

Closing Thoughts

Leveraging Reddit‘s crowdsourced wisdom, entrepreneurs gain access to millions seeking anything from personalized advice to life-changing products and services.

I hope detailing my 50 top ideas distilled from real-world success empowers you to unlock Reddit‘s full potential. With the right game plan, your next business venture awaits!

Having guided multiple new entrepreneurs transitioning side hustles into successful small enterprises, please reach out if you need any assistance getting started or expanding ventures leveraging Reddit. I look forward to seeing you help even more people by sharing your own experiences someday!

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How marketing on Reddit works (and how to do it right)

Written by by Brent Barnhart

Published on  August 25, 2020

Reading time  6 minutes

If you’re curious about marketing on Reddit, we totally understand why.

After all, Reddit is the epicenter of all things viral online. With billions of visits per month and 430+ million active users, the platform represents one of the most engaged communities online.

Not to mention that content originating from Reddit tends to score huge numbers on social media.

Here’s the thing, though: marketing on Reddit is often an uphill battle for brands who don’t really “get” what the site is all about.

If you approach Reddit like the rest of your social presence, you’re going to be disappointed.

That’s why we put together this guide on how to use Reddit for business and decide if marketing on the platform makes sense for you.

What is Reddit, anyway?

Fair question! To folks who’ve never really navigated Reddit before, the site might look like a hot mess.

The self-promoted “front page of the Internet,” Reddit is basically one-part webform and one-part news site.

But where does all the “stuff” on Reddit come from?

In short, users publish content to Reddit in the form of links, photos or videos. Posts and comments related to that content are then “upvoted” or “downvoted.”

The concept of upvote system is simple: the cream (buzzworthy content) rises to the top while downvoted content (often irrelevant, inflammatory or spammy) gets buried.

Beyond Reddit’s front page, discussions are separated by individual communities known as “subreddits.”

It’s no exaggeration to say there’s a subreddit for just about everything. Beyond subreddits such as /r/IAmA (ask me anything) or /r/personalfinance, there are tons of large niche communities such as /r/jellybeantoes which is dedicated to cat paws (and has over 139,000 members, by the way).

Reddit isn’t  technically a social media site, although some critics may argue otherwise. While your actual user profile is limited, the ability to “like” (via upvotes) posts, drop comments and publish content is similar to the major social platforms out there.

Demographically, Reddit’s audience skews on the younger side and is nearly 70% male . While the platform is still largely associated with gaming and fandom culture, there are active communities for everything from fitness to beauty and beyond.

The challenge of marketing on Reddit

At a glance, Reddit might seem like the perfect place for marketers and brands to engage with customers.

And sure, it  can be.

But just like any social network, you can’t just dump a bunch of links on people and expect traction.

This is especially true on Reddit, a platform that thrives on a sense of community. Users don’t take kindly to people trying to sell to them without contributing to the community themselves.

Also, users on Reddit can see through thinly-veiled attempts at promotion and are often hostile toward them. That’s why many subreddits have explicit rules that restrict advertising.

Does this mean that Reddit is against businesses? Absolutely not. They just take a firm stance on self-promotion . Perhaps they put it best themselves:

“It’s perfectly fine to be a Redditor with a website, it’s not okay to be a website with a Reddit account.”

Reddit has no problem with businesses joining the platform. The key is that those businesses need to focus on community relationships and value versus selling. Here’s their “tl;dr” to anyone interested in marketing on Reddit:

“Don’t just spam out your links, and don’t blindly upvote your own content or ask anyone else to! Why? Because Reddit is a community, not a platform for self-promotion.”

Keep in mind that Reddit boasts its own ad platform and sponsored posts for brands. With advertising partners such as Audi, Poshmark and Adobe, it’s silly to say Reddit is antibusiness.

Oh, and conversations about brands and products are all the rage on Reddit. People love using the platform to discuss businesses because all content is authentic and unfiltered (hint: no brands butting in).

The takeaway here is that there is a place for businesses on Reddit: you just have to familiarize yourself with the platform prior to posting.

What the best way to approach marketing on Reddit, then?

Even if you never plan on business building a presence on Reddit, you should at the very least understand how brands use the platform and inculcate it into your overall social marketing strategy .

And if nothing else, Reddit is a brilliant place to conduct market research and maintain a pulse on trends in your industry and beyond.

Below are some ideas for how to use Reddit for business and marketing based on your brand.

Uncover customer feedback and suggestions

As noted earlier, Reddit is a potential treasure trove of conversations relevant to businesses.

From your audience’s favorite products to what people are saying about your competitors , you don’t have to look hard for customers asking for advice and recommendations.

However, the key here isn’t for you to intervene or take action.

Instead, just listen .

By keeping tabs on conversations about your products or competitors, you can get a better sense of where you’re winning, where you might be falling short and how you can improve.

For example, check out this /r/personalfinance discussion about IRA accounts. This conversation highlights real-world problems and concerns from banking customers, stressing specific pain points and why one bank might be preferable to another.

These are the exact sort of conversations your business should be privy to and Reddit is rife with them. Take some time to explore industry-specific subreddits to better understand trends and what your customers are thinking.

Another way to zero in on these conversations on Reddit (and beyond) is through social listening tools like Sprout Social. Aggregating messages and posts from across the web, you translate Reddit listening data into actionable data for your business.

Discover unique user-generated content

In addition to questions from customers, Reddit is home to tons of user-generated content such as product photos and testimonials.

Customer photos are perfect for platforms like Instagram. Meanwhile, the fact that you have Redditors talking up your brand is a brilliant form of social proof to give your business some serious credibility.

For example, check out these recent posts on /r/FancyFollicles talking up Arctic Fox’s hair dye.

With just a quick search, you can uncover brand advocates and success stories from satisfied customers.

Provide support and recommendations to your audience

Arguably one of the best ways to approach marketing on Reddit is to prioritize support over selling.

There are many brands that have dedicated subreddit communities for asking questions and troubleshooting problems. This creates a direct line between your brand and customers, all the while being a public forum for people to seek out solutions and product recommendations in the future.

Heck, some companies such as Corsair use Reddit as an extension of their existing customer support efforts. Doing so creates visibility for your brand and likewise proves how committed you are to helping customers.

Use AMA events to get in front of your community

If you’re part of a bigger brand, you can flex your influence to talk directly to members of your community.

AMA (ask me anything) sessions are a cornerstone of Reddit and are a popular way to engage with fans organically, taking on questions and letting your brand’s personality shine through. Companies usually conduct AMAs in conjunction with a promotion or launch.

The key to a successful AMA is actually going back-and-forth with people rather than talking about what you’re promoting. In fact, shameless self-promotion has been the result of some of the worst (and most infamous) AMAs in Reddit lore.

Engage with customers from a personal account

This is a subtle tip but definitely one worth mentioning.

Ideally, you don’t want to potentially approach Redditors with a totally inactive account. Accumulating posts and comments on the site might take time, but doing so is worth it to prove to your community that you aren’t a spammer.

Some companies get around this by approaching customers from a personal, non-corporate account.

For example, Beardbrand’s Eric Banholtz is a seasoned Redditor and regularly comments on brand and beard-related topics from his personal account.

Similar to how brands conduct employee advocacy efforts, this is a great way to approach people on Reddit minus the sort corporate “stamp” on your presence.

Be human when talking with Redditors

This might seem like a no-brainer, but brands should talk to their customers candidly and jargon-free.

A distinct and approachable brand voice is pretty much always a good idea but is particularly important on a platform like Reddit where authenticity counts.

Here’s a great example from Deciem’s AMA on /r/skincareaddiction.

Their brand response is personalized, detailed and has some emotion behind it. This is exactly how brands should interact with customers on Reddit to win them over (and the upvotes on this post prove they were successful)

Ready to start marketing on Reddit?

Listen: marketing on Reddit is definitely tricky.

Even so, the platform is totally worth exploring for brands who want to understand industry trends and what their customers are thinking.

And as you brainstorm your Reddit business plan, make sure to check out our social media toolkit for additional ways to level up your brand’s social marketing.

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The Ultimate Guide to Reddit Marketing: How to Grow Your Business Using Reddit

Reddit is a user-created social news aggregator that’s referred to as the front page of the Internet. That’s a nod to the front page of a newspaper, where you find the most important information for the day. Basically, Reddit is an enormous collection of forums on practically any topic you can think of, and niches of that topic, and then niches of that topic, too.

People share advice, complaints, experiences, insights, news – anything they want. They also comment on or respond to other people’s posts. A lot of people share links on Reddit, too, and if a link makes its way to a popular Reddit page, it can get enough attention to crash servers. Used correctly, Reddit can be a marketer’s dream.

However, Reddit functions in a totally different way from other social platforms you’re used to. Its users expect a much different experience from what you deliver via something like Facebook or LinkedIn. Brands are catching on, though, and they’re starting to use Reddit for marketing and to speak directly to Reddit users from other platforms. For example, Budweiser has a YouTube video where they specifically reference Reddit users.

Knowing how to use Reddit is just as important as knowing what not to do. Branded content doesn’t always perform well on Reddit, because it’s not a gathering space for people to connect with brands. Instead, it’s a gathering space for people to connect with people . And that also makes it an ideal place to humanize your brand.

Here’s everything you need to know about Reddit marketing and advertising. We cover getting started, learning your way around Reddit and choosing the techniques that are right for your business.

Source: Reddit Inc.

• 1.1 Subreddits
• 1.2 Moderators and Admins
• 1.4 Comments
• 1.5 Voting and Karma
• 1.6 Reddit Marketing with Coins
• 1.7 Rules and Best Practices
• 1.8 Reddit Premium
• 2.1 Creating Your Reddit Account
• 2.2 Choosing Your Interests and Subreddits
• 2.3 The Front Page
• 2.4 Posting to a Subreddit
• 3.1 Engage Before You Promote
• 3.2 Always Offer Value
• 3.3 Listen to What Customers Are Saying
• 3.4 Incentive Engagement
• 3.5 Let Reddit Guide Your Content Creation
• 3.6 Refer to Pop Culture in Your Reddit Marketing
• 3.7 Host an Ask Me Anything
• 3.8 Host an “I Am A” AMA
• 3.9 Start a Discussion
• 3.10 Add Links to Posts and Comments
• 3.11 Use Reddit as a Customer Service Channel
• 3.12 Advertise on Reddit with Promoted Posts
• 4.1 Reddit’s Three Ad Types
• 4.2 Campaign Objectives
• 4.3 Targeting Options
• 4.4 Call-to-Action Buttons
• 4.5 Ad Budgets
• 4.6 Running a Test Campaign
• 4.7 Ad Metrics
• 5 Final Thoughts About Reddit Marketing

What is Reddit? A Crash Course in Understanding the Platform

Before you can reap the benefits of Reddit marketing, you have to learn how to use Reddit, period. It’s unlike other social media platforms, and there’s a decent learning curve to maneuver. In this section, we’ll get into the different components of Reddit and how to use them. Later on, we’ll refer back to this information to talk about getting started with Reddit and using different marketing techniques.

There are over a million communities on Reddit, which are called subreddits, and each one is dedicated to a different topic. Metrics for Reddit and RedditList both have collections of trending Reddits, which can help you discover ones to follow. The posts in a subreddit should all relate to the subreddit’s topic in some way. Each subreddit starts with reddit.com/r/.

If you want to find the travel Reddit, you could simply enter reddit.com/r/travel . Some subreddits are basic, but others are specialized or obscure, like r/DisneyPlus or r/AnimalsBeingBros . This thread has tons of suggestions for the weirdest Reddits out there. And if you can’t find the type of community you’re looking for, you can create a subreddit for any topic you want.

Moderators and Admins

Moderators (mods) manage subreddits. There are also volunteers who edit the subreddit’s appearance, decide which content to allow and remove posts or users. Here’s a partial list of moderators for r/AskReddit :

Even though Reddit is self-managed quite a bit and moderators are in charge of subreddits, admins are in charge of Reddit as a whole. Admins are Reddit employees who have a lot of different responsibilities and access across Reddit. They can take away moderator functionality and ban subreddits.

Post content on Reddit ranges from humorous to creative to controversial. (There are efforts to keep some controversial and sensitive content from the front page.) The person who creates a post is called the Original Poster (OP). There are all types of content that people post on Reddit, including:

• Help requests
• News articles

For the sake of Reddit marketing, brands can offer tips for using their products or services, especially if there’s already an open discussion about it. You can also offer your industry expertise in the form of tips, tricks or hacks – just make sure there isn’t a hard sell at the end. You’re here to help, not to push.

It’s helpful to know that Redditors have their own language. They use a lot of acronyms, and some popular ones become their own subreddits, like TIL for “today I learned.” Here’s a list of common acronyms and what they mean.

After someone creates a Reddit post, others can comment on it and start a thread. Reddit (and most forums) organize comments in a tree structure so that you can see exactly what each user is commenting on, whether that’s the main post, a reply to it, a reply to a reply, etc.

Voting and Karma

Next to a post or comment, there are up and down arrows and a number. People use the up and down arrows to upvote and downvote posts, and the number changes accordingly, accounting for the total balance of upvotes and downvotes. The resulting number is called karma.

Upvoting can increase the post’s visibility, while downvoting can decrease the post’s visibility. That means that the post will either be displayed closer to or farther away from the top of the feed, similar to how the Facebook algorithm prioritizes content people want to see. Reddit best practices say that votes shouldn’t be used to show that you agree or disagree with what a commenter or OP says, but instead to vote on the post or comment’s quality level.

It’s possible to have a negative rating if you get enough downvotes. If your score is super low, your comment may be minimized so that only your name is displayed. If a reader wants to see what you wrote, they’ll have to click on your username.

Your account has a karma number, too. This reflects how much karma your comments have received. The more karma, the better, because it can make you more prominent in the Reddit community. If you have a high karma rating, you also have a better chance of being selected as a moderator. I’m on Reddit often, but I rarely post, so my karma score is pretty low.

Reddit Marketing with Coins

In addition to karma, Redditors can give awards to other users to highlight or recognize their posts. Giving a user an award costs Reddit Coins , which you can purchase. This post has several different awards, including community-specific awards, which are created by mods:

Note that Coins used to be called Creddits – they’re the same thing, just under a new name. Also, I mention Reddit Premium in this section, which I cover more later on. Coins can be used to buy three different types of awards:

• Silver Award: Costs 100 Coins. Shows a Silver Award on the post or comment.
• Gold Award: Costs 500 Coins. Gives the recipient one free week of Reddit Premium and 100 Coins. Shows a Gold Award on the post or comment.
• Platinum Award: Costs 1,800 Coins. Gives the recipient one free month of Reddit Premium and 700 Coins. Shows a Platinum Award on the post or comment.

Coins aren’t expensive, and they’re great for marketers who want to award customers for offering excellent feedback, chiming in with a great comment, participating in a contest, etc. With Reddit Premium, you get 700 coins each month. Otherwise, you can pay for Coins separately, with prices like $5.99 for 1,800 or $19.99 for 7,200.

Rules and Best Practices

If you don’t follow the platform’s guidelines, you could get banned from communities before your Reddit marketing has a chance to get off the ground. Subreddits have to abide by Reddit’s community guidelines . You can also set your own forum rules that Redditors have to follow if they want access to your subreddit. For example, you may have guidelines for the types of comments that are allowed. There’s also Reddit etiquette, called Reddiquette , that users should follow. Rediquette best practices include:

• Read the subreddit community rules before submitting anything.
• Report spam.
• Always tag Not Safe For Work (NSFW) content.
• Be polite and make everyone feel welcome.

Anybody who feels threatened or offended can block and/or report a user. The option to do so is below messages and links.

Reddit Premium

Reddit Premium is Reddit’s membership program . It used to be called Reddit Gold, but it was changed to Reddit Premium to not be confused with Coins or awards. Premium costs $5.99 per month and gives users access to advanced features, like an ad-free experience and access to r/lounge, a top-secret subreddit where leading minds head to chat. Premium members will also have early access to new features that are being tested before being released officially, and they get a regular supply of Reddit Coins to spend on Awards. While you don’t have to be a Premium member to market your business, it does give you deeper access to the site and the community, which can be great for networking or Reddit marketing if those users are in your target audience.

Getting Started with Reddit

Now that you know how Reddit works, let’s go through the process of creating an account, joining subreddits and creating your first post.

Creating Your Reddit Account

The signup process is super simple:

• Sign up for Reddit from the register page .
• Enter your email (optional).
• Choose a username and password. Your username has to be 3-20 characters.
• Verify that you’re a human with the captcha.
• Click “Sign Up” on the bottom-right.

You don’t have to use your real name as your username – most people don’t. You can use your brand name as your username, if you want, or a spin-off of your brand name. Also, you can create more than one account using the same email address. You could set up one account under your brand name, and then create an incognito account to use for secret customer or competitor analysis.

Choosing Your Interests and Subreddits

After signing up, you’ll get suggestions for popular boards that may interest you. If you have more than one account connected to the same email address, the subreddits you follow will be shared. I created a second username using the same email, and when I got to the part where I can pick subreddits to follow, I was already following the same ones as my first account:

If you want to join any of the subreddits on the auto-populated list, click the blue “Join” button on the right. When you’re done, click “Finish” on the bottom of the screen. When you’re on the homepage, you can search for more communities, and they all have “Join” buttons on the search results page or if you click into the subreddit. (More about searching from the homepage in a second.)

As a brand, you should subscribe to any subreddits that have to do with your company. What are the topics related to your brand and industry, and what topics are your target customers interested in, even if the connection is less obvious? Connecting with the right communities is a necessity for successful Reddit marketing.

The insurance app Lemonade promoted a post in a fast food subreddit. Does insurance have anything to do with fast food? No, but their post was geared toward food-lovers, and a lot of people have a vested interest in insurance, so chances are that their audience crossed over with the subreddit’s audience. (It also helped that their brand name is food-oriented.)

Once you have a list of subreddits you may be interested in, narrow them down. The subreddits you ultimately choose to follow and engage in should have a lot of subscribers, recently-active threads and guidelines that allow you to share the type of content you plan to create.

The Front Page

Looking at Reddit for the first time can be a bit overwhelming because there’s a lot to take in. The homepage – referred to as the front page, in Reddit lingo – shows trending posts from a selection of subreddits, including subreddits you follow. If you click the sort button in the upper-left of the home page, you can sort by popular Reddit feeds or the communities you’re part of.

There’s also a search bar toward the top of the page that you can use to search for subreddits or posts related to a term.

You can change the homepage view, too. There’s card view, which is the default homepage view, classic or compact. Here’s the classic view, as well as where you can change your view.

Posting to a Subreddit

When you’re on the home page or in a subreddit, there will be a pen next to your name. Click it to open a new window. Then, write something or share an image or link. Write a headline and include a tag to categorize the post. If you’re creating the post from the homepage, you’ll choose the subreddit that you want to post to.

Make sure to read the subreddit rules before posting. Some subreddits want posts formatted in a specific way, and if you miss a step, your post may get deleted by a moderator. Also, remain honest and transparent instead of sales-y, both in the post itself and in the headline you create for it. Something like, “Best home security systems ever!” won’t work, and a headline like this will likely get downvoted and invite negative comments.

12 Tips and Tools for Reddit Marketing

At its most basic, Reddit is a gathering place for any and every type of person, where people meet to chat and share content. Even if you’re going to use it for business, show up as though you’re here to hang with pals. Focus on building a community and generating or contributing to online discussions. The community has to be engaged in order to make any type of content or information viral. Here are 12 tips and tools for marketing your brand using Reddit.

Engage Before You Promote

You have to become a trusted part of the Reddit community before people care about what you have to say regarding your brand. Don’t jump into Reddit and start posting brand-focused content right away. Instead, upvote other posts and comments, leave thoughtful or interesting comments (that don’t have to do with your brand) on threads and share valuable content from other creators. For example, if you sell jewelry and you’re part of a fashion subreddit, post an infographic from another creator, like a fashion magazine, that shows different ways to style accessories.

Always Offer Value

Redditors only want to see valuable content – there’s no patience for obvious advertising like there is on a platform like Facebook. This can get tricky for brands that are used to using other social media sites to make announcements or offer blanket apologies that use a lot of jargon. That kind of thing doesn’t fly on Reddit. And since Reddit is where a lot of people go to complain about their dissatisfaction with a brand, if you’re going to respond, you can’t offer something as noncommittal as an apology without a real solution .

Listen to What Customers Are Saying

On Reddit, brands can listen in on what customers are saying, both the good and the bad. Reddit is a place for airing complaints and comparing notes with other customers, and this is where your customers may be discussing your company. You can basically get a front-row seat to customer feedback, and they don’t even have to know you’re listening. For example, here are several comments on a post in r/Amazon about Echo pet peeves:

Incentive Engagement

Incentivizing engagement isn’t about tricking people into communicating with you or the community. Instead, it’s about encouraging people who have something to say to actually say it. Run a contest, explain that you’re conducting market research and need feedback, or crowdsource ideas for your next product. Offer Reddit Coins or an exclusive coupon code in return.

Let Reddit Guide Your Content Creation

As you dive into the subreddits that are unofficially dedicated to your brand, you’ll learn quite a bit about what customers like, hate, want and need. You can use all of this intel for Reddit marketing and to create content moving forward. That can be Reddit-specific content or content for another outlet, like your blog or newsletter.

For example, let’s say your company just launched a new video game. You head into a subreddit where people are sharing tips, and you realize that there’s one tip that’s super popular. You can add that insider tip to your next newsletter to keep your subscribers engaged. Or, maybe users are frustrated because they can’t figure out how to get past a certain level or solve a quest – you can create an ultimate guide or walkthrough and then post it to Reddit or your blog, or you can create a video and put it on Facebook or YouTube.

You may also discover a part of your business you didn’t know existed. For example, let’s say you run a chain of coffee shops. You notice that a lot of Reddit posts have comments about funny or strange things people encountered at your shops, like customers doing odd things when waiting for their coffee or baristas sharing their behind-the-coffee-bar stories . You could create an Instagram hashtag dedicated just to this, and then encourage your community to send in their stories.

Refer to Pop Culture in Your Reddit Marketing

Reddit is always focused on what’s happening right now, so look to relevant pop culture references when creating your content. For example, a viral meme can be used in your Reddit content, so long as you can somehow make the connection. Using a popular meme just to grab people’s attention when your messaging has nothing to do with it is a cheap ploy and one that users will see through quickly. Chipotle got meme marketing right and did their own spin on “there are two types of people” memes with this one:

Host an Ask Me Anything

Ask Me Anything (AMA) sessions are excellent for prominent people, like celebrities, influencers, journalists and CEOs. Basically, anyone who people want to talk to should host an AMA. If your company isn’t well-known yet or your managers or staff aren’t well-known, partner up with an influencer who can speak on your brand’s behalf and share how they’re affiliated with your company. Essentially, the host has to be interesting enough to get people to tune in.

Audi also did a great job of this by hosting live video AMAs featuring celebrities . As the celebs rode shotgun in racecars and hit high speeds, they answered user questions. They combined everything that works: a recognizable influencer, an engaging AMA session with users, and video instead of text-only content. Plus, Audi caught the eye of people who may not care so much about cars or racing, but who do care about the celeb being interviewed. No matter why people watched, Audi increased brand awareness.

AMAs don’t have to be hosted on your own subreddit. They can be held in a broader subreddit that includes your audience. Not only will you reach more people, but you’ll become known to people who haven’t heard of you or your company yet.

Host an “I Am A” AMA

You can also host an “I am a…” AMA, which is for people who have specific expertise. This type of AMA may have a little more wiggle room in terms of getting attention without being well-known, because the focus is on your job title or experience, not necessarily your name and prominence. For example, people may not know Rachel DeAlto by name, but as a dating expert for Match.com, she has an interesting job that people want to ask about, especially in terms of social distancing.

Start a Discussion

If you find that people are talking about your brand, product or service in some way, you can create a post to start a discussion about something specific you want to know. For example, ask for feedback on a new product or a marketing campaign you just launched. Invite them to offer criticism or point out issues they’ve experienced. As you respond to comments and interact with users, make sure you’re just having a discussion. This isn’t the time to promote anything unless it will be truly helpful to the customer and solve a problem they’re having right now.

When you create a post, assign a community manager to keep an eye on the thread. First, you have to know when someone replies so you can hop in and comment within a reasonable amount of time, like a few hours or a day. Second, if negative comments get out of hand, you’ll want to address them quickly.

Add Links to Posts and Comments

While you don’t want to push users to visit links or slam them with “buy this” messaging, you can definitely link to content or products that users will find valuable. After mentioning something, you can simply say, “Learn more here,” and then include the link. The link (or the sale) shouldn’t be your primary point of being on Reddit, but it’s okay to include it if it’ll be valuable to others. Think of this as a soft plug for your brand, product or service rather than a hard sell. In Rachel DeAlto’s AMA, she posts a link for people to find out more about dating while social distancing.

Use Reddit as a Customer Service Channel

Some companies use a branded username or subreddit to help with customer service and Reddit marketing. Promote this type of subreddit on other channels, too – it’ll be helpful for potential customers who are researching before they move forward. The Xbox One subreddit was created by fans, not Microsoft, but there are Xbox-affiliated mods who post announcements and help troubleshoot.

Advertise on Reddit with Promoted Posts

While your messaging has to be community-focused instead of promotional, you can still pay for advertising to promote your posts and have your content seen by more people. By promoting a post, you’ll have it prioritized higher in subreddits, and you can also target the post to a specific user group. An icon will show up next to the post to indicate that it’s promoted, so use this feature wisely – you don’t want people to automatically ignore all of your posts because they think of them as ads.

If you’re going to promote the same message in different subreddits, tweak the content to match each specific subreddit – you’ll have a better chance at higher conversion rates this way. You should promote posts in subreddits that already include your audience, but you can think outside-the-box when it comes to that.

Here’s an example from Ally Bank, which promoted this post in a PlayStation subreddit. There’s not an obvious connection between gaming and banking, but since pretty much everyone needs a bank, this isn’t as much of a stretch as it seems at first. Also, Ally may know that a lot of their account owners are within a certain age range, making the video game audience a great target for their Reddit marketing. Ally showed users something they can identify with and compare to choosing a bank.

While you can promote a Reddit post you already posted, you can also create a Reddit ad. In the next section, we’ll go through the basics of advertising with Reddit.

An Overview of Advertising with Reddit

Reddit offers a ton of help and guidance for people who want to pay for advertising, and this page has links to practically anything you need to know. There’s also this page , which has a bunch of tips for advanced ad management.

If you know you’re going to use Reddit paid advertising and you don’t have a Reddit account yet, you can sign up here . If you do have a Reddit account, there’s an option to log in on that page. Let’s go over what you need to know to get started with Reddit ads.

Reddit’s Three Ad Types

There are three types of ads you can run on Reddit, and each one comes with its own strengths:

• Link: Best for driving traffic to a landing page. The only copy you can add is a 300-character headline.
• Text: Best for collecting feedback or generating a discussion. Add a 300-character headline; the body has unlimited space for text and hyperlinks.
• Video: Best for driving traffic to a landing page, since clicking the ad directs the user to an external link. (Personally, I also think video is great for brand awareness.) The only copy you can add is a 300-character headline.

You can use GIFs in a video ad, too. Also, if you have one long video, you can cut it into smaller videos and run several video ads to see which length and content perform best.

Campaign Objectives

There are five campaign objectives to choose from:

• App Installs: Get more installations of your mobile app.
• Brand Awareness and Reach: Help more people learn about your brand or product.
• Conversions: Encourage actions on your landing page.
• Traffic: Drive more traffic to your landing page.
• Video Views: Increase how many people watch your video.

The objective you choose may affect the type of ad you can create. For example, you can only run a traffic ad with a link or video post.

Source: Reddit Help

Targeting Options

You can target and define audiences for Reddit ads using the following demographics:

• Time of day

You can also choose to not define your audience in certain ways. For example, if your brand has a global reach, you don’t have to choose a location for targeting.

Call-to-Action Buttons

You can add a call-to-action (CTA) button to your Reddit ad, and there are a number of choices, like “Contact Us,” “Download” and “Play Now.” Below is an example of what it looks like on a link or text ad, and if you have a video ad, the CTA will come up on the end card.

Like with other social media ad platforms, you can set daily or lifetime budgets. You’ll set bids, which should be reflective of the most you’re willing to pay for that ad’s results. That differs based on the type of ad you run. For example, with a Brand Awareness and Reach campaign, you’ll set a bid for every 1,000 impressions, while with an App Install ad, you’ll set a bid for every click.

Running a Test Campaign

Reddit suggests running your first test campaign for four weeks, which should give you enough time to determine how well Reddit advertising will work for you or if you need to make changes to your ads to get more traction out of them. When creating your first ad, make sure to follow these suggestions to limit the chances of your ad getting rejected during the approval process. Here are a few more must-know tips, too:

• Create separate ad groups to see which type of ad (video vs. link vs. text-only) or target audience performs best.
• Start with a high bid until your ads start getting attention, then lower it, if needed.
• Target broadly, and think abstractly, too. For example, if you run a fitness brand and you know that your audience is full of adventure-seekers, you can target travel audiences.

Each campaign will have ad groups, and ad groups contain ads. Reddit suggests adding multiple ads to your ad groups so there are different versions to cycle through, which prevents ad fatigue. Plus, Reddit limits how many times a user sees your ad in one day, so if you have more ads for Reddit to show, you can increase their impact.

When tracking the performance of your ads, the ads dashboard lets you select the metrics you care about and organize them in whatever way works for you. You can find definitions for the metrics here , which may help you decide which ones to watch.

Final Thoughts About Reddit Marketing

Reddit is a niche social platform, one that’s quite different from other outlets you have experience with. It requires a lot of hands-on attention, and while it can help you build relationships with potential or current customers, it’s not often a direct line to making a sale. If your fans or customers are already on Reddit, though, you should definitely add it to your marketing strategy.

One thing you don’t want to do is run Reddit ads and skip genuine, non-promoted engagement. Some ads work incredibly well, while other users run ads and get nothing in return – and in some cases, organic posts perform much better than paid posts. There’s no guarantee that your content will go viral, whether you pay for it or not, and if you don’t take the time to engage with the community, nothing you do will have much reach.

Approached strategically, Reddit can definitely benefit your marketing efforts, but don’t dedicate all of your time or resources to this one platform. Luckily, you don’t have to be all in all the time. Reddit is more forgiving than something like Instagram, which requires regular content to stay relevant. With Reddit, you can hop in whenever you think Reddit will give you customer insight or help you get a message out, then focus on other marketing avenues the rest of the time.

Do you want to tune in to what Reddit has to say about WordPress? We’ve put together a list for exactly that .

Featured Image via Julia Tim / shutterstock.com

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Thanks, Lindsay Pietroluongo! You did a great job. The importance of Reddit Community cannot be ignored in this age. I am going to get involved it Reddit. Thanks again for highlighting this big opportunity.

Pro tip: Understand the culture before diving into “Reddit marketing.” Reddit has a very specific culture, plus each sub has its own culture as well, and even a well-intended post or comment can induce downvotes.

Very easy to be downvoted or end up on /r/AMADisasters or /r/FellowKids if rushed without understanding the culture.

So anyone interested in Reddit for marketing, then I strongly advise to really understand the community and have fun with the users, and gather some karma before trying to leverage it.

Never even looked at Reddit before, time to give it a whirl I think.

Reddit is undoubtedly a great platform for marketing purpose. Reddit has very strict guidelines. If you are really focusing on providing valued information, only then you can survive at Reddit. Always read subreddit’s rules before promoting your shit out there.

I like your effort to help us improve on the quality you have produce over and over again

Thanks for describing the importance of Reddit in growing a business.

Great guide, thank you for sharing. I will try to do it step by step as you wrote it.

Surprised a few things weren’t mentioned: old.reddit.com is a much better way to view the site. Reddit Enhancement Suite (RES) plugin has a bunch of useful tools. Unchecking “use this subreddit style” on all subs you frequent is really helpful. Most custom designs are a trainwreck. Alienblue is a great iOS reddit reader app.

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Marketing For Health & Wellness

The Ultimate Guide to Reddit for Small Business 

Reddit for Small Business

Reddit is a massive online social news platform, started in 2005, that encourages users to discuss, rate and share content in the form of text posts, images, and videos. The highest-ranking content gets pushed to the top, making it more visible to users, so sharing quality content is a vital part of the social exchange.

It hosts 52 million unique users per day—making it the 8th most visited website in the world as of November 2022. You’ll find over 130,000 active communities called subreddits that cover any topic you can imagine. These subreddits are typically focused on a singular topic, that ranges from politics, news, video games, music, movies, technology, careers, and much, much, more.

Reddit’s great to get a general idea of what’s trending in the world, while subreddits can give you a focused scope of any specific topic. There’s essentially a subreddit for any topic imaginable (unstirred paint? Yeah. There’s a subreddit for that). 

While you might find entertainment value in discussing the latest The Last of Us episode and how it differs from the videogame, a savvy Reddit user can strike gold  by discovering where its product or service fits into their niche consumer market. 

Reddit can be used to gain feedback about a business’s product, learn more about your competitors, what customers like and (really) don’t like, and understand what steps to take to make your product or messaging more appealing to the market. 

In short, Reddit provides a wealth of information and a unique opportunity for small businesses owners to connect with their target audience, gather insights, and stay ahead of the competition.

Importance of Reddit for market research and competitive research

Reddit is an invaluable resource for competitive market research because  it provides access to a large and diverse community of users with a wide range of interests and perspectives. This anonymous pool of users also notably has nothing to lose- they tend to be extremely honest, which can be critical for getting unfiltered feedback on your product and its position in the market.

Other social media sites like Facebook or Instagram are not extremely searchable, with most users’ profiles locked down from public searches. Blogs are becoming increasingly rare. And Twitter is a firehose, making it hard to wade  through the noise to get the good stuff.

For market research, businesses can gather information on Reddit about consumer preferences, trends, and rapidly shifting opinions. This can help you make informed decisions about product development, marketing, and customer service- information that can help bulletproof businesses in an increasingly unpredictable economy.

When it comes to competitive research, you can monitor mentions of your competitors and gather a sense of customer sentiment towards these competitors. This information can provide valuable insights into what practices are working well for competitors, and what areas may be opportunities to offer an improved product  or competitive messaging.

If you own a furniture company that’s primarily known for a type of recliner, search out your competitors on Reddit and see what customers love about their La-Z-Boy and what they honestly  wish was better. If your recliner is designed to be every new mother’s dream chair, then visit the subreddits geared toward pregnancy and parenting to figure out what some gaps in the market might be- then use that intel to your advantage.

By leveraging this platform, small businesses can gain a deeper understanding of their target market and the competitive landscape, which can then help them make more informed decisions and unlock their product’s true market potential.

Understanding Reddit as a Community

Who Uses Reddit

It’s a myth that only teenagers use Reddit. Even though the majority of Reddit’s user base is between the ages of 18-29 , you won’t have difficulty  finding someone that matches your target demographic. 22 percent of users are between 30 and 49, and the whole of Reddit includes users from countries all over the world, so the feedback you’re gathering is from an extremely wide net. 

While the demographics lean male, there are plenty of women on Reddit, and there are lots of women-specific subreddits, often designated by the ‘xx’ prefix. For example, while there’s an r/Fitness subreddit, there’s also an r/xxFitness for women.

People come to Reddit to ask questions, get opinions, and discuss what keeps them from switching from Car A to Car B, or software engineers using a Mac vs. PC for app development. 

The interest topics are endless – and even if it’s a smaller-sized community, they may be very active, engaged, and opinionated! 

When conducting market research on Reddit, the more vocal the community, the better. This data can help you strengthen your strategies around product designs or what you should address when speaking to your audience. 

In general, on the internet: 

• 90% of people are lurkers (meaning they will never like/comment, only read/browse), 
• 9% are participants (meaning they will upvote or downvote), and 
• only 1% will actively engage by commenting or creating new posts.

This means that you can assign a heavier weight to singular comments than you might think – even if you only find one relevant comment to your brand or industry, it means there were many other people who likely felt the same way but didn’t want to comment themselves. Upvotes can also give you data – a comment score of 1 is very different from one with 34 upvotes.

So as you are searching through Reddit, don’t get discouraged if you “only” find a handful of threads or comments – these are valuable, too!

Understanding Reddit – Hands On

To understand Reddit as a community, it’s best to jump in and immerse yourself. Like any real-life community, Reddit has its own set of rules, norms, faux pas, and slang. To make it even more complex, each subreddit or topic can have its own unique way of speaking and operating.

Here’s how you can start familiarizing yourself with the platform:

• Get to know the basics and features: Start by exploring the platform and getting a sense of how it works. Use the “front page” of reddit.com to get started. Familiarize yourself with the different features , such as subreddits, upvoting and downvoting, and commenting threads.
• Identify relevant communities: Reddit is made up of many communities, or subreddits, focused on different topics. Identify the subreddits that are relevant to your industry or target audience. The easiest way is just to Google it – e.g. “subreddits for marketing” or “reddit small business”. Each major subreddit typically has links to smaller subreddits on its front page (look for “related subreddits”).  
• Observe community norms and etiquette: Each subreddit has its own set of norms and etiquette, so be sure to observe and respect these when participating in discussions. These rules and expectations are typically clearly lined out in the top of the subreddit, so be sure to read them thoroughly before engaging.

By taking these steps, you’ll gain a deeper understanding of Reddit as a community and be better equipped to use the platform for market research and competitive research.

Is reddit more honest than other social networks or online reviews?

People are often more honest on Reddit about a company’s products and services because the platform provides both anonymity and a sense of community. 

This anonymity tends to allow users to freely express their opinions and experiences without fear of retaliation or judgment. 

This sense of community and anonymity on Reddit fosters open and honest discussion, as users are able to share their experiences with others who have similar interests. 

There is a material gain from participating in these communities, as users get more information and insight around their questions or ideas, and the opportunity to bond over a set of shared experiences.

For example, on a thread about Eleven Madison Park in the Fine Dining subreddit, I commented that I’d just finished the last of my EMP granola and that the OP (original poster, the person who started the thread) should really savor theirs. Another redditor replied with a copycat recipe so I could make my own at home! 

Which I did this weekend. Spoiler: It was great.

Additionally, because Reddit’s upvoting and downvoting system helps to promote accurate and relevant information, users are able to regulate the quality and accuracy of posts and comments. 

This system is set up so that the most valuable and accurate information rises to the top, while less relevant or inaccurate information is downvoted and less visible- at least, in theory.

While upvoting for accuracy and relevance is the Platonic ideal, what often ends up happening is the funniest or most popular / well-liked answer is the most upvoted. If you want to get the opposite perspective from the crowd, try sorting by “controversial”. 

There, you may find some insights that really help you tweak  your product or marketing. These comments could be the thoughts of the “silent majority” that are hampering real product-market fit or marketing strategy.

Conducting Market Research on Reddit

Identifying relevant subreddits for market research.

The first step in using Reddit for market research is to search for relevant subreddits to your product or service. This way, you can see specific topics and get an idea of what people are saying within that area. 

Not sure how to find topical subreddits? Turns out, Google is a pretty good resource for aggregating and recommending subreddits.

Say you’re an accountant looking to bring on extra clients before tax season. You might search for something like “ Filing Taxes ” to find discussions about who people are filing with and why, or what common questions and pain points they may have.

People could contribute to the post by commenting  they’d rather use software like Turbotax because it’s cheaper than hiring an accountant, or discuss how much of a tax refund one accountant got them versus others in a specific area. 

 You could use this information to create campaigns that address what problems your service can solve for customers:

• You save the customer valuable time
• Your business reduces the risk of not filing correctly and getting audited later.
• You can get your customer a bigger tax refund.

Use Reddit’s search feature to find conversations that have been occurring around particular topics that might relate to what you do. 

From these conversations, you may find that someone loves your product or service but wishes the website was easier to use or had better support for the customer after they made the purchase. Gems like these are sprinkled all over Reddit- you just have to know how to search for them.

Utilizing Reddit search to gather information

There are multiple ways to use reddit search – search the entire site for a word or phrase, or search a specific subreddit for a word or phrase. 

• Use specific keywords: Start by searching for keywords related to your topic of interest. For example, if you’re looking to gather information about a particular company, search for the company name or any nicknames for the company.
• Refine your search: you can then refine your search results by date, subreddit, and type of content (e.g. posts, comments). Use these filters to focus your search and find the most relevant information.
• Check multiple subreddits: Reddit search results can vary widely depending on the subreddit, so be sure to check multiple subreddits to get a more comprehensive view of the topic. Your area of interest may be discussed in seemingly irrelevant topic areas, but don’t discount the potential value of these conversations. Take a peek at search results from anywhere that pops up.
• Analyze the information: Once you’ve gathered information from Reddit, pop it into a document or spreadsheet and analyze the information to identify common themes and trends. This information can help you get a better understanding of customer opinions, preferences, and experiences.

Engaging with the community for insights and feedback

Let’s say you own a Toyota dealership in Los Angeles, and you’re curious about your competition – another Toyota dealership in Santa Monica.. You might search for something like “Toyota dealerships in Los Angeles” and find a post asking “Are there any dealerships in L.A. County that aren’t charging a market adjustment?”

From these posts, we could find that our competitor is literally and figuratively driving away business by adding on $5-$10K in market adjustments, or another dealership is saying they don’t have one, while in reality  they get their “market adjustment” in overpriced tints, floor mats, tires, or warranty plans.

With this information, we could frame our dealership as transparent with no markups or hidden fees, highlight what’s included, and boast our large inventory of cars. We can also address issues the customer may find at other dealerships, such as a pushy salesperson or untrustworthy motives.

Conducting Competitive Research on Reddit

Monitoring competitor mentions and brand mentions on Reddit

If you’d like to regularly monitor competitor mentions and brand mentions on Reddit (and you should!), you can follow these steps:

• Set up a Reddit account: To monitor company and competitor mentions on Reddit, you’ll need to set up a Reddit account. This will allow you to search for mentions and subscribe to relevant subreddits. This only takes a minute.
• Use Reddit search: Use Reddit’s search function to search for mentions of your brand or competitors. Make sure to search for variations of your brand name, as well as any common misspellings.
• Monitor relevant subreddits: Subscribing to relevant subreddits can help you stay up-to-date on any mentions of your brand or competitors. Look for subreddits that are related to your industry or target audience, and check them regularly. It can help to have a recurring calendar reminder to check these in order to stay on top of trends and changes.
• You can use this syntax for Google Alerts: 
• site:http://www.reddit.com/r/<name of subreddit> <query> (remove the angle brackets) 

• You can use data visualization tools (like a word cloud) or a simple spreadsheet to keep tabs on the common issues, complaints, and questions. 

Some helpful tips when conducting searches include sorting subreddits strategically: sorting by “Top: All Time” will put the post popular (and most engaged with) subreddits at your fingertips. Searching for your product or similar products in related subreddits (not just by the brand name) could yield juicy results. Instead of just searching r/Nike, be sure to also search for Nike in r/fitness. 

Think creatively about the places your customers are hanging out on Reddit in order to make sure you aren’t overlooking valuable conversations. 

Identifying market trends and emerging products through Reddit discussion

By monitoring Reddit discussion, you can stay ahead of the curve and identify market trends and emerging products before they become mainstream. Compare your product to ones you see eagerly discussed in relevant subreddits: what changes can you make to your product to keep it competitive or surpass your competition?

• Analyze discussion: What are users excited about? What do they keep wanting to discuss again and again? Make note of products, issues or ideas that you see popping up repeatedly- there’s probably a good reason for it. 
• Look for mentions of new products: Check for mention of products and emerging technologies in the discussion threads. What are users saying about these new products? Are the responses largely positive or negative, and why? Are users quick to embrace new technologies, or do they wish things could revert back to the way they were in a previous version? 
• In smaller communities, this is easier to spot. There will be a handful of ‘top users’ who tend to dominate the conversation.

Using Reddit Data for Business Decisions

As a business owner, it’s important to understand your target audience and stay ahead of the competition. Reddit can be a valuable source of data and insights that can help you make savvy business decisions. A couple of simple actions will help you shape the way you do business and positively influence the trajectory of your product.

• If there isn’t an existing conversation for your particular niche or product, start a new thread, or start a new conversation within an existing thread. Make sure you’ve thoroughly read through the subreddit’s community guidelines and rules before posting in order to remain in good standing (and to avoid your post being removed).
• Catalog the number of people who are interested or have purchased a competitor’s product – if there’s smoke, there’s fire – and likely market demand for your better product.

Final thoughts on utilizing Reddit data to drive business decisions.

Data gathered from Reddit can have an immense impact on the trajectory of your business – it can illuminate a problem (or series of problems) you didn’t know your customers had, which in turn can help you market your product as the solution to those problems. 

It can also help address areas of new product development that require clarity, or determine if a current service/product you offer is even relevant to the market anymore. 

And our favorite use for it – understanding the exact way people speak about your product, service, or industry. This will better inform all of your marketing material and help your company “speak their language.” When customers feel seen and reflected by the brands they love, it only reinforces their brand loyalty and enthusiasm.

Reddit can be an incredibly helpful tool in eliminating your business blind spots- if you’re able to commit to the time investment. With Reddit, you have the unique opportunity to find out what consumers think about your brand, your competitors, fill knowledge gaps about your niche, and use that data to help inform what’s next for your business. 

For a free resource, you can’t put a price on that! Understanding Reddit for market and competitive research is fundamental in today’s environment. The platform’s massive user base offers a rich and diverse source of data that can give businesses a unique insight into consumer behavior and preferences.

The feedback and engagement gathered on Reddit can help a small businesses identify gaps in the market, evaluate their competitors, understand trends, and ultimately, adapt their strategies to stay competitive. These benefits can be especially impactful for small businesses who are looking to gain traction in their respective markets. While traditional research methods may not capture the real-time sentiments of consumers, Reddit provides a dynamic and authentic environment to tune into the conversations that matter most.

Using Reddit effectively for your business’s market research could become your secret weapon for success.

To learn more about how to leverage this platform check out the rest of our website at ArnoldMarketing.com

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