business plan challenges and opportunities

Expert business plan and financial models

How to Write a SWOT Analysis for a Business Plan

• September 4, 2024
• Business Plan , How to Write

Navigating the complexities of business requires a clear understanding of your strategic position, and a SWOT analysis is an essential tool to help you achieve this clarity. It’s a straightforward method that breaks down into Strengths, Weaknesses, Opportunities, and Threats, providing a snapshot of where your business stands and guiding your future strategic moves.

With this guide, you’ll learn how to leverage your advantages, address challenges, seize new opportunities, and guard against potential threats. Let’s dive into the process together and set a strong foundation for your business’s strategic planning. Let’s dive in!

What is a SWOT Analysis?

A SWOT analysis is a strategic planning tool used to identify and understand the Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning. This method helps organizations in assessing both internal and external factors that could impact their objectives.

• Strengths : Positive attributes internal to the organization and within its control. Strengths are resources and capabilities that can be used as a basis for developing a competitive advantage.
• Weaknesses : Factors that are within an organization’s control but detract from its ability to attain the desired goal. These are areas the business needs to improve to remain competitive.
• Opportunities : External chances to improve performance in the environment. Opportunities reflect the potential you can leverage to grow your business or project.
• Threats : External challenges to the business’s performance or project’s success. Threats might stem from various sources, such as economic downturns, increased competition, or changes in regulatory landscapes.

Why Use a SWOT Analysis?

We use a SWOT analysis for several important reasons in business and strategic planning:

• Strategic Overview : It provides a concise and comprehensive overview of the current strategic position of the business or project. By examining internal and external factors, stakeholders can get a clear picture of their situation.
• Decision Making : SWOT analysis aids in decision-making by highlighting the strengths to leverage, weaknesses to address, opportunities to pursue, and threats to mitigate. It helps in prioritizing actions based on the analysis.
• Opportunity Identification : SWOT analysis is instrumental in identifying new opportunities for growth and expansion. Opportunities might come from market trends , economic shifts, or changes in technology.
• Risk Management : By identifying threats, organizations can develop strategies to address or mitigate these risks before they become significant issues. It’s a proactive approach to managing potential external challenges.
• Resource Allocation : Understanding the organization’s strengths and weaknesses helps in the effective allocation of resources. Resources can be directed to areas where they are needed most or where they will have the highest impact.
• Competitive Advantage : It helps businesses identify unique features and capabilities that give them a competitive edge in the market. Recognizing these strengths can guide marketing strategies and business development.

How to Write a SWOT Analysis

Writing a strength in a SWOT analysis involves identifying and articulating the internal attributes and resources of a business or project that contribute to its success and competitive advantage. Here’s how to effectively write a strength in a SWOT analysis:

• Identify Internal Positive Attributes : Focus on internal factors that are within the control of the business. These can include resources, skills, or other advantages relative to competitors. Consider areas like strong brand reputation, proprietary technology, skilled workforce, financial resources, strategic location, and efficient processes.
• Be Specific and Relevant : General statements like “we have a good team” are less helpful than specific ones like “our team includes industry-recognized experts in X field.” The more precise you are, the more actionable your analysis will be. Ensure that the strengths are directly relevant to achieving the business’s goals and objectives.
• Use Quantifiable Data When Possible : Whenever you can, back up your strengths with quantifiable data. For example, “a customer satisfaction rate of 95%” or “a 20% lower production cost than industry average” provides concrete evidence of your strengths.
• Compare to Competitors : Strengths are often relative to the competition. Identify areas where your business outperforms competitors or fills a gap in the market. This might involve superior product quality, a unique service model, or a more extensive distribution network.

Example: Instead of simply stating “Experienced management team” as a strength, you could write: “Our management team has over 50 years of combined experience in the tech industry, including a track record of successful product launches and market expansions. This depth of experience provides us with strategic insights and operational expertise that have consistently resulted in market share growth and above-industry-average profitability.”

Writing a weakness in a SWOT analysis involves acknowledging and detailing the internal factors that limit or challenge your business or project’s ability to achieve its goals. Here’s a structured approach to effectively articulate weaknesses in a SWOT analysis:

• Identify Internal Limitations : Focus on internal attributes that are within the control of the organization but currently act as disadvantages. Weaknesses might include insufficient resources, lack of expertise, outdated technology, poor location, limited product range, or inefficiencies in processes.
• Be Specific and Honest : It’s important to be honest and specific about your organization’s weaknesses. Vague statements won’t help in addressing these issues. For instance, rather than saying “we need to improve our marketing,” specify “our current marketing strategy does not effectively reach our target demographic of 18-25-year-olds on digital platforms.”
• Use Internal Comparisons and Feedback : Compare your performance, processes, and resources against your own past performance or industry benchmarks. Utilize customer feedback, employee insights, and performance data to identify areas of weakness.
• Keep it Constructive : While it’s crucial to be honest about weaknesses, frame them in a way that focuses on potential for improvement. Consider each weakness as an area for development and growth.

Example: Instead of a broad statement like “Inadequate online presence,” a more effective description would be: “Our business currently lacks a robust online presence, reflected in our outdated website and minimal engagement on key social media platforms. This limits our ability to attract younger demographics who predominantly discover and interact with brands online. Improving our online visibility and engagement could enhance brand awareness and customer acquisition.”

Opportunities

Writing opportunities in a SWOT analysis involves identifying and articulating external factors that your business or project could exploit to its advantage. Opportunities are elements in the environment that, if leveraged effectively, could provide a pathway for growth, improvement, or competitive advantage. Here’s how to systematically approach writing opportunities in your SWOT analysis:

• Spot External Trends : Focus on the trends and changes outside your organization that could be beneficial. These might include technological advancements, shifts in consumer behavior, market gaps, regulatory changes, or economic trends.
• Be Relevant and Actionable : Ensure that the opportunities you identify are relevant to your business and actionable. They should align with your business’s strengths and capabilities, allowing you to take practical steps toward capitalizing on them.
• Use Market Research : Base your identification of opportunities on solid market research. Understand your target market , industry trends, and the competitive landscape to pinpoint where the real opportunities lie.
• Detail Potential Benefits : Clearly articulate how each opportunity could benefit your business. Whether it’s entering a new market, launching a new product line, or adopting new technology, explain the potential impact on your business growth and success.

Example: Rather than vaguely stating “New market segments,” a more strategic description of an opportunity could be: “With increasing consumer interest in sustainable living, there’s a growing market segment for eco-friendly products. Our business’s strong commitment to sustainability and existing lineup of environmentally friendly products positions us well to capture this emerging market. Expanding our product range to include more items that cater to eco-conscious consumers can tap into this trend, potentially opening up new revenue streams and enhancing our brand’s reputation as a leader in sustainability.”

Writing threats in a SWOT analysis involves identifying external challenges that could pose risks to your business or project’s success. These are factors outside your control that have the potential to harm your operations, financial performance, or strategic positioning. Addressing threats effectively in a SWOT analysis requires a focused approach:

• Identify External Challenges : Start by pinpointing the external factors that could negatively impact your business. This can include new competitors entering the market, changes in consumer preferences, technological advancements that render your product less desirable, regulatory changes, or economic downturns.
• Be Precise and Realistic : Clearly define each threat in specific terms, avoiding vague descriptions. Being realistic about the level of risk each threat poses is crucial; not every external challenge is a dire threat, but understanding the potential impact is key for strategic planning.
• Assess the Impact : For each threat identified, evaluate how it could impact your business. Consider the worst-case scenario and more likely outcomes to gauge the potential severity of the threat. This helps in prioritizing which threats need immediate attention and strategic response.
• Use Reliable Sources : Base your identification of threats on solid, reliable information. This might include industry reports, economic forecasts, and news sources that provide insights into market dynamics and external conditions.
• Consider Your Weaknesses : Link potential threats to your identified weaknesses. Understanding how external threats could exploit your vulnerabilities offers valuable insights for fortifying your business against these challenges.

Example: Instead of broadly stating “Economic uncertainty,” a more actionable description of a threat would be: “The looming economic downturn poses a significant threat to discretionary consumer spending. Given our business’s reliance on non-essential luxury products, a reduction in consumer spending could directly impact sales. This economic uncertainty requires us to diversify our product offerings and identify more value-oriented options to maintain customer engagement and spending during tighter economic conditions.”

Related Posts

How Much It Costs to Open a Chiropractic Clinic: Examples

• September 17, 2024
• Startup Costs

How Much It Costs to Start a Medical Practice: Examples & Budget

• September 14, 2024

How Much It Costs to Start a Pilates Studio: Examples & Budget

Privacy overview.

Table of Contents

How to make a business plan

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

Get on board in seconds

Plans and pricing.

Small Business Trends

Top 15 small business challenges and how to overcome them.

Table of Contents

Top Small Business Challenges

1. cash flow, 2. supply chain disruption, 3. customer acquisition, 4. undiversified customer base, 5. balancing quality and business growth, 6. company culture, 7. customer satisfaction, 8. economic trends, 9. healthcare, 10. time management, 11. government regulation, 13. losing passion, 14. market competition, 15. recruiting employees.

How Do You Overcome Challenges Facing a Small Business Owner?

Understanding the target market:, being informed about current market trends:, developing an effective business strategy:, having sufficient start-up funds:, flexibility and adaptability:, seek mentorship:, why do so many small businesses fail, inadequate planning or flawed business model:, financial difficulties:, challenges in marketing and advertising:, intense competition:, operational mistakes:, external factors:, what is the biggest challenge for small business owners.

• Certifications
• Associate Business Strategy Professional
• Senior Business Strategy Professional
• Examination
• Partnership
• For Academic Affiliation
• For Training Companies
• For Corporates
• Help Center
• Associate Business Strategy Professional (ABSP™)
• Senior Business Strategy Professional (SBSP™)
• Certification Process
• TSI Certification Examination
• Get your Institution TSI Affiliated
• Become a Corporate Education Partner
• Become a Strategy Educator

Frequently Asked Questions

Swot analysis: how to strengthen your business plan.

Introduction

Every business, big or small needs a solid plan to succeed. A well-constructed business plan takes into account the strengths and weaknesses of a company and the opportunities and threats present in the marketplace. One of the most useful tools for assessing these factors is the SWOT analysis as it provides a comprehensive overview of a company's current situation and potential for growth. In this article, we will discuss what a SWOT analysis is, why it is important for businesses, who should conduct it, and how to conduct it effectively.

What is a SWOT analysis?

Have you ever wondered how businesses manage to evaluate all the internal and external factors that could affect their success? Welcome to the SWOT analysis. It's a strategic planning tool that helps businesses identify their Strengths, Weaknesses, Opportunities, and Threats.

Strengths refer to internal factors that give a company an edge over its competitors. Think of a strong brand, loyal customer base, experienced employees, or efficient operations. Weaknesses, on the other hand, are internal factors that put a company at a disadvantage. These could be a weak brand, lack of funding, inexperienced employees, or outdated technology .

But what about external factors that could impact a business's success? That's where Opportunities and Threats come in. Opportunities are external factors that could help a company grow and succeed. This could include a growing market, new trends, technological advancements, or changes in regulations. Threats, on the other hand, are external factors that could harm a company's growth and success. Examples of threats could be economic downturns, increased competition, changes in consumer behavior, or natural disasters.

By conducting a SWOT analysis, businesses can make informed decisions about their strategic initiatives. By focusing their resources on areas with the greatest potential for growth and competitive advantage, businesses can increase their profitability, market share, and long-term success. So, whether you're a business strategist, executive, manager, or consultant, SWOT analysis can provide a fresh perspective on your company's current situation and potential for growth .

Why is a SWOT analysis important for businesses?

A SWOT analysis is essential for developing a business plan that maximizes a company's strengths, minimizes its weaknesses, and takes advantage of opportunities while mitigating threats.

Here are some of the reasons why a SWOT analysis is important for businesses:

• Identifies key areas for improvement By conducting the SWOT analysis, businesses can gain a better understanding of their internal weaknesses and external threats, which enables them to prioritize areas for improvement. They can then focus their resources and efforts on those areas, which can help them become more competitive and improve their overall performance.
• Maximizes the strength of businesses In addition to identifying areas for improvement, SWOT analysis also helps businesses identify their strengths. By leveraging these strengths, businesses can differentiate themselves from their competitors and take advantage of their competitive advantages. This can lead to increased market share, improved profitability, and overall success.
• Mitigates threats SWOT analysis can help businesses identify potential threats to their operations and take proactive measures to mitigate them. This could include diversifying their product or service offerings, investing in risk management strategies, or developing contingency plans to minimize the impact of unforeseen events.
• Takes advantage of potential opportunities In addition to mitigating threats, SWOT analysis can also help businesses identify potential opportunities for growth and success. By capitalizing on these opportunities, businesses can increase their market share, expand their customer base, and improve their overall performance.
• Provides a comprehensive overview Finally, SWOT analysis provides a comprehensive overview of a company's internal and external factors. This can help businesses develop a well-informed business plan that takes into account their current situation and potential for growth. By developing a strategic plan based on the SWOT analysis, businesses can increase their chances of success and achieve their long-term goals.

How to conduct a SWOT analysis?

Now that we know what a SWOT analysis is and why it is important for businesses, let's discuss how to conduct a SWOT analysis effectively. Here are the steps involved:

• Define the objective: The first step in conducting a SWOT analysis is to define the objective. What is the purpose of the analysis? What are the specific goals that the analysis aims to achieve? Defining the objective will help focus the analysis and ensure that it is relevant to the specific needs of the business.
• Gather information: Once you have defined the objective, the next step is to gather information about the business, its industry, and its competitors. This can include things like financial reports, customer feedback, market research, and competitor analysis.
• Identify strengths: What are the things that the business does well? What advantages does it have over its competitors? This can include things like a strong brand, loyal customer base, experienced employees, and efficient operations.
• Identify weaknesses: The next step is to identify the weaknesses of the business. What are the areas that need improvement? What disadvantages does it have compared to its competitors? This can include things like a weak brand, lack of funding, inexperienced employees, and outdated technology.
• Identify opportunities: To identify the opportunities available to the business , you need to address questions such as, What are the trends in the industry? What changes in regulations could benefit the business? What new technologies are emerging? This can include things like a growing market, new trends, technological advancements, and changes in regulations.
• Identify threats: The final step is to identify the threats to the business. What are the economic, social, and environmental factors that could impact the business negatively? What are the risks associated with the current situation and potential growth opportunities? This can include things like economic downturns, increased competition, changes in consumer behavior, and natural disasters.

Once the SWOT analysis is complete, the next step is to use the information to develop a strategic plan that maximizes the strengths of the business, minimizes its weaknesses, takes advantage of opportunities, and mitigates threats.

Who should conduct a SWOT analysis and what are the benefits?

A SWOT analysis can be conducted by anyone involved in the strategic planning process of a business. This can include business strategists , executives, managers, and consultants. Here are some of the benefits of conducting a SWOT analysis:

• Provides a fresh perspective on a company's strengths, weaknesses, opportunities, and threats, allowing for a more objective view of the situation.
• Facilitates strategic decision-making that enables businesses to make informed strategic decisions based on their current situation and potential for growth.
• Helps prioritize action items based on their importance and potential impact to the business.
• Encourages collaboration among team members, allowing for a more comprehensive analysis of the situation.
• Enables risk assessment associated with their current situation and potential growth opportunities.
• Improves communication among team members, ensuring that everyone is on the same page regarding the current situation and potential for growth.

This information helps businesses to prioritize their key strategic initiatives, focus their resources on areas with the greatest potential for growth and competitive advantage, and develop a strategic plan that aligns with their goals and objectives. Ultimately, a SWOT analysis helps businesses to make more effective strategic decisions that can lead to increased profitability, market share, and long-term success.

Example of a SWOT analysis

To help illustrate the SWOT analysis process, let's take a look at an example of a SWOT analysis for a company in the fashion industry:

• Strong brand recognition
• Innovative designs
• Loyal customer base
• Experienced and skilled designers and staff
• Efficient production processes
• Limited distribution channels
• Dependence on a few key suppliers
• High production costs
• Lack of international presence
• Limited online presence

Opportunities

• Growing demand for sustainable fashion
• Emerging markets in Asia and South America
• Expansion into e-commerce
• Partnership with influencers and celebrities
• Diversification of product offerings
• Economic downturns and recessions
• Increased competition from established and emerging brands
• Shifting consumer preferences and trends
• Changes in regulations and trade policies
• Disruptive technologies and innovations

Using this SWOT analysis, the company could focus on expanding its distribution channels and international presence, reducing production costs, and investing in sustainable and diverse product offerings.

Q: Is a SWOT analysis only for large businesses? A: No, a SWOT analysis is beneficial for businesses of all sizes, including small businesses.

Q: Can a SWOT analysis be conducted for a specific project or product? A: Yes, a SWOT analysis can be conducted for a specific project or product to evaluate its strengths, weaknesses, opportunities, and threats.

Q: How often should a SWOT analysis be conducted? A: It is recommended to conduct a SWOT analysis at least once a year or whenever there are significant changes in the industry, competition, or business environment.

Q: What should I do with the information gathered from a SWOT analysis? A: The information gathered from a SWOT analysis should be used to develop a strategic plan that maximizes strengths, minimizes weaknesses, takes advantage of opportunities, and mitigates threats.

In conclusion, a SWOT analysis is an important tool that can help businesses of all sizes and industries to identify their strengths, weaknesses, opportunities, and threats. By conducting a SWOT analysis, businesses can gain a better understanding of their current situation and potential growth opportunities, enabling them to make informed business decisions and develop effective business strategies. As a strategic leader or business strategist, it is important to conduct a SWOT analysis regularly to stay up-to-date with changes in the industry and competition, and ensure that your business plan is relevant and effective in achieving your business goals.

Recent Posts

How Data Analytics Can Revolutionize Your Business - A Strategist's Guide

Download this Strategist's Guide to empower yourself with resourceful insights:

• Roadblocks to Data Usage
• Advantages that Data Analytics offer for businesses
• Elements of a Data Analytics Strategy
• Top reasons why businesses must adopt a Data Analytics Strategy
• Case studies, Scenarios, and more

CredBadge™ is a proprietary, secure, digital badging platform that provides for seamless authentication and verification of credentials across digital media worldwide.

CredBadge™ powered credentials ensure that professionals can showcase and verify their qualifications and credentials across all digital platforms, and at any time, across the planet.

Verify A Credential

Please enter the License Number/Unique Credential Code of the certificant. Results will be displayed if the person holds an active credential from TSI.

Stay Informed!

Keep yourself informed on the latest updates and information about business strategy by subscribing to our newsletter.

Start Your Journey with The Strategy Institute by Creating Your myTSI Account Today.

• Manage your professional profile conveniently.
• Manage your credentials anytime.
• Share your experiences and ideas with The Strategy Institute.

Account Login

• Remember Password
• Forgot Password?

Forgot Password

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

Inc. Premium

How to Write the Perfect Business Plan: A Comprehensive Guide

Thinking of starting a business here's the best step-by-step template for writing the perfect business plan when creating your startup..

Maybe you think you don't need a step-by-step guide to writing a great business plan . Maybe you think you don't need a template for writing a business plan. After all, some entrepreneurs succeed without writing a business plan. With great timing, solid business skills, entrepreneurial drive, and a little luck , some founders build thriving businesses without creating even an  informal business plan . 

But the odds are greater that those entrepreneurs will fail.

Does a business plan make startup success inevitable? Absolutely not. But great planning often means the difference between success and failure. Where your entrepreneurial dreams are concerned, you should do everything possible to set the stage for success.

And that's why a great business plan is one that helps you  succeed .

The following is a comprehensive guide to creating a great business plan. We'll start with an overview of key concepts. Then we'll look at each section of a typical business plan:

Executive Summary

Overview and objectives, products and services, market opportunities, sales and marketing.

• Competitive Analysis

Management Team

Financial analysis.

So first let's gain a little perspective on why you need a business plan.

Key Concepts

Many business plans are fantasies. That's because many aspiring entrepreneurs see a business plan as simply a tool--filled with strategies and projections and hyperbole--that will convince lenders or investors the business makes sense.

That's a huge mistake.

First and foremost, your business plan should convince  you  that your idea makes sense--because your time, your money, and your effort are on the line.

So a solid business plan should be a blueprint for a successful business . It should flesh out strategic plans, develop marketing and sales plans, create the foundation for smooth operations, and maybe--just maybe--persuade a lender or investor to jump on board.

For many entrepreneurs, developing a business plan is the first step in the process of deciding whether to actually start a business. Determining if an idea fails on paper can help a prospective founder avoid wasting time and money on a business with no realistic hope of success.

So, at a minimum, your plan should:

• Be as objective and logical as possible. What may have seemed like a good idea for a business can, after some thought and analysis, prove not viable because of heavy competition, insufficient funding, or a nonexistent market. (Sometimes even the best ideas are simply ahead of their time.)
• Serve as a guide to the business's operations for the first months and sometimes years, creating a blueprint for company leaders to follow.
• Communicate the company's purpose and vision, describe management responsibilities, detail personnel requirements, provide an overview of marketing plans, and evaluate current and future competition in the marketplace.
• Create the foundation of a financing proposal for investors and lenders to use to evaluate the company.

A good business plan delves into each of the above categories, but it should also accomplish other objectives. Most of all, a good business plan is  convincing . It proves a case. It provides concrete, factual evidence showing your idea for a business is in fact sound and reasonable and has every chance of success.

Who  must  your business plan convince?

First and foremost, your business plan should convince  you  that your idea for a business is not just a dream but can be a viable reality. Entrepreneurs are by nature confident, positive, can-do people. After you objectively evaluate your capital needs, products or services, competition, marketing plans, and potential to make a profit, you'll have a much better grasp on your chances for success.

And if you're not convinced, fine: Take a step back and refine your ideas and your plans.

Who  can  your business plan convince?

1. Potential sources of financing.   If you need seed money from a bank or friends and relatives, your business plan can help you make a great case. Financial statements can show where you have been. Financial projections describe where you plan to go.

Your business plan shows how you will get there. Lending naturally involves risk, and a great business plan can help lenders understand and quantity that risk, increasing your chances for approval.

2. Potential partners and investors. Where friends and family are concerned, sharing your business plan may not be necessary (although it certainly could help).

Other investors--including angel investors or venture capitalists--generally require a business plan in order to evaluate your business.

3. Skilled employees . When you need to attract talent, you need  something  to show prospective employees since you're still in the startup phase. Early on, your business is more of an idea than a reality, so your business plan can help prospective employees understand your goals--and, more important, their place in helping you achieve those goals.

4. Potential joint ventures. Joint ventures are like partnerships between two companies. A joint venture is a formal agreement to share the work--and share the revenue and profit. As a new company, you will likely be an unknown quantity in your market. Setting up a joint venture with an established partner could make all the difference in getting your business off the ground.

But above all, your business plan should convince  you  that it makes sense to move forward.

As you map out your plan, you may discover issues or challenges you had not anticipated.

Maybe the market isn't as large as you thought. Maybe, after evaluating the competition, you realize your plan to be the low-cost provider isn't feasible since the profit margins will be too low to cover your costs.

Or you might realize the fundamental idea for your business is sound, but how you implement that idea should change. Maybe establishing a storefront for your operation isn't as cost-effective as taking your products directly to customers--not only will your operating costs be lower, but you can charge a premium since you provide additional customer convenience.

Think of it this way. Successful businesses do not remain static. They learn from mistakes, and adapt and react to changes: changes in the economy, the marketplace, their customers, their products and services, etc. Successful businesses identify opportunities and challenges and react accordingly.

Creating a business plan lets you spot opportunities and challenges without risk. Use your plan to dip your toe in the business water. It's the perfect way to review and revise your ideas and concepts before you ever spend a penny.

Many people see writing a business plan as a "necessary evil" required to attract financing or investors. Instead, see your plan as a no-cost way to explore the viability of your potential business and avoid costly mistakes.

Now let's look at the first section of your business plan: The Executive Summary.

The Executive Summary is a brief outline of the company's purpose and goals. While it can be tough to fit on one or two pages, a good Summary includes:

• A brief description of products and services
• A summary of objectives
• A solid description of the market
• A high-level justification for viability (including a quick look at your competition and your competitive advantage)
• A snapshot of growth potential
• An overview of funding requirements

I know that seems like a lot, and that's why it's so important you get it right. The Executive Summary is often the make-or-break section of your business plan.

A great business solves customer problems. If your Summary cannot clearly describe, in one or two pages, how your business will solve a particular problem and make a profit, then it's very possible the opportunity does not exist--or your plan to take advantage of a genuine opportunity is not well developed.

So think of it as a snapshot of your business plan. Don't try to "hype" your business--focus on helping a busy reader get a great feel for what you plan to do, how you plan to do it, and how you will succeed.

Since a business plan should above all help you start and grow your business, your Executive Summary should first and foremost help you do the following.

1. Refine and tighten your concept.

Think of it as a written elevator pitch  (with more detail, of course). Your Summary describes the highlights of your plan, includes only the most critical points, and leaves out less important issues and factors.

As you develop your Summary, you will naturally focus on the issues that contribute most to potential success. If your concept is too fuzzy, too broad, or too complicated, go back and start again. Most great businesses can be described in several sentences, not several pages.

2. Determine your priorities.

Your business plan walks the reader through your plan. What ranks high in terms of importance? Product development? Research? Acquiring the right location? Creating strategic partnerships?

Your Summary can serve as a guide to writing the rest of your plan.

3. Make the rest of the process easy.

Once your Summary is complete, you can use it as an outline for the rest of your plan. Simply flesh out the highlights with more detail.

Then work to accomplish your secondary objective by focusing on your readers. Even though you may be creating a business plan solely for your own purposes, at some point you may decide to seek financing or to bring on other investors, so make sure your Summary meets their needs as well. Work hard to set the stage for the rest of the plan. Let your excitement for your idea and your business shine through.

In short, make readers want to turn the page and keep reading. Just make sure your sizzle meets your steak by providing clear, factual descriptions.

How? The following is how an Executive Summary for a bicycle rental store might read.

Introduction

Blue Mountain Cycle Rentals will offer road and mountain bike rentals in a strategic location directly adjacent to an entrance to the George Washington National Forest. Our primary strategy is to develop Blue Mountain Cycle Rentals as the most convenient and cost-effective rental alternative for the thousands of visitors who flock to the area each year.

Once underway, we will expand our scope and take advantage of high-margin new equipment sales and leverage our existing labor force to sell and service those products. Within three years we intend to create the area's premier destination for cycling enthusiasts.

Company and Management

Blue Mountain Cycle Rentals will be located at 321 Mountain Drive, a location providing extremely high visibility as well as direct entry and exit from a primary national park access road. The owner of the company, Marty Cycle, has over 20 years experience in the bicycle business, having served as a product manager for Acme Cycles as well as the general manager of Epic Cycling.

Because of his extensive industry contacts, initial equipment inventory will be purchased at significant discounts from OEM suppliers as well by sourcing excess inventory from shops around the country.

Because of the somewhat seasonal nature of the business, part-time employees will be hired to handle spikes in demand. Those employees will be attracted through competitive wages as well as discounts products and services.

460,000 people visited the George Washington National Forest during the last 12 months. While the outdoor tourism industry as a whole is flat, the park expects its number of visitors to grow over the next few years.

• The economic outlook indicates fewer VA, WV, NC, and MD cycling enthusiasts will travel outside the region
• The park has added a camping and lodging facilities that should attract an increased number of visitors
• The park has opened up additional areas for trail exploration and construction, ensuring a greater number of single-track options and therefore a greater number of visitors

The market potential inherent in those visitors is substantial. According to third-party research data, approximately 30 percent of all cyclists would rather rent than transport their own bicycles, especially those who are visiting the area for reasons other than cycling.

Competitive Advantages

The cycling shops located in Harrisonburg, VA, are direct and established competitors. Our two primary competitive advantages will be location and lower costs.

Our location is also a key disadvantage where non-park rentals are concerned. We will overcome that issue by establishing a satellite location in Harrisonburg for enthusiasts who wish to rent bicycles to use in town or on other local trails.

We will also use online tools to better engage customers, allowing them to reserve and pay online as well as create individual profiles regarding sizes, preferences, and special needs.

Financial Projections

Blue Mountain Cycle Rentals expects to earn a modest profit by year two based on projected sales. Our projections are based on the following key assumptions:

• Initial growth will be moderate as we establish awareness in the market
• Initial equipment purchases will stay in service for an average of three to four years; after two years we will begin investing in "new" equipment to replace damaged or obsolete equipment
• Marketing costs will not exceed 14 percent of sales
• Residual profits will be reinvested in expanding the product and service line

We project first-year revenue of $720,000 and a 10 percent growth rate for the next two years. Direct cost of sales is projected to average 60 percent of gross sales, including 50 percent for the purchase of equipment and 10 percent for the purchase of ancillary items. Net income is projected to reach $105,000 in year three as sales increase and operations become more efficient.

And so on ...

Keep in mind this is just a made-up example of how your Summary might read. Also keep in mind this example focused on the rental business, so a description of products was not included. (They'll show up later.) If your business will manufacture or sell products, or provide a variety of services, then be sure to include a Products and Services section in your Summary. (In this case the products and services are obvious, so including a specific section would be redundant.)

Bottom line:  Provide some sizzle in your Executive Summary, but make sure you show a reasonable look at the steak, too.

Providing an overview of your business can be tricky, especially when you're still in the planning stages. If you already own an existing business, summarizing your current operation should be relatively easy; it can be a lot harder to explain what you plan to  become .

So start by taking a step back.

Think about what products and services you will provide, how you will provide those items, what you need to have in order to provide those items, exactly who will provide those items, and most important, whom you will provide those items to.

Consider our bicycle rental business example. It's serves retail customers. It has an online component, but the core of the business is based on face-to-face transactions for bike rentals and support.

So you'll need a physical location, bikes, racks and tools and supporting equipment, and other brick-and-mortar related items. You'll need employees  with a very particular set of skills  to serve those customers, and you'll need an operating plan to guide your everyday activities.

Sound like a lot? It boils down to:

• What you will provide
• What you need to run your business
• Who will service your customers, and
• Who your customers are.

In our example, defining the above is fairly simple. You know what you will provide to meet your customer's needs. You will of course need a certain quantity of bikes to service demand, but you will not need a number of different types of bikes. You need a retail location, furnished to meet the demands of your business. You need semi-skilled employees capable of sizing, customizing, and repairing bikes.

And you know your customers: cycling enthusiasts.

In other businesses and industries, answering the above questions can be more difficult. If you open a restaurant, what you plan to serve will in some ways determine your labor needs, the location you choose, the equipment you need to purchase. And, most important, it will help define your customer. Changing any one element may change other elements; if you cannot afford to purchase expensive kitchen equipment, you may need to adapt your menu accordingly. If you hope to attract an upscale clientele, you may need to invest more in purchasing a prime location and creating an appealing ambience.

So where do you start? Focus on the basics first:

• Identify your industry. Retail, wholesale, service, manufacturing, etc. Clearly define your type of business.
• Identify your customer. You cannot market and sell to customers until you know who they are.
• Explain the problem you solve. Successful businesses create customer value by solving problems. In our rental example, one problem is cycling enthusiasts who don't--or can't--travel with bikes. Another problem is casual cyclists who can't--or choose not to--spend significant sums on their own bikes. The rental shop will solve that problem by offering a lower-cost and convenient alternative.
• Show how you will solve that problem. Our rental shop will offer better prices and enhanced services like remote deliveries, off-hours equipment returns, and online reservations.

If you are still stuck, try answering these questions. Some may pertain to you; others may not.

• Who is my average customer? Who am I targeting? (Unless you plan to open a grocery store, you should be unlikely to answer, "Everyone!")
• What pain point do I solve for my customers?
• How will I overcome that paint point?
• Where will I fail to solve a customer problem, and what can I do to overcome that issue? (In our rental example, one problem is a potential lack of convenience; we will overcome that issue by offering online reservations, on-resort deliveries, and drive-up equipment returns.)
• Where will I locate my business?
• What products, services, and equipment do I need to run my business?
• What skills do my employees need, and how many do I need?
• How will I beat my competition?
• How can I differentiate myself from my competition in the eyes of my customers? (You can have a great plan to beat your competition, but you also must win the perception battle among your customers. If customers don't feel you are different, then you aren't truly different. Perception is critical.)

Once you work through this list you will probably end up with a lot more detail than is necessary for your business plan. That is not a problem: Start summarizing the main points. For example, your Business Overview and Objectives section could start something like this:

History and Vision

Blue Mountain Cycle Rentals is a new retail venture that will be located at 321 Mountain Drive, directly adjacent to an extremely popular cycling destination. Our initial goal is to become the premier provider for bicycle rentals. We will then leverage our customer base and position in the market to offer new equipment sales as well as comprehensive maintenance and service, custom equipment fittings, and expert trail advice.

• Achieve the largest market share bicycle rentals in the area
• Generate a net income of $235,000 at the end of the second year of operation
• Minimize rental inventory replacement costs by maintaining a 7 percent attrition rate on existing equipment (industry average is 12 percent)

Keys to Success

• Provide high-quality equipment, sourcing that equipment as inexpensively as possible through existing relationships with equipment manufacturers and other cycling shops
• Use signage to attract visitors traveling to the national forest, highlighting our cost and service advantage
• Create additional customer convenience factors to overcome a perceived lack of convenience for customers planning to ride roads and trails some distance away from our shop
• Develop customer incentive and loyalty programs to leverage customer relationships and create positive word of mouth

You could certainly include more detail in each section; this is simply a quick guide. And if you plan to develop a product or service, you should thoroughly describe the development process as well as the end result.

The key is to describe what you will do for your customers--if you can't, you won't  have  any customers.

In the Products and Services section of your business plan, you will clearly describe--yep--the products and services your business will provide.

Keep in mind that highly detailed or technical descriptions are not necessary and definitely not recommended. Use simple terms and avoid industry buzzwords.

On the other hand, describing how the company's products and services will differ from the competition is critical. So is describing why your products and services are needed if no market currently exists. (For example, before there was Federal Express, overnight delivery was a niche business served by small companies. FedEx had to define the opportunity for a new, large-scale service and justify why customers needed--and would actually  use --that service.)

Patents, copyrights, and trademarks you own or have applied for should also be listed in this section.

Depending on the nature of your business, your Products and Services section could be very long or relatively short. If your business is product-focused, you will want to spend more time describing those products.

If you plan to sell a commodity item and the key to your success lies in, say, competitive pricing, you probably don't need to provide significant product detail. Or if you plan to sell a commodity readily available in a variety of outlets, the key to your business may not be the commodity itself but your ability to market in a more cost-effective way than your competition.

But if you're creating a new product (or service), make sure you thoroughly explain the nature of the product, its uses, and its value, etc.--otherwise your readers will not have enough information to evaluate your business.

Key questions to answer:

• Are products or services in development or existing (and on the market)?
• What is the timeline for bringing new products and services to market?
• What makes your products or services different? Are there competitive advantages compared with offerings from other competitors? Are there competitive disadvantages you will need to overcome? (And if so, how?)
• Is price an issue? Will your operating costs be low enough to allow a reasonable profit margin?
• How will you acquire your products? Are you the manufacturer? Do you assemble products using components provided by others? Do you purchase products from suppliers or wholesalers? If your business takes off, is a steady supply of products available?

In the cycling rental business example we've been using, products and services could be a relatively simple section to complete or it could be fairly involved. It depends on the nature of the products the company plans to rent to customers.

If Blue Mountain Cycling Rentals plans to market itself as a provider of high-end bikes, describing those bikes--and the sources for those bikes--is important, since "high-end cycling rentals" is intended to be a market differentiation. If the company plans to be the low-cost provider, then describing specific brands of equipment is probably not necessary.

Also, keep in mind that if a supplier runs out of capacity--or goes out of business altogether--you may not have a sufficient supply to meet your demand. Plan to set up multiple vendor or supplier relationships, and describe those relationships fully. 

Remember, the primary goal of your business plan is to convince  you  that the business is viable--and to create a road map for you to follow.

The Products and Services section for our cycling rental business could start something like this:

Product Description

Blue Mountain Cycle Rentals will provide a comprehensive line of bicycles and cycling equipment for all ages and levels of ability. Since the typical customer seeks medium-quality equipment and excellent services at competitive prices, we will focus on providing brands like Trek bikes, Shimano footwear, and Giro helmets. These manufacturers have a widespread reputation as mid- to high-level quality, unlike equipment typically found in the rental market.

The following is a breakdown of anticipated rental price points, per day and per week:

• Bicycle $30/$120
• Helmet $6/$30
• Customers can extend the rental term online without visiting the store.
• A grace period of two hours will be applied to all rentals; customers who return equipment within that two-hour period will not be charged an additional fee.

Competition

Blue Mountain Cycle Rentals will have clear advantages over its primary competitors, the bike shops located in Harrisonburg, VA:

• Newer equipment inventory with higher perceived quality
• Price points 15 percent below the competition
• Online renewals offering greater convenience
• A liberal return grace period that will reinforce our reputation as a customer-friendly rental experience

Future Products

Expansion will allow us to move product offerings into new equipment sales. We will also explore maintenance and fitting services, leveraging our existing maintenance staff to provide value-added services at a premium price.

When you draft your Products and Services section, think of your reader as a person who knows little to nothing about your business. Be clear and to the point.

Think of it this way: The Products and Services section answers the "what" question for your business. Make sure you fully understand the "what" factor; you may run the business, but your products and services are its lifeblood.

Market research is critical to business success. A good business plan analyzes and evaluates customer demographics, purchasing habits, buying cycles, and willingness to adopt new products and services.

The process starts with understanding your market and the opportunities inherent in that market. And that means you'll need to do a little research. Before you start a business you must be sure there is a viable market for what you plan to offer.

That process requires asking, and more importantly answering, a number of questions. The more thoroughly you answer the following questions, the better you will understand your market.

Start by evaluating the market at a relatively high level, answering some high-level questions about your market and your industry:

• What is the size of the market? Is it growing, stable, or in decline?
• Is the overall industry growing, stable, or in decline?
• What segment of the market do I plan to target? What demographics and behaviors make up the market I plan to target?
• Is demand for my specific products and services rising or falling?
• Can I differentiate myself from the competition in a way customers will find meaningful? If so, can I differentiate myself in a cost-effective manner?
• What do customers expect to pay for my products and services? Are they considered to be a commodity or to be custom and individualized?

Fortunately, you've already done some of the legwork. You've already defined and mapped out your products and services. The Market Opportunities section provides a sense-check of that analysis, which is particularly important since choosing the right products and services is such a critical factor in business success.

But your analysis should go further: Great products are great, but there still must be a market for those products. (Ferraris are awesome, but you're unlikely to sell many where I live.)

So let's dig deeper and quantify your market. Your goal is to thoroughly understand the characteristics and purchasing ability of potential customers in your market. A little Googling can yield a tremendous amount of data.

For the market you hope to serve, determine:

• Your potential customers. In general terms, potential customers are the people in the market segment you plan to target. Say you sell jet skis; anyone under the age of 16 and over the age of 60 or so is unlikely to be a customer. Plus, again in general terms, women make up a relatively small percentage of jet ski purchasers. Determining the total population for the market is not particularly helpful if your product or service does not serve a need for the entire population. Most products and services do not.
• Total households. In some cases determining the number of total households is important depending on your business. For example, if you sell heating and air conditioning systems, knowing the number of households is more important than simply knowing the total population in your area. While people purchase HVAC systems, "households" consume those systems.
• Median income. Spending ability is important. Does your market area have sufficient spending power to purchase enough of your products and services to enable you to make a profit? Some areas are more affluent than others. Don't assume every city or locality is the same in terms of spending power. A service that is viable in New York City may not be viable in your town.
• Income by demographics. You can also determine income levels by age group, by ethnic group, and by gender. (Again, potential spending power is an important number to quantify.) Senior citizens could very well have a lower income level than males or females age 45 to 55 in the prime of their careers. Or say you plan to sell services to local businesses; in that case, try to determine the amount they currently spend on similar services.

The key is to understand the market in general terms and then to dig deeper to understand whether there are specific segments within that market--the segments you plan to target--that can become customers and support the growth of your business.

Also keep in mind that if you plan to sell products online the global marketplace is incredibly crowded and competitive. Any business can sell a product online and ship that product around the world. Don't simply assume that just because "the bicycle industry is a $62 billion business" (a number I just made up) that you can capture a meaningful percentage of that market.

On the other hand, if you live in an area with 50,000 people and there's only one bicycle shop, you may be able to enter that market and attract a major portion of bicycle customers in your area.

Always remember it's much easier to serve a market you can define and quantify.

After you complete your research you may feel a little overwhelmed. While data is good, and more data is great, sifting through and making sense of too much data can be daunting.

For the purposes of your business plan, narrow your focus and focus on answering these main questions:

• What is your market? Include geographic descriptions, target demographics, and company profiles (if you're B2B). In short: Who are your customers?
• What segment of your market will you focus on? What niche will you attempt to carve out? What percentage of that market do you hope to penetrate and acquire?
• What is the size of your intended market? What is the population and spending habits and levels?
• Why do customers need and why will they be willing to purchase your products and services?
• How will you price your products and services? Will you be the low cost provider or provide value-added services at higher prices?
• Is your market likely to grow? How much? Why?
• How can you increase your market share over time?

The Market Opportunities section for our cycling rental business could start something like this:

Market Summary

Consumer spending on cycling equipment reached $9,250,000 in the states of VA, WV, MD, and NC last year. While we expect sales to rise, for the purposes of performing a conservative analysis we have projected a zero growth rate for the next three years.

In those states 2,500,000 people visited a national forest last year. Our target market includes customers visiting the Shenandoah National Forest; last year 120,000 people visited the area during spring, summer, and fall months.

Over time, however, we do expect equipment rentals and sales to increase as the popularity of cycling continues to rise. In particular we forecast a spike in demand in 2015 since the national road racing championships will be held in Richmond, VA.

Market Trends

Participation and population trends favor our venture:

• Recreational sports in general and both family-oriented and "extreme" sports continue to gain in exposure and popularity.
• Western VA and eastern WV have experienced population growth rates nearly double that of the country as a whole.
• Industry trends show cycling has risen at a more rapid rate than most other recreational activities.

Market Growth

According to the latest studies, recreation spending in our target market has grown by 14 percent per year for the past three years.

In addition, we anticipate greater than industry-norm growth rates for cycling in the area due to the increase in popularity of cycling events like the Alpine Loop Gran Fondo.

Market Needs

Out target market has one basic need: The availability to source bicycle rentals at a competitive price. Our only other competition are the bike shops in Harrisonburg, VA, and our location will give us a competitive advantage over those and other companies who try to serve our market.

You may want to add other categories to this section based on your particular industry.

For example, you might decide to provide information about Market Segments. In our case, the cycling rental business does not require much segmentation. Rentals are typically not broken down into segments like "inexpensive," "midrange," and "high-end." For the most part rental bikes are more of a commodity. (Although you'll notice in our Products and Services section, we decided to provide "high-end" rentals.)

But say you decide to open a clothing store. You could focus on high fashion, or children's clothes, or outdoor wear, or casual--you could segment the market in a number of ways. If that's the case, provide detail on segmentation that supports your plan.

The key is to define your market--and then show how you will serve your market.

Providing great products and services is wonderful, but customers must actually know those products and services exist. That's why marketing plans and strategies are critical to business success. (Duh, right?)

But keep in mind marketing is not just advertising. Marketing--whether advertising, public relations, promotional literature, etc.--is an investment in the growth of your business.

Like any other investment you would make, money spent on marketing must generate a return. (Otherwise why make the investment?) While that return could simply be greater cash flow, good marketing plans result in higher sales and profits.

So don't simply plan to spend money on a variety of advertising efforts. Do your homework and create a smart marketing program .

Here are some of the basic steps involved in creating your marketing plan:

• Focus on your target market. Who are your customers? Who will you target? Who makes the decisions? Determine how you can best reach potential customers.
• Evaluate your competition. Your marketing plan must set you apart from your competition, and you can't stand out unless you  know  your competition. (It's hard to stand out from a crowd if you don't know where the crowd stands.) Know your competitors by gathering information about their products, service, quality, pricing, and advertising campaigns. In marketing terms, what does your competition do that works well? What are their weaknesses? How can you create a marketing plan that highlights the advantages you offer to customers?
• Consider your brand. How customers perceive your business makes a dramatic impact on sales. Your marketing program should consistently reinforce and extend your brand. Before you start to market your business, think about how you want your marketing to reflect on your business and your products and services. Marketing is the face of your to potential customers--make sure you put your best face forward.
• Focus on benefits. What problems do you solve? What benefits do you deliver? Customers don't think in terms of products--they think in terms of benefits and solutions. Your marketing plan should clearly identify benefits customers will receive. Focus on what customers  get  instead of on what you provide. (Take Dominos; theoretically they're in the pizza business, but really they're a delivery business.)
• Focus on differentiation. Your products and services have to stand out from the competition in some way. How will you compete in terms of price, product, or service?

Then focus on providing detail and backup for your marketing plan.

• What is your budget for sales and marketing efforts? 
• How will you determine if your initial marketing efforts are successful? In what ways will you adapt if your initial efforts do not succeed?
• Will you need sales representatives (inside or external) to promote your products?
• Can you set up public relations activities to help market your business?

The Sales and Marketing section for our cycling rental business could start something like this:

Target Market

The target market for Blue Mountain Cycling Rentals is western VA, eastern WV, southwestern MD, and northern NC. While customers in the counties surrounding the George Washington National Forest make up 35 percent of our potential customer base, much of our market travels from outside that geographic area.

Marketing Strategy

Our marketing strategy will focus on three basic initiatives:

• Road signage. Access to the forest is restricted to a few primary entrances, and visitors reach those entrances after traveling on one of several main roadways. Since customers currently rent bicycles in the local town of Harrisonburg, road signage will communicate our value proposition to all potential customers.
• Web initiatives. Our website will attract potential visitors to the resort. We will partner with local businesses that serve our target market to provide discounts and incentives.
• Promotional events. We will hold regular events with professional cyclists, like demonstrations and autograph signings, to bring more customers to the store as well as to extend the athletes' "brand" to our brand.

Pricing Strategy

We will not be the low-cost provider for our target market. Our goal is to provide mid- to high-end equipment. However, we will create web-based loyalty programs to incent customers to set up online profiles and reserve and renew equipment rentals online, and provide discounts for those who do. Over time we will be able to market specifically to those customers.

Just as in the Market Opportunity section, you may want to include a few more categories. For example, if your business involves a commission-compensated sales force, describe your Sales Programs and incentives. If you distribute products to other companies or suppliers and those distribution efforts will impact your overall marketing plans, lay out your Distribution Strategy.

The key is to show you understand your market and you understand how you will reach your market. Marketing and promotions must result in customers--your goal is to thoroughly describe how you will acquire and keep your customers.

Also keep in mind you may want to include examples of marketing materials you have already prepared, like website descriptions, print ads, web-based advertising programs, etc. While you don't need to include samples, taking the time to create actual marketing materials might help you better understand and communicate your marketing plans and objectives.

Make sure your Sales and Marketing section answers the "How will I reach my customers?" question.

Competitive Advantage

The Competitive Analysis section of your business plan is devoted to analyzing your competition--both your current competition and potential competitors who might enter your market.

Every business has competition. Understanding the strengths and weaknesses of your competition--or potential competition--is critical to making sure your business survives and grows. While you don't need to hire a private detective, you do need to thoroughly assess your competition on a regular basis even if you plan to run only a small business.

In fact, small businesses can be especially vulnerable to competition, especially when new companies enter a marketplace.

Competitive analysis can be incredibly complicated and time-consuming, but it doesn't have to be. Here is a simple process you can follow to identify, analyze, and determine the strengths and weaknesses of your competition.

Profile  Current  Competitors

First, develop a basic profile of each of your current competition. For example, if you plan to open an office supply store, you may have three competing stores in your market.

Online retailers will also provide competition, but thoroughly analyzing those companies will be less valuable unless you also decide you want to sell office supplies online. (Although it's also possible that they--or, say, Amazon--are your  real  competition. Only you can determine that.)

To make the process easier, stick to analyzing companies you will directly compete with. If you plan to set up an accounting firm, you will compete with other accounting firms in your area. If you plan to open a clothing store, you will compete with other clothing retailers in your area.

Again, if you run a clothing store, you also compete with online retailers, but there is relatively little you can do about that type of competition other than to work hard to distinguish yourself in other ways: great service, friendly salespeople, convenient hours, truly understanding your customers, etc.

Once you identify your main competitors, answer these questions about each one. And be objective. It's easy to identify weaknesses in your competition, but less easy (and a lot less fun) to recognize how they may be able to outperform you:

• What are their strengths? Price, service, convenience, and extensive inventory are all areas where you may be vulnerable.
• What are their weaknesses? Weaknesses are opportunities you should plan to take advantage of.
• What are their basic objectives? Do they seek to gain market share? Do they attempt to capture premium clients? See your industry through their eyes. What are they trying to achieve?
• What marketing strategies do they use? Look at their advertising, public relations, etc.
• How can you take market share away from their business?
• How will they respond when you enter the market?

While these questions may seem like a lot of work to answer, in reality the process should be fairly easy. You should already have a feel for the competition's strengths and weaknesses--if you know your market and your industry.

To gather information, you can also:

• Check out their websites and marketing materials. Most of the information you need about products, services, prices, and company objectives should be readily available. If that information is not available, you may have identified a weakness.
• Visit their locations. Take a look around. Check out sales materials and promotional literature. Have friends stop in or call to ask for information.
• Evaluate their marketing and advertising campaigns. How a company advertises creates a great opportunity to uncover the objectives and strategies of that business. Advertising should help you quickly determine how a company positions itself, who it markets to, and what strategies it employs to reach potential customers.
• Browse. Search the Internet for news, public relations, and other mentions of your competition. Search blogs and Twitter feeds as well as review and recommendation sites. While most of the information you find will be anecdotal and based on the opinion of just a few people, you may at least get a sense of how some consumers perceive your competition. Plus you may also get advance warning about expansion plans, new markets they intend to enter, or changes in management.

Keep in mind competitive analysis does more than help you understand your competition. Competitive analysis can also help you identify changes you should make to  your  business strategies. Learn from competitor strengths, take advantage of competitor's weaknesses, and apply the same analysis to your own business plan.

You might be surprised by what you can learn about your business by evaluating other businesses.

Identify  Potential  Competitors

It can be tough to predict when and where new competitors may pop up. For starters, regularly search for news on your industry, your products, your services, and your target market.

But there are other ways to predict when competition may follow you into a market. Other people may see the same opportunity you see. Think about your business and your industry, and if the following conditions exist, you may face competition does the road:

• The industry enjoys relatively high profit margins
• Entering the market is relatively easy and inexpensive
• The market is growing--the more rapidly it is growing the greater the risk of competition
• Supply and demand is off--supply is low and demand is high
• Very little competition exists, so there is plenty of "room" for others to enter the market

In general terms, if serving your market seems easy you can safely assume competitors will enter your market. A good business plan anticipates and accounts for new competitors.

Now distill what you've learned by answering these questions in your business plan:

• Who are my current competitors? What is their market share? How successful are they?
• What market do current competitors target? Do they focus on a specific customer type, on serving the mass market, or on a particular niche?
• Are competing businesses growing or scaling back their operations? Why? What does that mean for your business?
• How will your company be different from the competition? What competitor weaknesses can you exploit? What competitor strengths will you need to overcome to be successful?
• What will you do if competitors drop out of the marketplace? What will you do to take advantage of the opportunity?
• What will you do if new competitors enter the marketplace? How will you react to and overcome new challenges?

The Competitive Analysis section for our cycling rental business could start something like this:

Primary Competitors

Our nearest and only competition is the bike shops in Harrisonburg, VA. Our next closest competitor is located over 100 miles away.

The in-town bike shops will be strong competitors. They are established businesses with excellent reputations. On the other hand, they offer inferior-quality equipment and their location is significantly less convenient.

Secondary Competitors

We do not plan to sell bicycles for at least the first two years of operation. However, sellers of new equipment do indirectly compete with our business since a customer who buys equipment no longer needs to rent equipment.

Later, when we add new equipment sales to our operation, we will face competition from online retailers. We will compete with new equipment retailers through personalized service and targeted marketing to our existing customer base, especially through online initiatives.

Opportunities

• By offering mid- to high-end quality equipment, we provide customers the opportunity to "try out" bikes they may wish to purchase at a later date, providing additional incentive (besides cost savings) to use our service.
• Offering drive-up, express rental return services will be seen as a much more attractive option compared with the hassle of renting bikes in Harrisonburg and transporting them to intended take-off points for rides.
• Online initiatives like online renewals and online reservations enhances customer convenience and positions us as a cutting-edge supplier in a market largely populated, especially in the cycling segment, by customers who tend to be early technology adapters.
• Renting bikes and cycling equipment may be perceived by some of our target market as a commodity transaction. If we do not differentiate ourselves in terms of quality, convenience, and service, we could face additional competition from other entrants to the market.
• One of the bike shops in Harrisonburg is a subsidiary of a larger corporation with significant financial assets. If we, as hoped, carve out a significant market share, the corporation may use those assets to increase service, improve equipment quality, or cut prices.

While your business plan is primarily intended to convince  you  that your business makes sense, keep in mind most investors look closely at your competitive analysis. A common mistake made by entrepreneurs is assuming they will simply "do it better" than any competition.

Experienced businesspeople know you will face stiff competition: showing you understand your competition, understand your strengths and weaknesses relative to that competition, and that you understand you will have to adapt and change based on that competition is critical.

And, even if you do not ever plan to seek financing or bring in investors, you absolutely must know your competition.

The Competitive Analysis section helps you answer the "Against whom?" question.

The next step in creating your business plan is to develop an Operations Plan that will serve your customers, keep your operating costs in line, and ensure profitability . Your ops plan should detail strategies for managing, staffing, manufacturing, fulfillment, inventory--all the stuff involved in operating your business on a day-to-day basis.

Fortunately, most entrepreneurs have a better handle on their operations plan than on any other aspect of their business. After all, while it may not seem natural to analyze your market or your competition, most budding entrepreneurs tend to spend a lot of time thinking about how they will  run  their businesses.

Your goal is to answer the following key questions:

• What facilities, equipment, and supplies do you need?
• What is your organizational structure? Who is responsible for which aspects of the business?
• Is research and development required, either during start up or as an ongoing operation? If so, how will you accomplish this task?
• What are your initial staffing needs? When and how will you add staff?
• How will you establish business relationships with vendors and suppliers? How will those relationships impact your day-to-day operations?
• How will your operations change as the company grows? What steps will you take to cut costs if the company initially does not perform up to expectations?

Operations plans should be highly specific to your industry, your market sector, and your customers. Instead of providing an example like I've done with other sections, use the following to determine the key areas your plan should address:

Location and Facility Management

In terms of location, describe:

• Zoning requirements
• The type of building you need
• The space you need
• Power and utility requirements
• Access: Customers, suppliers, shipping, etc.
• Specialized construction or renovations
• Interior and exterior remodeling and preparation

Daily Operations

• Production methods
• Service methods
• Inventory control
• Sales and customer service
• Receiving and Delivery
• Maintenance, cleaning, and re-stocking
• Licenses and permits
• Environmental or health regulations
• Patents, trademarks, and copyrights

Personnel Requirements

• Typical staffing
• Breakdown of skills required
• Recruiting and retention
• Policies and procedures
• Pay structures
• Anticipated inventory levels
• Turnover rate
• Seasonal fluctuations in demand
• Major suppliers
• Back-up suppliers and contingency plans
• Credit and payment policies

Sound like a lot? It can be, but not all of the above needs to be in your business plan.

You should think through and create a detailed plan for each category, but you won't need to share the results with the people who read your business plan

Working through each issue and developing concrete operations plans helps you in two major ways:

• If you don't plan to seek financing or outside capital, you can still take advantage of creating a comprehensive plan that addresses all of your operational needs.
• If you do seek financing or outside capital, you may not include all the detail in your business plan--but you will have answers to any operations questions at your fingertips.

Think of Operations as the "implementation" section of your business plan. What do you need to do? How will you get it done? Then create an overview of that plan to make sure your milestones and timeline make sense.

That way the operations section answers the "How?" question.

Many investors and lenders feel the quality and experience of the management team is one of the most important factors used to evaluate the potential of a new business.

But putting work into the Management Team section will not only benefit people who may read your plan. It will also help  you  evaluate the skills, experiences, and resources your management team will need . Addressing your company's needs during implementation will make a major impact on your chances for success.

• Who are the key leaders? (If actual people have not been identified, describe the type of people needed.) What are their experiences, educational backgrounds, and skills?
• Do your key leaders have industry experience? If not, what experience do they bring to the business that is applicable?
• What duties will each position perform? (Creating an organization chart might be helpful.) What authority is granted to and what responsibilities are expected in each position?
• What salary levels will be required to attract qualified candidates for each position? What is the salary structure for the company, by position?

The Management Team section for our cycling rental business could start something like this:

Jim Rouleur, Owner and Manager

Joe has over 20 years experience in the cycling business. He served for 10 years as a product manager for Acme Bikes. After that he was the operations manager of Single Track Cycles, a full-service bike shop located in Bend, Oregon. He has an undergraduate degree in marketing from Duke University and an MBA from Virginia Commonwealth University. (A complete resume for Mr. Rouleur can be found in the Appendix.)

Mary Gearset, Assistant Manager

Mary was the 2009 U.S. Mountain Biking National Champion. She worked in product development for High Tec frames, creating custom frames and frame modifications for professional cyclists. She also has extensive customer service and sales experience, having worked for four years as the online manager of Pro Parts Unlimited, an online retailer of high-end cycling equipment and accessories.

In some instances you may also wish to describe your staffing plans.

For example, if you manufacture a product or provide a service and will hire a key skilled employee, describe that employee's credentials. Otherwise, include staffing plans in the Operations section.

One key note: Don't be tempted to add a "name" to your management team in hopes of attracting investors. Celebrity management team members may attract the attention of your readers, but experienced lenders and investors will immediately ask what role that person will actually play in the running of the business--and in most cases those individuals won't play any meaningful role.

If you don't have a lot of experience--but are willing to work hard to overcome that lack of experience--don't be tempted to include people in your plan who will not actually work in the business.

If you can't survive without help, that's okay. In fact, that's expected; no one does anything worthwhile on their own. Just make plans to get help from the  right  people.

Finally, when you create your Management section, focus on credentials but pay extra attention to what each person actually will  do . Experience and reputation are great, but action is everything.

That way your Management section will answer the "Who is in charge?" question.

Numbers tell the story. Bottom line results indicate the success or failure of any business.

Financial projections and estimates help entrepreneurs, lenders, and investors or lenders objectively evaluate a company's potential for success. If a business seeks outside funding, providing comprehensive financial reports and analysis is critical.

But most important, financial projections tell you whether your business has a chance of being viable--and if not let you know you have more work to do.

Most business plans include at least five basic reports or projections:

• Balance Sheet: Describes the company cash position including assets, liabilities, shareholders, and earnings retained to fund future operations or to serve as funding for expansion and growth. It indicates the financial health of a business.
• Income Statement: Also called a Profit and Loss statement, this report lists projected revenue and expenses. It shows whether a company will be profitable during a given time period.
• Cash Flow Statement: A projection of cash receipts and expense payments. It shows how and when cash will flow through the business; without cash, payments (including salaries) cannot be made.
• Operating Budget: A detailed breakdown of income and expenses; provides a guide for how the company will operate from a "dollars" point of view.
• Break-Even Analysis: A projection of the revenue required to cover all fixed and variable expenses. Shows when, under specific conditions, a business can expect to become profitable.

It's easy to find examples of all of the above. Even the most basic accounting software packages include templates and samples. You can also find templates in Excel and Google Docs. (A quick search like "google docs profit and loss statement" yields plenty of examples.)

Or you can work with an accountant to create the necessary financial projections and documents. Certainly feel free to do so, but first play around with the reports yourself. While you don't need to be an accountant to run a business, you do need to understand your numbers, and the best way to understand your numbers is usually to actually work with your numbers.

But ultimately the tools you use to develop your numbers are not as important as whether those numbers are as accurate as possible--and whether those numbers help you decide whether to take the next step and put your business plan into action.

Then Financial Analysis can help you answer the most important business question: "Can we make a profit?"

Some business plans include less essential but potentially important information in an Appendix section. You may decide to include, as backup or additional information:

• Resumes of key leaders
• Additional descriptions of products and services
• Legal agreements
• Organizational charts
• Examples of marketing and advertising collateral
• Photographs of potential facilities, products, etc.
• Backup for market research or competitive analysis
• Additional financial documents or projections

Keep in mind creating an Appendix is usually only necessary if you're seeking financing or hoping to bring in partners or investors. Initially the people reading your business plan don't wish to plow through reams and reams of charts, numbers, and backup information. If one does want to dig deeper, fine--he or she can check out the documents in the Appendix.

That way your business plan can share your story clearly and concisely.

Otherwise, since you created your business plan, you should already have the backup.

Tying It All Together

While you may use your business plan to attract investors, partners, suppliers, etc., never forget that the goal of your business plan is to convince  you  that your idea makes sense. 

Because ultimately it's your time, your money, and your effort on the line.

The Daily Digest for Entrepreneurs and Business Leaders

Privacy Policy

Please note that the contents of this site are not being updated since October 1, 2023.

As of October 2, 2023, Acclr Business Information Services (Info entrepreneurs) will be delivered directly by CED’s Business Information Services . To find out more about CCMM’s other Acclr services, please visit this page: Acclr – Business Services | CCMM.

• Advice and guidance
• Starting a business
• Personalized Guidance
• Seminars on Business Opportunities
• Certification of Export Documents
• Market Studies
• Export Financing
• International Trade Training
• Connection with the World Bank
• Trade Missions
• SME Passport
• Export Resources
• Import Resources
• Networking Activities
• Networking Training
• CCMM Member Directory
• Market Studies and Research Services
• Business plan
• Registration and legal structures
• Guidance for Drafting a Business Plan
• Help in Seeking Funding
• News, Grants, and Competitions
• Funding Meet-and-Greet
• Resources for Drafting a Business Plan
• Regulations / Permits / Licences
• Personalized Market Information Research
• Personalized Meetings with Guest Experts
• Government Subsidies and Programs
• Training for your employees
• Employee Management
• Interconnection Program
• Wage Subsidies
• French courses
• Merchant-Student Pairing
• Intellectual property
• Marketing and sales
• Operations management
• Hiring and managing human resources
• Growth and innovation
• Importing and exporting
• Calls for tenders
• Support organizations
• Sale / Closure / Bankruptcy
• Business intelligence
• Business lists and profiles
• Market data
• Market trends
• Business advice
• Business plan management consultant
• Legal structures consultant
• Accounting consultant
• Legal consultant
• Export certification
• Resource centre

The challenges of growing a business - and how to meet them

Growing businesses face a range of challenges. As a business grows, different problems and opportunities demand different solutions - what worked a year ago might now be not the best approach. All too often, avoidable mistakes turn what could have been a great business into an also-ran.

Recognising and overcoming the common pitfalls associated with growth is essential if your business is to continue to grow and thrive. Crucially, you need to ensure that the steps you take today don't themselves create additional problems for the future. Effective leadership will help you make the most of the opportunities, creating sustainable growth for the future.

This guide highlights the particular risks and mistakes that most commonly affect growing businesses and outlines what you can do about them.

Keeping up with the market

Planning ahead, cash flow and financial management, problem solving, the right systems, skills and attitudes, welcoming change.

Market research isn't something you do as a one-off when you launch your business. Business conditions change continually, so your market research should be continuous as well. Otherwise you run the risk of making business decisions based on out-of-date information, which can lead to business failure.

The more you succeed, the more competitors notice - and react to - what you are doing. A market-leading offer one day may be no better than average a few months later.

Apparently loyal customers can be quick to find alternative suppliers who provide a better deal.

As products (and services) age, sales growth and profit margins get squeezed. Understanding where your products are in their lifecycles can help you work out how to maximise overall profitability. At the same time, you need to invest in innovation to build a stream of new, profitable products to market.

Information sources

Published information can provide useful insights into market conditions and trends. As a growing business, your own experience can be even more valuable.

You should be able to build up an in-depth picture of what customers want, how they behave and which of your marketing approaches work best.

Taking the time to talk to key customers pays off. Your suppliers and other business partners can be important sources of market information. You should encourage your employees to share what they know about customers and the market. Effective IT systems can also make it easier to share and analyse key information such as customers' purchasing behaviour and preferences.

You may want to carry out extra research as well - for example, to test customer reaction to a new product. You might do this yourself, or use a freelance researcher or market research agency.

The plan that made sense for you a year ago isn't necessarily right for you now. Market conditions continually change, so you need to revisit and update your business plan regularly. See the page in this guide on keeping up with the market.

As your business grows, your strategy needs to evolve to suit your changed circumstances. For example, your focus is likely to change from winning new customers to building profitable relationships and maximising growth with existing customers. Existing business relationships often have greater potential for profit and can also provide reliable cash flow. Newer relationships may increase turnover, but the profit margins may be lower, which may not be sustainable. See the page in this guide on cash flow and financial management.

At the same time, every business needs to be alert to new opportunities. There are obvious risks to relying solely on existing customers. Diversifying your customer base spreads those risks.

Following the same business model, but bigger, is not the only route to growth. There are other strategic options such as outsourcing or franchising that might provide better growth opportunities.

It's important not to assume that your current success means that you will automatically be able to take advantage of these opportunities. Every major move needs planning in the same way as a new business launch.

Watch out for being too opportunistic - ask yourself whether new ideas suit your strengths and your overall vision of where the business is going. Bear in mind that every new development brings with it changing risks. It's worth regularly reviewing the risks you face and developing contingency plans.

Good cash flow control is important for any business. For a growing business, it's crucial - cash constraints can be the biggest factor limiting growth and overtrading can be fatal

.Making the best use of your finances should be a key element in business planning and assessing new opportunities. With limited resources, you may need to pass up promising opportunities if pursuing them would mean starving your core business of essential funding.

Every element of working capital should be carefully controlled to maximise your free cash flow. Effective credit management and tight control of overdue debts are essential. You may also want to consider raising financing against trade debts.

Good stock control and effective supplier management tend to become increasingly important as businesses grow. Holdings of obsolete stock may become a problem that needs periodic clearing up. You may want to work with suppliers to reduce delivery cycles, or switch to suppliers and systems that can handle just-in-time delivery.

Planning ahead helps you anticipate your financing needs and arrange suitable funding. For many growing businesses, a key decision is whether to bring in outside investors to provide the equity needed to underpin further expansion.

New businesses often run in perpetual crisis mode. Every day brings new challenges that urgently need resolving and management spends most of their time troubleshooting.

As your business grows, this approach simply doesn't work. While a short-term crisis is always urgent, it may not matter nearly as much as other things you could be doing. Spending your time soothing an irritated customer might help protect that one relationship - but focusing instead on recruiting the right salesperson could lay the foundations of substantial new sales for years to come

.As your business grows, you also need to be alert to new problems and priorities.

For example, your business might be increasingly at risk unless you take steps to ensure your intellectual property is properly protected.

If you are focusing on individual marketing campaigns, you might need to devote more resources to developing your brand.

Identifying the key drivers of growth is a good way of understanding what to prioritise.

A disciplined approach to management focuses on leading employees, developing your management team and building your business strategy. Instead of treating each problem as a one-off, you develop systems and structures that make it easier to handle in the future.

All businesses produce and rely on large volumes of information - financial records, interactions with customers and other business contacts, employee details, regulatory requirements and so on. It's too much to keep track of - let alone use effectively - without the right systems.

Responsibilities and tasks can be delegated as your business grows, but without solid management information systems you cannot manage effectively. The larger your business grows, the harder it is to ensure that information is shared and different functions work together effectively. Putting the right infrastructure in place is an essential part of helping your business to grow.

Documentation, policies and procedures also become increasingly important. The informality that might work with one or two employees and a handful of customers simply isn't practical in a growing business. You need proper contracts, clear terms and conditions, effective employment procedures and so on.

Many growing businesses find using established management standards one of the most effective ways of introducing best practice. Quality control systems can be an important part of driving improvements and convincing larger customers that you can be relied on.

Investing in the right systems is an investment that will pay off both short and long term. You benefit every day from more effective operations. If you ever decide to sell the business, demonstrating that you have well-run, efficient systems will be an important part of proving its value.

Entrepreneurs are the driving force behind creating and growing new businesses. All too often, they are also the people holding them back.

The abilities that can help you launch a business are not the same as those you need to help it grow. It's vital not to fool yourself into valuing your own abilities too highly. The chances are that you'll need training to learn the skills and attitudes required by someone who is leading growth.

To grow your business, you need to learn to delegate properly, trusting your management team and giving up day-to-day control of every detail. It's all too easy to stifle creativity and motivation with excessive interference. As the business becomes more complex, you also need to develop your time management skills and learn to focus on what's really important.

As your business grows, you may need to bring in outsiders to help. You'll want to delegate responsibility for particular areas to different specialists, or appoint a non-executive director or two to strengthen your board. As you start tackling a new opportunity, someone who has experience of that activity can be vital.

For many successful entrepreneurs, learning to listen to - and take - advice is one of the hardest challenges they face. But it may also be essential if you are going to make the most of your opportunities. Some entrepreneurs, recognising their own limitations, even appoint someone else to act as managing director or chairman.

Complacency can be a major threat to a growing business. Assuming that you will continue to be successful simply because you have been in the past is very unwise.

Regularly revisiting and updating your business plan can help remind you of the changing market conditions and the need to respond to them. See the page in this guide on planning ahead.

An up-to-date plan helps you identify what action you need to take to change your business and the way it operates, for example:

• Changing to suppliers who can grow with you and meet your new priorities. As your business grows, consistent quality and reliability may be more important than simply getting the cheapest offer.
• Renegotiating contracts to take account of increased volume.
• Training and developing employees. Your own role will also evolve as the business grows. See the page in this guide on skills and attitudes.
• Making sure that you keep up to date with new technologies.

You need to be fully committed to your strategy, even if it takes you out of your comfort zone. This may involve hard decisions - for example making employees redundant or switching business away from suppliers you have become friends with. But unless you're prepared to do this, you risk putting your business at a dangerous competitive disadvantage.

Original document, The challenges of growing a business - and how to meet them , © Crown copyright 2009 Source: Business Link UK (now GOV.UK/Business ) Adapted for Québec by Info entrepreneurs

Our information is provided free of charge and is intended to be helpful to a large range of UK-based (gov.uk/business) and Québec-based (infoentrepreneurs.org) businesses. Because of its general nature the information cannot be taken as comprehensive and should never be used as a substitute for legal or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date.

• The websites operators cannot take any responsibility for the consequences of errors or omissions.
• You should always follow the links to more detailed information from the relevant government department or agency.
• Any reliance you place on our information or linked to on other websites will be at your own risk. You should consider seeking the advice of independent advisors, and should always check your decisions against your normal business methods and best practice in your field of business.
• The websites operators, their agents and employees, are not liable for any losses or damages arising from your use of our websites, other than in respect of death or personal injury caused by their negligence or in respect of fraud.

Need help? Our qualified agents can help you. Contact us!

• Create my account

The address of this page is: https://www.infoentrepreneurs.org/en/guides/the-challenges-of-growing-a-business---and-how-to-meet-them/

INFO ENTREPRENEURS

380 St-Antoine West Suite W204 (mezzanine level) Montréal, Québec, Canada H2Y 3X7

www.infoentrepreneurs.org

514-496-4636 | 888-576-4444 [email protected]

Consent to Cookies

This website uses necessary cookies to ensure its proper functioning and security. Other cookies and optional technologies make it possible to facilitate, improve or personalize your navigation on our website. If you click "Refuse", some portions of our website may not function properly. Learn more about our privacy policy.

Click on one of the two buttons to access the content you wish to view.

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

Published: June 28, 2024

Years ago, I had an idea to launch a line of region-specific board games. I knew there was a market for games that celebrated local culture and heritage. I was so excited about the concept and couldn't wait to get started.

But my idea never took off. Why? Because I didn‘t have a plan. I lacked direction, missed opportunities, and ultimately, the venture never got off the ground.

And that’s exactly why a business plan is important. It cements your vision, gives you clarity, and outlines your next step.

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

Table of Contents

What is a business plan?

What is a business plan used for.

• Business Plan Template [Download Now]

Purposes of a Business Plan

What does a business plan need to include, types of business plans.

Free Business Plan Template

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

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

Download Free

All fields are required.

You're all set!

Click this link to access this resource at any time.

A business plan is a comprehensive document that outlines a company's goals, strategies, and financial projections. It provides a detailed description of the business, including its products or services, target market, competitive landscape, and marketing and sales strategies. The plan also includes a financial section that forecasts revenue, expenses, and cash flow, as well as a funding request if the business is seeking investment.

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

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

Business Plan Template [ Download Now ]

Don't forget to share this post!

Related articles.

The Best AI Tools for Ecommerce & How They'll Boost Your Business

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

23 of My Favorite Free Marketing Newsletters

The 8 Best Free Flowchart Templates [+ Examples]

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

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

20 Free & Paid Small Business Tools for Any Budget

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

The Content Aggregator Guide for 2024

2 Essential Templates For Starting Your Business

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

Top 10 Business Challenges to Watch and How to Overcome Them

July 23, 2021

The events of 2020 influenced all industries and brought new business challenges that companies had to overcome. The COVID-19 pandemic disrupted plans of numerous companies and forced businesses to take urgent measures. According to McKinsey & Company , the average share of customer digital interactions grew from 36% to 58% between December 2019 and July 2020. This tendency didn’t go unnoticed and all companies ventured into digital space. Consequently, the competition in every niche became extremely high.

Apart from delivering a quality product or services to retain customers, your company has to be agile and navigate through market tendencies. Kim Huffman, VP of global IT in Elastic shared her vision on the situation: “2020 taught us that to be competitive, we must be agile and able to respond quickly to changing market conditions. In 2021, my team and I will look to drive digital business model innovation that focuses on speed, flexibility, and agility.”

Coping with market competition and driving your company’s revenue, requires you to prepare for business challenges ahead and understand how you can overcome them. In this article, OpenGeeksLab will navigate you through the biggest business challenges and explain how you can turn them into growth opportunities. Let’s roll.

How COVID-19 Influenced Businesses?

During the pandemic, businesses and governments worldwide faced the same business challenge: keeping our economy up and running while all consumers are locked in their housings. Companies had no other choice but to adapt to a new reality. The COVID-19 crisis forced virtually all industries to reshape their business models.

Let’s take a look at the hospitality industry, which accounts for 10% of the global GDP. EHL Insights stated that in 2020 the global number of tourists decreased by 30% compared to 2019. While being a huge troublemaker that left 650,000 hospitality workforce unemployed and created severe challenges for small business owners, COVID-19 also became a huge accelerant of digital transformation in this niche. To ensure visitors’ safety, hotel chains provided a mobile check-in which completely eliminated front desk queues. Besides, clients can order meals and additional room services via concierge apps. Hotel booking apps help clients customize their stay before even getting to a hotel. By the way, you can take a look at GOeureka , a Blockchain-based platform shaping the future of online hotel booking, developed by our team.

Another industry that took the COVID-19 heat was food services . Recent research by Deloitte showed that 42% more people (in comparison with pre-COVID times) will cook at home rather than going to restaurants. Besides, 20% more respondents will order food for takeout or deliveries.This fact may become one of the biggest challenges for small business owners. Therefore, this niche has to adapt to new business challenges and provide takeaway abilities.

Additionally, the food delivery market is expected to grow up to $154.3 billion compared to $107.44 billion in 2019. During a transformation, some restaurants launched their own delivery services, while others cooperated with intermediaries like UberEats, GrubHub, and so on to overcome new business challenges. Besides, local farm shops didn’t experience small business challenges like other niches. They became popular among consumers, as large retail stores lacked supplies.

There are a lot more niches that can be discussed. The healthcare industry went digital and applied telehealth solutions for remote examining patients and prescribing medicines. Therefore, the telehealth market size is expected to reach $559.52 billion by 2027 with a CAGR of 25.2% during the forecast period. Now’s a good time to read about Doctro.app , which was crafted by our experts to help doctors and patients stay connected in the age of pandemic.

The educational industry also faced business challenges with on-site education. As reported by UNESCO, 82,1% of enrolled students were affected by school closures at the peak of the pandemic. That’s why educational institutions’ management went remote to not interrupt the learning process. Plus, online educational platforms gained unprecedented user base growth. For example, Coursera reports on 59 million course enrollments representing 248% year-to-year growth.

At a first glance, it may seem that COVID-19 brought more growth opportunities than harm. However, what distinguishes companies from our example is perfect management that helped them adapt rapidly. Let’s not forget about companies that went bankrupt because they couldn’t adjust to this situation and all problems of small businesses that haven’t been solved yet.

To help you avoid their mistakes, we’ve made in-depth research and compiled a list of possible business challenges in 2021-2022. Let’s examine all problems of entrepreneurship closely and find a solution to overcome them.

Business Challenges Ambushing Entrepreneurs

Even the toughest challenge can be turned in your favor with a careful strategy and well-advanced preparation. Get a closer look at our list to be informed about upcoming business challenges.

1. Keeping up With Industry Trends

As you already understand, COVID-19 influenced every single niche and increased the competition across all industries. The pandemic left companies rethinking their business strategies and finding new means of revenue generation. Such a rapid transformation brings prosperity to ones open for changes and leaves conservative and overthinking entrepreneurs behind.

Let’s examine Spotify’s successful case during the pandemic. When using a free plan, users listen to advertisements. Spotify focused on this revenue model because of a large free user base. However, when the COVID-19 struck, advertisers had to cut their budgets, and this model failed to deliver desired results. That’s why Spotify changed its vector towards paid podcast subscriptions. Paid podcasts on the pretext of a mental health partner during isolation quickly raised an audience and attracted celebrities that provide content. Eventually, this strategy became profitable and warmly welcomed by Spotify’s user base.

2. Coping With Market Competition

Each and every company is thinking of how to deliver a quality product and provide first-class customer service to retain existing customers and achieve user base growth. That’s why it’s crucial to keep an eye on your competitors and industry leaders. Check on their new services, marketing strategies, and reviews from their clients. This information sheds more light on rivals’ revenue sources and explains how they obtain clients’ loyalty.

Unfortunately, sometimes you realize that you can’t compete in your current market. In fact, it’s not too much of a problem compared to other challenges of entrepreneurship. You can easily promote your product to other markets. We’re not suggesting you switch from your current industry to a completely new one. Instead, you can aim at a new target audience.

Telehealth became a niche that experienced an enormous rise in popularity during COVID-19. Apart from helping patients, companies needed to figure out how to stay competitive in a booming market. Plushcare , a service that helps companies find doctors online, experienced a 70% rise in users . To retain their audience, Plushcare decided to launch at-home COVID-19 tests and coronavirus risk assessments that were neatly tied with their telehealth services. Such a pivot in Plushcare’s business strategy helped it to overcome one of the biggest business challenges — retaining an audience in an oversaturated market.

You Name the Idea, We Bring It to Life!

Contact us right away to know how our pros can transform your business with custom software development services.

3. Digital Adoption

In today’s world digitalization could not be more relevant for companies. The pandemic compressed several years of digital transformation processes into just several months. All industries, ranging from automotive to fashion turned digital for a number of reasons. One of the major ones is the clients’ outreach. Mobile apps and websites became high-value distribution channels for companies around the world. In retail, for example, e-commerce sales account for $4.5 trillion with global retail market size of $25 trillion.

However, digitalization is an intricate and time-consuming process. One of the biggest business challenges here is realizing how you can provide value for your customers over the Internet. You should establish a brand presence in the digital space, adjust marketing campaigns, create an efficient software solution that meets your customers’ needs, and much more. Obviously, there’s no unified digitalization approach at all. The whole strategy revolves around your business needs.

Still, the main advice on overcoming this business challenge is to take software development seriously. It’s impossible to jury rig a software product that solves buyer problems and works perfectly. Software development life cycle includes too many variables and you can’t handle them on your own. So, when thinking of app or website development, it’s better to delegate this process to a software development company with proven expertise in your niche.

4. Automating Business Processes

Business processes automation (BPA) helps companies eliminate repeatable day-by-day tasks. BPA’s main goal is to accelerate employees’ workflow and allow more time for higher priority tasks. Today, organizations automate various activities like hiring candidates, data transformation, marketing campaigns, accounting, and more. Streamlining routine operations solves one of the biggest problems in business. It removes possible mistakes caused by the human factor.

When thinking of BPA, companies decide between two options. The first one implies hiring a third-party vendor which integrates their solution with your business processes. This approach is highly controversial. On the one hand, you get a painless solution to your business challenges. Vendors usually offer full-cycle support which includes dedicated managers that set up software for you and instruct your workforce on how to use it effectively. Integration speed is the major benefit of third-party platforms.

On the other hand, these solutions often have strict limitations and do not necessarily meet your needs. Even if you want to expand the opportunities of this product, a pre-made software fine-tuning may cost you a fortune. If you don’t tolerate such trade-offs, a second option will be your choice.

Custom BPA systems are tailored to your business requirements. Having analyzed all routine processes in your company, you can draw up a comprehensive feature list and pass it to a software development company. Later on, engineers create your software from scratch that solves your particular business challenges. With this approach, you get exactly what you need. Plus, you shouldn’t pay yearly fees as with third parties. However, custom software services cost a lot and increase the time to value.

5. Data Analysis

For the past decade, data has become one of the most valuable resources in the world that solves a range of business challenges. With data science, enterprises gained access to new insights on customer behavior, trending products, and improved decision-making processes. For example, Airbnb created a data-based algorithm capable of predicting the outcomes of an action or event that happens inside the company.

Additionally, companies experienced a lack of storage for their data. Therefore, cloud infrastructures replace conventional on-premise architecture. Sooner or later, those who don’t gather data will fall behind their competitors. Companies already create cloud-oriented startup aggregators. For example, Snowflake Startup Challenge brings together startups that build applications based on the Snowflake Data Cloud.

To overcome this business challenge you should utilize proper tools. The market offers powerful business intelligence tools that extract valuable insights from your raw data. In combination with a custom ETL (extract, transform, load) system, you’ll get a full-fledged data pipeline for your marketing or business analysis needs. All you need is a group of data scientists that will get the value out of these insights.

6. Modernizing Legacy Systems

In plain language, legacy software is an outdated system that is currently in use by the company. Basically, it meets all primary requirements and handles the initial task. However, such a system may turn into a tough business challenge. The first and foremost — legacy software destroys software scalability. The reason lies in an outdated tech stack. The system created a decade ago can’t be supported or maintained with up-to-date tools. On the other hand, hiring developers that work with obsolete tools is a time-consuming and not very promising idea in terms of today’s IT market.

Some companies address this business challenge by adding new software modules created with modern tools. However, there is a high probability that a stockpile of modules made with completely different technologies will cause a global system malfunction. Not to mention the fact that these systems require a lot more money than conventional software would.

To solve similar problems in business you should modernize your entire legacy system . Even though it requires some time and finances, you’ll gain more than you lose. After an upgrade the performance of your software will rise drastically, growing your workforce efficiency and making a system more secure and agile.

7. Cybersecurity

Enterprise-level companies and small businesses become a target for hackers and scammers. With increased volumes of users’ personal data comes more risks of data leaks from neglected vulnerabilities. In 2021, cybersecurity is one of the main business challenges that should be treated with an utmost seriousness.

So, what exactly should you watch out for? Here are three main threats for the immediate future:

• Ransomware and phishing. During the last year, ransomware constituted more than a quarter of the total cyberattacks reported by IBM Security’s X-Force. Hackers have almost doubled ransomware cases since the epidemic began.
• Hackers explore new terrains for attacks. The urgency in remote work has transformed millions of employees’ houses into their offices. However, in day-to-day life, people don’t treat network security as companies do. Home offices rarely have secure firewalls, routers, and access management run by dedicated workforce. This situation creates new opportunities for hackers allowing them to test their exploits on employees’ devices and networks.
• Internet of Things. IoT also brings infinite possibilities for hackers. With an estimated 30 billion connected devices by 2025 , hackers will definitely explore these opportunities for breaching into corporate networks. Implementing serious security measures consumes a significant part of the budget. This fact may negatively affect the IoT industry and become a serious startup challenge for IoT entrepreneurs.

8. Balancing Quality and Growth

In the perfect world, quality and growth should always align in your company. It seems legit to grow your business while providing quality services. However, things aren’t that simple. Expanding to new markets and broadening your scope of activities implies making large investments in new workforce, offices, and operational expenses before seeing actual profits. Eventually, if expenses are higher than the revenue generated by a specific market, the product quality may downgrade or the price may rise up.

To overcome this business challenge, you should clearly understand your growth criteria and what exactly you want to achieve. Accelerating your growth trajectory too much may lead to operational inconsistencies, deteriorated customer experience, and degradation of the brand image. Don’t push for instant profits, instead approach challenges of growth in business with ease. Keeping up with customers’ needs is what makes you stand out among other companies that are in a rush for revenue.

Looking for vetted app developers who can build a software product that makes a difference?

Check Out Our Case Studies

9. Attracting and Retaining Talents

With millions of people losing their jobs, those who are still employed usually stick to their places and don’t search for new job opportunities. This fact made hiring talents much harder these days. Especially when we’re talking about software engineers. Since all companies digitalize, these fellows have a lot of work to do. Management constantly increases developers’ salaries to keep them in their company. Enormous engineers’ salaries may become one of the challenges of starting a business today.

Still, if you’re planning on attracting new workforce, you should find experienced recruiters and provide them with up-to-date recruitment software. Besides, calculate your budget for developers. It’s hard to estimate an average salary for an engineer because it depends on a tech stack they work with and their work experience. You can use Glassdoor to learn about median salaries for developers with the required experience. If you don’t need an in-house team, it may be better to consider the services of a third-party vendor to deal with this business management problem.

10. Identifying New Sales Channels

Expanding your sales channels and retaining current customers is the last but not the least on our list of business challenges for the upcoming years. To get new customers you should know exactly who your existing customer is. Knowing your client’s gender and age is not enough today to accelerate sales. You have to clearly understand why customers are into your product and how you can scale your sales to new customers. Fun and Function case study explains how you can target a proper audience.

We Can Help You Solve Your Business Challenges!

As it comes clear, recent events have changed the way entrepreneurs run business. Digitalization became an inevitable part of any business strategy. We at OpenGeeksLab can help you overcome all business challenges and build any software product that meets your business requirements. Our extensive experience across numerous industries helps us deliver the quality that customers expect. Contact us and discover how we can collaborate to lead your business to a new level.

Need to start a project?

Similar Posts

AI Development for B2B Startups. Unlocking New Potentials...

Psychological issues have always been a significant part...

These days many industries enhance and grow their...

Today, geolocation apps revolutionize the digital services market....

If you prefer creating payment gateway software rather...

These days Artificial Intelligence is no longer just...

Luxury items and non-fungible tokens are similar in...

The app development industry can historically be defined...

Metaverse and Web 3.0 forever changed how customers...

Sooner or later, businesses using software to collect,...

Tell us about your project. We know how to incorporate the tech solutions that best suit your case. Just drop us a line to get yours!

[email protected] +46792020145

Startup Investment Checklist

Product pitch or product spec is not enough. You must prove that the value you bring is worth funding. And that’s how.

What Will You Get?

We will perform code review best practices, and provide a report with the data, including:

• - Code cleanliness, readability, and scalability.
• - Test coverage and test quality.
• - Failure tolerance.
• - Double-checking performance—performance for users and resource consumption.
• - Security vulnerabilities.
• - Documentation that explains how to use a product.

How to effectively pitch your business idea to get funded? Get our Startup Investment Checklist!

*E-mail Wrong e-mail adress

You name your idea, we bring it to life!

Thanks for contacting us.

We’re thrilled to hear from you, and will get back to you ASAP. Have an awesome day!

In the meantime, we want to invite you to follow us on LinkedIn .

Enjoy a 15% discount when you use the code EQLYSEPT24 at checkout from the 17 th to the 30 th  of September 2024

8 Ways to Identify Market Opportunities for Business Growth

Let’s face it. Growing a business is hard. Geopolitical tensions, market volatility and economic uncertainty are real challenges that executives must navigate to thrive amid the upheaval.     

Your company’s future success depends on your ability to determine which strategies will sustain growth . It takes considerable effort. But we’re here to help you get there.    

Before we get started, it’s important for you to have a deep understanding of your company's business direction, resources, strengths and capabilities. Complete visibility is key to making data-driven decisions. Then, you can evaluate the market and assess consumer needs to understand how those demands are being met by companies today.  

Now, let’s examine how to analyse those factors to ignite your next growth opportunity.

Eight analysis types to identify market opportunities

1. consumer segmentation and behaviour analysis .

Divide or group your audience based on traits. This will help you target the right people in the most effective way.    

Consumer segments can be broken down by demographic (age, gender, education, income, etc.), geographic (city, country, region) or behavioural (attitudes, lifestyles, etc.) variables.   

Demographic and geographic data helps you estimate the number of potential customers. For example, a baby food brand should know the population of infants in countries where their products are sold. Or an appliance manufacturer might want to understand the number of households in a target market before expanding distribution.  

You should also consider behavioural variables because these indicators help pinpoint purchase motivations associated with your product or service. Price or positioning, to name a few, can be influential factors. Lifestyles, attitudes and values ​​often drive shopping decisions, so behavioural segmentations help you tailor your marketing efforts.   

You’ll want to monitor short- and long-term consumer shifts like megatrends to understand how priorities are evolving. In recent years, high inflation drove a shift towards cautious and conscious spending. Certain consumers had to cut back on purchases but still want to treat themselves.  

Major packaged food players are strengthening their presence in the premium snacks space to offer affordable indulgences in response to this behaviour. Mondelez launched Toblerone Truffles; Mars acquired Trü Frü and Hotel Chocolat; and Nestlé acquired Grupo CRM.   

Organisations that use consumer segmentation to tailor their messaging, marketing and products will sell more effectively.  

2. Purchase situation analysis

The buyer’s journey is anything but straightforward. A multitude of factors can impact what, when and where consumers make purchases. You have to understand your customers’ shopping patterns so you can influence their decisions. Here are some questions you’ll want to answer.  

• When do people need or want your product or service?  
• Where do people make their purchases?   
• How do they pay?  

Look at distribution channels and payment methods to start uncovering buying patterns. This will help you sell your products in the right place.   

Let’s dig into the retail sector as an example. Today, most consumers expect speed and convenience, which is transforming the grocery landscape. In the last five years, the number of discounters and convenience retailers globally grew 28% and 17%, respectively. But the number of hypermarkets declined 2%.   

Another channel that’s been on the rise: livestreaming e-commerce. Euromonitor expects sales to exceed $450 billion in China in 2024, reaching 14.5% of total e-commerce sales in that country. And steady growth of this channel continues in the US.   

Buying patterns can tell you a lot about your customers. A clear analysis of channel shifts help you prioritise distribution.   

3. Direct competitor analysis

Direct competitors offer similar products or services. For example, Coca-Cola and Pepsi, or Netflix and Hulu.    

Conduct comprehensive research on where your business stands in the marketplace. You should know how key players are building a competitive edge and positioning their products or services. Then, find out how these companies size up against your business. These questions can help you get started.  

• Which brands are growing and why?   
• What is their unique value proposition?   
• How are they marketing their offerings?   
• What competitive advantage do you have over them?   

Take IKEA, for example. In 2022, the company entered a new market, opening its first store in Chile. Before deciding to expand, IKEA did extensive research, most likely looking at competitors like Sodimac that already had 74 outlets in the country.  

Understanding your competitors—from performance to product portfolios and new product development (NPD) to strategic direction—will help you identify growth opportunities.   

4. Indirect competitor analysis

Indirect competitors target a similar audience but sell different products that satisfy the same needs. For example, Coca-Cola and Tropicana, or Netflix and Marvel Comics.   

Analysing companies in tangential industries or categories can help you improve your offerings and reach new audiences.    

Let’s use the travel industry to bring this to life. Airlines could look for opportunities to capture share from other modes of transport. The following questions start to uncover white space.   

• How many people travel long-distance on buses and trains?   
• What are the most in-demand routes?   
• How much do travellers pay for their tickets?   
• What is the occupancy rate of long-distance buses and trains?   
• How can we persuade a current bus or train passenger to travel by plane instead?   

Similarly, producers of chocolate spreads should research performance of jams, honey and peanut butter to understand their competitive positioning within the whole sweet spreads market.  

Attributes of adjacent products can give you insight into market opportunities as well. In the packaged food sector, snack bars with protein have grown in popularity. Yoghurt brands—another product consumed as a snack—have also been launching high-protein varieties. You should keep up with NPD launches of your indirect competitors to inform your innovation plans.   

Similar to a direct competitor analysis, unit prices of indirect competitors must be reviewed. In the edible oils market, for example, strong unit price growth of sunflower oil in recent years represented an opportunity for other types of edible oils to reevaluate pricing strategies and improve profit margins.  

This type of analysis helps you tap into a wider customer base and reveals your competitive advantages against indirect competitors.  

5. Complementary product and service analysis

You should monitor the performance of products and services that complement your business.    

That means sweet spreads and butter brands should analyse market trends in bread and savoury biscuits. Another example: tomato sauce manufacturers monitoring performance of the pasta category.   

This research helps you:    

• Understand how your customers use your product in conjunction with others   
• Detect new needs, opportunities and threats   
• Develop new offerings or redesign your products   
• Sell more effectively   

Let’s say a company that produces fresh ground coffee pods wants to expand retail distribution. Sales data for pod coffee machines like Nespresso and Dolce Gusto can estimate market potential and demand.  

Trends in complementary sectors should be considered when making investment decisions. Use this information to guide your product innovation strategy and gain market share.    

6. Diversification analysis

If your company has reached a high level of maturity in your current market, a diversification analysis will help you understand how and where to grow. But you must have the right skills, resources and business models to successfully expand into new categories.   

First, analyse any sectors that could benefit from your offering. Then, quantify the growth potential and understand the competitive landscape for each. Look at market sizes, shares, growth rates, unit prices, per capita sales and brand positioning. You’ll want to answer these important questions before making investment decisions.   

• Do you have the capacity and tools to diversify? 
• Do you have applicable resources in other industries and could gain economies of scale?
• Will diversifying dilute your brand reputation? Should you use a new brand in this new industry?
• Do the potential financial gains outweigh the risks?

British investment firm easyGroup uses a diversification strategy for long-term business growth. easyGroup first created easyJet, a low-cost air carrier, but extended its business model across other industries like FMCG, entertainment, e-commerce and technology. And the company even created competition for easyJet with the launch of easyBus and easyCar. This gives consumers various travel options while bringing in new revenue streams.    

Diversification can bring in more customers, income security and consistent demand when executed successfully because your company transforms alongside consumer needs.  

7. Foreign market analysis 

If your company operates in a mature or saturated market, exploring other countries could help you achieve your financial goals.   

Different countries grow at different paces due to disparities in economic development and local habits. The evolution of per capita consumption for a given product in each country can serve as an indicator of product lifecycle maturity. Understanding the size of the market and competitive landscape will help you estimate business potential.  

For example, private labels have a high penetration rate in developed regions like Western Europe and North America. That could be an indication of growth potential for these types of brands in emerging markets, especially considering the lower price points of such products.  

Local cultures, regulations and competitors must be considered before expanding into new markets. Helpful questions to ask are:   

• How does your product need to adapt to local preferences or legislation?  
• Who are your main competitors in this new country?  
• Are there seasons or local festivities when your products could be in higher demand?  

These questions must be addressed when planning international expansion.  

8. Environmental analysis

Don’t forget to analyse external factors like international relations, scientific developments, regulations and environmental shifts that could impact your business. A PEST (political, economic, social, technological) analysis is useful here as well.  

You’ll also want to evaluate possible economic scenarios to plan for potential disruptions or risks. Paying attention to these elements will help you assess market attractiveness and create winning strategies.  

Generative AI is a recent example and has moved up the corporate agenda as of late. According to Euromonitor’s Voice of the Industry Survey 2023, 49% of professionals expect generative AI to improve customer experiences through data analysis that will create more intelligent shopping suggestions. Companies can embrace this new technology to facilitate business growth.  

Scientific developments may also bring new opportunities. The world's largest market for processed meat—the US— approved cell-cultivated chicken for human consumption alongside Singapore, which could greatly disrupt the alternatives market.   

Regulatory framework changes can impact your business, too. But those that stay ahead of these reforms can turn them into effective new ways of working. For example, Latin American governments require companies to include black labels on products with high amounts of calories, sodium, sugar and saturated fats. While this might have negative implications for some food and beverage brands, players that use it as an opportunity to invest in healthier alternatives could reap the rewards.    

This type of analysis should be ongoing. External factors change every day. But this research will help you stay resilient amidst volatility.  

Next steps  

Using a mix of these eight analyses will help your business gain a holistic view of opportunities and create long-term strategic business plans.    

Once you identify an opportunity, quickly develop a value proposition, plan the commercialisation chain and estimate costs, revenues, cash flows and financing needs.   

Remember: not all market opportunities identified will succeed. That’s why companies invest in different types of research before moving into a new market and making changes to a product.    

Now, are you ready to spot your next market opportunity? Connect with us to get the data and insights you need to conduct these analyses for your business strategy.   

Editor’s note: This article was originally published in June 2017 and has been updated.  

Explore More

Shop our reports, leading fragrance claims: charting the trendsetters in skinification.

Skin health positioning in fragrances is an under-penetrated space. Trending claims address skin sensitivity, but consumers are likely to demand more…

The New Loyalty Playbook: Strategies From Leading Brands

This report evaluates top 100 brands' loyalty strategies and customer engagement performance in comparison to industry standards and competitors to identify…

Emotional Wellbeing in Fragrances: Claims, Engagement and Future Outlook

Fragrances are gaining relevance among consumers experiencing anxiety and looking for emotional wellness. Fragrances, however, face many challenges, as they…

• Business Essentials
• Leadership & Management
• Credential of Leadership, Impact, and Management in Business (CLIMB)
• Entrepreneurship & Innovation
• Digital Transformation
• Finance & Accounting
• Business in Society
• For Organizations
• Support Portal
• Media Coverage
• Founding Donors
• Leadership Team

• Harvard Business School →
• HBS Online →
• Business Insights →

Business Insights

Harvard Business School Online's Business Insights Blog provides the career insights you need to achieve your goals and gain confidence in your business skills.

• Career Development
• Communication
• Decision-Making
• Earning Your MBA
• Negotiation
• News & Events
• Productivity
• Staff Spotlight
• Student Profiles
• Work-Life Balance
• AI Essentials for Business
• Alternative Investments
• Business Analytics
• Business Strategy
• Business and Climate Change
• Creating Brand Value
• Design Thinking and Innovation
• Digital Marketing Strategy
• Disruptive Strategy
• Economics for Managers
• Entrepreneurship Essentials
• Financial Accounting
• Global Business
• Launching Tech Ventures
• Leadership Principles
• Leadership, Ethics, and Corporate Accountability
• Leading Change and Organizational Renewal
• Leading with Finance
• Management Essentials
• Negotiation Mastery
• Organizational Leadership
• Power and Influence for Positive Impact
• Strategy Execution
• Sustainable Business Strategy
• Sustainable Investing
• Winning with Digital Platforms

How to Identify Business & Market Opportunities

• 05 Apr 2022

Although many aspiring entrepreneurs start with an idea for a new business, the question remains: Is the idea a business opportunity? In other words, does it fulfill a market need, solve a customer pain point, or improve an existing product?

Perhaps you want to assess whether your business idea is viable, or you like the concept of entrepreneurship and are searching for the right opportunity to jump in. Either way, you need to familiarize yourself with different types of business opportunities and learn to identify them.

Lessons for recognizing and acting on business and market opportunities can be gleaned from Harvard Business School Professor Clayton Christensen, who teaches the online course Disruptive Strategy .

Here are three types of business opportunities to search for, tips to identify them, and how to maintain a disruptive mindset for entrepreneurial success.

Access your free e-book today.

Types of Business Opportunities to Search For

1. jobs to be done.

At its core, entrepreneurship is the process of using available resources to fill unmet market needs. One way to identify those needs is through Christensen’s jobs to be done theory , which states that people don’t buy a product; they “hire” it to do a job.

One example Christensen outlines in Disruptive Strategy is McDonald’s milkshakes. McDonald’s executives were surprised to find milkshake sales were highest in the morning. By conducting research, they discovered customers were hiring milkshakes to do the job of keeping them occupied and full during their morning commutes.

“It allows you to reach out and grab ahold of the causal mechanism that causes customers to buy your product or service,” Christensen says in Disruptive Strategy. “If we understand the job the customer is trying to do, and then develop a product that nails this job perfectly, the probability that your innovation will be successful is improved in dramatic ways.”

This theory also expands the scope of the competitive landscape and helps you conceptualize how many choices customers have when they want to get a specific job done.

Returning to the milkshake example, customers could have hired quicker snacks like bananas or granola bars to do the same job of keeping them full and occupied during their commutes, even though they wouldn’t be considered direct competitors. In this case, the milkshake beat out competitors because its thick consistency allowed it to be consumed slowly over commutes.

2. Low-End Market Opportunities

The key to identifying market gaps is understanding the theory of disruptive innovation . This theory, also coined by Christensen, explains how companies with fewer resources can enter existing markets and disrupt incumbent businesses that own segments of them. There are two types of disruptive innovation : low-end disruption and new-market disruption.

Low-end disruption occurs when a new market entrant claims the lowest segment with a low-profit business model. Entering at the bottom of the market ensures the incumbent company isn’t financially motivated to fight back; after all, it owns the highest-profit segments.

Over time, the new entrant moves into the next highest market segment. Once again, the incumbent company is financially motivated to pull out of that segment and move into higher-profit ones. This continues until the new entrant has completely driven the incumbent company out of the market.

This method is more effective than trying to directly compete with the incumbent company for top market segments because it’s likely to defend its position.

3. New Market Opportunities

The other type of disruptive innovation is new-market disruption . It provides ample opportunity for entrepreneurial success, so it’s important to know how to identify it.

New-market disruption occurs when a company creates a new segment in an existing market. This new segment can often cater to people overserved by existing offerings, meaning they aren’t willing to pay for the latest features of the incumbent company’s products.

If you identify such an opportunity, make a product that’s less expensive and of “good enough” quality to create and capture a new market segment.

One example of new-market disruption is the transistor radio, which entered the personal entertainment market with the first model by Texas Instruments in 1954. The portable radio catered to young, non-wealthy people who were overserved by other radio offerings at the time, which were large, expensive, and designed to sit in homes like a piece of furniture. By creating a cheap, “good enough” option for listening to music, Texas Instruments paved the way for higher-quality options, such as the Sony Walkman and Apple iPod, which eventually rendered in-home radio consoles obsolete.

By identifying overserved people in any market, you can find and act on opportunities.

Related: Innovation in a Disrupted World: How to Discover New and Emerging Jobs to Be Done

3 Ways to Identify Business Opportunities

With a foundational understanding of the types of opportunities that exist, you can dive into identifying them. Here are three ways you can do so and examples to learn from.

1. Identify Your Pain Points

When searching for potential market needs, start with yourself. In your everyday life, what processes or tasks bother you? What’s the job to be done that you haven’t quite found the perfect product to fulfill?

Many successful entrepreneurial ventures began with a personal problem in the founder’s life. For instance, after Neil Blumenthal lost his prescription glasses and couldn’t afford to buy new ones, he created an eyewear company that provides inexpensive, stylish glasses: Warby Parker.

Another example is the dating app Bumble, which Whitney Wolfe Herd created after leaving an abusive relationship. The app puts women first, requiring them to make the first move in heterosexual pairings, and advocates for gender equality and sexual harassment prevention.

Starting with personal questions can help determine if others have the same pain point and if opportunities are low-end or new-market disruptions.

Related: 4 Entrepreneur Success Stories to Learn From

2. Conduct Market Research

Another way to prove whether a business idea is viable is by conducting market research . This includes using industry research to define the competitive landscape and determine your target audience, as well as interviewing or surveying people who fit your target demographics.

Observing and gathering feedback from real people enables you to consider their perspectives and gain a deeper understanding of their motivations, frustrations, fears, and desires. This can help you conceptualize whether your product addresses a job to be done and the size of the audience that could benefit from it.

Once an opportunity is identified, you can utilize design thinking to create an innovative product that fits the job to be done you uncovered through research.

3. Question Processes

You can also identify business opportunities by examining the processes and delivery methods of existing product or service offerings. Try to evaluate each process with an open mind and ask questions about how you could improve it, such as:

• Could this process be faster?
• Could this process be executed using a cheaper business model?
• Is there a more sustainable way to execute this process?
• Does this process exclude certain groups of people? If so, is there a way to make the process accessible to all?

You don’t have to reinvent the wheel to break into entrepreneurship—you just need to recognize the potential for innovation that already exists.

Leading with a Disruptive Lens

When searching for business and market opportunities, lead with a disruptive lens. Using Christensen’s jobs to be done theory, you can identify customer needs that aren’t being fulfilled, then assess them using his theory of disruptive innovation to determine if there’s a low-end or new-market entry point for your product.

Rather than directly challenge companies dominating market segments, you can identify people who are over- or underserved by existing offerings and compete on a disruptive level.

To deepen your knowledge and learn how to craft an end-to-end disruptive strategy, consider taking an online course. Disruptive Strategy uses a “learn, practice, apply” approach: Christensen teaches key concepts and frameworks, then introduces case studies and interviews featuring real business leaders. Christensen also encourages you to put those frameworks on “like a set of lenses” and apply what you’ve learned to your business.

Are you interested in crafting an innovative strategy for your business? Explore our six-week course Disruptive Strategy , one of our online entrepreneurship and innovation courses . If you aren't sure which is the right fit, download our free course flowchart to determine which best aligns with your goals.

About the Author

• Search Search Please fill out this field.

What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

• How to Start a Business: A Comprehensive Guide and Essential Steps
• How to Do Market Research, Types, and Example
• Marketing Strategy: What It Is, How It Works, How To Create One
• Marketing in Business: Strategies and Types Explained
• What Is a Marketing Plan? Types and How to Write One
• Business Development: Definition, Strategies, Steps & Skills
• Business Plan: What It Is, What's Included, and How to Write One CURRENT ARTICLE
• Small Business Development Center (SBDC): Meaning, Types, Impact
• How to Write a Business Plan for a Loan
• Business Startup Costs: It’s in the Details
• Startup Capital Definition, Types, and Risks
• Bootstrapping Definition, Strategies, and Pros/Cons
• Crowdfunding: What It Is, How It Works, and Popular Websites
• Starting a Business with No Money: How to Begin
• A Comprehensive Guide to Establishing Business Credit
• Equity Financing: What It Is, How It Works, Pros and Cons
• Best Startup Business Loans
• Sole Proprietorship: What It Is, Pros & Cons, and Differences From an LLC
• Partnership: Definition, How It Works, Taxation, and Types
• What is an LLC? Limited Liability Company Structure and Benefits Defined
• Corporation: What It Is and How to Form One
• Starting a Small Business: Your Complete How-to Guide
• Starting an Online Business: A Step-by-Step Guide
• How to Start Your Own Bookkeeping Business: Essential Tips
• How to Start a Successful Dropshipping Business: A Comprehensive Guide

A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• Executive summary : This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

A business plan isn't a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections. Markets and the economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All this calls for building flexibility into your plan, so you can pivot to a new course if needed.

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While a well-established business might want to review its plan once a year and make changes if necessary, a new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

Harvard Business Review. " How to Write a Winning Business Plan ."

U.S. Small Business Administration. " Write Your Business Plan ."

SCORE. " When and Why Should You Review Your Business Plan? "

• Terms of Service
• Editorial Policy
• Privacy Policy

• Starting a Business

Our Top Picks

• Best Small Business Loans
• Best Business Internet Service
• Best Online Payroll Service
• Best Business Phone Systems

Our In-Depth Reviews

• OnPay Payroll Review
• ADP Payroll Review
• Ooma Office Review
• RingCentral Review

Explore More

• Business Solutions
• Entrepreneurship
• Franchising
• Best Accounting Software
• Best Merchant Services Providers
• Best Credit Card Processors
• Best Mobile Credit Card Processors
• Clover Review
• Merchant One Review
• QuickBooks Online Review
• Xero Accounting Review
• Financial Solutions

Human Resources

• Best Human Resources Outsourcing Services
• Best Time and Attendance Software
• Best PEO Services
• Best Business Employee Retirement Plans
• Bambee Review
• Rippling HR Software Review
• TriNet Review
• Gusto Payroll Review
• HR Solutions

Marketing and Sales

• Best Text Message Marketing Services
• Best CRM Software
• Best Email Marketing Services
• Best Website Builders
• Textedly Review
• Salesforce Review
• EZ Texting Review
• Textline Review
• Business Intelligence
• Marketing Solutions
• Marketing Strategy
• Public Relations
• Social Media
• Best GPS Fleet Management Software
• Best POS Systems
• Best Employee Monitoring Software
• Best Document Management Software
• Verizon Connect Fleet GPS Review
• Zoom Review
• Samsara Review
• Zoho CRM Review
• Technology Solutions

Business Basics

• 4 Simple Steps to Valuing Your Small Business
• How to Write a Business Growth Plan
• 12 Business Skills You Need to Master
• How to Start a One-Person Business
• FreshBooks vs. QuickBooks Comparison
• Salesforce CRM vs. Zoho CRM
• RingCentral vs. Zoom Comparison
• 10 Ways to Generate More Sales Leads

Business.com aims to help business owners make informed decisions to support and grow their companies. We research and recommend products and services suitable for various business types, investing thousands of hours each year in this process.

As a business, we need to generate revenue to sustain our content. We have financial relationships with some companies we cover, earning commissions when readers purchase from our partners or share information about their needs. These relationships do not dictate our advice and recommendations. Our editorial team independently evaluates and recommends products and services based on their research and expertise. Learn more about our process and partners here .

The 4 Biggest Challenges of Starting a Business (and How to Overcome Them)

Starting a business isn't for the faint of heart. Identifying and tackling your challenges are crucial for success.

Table of Contents

There are many excellent reasons to start a business, including working for yourself, earning more money, having a flexible work schedule and expanding your skill set. However, like all worthwhile endeavors, starting and building a new business is challenging. 

If you’re passionate about your business idea, don’t let inevitable entrepreneurial pain points keep you from following through and making your business ownership dream a reality. As most small business owners will tell you, the risks and challenges are usually worth the rewards. 

The biggest challenges of starting a business

Consider the following four challenges most entrepreneurs face when starting a business and start thinking about how you’ll overcome them.

1. Running the show alone is a business ownership challenge.

New business owners wear many hats as they get their operations up and running, often handling sales, marketing, accounting, information technology (IT) and more. However, they likely don’t excel in all areas and may end up feeling overwhelmed. 

Entrepreneurs often find themselves moving from task to task, putting out fires with one hand while completing everyday tasks with the other. As experienced business owners know, handling everything for too long is bad for your mental and physical health and can take a toll on business productivity .

How to overcome the challenges of running the operation alone

Be honest about your strengths and weaknesses and understand that your time is precious when running a business. While you can certainly embrace professional growth and learn more, sharing the load is key. 

Editor’s note: Looking for the right loan for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

Here are some tips for handling the myriad tasks required when running a business:

• Look for outside help: Seek help in the areas where you struggle. For example, hire a virtual assistant, use a marketing agency or find an IT partner . Hire full-time and part-time employees as you grow to lighten your load. 
• Utilize Small Business Association (SBA) resources: Explore the SBA’s Office of Small Business Development Centers . This SBA program provides one-stop assistance to current and prospective small business owners, with experts in local offices throughout the United States. sharing information on handling many aspects of running a business.
• Get organized: To combat feeling overwhelmed, make your business more organized . Write down and define your daily tasks and goals. Once you’ve identified your tasks, list them in order of priority and cluster-related tasks. Prioritizing helps you determine which tasks and goals to tackle at the most productive time of your day. Organizing and clustering help you handle similar tasks in the same period instead of sporadically.

2. Finding funding is a crucial challenge when starting a business.

Finding investors and funding is one of the biggest startup challenges new business owners face. Not every business needs an immediate, significant cash infusion, but you must ensure you can keep the business running for the long term.

How to overcome funding challenges

When starting a business, you’ll likely apply for small business loans , seek a line of credit, self-fund the business or raise capital. 

Here are some best practices for overcoming startup funding challenges:

• Utilize SCORE resources: SCORE offers mentors, education and advisors to help small businesses succeed. Speak with a mentor at SCORE to get their thoughts on the best funding course of action for your business based on your goals.
• Consider a microloan: Microloans ― typically for less than $50,000 ― are another option for new business owners. Because they’re smaller, microloans are easier to qualify for and provide borrowing opportunities that may not otherwise be available to you. You can use a microloan for a startup project, to get a business off the ground, as working capital or to fund equipment purchases, office leases or new hires. Different microlenders have various rules about using the funds and different qualification requirements (such as a minimum credit score ). 
• Consider an SBA loan: SBA small business loan programs aim to help entrepreneurs who want to start or expand a business. (The SBA also has a microloan program, so contact your local SBA office to learn more.)
• Create an investor pitch: Before presenting your business idea to investors , perfect your pitch. Investors, banks and other lenders will want to understand your vision for success. The better you articulate this vision, the more likely you’ll get the funding you need.

3. Finding and attracting customers is a business startup challenge.

Attracting customers is an area where many new businesses stumble. After all, if no one buys what you’re selling, you can’t succeed. Ideally, you conducted market research before launching your business to ensure your offerings had a receptive market. Now you must identify your target audience , understand their needs and determine what they’re willing to pay.  

How to overcome the challenge of attracting customers:

To find and attract customers, you must create a marketing plan that identifies the following: 

• Your target market
• Your product’s strengths and weaknesses compared to the competition
• Your marketing position and message
• Where you plan to market your product 
• Your marketing budget 

Many new businesses have slim marketing budgets, so low-cost ways to make a big impact are essential. For example, marketers on a budget can consider the following: 

• Creating social media marketing campaigns
• Setting up co-marketing agreements with companies that sell complementary products
• Creating email marketing campaigns
• Utilizing video marketing to create brand trust
• Hosting events or initiatives the media will cover

4. Maintaining a work-life balance is challenging when starting a business.

Any seasoned entrepreneur can tell you about the challenges of maintaining a positive work-life balance . It’s easy to find yourself on the computer from early morning to dinner, only to spend another few hours at night crossing more items off your list. You may suddenly find yourself manic about work and business-related tasks, neglecting responsibilities in other areas of your life. Exercise, time with friends and family and sleep are often taken for granted.

How to overcome work-life balance challenges

As difficult as it might be, establishing a routine that sets clear boundaries between work and free or family time is crucial. Everyone manages their days differently, but if putting “run three miles at lunchtime” on your calendar makes you stick to the commitment, do it.

If you cross everything off your to-do list by 8 p.m., don’t start diving into tomorrow’s tasks. Spend that extra time with family or consider going to bed early. Your body and mind will thank you.

Resources for starting a business

In addition to the SBA and SCORE, many resources can help entrepreneurs set up and run new businesses.

1. Turn to your local chamber of commerce.

Your local chamber of commerce likely has educational materials and videos on starting a business. But even more impactful is meeting, mingling with and getting advice from established business people in your area. They can help you navigate local government requirements, point you in the right direction when you need vendors and give you industry-specific advice. 

Your chamber of commerce also likely offers various networking and marketing opportunities, including networking events ― (particularly helpful if you have a business-to-business (B2B) business ― directories, trade shows, job fairs, leadership events and lunch-and-learn events.

2. Create a LinkedIn profile.

Consider creating a LinkedIn business profile . In addition to peer-to-peer communication and networking, LinkedIn helps business owners learn about and participate in free webinars, market their businesses and participate in industry-specific or topic-specific groups. LinkedIn also has a small business resource center with free online courses, written resources on various business topics and virtual events. 

3. Find a mentor. 

Do you know someone with experience in the type of business you’re starting? Ask them to become your mentor. A mentorship is an informal arrangement where a more experienced person agrees to help and discuss business questions and challenges with you. Mentors can give you great advice, pose questions and issues you may not have considered, help keep you focused and balanced and introduce you to potential customers, partners or funding sources.

4. Check out HR.com.

Although you may start with no employees, you’ll probably need to hire some as you grow your business. HR.com is an excellent HR resource that can help you stay on top of employee and workplace-related regulations , taxes and benefits. It has free HR compliance posters you can download and print, industry trends and research reports and thousands of educational webcasts. After you hire your first HR person , they can take HR certification prep courses at HR.com and earn recertification credits. 

4. Access Google’s business resources.

As soon as your business is up and running, create a Google Business Profile so you can control your business’s information across all of Google’s services. Your Google Business Profile will help you appear in local searches, improve your website’s SEO strategy , give your company credibility and allow you to gather reviews. 

Google also provides tools for entrepreneurs at a nominal price ($6 per user per month) via Google Workspace, which includes Gmail, Google Drive, Google Meet, Google Calendar, Google Chat, Google Docs, Sheets and Slides to enable seamless communication and collaboration. Google Analytics , which is free, shows you how many people visit your website, how long they stay, where they come from and other information.

If you have a topic you want to learn more about, Google for Small Business provides courses on marketing-related topics like SEO, gathering insights, starting an online store and using email marketing and digital advertising. Most (if not all) of these courses will point you toward Google’s products, but since it’s the 600-pound gorilla of search and digital advertising, it’s valuable information.

Dave Thomas contributed to this article.

• Inspiration Revealed: 36 Top CEOs Share Their Secrets to Success

Get Weekly 5-Minute Business Advice

B. newsletter is your digest of bite-sized news, thought & brand leadership, and entertainment. All in one email.

Our mission is to help you take your team, your business and your career to the next level. Whether you're here for product recommendations, research or career advice, we're happy you're here!

14 Reasons Why You Need a Business Plan

10 min. read

Updated May 10, 2024

There’s no question that starting and running a business is hard work. But it’s also incredibly rewarding. And, one of the most important things you can do to increase your chances of success is to have a business plan.

A business plan is a foundational document that is essential for any company, no matter the size or age. From attracting potential investors to keeping your business on track—a business plan helps you achieve important milestones and grow in the right direction.

A business plan isn’t just a document you put together once when starting your business. It’s a living, breathing guide for existing businesses – one that business owners should revisit and update regularly.

Unfortunately, writing a business plan is often a daunting task for potential entrepreneurs. So, do you really need a business plan? Is it really worth the investment of time and resources? Can’t you just wing it and skip the whole planning process?

Good questions. Here’s every reason why you need a business plan.

• 1. Business planning is proven to help you grow 30 percent faster

Writing a business plan isn’t about producing a document that accurately predicts the future of your company. The  process  of writing your plan is what’s important. Writing your plan and reviewing it regularly gives you a better window into what you need to do to achieve your goals and succeed. 

You don’t have to just take our word for it. Studies have  proven that companies that plan  and review their results regularly grow 30 percent faster. Beyond faster growth, research also shows that companies that plan actually perform better. They’re less likely to become one of those woeful failure statistics, or experience  cash flow crises  that threaten to close them down. 

• 2. Planning is a necessary part of the fundraising process

One of the top reasons to have a business plan is to make it easier to raise money for your business. Without a business plan, it’s difficult to know how much money you need to raise, how you will spend the money once you raise it, and what your budget should be.

Investors want to know that you have a solid plan in place – that your business is headed in the right direction and that there is long-term potential in your venture. 

A business plan shows that your business is serious and that there are clearly defined steps on how it aims to become successful. It also demonstrates that you have the necessary competence to make that vision a reality. 

Investors, partners, and creditors will want to see detailed financial forecasts for your business that shows how you plan to grow and how you plan on spending their money. 

• 3. Having a business plan minimizes your risk

When you’re just starting out, there’s so much you don’t know—about your customers, your competition, and even about operations. 

As a business owner, you signed up for some of that uncertainty when you started your business, but there’s a lot you can  do to reduce your risk . Creating and reviewing your business plan regularly is a great way to uncover your weak spots—the flaws, gaps, and assumptions you’ve made—and develop contingency plans. 

Your business plan will also help you define budgets and revenue goals. And, if you’re not meeting your goals, you can quickly adjust spending plans and create more realistic budgets to keep your business healthy.

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

• 4. Crafts a roadmap to achieve important milestones

A business plan is like a roadmap for your business. It helps you set, track and reach business milestones. 

For your plan to function in this way, your business plan should first outline your company’s short- and long-term goals. You can then fill in the specific steps necessary to reach those goals. This ensures that you measure your progress (or lack thereof) and make necessary adjustments along the way to stay on track while avoiding costly detours.

In fact, one of the top reasons why new businesses fail is due to bad business planning. Combine this with inflexibility and you have a recipe for disaster.

And planning is not just for startups. Established businesses benefit greatly from revisiting their business plan. It keeps them on track, even when the global market rapidly shifts as we’ve seen in recent years.

• 5. A plan helps you figure out if your idea can become a business

To turn your idea into reality, you need to accurately assess the feasibility of your business idea.

You need to verify:

• If there is a market for your product or service
• Who your target audience is
• How you will gain an edge over the current competition
• If your business can run profitably

A business plan forces you to take a step back and look at your business objectively, which makes it far easier to make tough decisions down the road. Additionally, a business plan helps you to identify risks and opportunities early on, providing you with the necessary time to come up with strategies to address them properly.

Finally, a business plan helps you work through the nuts and bolts of how your business will work financially and if it can become sustainable over time.

6. You’ll make big spending decisions with confidence

As your business grows, you’ll have to figure out when to hire new employees, when to expand to a new location, or whether you can afford a major purchase. 

These are always major spending decisions, and if you’re regularly reviewing the forecasts you mapped out in your business plan, you’re going to have better information to use to make your decisions.

7. You’re more likely to catch critical cash flow challenges early

The other side of those major spending decisions is understanding and monitoring your business’s cash flow. Your  cash flow statement  is one of the three key financial statements you’ll put together for your business plan. (The other two are your  balance sheet  and your  income statement  (P&L). 

Reviewing your cash flow statement regularly as part of your regular business plan review will help you see potential cash flow challenges earlier so you can take action to avoid a cash crisis where you can’t pay your bills. 

• 8. Position your brand against the competition

Competitors are one of the factors that you need to take into account when starting a business. Luckily, competitive research is an integral part of writing a business plan. It encourages you to ask questions like:

• What is your competition doing well? What are they doing poorly?
• What can you do to set yourself apart?
• What can you learn from them?
• How can you make your business stand out?
• What key business areas can you outcompete?
• How can you identify your target market?

Finding answers to these questions helps you solidify a strategic market position and identify ways to differentiate yourself. It also proves to potential investors that you’ve done your homework and understand how to compete. 

• 9. Determines financial needs and revenue models

A vital part of starting a business is understanding what your expenses will be and how you will generate revenue to cover those expenses. Creating a business plan helps you do just that while also defining ongoing financial needs to keep in mind. 

Without a business model, it’s difficult to know whether your business idea will generate revenue. By detailing how you plan to make money, you can effectively assess the viability and scalability of your business. 

Understanding this early on can help you avoid unnecessary risks and start with the confidence that your business is set up to succeed.

• 10. Helps you think through your marketing strategy

A business plan is a great way to document your marketing plan. This will ensure that all of your marketing activities are aligned with your overall goals. After all, a business can’t grow without customers and you’ll need a strategy for acquiring those customers. 

Your business plan should include information about your target market, your marketing strategy, and your marketing budget. Detail things like how you plan to attract and retain customers, acquire new leads, how the digital marketing funnel will work, etc. 

Having a documented marketing plan will help you to automate business operations, stay on track and ensure that you’re making the most of your marketing dollars.

• 11. Clarifies your vision and ensures everyone is on the same page

In order to create a successful business, you need a clear vision and a plan for how you’re going to achieve it. This is all detailed with your mission statement, which defines the purpose of your business, and your personnel plan, which outlines the roles and responsibilities of current and future employees. Together, they establish the long-term vision you have in mind and who will need to be involved to get there. 

Additionally, your business plan is a great tool for getting your team in sync. Through consistent plan reviews, you can easily get everyone in your company on the same page and direct your workforce toward tasks that truly move the needle.

• 12. Future-proof your business

A business plan helps you to evaluate your current situation and make realistic projections for the future.

This is an essential step in growing your business, and it’s one that’s often overlooked. When you have a business plan in place, it’s easier to identify opportunities and make informed decisions based on data.

Therefore, it requires you to outline goals, strategies, and tactics to help the organization stay focused on what’s important.

By regularly revisiting your business plan, especially when the global market changes, you’ll be better equipped to handle whatever challenges come your way, and pivot faster.

You’ll also be in a better position to seize opportunities as they arise.

Further Reading: 5 fundamental principles of business planning

• 13. Tracks your progress and measures success

An often overlooked purpose of a business plan is as a tool to define success metrics. A key part of writing your plan involves pulling together a viable financial plan. This includes financial statements such as your profit and loss, cash flow, balance sheet, and sales forecast.

By housing these financial metrics within your business plan, you suddenly have an easy way to relate your strategy to actual performance. You can track progress, measure results, and follow up on how the company is progressing. Without a plan, it’s almost impossible to gauge whether you’re on track or not.  

Additionally, by evaluating your successes and failures, you learn what works and what doesn’t and you can make necessary changes to your plan. In short, having a business plan gives you a framework for measuring your success. It also helps with building up a “lessons learned” knowledge database to avoid costly mistakes in the future.

• 14. Your business plan is an asset if you ever want to sell

Down the road, you might decide that you want to sell your business or position yourself for acquisition. Having a solid business plan is going to help you make the case for a higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale. 

Free business plan template

Join over 1-million businesses and make planning easy with our simple, modern, investor-approved business plan template.

Download Template

• Writing your business plan

By taking the time to create a business plan, you ensure that your business is heading in the right direction and that you have a roadmap to get there. We hope that this post has shown you just how important and valuable a business plan can be. While it may still seem daunting, the benefits far outweigh the time investment and learning curve for writing one. 

Luckily, you can write a plan in as little as 30 minutes. And there are plenty of excellent planning tools and business plan templates out there if you’re looking for more step-by-step guidance. Whatever it takes, write your plan and you’ll quickly see how useful it can be.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• 6. You’ll make big spending decisions with confidence
• 7. You’re more likely to catch critical cash flow challenges early

Related Articles

11 Min. Read

Use This Simple Business Plan Outline Example to Organize Your Plan

7 Min. Read

8 Business Plan Templates You Can Get for Free

5 Min. Read

How to Run a Productive Monthly Business Plan Review Meeting

5 Consequences of Skipping a Business Plan

The LivePlan Newsletter

Become a smarter, more strategic entrepreneur.

Your first monthly newsetter will be delivered soon..

Unsubscribe anytime. Privacy policy .

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

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

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

WRITE FOR US

• Advertisement

• Agriculture
• Engineering
• Oil & gas
• Digital updates
• Latest phone/device
• Entreprenuership
• MADE IN INDIA
• Health & fitness
• Productivity
• Relationship
• Business/Startup
• WOMEN IN BIZZ
• Startup Stories
• Editors Note
• Expert’s Advice
• SPECIAL REPORTS
• PR Services

What Is a Business Plan?

A business plan is a written document that outlines your business. It covers everything from your business history and current status to your sales and marketing strategy and how you plan on turning a profit. A business plan is critical for all businesses, no matter how small or large. Without one, it's difficult to track your progress and make adjustments as needed. Plus, if you're ever looking for investors or loans, a strong business plan will give them the confidence they need to support your venture.

Why do I need a business plan?

A business plan is important because it gives you a road map to follow as you start and grow your business. It can help you attract new investors and customers, and keep everyone on track as you move forward.

How often should I update my business plan?

You should update your business plan as your business grows and changes. At a minimum, you should review and revise it annually. However, you may need to make more frequent updates if you're experiencing rapid growth or making major changes to your business.

What are the three main purposes of a business plan?

The three main purposes of a business plan are to:

- Help you get a clear picture of your business and what you want it to achieve

Here are a few tips to help you write a successful business plan:

- Do your research. Before you start writing, find out as much as you can about your industry and what it takes to start and grow a successful business in that field.

- Be realistic. Don't try to inflate your numbers or make unrealistic predictions in an effort to make your business look more successful than it is. Investors will see through this and it will damage your credibility.

- Keep it concise. No one wants to read a 100-page business plan. Try to keep your plan to 10 pages or less, with clear and concise language.

- Get help if you need it. If you're not sure where to start, there are plenty of business plan templates and examples available online. You can also hire a professional business plan writer to get the job done for you.

What are some common mistakes to avoid when writing a business plan?

Here are a few common mistakes to avoid when writing a business plan:

- Not doing your research. Before you start writing, find out as much as you can about your industry and what it takes to start and grow a successful business in that field.

- Making unrealistic predictions. Don't try to inflate your numbers or make unrealistic predictions in an effort to make your business look more successful than it is. Investors will see through this and it will damage your credibility.

- Overcomplicating things. No one wants to read a 100-page business plan. Try to keep your plan to 10 pages or less, with clear and concise language.

- Not getting help when you need it. If you're not sure where to start, there are plenty of business plan templates and examples available online.

Types of business plans:

There are two types of business plans: traditional and lean startup.

Traditional business plans

A traditional business plan is a document that typically includes detailed information about the company's products or services, marketing strategy, management team, financial projections, and more. This type of business plan is often used by banks and other investors to get a better understanding of the company before they provide funding.

Writing a traditional business plan can be a daunting task, but it doesn't have to be. By understanding the structures of traditional business plan s and what should be included in each section, you can make the process much simpler.

A traditional business plan typically includes the following sections:

- The executive summary is the first section of the business plan and it should provide an overview of the main points of the plan.

- The company description is the second section and it should provide more detail about the company, its history, its products or services, and its mission.

- The market analysis is the third section and it should provide information about the target market, the competition, and the market trends.

-The fourth section, sales and marketing strategy, should describe how the company plans to generate sales and grow the business.

-The fifth section, management team, should provide information about the company's management team and its experience.

-The sixth section, financial projections, should provide financial information about the company, such as its revenue, expenses, and profitability.

- The appendix is the last section of the plan and it should include any additional information that would be helpful for understanding the company.

Lean business plans

A Lean business plan or Lean startup business plan is a shorter and simpler version of a traditional business plan. It focuses on the key elements of the company, such as the problem that it solves, the target market, the solution, the business model, and key metrics. This type of business plan is often used by startup companies that want to get a better understanding of their business before they start raising money.

Simple business planning makes writing a plan faster and easier, and helps you get your thoughts down on paper so that you can better understand your business.

To write a lean startup business plan, you'll need to:

-Identify your target market

-Describe your solution

-Explain your business model

-Define your key metrics

-Set your milestones

How should a business plan look?

A good business plan should be:

- Concise: The best business plans are clear, concise, and to the point. They are not overly long or filled with unnecessary fluff.

- Realistic: A good business plan is realistic and achievable. It sets realistic goals and milestones, and it doesn't make promises that can't be kept.

- Flexible: A good business plan is flexible and can be adjusted as the company grows and changes.

- Focused: A good business plan is focused on a specific market or opportunity. It doesn't try to do too much or be all things to all people.

When you're writing a business plan, it's important to keep in mind that the goal is to create a document that will be used to help you run and grow your business. This means that the plan should be clear, concise, and achievable. It should also be flexible so that it can be adjusted as the company grows and changes.

Finally, it should be focused on a specific market or opportunity. By remembering these key points, you can make sure that your business plan is as effective as possible.

How to Write a Solid Business Plan, Step by Step Guide

There are some key steps that all businesses should take when writing a business plan.

1. Define the purpose of the business plan.

2. Research the market and competition.

3. Describe the company and its products or services.

4. Develop a marketing and sales strategy.

5. Create financial projections.

6. Write the executive summary.

7. assemble and organize the plan.

8 Review and revise the plan as needed.

By following these steps, you can be sure that your business plan is comprehensive and well-organized, and that it will effectively communicate your business's goals and objectives.

Challenges you face while writing a detailed business plan

Writing a business plan is not a cup of tea. It includes many tasks like establishing the business’ focus, obtaining funding, and getting new investors. Your business plan is essentially your road map to success. 

It is critical to have a business plan if you are obtaining funds and the difficulty you face depends upon the type of business you have, the size of your business, and the intricacy of your desired result.

It is unique to every business as it tells about:-  

• The current position of your organisation, 
• Overall prospects of your industry(e.g., developing, stagnant or decreasing), 
• How you stand unique among the competitors, 
• What are your predictions for your sales and revenue for the next year, next five years, etc., 
• How will you make your estimation realistic?

For industries like finance, there are additional regulations that have to be included.

The challenges you face while writing a business plan depend upon the type of business you have, the size of your business, and the intricacy of your desired result. However, some key challenges include:

- Getting Started: The most important and difficult part about writing a business plan is getting it started. Until and unless you make a blueprint of how you should strategize it, you will continue messing it up. When you start making a business plan, lock yourself in a room, switch off your phones, and focus.

-  Defining the purpose of the plan:  What is the goal of the business plan? What are you hoping to achieve with it?

- Researching the market and competition: What is the current market landscape? Who are your major competitors?

- Describing the company and its products or services: What does your company do? What are its unique selling points?

- Developing a marketing and sales strategy: How will you generate leads and convert them into customers?

- Writing the executive summary: How do you concisely and effectively communicate the key points of the plan?

- Assembling and organizing the plan: How do you structure the plan so that it is easy to read and understand?

- Reviewing and revising the plan: Is the plan realistic and achievable? Does it need to be updated as the company grows and changes?

- Financial Estimation: It is difficult to estimate the figures on a brand-new concept. There is no roadmap, nobody whom you can follow. Find a similar company and try to measure how they identify their cash flows and make the plan.

- Prove that your business idea is best:  One of the challenging problems in writing a business plan is to prove the investors and lenders that your idea is worth their investments otherwise they won’t take interest in your idea.

- Realistic Business Plans:  You need to be honest about the plans, generally, entrepreneurs’ dream about their business, and when they make a business plan, it challenges their assumptions about the opportunities in their market, its competition, products and growth estimations. That is where they get caught up in defining an executable business plan. Create a strategy that you will actually be working upon not just making castles in the air.

By keeping these challenges in mind, you can ensure that your business plan is as strong as possible.

Is it hard to write a business plan?

The difficulty you face depends upon the type of business you have, the size of your business, and the intricacy of your desired result.

Do I Need a Simple or Detailed Plan?

The type of business plan you need depends on your goals and objectives. If you are seeking funding, you will need a more comprehensive and detailed plan. If you are not seeking funding, a simpler and shorter plan may suffice.

How long does it take to write a business plan?

Again, the answer to this question depends on the type of business you have, the size of your business, and the intricacy of your desired result. A simple plan can be completed in a matter of hours, while a more detailed plan can take days or even weeks to complete. No matter what type of business you have, it is important to take the time to carefully craft a well-thought-out business plan.

Who can make me a business plan?

There are a number of resources available to help you write a business plan. You can hire a professional business plan writer, use a business plan template or software, or even do it yourself.

The 5 toughest things entrepreneurs face when starting a business

1. Coming up with a business idea

2. Researching the market and competition

3. Describing the company and its products or services

4. Developing a marketing and sales strategy

5. Creating financial projections

Are business plans useful?

Business plans can be an invaluable tool for any business, small or large. By taking the time to write a comprehensive and well-organized plan, you can effectively communicate your company's goals and objectives, and make sure that everyone on your team is on the same page.

A business plan can also help you raise money from investors, and keep track of your company's progress over time. Whether you are starting a new business or growing an existing one, a business plan is an essential tool.

By taking the time to research and write a well-thought-out plan, you can increase your chances of success and ensure that your business is on the right track.

8 Tips for Successful Business plan

There are a 8 key pieces that should be included in every successful business plan.

-The company's products or services: Describe the problem that your product or service solves and how it is different from other products or services on the market. Be sure to include information about the features and benefits of your product or service.

-The target market: Describe the people or businesses that you plan to sell your product or service to. Be sure to include information about their needs and how your product or service meets those needs.

-The marketing strategy: Describe how you plan to market your product or service to your target market. Be sure to include information about your sales process, pricing strategy, and promotional activities.

-The management team: Introduce the people who will be responsible for running the day-to-day operations of the business. Be sure to include information about their experience, skills, and education.

-The financial projections: Include detailed financial statements that show how much money you expect to make and spend over the next three years. Be sure to include information about your revenue, expenses, and profits.

-The company's history: Describe the history of the company, including any milestones or accomplishments.

-The risks and challenges: Discuss the risks and challenges that your business faces and how you plan to overcome them.

-The exit strategy: Describe how you plan to exit the business, such as selling it to another company or taking it public.

FAQs on Writing a Business plan

What is the biggest mistake in preparing a business plan.

The biggest mistake is not doing your homework. Make sure you understand your industry, your market, your competition, and your customers before you start writing your business plan.

Do I need a business plan if I'm not seeking funding?

While a business plan is not required if you are not seeking funding, it can still be a valuable tool for any business. A business plan can help you to clarify your goals and objectives, and keep track of your company's progress over time.

Can I use a business plan template?

Yes, there are many business plan templates available online. However, it is important to make sure that the template you choose is appropriate for your industry and business model.

How long should my business plan be?

There is no hard and fast rule for the length of a business plan. However, a good rule of thumb is to keep it as concise as possible. Your goal should be to communicate your company's key points in a clear and concise manner.

What makes a bad business plan?

A bad business plan is one that is either too long or too short, and does not effectively communicate your company's key points. It should also be free of grammar and spelling errors, and should be clear and easy to read.

How can I make my business plan stand out?

One way to make your business plan stand out is to include a cover letter that briefly introduces your company and its products or services. You should also make sure to proofread your business plan carefully, and have someone else read it as well before you submit it.

Why do some business plans fail?

There are many reasons why business plans fail. Sometimes, the company does not do enough research on the market or the competition. Other times, the plan is not well-written or organized. And sometimes, the company simply does not have a viable business model.

You should update your business plan as your company grows and changes. As your business evolves, so too should your business plan. Review and update your plan at least once a year, or more often if needed.

What are the biggest challenges in scaling a business?

The biggest challenges in scaling a business include finding new customers, expanding into new markets, and hiring new employees. As your company grows, you will need to find ways to reach new customers and continue to provide excellent customer service. Additionally, you will need to expand your operations to meet the demands of your growing business. Finally, you will need to hire new employees to support your company's growth.

A business plan is a road map to success and is critical for obtaining funding. A well-written, proofread business plan will make your company more likely to succeed. The biggest challenges in scaling a business include finding new customers, expanding into new markets, and hiring new employees.

With careful planning and execution, you can overcome these challenges and successfully scale your business. By following these tips, you can ensure that your company is well-positioned for growth. By following these tips, you can write a comprehensive and well-organized business plan that will help you achieve your desired results. With a little time and effort, you can put your company on the path to success.

By  The Thrive

0  comments

This was a fun article to read, I hope you enjoyed it.

Subscribe to the Newsletter! Get the latest Business Articles delivered straight to your inbox

You may also like

Why 2023 Can Be A Difficult Year For Indian Start-ups: Things To Remember

How JioCinema is Killing OTT’s existing business model

• Person Of The Week
• Transportation
• Real Estate
• Artificial Intelligence
• Renewable Energy
• The Green Podcast
• The Ocean Optimism Podcast
• Mountain Conversations
• Documentaries
• About Green.Org
• Contact Green.Org

The Future of Sustainable Business: Trends, Challenges, and Opportunities

As the global community grapples with the impacts of climate change, resource depletion, and social inequities, the future of business lies in embracing sustainability. The shift toward sustainable business models is no longer just a niche pursuit or a trend; it’s becoming a competitive necessity. Companies that fail to adapt may risk falling behind in the rapidly evolving marketplace, while those that lead in sustainability are finding new opportunities for growth, innovation, and impact.

• 1 1. Sustainability as a Core Business Strategy
• 2 2. The Role of Technology and Innovation
• 3 3. Consumer Demand for Sustainability
• 4 4. Regulatory and Policy Pressure
• 5 5. Challenges in the Transition to Sustainability
• 6 6. Opportunities for Leadership and Innovation
• 7 7. Collaboration is Key
• 8 The Future of Sustainable Business
• 9 Share this:
• 10 Like this:

1. Sustainability as a Core Business Strategy

For many companies, sustainability has moved beyond corporate social responsibility (CSR) initiatives and into the core of their business strategy. Today, more firms are integrating environmental, social, and governance (ESG) factors into decision-making processes, recognizing that sustainability is essential for long-term profitability and risk management.

Leading businesses are increasingly setting ambitious goals around carbon neutrality, circular economy models, and sustainable sourcing. Major corporations like Microsoft and Unilever have committed to achieving net-zero emissions and reducing waste, driving industry-wide transformations.

2. The Role of Technology and Innovation

Technological advancements are key drivers in the future of sustainable business. Breakthroughs in renewable energy, electric vehicles, carbon capture, and energy storage are revolutionizing how businesses operate. Companies are also leveraging artificial intelligence (AI), blockchain, and data analytics to improve supply chain transparency, reduce inefficiencies, and monitor their environmental impacts.

Innovation isn’t just limited to products and services; new business models are emerging as well. The sharing economy, circular economy, and pay-per-use models allow companies to reduce resource consumption while offering customers more sustainable alternatives. For example, companies like Patagonia and IKEA are promoting product reuse and recycling, creating closed-loop systems that extend product lifecycles and minimize waste.

3. Consumer Demand for Sustainability

Today’s consumers are more eco-conscious than ever, and their purchasing decisions reflect their values. Studies consistently show that consumers prefer brands that prioritize sustainability, transparency, and ethical practices. This shift in consumer expectations is pushing companies to adopt more sustainable practices and communicate their environmental and social impacts clearly.

Brands that lead in sustainability are not only capturing consumer loyalty but also attracting investment. ESG investing is on the rise, with investors increasingly looking for companies that align with sustainability principles. This trend is creating a powerful financial incentive for businesses to prioritize sustainability and build long-term value.

4. Regulatory and Policy Pressure

Governments and regulatory bodies are playing a crucial role in shaping the future of sustainable business. From the European Union’s Green Deal to the Paris Agreement, international and national policies are pushing companies to adopt greener practices and reduce carbon emissions.

In many regions, regulatory frameworks are becoming more stringent, requiring businesses to disclose their ESG performance, adopt clean energy solutions, and meet specific emissions targets. Failure to comply can result in fines, reputational damage, and loss of market access. On the other hand, businesses that proactively align with these regulations are well-positioned to lead in the new economy.

5. Challenges in the Transition to Sustainability

Despite the growing momentum, transitioning to sustainable business models is not without its challenges. For many companies, especially small and medium enterprises (SMEs), the upfront costs of sustainability initiatives can be prohibitive. Investments in clean technology, supply chain restructuring, and sustainable materials may require significant capital and resources.

Additionally, the complexity of global supply chains makes it difficult to ensure sustainable sourcing and traceability. Many industries are still grappling with how to transition to low-carbon models without disrupting their operations or facing increased costs.

6. Opportunities for Leadership and Innovation

The future of sustainable business presents unprecedented opportunities for those willing to innovate. Businesses that adopt a forward-thinking approach, focus on reducing their environmental footprint, and invest in sustainable technologies can create lasting competitive advantages. By aligning business goals with sustainability targets, companies can drive positive change while tapping into new markets and customer bases.

Moreover, sustainability offers businesses a chance to redefine their purpose. Companies that show genuine commitment to solving the world’s most pressing challenges—such as climate change, inequality, and biodiversity loss—can enhance their brand reputation, build stronger customer relationships, and foster loyalty among employees.

7. Collaboration is Key

No business can tackle sustainability alone. Collaboration between governments, businesses, NGOs, and consumers is essential to drive systemic change. Cross-industry partnerships and collaborations can help accelerate the development and deployment of sustainable technologies, improve resource efficiency, and scale impact.

For example, initiatives like the Science-Based Targets initiative (SBTi) and the Race to Zero campaign bring together companies, cities, and financial institutions to commit to reducing their greenhouse gas emissions and transitioning to a net-zero economy.

The Future of Sustainable Business

The future of business is sustainable. Companies that embrace sustainability as a core component of their operations, leverage technology and innovation, and collaborate across sectors will be well-positioned to lead in a rapidly changing world. As consumer preferences, regulations, and technological advancements converge, sustainability will continue to drive new opportunities, reshape industries, and define the next era of business leadership. Those who act now will not only safeguard the future of their businesses but also contribute to a more resilient and sustainable global economy.

Dylan Welch is the CEO and Host of Going Green, a podcast, website, and social media brand that highlights renewable energy, cleantech, and sustainable news.

Share this:

Related posts, maximizing twitter impressions: 3 tips for going viral, 15 sustainable business ideas you can start, 10 ways to make your business more sustainable, leave a reply cancel reply.

Type above and press Enter to search. Press Esc to cancel.

Discover more from Green.org

Subscribe now to keep reading and get access to the full archive.

Continue reading

The global body for professional accountants

• Search jobs
• Find an accountant
• Technical activities
• Help & support

Can't find your location/region listed? Please visit our global website instead

• Middle East
• Cayman Islands
• Trinidad & Tobago
• Virgin Islands (British)
• United Kingdom
• Czech Republic
• United Arab Emirates
• Saudi Arabia
• State of Palestine
• Syrian Arab Republic
• South Africa
• Africa (other)
• Hong Kong SAR of China
• New Zealand
• Our qualifications
• Getting started
• Your career
• Sign-up to our industry newsletter
• Apply to become an ACCA student
• Why choose to study ACCA?
• ACCA accountancy qualifications
• Getting started with ACCA
• ACCA Learning
• Register your interest in ACCA
• Learn why you should hire ACCA members
• Why train your staff with ACCA?
• Recruit finance staff
• Train and develop finance talent
• Approved Employer programme
• Employer support
• Resources to help your organisation stay one step ahead
• Support for Approved Learning Partners
• Becoming an ACCA Approved Learning Partner
• Tutor support
• ACCA Study Hub for learning providers
• Computer-Based Exam (CBE) centres
• ACCA Content Partners
• Registered Learning Partner
• Exemption accreditation
• University partnerships
• Find tuition
• Virtual classroom support for learning partners
• Find CPD resources
• Your membership
• Member networks
• AB magazine
• Sectors and industries
• Regulation and standards
• Advocacy and mentoring
• Council, elections and AGM
• Tuition and study options
• Study support resources
• Practical experience
• Our ethics modules
• Student Accountant
• Regulation and standards for students
• Your 2024 subscription
• Completing your EPSM
• Completing your PER
• Apply for membership
• Skills webinars
• Finding a great supervisor
• Choosing the right objectives for you
• Regularly recording your PER
• The next phase of your journey
• Your future once qualified
• Mentoring and networks
• Advance e-magazine
• Affiliate video support
• About policy and insights at ACCA
• Meet the team
• Global economics
• Professional accountants - the future

Supporting the global profession

• Download the insights app

Can't find your location listed? Please visit our global website instead

Policy and insights report

11 January 2024

SMEs: Business challenges and strategic innovation opportunities

• Policy and insights

New research from ACCA highlights the pressing challenges and strategic innovation opportunities for small and medium-sized enterprises

ACCA's latest report, SMEs: Business challenges and strategic innovation opportunities , highlights three main challenges facing small and medium-sized enterprises (SMEs): escalating costs (the top concern for 58% of SMEs), workforce and talent management, and the evolving ESG (environmental, social and governance) reporting agenda.

The report emphasises the importance of innovation and strategic planning in overcoming these challenges. It highlights the role of small and medium-sized accountancy practices (SMPs) as vital supporters in this transformative journey, helping SMEs to navigate financial resilience, technological advancements and sustainable practices.

This comprehensive study provides a detailed analysis of the current landscape, offering insights and strategies for SMEs and SMPs to thrive in a rapidly evolving business environment.

Further reading

Space to grow: new models of business support

Responsible SMP pacesetters

How SMEs can create a more sustainable world

The passionate practitioner: developing the digitalised small and medium practice

Careers in small and medium sized accountancy practices (SMPs)

Global talent trends 2023

"In these testing times, SMEs must pivot towards innovative strategies to navigate the complexities of cost pressures, talent retention, and sustainable practices. Our research not only identifies the critical hurdles, but also offers a roadmap for SMEs to emerge stronger and more agile" Aleksandra Zaronina-Kirillova, head of SME professional insights, ACCA

Related downloads

• Download PDF3.35MB SMEs: Business challenges and strategic innovation opportunities
• ACCA Careers
• ACCA Career Navigator
• ACCA-X online courses

Useful links

• Make a payment
• ACCA Rulebook
• Work for us
• Supporting Ukraine

Using this site

• Accessibility
• Legal & copyright
• Advertising

Send us a message

Planned system updates

View our maintenance windows

16 Signs Of A Good Business Opportunity

• Share to Facebook
• Share to Twitter
• Share to Linkedin

What sets entrepreneurs apart from other professions is their ability to spot business ideas. Even in seemingly crowded and oversaturated markets, skilled entrepreneurs can identify missed opportunities and create offerings that cater to unmet consumer needs.

While this ability comes naturally to some people, learning how to recognize ideas that have potential from duds is a skill that can be sharpened over time.

As experts, the members of Forbes Business Council have honed their ability to spot good business opportunities. Below, 16 of them share advice on “green flags” to watch for and how watching these key signs can ensure an entrepreneur finds success in their future venture.

1. An Unmet Market Gap

A top indicator of a strong business opportunity is identifying a genuine market gap or an unmet need where consumers are already improvising their own solutions. When you see potential customers struggling or expressing dissatisfaction with existing options, it signals a strong demand and a readiness to pay for a superior alternative. This is a key sign that the market is ripe for innovation. - Diogo Capela , Lamares, Capela e Associados

2. Deeply Rooted Ways Of Doing Things

Statements such as, “It has always been done that way” is a large "green flag" that there are exceptional opportunities. When a large problem is ignored, the majority of the world stops thinking about solutions, giving you the field. The longer this problem is ignored, the greater the lore that the problem is unsolvable, even when solution-enabling technologies have likely become available. - Thomas Farb-Horch , Thrive Bioscience, Inc.

3. A Subtle Societal Shift Or Change

An entrepreneur can spot a good business opportunity by identifying an overlooked or undervalued societal shift. Often, the most lucrative ventures emerge from subtle changes in human behavior, technology or culture. By keenly observing these shifts and recognizing their potential impact, entrepreneurs can identify opportunities to create products or services that address those emerging needs. - Anand Subbaraj , Zuper

4. An Inefficient Industry

Embrace a contrarian mindset to look for undervalued, out-of-favor and niche opportunities in inefficient industries. Find a location to quickly build economies of scale and gain a measurable competitive edge in smaller markets. For example, I have identified the potential of luxury RV resorts in southern Mississippi and Alabama. By the end of the year, I will own and operate over 1,500 pads. - Ben Spiegel , Redwood Capital Advisors, LLC

5. Strong Demand And Little Competition

An entrepreneur can spot a good business opportunity by seeing a gap in the market where there is a high demand. A key "green flag" to look for is strong demand and minimal competition. This is a good indication your business can thrive and grow without immediate saturation. - Barbara Schreihans , Your Tax Coach LLC

6. Subpar Existing Solutions

A good sign of a business opportunity is when you see a real problem people are trying to solve but existing solutions aren't cutting it. If your idea offers a better way to fix that problem, you're likely onto something valuable. - Ryan Hutchins , Peak Business Valuation LLC

Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?

7. A Clear Path To Commercialization

Spotting a good business opportunity involves identifying a market gap and understanding the problem it solves. One "green flag" is a clear path from gap identification to commercialization. The key is envisioning how filling this gap addresses a need and can be commercialized. Focus on turning the solution into a viable product or service, making it visible to customers. - Gandhi Perla , Fusion5store.com

8. Consistent Customer Feedback Or Demand

In my experience, an entrepreneur can spot a good business opportunity by identifying a clear market gap or unmet need. One "green flag" to look for is consistent customer feedback or demand indicating a strong desire for a solution that isn’t currently available. This shows there is a real problem to solve and a potential market ready for the product or service. - Shehar Yar , Software House

9. A Good CAC-To-LTV Ratio

One “green flag” to look for is if the customer acquisition cost to lifetime value ratio is above 3.5 and has a payback period of 15, 30 or 60 days. This shows that the business can enable faster reinvestment, less risk and better cash flow. These quick-return opportunities can support sustainable growth, which in turn signals a good business opportunity. - Shivangi Khurania , Udeso

10. Emotional Drive

Emotional drive is a sign that indicates genuine demand and potential for meaningful impact. For instance, PissedConsumer was inspired by an unpleasant vacation. The emotions I felt gave me an opportunity to grow on a personal level and a way to support others. Passion can fuel innovation and help build a strong connection with an audience, turning personal challenges into valuable business opportunities. - Michael Podolsky , PissedConsumer.com

11. Few Or No Existing Solutions

One way an entrepreneur can spot a good business opportunity is by identifying a clear market gap in a problem that many people face but that no one else is adequately solving. A strong "green flag" is when potential customers express a real need or frustration but there are few or no existing solutions. This indicates a demand that you can fulfill, often leading to a successful venture. - Mohammad Bahareth , Mohammad Bahareth Consultation & Research Office

12. The Potential For Recurring Income

A “green flag” for a good business opportunity is one where there is potential for recurring monthly income. This will keep the business healthy and not dependent on making sales all the time. - Allen Kopelman , Nationwide Payment Systems Inc.

13. A Solid Team And Culture

A good business opportunity goes beyond just exceptional product/market fit, annual recurring revenue and EBITDA; it’s about the people. Is the business irresistible to the best talent in your industry? Do its values align with how it treats its customers and colleagues? An organization rooted in meaningful culture will open the door for entrepreneurial opportunities. - Tim Brackney , Springline Advisory

14. An Emerging Trend

Spot the trends that have yet to reach the mainstream. Look for emerging technologies, shifting consumer behaviors or underserved niche markets that have the potential to explode. Early adoption of these trends can position your startup as a leader and innovator in a rapidly growing space. - Elie Y. Katz , National Retail Solutions (NRS)

15. A Scalable Solution

Good opportunities emerge where societal needs intersect with the potential for positive change. Look for scalable solutions that address growing trends and create value beyond profits. Seek areas to innovate at the intersection of multiple needs, such as sustainability and technology. The most promising ventures balance social impact with economic viability. - Alessandro Lombardi , Elea Data Centers

16. High Potential For A Big Impact

There's an unmet need, of course, but I think the x-factor is impact or the ripple effect that a cool new product or service will create. Sometimes the need isn't fully clear, but the power of the idea is. If there is potential for profound, positive change, then it could be an opportunity worth exploring, even if the immediate need isn't fully apparent. - Suzanne Lerner , Michael Stars

• Editorial Standards
• Reprints & Permissions

The evolving role of experiences in travel

The Evolving Role of Experiences in Travel

Since the dawn of leisure travel, people have journeyed in search of new experiences. They long to meet friendly locals, eat new foods, stroll through unfamiliar landscapes, and witness (or maybe even join) cultural traditions that remind them that they’ve left home.

More and more, experiences have become powerful decision drivers for travelers: the possibility of a life-changing travel moment motivates people to book a trip. The quest for the right type of moment even influences which destinations people will choose. But despite the enduring excitement about experiences and the large pool of value they represent, the travel industry has yet to crack the code on an approach that can simultaneously please travelers, make sense for experience providers, and produce profit at scale for distributors and larger stakeholders.

Today’s travelers often find the breadth of available experiences overwhelming, and they crave easy-to-navigate platforms that can sort through experiences and offer seamless, real-time booking anywhere in the world. Experience providers (often small, passionate outfits, sometimes run by a single tour guide) want to create broad awareness of their offerings. But operators can become frustrated when a booking platform’s thumbnail descriptions fail to capture the appeal of a quirky activity—or when an intermediating player fumbles customer relations. Distribution platforms want to become comprehensive sites for one-stop experience shopping but face challenges as they try to scale profitably while cobbling together a fragmented array of experiential offerings. Meanwhile, legacy travel institutions, such as airlines and hotel chains, are still searching for ideal ways to fit magical travel moments into the machinery of complex corporate enterprises.

The global marketplace for travel experiences offers a more than $1 trillion opportunity. Younger generations, in particular, demonstrate an eagerness to splurge on experiences, suggesting the sector will continue to expand. Yet nearly half of the business of experiences is still transacted offline. As experience booking goes digital, a considerable share could be claimed by organizations that can anticipate and eliminate pain points at every stage of the process, up and down the value chain.

How can operators quench travelers’ thirst for magical experiences while finding new customer streams from around the world? How can distribution platforms simplify and scale the discovery and booking process while creating an attractive proposition for operators? How can airlines and hotels learn from the awe and wonder that a terrific tour guide can conjure, becoming distributors for experiences and also injecting the essence of that magic into their core businesses?

A new report, The evolving role of experiences in travel , produced by McKinsey and Skift, examines the world of travel experiences 1 In this research, we defined “travel experiences” as activities, attractions, and tours, excluding multiday tours, available to visitors at a destination. —ranging from stadium rock concerts to guided nature hikes to in-home culinary gatherings and everything in between. The report offers an assessment of the experience industry as it stands today, presents ideas that could help address current dissatisfactions, and looks at opportunities for various players to capitalize on growing interest.

Desire for experiences is reshaping travel demand

Once upon a time, travelers might have picked a destination first and only later started choosing what to do upon arrival. But today’s travelers don’t treat experiences as afterthoughts. Their travel decisions are increasingly based on specific activity interests. This can invert the trip-planning funnel, placing experiences at the top and destination choices further down the cone.

A recent McKinsey survey asked about the factors most important to travelers when selecting a destination . 2 “ The way we travel now ,” McKinsey, May 29, 2024. Survey respondents cited the range and quality of local activities on offer at a rate that trailed only the rates of their citations of essential needs, such as safety, navigability, cost, and accommodation range and quality (Exhibit 1). Respondents were nearly as likely to cite, as a decision factor, the ability to experience authentic local customs and culture.

Interest in experiences is unlikely to dissipate soon, as evidenced by the preferences of younger travelers. According to McKinsey survey data, 52 percent of Gen Zers say they splurge on experiences , compared with only 29 percent of baby boomers. 3 “ The way we travel now ,” McKinsey, May 29, 2024. And Gen Z travelers say they try to save money on flights, local transportation, shopping, and food before trimming their spending on experiences.

Travel experiences could compose a market worth more than $1 trillion

The travel experience market is large and, by some estimates, rapidly growing. To size it, we began by examining the value represented by the entirety of the world’s tours, attractions, and activities. Our analysis indicates that this global market could be more than $3 trillion.

Many local residents participate in the experiences offered at a given destination. But per our research, destination visitors—both domestic and international—account for roughly 30 percent of the experience market, spending about $1.1 trillion to $1.3 trillion on experiences. This is how we defined the total addressable market for travel experiences.

Next, we quantified the serviceable available market by assessing the proportion of travel experiences that are in some way structured (for example, a professionally guided tour or a live ticketed event) versus those that are independently undertaken (for example, a tourist strolling up to an art museum’s ticket window and then perusing its galleries). The segment involving paid, structured activities represents a large part of the market that’s in play for experience providers (such as tour operators), intermediaries (such as online-booking platforms), and stakeholders from other parts of the travel industry (such as hotels and airlines).

We estimate that paid, structured tourist activities account for roughly 25 percent of global experience spending, totaling about $250 billion to $310 billion per year (Exhibit 2). This number comprises tourist spending on rock concerts, baseball games, history walks, nature hikes, theme park visits, spa treatments, museum tours, and a host of other activities. And it continues to expand: experts estimate growth in this segment of more than 14 percent per year by 2025. 4 “TUI Musement special—part of FY22 results,” TUI, December 14, 2022.

There’s an emerging recipe for creating magical experiences

A top-notch experience can be the cornerstone of a trip, lingering in a traveler’s memory for years to come. In our conversations with 19 experience providers, several crucial components for creating great experiences became apparent:

• Entertainment comes first. Experience operators observe that, no matter the type of experience, what travelers want above all is to have a good time and be entertained.
• Well-trained guides set the tone. Because creating a magical, guided experience depends so much on the guide, experience operators focus on molding high-quality frontline employees.
• Authenticity and local engagement matter. Visitors appreciate thoughtfully crafted itineraries that bring a specific locale to life.
• Expectations should be managed—and then exceeded. Overcommunicating and overdelivering are crucial.
• Guests need to feel they’re in sure, safe hands. Travelers like to feel that a tour guide is in control every step of the way.

Booking platforms might consider these components when deciding which experiences to give prominent visibility. Larger travel players, such as hotel chains and airlines, might also keep these ingredients in mind—both when thinking about add-on experiences to offer through their own platforms and when exploring how to scale magical experiences across a chain of hotel lobbies or a schedule of transoceanic flights.

Finding and booking experiences remains a frustrating process—offering opportunities for improvement

Many travelers enjoy the process of planning a vacation. They have fun searching for the individual elements that will add up to a perfect trip. But the discovery and booking process for travel experiences can be alternately thorny and exhausting. It can present travelers with an overwhelming menu of options but doesn’t always surface the best ones. It sometimes fails to accurately describe an activity, which can create expectation mismatches.

Meanwhile, the experience industry’s move to digital is still in progress. According to 2023 data, 47 percent of experience booking still happens offline—either via walk-ups or telephone calls or through offline conduits, such as hotel concierges and traditional travel agents. 5 Euromonitor, accessed July 2024. Only 22 percent of booking occurs through online intermediaries, such as booking platforms.

Many experience providers have faced difficulties as they shift their booking operations toward online distribution platforms. And for the platforms, scaling while maintaining or expanding margins has been a challenge.

Travelers aren’t always getting what they want or need from online booking

Booking platforms that offer experiences sometimes serve up a large database presented as a list, which might not have been carefully curated. These lists can be overwhelming for a customer who isn’t sure what to look for. And they might fail to surface hidden gems. What’s more, the tours and activities that appear on platforms aren’t always especially well vetted. They might not meet travelers’ expectations for quality or value—or might not align with the thumbnail descriptions travelers see on the platforms.

There’s an opportunity here to create a discovery and booking process that features more fun and fewer hiccups. Travelers could benefit from simplified and more enjoyable discovery systems (including ones linked with social media), a streamlined booking process in which platforms become seamless (or even invisible), and a detangled customer service approach (in which it’s always clear who to contact, even on short notice).

Experience operators can benefit from the transition to digital—but may also encounter challenges

Of the 19 operators we interviewed in June 2024, 78 percent already receive at least half of their bookings through platforms. Platforms can help attract online eyeballs and raise product awareness in ways an experience provider couldn’t on its own. One reason is that platforms tend to perform better in search engine results than an individual operator’s website does on its own—in part, because platforms can afford to pay more for local language translation, search engine optimization, and search keyword marketing than a typical experience operator could.

Despite all the advantages that online platforming can offer operators, it also presents some structural challenges. For instance, the variety of experience offerings—ranging from strenuous outdoor adventures to quiet cooking classes and from giant group tours to intimate gatherings—is difficult to fit into the one-size-fits-all listing approach that platforms sometimes take. Unlike, for example, air travel, where the ticket offerings tend to be fundamentally similar and easily compared, distinctively crafted activities and tours can often benefit more from a bespoke framing of offers.

The intermediary role of the booking platform can also create frustration for experience providers. When service issues arise or customers wish to cancel or reschedule a booking, execution isn’t always smooth. For instance, the customer might attempt to interact with the platform when it would be more effective to interact directly with the operator. The operator might become aware too late of a service issue or booking change request—or might not become aware at all.

Online booking platforms are hoping to scale a fragmented industry

Online-booking platforms enjoy natural advantages when it comes to selling experiences to travelers. Because the experience space is so fragmented—full of countless smaller operators—travelers look to save time and effort by turning to a platform that can aggregate and sort through an overwhelming number of options. Platforms can also lower payment and communication hurdles for a traveler, particularly when experience operators speak foreign languages or transact in foreign currencies.

Many booking platforms have thus far focused on prioritizing top-line growth instead of maximizing profitability. Building a large platform can incur significant expenses related to both acquiring a large supply of inventory and ensuring that the platform’s tools and algorithms can handle it. A central question for platforms will be how effectively they’ll be able to expand revenue while also growing margins.

Other players are seeking profitable ways to get involved with experiences

Experiences are gaining enough traction in the travel ecosystem that other players are now eyeing the market. The margins for sales of experiences can be high: operators told us they typically achieve up to 60 percent margins, even after deducting a booking platform’s commission (with labor constituting the bulk of the operator’s cost). That can make this an appealing space for businesses to enter.

Which strategies might help stakeholders find success in the experience marketplace?

The evolving role of experiences in travel could create favorable circumstances for stakeholders across the value chain. Industry players in various sectors should consider how best to capitalize on emerging opportunities.

Experience operators should generate the magic that will enable industry growth

For experience providers, it begins with delivering the distinctive, authentic moments that travelers crave. Once this crucial prerequisite is met, other success factors can be considered:

• Meeting consumer demand. This requires monitoring changing trends, catering to evolving traveler tastes, and making guests feel they’re in safe hands from start to finish.
• Savvy marketing. Using the right words and images can communicate an experience’s value proposition.
• Discovery systems. For experiences, discovery systems are still in flux, so it’s important to find customers where they are—including on social media.
• Booking strategy. Different operators can benefit from different booking strategies. It’s important for operators to consider how their needs could evolve over time when evaluating the trade-offs that come with various booking approaches.

Booking platforms could profit from making sense of a large and growing market

Distributors might find themselves in a sweet spot, as demand for travel experiences grows and the corresponding rise in supply creates an ever-more-confusing marketplace. Platforms might consider how to effectively gather, intelligently curate, artfully display, and smoothly broker the sale of experiences in ways that will appeal to overwhelmed travelers who want one-stop activity shopping:

• Building supply might involve building relationships with operators. Experience providers want to list on platforms that offer visibility and value.
• Curation can make a traveler’s discovery phase relatively easy and fun. Most travelers don’t have the time, ability, or desire to conduct a long, difficult search for a hard-to-find experience.
• A seamless booking process is likely to draw customers in and keep them coming back. Customers shouldn’t need to wade through multiple pages and filtering tools to find what they’re looking for.
• Platforms might advise—or even become—experience providers. Booking platforms have a high-level vantage point and an ability to access large amounts of data, so they are in a good position to spot unmet demand in the marketplace and help generate supply that’s likely to be appealing to travelers.

As demand for experiences grows, travel industry players could look for new ways to get involved

Stakeholders across all travel sectors could benefit from viewing their roles through the lens of serving up memorable, positive experiences to travelers. This might involve reframing services a company already provides, or it might mean looking for new opportunities to integrate experiences into a traveler’s journey:

• Hotel stays. Hotels might use experiences as incentives for travelers to book stays. Strong brand recognition and existing digital infrastructure can help hotel chains act as distribution channels for experiences. There might also be an opportunity to improve on-premises experiences that a hotel more closely controls—for instance, at the hotel’s spa or through a pop-up event in the hotel’s lobby.
• Short-term rentals. Short-term-rental platforms might offer experiences alongside accommodation bookings. Given that many short-term-rental bookings already happen online, it might make sense for short-term-rental platforms to claim a share of experience booking. These platforms have established online relationships with many customers, and they have already integrated online payments and scheduling into their operations.
• Flight packages. Many airlines already generate significant revenue from package holidays, which could be supplemented with add-on experiences. Airlines might take advantage of customer data and contexts to surface attractive experience options at the time of flight booking, which tends to happen early in the trip-planning process.
• Reframed core products. Travel stakeholders can view their core products through the lens of experiences. Hotels might consider how to turn lobbies into experiential opportunities. Airlines might examine what travelers want from experiences and then apply the insights to create in-flight presentations and improve cabin atmospheres. Spaces might be revamped in ways that make them social media worthy.

Destinations could offer support for the experience ecosystem

Visitor bureaus and destination management organizations have roles to play in helping meet traveler demand for great experiences. The distinctive capabilities and resources of these groups could aid them in shaping the experience landscape.

Magical experiences are what leisure travel is all about. They bring people joy. They shape people’s identities. They can be the chapters of people’s lives that they’re most eager to tell the world about.

The business of travel experiences is quickly growing and evolving. Today’s marketplace could be at an inflection point, poised to transform in ways that will better connect travelers, providers, platforms, and other players. The travel industry should look for opportunities to collaborate and innovate to improve the commercial elements of travel experiences while never losing sight of the essential magic that turns a travel experience into a life-changing event.

Download the full report: The evolving role of experiences in travel

Jules Seeley is a senior partner in McKinsey’s Boston office, Ryan Mann is a partner in the Chicago office, Vik Krishnan is a senior partner in the Bay Area office, and Alex Gersovitz is an associate partner in the Southern California office.

The authors wish to thank Alessandra Powell, Carol Flaksberg, Cedric Tsai, Lily Miller, Nadya Snezhkova, Nick Meronyk, and Sharon Yao of McKinsey, as well as Pranavi Agarwal, Robin Gilbert-Jones, Seth Borko, and Varsha Arora of Skift, for their contributions to this article.

This article was edited by Seth Stevenson, a senior editor in the New York office.

Explore a career with us

Related articles.

The way we travel now

Now boarding: Faces, places, and trends shaping tourism in 2024

The promise of travel in the age of AI

Beauty queen Danielle Hazel challenges pageant rules disqualifying mothers

The 25-year-old said eligibility criteria for the Miss America and Miss World competitions exclude mothers from "employment or business opportunities" because they are parents.

Tuesday 17 September 2024 06:45, UK

A budding beauty queen is challenging the rules of the Miss America and Miss World pageants that she claims disqualify mothers from competing. 

Danielle Hazel, 25, always dreamed of entering the competitions but was devastated after learning she is no longer eligible because of her six-year-old son Zion, who she had at 19.

She has now filed a complaint to the New York Commission on Human Rights in a bid to get rid of the requirements on the grounds that the rule denies and excludes mothers from an "important business and cultural opportunity" simply because of their status as parents.

Announcing the complaint at the city's Women's Rights Pioneers Monument in Central Park, Ms Hazel was joined by esteemed feminist lawyer Gloria Allred.

"As we stated in Danielle's filed complaint, this exclusion is degrading to Danielle as it is based upon the antiquated stereotype that women cannot be both a mother and be beautiful, poised, passionate, talented and philanthropic," Ms Allred - who has been involved in high-profile cases such as the OJ Simpson trial - said.

"Being pregnant or being a parent is not a crime and should not exclude an individual from employment or business opportunities.

"An individual's status as a parent should not carry a stigma and no person should have to feel embarrassed, humiliated, or degraded because they have become a parent."

Ms Hazel added that when she told her son about the rule he said they were "stupid".

"His sense of fairness at only six years old tells him that this is unjust and makes no sense," the young mother said.

Joining the pair on Monday was Veronika Didusenko, who was crowned Miss Ukraine in 2018 only to have the title stripped when the Miss World organisation learned that she had a child.

Who is Gloria Allred?

Gloria Allred is an American lawyer known for taking on high-profile and often controversial cases.

She is a founding partner of the law firm Allred, Maroko & Goldberg (AM&G) - which handles more women's rights cases than any other private firm in the US.

Throughout her 40-year plus career, Ms Allred has represented clients in lawsuits against celebrities including Motley Crue drummer Tommy Lee, Sacha Baron Cohen, R Kelly and Bill Cosby.

She also represented the family of Nicole Brown Simpson during the OJ Simpson murder trial in the 1990s.

In 2018 a Netflix documentary focusing on Ms Allred's career premiered at the Sundance Film Festival.

Ms Didusenko, who has since advocated for an end to beauty pageant bans on mothers, said she lost her legal challenge in Ukraine but is seeking relief from the European Court of Human Rights.

Stuart Moskovitz, a lawyer for the Miss America pageant, told the New York Post that there was no ban on mothers "only on those with legal custodianship of their children".

The pageants website states that all those applying for the contest must: Be a US citizen, be a female, be single, have no legal dependents and meet residency requirements for competing in a certain city or state.

Read more: Former Miss Switzerland finalist Kristina Joksimovic 'pureed' in blender Ukraine-born Miss Japan winner hands back crown over affair with married man

Keep up with all the latest news from the UK and around the world by following Sky News

"The only ban is where it's necessary to protect the welfare of the child," Mr Moskovitz said, claiming that Miss America works "365 days a year" and is busier than the President of the United States, according to the Post.

He reportedly said "even if there is shared custody that child is jeopardised", if mothers were to compete.

Representatives for the Miss World pageant did not respond to comment from the Associated Press.