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10 Free Cost-Benefit Analysis Templates

Praburam Srinivasan

Growth Marketing Manager

May 14, 2024

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The revolutionary idea of cost-benefit analysis broadened the understanding of ‘profit’ for businesses.

Rather than focusing purely on the net expected costs and the monetary value of benefits, it offered a multi-dimensional understanding of perceived value.

This brought to light scenarios where the benefits outweigh costs due to intangible benefits or gains like social good, brand building, etc.

Even though the concept dates back to the late 1840s, this comprehensive economic impact analysis continues to clarify whether a decision or action is worth pursuing.

Modern-day cost-benefit analysis processes have evolved to gain more structure while methodically comparing the costs incurred and the anticipated benefits for a decision or action item.

We take a look at some cost-benefit analysis templates that embody this quality.

What are Cost-Benefit Analysis Templates?

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• Translate Every Cost into Benefit With ClickUp

A cost-benefit analysis template is a structured document or spreadsheet for businesses or individuals to assess the cost and benefits of a project, expense decision, or investment. Think of it as a preconfigured tool to systematically evaluate whether the benefits of a proposed action or decision justify the associated costs. 

When to Use a Cost-Benefit Analysis Template?

Knowing the right timing to use a cost-benefit analysis template can be crucial for making informed decisions for your business. Here are some scenarios when deploying these templates may be highly beneficial:

• Project Initiation : Before kick-starting a new project or venture, a cost benefit analysis template could provide essential insights into potential costs and benefits – guiding your decision-making process.
• Budgeting and Forecasting: In planning phases, these templates can be incredibly useful in estimating costs and projecting potential revenues, aiding in the creation of accurate budgets and forecasts.
• Making Investment Decisions: If you’re contemplating a significant capital investment in your business – like buying new equipment or machinery – a CBA template facilitates comparing pros and cons of the investment.
• Resource Allocation : When you need to distribute resources among different projects or departments, cost-benefit analysis can be instrumental in making rational and value-driven allocation decisions.
• Risk Management : If your business is facing a risky decision, using a cost-benefit analysis template can help you weigh potential costs against the benefits, assisting in creating a comprehensive risk management plan.

10 Cost-Benefit Analysis Templates to Use in 2024

Now that you have a basic understanding of a cost-benefit analysis template and its underlying components let’s dive into a few templates that can power effective project management:

The ClickUp Cost-Benefit Analysis Template is a highly versatile tool designed to assist financial analysts in evaluating the financial implications of key business decisions. Use this simple cost-benefit analysis template to reach strategic decisions, like whether to launch a product or invest in project management tools and how they will benefit your business. 

Some key features of the ClickUp cost-benefit analysis template include:

• Track the progress of every step in the analysis meticulously with custom statuses like ‘Open’ or ‘Complete’   for transparency and clarity 
• Leverage custom fields to categorize and add attributes to various tasks, enhancing the structured approach to cost-benefit analyses
• Use custom views as a function of the Cost or Benefit to gain perspective into various focus areas while offering flexibility to switch between the two for a holistic understanding

In addition to the above features, the template supports collaborative working, integration with AI and automation, and continuous monitoring and analysis to improve decision-making .

The ClickUp Cost Analysis Template is necessary to monitor financial health, streamline processes, and make them financially viable. It takes a comprehensive look at the project’s cost —including the direct costs and indirect costs. In addition to the standard features of custom statuses, fields, and views, this template also offers:

• Real-time cash flow monitoring in six different custom views in configurations of cost variables, benefit variables, current year cost profile, analysis, etc.
• An overview of the actual costs of the project for a smarter and more comprehensive decision-making process
• Single-dashboard cost impact assessment for quick access to data-backed decisions
• Data-driven insights for efficient resource allocation to maximize resource utilization throughout the project lifecycle
• The tradeoff between business objectives and financial capabilities for practical viability

The template also offers insight into areas for cost reduction and possible roadblocks to cost efficiency, which can be instrumental in maintaining business profitability and maximizing benefits.

If your organization is involved in the production process of products or services, then the ClickUp Production Cost Analysis Template is an invaluable asset. This cost-benefit analysis goes beyond traditional cost analysis by factoring in all the costs, like labor costs, opportunity costs, etc., that go into production. This quality makes this cost-benefit analysis template useful for building complete project budget proposals .

Some of its key features include:

• Expense identification and categorization by thoroughly examining material, labor, and overhead costs, as well as quality control measures
• Cost-effectiveness by granting detailed insights into the different cost components that allow businesses to visualize and analyze data related to costs and benefits
• Budget evaluation to track how current project costs match up to predicted potential costs for prudent financial management
• Identification of inefficiencies in production cycles using key metrics and KPIs . The resulting interventions will reduce waste and improve efficiency to maximize benefits
• Real-time visualization tools to display the impact of changing prices on the future value of production costs

The above template will infuse a systemic approach to your production cost analysis and help you make informed decisions.

The ClickUp Project Cost Analysis Template is essential to every project manager’s arsenal. It offers a reliable framework for project managers to track and analyze project costs to maintain profitability. It makes project management more data-driven with the following offerings:

• Granular expense monitoring captures all expense-related details, such as the number of units, cost per unit, and the total cost for each task or item. Such itemized calculation keeps a tab on the financial health of your project
• Comprehensive project budget monitoring to track and analyze project-related costs and maximize the ROI
• Compatibility with multiple projects, allowing the project manager to perform cross-project cost-benefit analyses for richer insights and improved decision-making. Such insights allow managers to identify trends, patterns, and areas of improvement from historical data to strengthen financial management
• Forecasting using predictive modeling to power data-driven decisions to ensure that the project stays within the budget. The futuristic aspect of the project costs fuels proactive financial management to prevent cost overruns

Use this cost analysis template from the project planning to maximize financial benefits.

As the name suggests, use the ClickUp Monthly Expense Report Template to document, track, and analyze monthly expenses. This template is helpful as a process standardization tool as you monitor all tangible and intangible costs month after month.

Some of the key features and benefits of this template include:

• Ability to document all your expenses in a centralized location and leverage powerful analytics to visualize detailed expense reports
• Spend analysis tool to track expenses, analyze historical data, and spending patterns to make informed predictions on future financial gain based on present value
• Increased transparency into financial decisions, cost estimations , budget tracking, financial progress, and more
• Visibility into cost-saving opportunities that can optimize financial resources and cut down wasteful expenditures

This cost-benefit analysis template can improve your organization’s financial health as it supports monthly expense tracking and management for greater profitability.

While running a large business or an enterprise, tracking all expenses made by different teams or team members can be challenging. The ClickUp Business Expense and Report Template  streamlines the process of tracking, managing, and reporting such company expenses.

It offers the following:

• Seamless expense submission across different departments, teams, and individuals to make expense reporting more collaborative
• Gain a 360-degree view of all your business expenses through detailed expense reports to track all expenses and identify cost savings
• Data visualization tools to display spending patterns and trends. Visualization makes vital information accessible and supports informed, cross-sectional decision-making
• Track how your business expenses fare against the projected expenses. Such real-time monitoring facilitates the implementation of cost-mitigation strategies to maintain financial stability

Most importantly, this cost-benefit analysis template is instrumental in maintaining compliance with any financial regulation. For a solution that tracks company expenses, offers savings opportunities, forecasts future costs, and enforces compliance, this Business Expense and Report template is the way to go.

The ClickUp Project Cost Management Template is another indispensable tool for project managers to track and manage expenses across various projects. Designed by the experts at ClickUp, this template grants real-time visibility, performance visualization, and optimization insights for project cost management .

Its key features include

• High-level budget tracking beyond traditional calculator methods or spreadsheets. The template can automatically calculate costs and compare them to allocated budgets
• Cross-project resource allocation based on data-driven insights, for when you have limited resources spread across different projects
• View the cost performance in real-time and manage unexpected risks and uncertainties such as scope creep, force majeure, etc.
• Recalibrate budget estimates based on real-time progress, expenditure, and financial condition of the project

This project cost management template is highly versatile and can be used for various projects—from software development to construction, manufacturing, and more!

While the Expense and Report template discussed previously was more aligned with the requirements of large businesses and enterprises, this ClickUp Expenses Report Template is for businesses of all shapes and sizes. You can even use this template for personal finance management to track your expenses.

As a centralized platform for comprehensive expense tracking and management, it has the following to offer:

• Forecasting based on past spending patterns and trends to optimize budget planning and anticipate future expenses
• Spend analysis to grant visibility to your spending patterns and identify areas for cost savings
• Vendor and contractor payment tracking to ensure that you don’t miss any single payment while minimizing follow-ups and instilling confidence
• Timely and accurate reimbursements to employees with a robust mechanism to review and approve expenses

Use this cost-benefit analysis template to make your business more profitable.

The Excel Enterprise Cost Analysis Statement Template from WPS Template is a comprehensive tool to manage and dissect all the costs across different operations and departments within your enterprise. Available as an Excel template, this cost-benefit analysis template offers structure to your cost-benefit analysis activities and makes all expenses traceable and accountable.

The template also translates all the calculations and findings into interactive bar graphs, pie charts, and other visual forms to represent the enterprise’s financial health. 

Unlike the different templates discussed above, this offers limited customization. However, whatever it does offer is sufficient for a simple cost-benefit analysis.

This Excel Cost-Benefit Analysis Template is another option to consider if you prefer to use Microsoft Excel in project planning and cost-benefit analysis. It is a highly visual template that automatically converts all the entered data into visual elements like graphs, charts, etc., to make all the financial reports easy to comprehend.

This template replicates a dashboard that visually depicts all the cost-benefit analysis parameters, such as the different cost categories, monetary value of cost, direct and indirect benefits, etc.

Unfortunately, due to the limited scope of Excel spreadsheets, you cannot extract additional features like project management abilities like the ClickUp templates. 

A good cost-benefit analysis template carries different sections and elements to facilitate granular analysis. Some basic cost benefit analysis template components include:

• Project details : Name of the project, a brief description, date of the analysis, project scope and objectives , and details of the team conducting cost-benefit analysis
• Executive summary : A concise summary of the methodologies used, key findings, and recommendations of the analysis team for quick review and reference
• Cost : A detailed summary of the total project costs (direct costs + indirect costs) involved spread across different parameters such as the initial cost, one-time costs, ongoing operating costs, recurring costs, maintenance costs, training costs, and every other expense. The cost-benefit analysis template should have a section for intangible costs that quantifies every cost item while adding them to the calculation
• Benefits : An itemized list of the expected benefits resulting from the project. It should help identify and classify all benefits, such as financial gains, productivity or efficiency boosts, cost savings, strategic advantage, and every positive outcome. The cost-benefit analysis template should also allow quantifying intangible benefits such as increased customer satisfaction, referrals, etc.
• Time frame : The cost-benefit timeline helps calculate, project, and benchmark the present and future values of costs, benefits, and benefit-cost ratio
• Discount rate : Discount rate represents the monetary value of time by converting future costs and benefits into their net present value
• Net Present Value (NPV) : NPV is the difference between the total cost and benefit after adjusting the values for the discount rate
• Return on Investment (ROI) : ROI is the percentage depiction of the cost-benefit ratio obtained by multiplying it by one hundred. It represents the profitability of the investment, decision, or action
• Risk assessment : This part of the cost-benefit analysis template elaborates on the potential risks that could afflict the expected costs and benefits. It also includes various risk mitigation strategies to neutralize their effects
• Sensitivity analysis : Outlines the multiple assumptions, control elements, and fixed variables involved in the cost-benefit analysis. It offers a peek into the sensitivity and robustness of the cost-benefit analysis methodology while highlighting the possible impact of a change in these values
• Recommendations : A comprehensive and cross-sectional list of recommendations on whether the individual or organization should proceed with the project or investment decision or otherwise

Turn Every Cost into Benefit With Cost Benefit Analysis Templates

That’s a wrap on cost-benefit analyses. Use the above free tools responsibly to convert project ideas into financially viable business models, attracting an array of benefits. Configure these templates to match your requirements to convert business opportunities and reduce wasteful costs.

Also, if you’re looking for a one-stop cost-benefit analysis tool equipped with powerful project management features and cloud-based functionality, then ClickUp is the perfect option.

From remote accessibility to a user-friendly interface to real-time analytics, the platform takes regular cost-benefit analysis to a new plane. Schedule a demo to discover more.

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

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

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

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

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

Let’s get started.

What Do You Need A Business Plan For?

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

1. Secure Funds

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

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

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

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

2. Monitor Business Growth

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

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

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

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

3. Measure Business Success

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

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

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

4. Document Your Marketing Strategies

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

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

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

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

How to Write a Business Plan Step-by-Step

1. create your executive summary.

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

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

A good executive summary should do the following:

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

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

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

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

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

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

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

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

2. Add Your Company Overview

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

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

Your company overview should contain the following:

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

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

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

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

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

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

• Mission Statement

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

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

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

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

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

Business Objectives

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

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

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

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

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

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

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

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

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

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

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

Market Analysis

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

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

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

• Market Research

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

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

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

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

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

How to Quantify Your Target Market

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

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

What Does a Good Market Analysis Entail?

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

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

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

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

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

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

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

Competitive Analysis

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

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

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

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

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

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

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

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

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

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

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

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

Direct vs Indirect Competition

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

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

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

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

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

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

Factors that Differentiate Your Business from the Competition

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

1. Cost Leadership

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

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

2. Product Differentiation

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

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

3. Market Segmentation

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

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

4. Define Your Business and Management Structure

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

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

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

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

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

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

Management Team

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

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

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

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

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

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

Key Questions to Answer When Structuring Your Management Team

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

Additional Tips for Writing the Management Structure Section

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

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

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

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

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

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

Organizational Chart

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

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

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

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

5. Describe Your Product and Service Offering

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Avoid Technical Descriptions and Industry Buzzwords

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

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

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

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

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

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

3. Long or Short Products or Services Section

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

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

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

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

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

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

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

4. Describe Your Relationships with Vendors or Suppliers

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

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

5. Your Primary Goal Is to Convince Your Readers

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

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

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

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

Key Questions to Answer When Writing your Products and Services Section

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

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

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

6. Show and Explain Your Marketing and Sales Plan

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

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

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

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

Outline Your Business’ Unique Selling Proposition (USP)

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

Target Market and Target Audience

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

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

Creating a Smart Marketing and Sales Plan

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

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

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

Your Positioning Statement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Basic Rules to Follow When Pricing Your Offering

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

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

Pricing Strategy

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

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

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

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

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

Advertising

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

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

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

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

Public Relations

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

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

Content Marketing

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

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

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

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

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

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

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

Social Media

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

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

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

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

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

Strategic Alliances

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

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

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

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

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

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

2. Evaluate Your Competition

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

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

These questions can help you know your competition.

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

3. Consider Your Brand

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

4. Focus on Benefits

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

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

5. Focus on Differentiation

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

Key Questions to Answer When Writing Your Marketing and Sales Plan

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

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

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

7. Clearly Show Your Funding Request

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

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

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

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

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

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

Funding Request: Debt or Equity?

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

Case for Equity

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

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

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

Case for Debt

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

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

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

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

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

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

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

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

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

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

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

8. Detail Your Financial Plan, Metrics, and Projections

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

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

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

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

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

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

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

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

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

Use Graphs and Charts

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

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

Address the Risk Factors and Show Realistic Financial Projections

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

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

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

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

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

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

1. Sales Forecast

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

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

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

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

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

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

2. Personnel Plan

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

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

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

3. Income Statement

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

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

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

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

4. Cash Flow Statement

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

5. Balance Sheet

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

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

6. Exit Strategy

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

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

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

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

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

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

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

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

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

9. Add an Appendix to Your Business Plan

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

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

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

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

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

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

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

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

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

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

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

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

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

Tips and Strategies for Writing a Convincing Business Plan

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

1. Know Your Audience

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

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

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

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

2. Get Inspiration from People

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

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

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

3. Avoid Being Over Optimistic

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

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

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

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

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

4. Keep it Simple and Short

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

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

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

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

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

5. Make an Outline and Follow Through

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

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

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

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

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

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

6. Ask a Professional to Proofread

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

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

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

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

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

1. hubspot's one-page business plan.

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

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

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

2. Bplan’s Free Business Plan Template

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

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

3. HubSpot's Downloadable Business Plan Template

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

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

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

4. Business Plan by My Own Business Institute

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

The comprehensive template consists of a whopping 15 sections.

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

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

5. Score's Business Plan Template for Startups

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

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

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

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

6. Minimalist Architecture Business Plan Template by Venngage

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

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

7. Small Business Administration Free Business Plan Template

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

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

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

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

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

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

9. PandaDoc’s Free Business Plan Template

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

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

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

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

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

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

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

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

Alternatives to the Traditional Business Plan

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

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

Business Model Canvas (BMC)

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

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

Segments of the Business Model Canvas

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

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

Lean Canvas

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

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

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

Startup Pitch Deck

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

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

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

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

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

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

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

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

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

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

Business Plan FAQ

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

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

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

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

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

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

Exlore Further

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

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Martin luenendonk.

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

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

Small Business Trends

How to create a business plan: examples & free template.

Whether you’re a seasoned entrepreneur or launching your very first startup, the guide will give you the insights, tools, and confidence you need to create a solid foundation for your business.

Table of Contents

How to Write a Business Plan

Executive summary.

It’s crucial to include a clear mission statement, a brief description of your primary products or services, an overview of your target market, and key financial projections or achievements.

Our target market includes environmentally conscious consumers and businesses seeking to reduce their carbon footprint. We project a 200% increase in revenue within the first three years of operation.

Overview and Business Objectives

Example: EcoTech’s primary objective is to become a market leader in sustainable technology products within the next five years. Our key objectives include:

Company Description

Example: EcoTech is committed to developing cutting-edge sustainable technology products that benefit both the environment and our customers. Our unique combination of innovative solutions and eco-friendly design sets us apart from the competition. We envision a future where technology and sustainability go hand in hand, leading to a greener planet.

Define Your Target Market

Market analysis.

The Market Analysis section requires thorough research and a keen understanding of the industry. It involves examining the current trends within your industry, understanding the needs and preferences of your customers, and analyzing the strengths and weaknesses of your competitors.

Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.

SWOT Analysis

Including a SWOT analysis demonstrates to stakeholders that you have a balanced and realistic understanding of your business in its operational context.

Competitive Analysis

Organization and management team.

Provide an overview of your company’s organizational structure, including key roles and responsibilities. Introduce your management team, highlighting their expertise and experience to demonstrate that your team is capable of executing the business plan successfully.

Products and Services Offered

This section should emphasize the value you provide to customers, demonstrating that your business has a deep understanding of customer needs and is well-positioned to deliver innovative solutions that address those needs and set your company apart from competitors.

Marketing and Sales Strategy

Discuss how these marketing and sales efforts will work together to attract and retain customers, generate leads, and ultimately contribute to achieving your business’s revenue goals.

Logistics and Operations Plan

Inventory control is another crucial aspect, where you explain strategies for inventory management to ensure efficiency and reduce wastage. The section should also describe your production processes, emphasizing scalability and adaptability to meet changing market demands.

We also prioritize efficient distribution through various channels, including online platforms and retail partners, to deliver products to our customers in a timely manner.

Financial Projections Plan

This forward-looking financial plan is crucial for demonstrating that you have a firm grasp of the financial nuances of your business and are prepared to manage its financial health effectively.

Income Statement

Cash flow statement.

A cash flow statement is a crucial part of a financial business plan that shows the inflows and outflows of cash within your business. It helps you monitor your company’s liquidity, ensuring you have enough cash on hand to cover operating expenses, pay debts, and invest in growth opportunities.

Tips on Writing a Business Plan

4. Focus on your unique selling proposition (USP): Clearly articulate what sets your business apart from the competition. Emphasize your USP throughout your business plan to showcase your company’s value and potential for success.

FREE Business Plan Template

To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.

What is a Business Plan?

Why you should write a business plan.

Understanding the importance of a business plan in today’s competitive environment is crucial for entrepreneurs and business owners. Here are five compelling reasons to write a business plan:

What are the Different Types of Business Plans?

Using Business Plan Software

Upmetrics provides a simple and intuitive platform for creating a well-structured business plan. It features customizable templates, financial forecasting tools, and collaboration capabilities, allowing you to work with team members and advisors. Upmetrics also offers a library of resources to guide you through the business planning process.

Business Plan FAQs

What is a good business plan.

A good business plan is a well-researched, clear, and concise document that outlines a company’s goals, strategies, target market, competitive advantages, and financial projections. It should be adaptable to change and provide a roadmap for achieving success.

What are the 3 main purposes of a business plan?

Can i write a business plan by myself, is it possible to create a one-page business plan.

Yes, a one-page business plan is a condensed version that highlights the most essential elements, including the company’s mission, target market, unique selling proposition, and financial goals.

How long should a business plan be?

What is a business plan outline, what are the 5 most common business plan mistakes, what questions should be asked in a business plan.

A business plan should address questions such as: What problem does the business solve? Who is the specific target market ? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?

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

How is business planning for a nonprofit different.

Cost benefit analysis

Enhance decision-making with our cost benefit analysis template, your guide to profitable business strategies.

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In the fast-paced business environment, making informed decisions is crucial. Our cost benefit analysis template offers a structured approach to evaluating project costs and benefits — from small-scale projects to major investments — ensuring sound and profitable decisions.

What's included in this cost benefit analysis template?

Our template simplifies cost benefit analysis, catering to business owners, project managers, and finance teams who want to quickly visualize costs and benefits of a new project or initiative.

• Side-by-side comparison: Presents costs and benefits together for clear visual comparison.
• Detailed cost analysis: Includes sections for both direct and indirect costs.
• Comprehensive benefit assessment: Separates tangible and intangible benefits, highlighting potential gains.
• Clear summary table: Concisely summarizes costs, benefits, and net benefits.

Benefits of using the template

This template enhances decision-making by providing a structured, quantitative framework. Completing the cost-benefit analysis process helps to minimize risks and maximize returns, ensuring optimal resource allocation.

• Time-saving: Streamlines the analysis process.
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If you're looking for a streamlined budgeting solution for your business, try our project estimate template.

Connecting this template to your goals

Guide your projects and investments towards success, supported by thorough financial analysis. This template is a roadmap to achieving business objectives with precision and confidence. Start shaping your financial strategy with our Cost Benefit Analysis Template today!

FAQ About the Cost benefit analysis Template

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How to make a business plan

Table of Contents

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.

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Business plan templates

From competitive analysis to financial projections, business plans give your new business a roadmap for success. Download one of our free business plan templates and take your company to the next level.

Big Data Startup Business Plan Template

Create a professional Big Data Startup business plan with our customizable Startup Business Plan Template.

Virtual Assistant Business Plan

Strategize your way to success with this customizable AI virtual assistant business plan template.

Virtual Reality (VR) Business Plan

Our free virtual reality (VR) business plan helps you customize your document and create a winning strategy to land investors.

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Laundromat Business Plan

Create your success roadmap with a laundromat business plan template, designed to arrange the essentials of the laundry business.

5-Year Business Plan Template

Empower your path to long-term success with our 5-year business plan template.

Car Wash Business Plan Template

Launch and grow your car wash business with our customizable plan template.

Airbnb Business Plan Template

Unlock your path to success with our Airbnb business plan template, made to guide you in structuring the fundamental aspects of your Airbnb business.

Clothing Line Business Plan

Use this free and customizable clothing line business plan to appeal to investors and set up your fashion brand.

Gym Business Plan Template 

The Panda tips in this gym business plan template guide you through the process of researching and presenting information necessary to secure funding and partners for your business.

Handyman Business Plan Template

Start a new handyman business using a well-researched handyman business plan template to meet your goals faster.

Vending Machine Business Plan Template

If you’re starting a new vending machine business, a well-rounded vending machine business plan can improve your chances of success.

Bar Business Plan Template

Create your path to success with our bar business plan template, designed as a valuable tool to help entrepreneurs organize the bar business.

Massage Therapy Business Plan

This massage therapy business plan template helps you cover the basics of starting or expanding a massage business.

Bed and Breakfast Business Plan Template

Use a complete bed and breakfast business plan template to set up your business for growth and success.

Catering Business Plan

Chart your path to success with our catering business plan template designed to help entrepreneurs organize their catering business.

Event Venue Business Plan Template

Launch and grow your event venue with our customizable business plan template.

Event Planning Business Plan 

Prepare your event planning business for success with our ready-to-fill and easily downloadable event planning business plan template.

Rental Property Business Plan

Develop a rental property business plan tailored to serve as a valuable resource for entrepreneurs to organize their rental business.

Coaching Business Plan Template

If you want to grow your new or existing coaching business, use our free coaching business plan template as a roadmap to success.

Lawn Care Business Plan

Use a comprehensive lawn care business plan template that includes guidance and all critical information.

T-shirt Business Plan Template 

Craft a winning T-shirt business plan in a structured business format that attracts investors and funding.

Candle-Making Business Plan Template

Use a candle-making business plan template to get together all of the information you need to ensure that your candle business succeeds.

SBA Business Plan Template

Use our free and fully customizable SBA business plan template to get started when writing a successful proposal for an SBA loan.

Cleaning Business Plan Template

Discover a hassle-free way to document a roadmap for your cleaning business with this free business plan template.

Real Estate Business Plan Template

Start off your new real estate business on the right foot by using a real estate business plan template to ensure your goals, visions, and finances are sorted.

Trucking Business Plan Template

Empower your journey to success with our trucking business plan template, designed as a valuable tool to organize the essentials of your trucking business.

Food Truck Business Plan Template

Find a fully customizable, free food truck business plan template that helps you create an effective proposal for interested investors.

Simple Business Plan Template

This simple business plan template walks you through the stages of establishing a successful business or seeking funding.

Solar Farm Business Plan

Give your solar farm business the best start by creating a professional business plan to keep your company on the right track.

Ecommerce Business Plan Template

This Ecommerce Business Plan Template is tailored particularly to e-commerce companies, and all you require to do is add the elements related to your business.

Accounting Firm Business Plan

Use this Accounting Firm Business Plan to achieve your goals. Accounting firms are comparable to other industries and need the Business Plan to help their development.

Campground Business Plan Template

This PandaDoc Campground Business Plan Template has all the essential information to help you develop a successful business strategy.

Firewood Business Plan

This Firewood Business Plan Template perfectly outlines the company structure of a probable firewood venture. It highlights the budgets needed to start and manage the unique business.

Funeral Home Business Plan

A Funeral Home Business Plan covers detailed data on the courtesies offered by the company, market analysis, administration strategies, personnel procedures, budget and financing plans, and other applicable topics.

Community Center Business Plan

You can use this Community Center Business Plan Template, it is perfect for anyone desiring to open and run a society center. It gives the center’s owner an outline of areas that must be disseminated with the investors to earn an acquisition.

Gas Station Business Plan

Take the first step towards success in the fuel industry with our professionally crafted Gas Station Business Plan template.

Beauty Supply Store Business Plan

This Beauty Supply Store Business Plan Template covers all the appropriate sections needed to invest in a beauty supply store. The template will help you to raise money for your business.

Flower Shop Business Plan Template

The Flower Shop Business Plan Template is organized to help you achieve the awareness of various investors to invest in your company.

Electrical Contractor Business Plan

This Electrical Contractor Business Plan template include information about the services you offer, who your target consumers are, why they should prefer you over your opponents and how much capital you require to get started.

Car Dealership Business Plan

A Car Dealership Business Plan is a detailed plan that will help you take your business to the next level. Use this template to create your plan.

Farm Business Plan

Farm Business Plan gives an overview of the company, including corporation history, owner backgrounds, creations and more. Use this template to quickly develop your farm company plan.

Consultant Business Plan Template

An example of a document outlining your strategy for launching or expanding your consulting firm is a Consultant Business Plan Template. The essential elements include a summary of the company, team, sector, rivals, target audience, and an operations and marketing strategy.

Construction Company Business Plan

The objectives and tactics of a construction company are described in a business plan for a construction company. For the creation of your business plan, use this Construction Company Business Plan Template.

Fashion Business Plan Template

Structural and action plans for a fashion firm are laid out in the fashion business plan template.

Daycare Business Plan

The creation of a business strategy is the first step in starting a daycare. Use this Daycare Business Plan Template to describe your company’s objectives, as well as your target market, potential rivals, and your financing strategy.

Convenience Store Business Plan

Do you need a Convenience Store Business Plan Template? This plan includes all the details and information needed to secure funding for a convenience store.

Startup Business Plan Template

We offer you the steps and the tools to create a fantastic business plan. Attract investors with this sleek and free startup business plan template.

Business Plan Template

This business plan template is a great tool for your startup to customize to reflect your strong qualifications, experienced team, and marketable business idea.

What is a business plan?

A business plan is a document that helps small business owners determine the viability of their business idea. Combining market research and financial analysis, a professional business plan helps startup CEOs and potential investors determine if the company can compete in the target market.

Typically, a good business plan consists of the following:

• Executive summary
• Company description
• Mission statement
• Product and services
• Marketing plan
• Operations plan
• Management organization
• Financial plan
• Conclusion & appendix

Every section involved in a business plan is designed to help startup businesses reach their target market.

A business plan asks founders and entrepreneurs to detail their business strategy in a step-by-step process that makes sense from an operational perspective. This is essential if a startup is seeking a business loan or an investment from a venture capital firm.

However, even small businesses that are already economically viable can benefit from creating a business plan, since it encourages business owners and their management teams to examine their business model and reevaluate the best ways to reach their target customers.

Should I use a business plan template?

Yes.  If you’ve never written one, a business plan can be challenging to write.

Creating a successful plan that you can use to grow your small business can require weeks of market analysis and financial preparation. You may spend time using Microsoft Excel or Powerpoint in order to create documentation which better supports our operational decisions.

However, almost every professional business plan is structured in the same way and most ask for the same information. Because of this, using a business plan template is advisable to save time, money, and effort.

Business plan templates for free

Rather than spending time trying to figure out how to write a business plan , use a free template as a guide to completion.

Business plan templates from PandaDoc can help you reach an effective go-to-market strategy even faster by asking you to provide all the relevant information you need when creating an effective business plan.

Grab a free template to get started!

Frequently asked questions

How many pages should my business plan be.

This depends on the kind of business plan you need to write and how you intend to use the plan that you create.

For example, a plan for a small business seeking potential investors or a business loan will need to provide income statements, cash flow statements, and a balance sheet (usually for a three-year or five-year forecast period).

These financial statements can be omitted if a small business owner isn’t seeking funding and is instead planning to use their business plan as a guiding document for themselves and their management team members.

Some business plans may only run a few pages. Fully-developed business plans can be as long as 50 pages. Much of this depends on the type of business, the operational strategy, and the level of detail that goes into developing the business plan.

Who needs a business plan?

Every business should have a business plan. This is an essential guidance document for any founder or CEO.

Good business plans help a company determine the viability of its place in the market and can help the business develop better strategies for differentiating itself from its competitors.

Business planning also forces business owners to evaluate their marketing strategy, the cost of customer acquisition and retention, and how they plan to grow their business over time.

What is the best business plan template?

Business plans come in all shapes and sizes. The best business plan template for your business is one that you understand and that matches the size and legal structure of your operation.

If you’re a sole proprietor, a business plan template designed for a big corporation probably doesn’t make sense. However, a business plan that helps you build an effective roadmap to grow your business while protecting your intellectual property is a good starting point.

PandaDoc offers specialized business plan templates for common industries along with tips to help you get started with business planning.

Should I hire someone to write my business plan for me?

No. You’ll find freelance writers and business strategy companies out there who are happy to write your business plan for a fee.  These resources can guide you through the process, but you should write (or be heavily involved in) the creation of your business plan.

The reason for this is simple: You know the most about your business, and your business needs you to succeed.

A writer can work with you to make your business plan sound better to investors, and a consultant can help you fill in knowledge gaps — like how to conduct a SWOT analysis — and point out weaknesses in your plan. But, at the end of the day, you need to use the business plan to pitch investors and run your business.

Those ideas and guiding principles aren’t something you can outsource.

Should I use business planning software?

Software isn’t required when creating an effective business plan. Most business planning software is designed to help you navigate the outlining and writing process more effectively.

You don’t need software to write a professional business plan, but a solid template can help you get started. Download a free template from PandaDoc today and take your business to the next level.

Get started with PandaDoc today

Simple Business Plan Template (2024)

Updated: May 4, 2024, 4:37pm

Table of Contents

Why business plans are vital, get your free simple business plan template, how to write an effective business plan in 6 steps, frequently asked questions.

While taking many forms and serving many purposes, they all have one thing in common: business plans help you establish your goals and define the means for achieving them. Our simple business plan template covers everything you need to consider when launching a side gig, solo operation or small business. By following this step-by-step process, you might even uncover a few alternate routes to success.

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Whether you’re a first-time solopreneur or a seasoned business owner, the planning process challenges you to examine the costs and tasks involved in bringing a product or service to market. The process can also help you spot new income opportunities and hone in on the most profitable business models.

Though vital, business planning doesn’t have to be a chore. Business plans for lean startups and solopreneurs can simply outline the business concept, sales proposition, target customers and sketch out a plan of action to bring the product or service to market. However, if you’re seeking startup funding or partnership opportunities, you’ll need a write a business plan that details market research, operating costs and revenue forecasting. Whichever startup category you fall into, if you’re at square one, our simple business plan template will point you down the right path.

Copy our free simple business plan template so you can fill in the blanks as we explore each element of your business plan. Need help getting your ideas flowing? You’ll also find several startup scenario examples below.

Download free template as .docx

Whether you need a quick-launch overview or an in-depth plan for investors, any business plan should cover the six key elements outlined in our free template and explained below. The main difference in starting a small business versus an investor-funded business is the market research and operational and financial details needed to support the concept.

1. Your Mission or Vision

Start by declaring a “dream statement” for your business. You can call this your executive summary, vision statement or mission. Whatever the name, the first part of your business plan summarizes your idea by answering five questions. Keep it brief, such as an elevator pitch. You’ll expand these answers in the following sections of the simple business plan template.

• What does your business do? Are you selling products, services, information or a combination?
• Where does this happen? Will you conduct business online, in-store, via mobile means or in a specific location or environment?
• Who does your business benefit? Who is your target market and ideal customer for your concept?
• Why would potential customers care? What would make your ideal customers take notice of your business?
• How do your products and/or services outshine the competition? What would make your ideal customers choose you over a competitor?

These answers come easily if you have a solid concept for your business, but don’t worry if you get stuck. Use the rest of your plan template to brainstorm ideas and tactics. You’ll quickly find these answers and possibly new directions as you explore your ideas and options.

2. Offer and Value Proposition

This is where you detail your offer, such as selling products, providing services or both, and why anyone would care. That’s the value proposition. Specifically, you’ll expand on your answers to the first and fourth bullets from your mission/vision.

As you complete this section, you might find that exploring value propositions uncovers marketable business opportunities that you hadn’t yet considered. So spend some time brainstorming the possibilities in this section.

For example, a cottage baker startup specializing in gluten-free or keto-friendly products might be a value proposition that certain audiences care deeply about. Plus, you could expand on that value proposition by offering wedding and other special-occasion cakes that incorporate gluten-free, keto-friendly and traditional cake elements that all guests can enjoy.

3. Audience and Ideal Customer

Here is where you explore bullet point number three, who your business will benefit. Identifying your ideal customer and exploring a broader audience for your goods or services is essential in defining your sales and marketing strategies, plus it helps fine-tune what you offer.

There are many ways to research potential audiences, but a shortcut is to simply identify a problem that people have that your product or service can solve. If you start from the position of being a problem solver, it’s easy to define your audience and describe the wants and needs of your ideal customer for marketing efforts.

Using the cottage baker startup example, a problem people might have is finding fresh-baked gluten-free or keto-friendly sweets. Examining the wants and needs of these people might reveal a target audience that is health-conscious or possibly dealing with health issues and willing to spend more for hard-to-find items.

However, it’s essential to have a customer base that can support your business. You can be too specialized. For example, our baker startup can attract a broader audience and boost revenue by offering a wider selection of traditional baked goods alongside its gluten-free and keto-focused specialties.

4. Revenue Streams, Sales Channels and Marketing

Thanks to our internet-driven economy, startups have many revenue opportunities and can connect with target audiences through various channels. Revenue streams and sales channels also serve as marketing vehicles, so you can cover all three in this section.

Revenue Streams

Revenue streams are the many ways you can make money in your business. In your plan template, list how you’ll make money upon launch, plus include ideas for future expansion. The income possibilities just might surprise you.

For example, our cottage baker startup might consider these revenue streams:

• Product sales : Online, pop-up shops , wholesale and (future) in-store sales
• Affiliate income : Monetize blog and social media posts with affiliate links
• Advertising income : Reserve website space for advertising
• E-book sales : (future) Publish recipe e-books targeting gluten-free and keto-friendly dessert niches
• Video income : (future) Monetize a YouTube channel featuring how-to videos for the gluten-free and keto-friendly dessert niches
• Webinars and online classes : (future) Monetize coaching-style webinars and online classes covering specialty baking tips and techniques
• Members-only content : (future) Monetize a members-only section of the website for specialty content to complement webinars and online classes
• Franchise : (future) Monetize a specialty cottage bakery concept and sell to franchise entrepreneurs

Sales Channels

Sales channels put your revenue streams into action. This section also answers the “where will this happen” question in the second bullet of your vision.

The product sales channels for our cottage bakery example can include:

• Mobile point-of-sale (POS) : A mobile platform such as Shopify or Square POS for managing in-person sales at local farmers’ markets, fairs and festivals
• E-commerce platform : An online store such as Shopify, Square or WooCommerce for online retail sales and wholesale sales orders
• Social media channels : Facebook, Instagram and Pinterest shoppable posts and pins for online sales via social media channels
• Brick-and-mortar location : For in-store sales , once the business has grown to a point that it can support a physical location

Channels that support other income streams might include:

• Affiliate income : Blog section on the e-commerce website and affiliate partner accounts
• Advertising income : Reserved advertising spaces on the e-commerce website
• E-book sales : Amazon e-book sales via Amazon Kindle Direct Publishing
• Video income : YouTube channel with ad monetization
• Webinars and online classes : Online class and webinar platforms that support member accounts, recordings and playback
• Members-only content : Password-protected website content using membership apps such as MemberPress

Nowadays, the line between marketing and sales channels is blurred. Social media outlets, e-books, websites, blogs and videos serve as both marketing tools and income opportunities. Since most are free and those with advertising options are extremely economical, these are ideal marketing outlets for lean startups.

However, many businesses still find value in traditional advertising such as local radio, television, direct mail, newspapers and magazines. You can include these advertising costs in your simple business plan template to help build a marketing plan and budget.

5. Structure, Suppliers and Operations

This section of your simple business plan template explores how to structure and operate your business. Details include the type of business organization your startup will take, roles and responsibilities, supplier logistics and day-to-day operations. Also, include any certifications or permits needed to launch your enterprise in this section.

Our cottage baker example might use a structure and startup plan such as this:

• Business structure : Sole proprietorship with a “doing business as” (DBA) .
• Permits and certifications : County-issued food handling permit and state cottage food certification for home-based food production. Option, check into certified commercial kitchen rentals.
• Roles and responsibilities : Solopreneur, all roles and responsibilities with the owner.
• Supply chain : Bulk ingredients and food packaging via Sam’s Club, Costco, Amazon Prime with annual membership costs. Uline for shipping supplies; no membership needed.
• Day-to-day operations : Source ingredients and bake three days per week to fulfill local and online orders. Reserve time for specialty sales, wholesale partner orders and market events as needed. Ship online orders on alternating days. Update website and create marketing and affiliate blog posts on non-shipping days.

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6. Financial Forecasts

Your final task is to list forecasted business startup and ongoing costs and profit projections in your simple business plan template. Thanks to free business tools such as Square and free marketing on social media, lean startups can launch with few upfront costs. In many cases, cost of goods, shipping and packaging, business permits and printing for business cards are your only out-of-pocket expenses.

Cost Forecast

Our cottage baker’s forecasted lean startup costs might include:

Gross Profit Projections

This helps you determine the retail prices and sales volume required to keep your business running and, hopefully, earn income for yourself. Use product research to spot target retail prices for your goods, then subtract your cost of goods, such as hourly rate, raw goods and supplier costs. The total amount is your gross profit per item or service.

Here are some examples of projected gross profits for our cottage baker:

Bottom Line

Putting careful thought and detail in a business plan is always beneficial, but don’t get so bogged down in planning that you never hit the start button to launch your business . Also, remember that business plans aren’t set in stone. Markets, audiences and technologies change, and so will your goals and means of achieving them. Think of your business plan as a living document and regularly revisit, expand and restructure it as market opportunities and business growth demand.

Is there a template for a business plan?

You can copy our free business plan template and fill in the blanks or customize it in Google Docs, Microsoft Word or another word processing app. This free business plan template includes the six key elements that any entrepreneur needs to consider when launching a new business.

What does a simple business plan include?

A simple business plan is a one- to two-page overview covering six key elements that any budding entrepreneur needs to consider when launching a startup. These include your vision or mission, product or service offering, target audience, revenue streams and sales channels, structure and operations, and financial forecasts.

How can I create a free business plan template?

Start with our free business plan template that covers the six essential elements of a startup. Once downloaded, you can edit this document in Google Docs or another word processing app and add new sections or subsections to your plan template to meet your specific business plan needs.

What basic items should be included in a business plan?

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

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Krista Fabregas is a seasoned eCommerce and online content pro sharing more than 20 years of hands-on know-how with those looking to launch and grow tech-forward businesses. Her expertise includes eCommerce startups and growth, SMB operations and logistics, website platforms, payment systems, side-gig and affiliate income, and multichannel marketing. Krista holds a bachelor's degree in English from The University of Texas at Austin and held senior positions at NASA, a Fortune 100 company, and several online startups.

Business Cost Analysis Template

Identify direct costs to the business.

Identify indirect costs to the business

Categorize the costs.

• 1 Labor costs
• 2 Materials costs
• 3 Overhead costs
• 4 Marketing costs

Estimate and record direct cost amounts

Estimate and record indirect cost amounts, consider potential variables and risks, calculate total costs, calculate profit margins, identify potential areas of cost savings, prepare initial report, approval: manager's review of initial report.

• Prepare initial report Will be submitted

Incorporate feedback from approval process

Prepare final report, plan strategies for implementing cost savings, discuss strategies with stakeholders.

• 1 Department heads
• 2 Management team members
• 3 Key employees
• 4 External consultants

Approval: Stakeholder approval of strategies

• Discuss strategies with stakeholders Will be submitted

Implement approved strategies

Monitor results of implemented strategies, update report with results, approval: final report.

• Update report with results Will be submitted

Take control of your workflows today.

More templates like this.

Free Project Cost Templates

By Andy Marker | July 4, 2021

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We’ve rounded up 15 of the most useful cost management templates, available in Microsoft Word and Excel, Adobe PDF, and Google Sheets versions. All templates are completely customizable and free to download. 

Included on this page you’ll find project cost estimating spreadsheet templates , a project cost tracker template , and construction project cost templates , as well as IT project cost templates for estimation and cost benefit analysis.

Project Cost Estimating Templates

Parametric project cost estimating template.

Download Parametric Project Cost Estimating Template

Microsoft Excel | Microsoft Word

Parametric cost estimating is a reliable method of cost estimation for projects with predictable tasks and standard rates that can be expressed in units, such as work hours or product numbers. This template separates project costs by products and labor. Each section shows the number of units, price per unit, and total cost for each item or task. The template will then automatically calculate subtotals and display the total estimated project cost at the top of the template.

Three-Point Project Cost Estimate Template

Download Three-Point Project Cost Estimate Template — Microsoft Excel

Utilize the three-point estimating method to determine project expenses based on optimistic, pessimistic, and most likely costs. The template calculates weighted averages for each activity and the total project cost. Add notes to each line item to create a detailed estimate.

Activity Cost Estimate Template

Download Activity Cost Estimate Template

Microsoft Word | Adobe PDF

Create a list of estimated costs for all activities and resources required to complete your project. This cost estimating template shows direct and indirect expenses, contingency funds, and an estimated cost range for each item. Document the estimation method used, any assumptions and constraints, and your confidence rating. The template provides a simple table format for organizing and planning project costs.

Project Cost Management Templates

Project cost management plan template.

Download Project Cost Management Plan Template

This project cost management plan report template provides a detailed outline from which you can develop your own customized template. Sections include an introductory summary, spending limits, cost variance planning, management approach, reporting processes, change control, and project budget. The template is broken down into subsections, and tables make it easy to present data in a comprehensive and easily readable report.

Project Cost Control Template

Download Project Cost Control Template — Microsoft Excel

This project cost control sheet allows you to track budgeted versus actual costs, whether you’re managing product prices, hourly rates, or other project expenses. It also shows item quantities, budgeted rates, actual expenses, pending costs, and forecasted total costs for each individual item, as well as the project as a whole. The template displays amounts for project budget, actual costs, and projected costs at the top for quick reference.

Project Cost Schedule Template

Download Project Cost Schedule Template — Microsoft Excel

Create a project cost schedule that lists total costs allocated for each item, along with the time frame for distributing those costs. Use the 12-month calendar to view the dollar amounts allotted for a given week or month. This template works as both a planning and tracking tool to help you anticipate future issues, adapt to project changes, and ensure that costs stay on track and within budget.

Project Cost Tracking Template

Download Project Cost Tracking Template

Microsoft Excel | Google Sheets

This project cost tracker template provides both a detailed spreadsheet and a visual chart that shows a snapshot comparison of actual vs. budgeted expenses. Group your project costs by category, and list fixed costs or unit rates for each item. Enter actual expenses as you accrue them to track how far project costs are over or under budget.

Construction Project Cost Templates

Construction project cost tracking spreadsheet.

Download Construction Project Cost Tracking Spreadsheet Template — Microsoft Excel

This tracking spreadsheet functions as both a project cost estimate and budget template. The spreadsheet includes example categories and tasks, ranging from planning and site prep to interior finish work. Compare estimated and actual costs for individual items and the entire project. Keep track of vendors and other responsible parties, as well as task status and amounts due. The template displays summaries of total costs and payments at the top.

Construction Project Cost Comparison Template

Download Construction Project Cost Comparison Template — Microsoft Excel

This cost comparison template enables you to compare bids on a project and evaluate potential costs. The template shows the base bid amount for each party, as well as bids for proposed additive or deductive alternatives. Check boxes help you track qualifications and other bid requirements. Ultimately, by viewing a compilation of bids, you can easily compare potential costs and identify the most competitive bidders.

Multi-Unit Construction Project Estimate Template

Download Multi-Unit Construction Project Estimate Template

Microsoft Excel | Microsoft Word | Adobe PDF

This multi-unit estimate template is divided into sections for on-site and off-site construction and includes sample categories. List work tasks or materials needed under each category, and add estimated costs; the Excel version of this template will automatically calculate the projected subtotal. Then add percentages for fees, insurance, and contingency costs to estimate the final project cost.

Remodeling Project Cost Estimate Template

Download Remodeling Project Cost Estimate Template

This estimate worksheet is designed for remodeling projects, and it groups costs into interior vs. exterior home spaces. Edit the example entries for labor and materials based on your specific remodel project. The Excel estimate template will generate project costs for you, with estimated subtotals listed for each area of the home and the grand total shown at the top.

New Home Construction Cost Estimate Template

Download New Home Construction Cost Estimate Template

This cost estimate template shows gross profit and margin of profit to help determine the total estimated expense for a new home construction project. The spreadsheet provides columns for construction categories, unit quantities, price per unit, base prices, markup amount, and profit. It also includes a thorough list of example tasks, materials, permits, and other items, which you can easily edit to suit your home-building project.

For more estimating templates, see our collection of free construction estimate templates , including for specific jobs, such as roofing, painting, or electrical work.

IT Project Cost Templates

It project cost estimation template.

Download IT Project Cost Estimate Template — Microsoft Excel

Assess project costs with this estimator template designed for IT projects. The template breaks down the project into phases, displaying estimated hours, labor requirements and rates, additional costs, and total cost for each phase. Choose a status from the drop-down menu to indicate whether a project element is not started or in progress, complete, or on hold. The template provides a quick, itemized overview of estimated total hours, staffing, and costs at the top.

Software Development Project Estimate Template

Download Software Development Project Estimate Template — Microsoft Excel

This software development template includes work effort and task duration in its estimate of project costs. For each phase activity, the template computes work effort in hours and days, task duration in days and weeks, the average hourly cost for required resources, and estimated total cost. It also calculates the estimated date of completion for each activity based on your data. Compare estimated hours with actual hours as you move through project phases, and get baseline, minimum, and maximum estimates for total project costs.

IT Project Cost Benefit Analysis Template

Download IT Project Cost Benefit Analysis Template

Microsoft Excel  | Smartsheet

Conduct a cost benefit analysis to determine the value of an IT project over several years. This project cost analysis template includes four spreadsheet tabs. The first two tabs compile projected and current value costs and benefits; the third combines total costs and benefits for a cumulative cost benefit profile; and the fourth tab provides a cost benefit analysis of alternatives. The template also includes example cost categories and covers an eight-year timeline.

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Cost-Benefit Analysis: A Quick Guide with Examples and Templates

When managing a project, many key decisions are required. Project managers strive to control costs while getting the highest return on investment and other benefits for their business or organization. A cost-benefit analysis (CBA) is just what they need to help them do that. Before we explain how to do a cost-benefit analysis, let’s briefly define what it is.

What Is a Cost-Benefit Analysis?

A cost-benefit analysis (CBA) is a process that’s used to estimate the costs and benefits of projects or investments to determine their profitability for an organization. A CBA is a versatile method that’s often used for business administration, project management and public policy decisions. An effective CBA evaluates the following costs and benefits:

• Direct costs
• Indirect costs
• Intangible costs
• Opportunity costs
• Costs of potential risks
• Total benefits
• Net benefits

These project costs and benefits are then assigned a monetary value and used to determine the cost-benefit ratio. However, a cost-benefit analysis might also involve other calculations such as return on investment (ROI), internal rate of return (IRR), net present value (NPV) and the payback period (PBP).

Cost-Benefit Analysis Template

Use this Excel template to put what you’ve learned into practice. This free cost-benefit analysis template helps you identify quanitative costs and benefits, as well as qualitative costs and benefits, so you can appreciate the full impact of your project. Download yours today.

The Purpose of Cost-Benefit Analysis

The purpose of cost-benefit analysis is to have a systemic approach to figure out the pluses and minuses of various business or project proposals. The cost-benefit analysis gives you options and offers the best project budgeting approach to achieve your goal while saving on investment costs.

When to Do a Cost-Benefit Analysis

Cost-benefit analysis is a technique that helps decision-makers choose the best investment opportunities in different scenarios. Here are some of the most common applications for a cost-benefit analysis in project management.

Cost Benefit Analysis & Feasibility Studies

A feasibility study determines whether a project or business initiative is feasible by determining whether it meets technical, economic, legal and market criteria.

Cost Benefit Analysis & Business Requirements Documents

A cost-benefit analysis should be included in a business requirements document , a document that explains what a project entails and what it requires for its successful completion.

Cost Benefit Analysis & Government Projects

Government projects also require conducting a cost-benefit analysis. However, in these types of projects, decision-makers must not only focus on financial gain, but rather think about the impact projects have on the communities and external stakeholders who might benefit from them.

Keeping track of project costs is easier with project management software. For example, ProjectManager has a sheet view, which is exactly like a Gantt but without a visual timeline. You can switch back and forth from the Gantt to the sheet view when you want to just look at your costs in a spreadsheet. You can add as many columns as you like and filter the sheet to capture only the relevant data. Keeping track of your costs and benefits is what makes a successful project. Get started for free today.

How to Do a Cost-Benefit Analysis

According to the Economist , CBA has been around for a long time. In 1772, Benjamin Franklin wrote of its use. But the concept of CBA as we know it dates to Jules Dupuit, a French engineer, who outlined the process in an article in 1848.

Since then, the CBA process has greatly evolved. Let’s go through this checklist to learn how to do a basic cost-benefit analysis using the cost-benefit ratio and present value formulas:

1. What Are the Project Goals and Objectives?

Create a business case for your project and state its goals and objectives.

2. Review Historical Data

Before you can know if a project proposal might be valuable, you need to compare it to similar past projects to see which is the best path forward. Check their success metrics such as their return on investment, internal rate of return, payback period and benefit-cost ratio.

3. Who Are the Stakeholders?

List all stakeholders in the project. They’re the ones affected by the costs and benefits. Describe which of them are decision-makers.

4. What Are the Project Costs and Benefits?

Estimate the future value of your project costs and benefits and think about all the non-financial benefits that a project proposal might bring

The process can be greatly improved with project management software. ProjectManager has one-click reporting that lets you can create eight different project reports. Get data on project status, variance and more. Reports can be easily shared as PDFs or printed out for stakeholders. Filter any report to display only the data you need at the time.

Get your free

Cost Benefit Analysis Template

Use this free Cost Benefit Analysis Template for Excel to manage your projects better.

5. Define a Project Timeframe

Look over the costs and benefits of the project, assign them a monetary value and map them over a relevant time period. It’s important to understand that the cost-benefit ratio formula factors in the number of periods in which the project is expected to generate benefits.

6. What Is the Rate of Return?

As explained above, the rate of return is used to calculate the present values of your project’s costs and benefits, which are needed to find the cost-benefit ratio.

What Is the Cost-Benefit Ratio?

The cost-benefit ratio, or benefit-cost ratio, is the mathematical relation between the costs and financial benefits of a project. The cost-benefit ratio compares the present value of the estimated costs and benefits of a project or investment.

Cost-Benefit Ratio Formula

This is a simplified version of the cost-benefit ratio formula.

Cost-Benefit Ratio= Sum of Present Value Benefits / Sum of Present Value Costs

Here’s how you should interpret the result of the cost-benefit ratio formula.

• If the result is less than 1: The benefit-cost ratio is negative, therefore the project isn’t a good investment as its expected costs exceed the benefits.
• If the result is greater than 1: The cost-benefit ratio is positive, which means the project will generate financial benefits for the organization and it’s a good investment. The larger the number, the most benefits it’ll generate.

Present Value Formula

The present value of a project’s benefits and costs is calculated with the present value formula (PV).

PV = FV/(1+r)^n

• FV: Future value
• r= Rate of return
• n= Number of periods

We’ll apply these formulas in the cost-benefit analysis example below. Our free cost-benefit analysis template can help you gather the information you need for the cost-benefit ratio analysis.

Cost-Benefit Analysis Example

Now let’s put the formulas reviewed above into practice. For our cost-benefit analysis example, we’ll think about a residential construction project, the renovation of an apartment complex. After using project cost estimation methods and evaluating past-project data, the apartment management company concludes that:

• The project costs are $65,000. They’re paid upfront, so it’s not necessary to calculate their present value
• The project is expected to generate $100,000 in profit for the next 3 years
• The rate of return based on inflation data is 2%

Next, we’ll need to calculate the present value of the benefits expected to be earned in the future using the present value formula:

PV= ($100,000 / (1 + 0.02)^1) + ($100,000 / (1 + 0.02)^2) + ($100,000 / (1 + 0.02)^3)=$288,000

Now we need to use this cost value to find the cost-benefit ratio. Here’s how it would be calculated in this case:

Cost-Benefit Ratio: 288,000/65,000= 4.43

Since we obtained a positive benefit-cost ratio, we can conclude that the project will be profitable for this company. This result implies that the project will generate about $4,43 dollars per each $1 spent to cover expenses .

This is a simple cost-benefit analysis that relies on the cost-benefit ratio to establish the profitability of this project. In other scenarios, you might also need to calculate the return on investment (ROI), internal rate of return (IRR), net present value (NPV) and the payback period (PBP). In addition, it’s advisable to conduct a sensitivity analysis to evaluate different scenarios and how those affect your cost-benefit analysis.

Capture all the costs and benefits with project management software. But unlike many apps with inferior to-do lists, ProjectManager has a list view that is dynamic. It adds priority and customized tags you can assign team members to own each item. Our online tool automatically tracks the percentage complete for each item in real time. All the data you collect in our list view is visible throughout the tool. Regardless of the view, they all update live and they’re ready for you to utilize.

How Accurate Is Cost-Benefit Analysis?

How accurate is CBA? The short answer is it’s as accurate as the data you put into the process. The more accurate your estimates, the more accurate your results.

Some inaccuracies are caused by the following:

• Relying too heavily on data collected from past projects, especially when those projects differ in function, size, etc., from the one you’re working on
• Using subjective impressions when you’re making your assessment
• Improperly using heuristics (problem-solving employing a practical method that is not guaranteed) to get the cost of intangibles
• Confirmation bias or only using data that backs up what you want to find

Cost-Benefit Analysis Limitations

Cost-benefit analysis is best suited to smaller to mid-sized projects that don’t take too long to complete. In these cases, the analysis can help decision-makers optimize the benefit-cost ratio of their projects.

However, large projects that go on for a long time can be problematic in terms of CBA. There are outside factors, such as inflation, interest rates, etc., that impact the accuracy of the analysis. In those cases, calculating the net present value, time value of money, discount rates and other metrics can be complicated for most project managers .

There are other methods that complement CBA in assessing larger projects, such as NPV and IRR. Overall, though, the use of CBA is a crucial step in determining if any project is worth pursuing.

Templates to Help With Your Cost-Benefit Analysis

As you work to calculate the cost-benefit analysis of your project, you can get help from some of the free project management templates we offer on our site. We have dozens of free templates that assist every phase of the project life cycle. For cost-benefit analysis, use these three.

RACI Matrix Template

One of the steps when executing a cost-benefit analysis includes identifying project stakeholders. You need to list those stakeholders, but our free RACI matrix template takes that one step further by outlining who needs to know what. RACI is an acronym for responsible, accountable, consulted and informed. By filling out this template, you’ll organize your team and stakeholders and keep everyone on the same page.

Project Budget Template

You can’t do a cost-benefit analysis without outlining all your expenses first. That’s where our free project budget template comes in. It helps you capture all the expenses related to your project from labor costs, consultant fees, the price of raw materials, software licenses and travel. There’s even space to capture other line items, such as telephone charges, rental space, office equipment, admin and insurance. A thorough budget makes for a more accurate cost analysis.

Project Risk Register Template

You have your stakeholders identified and your budget outlined, but there’s always the unknown to consider. You can’t leave that up to chance: you must manage risk, which is why our free project risk register is so essential. Use it to outline inherent project risks. There are places to list the description of the risk, its impact, the level of risk and who’s responsible for it. By maintaining a risk register, you can control the project variables and make a better cost-benefit analysis.

Make Any Project Profitable With ProjectManager

No matter how great your return on investment might be on paper, a lot of that value can evaporate with poor execution of your project. ProjectManager is award-winning project management software with the tools you need to realize the potential of your project. First, you need an airtight plan.

Planning on Gantt Charts

Our online Gantt charts have features to plan your projects and organize your tasks, so they lead to a successful final deliverable. If things change, and they will, the Gantt is easy to edit, so you can pivot quickly.

Resource Management Tools

Another snag that can waylay a project is your resources. ProjectManager has resource management tools that track your materials, supplies and your most valuable resource: the project team. If they’re overworked, morale erodes and production suffers.

The workload page on ProjectManager is color-coded to show who is working on what and gives you the tools to reassign to keep the workload balanced and the team productive.

Real-Time Cost Tracking

The surest way to kill any project is for it to bleed money. ProjectManager lets you set a budget for your project from the start. This figure is then reflected in reports and in the charts and graphs of the real-time dashboard , so you’re always aware of how costs are impacting your project. ProjectManager has the features you need to lead your project to profitability.

Cost benefits analysis is a data-driven process and requires project management software robust enough to digest and distribute the information. ProjectManager is online project management software with tools, such as a real-time dashboard, that can collect, filter and share your results in easy-to-understand graphs and charts. Try it today with this free 30-day trial.

Deliver your projects on time and on budget

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WTO / Business / Budget / 12+ Free Business Startup Costs Templates [Word | Excel]

12+ Free Business Startup Costs Templates [Word | Excel]

A key challenge to many entrepreneurs is forecasting and managing the costs of their startups. A good way to overcome such a hurdle is using a Business Startup Costs Budget , which is a document that provides a list of all anticipated expenses that will be incurred when starting a business and how to raise the capital to meet them.

The business startup costs template constitutes an essential element of the business plan that will guide your financial decisions, such as raising funds and projecting profits.

Although starting a business is quite exciting, there is more to a business than employing people and furnishing an office space . Nowadays, business startup costs are quite huge since entrepreneurs have to purchase software, equipment, appoint employees, and sign leases. These are just the basic costs since they also have to host a website, make business cards, and acquire licenses and permits, among others. Most entrepreneurs, however, overlook startup costs and start their business in an unplanned manner. Although this may work, it is usually more challenging.

Free Business Startup Costs Templates

Types of Business Startup Costs

All startups are different from each other, and hence the business startup costs vary depending on the business type. Some of the many types of business startup costs are the following:

Incorporation fees

When launching a new business, deciding whether the entity will be either a sole proprietorship, a partnership, or a limited company is essential. The various business entities have distinct legal and financial implications.

Individuals looking forward to registering a company may pay a fee of up to $725 for filing their articles of organization and incorporation.

Licensing fees, permits, and incorporation fees will apply depending on the type of business, industry, and location.

Some jurisdictions require payment for licenses when operating in some industries such as aviation, food processing, among others. Some retail outlets will also need to pay for registration or permits in order to operate.

Research expenses

The secret of running any successful business is conducting careful and thorough research to understand the prospective industry. Some businesses may decide to hire a market research firm to gather important information about the business. The expenses of hiring research experts must be included in the budget.

When starting a new business, some equipment and basic supplies must be purchased to meet business needs. It is paramount to decide whether to buy or lease the equipment depending on your financial position and the available options. Equipment costs may vary depending on the type and size of the business. If the business cannot operate without such assets, it is crucial to account for them in the startup budget.

If your new construction business needs a concrete mixer machine, include its estimated cost in your budget.

Office space

Many small businesses with limited capital begin from the homes of their founders in order to reduce costs. For those that have fairly significant amounts of money, the business owner may decide to lease or buy the premises. However, it is important to state that the entrepreneur will also have to pay for other costs such as purchasing furniture, installing office fittings, paying for utilities, among others.

Due to such expenses, many small businesses will choose to rent an office or use a co-working space that can be accessed using various apps. Obtaining a suitable business premise is often a top priority for new business owners because a good location can help the business to get recognition and thrive faster. The cost of office space is often dependent on the location.

For startups with low budgets, co-working space is a good area to start as it comes fully fitted and ready to use. Business owners in the service industry can also operate their new startups as virtual offices that do not require a physical office. In most cases, the proprietors will travel to meet clients in their own premises or in agreed locations.

For startups in the manufacturing, restaurant, retail, wholesale, and distribution sector, purchasing initial inventory for ongoing operations and resale is a basic necessity. You must carefully estimate the required inventory to ensure that it is enough to operate the business effectively. Inventory management is a complicated affair that can have serious repercussions if not well handled.

A business risks having dead stock or outdated items if excess inventory is purchased. On the other hand, if the inventory is too low, the business will experience stockouts, which means that customers will have to look for the goods they need elsewhere. Being able to determine the optimal amount of inventory that will just be enough for the business is very important.

Advertising/marketing

Once you have set up your business, the next step is spreading the word to your target market . Advertising and promotion will be necessary early in the business life cycle and in the subsequent stages to build trust with the public and boost brand visibility. Related advertising costs may include print ads, business cards, brochures, and online advertising.

The contemporary business scene has evidenced rapid technological advances whereby owning a website is a key competitive tool.  An online presence will ensure that potential customers interact with your brand. Using a variety of freely available content management systems and free website builders, you can easily create a professional-looking website at a low cost.

Office supplies

All businesses will require office supplies such as office desks, computers, and office phones to operate effectively. The total sum mainly depends on the tools specific to your business and the total number of employees. However, business experts recommend that office supplies and furniture should not exceed 10% of the total budget.

Common costs for brick-and-mortar businesses include internet, electricity, water, and phone bills that are paid along with the fixed costs of operating a business. These costs are both startup and ongoing business expenses.

The cost of human capital includes salaries, wages, bonuses, stipends, and employee benefits. These costs must be paid even in the early stages of the business life cycle when less revenue is generated.

Professional consultants

To eliminate costly mistakes in business, it is paramount to work with experts and professionals who understand the field better.

A company will be able to handle the tax filing requirements of their business or company by employing the services of a certified public accountant.

The accountant can also help businesses in determining their tax liability when operating in the various legal structures, selecting the most appropriate workers’ compensation procedures, and advise on how to perform your employer duties. When filing your taxes, the accountant will also help you in preparation, which may reduce your tax obligations significantly.

Keep in mind that you can always outsource tasks to such professionals without hiring them in order to save on costs. You can do some of the simple tasks in accounting such as bookkeeping, and only invite the accountant after a period of time to handle the more complicated aspects of accounting. Small business owners can also ensure they are conversant with relevant business laws, and only consult attorneys when it is very necessary. Liaising with an attorney can help to avoid costly litigations that are related to copyright infringement, or even assist in preparing contracts with your business associates .

Professionals charge differently depending on the field, such as law, accounting, IT, etc. By handling some of the minor tasks yourself, you can save a lot of money that would have been paid to the consultants. You need to ensure that only complicated projects should be outsourced to save on costs.

Business insurance is important to protect personal assets from business-related legal liabilities. Insurance also covers workers and business assets, and it can be an annual or a monthly cost.

There are four common forms of insurance that businesses can choose from:

• The general liability insurance covers the business owner and property against injuries or damage respectively.
• Commercial property insurance covers the tangible assets of the business from perils such as storms, fire, or theft.
• Workers’ compensation insurance helps you to avoid costly liability claims in case of injury to employees during the course of their work.
• Errors and omissions insurance protects the business against losses related to undelivered services or business mistakes, for which the client incurred a loss.

It is important to mention that the rates charged for the various types of insurance depend on the factors such as the nature of the business, location, business size, environmental hazards, legal history, among others.

The total amount of taxes to be paid mainly depends on the business revenue, the business entity, and the deductible expenses. Therefore, it may be important to work with a CPA to ascertain deductibles and save on tax fees.

Although travel costs are essential to consider, not all business owners have to factor this cost into the budget. You can avoid frequent travel in order to minimize transportation costs and allocate such funds to more important cost items, such as utilities or rent. Another strategy is to use travel business cards when making official trips since they are able to gather loyalty points and reduce future fares. For those people whose businesses require a lot of trips, you may choose to travel in economy class once in a while to lower your costs.

Shipping costs are variable costs that only apply to businesses in the retail sector. These costs may include the cost of packing materials and postage. Shipping services can reduce the burden related to shipping costs, particularly for small businesses. These services also allow you to print postage without the need to purchase expensive postage meters. You can also obtain affordable shipping boxes from various shipping services.

As a new business owner, you should never underestimate the expenses of the new venture. To help you capture all startup costs, you can make a business startup costs template. The following businesses can significantly gain help from the startup costs budget template:

• Restaurant business
• Home-based business
• Online businesses
• Franchise business

Download: Microsoft Word (.docx)

How to Create Your Business Startup Costs Budget

Creating a costs budget for your startup is a simple procedure that guarantees you a successful business launch. The following tips may help guide the process:

Plan your first day

Your first day when you open the business should be well mapped out by preparing a budget of all the cost items needed to launch the business. A budget for this day should account for all expenditures including the facilities cost, capital expenditures, supplies, and fees.  Facilities cost may include the cost to purchase the space, security deposits for lease, etc. Capital expenditures include costs incurred to purchase fixed assets such as furniture, vehicles, equipment, etc. Other vital costs such as attorney fees and accounting fees should not be excluded from the budget template.

Make a list of your funding sources

Only a tiny percentage of small business owners manage to finance the entire business without sourcing finances externally. Therefore, it is paramount to outline all the sources of funds, including loans, savings, investment income, and credit cards, to determine where all the money will come from.

Enter variable and fixed costs

It is important to categorize your costs into one-time costs and variable costs. Variable costs mainly fluctuate with the sales and production and may include utilities, raw materials, shipping costs, etc. One-time costs include the cost of furniture and fees.  Fixed costs are basically the costs that do not change irrespective of how good or bad your business is. Variable costs on the other hand are those that vary with a change in the business performance.

Estimate monthly sales

This step is very critical during your budgeting process. Mapping out your sales and profitability in the profit and loss statement guides your strategy. Be very realistic when making these projections to understand your business and the amount of money you need to continue operating. However, it is worth noting that this is a difficult process as you are not aware of the sales that your business will generate.

To simplify your work, you can perform three sales estimates:

• Most optimistic forecast- This is the highest amount of sales that you can possibly make within a year.
• Worst forecasted situation- This is the least amount of sales that you expect to make within a year.
• Most likely situation- This is an average of the total sales that will be made in the year, which is used to guide any financing decisions to be made.

The three cash estimates can be used to create your cash balance, which subsequently assists you to determine how much additional funds are needed from internal and external sources.

Small business owners should be practical and realistic when making sales estimates.

It would be safe to predict that not every sale will be realized. The total sales realized will mostly depend on the nature of the business, as well as the payment method by clients.

Perform calculations

People often underestimate the importance of analyzing the budget to determine the deficit or surplus. This information helps to ascertain expenditures that are not a must for inclusion in the budget. It is important to sum your estimated figures in the business startup budget template in order to establish if you have a deficit or a surplus. A deficit means that your costs need to be minimized and you may have to get more finances for the new business. A surplus implies that the business can proceed without funding hitches.

Create your cash flow statement

A cash flow statement is important for your business as it helps you trace all the cash and cash equivalents that enter and leave the company. You can also use downloadable online templates to do the calculations. You can calculate the cash flow by combining the monthly total sales, total collections, and total costs.

Keep things in check

As the final step, it is crucial to give budgeting the attention it requires by involving everybody in your team and ensuring that all key components have been taken into account. Changes can also be made where necessary and as the need arises. It is also important to keep things in check to avoid overspending. The template allows you to create a budget and determine the actual costs of various startup items.

How to Save on Startup Costs

If not well managed, the startup cost for a business can be overwhelming. However, some costs are worth investment, particularly in purchasing equipment and fittings and designing the business website. If you feel overwhelmed by the startup costs, there are various avenues where you can obtain finances for your investmen:

Secure funding

Initial funds for your business can come from either debt and equity financing. However, debt financing options are relatively hard to obtain for new businesses. Instead, you can work with venture capitalists who are willing to fund seed-stage businesses.

Get a business credit card

It is essential to apply for a business credit card that qualifies for a higher credit limit compared to a personal card. In addition, a business card is important as it enables you to separate business and personal expenditures.

Hunt for bargains

It should be your key priority to reduce unnecessary expenditure as much as you can.

Using accounting software can save you significant costs compared to hiring a professional bookkeeper.

In addition, advertising on social media that is free may save the business substantial advertising costs.

Frequently Asked Questions

There is no specific amount attached to starting a business. The average cost is dependent on the size of the business, business type, and industry. Therefore, the average cost varies from business to business.

The easiest and most efficient method of computing startup costs is by using a budget template. The template highlights all the startup costs and variable expenses. Business experts recommend covering business expenses for the next six months when revenues are minimal.

The IRS does not acknowledge startup costs as capital expenditures. However, organizational costs worth $5000 incurred after October 22, 2004, can be deducted for businesses with startup costs of $50,000 or less.

A startup cost is categorized as any expense incurred when setting up a new business. This may include office space, taxes, payroll, professional fees, insurance, etc.

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Cost benefit analysis template

Digital cost benefit analysis templates are a useful framework to see if a new project or idea is viable. Learn how to create your own in a few simple steps, with Asana.

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[ProdDecision-making is hard. Especially when you’re faced with larger, higher-impact decisions, it’s easy to overthink them and doubt yourself. But thankfully, tools and frameworks like cost benefit analyses can help. 

What is a cost benefit analysis template?

Your cost benefit analysis template is a decision-making tool for project planning to help you decide whether or not you should move forward with a project. This template helps you visualize the total costs if you move forward with a project (including unexpected costs), compared to the total benefits.

Your cost benefit analysis template is a blank slate for every new project idea. With it, you can determine the feasibility of any project and decide if it’s worth pursuing. Using a template saves you the added work of creating an analysis from scratch each time, and helps you choose the best course of action based on simple math.

Why it’s important to use a cost benefit analysis template

You won’t need to use your template for every new project. To get the most out of it, run a CBA:

When you’re brainstorming a new product, feature, or strategy .

For high-impact business decisions related to your OKRs and KPIs .

When you have limited resources or cash flow, and you aren’t sure what to prioritize.

How to create a cost benefit analysis template

In your template, you’ll want space to calculate the costs, benefits, and risks to determine the total monetary value of your project. Be sure that you pay attention to intangible benefits and costs that can impact your bottom line, such as office heating bills in the wintertime. 

To simplify your CBA, create your template with project management software . This can help you:

Save your template and make it accessible to all stakeholders.

Categorize each asset as an indirect or direct cost or benefit.

Attach a value to every item (including intangible costs).

Automatically calculate your breakeven and cost ratio for each analysis.

Track the progress of your cost benefit analyses over any timeframe.

Inputs vs. outputs

In a cost benefit analysis: inputs = costs and outputs = benefits.

For your template, create a section for both inputs and outputs. To get the total project cost, factor in both the indirect and direct costs and benefits for your project, as well as the risks . For example, if you’re developing a new software program, you’d add in the physical items you need for the software (computers and a team) as well as potential costs, such as increased WiFi charges.

Other examples of inputs:

Salaries for new team members

Paid trainings or software

Manufacturing costs

Other examples of outputs:

Production increase of 10%

Higher customer satisfaction

Revenue growth

You might notice that some of your costs and benefits are non-monetary. When this is the case, do your best to assign a dollar amount. For example, higher customer satisfaction is linked to higher sales. Knowing this, try to project how much you think sales will increase over a period of time if you’re able to boost customer satisfaction with your new project.

When should you use your cost benefit analysis template?

Once it’s created, you can use your simple cost benefit analysis template anytime you need to run a CBA . But the best times to run them are:

Before the project lifecycle starts. 

To create a customer-facing description of your product or service tiers (i.e., the pricing plan you list on your website or marketing materials).

To see if you have available resources for a project.

When you need to show a return on your investment.

Integrated features

List View . List View is a grid-style view that makes it easy to see all of your project’s information at a glance. Like a to-do list or a spreadsheet, List View displays all of your tasks at once so you can not only see task titles and due dates, but also view any relevant custom fields like Priority, Status, or more. Unlock effortless collaboration by giving your entire team visibility into who’s doing what by when.

Goals . Goals in Asana directly connect to the work you’re doing to hit them, making it easy for team members to see what they’re working towards. More often than not, our goals live separate from the work that goes into achieving them. By connecting your team and company goals to the work that supports them, team members have real-time insight and clarity into how their work directly contributes to your team—and company—success. As a result, team members can make better decisions. If necessary, they can identify the projects that support the company’s strategy and prioritize work that delivers measurable results.

Automation . Automate manual work so your team spends less time on the busy work and more time on the tasks you hired them for. Rules in Asana function on a basis of triggers and actions—essentially “when X happens, do Y.” Use Rules to automatically assign work, adjust due dates, set custom fields, notify stakeholders, and more. From ad hoc automations to entire workflows, Rules gives your team time back for skilled and strategic work.

Custom fields . Custom fields are the best way to tag, sort, and filter work. Create unique custom fields for any information you need to track—from priority and status to email or phone number. Use custom fields to sort and schedule your to-dos so you know what to work on first. Plus, share custom fields across tasks and projects to ensure consistency across your organization.

Microsoft Teams . With the Microsoft Teams + Asana integration, you can search for and share the information you need without leaving Teams. Easily connect your Teams conversations to actionable items in Asana. Plus, create, assign, and view tasks during a Teams Meeting without needing to switch to your browser.

Salesforce . Remove bottlenecks by enabling sales, customer success, and service teams to communicate directly with their support teams in Asana. Share attachments and create actionable, trackable tasks for pre-sales needs. With Service Cloud, connect your implementation and service teams with supporting teams in Asana to deliver amazing customer experiences.

Slack . Turn ideas, work requests, and action items from Slack into trackable tasks and comments in Asana. Go from quick questions and action items to tasks with assignees and due dates. Easily capture work so requests and to-dos don’t get lost in Slack.

Google Workplace . Attach files directly to tasks in Asana with the Google Workplace file chooser, which is built into the Asana task pane. Easily attach any My Drive file with just a few clicks.

What is a cost benefit analysis template? .css-i4fobf{-webkit-transition:-webkit-transform 200ms ease-in-out;transition:transform 200ms ease-in-out;-webkit-transform:rotateZ(0);-moz-transform:rotateZ(0);-ms-transform:rotateZ(0);transform:rotateZ(0);}

A digital cost benefit analysis template is a reusable template to determine the direct and indirect costs, benefits, and risks of a potential project. When created with project management software , you can easily customize your CBA template to use for every new high-impact project.

What is the difference between a risk analysis and a cost benefit analysis?

A risk analysis looks solely at the risks of a possible project, whereas a cost benefit analysis looks at the costs, risks, and benefits associated with a project.

Do I need a cost benefit analysis template?

If you’re in project planning or project management, having a cost benefit analysis template will save you countless hours of administrative work. Once you’ve created your template, you can quickly and easily reuse it for every new project.

What are the benefits of using a cost benefit analysis template?

Cost benefit analysis templates are a structured way to help you make decisions. Before you give the final go ahead on a project, you can use a CBA template to review the impact it would have on your cash flow, and then decide if it feels worth it.

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Small Business Start Up Costs

No matter what kind of business you intend on owning, it is a good idea to estimate your business startup expenses prior to jumping in. Whether you plan on starting a small business or a larger franchise, you may be surprised at the total start up cost. Nearly all new business owners underestimate the cost of starting their business, leaving it exposed to the risks of being underfunded. To help you avoid this common mistake, use our Free Business Start Up Costs Template to help you determine how much money you need to get your start up business up and running safely. See below for additional information, tips and resources.

Calculating business start up costs should be a part of starting any business. An entrepreneur is usually required to put these costs together as part of a business plan , loan or grant application. They are also helpful when putting together proforma financial statements.

Business Start Up Costs Template

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License : Private Use (not for distribution or resale)

"No installation, no macros - just a simple spreadsheet" - by Jon Wittwer

Description

This Excel workbook will help you put together an estimate of costs and funding required to start your business. It is pre-populated with expense categories common to many small businesses and home-based businesses, so it can be very useful in helping you identify all of your start up costs, including many you may not have considered.

As you add your own costs or expense categories, the template will help you understand whether you have adequate funding. Once you have your funding secured and you pull the trigger, use the worksheet to track your actual expenditures to help you keep your costs under control.

As you get your business going, you may want to consider using a more detailed business budget and other financial statements .

Starting a restaurant? This free template also includes a customized start up cost sheet with many cost categories specific to owning and operating a restaurant. Perfect for helping you capture all of those Restaurant Start up Costs.

Starting a franchise, web business or home business? Continue reading below for some help with costs specific to these types of businesses as well as links to other helpful resources.

Start Up Costs for Different Businesses

Restaurant business start up costs.

Starting a restaurant can be expensive because of the specialized equipment and facilities that are required. Luckily, there are usually leasing options available for the expensive items and many landlords will work with you on leasehold improvements. Use the Restaurant specific worksheet in the Business Start up Cost Template to help you consider other expenses such as cleaning costs, uniforms, menu development and supplier sourcing costs.

Home Business Startup Costs

The nice thing about a home based business is that you can forgo many of the typical expenses of a startup. Things like internet, office space, furniture and utilities are already taken care of. Better yet, if you qualify for the home office deduction, now you can write some of these items off as business expenses. Simply put $0 in the template or delete the rows for those expenses already covered. If you are starting a home-based internet business , continue on to the next section.

Internet Business Startup Costs

A web based business may be one of the least expensive businesses to start, especially if you can do the web development work yourself. Use the basic template and decide which expenses apply to you – simply delete the rest. You may also want to consider some items not listed, such as custom web page design and development work, custom database development and scripting, search engine optimization (SEO) and advanced hosting services to name a few. Also, if your business is retail, don't forget to include all of the referral and usage fees for selling through storefronts like Amazon and Ebay.

Franchise Business Start Up Costs

Our Business Start up Cost Template will also help you if you are looking for a start up franchise opportunity or looking for franchises for sale. Along with all of the regular costs of starting a business, the template also includes categories for fixed franchise fees as well as monthly franchise dues and marketing co-op fees. You may also want to check with the franchise corporate offices. Many of them provide tools to help you estimate your start up and operating costs.

How to Use the Business Startup Cost Template

The key to putting together accurate numbers is to get into the details. This requires doing detailed research by calling suppliers and providers, searching the internet and listing any and all costs that may be applicable. To help you, the business cost template comes pre-populated with many of the most common expense categories. It also contains additional suggestions and tips for each category to help you make sure you considered everything. Feel free to add additional line items that are unique to your business.

Funding Sources

Start by listing the sources of funding that you believe will be available to you in the Estimated column. This would include money supplied by owners and investors, funds available from bank loans or other lines of credit. In some cases you may be pursuing other sources of funds such as grants, endowments or sale of assets.

Fixed Costs

After all your funding sources have been outlined, start putting in the estimated fixed costs. These costs are one-time costs associated with getting your business up and running. This includes things like leasing space, purchasing assets, stocking up on inventory and getting your legal and marketing issues in order.

Two key parts to the fixed costs are the Working Capital and a Reserve for Contingencies – these can be significant. Any startup is advised to have a Contingency Fund as there are always last minute surprise costs and fees. Consider the risks of your business and set aside sufficient funds accordingly.

Be sure to include enough Working Capital to fund your normal business operations as you grow. Remember that there can be a significant amount of time between when a sale is made and when you actually receive payment. Sufficient working capital is needed to allow you to continue to purchase inventory and pay bills while waiting for payment. More than one growing business has failed because it lacked sufficient working capital.

Monthly Costs - Until Profitable

Many entrepreneurs fail to understand that businesses are seldom profitable the first day. In order to have a clear picture of actual cash required, it is important to estimate your monthly operating costs as well as how many months it will take you to move from the red to the black. The template is setup to assist you in determining these important costs. Simply identify how many months you believe it will take to get up and running and fill in the estimated monthly costs.

Ready, Set, Go

As a time window is provided and all the sources and costs are identified, the spreadsheet will calculate whether you have a surplus or deficit in funding. If you have a deficit, then you will need to figure out if there are ways to scale back your costs or look for additional funding. If you have surplus and are confident in your numbers, you may be good to go.

Keeping Things in Check

The excitement of starting the business can cause entrepreneurs to spend more than they planned. Use the template to keep you grounded. As you collect funds and begin to spend money, record the Actual amounts next to the Estimated numbers. The spreadsheet will calculate whether you are running over or under you estimated numbers so you can make adjustments as you go.

Additional Business Startup Expense Tips

• Securing lines of credit can take some time. Be sure to have them in place before they are needed.
• Be aware of credit card processing fees. These can be 2% to 5% of the total.
• Little items may not seem like much, but they can add up quickly. Don’t overlook them.
• Business Startup Costs are only part of the financials that any new business owner should put together. Consider putting together a proforma cash flow statement and balance sheet.
• If you are searching for funding, odds are you will need a business plan. Business plans can be a great way to concentrate your thoughts and to really put together a game winning strategy as well as get feedback from mentors and associates.

References and Resources

Below are a number of great references that can help provide you with more information and direction on starting your own business.

Startup Costs For Different Businesses

• Estimating Startup Costs at sba.gov - Information on estimating start up costs from the U.S. Small Business Administration (SBA) office.

Business Startup Loans and Grants

• Small Business Loans and Grants at sba.gov - Information and assistance on understanding the various Business Startup Loans and Start up Business Grants available to small businesses.
• Official Site of U.S. Grants - Official site for finding and applying for U.S. Grants including Business Startup Grants.

How to Start a Business

• Starting and Managing a Business at sba.gov - Helpful information from the SBA on starting and managing a business.
• Starting a Business at entrepreneur.com - Many different articles and tips on starting your own business.
• 10 Steps to Starting a Business at business.gov - Detailed information from the U.S. Government on the 10 steps for starting a business.
• Writing a Business Plan at sba.gov - SBA information about how to put a solid business startup plan together.
• Business Plan Software at paloalto.com - Great software for putting together a business plan. Will guide you through the process and has hundreds of industry specific examples.

Small Business Information and Assistance

• Online and face-to-face Mentoring at SCORE - SCORE,a non-profit organization, partners with the SBA to educate entrepreneurs and help small businesses.
• Minority Business Development Agency at mbda.gov - Tools, information and help for those starting Minority Owned Businesses.
• Small Business and the FDA at fda.gov - Great information for those who are launching business under the purview of the FDA.
• Federal Business Opportunities at fbo.gov - Official government site for identify and bidding on opportunities to do business with the U.S. Government. Can even use it to come up with Business Startup Ideas.
• Information for Entrepreneurs at startupnation.com – Site dedicated to helping entrepreneurs to build a business.

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• The Workstream
• Strategic planning
• Cost benefit analysis

What is a cost-benefit analysis (CBA)?

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Cost-benefit analysis, or CBA, is a data-driven approach to evaluating a project or decision's financial benefits and costs from a business perspective. By forecasting profitability through a CBA, teams can work to avoid financial loss. 

A CBA involves defining the project scope, identifying costs and benefits, assigning monetary values, calculating the net present value (NPV), analyzing results, and making informed decisions. It compares the total expected costs against the expected benefits to determine the project's overall value and feasibility (often in the form of a ratio). 

This guide will discuss the advantages and disadvantages of CBA, identify critical components of a CBA, and explain how to conduct a cost-benefit analysis correctly.

Understanding cost-benefit analysis

Cost-benefit analysis compares a project or decision's estimated or projected costs and benefits. It’s a vital component of project management because it measures a project’s financial feasibility and helps companies avoid losses. If the analysis shows that the benefits outweigh the costs, you can assume that the project will be profitable for your company and that it’s viable to proceed.

In contrast, if the costs exceed the expected benefits, the project is not viable and should be rejected.

You can use cost-benefit analysis in the following scenarios:

• Project initiation : CBA allows you to forecast the viability of your project by comparing the potential benefits and costs. You can decide whether to proceed or decline based on the expected value.
• Budgeting : You can manage multiple projects more efficiently with a limited budget. By evaluating the anticipated benefits, CBA will tell you whether to approve your allocated budget. 
• Resource allocation : You can effortlessly calculate the ROI (Return on investment) and thus identify which projects will be more lucrative. CBA can optimize your resource allocation and distribute them more efficiently, especially when integrated with project scheduling software . 
• Risk management : Using CBA, you can assess risks and apply mitigation strategies, leveraging Scrum to address risks iteratively and adaptively. It also enables you to allocate a budget for potential risks based on the cost-benefit trade-offs of different contingency measures.
• Improving communication : Evaluating CBA, especially when visualized through a Kanban Board , can help justify your project decisions and enhance transparency with a quantitative approach, improving stakeholder communication.

Policy development : CBA can guide you in evaluating new policies or regulations within the project framework to apply implementation strategies. You can ensure regulatory compliance by assessing the costs and benefits of different compliance approaches. 

Using cost-benefit analysis, you can make informed decisions that evaluate your project discovery , align with your organizational goals, optimize resource use, and maximize project value.

Due to its data-driven nature, CBA can also be applied to product analytics , product development strategy , and other economic decisions. Whether using Agile or Waterfall methodology to manage your projects, CBA is crucial.

Key components of a cost-benefit analysis

The key components of cost-benefit analysis are costs , benefits , timeframes , and discount rates . These components help project managers efficiently calculate a business's costs and benefits.

You can assess the following costs throughout the CBA process:

• Direct costs : You can trace direct costs to producing a specific product or service, including labor, materials, supplies, and wages.
• Indirect costs : You can't link indirect costs to producing goods or services. These costs include office rent, administrative salaries, utilities, and overheads.
• Intangible costs : You can identify intangible costs, but measuring them in monetary value is difficult. Examples of intangible costs include decreases in productivity, loss of goodwill, and customer dissatisfaction.
• Opportunity costs : Opportunity costs refer to choosing one project or strategy over another. For instance, allocating resources to develop a new feature for a software project rather than improving existing features represents an opportunity cost of potentially enhanced user satisfaction and retention.

After identifying the costs, it’s crucial to recognize the benefits of projects that CBA measures:

• Tangible benefits : Tangible benefits are easily quantified and measured in terms of monetary value. Examples include revenue growth, cost savings, and increased efficiency.
• Intangible benefits : Similar to intangible costs, intangible benefits are difficult to measure in monetary value. These benefits include enhanced reputation, employee satisfaction, and customer loyalty.

When conducting a cost-benefit analysis, you must consider both short-term and long-term costs and benefits:

• Short-term : Short-term cost-benefit analysis gives you an idea of the immediate results you can expect from your project. For example, hiring temporary staff for a project increases immediate payroll expenses.
• Long-term : Long-term analysis provides a broader picture of the project's feasibility. For instance, investing in new equipment involves maintenance and replacement costs.

The discount rate is the rate of return a company must earn from a project to be profitable. It’s essential to find the discount rate to accurately calculate the present value of all the future cash flows.

If not calculated correctly, it will give a false NPV, leading to wrong decision-making that can cause project losses.

There are different approaches to calculating the discount rate , such as:

• The capital asset pricing model (CAPM) : The CAPM method considers an investment's systematic or market risk compared to the overall market.
• The build-up method : This method focuses on the company's capital structure. It calculates the weighted average cost of capital (WACC) by considering the cost of debt and equity financing, proportional to their usage.
• The Fama-French three-factor model : It’s a more comprehensive approach than CAPM. It considers factors beyond market risk, incorporating size and value factors to refine the discount rate estimate.

The CAPM model is the perfect choice for publicly traded companies as it leverages publicly available data. The build-up method is suitable if you have detailed information regarding the company's capital structure, including debt and equity proportions and their respective costs.

Moreover, if you have access to the necessary data on market risk, size, and value factors, the Fama-French factor model can offer more accurate results than the other two.

Advantages of using CBA in project management

Decision-makers need information to make crucial decisions, making CBA a helpful tool for project management. For example, if you constantly want to evaluate your project and make decisions to ensure a smooth and dynamic analysis, use lean methodology to avoid chaos.

Cost-benefit analysis can help you with the following aspects of project planning :

• Objective decision-making . Objective decision-making is a data-driven approach in which analysts collect and analyze data to help make decisions. This approach is fully evidence-based and free from biases, allowing for more informed decisions. Remember, CBA is a useful tool for collecting relevant data.
• Risk mitigation . CBA helps the project management team identify potential issues such as budget overruns, scope creep , resource allocation problems, risk management challenges, stakeholder conflicts, regulatory compliance issues, technological difficulties, quality assurance problems, market changes, environmental and social impacts, and communication breakdowns. Alternatively, if the project seems unprofitable, the company can drop it to avoid the risk of losses.
• Resource optimization . CBA helps you identify hidden costs associated with a project. This information provides the tools you need to generate alternate options for resource allocation and optimize resources to minimize costs and maximize benefits. 
• Stakeholder confidence . CBA increases the chance of project success because the team will only select profitable projects. Successful projects help companies gain stakeholder confidence.

Challenges and limitations of CBA

Although CBA is crucial for the decision-making process in project management, it’s not free from limitations. 

Determining the monetary value of intangible costs and benefits can be challenging as they rely heavily on assumptions. As a result, you may not get a clear picture of the effect of these components. Initially, a project may seem profitable, but intangible losses underestimated during the CBA process can lead to unexpected future losses.

Moreover, if you’re working with limited cost and benefit data, the result will not be accurate. These factors can influence the analysis's results and lead to false predictions.

How to conduct a cost-benefit analysis for project management

Follow these steps to conduct an accurate cost-benefit analysis for your next project:

Define the project scope

The first step in cost-benefit analysis is defining the project scope and creating a framework. A simple project plan template makes this easy. You can start by stating the purpose of the analysis. Similarly, you should define your goals and objectives.

Determine the required resources, equipment, timeline, evaluation technique, personnel requirements, and relevant data. At this stage, you should also identify and notify key stakeholders so they can provide their input.

To simplify the process, use a common currency for all monetary values. Remember, this is teamwork, and you should apply proper team management strategies to achieve the best outcome.

Identify costs and benefits

The second step is to identify all the related costs and benefits. Sit down with your project management team and hold a brainstorming session to ensure you cover all the bases -- a brainstorming template can help keep the conversation productive. This is where you may find hidden costs that were not apparent at first glance. 

Once you identify the project’s costs and benefits, you should start categorizing them as direct, indirect, tangible, intangible, and others. Note that you only identify the items in this step, not their monetary values.

Assign monetary values

When you finish categorizing all the cost and benefit items, it’s time to assign them a monetary value. 

Quantifying tangible costs and benefits using market prices, historical data, and estimation techniques should be easy, but quantifying intangible items can be difficult.

However, you can try the contingent valuation method (CVM), hedonic pricing method, cost-effectiveness Analysis (CEA), or software to get closer to an accurate estimation and assign dollar value more efficiently.

Calculate net present value (NPV)

The cost-benefit analysis includes many future cash inflows and outflows. Calculating their current worth is essential to understanding their current worth. 

Then, you can find the difference between the costs and benefits to calculate the NPV, which indicates whether the project will be profitable.

The calculations include four factors: benefits (B), costs (C), interest rate or discount rate (i), and the number of years since starting the project (t).

Below is the formula for calculating net present value:

NPV = B 0 -C 0 (1+i) 0 +B 1 -C 1 (1+i) 1 +......+B t -C t (1+i) t ,

Or, NPV = \[\sum_{t=0}^T\Bigg\{{(B_t- C_t) \over (1+i)^t}\Bigg\}\Bigg\{(B_t- C_t) / (1+i)^t\]  

• NPV is the present value. 
• t is the time period (starting from 0 up to T).
• Bt is the cash inflow at time t. 
• C t is the cash outflow at time t. 
• i is the discount rate or the interest rate.  

The formula uses a chosen discount rate to find the present value of all the future costs and benefits. As discussed earlier, different methods can be used to select a discount rate for the analysis. Finding the present value of all the future cash flows sums up the differences between the costs and benefits to find the NPV.

Here is the simpler formula:

Net present value (NPV) = Present value of future benefits - Present value of future costs

Analyze your results

The NPV tells you whether the project will be profitable. You’ll likely get one of the three results: 

• Positive : A positive value means the project will be profitable, and you can accept it. 
• Negative : A negative value means it will be unprofitable, and you should ditch the project. 

Zero : A zero value means you’ll neither profit nor lose money from it.

Make informed decisions

Depending on the results of the analysis, you will need to make a decision. Meet with your project management team and decide whether to proceed or halt the project.

Make smarter decisions with cost-benefit analysis in Confluence

Cost-benefit analysis is imperative to make informed decisions and manage risks. Despite a few limitations, it’s an excellent method to determine if a project or economic activity is profitable. Following this guide, you can properly conduct your cost-benefit analysis to manage projects more efficiently.

It’s crucial to share the cost-benefit analysis report, project updates, and business decisions with your team members to ensure everyone is on the same page. Again, performing the analysis manually can be difficult and time-consuming. To address these issues, we recommend using project collaboration software like Confluence . 

Confluence allows you to conduct a cost-and-benefit analysis and communicate all project updates in real-time with your teammates. It enables you to do the job your way: take notes, brainstorm on a whiteboard or record videos . You can invite your peers to collaborate through real-time editing and inline comments. When you’re ready, you can easily share with your broader company. 

Its intuitive navigation and powerful search ensure your work stays organized and connected to the right teams, projects, and goals, even as your business scales and grows. Key company-wide and project-related knowledge is centralized in one place, making it instantly accessible and ready to move your business forward.

Try Confluence for free

Frequently asked questions

What is a cost-benefit analysis.

A cost-benefit analysis is a company's systematic approach to evaluating the strengths and weaknesses of a project, business, or any economic activity related to decision-making.

What are the five steps of cost-benefit analysis?

The five steps of cost-benefit analysis are: 1) Identifying costs and benefits, 2) Quantifying costs and benefits, 3) Calculating net present value, 4) Assessing risk and uncertainty, and 5) Making a decision.

What is a cost-benefit analysis example?

Examples of cost-benefit analysis include assessing the expenses of manufacturing a product, conducting a project budget review, and comparing the costs of different healthcare treatments.

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Column: Trump says Harris stole his idea for exempting tips from tax, but her version beats his

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Every four years, the just-toss-an-idea-out-there phase of the presidential race precedes the serious campaigning that starts after Labor Day.

The flavor of the moment is the idea of exempting tips from federal taxes. Donald Trump proposed it during an appearance in June in Las Vegas (home to a lot of restaurant and hotel workers who depend on tips).

Kamala Harris offered her version a few days ago during a rally of her own, also in Las Vegas. That prompted Trump to whine on social media that she had poached his idea.

A meaningful share of tipped workers already pay zero federal income tax.

— Ernie Tedeschi, Yale Budget Lab

Are you tired of this yet?

Hang on, because there’s more to say, starting with the fact that a tax exemption for tips on its own won’t do much good for the many low-income workers who count tips as an important part of their income.

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Second, this is hardly a new idea — it has been kicking around the political world since at least the 1980s. California exempted tips from state tax (with some conditions) in 2015.

A tax exemption for tips is a crowd-pleaser, but doesn’t stand up to scrutiny. Trump’s version, and a bill introduced by Sen. Ted Cruz (R-Texas) and Rep. Byron Donalds (R-Fla.) to put meat on its bones, are half-baked.

Harris paired hers with a proposal to raise the federal minimum wage, which is a much better policy.

If all this jockeying is the two parties vying to be more family-friendly, the crown goes to the Democrats, hands down.

Let’s place the issue under a microscope.

Since Trump hasn’t given any details, we have to use the Cruz/Donalds No Tax on Tips Act as a signpost for the GOP approach. The measure exempts tips from federal income tax, but not from the payroll tax that funds Social Security and part of Medicare. It applies only to households that pay federal income taxes — it’s not refundable, meaning that it doesn’t provide any benefit to households whose income is so low they don’t owe federal taxes.

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That leaves out all but “a small sliver” of American workers, according to economist Ernie Tedeschi of the Yale Budget Lab . He counts the number of workers in traditional tipped occupations, including wait staff, barbers and hairdressers, at about 4 million, or just 2.5% of all workers.

“A meaningful share of tipped workers already pay zero federal income tax,” Tedeschi notes.

U.S. census data drive home his point: More than a third of tipped workers earned so little in 2022 that they owed no federal income tax. In other words, they’d receive zero benefit from the Republican act.

Another flaw of the bill is its lack of guardrails to ensure that only low-income tipped workers receive its benefits. Nowhere in the three-page measure are tips defined, nor is there a phase-out of the tax break based on income. This raises the possibility that higher-income households could game the system by defining some of their earnings as tips and pocketing the deduction.

Nothing would “prevent high-income professionals such as hedge fund managers from shifting their compensation to a tax-free tipping model ,” observes Brendan Duke of the liberal Center for American Progress.

That mention of “hedge fund managers” shows that the folks at CAP know how their audience would react to another giveaway to plutocrats, but it’s hard to deny that the wealthy are masters of exploiting any tax break that could conceivably save them money.

The biggest problem with the Republican approach is that it operates in a vacuum, as if exempting tips from income tax is all that needs to be done to vest the GOP with pro-family cred. It’s not. Far more gains would be achieved by extending enhancements to the Earned Income Tax Credit and the Child Tax Credit that were enacted as part of the American Rescue Plan of 2021.

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The EITC and Child Tax Credit enhancements expired at the end of 2021. Efforts by the Biden White House and its Democratic allies on Capitol Hill to extend them failed, due mostly to Republican opposition. Under the Rescue Plan, the child tax credit was increased to an annual $3,000 per child ($3,600 for children under age 6), from $2,000 per child. The measure raised the maximum age of children eligible for the credit to 17 from 16.

Even more important, the credit was made fully refundable, meaning that it went to families regardless of whether or how much they paid in federal income taxes. The American Rescue Plan also eliminated the preexisting program’s work incentives, which reduced the credit for lower-income families. When the enhancements expired, the child credit fell back to $2,000 per child and reduced the refundable portion to $1,700.

As CAP calculates, many of the low-income households that would receive nothing from the No Tax on Tips Act — a single parent with one child, living on $24,000 income mostly from tips, a student working part-time or a married couple earning less than $30,000 — would receive benefits of up to $2,600 from restoration of the American Rescue Plan credits.

The enhanced Child Tax Credit reduced the child poverty rate by about 30% , keeping as many as 3.7 million children out of poverty by the end of 2021. When the enhancements expired in January, the child poverty rate spiked to 17% from 12.1%, plunging 3.7 million children back under the poverty line. The impact was much worse on Black, Latino and Asian children than on white ones.

In other words, if the Republicans wished to be pro-family really, not just rhetorically, they would have clamored to extend the credits.

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Trump’s running mate, JD Vance, whose mouth writes checks his campaign can’t cash, says he’s in favor of the child tax credit and even wants to raise it as high as $5,000 per child. Couple of problems here: First, he surely knows that his Republican colleagues in Congress would never support such a large grant to families, and second, when a more modest increase came up to the Senate floor two weeks ago, Vance didn’t even show up to vote .

How about Harris’ proposal?

What she said in Las Vegas was this: “We will continue our fight for working families of America, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers.” Nestled within that statement are two very important distinctions from the Trump or Republican proposal.

First is a raise in the federal minimum wage, which has been frozen at $7.25 an hour since 2009. Had the minimum kept pace with inflation, it would be $10.79 today. In seven states, the federal wage applies — five that have not enacted a minimum wage of their own (Alabama, Louisiana, Mississippi, South Carolina and Tennessee) and two (Georgia and Wyoming) where the state minimum is lower than $7.25, meaning that the federal wage is the law.

Harris also specified service and hospitality workers, which obviously means she would exclude professionals gaming the law. Whether she would do so by phasing out the benefit by income or specifically identifying eligible occupations isn’t clear.

Despite her careful phrasing, conservative commentators and not a few actual journalistic organizations fell into the trap of treating Harris’ proposal as a copycat of Trump’s.

The right-wing pundit Mary Katherine Ham, whose determination to tell it like it is was hampered by her lack of knowledge, tweeted that if Harris is “ just gonna copy and paste Trump’s site , she doesn’t need another week or two to debut it.”

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Obviously, if Ham spent two minutes examining the proposals, she wouldn’t have made this claim. But her error matched those of, for example, CBS News, which reported in headline syntax that Harris was “ echoing Trump proposal .”

The distinction was also lost on the Wall Street Journal, which accused Harris of “ borrowing a Trump idea .” Never mind that the idea wasn’t Trump’s in the first place. The Times, I’m sorry to say, picked up an Associated Press account that described Harris as “echoing a pledge that her opponent, Republican Donald Trump, has made, and marking a rare instance of political overlap from both sides.”

Budget deficit hawks have also weighed in. The Committee for a Responsible Federal Budget, a watchdog group that is an offspring of the late hedge fund billionaire Pete Peterson, wrung its hands over the potential cost of Harris’ plan, based on a conjecture that she would raise the minimum wage to $15 an hour.

The committee estimated that, combined with an income tax exemption, her plan would cost the federal government as much as $200 billion over 10 years. Is that a lot?

The Congressional Budget Office projects that annual federal budgets will total about $19.6 trillion over the next 10 years, making the cost of the minimum wage and tip exemption come to about 1% of federal outlays during that time.

You make the call. Two of the most expensive tax breaks in federal law are the exemptions for contributions and earnings for pension and individual retirement accounts, and the preferential tax rates on dividends and capital gains. Both disproportionately benefit the wealthy. Combined, they come to $680 billion a year ; the minimum wage increase and tip exemption would cost an average of $20 billion a year.

Some people might think that an important goal of the federal government should be providing for the most vulnerable members of society. The current system, especially after a massive tax break was enacted by the Republicans and signed by Trump in 2017, is heavily skewed toward comforting the wealthy.

If the parties and their candidates want to play the pro-family card, one can’t really blame them for seizing on a policy that sounds great on TV. Only one of the parties has gone beyond a tax exemption on tips and has favored truly comprehensive pro-family policies. Can you see which one?

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Pulitzer Prize-winning journalist Michael Hiltzik has written for the Los Angeles Times for more than 40 years. His business column appears in print every Sunday and Wednesday, and occasionally on other days. Hiltzik and colleague Chuck Philips shared the 1999 Pulitzer Prize for articles exposing corruption in the entertainment industry. His seventh book, “Iron Empires: Robber Barons, Railroads, and the Making of Modern America,” was published in 2020. His forthcoming book, “The Golden State,” is a history of California. Follow him on Twitter at twitter.com/hiltzikm and on Facebook at facebook.com/hiltzik.

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• Vice President Harris releases partial economic plan that includes tax proposals

Elements of economic plan include several new tax incentives and preferences

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Vice President and Democratic presidential nominee Kamala Harris today released details of elements of her economic plan. Among other items, Harris proposed several new tax incentives and preferences, including the following:

• A tax incentive for builders of homes sold to first time homebuyers
• An expansion of existing tax incentives for builders of affordable rental housing
• A tax credit for first time homebuyers
• A restoration of the American Rescue Plan Act version of the child tax credit (CTC) providing up to $3,600 per child
• A new expansion of the CTC providing a $6,000 tax credit for children in the first year of life
• A $1,500 expansion of the earned income tax credit available to lower income individuals
• A tax cut for Affordable Care Act premiums

The plan does not include specifics on whether the revenue cost of these items would be offset, though it does state that Harris will ask “the wealthiest Americans and largest corporations to pay their fair share” and that the plan will reduce the deficit.

Harris also calls for Congress to pass the Stop Predatory Investing Act , which would eliminate certain tax benefits for investors who own large numbers of single-family homes.

KPMG observation

Notably, with regard to President Biden’s oft-stated pledge not to increase taxes on those making less than $400,000, “Vice President Harris is committed to ensuring no one earning less than $400,000 a year will pay more in new taxes.”

This pledge suggests that, for the $4 trillion of “tax cliff” items scheduled to expire at the end of 2025, Harris appears committed to extending those tax cuts for individuals making $400,000 or less. Though it is worth noting that use of the word “new” raises some uncertainty as to how the pledge will be applied.

Harris does not in today’s release endorse, or otherwise mention, the official tax plan of the Biden-Harris Administration, the so-called Green Book .  Her vow to raise taxes on large corporations and the wealthy, however, is consistent with many of the proposals included in the Administration’s plan. Among other things, that plan calls for a 7% increase in the corporate tax rate, a number of new taxes on multinational businesses, and new taxes on high-earning individuals. For more information on the FY2025 Green Book, read  KPMG report: Tax proposals in FY 2025 budget .

Absent from today’s release is a proposal to exempt tip income from taxation. Harris has previously indicated that she (along with Republican nominee Donald Trump) supports this idea.

Finally, it should be noted that the sum total cost of all these proposals is several trillion dollars. Pursuing all of these ideas is likely to put significant pressure on finding new tax increases to offset the cost of these items.

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.

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FACT FOCUS: A look at Harris’ economic agenda

Democratic presidential nominee Vice President Kamala Harris greets supporters at a campaign event at Hendrick Center for Automotive Excellence on the Scott Northern Wake Campus of Wake Tech Community College in Raleigh, N.C., Friday, Aug. 16, 2024. (AP Photo/Mike Stewart)

Democratic presidential nominee Vice President Kamala Harris arrives at a campaign event at Hendrick Center for Automotive Excellence on the Scott Northern Wake Campus of Wake Tech Community College in Raleigh, N.C., Friday, Aug. 16, 2024. (AP Photo/Julia Nikhinson)

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Vice President Kamala Harris unveiled her economic agenda in a speech Friday in Raleigh, North Carolina.

The Democratic presidential nominee laid out plans including a proposal for a federal ban on what she called price gouging on groceries, as well as $25,000 in down payment help for certain first-time homebuyers and tax incentives for builders of starter homes. She also spoke at length about lowering drug costs and criticized the platform of her Republican opponent, former President Donald Trump .

Here’s a closer look at some of her promises and claims.

The impact of Trump’s proposed tariffs

HARRIS: Trump “wants to impose what is in effect, a national sales tax on everyday products and basic necessities that we import from other countries. ... And you know, economists have done the math. Donald Trump’s plan would cost a typical family $3,900 a year.”

THE FACTS: Harris was referring to Trump’s proposal to impose a tariff of 10% to 20% on all imports — he has mentioned both figures — and up to 60% on imports from China.

Most economists do expect it would raise prices on many goods. The Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, estimates it would reduce average incomes in the top 60% of earners by 1.8%. And the Center for American Progress Action Fund, a progressive advocacy group, has calculated that the higher tariffs would cost households an extra $3,900 a year. However, Trump has said the tariff revenue could be used to cut other taxes, which would reduce the overall cost of the policy.

Lowering the cost of insulin and prescription drugs

HARRIS: “I’ll lower the cost of insulin and prescription drugs for everyone.”

THE FACTS: Harris made this promise while referencing the Inflation Reduction Act of 2022 , which allows Medicare to negotiate medication costs directly with drug companies. While it is difficult to predict whether she will be able to keep it, especially without more details, recent policy can provide some clues.

For example, the White House announced Thursday that it had inked deals with manufacturers that could save taxpayers billions of dollars by knocking down the list prices for 10 of Medicare’s costliest drugs. However, there are a number of factors — from discounts to the coinsurance or copays for the person’s Medicare drug plan — that determine the final price a person pays when they pick up the drugs at their pharmacy.

Powerful drug companies unsuccessfully tried to file lawsuits to stop these negotiations. They ended up engaging in talks and executives hinted in recent weeks during earnings calls that they don’t expect the new Medicare drug prices to impact their bottom line. However, the manufacturers have warned that the Inflation Reduction Act could drive up prices for consumers in other areas.

Both the Trump and Biden administrations achieved $35 insulin copay caps for certain Medicare recipients. Biden’s caps have a wider reach, as they apply to all insulin products covered by any Medicare Part D or Part B plan, according to health policy research nonprofit KFF . Trump’s applied only to some insulin products covered by a voluntary subset of Part D plans.

A federal ban on grocery ‘price gouging’

HARRIS: “As president, I will take on the high costs that matter most to most Americans. ... And I will work to pass the first ever federal ban on price gouging on food.”

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THE FACTS: While grocery prices are 25% higher than they were before the pandemic four-and-a-half years ago, they have settled down recently and it’s not clear that much price gouging is now going on.

In the past 12 months, grocery prices on average are up just 1.1%, comparable to pre-pandemic increases. Also, prices for most goods and services, in general, don’t fall significantly except in steep, painful recessions. Instead, most economists expect that wages will rise enough so that Americans can adjust to higher costs. Still, prices remain higher overall than they were just a couple of years ago.

Addressing housing shortages and helping home buyers

HARRIS: “And by the end of my first term, we will end America’s housing shortage by building 3 million new homes and rentals. ... While we work on the housing shortage, my administration will provide first time homebuyers with $25,000 to help with the down payment on a new home.”

THE FACTS: These promises could end up working at cross-purposes. By helping more Americans afford homes, the Harris proposal to subsidize down payments would almost certainly increase demand, at a time when estimates of the U.S. housing shortage already range from 3 million to as high as 7 million .

Harris’ proposal to provide tax incentives to builders to encourage more home and apartment construction would address that concern, but there are many reasons experts cite for the housing shortage, including restrictive zoning laws , higher costs for building materials, and even shortages of construction workers, which tax incentives can’t address.

Harris is also promising to cut red tape that restricts new building, but that is mostly a state and local concern, and many localities are already moving to make it easier build homes.

Find AP Fact Checks here: https://apnews.com/APFactCheck .

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Harris Plans to Ban Grocery ‘Price Gouging.’ What Does the Evidence Say?

Price increases when demand exceeds supply are textbook economics. The question is whether, and how much, the pandemic yielded an excess take.

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By Jim Tankersley and Jeanna Smialek

Reporting from Washington

Vice President Kamala Harris’s economic agenda for her presidential campaign features an argument that blames corporate price gouging for high grocery prices.

That message polls well with swing voters. It has been embraced by progressive groups , which regularly point to price gouging as a driver of rapid inflation, or at least something that contributes to rapid price increases. Those groups cheered the announcement late Wednesday that Ms. Harris would call for a federal ban on corporate price gouging on groceries in an economic policy speech on Friday.

But the economic argument over the issue is complicated.

Economists have cited a range of forces for pushing up prices in the recovery from the pandemic recession, including snarled supply chains, a sudden shift in consumer buying patterns , and the increased customer demand fueled by stimulus from the government and low rates from the Federal Reserve. Most economists say those forces are far more responsible than corporate behavior for the rise in prices in that period.

Biden administration economists have found that corporate behavior has played a role in pushing up grocery costs in recent years — but that other factors have played a much larger one.

The Harris campaign announcement on Wednesday cited meat industry consolidation as a driver of excessive grocery prices, but officials did not respond on Thursday to questions about the evidence Ms. Harris would cite or how her proposal would work.

There are examples of companies telling investors in recent years that they have been able to raise prices to increase profits. But even the term “price gouging” means different things to different people.

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