8 Tips to Help You Create a Successful Business Plan

8 Tips to Help You Create a Successful Business Plan

Nelson Smith |Jan 24, 2022

How to Make a Business Plan

Most businesses fail because of poor planning. Their owners tend to get wrapped up in all the fun parts of owning a business. Everybody likes serving customers or spending money on sprucing up headquarters, but very few people like making revenue projections or expense forecasts for the upcoming year. Yet those are the things that will make a difference between a business failing or succeeding.

Many business owners do not really know the nature of their business. Sure, they can tell you what they might pay for raw materials or how much their rent costs, but the analysis of the business never goes much deeper than that. They’re too focused on tasks at hand to take the time to do long-term planning.

The number one thing new (and current) business owners can do to better understand their business is to create a business plan. This is a more daunting task than you might think; a good business plan will be anywhere from 20⁠ to 40 pages long. It’ll require hours of research, and even more time to complete.

Knowing how to make a business plan might seem overwhelming, but do not worry — you can do it. Here are the steps you will need to take to write a proper business plan.

1. Start With the Basics

First off, do not sweat it if you have never written a business plan and have no idea where to get started. There are dozens of templates that are a quick Google search away. Don’t try to reinvent the wheel here.

The first thing you will start with is a description of your business: What do you do? Who will be your main customers? Where does your target customer live? What sets you apart from other businesses?

Next, you will want to talk about major factors that shape your market. If you are opening a Mexican restaurant, this would be a good time to mention overall growth in ethnic foods, or a trend toward people eating away from home more often. Think about whether your target market will increase over time or slowly get smaller, and why the world is likely to turn out that way. It’s hard for one business to buck a whole societal trend.

Now it is time for you to take a hard look at the competition. Who are the dominant players in your business’s niche? What percentage of the market do they have? Even unsuccessful competitors are doing some things right.

Going back to our Mexican restaurant example, your competition is not just Taco Bell. It is not just other Mexican restaurants either — it is every restaurant and every grocery store. Every restaurant in a major city has thousands of competitors, so it is no wonder that so many fail.

Finally, think a little deeper about your industry. Do you want to be a general player, or focus on a niche part of the sector, something larger companies can afford to ignore? What impact will the overall economy have on your industry? You’ll even have to consider any government regulations that could impact your business, both current or in the future.

2. Analyze Your Market

We’ve already talked about analyzing your market from a big picture perspective. The next part of the business plan is where an entrepreneur will narrow down the exact focus of their business.

I would urge every entrepreneur to find their own niche. For instance, I know a business owner who acquires apartment buildings near hospitals and schools and markets nice units to tenants who work there. He has virtually zero vacancy and enjoys the benefits of having higher-quality tenants.

The first step of this part of the business plan is to identify your market. A new entrepreneur will be tempted to stray, especially when money is tight. Think long and hard before you give into this temptation, or else you might end up with a poor business by accident.

Next, identify your pricing strategy. My landlord friend has nice buildings filled with respectful tenants, so he can charge premium rents versus similar buildings down the road. Don’t be afraid to shoot for the top of a market, but make sure you are offering these customers a good value proposition.

You’ll also want to identify any risks you can think of in this section of your business plan. Think about how immune your business is to competition and what would happen if the economy tanked.

3. Understand Your Competition

To succeed in business, you must understand your competition’s strengths and weaknesses. You’ll need an intimate understanding of how they could potentially crush you.

A good place to start is to list your competition and the part of the market they focus on. A supermarket chain competes with everyone from Amazon to the convenience store down the street, but not directly. Each competitor will focus more on one part of the market rather than the whole sector itself.

Next, think about each competitor’s strengths and weaknesses. A high-end supermarket chain might offer good service and a nice store, but the average product will be expensive. A discount supermarket offers cheap prices but a lackluster shopping experience. A convenience store offers an easy location and quick service. Every competitor is doing something right — even the worst player in the industry.

The next step in your business plan might be the most important of all. It’s now time to look at your own competitive advantage and determine if it is strong enough to build an entire business around. This is the time to be critical of your business idea. If this advantage is not crystal clear to potential customers, it is likely your business will fail.

4. Dive Into Sales and Marketing

Once you have demystified your competition, the next step is to identify your customers: who are they? How will you reach them?

Generally, businesses either market directly to customers or try to sell to other businesses. A select few do both, usually by offering the same product to retailers and directly to customers.

A company that manufactures custom doors might try to market to customers directly as well as gaining space in home improvement stores. A new kind of chocolate bar might try a similar strategy, trying to sell its products through its website and off supermarket shelves.

This is a good time to remember your niche. It’s tempting to try and please every type of customer, but maybe your business would be better off maintaining a narrower vision.

A good sales and marketing plan will follow. How will you let your customers know your business exists? It might be as simple as using contacts in an industry you are already familiar with. Or, you might need to advertise using several different methods.

Don’t forget about promotions to drive business. A restaurant might give out coupons that can create repeat visits. Just make sure to impress these potential customers; nobody is going to come back after getting lackluster service.

Finally, offer customers a way to give feedback. I’m constantly amazed at how many businesses do not listen to their customers.

5. Always Have an Operational Plan

Business strategy can only take you so far. Now it is time to focus on execution.

The first section of this part of the business plan is more general. You’ll list the major parts of your operation: What kind of location will you need? What equipment must be purchased? Will you buy or rent the real estate needed to operate the business?

Think about the present and the future when thinking about your operations. Some small restaurant owners will want to expand to a larger location, but others w ill not. A cheap deep fryer might work for now, but a new one will eventually be needed. The time to plan for these contingencies is now, not when a major decision is causing you stress.

Remember to plan for having to eventually replace equipment and potentially put some money aside to develop new products. A restaurant can easily add a new dish to the menu. It’s much harder for a paint producer to come out with a new product.

6. Invest in Human Resources

Congratulations, solopreneurs. Since you only have one employee, this part of the business plan will be a breeze. But a one-person operation has downfalls too, including diminished resale value down the road, difficulty taking time off and the inability to scale the business.

A new business will first need to assess the roles it wants to fill. A cleaning company will obviously need folks to do the job itself, but also support staff to handle incoming calls, schedule the workers and get feedback from customers. Perhaps it is prudent to start with a part-time office manager and expand that role into a full-time position once the company gets busier.

You’ll need to think about how employees are treated next. Will your sales staff be paid a salary or work on commission? How many hours per week do you expect everyone to work? How will vacation policy work? Some businesses use informal feedback, while others will use something more formal. These are all factors you must consider.

Staff who are not growing could get bored and leave. Will you invest in training them? How will that happen?

Lastly, figure out contingency plans in case one of your key employees suddenly quits. You could be the best boss in the world and it will still happen. It’s best to think about this before the stress of the situation hits you.

7. Put Your Plans Into Action

It’s now time to set some goals for your business and the steps you will take to get there. Let’s use a carpenter who wants to start his own handyman business as an example.

The first month will focus on finding new customers. The marketing plan will be put into place and our new entrepreneur will use his contacts to drum up business. The goal after the first month is to gain two customers.

Month two will see profits from the first two customers invested in more marketing. The goal is to attract four additional customers. Once the marketing plan shows it can consistently drive business, leave it in place.

After month six our contractor plans to be busy enough to hire a young person as a part-time assistant. This person will take a bigger role as they get more skilled.

A year after the business’s start date, the now experienced entrepreneur wants to use retained profits to purchase a rundown house. Additional employees can be hired to flip this property, creating an income stream that is less dependent on acquiring new business all the time.

Perhaps after two years our carpenter stops doing physical labor altogether and just manages the enterprise. This is the ultimate goal of the business: to be a self-sustaining unit that focuses on quality work for a reasonable price.

You’ll notice there is nothing terribly unique about this business plan. There are thousands of companies doing something similar. It does not matter, as long as it works.

8. Keep Records of Your Planning

The final part of your business plan is putting the important information into a smaller document that can be easily accessed. This will be an incredibly important document you will want to consult before making any major decisions.

It’s also good to have it around so the business owner does not forget about the plan. Sometimes, when a short-term opportunity presents itself, an entrepreneur might go down that path. If this is not part of the long-term plan of the business, it is usually a mistake.

Saying that, your business plan shouldn’t be written in stone. If something isn’t working out, changes can be made. There’s nothing wrong with pivoting to a better strategy, provided it’s thought out first and there’s a specific plan in place.

The Bottom Line

A detailed business plan is usually needed before a bank or financing company will give an entrepreneur a small business loan. These lenders know the importance of verifying an entrepreneur’s plan.

A business plan can be a daunting document, but there is a reason for that. To succeed in your business, you must first understand it. This usually only happens after an entrepreneur spends hours getting familiar with the intimate details of a business plan.

You might think executing the plan is the most important part of a business, but all that work is worthless without knowing what to execute. That’s what a business plan identifies.

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5 of the Best Auto Insurance Companies

Eric Bank | January 24, 2022

Protect Against Collisions and More If you drive a car in the United States, liability insurance must cover it. This type of policy pays for medical and property damage resulting from a vehicular accident. You can also purchase comprehensive and collision insurance to cover other costs. These additional coverages help protect the value of your car should it be damaged. If you are calculating how much it will cost to buy a car, you need to take into consideration the cost of insurance as well. In this article, we’ll review the basics of car insurance and the best auto insurance companies in America, including costs, pros and cons. This is a brief introduction to automobile coverage. Liability Coverage When an accident occurs, liability insurance covers you, household members and authorized drivers for the costs associated with property damage and bodily injury. It covers the cost to repair or replace property damage that you caused. [youmaylike] You are also covered if you cause the bodily harm or death to someone else while you are driving the car. This includes medical expenses, loss of income and specified legal defense costs. Collision Insurance If you are involved in a collision, this type of insurance will help pay for repairing or replacing your vehicle. If the collision is your fault, the coverage may extend to other damaged vehicles involved in the accident. States do not mandate that you buy collision insurance, but your lender or car dealer will if you finance or lease the car. Policies offer a range of deductibles, which is how much you’ll have to pay for repairs before the insurance kicks in. Larger deductibles lower the policy premiums but expose you to more out-of-pocket expenses if a collision occurs. Comprehensive Insurance Comprehensive insurance covers damage to your car that occurs for reasons other than a collision, including theft, fire, vandalism, weather and natural disasters. This coverage is often required if you finance your automobile. You can add riders to this insurance to provide coverage of additional costs, including auto towing, glass repair, daily rental while your car is in the shop and emergency roadside service. As with collision insurance, you can set the deductible on your comprehensive insurance policy to cut your premium costs. Gap Insurance If your car is severely damaged in an accident or other incident, you might find that your comprehensive and collision damage won’t provide enough coverage to pay off the amount you owe on the vehicle. Many policies pay only the fair market value of a totaled car, which might be only 80% of the amount you owe. You can buy additional insurance to plug this gap and ensure you can pay off the car loan in full if the vehicle is destroyed or stolen. Normally, car leases require you to buy gap insurance. If you pay cash or pay off your loan, you can save money by avoiding or dropping gap insurance when no longer needed. Top Five Auto Insurers These five insurers all offer full coverage policies and many additional services. Amica Amica is a superstar among car insurers, winning accolades from Consumer Reports and J.D. Powers. It’s known for handling the claims process smoothly. The average annual cost for full coverage: is $1,360. Pros You can have your car repaired at any body shop, without restrictions. Offers a premium package which, for an additional cost, provides full glass coverage, rental coverage, good driving rewards and identity fraud monitoring. Superior financial stability rating from A.M. Best. Cons Missing some discounts, such as military, low-mileage and prepay discounts. Must speak on the phone to get a quote. Sparse website when it comes to customer education. State Farm State Farm is the country’s largest multi-line insurance company. It excels in customer service and regularly garners high marks from customers. The average annual cost for full coverage: is $1,337. Pros Superior financial stability rating from A.M. Best. Excellent online quote tool, getting customers a quote in as little as five minutes. Easy claim handling and top service from its more than 18,000 agents and its easy-to-use mobile app. Cons Doesn’t offer coverage for new car replacements or uninsured motorists. Missing prepayment and automatic payment discounts. The Hartford While only 11th in size, The Hartford is big when it comes to policy options. It offers rates based on your actual driving as well as full replacement of new cars when destroyed shortly after purchase. Average annual cost for full coverage: N/A. Pros Solid benefits, including superior roadside assistance and towing programs. High marks from customers for their purchase experiences. One of the few insurers with mechanical breakdown coverage for out-of-warranty repairs. Cons Mediocre service interaction according to J.D. Power surveys. Sparse online learning materials. Geico Geico is the second-largest U.S. car insurer. It is a favorite among tech-savvy geeks who appreciate the insurer’s mobile app and excellent online service. The average annual cost for full coverage: is $1,627. Pros Geico offers plenty of ways to save, such as multi-vehicle, driving history and vehicle safety equipment discounts. Special savings for active and retired military members and federal employees. Full-featured mobile app for getting quotes, buying insurance, managing your policy, submitting claims, summoning roadside assistance and making payments. Cons Human help may be in short supply, as just about everything is handled online. No gap insurance is offered. USAA No insurer matches USAA for service to military members. Unfortunately, it's only available to active service members, their families and retired veterans. Average annual cost for full coverage: $896. Pros Superior financial stability rating from A.M. Best. Top-ranked purchase experience score from J.D. Power. Cons Missing gap coverage. Doesn’t offer interior vehicle coverage or new car replacement coverage. Limited availability. The Right One for You Competition in the insurance industry helps drive down prices and prompts insurers to offer money-saving features. For example, your carrier might reward you for a safe driving record and for having a long-term relationship with the insurer. The right insurer for you is highly rated for service, offers the exact coverage you want and does so at an unbeatable price. You should always gather multiple quotes before selecting an insurer, and make sure you get credit for all applicable discounts.

Everything You Need to Know About Filing Your Own Taxes

Katie Macomb | January 24, 2022

It's Not Fun, but It Has to be Done Benjamin Franklin wrote a 1789 letter that states, “But in this world nothing can be said to be certain, except death and taxes.” Even at the United States’ early beginnings, federal taxes were a necessary evil to fund various public projects and administrative costs. Today, federal taxes serve much of the same purpose. While virtually no one likes to prepare and file their taxes, it is a necessity if you want to avoid fines and further hassle. It is no secret that preparing and filing your taxes is notoriously complicated. Many people lament that it should not be so difficult to pay the government. However, some of the complications allow people to save money if they discover specific tax benefits. Knowing how to file your own taxes may be a good option if your tax situation is relatively straightforward, or if you are willing to learn the process. Why Do You Need to File Your Taxes Every Year? The short answer is that federal law requires that most individuals file taxes annually. Income taxes are assessed every year based on your income earned during that period. You then pay a percentage of that income to the government, less any deductions, adjustments, or credits that you qualify to receive. If you do not file (and pay) your taxes, then you may be assessed penalties and interest. The Internal Revenue Service (IRS) can even go as far as garnishing your wages and repossessing your property if you do not file and pay as required. The Benefits of Filing Your Own Taxes If you are one of the 43% of Americans that are doing your own taxes, you are certainly not alone. Roughly 53 million people prepared and filed their own taxes in 2018. There are many benefits to filing your own taxes, including: Saving money: Hiring a tax professional is expensive, and many people can prepare and file their returns on their own, completely free of charge. Control: Some people like knowing the exact information that is included in their return and being able to control the data, and for some, knowing precisely how the numbers work out, is comforting. Gain helpful information: When you prepare your taxes, you can see what items saved you money this year or which issues you should address so you can save money next year. While filing your own taxes is complicated, it can be beneficial under the right circumstances. There are several programs online that walk you through the process to help ensure you are taking advantage of all of your available deductions and credits. The Drawbacks of Filing Your Own Taxes In addition to the benefits, there are also some disadvantages to filing your own taxes. These include: Time and effort: Preparing and filing your taxes takes time and work You have to sift through financial information and deal with concepts that you may not understand well. The process can be frustrating and take a considerable amount of time. Error risk: If you do not completely understand how your taxes work, you run the risk of making a mistake because of misconceptions. If that happens, it could lead to underpayment and audits down the road. Questions: Even if you use a tax preparation software, you may still have questions that will remain unanswered unless you do significant research or reach out to a tax professional. For some people, the risk of having a substantial error that triggers the IRS’s attention is enough to scare them away from preparing their own taxes. Preparing for Filing Your Taxes When you begin work on your taxes, you should have information gathered throughout the year. Some of the most common items that you will need include: Social Security numbers for you, your spouse, and any dependents Information about wages, such as W2s or 1099s Investment income information Documents that represent any other source of income Information regarding adjustments to income, such as student loan interest paid, IRA contributions, and health savings account contributions, just to name a few Information regarding potential credits, including, for example, child care expenses, education expenses, or retirement savings contributions Data about any tax payments that you may have made throughout the year Keeping good records will help make tax preparation easier at the beginning of the year. [youmaylike] The Basics About What You Can Claim When Filing You must pay income taxes on all your income earned throughout the year. However, that income is reduced by a few things. The further you can reduce your taxable income, the less you tax you will pay. There are three general categories of tax reduction methods: Standard or Itemized Deductions Everyone can claim either the standard or itemized deductions. Standard deductions are a set amount that is based on your filing status. Itemized deductions are based on actual expenses that you incurred throughout the year. You can choose to use the higher deduction. The higher the deduction, the less tax you will have to pay on your income because your income decreases on paper. Itemized deductions include things like medical expenses, state and local tax payments, and home mortgage interest deductions. Itemized deductions will only decrease your income by a certain percentage, or up to a specific point. Adjustments Some adjustments to your income may also be available. These include things like paying student loan interest or alimony. Adjustments are more valuable compared to deductions because they decrease your income dollar for dollar. Credits A credit decreases your taxable income as well. Some credits are refundable while others are not. For example, you get a child tax credit simply for having children that qualify for that credit, but that credit will not be paid out to you if you do not have any tax obligations. On the other hand, the Earned Income Credit, which is available for low-income filers, will be refunded to you even if you do not owe any taxes. There are a wide variety of deductions and credits available. Take a look at the federal forms and related schedules to determine whether you might qualify for any of these. How to File Your Own Taxes If You Live Overseas If you earned income in the United States as a U.S. citizen or resident alien, you likely need to pay taxes on that income. This is true even if you live overseas. You can still choose to e-file or mail your tax return to the IRS once you have it prepared, just as if you physically lived in the United States. In some cases, you will be taxed on the income that you earned throughout the world. However, you may be able to deduct a portion or all of the revenue that was not made in the United States in some circumstances. Filing Online The IRS offers an online filing option that is free for individuals that have an adjusted gross income below a specific threshold. Generally, your income must be below $66,000 to qualify for this service. You can also file online by using a commercial tax preparation software. Examples of this type of software include: H&R Block TurboTax TaxCut TaxSlayer There are many programs available that will file your taxes for you, often for a fee. Knowing how to file your own taxes can be a great way to save money, but it can be tricky as well. If you want to file your taxes yourself, be sure to read the form instructions thoroughly and get familiar with various tax saving opportunities before you begin preparing your return.