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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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.

5 of the Best Investment Apps for Beginners

Stephanie Colestock | January 24, 2022

Make Investing Simple Whether you’re putting away your first $1,000 or have been saving for the future for years, you’re going to want to consider investing your funds at some point. Doing so will allow you to maximize returns and exponentially grow your savings. Unfortunately, the investment process can be pretty intimidating, especially if you are starting out on your own. It’s hard to know how to begin, where to invest, how to balance your portfolio and even what sort of fees you should expect to pay along the way. That’s where the convenience and ease of today’s best investment apps can come into play. What Are Investment Apps? Once upon a time, your only choice for investing was to pick up the phone and call your stock broker to initiate a trade. You were charged for the service, either based on commission or as a flat fee per transaction. While stock brokers are still an option, you can take investing into your own hands these days, without ever needing to talk to another human. And it’s all thanks to investment apps and platforms. Today’s apps offer a range of services and features. With them, users can: Research funds and individual stocks View fees and expenses related to investment choices Invest funds on-the-go, and even automate regular contributions Automatically reinvest earnings on current investments Adjust portfolio for personal risk tolerance View performance projections Choose funds or individual stocks that align with personal beliefs, through portfolios based on socially-responsible missions The best part? Investing through trusted apps is usually cheaper, faster and you’ll have instant access to your portfolio/reports at any time of day. Not only that, but you’ll also be able to set your investment risk tolerance, rebalance your portfolio and even reinvest earnings automatically. Who Are Investment Apps Designed For? Whether you’ve been playing the market for ages or are ready to invest your first $100, the right investment app is worth considering. For those new to the stock market, apps will simplify the process and put the power of investing at your fingertips… literally. From your phone or computer, you can easily see portfolio recommendations based on your own goals, savings plans and even risk tolerances. The right app will tell you up front how much you can expect to spend in fees throughout the year, and can even allow you to automate many of the more confusing aspects, such as picking well-performing stocks or even rebalancing. While investment apps are ideal for beginners, newbies aren’t the only ones who will see the benefits. Even seasoned investors will find the process easy to use, and may even learn that these platforms can maximize returns (and save them money in fees) along the way. Not to mention, many investment apps offer additional insight into specific funds, so you can choose to invest in companies that align with your own passions and beliefs. Now that you know why you should consider using an investment app for your own savings, let’s take a look at some of the best ones available today. Best Investment Apps Great for Beginners: Acorns Fees and Expenses: For investors with less than $1 million invested, fees are between $1-3 per month depending on the account option you choose. Acorns is also free for college students. Beginning Investment Requirement: At least $5 to start Types of Investments Available: ETFs (exchange-traded funds) Portfolio Options: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, Aggressive Automatic Investing?: Yes Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes If you want an easy, hands-off approach to investing that won’t leave your head spinning, Acorns is a great first choice. This app not only simplifies investing for beginners, but allows investors to completely automate the process from start to finish. After connecting the app to your debit card, the app will “round up” each of your daily purchases, putting the savings into an investment holding account. Once you reach the minimum required, Acorns will invest this money on your behalf, based on your account preferences. The app will also reinvest your earnings, as well as rebalance your portfolio when necessary. [youmaylike] Great for Truly Free Investing: Robinhood Fees and Expenses: Robinhood is a free investment platform in every sense of the word, pledging to never charge company fees or commissions to customers. Beginning Investment Requirement: You’ll need $2,000 to get started Types of Investments Available: ETFs, stocks, cryptocurrency and options Portfolio Options: Interest-based options such as Fashion ETF, Tech ETF and Energy ETF, as well as a standard S&P 500 ETF, all with personal risk tolerance settings. You’ll also find “collections,” which are individual stocks grouped according to specific interests — such as companies with female CEOs or that are in the social media sector. Automatic Investing?: No Automatic Reinvesting?: No Automatic Rebalancing?: Yes A great option for beginners and experienced investors alike, Robinhood makes the process both easy and affordable. How affordable? Well, it’s entirely free. By offering a truly free experience, Robinhood saves investors some serious cash over time. Additionally, the platform makes it easy to choose individual stocks or ETFs based on personal interests. If you want to invest in cryptocurrency or options, you can also do so through Robinhood. One of the biggest limitations of the platform, though, is its automation. While you can set up automatic deposits into your account, you will need to manually invest those funds and then reinvest (or withdraw) your dividends. Stash Fees and Expenses: $1 per month fee for those with less than $5,000 invested, or $2 per month for retirement accounts with less than $5,000. For users under 25, fees on retirement accounts are waived. If you have more than $5,000 invested, your fee will be 0.25% annually. Beginning Investment Requirement: You’ll need at least $5 to begin investing (fractional shares are available) Types of Investments Available: ETFs (exchange-traded funds) and fractional stock shares Portfolio Options: Too many to name, ranging from things you Want (portfolios that are conservative to aggressive mixes), things you Believe (such as groups of companies that believe in clean energy, LGBT rights, etc.), and things you Like (tech, retail and social media companies). Automatic Investing?: Yes Automatic Reinvesting?: No Automatic Rebalancing?: No The closest competitor to Acorns, Stash seeks to make investing easy for everyone, regardless of your goals and passions. They have three account options to choose from, allowing you to manage your investment and retirement accounts, or even a child’s education savings through custodial accounts. With Auto-Stash, you can set any number of automatic investment options and transfers. However, Stash will not rebalance your portfolio for you, nor will they reinvest dividends on your behalf. Wealthfront Fees and Expenses: 0.25% annually Beginning Investment Requirement: $500 minimum initial investment Types of Investments Available: ETFs (exchange-traded funds), individual stocks, retirement accounts (401k, IRA), 529 savings plans, trusts Portfolio Options: 11 asset classes to choose from, including natural resources and real estate Automatic Investing?: Yes Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes Wealthfront’s investment platform is designed to be friendly for users of all experience levels. If you’re a seasoned investor, you’ll enjoy all of the options available to you, including the ability to manage your retirement accounts, education savings, and even non-profits or trusts. If you’re a newbie, their free financial expertise center is the perfect place to learn all about investing and your future. TD Ameritrade Fees and Expenses: The managed, automatic portfolio investment option (called Essential Portfolios) is available with a 0.30% advisory fee Beginning Investment Requirement: $5,000 minimum for managed portfolios (no minimum requirement for traditional trading) Types of Investments Available: Stocks, ETFs, options, mutual funds, futures, bonds/CDs, Forex, cryptocurrency Portfolio Options: Essential Portfolios (EP) offer investors a range of options from Conservative to Aggressive, based on your individual passions, preferences and tolerances Automatic Investing?: Yes, with EP Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes A more traditional brokerage app, TD Ameritrade is one of the most recognizable names in the industry. You can easily educate yourself on all things financial, thanks to their free videos and posts. If you want a traditional experience, you can choose your trades and pay per transaction. Prefer a more streamlined, automated approach? Opt for their Essential Portfolios, a hands-off investment option (robo-advisor) that charges a flat monthly fee and requires little-to-no oversight from you. Plus, their app makes the investing process easier than ever with a user-friendly interface, price alerts and no minimum to get started. If you prefer a desktop experience, this is also available to you through TD Ameritrade. Bottom Line Getting started with investing can be intimidating. With all of the terminology and account options out there, it’s easy to want to run and hide. Thanks to some of today’s best investment apps, though, you can not only get started with your first portfolio but also watch your money quickly grow… no matter how much of a beginner you may be! It’s important to choose an app that offers you the portfolio options and features you want most, with fees and deposit minimums that match your financial needs. The five apps above are our favorites for beginners, making that first foray into investing easier than ever before. The hardest part will be choosing the one you love most!