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Loan Terminology Every Business Owner Should Know

The world of small business financing can be a confusing one—especially if you’re just entering it for the first time.

This industry has many acronyms and confusing loan terminology, and if you’ve never shopped for small business loans before, you might feel totally in the dark.

Whether you’re just shopping your options, comparing different loan offers, or signing an agreement, it’s important to know the business loan terms that relate to your financing.

We’re here to clear up some especially confusing loan terminologies so you can be fully equipped to find the right financing for your business.

DSCR

DSCR stands for debt service coverage ratio—and is sometimes referred to as the debt coverage ratio. Essentially, the debt service coverage ratio shows whether or not a business (on average) has enough cash on hand to cover a loan’s principal, interest, and leases.

EBITDA

EBITDA stands for earnings before interest, tax, depreciation, and amortization. Generally, it’s a measure of a company’s operating performance. It’s a way to evaluate a company’s performance without factoring in tax environments, financing obligations, or accounting decisions.

LTV Ratio

The LTV ratio (loan-to-value ratio) is a measure of financial risk—comparing the loan amount to the value of the asset that the loan is being used to acquire; in other words, it is calculated by dividing the loan amount by the value of the asset.

Second Position

A lender is in second position when they’re lending to a borrower that already has business debt on their books. So, if you have a business line of credit out for your business and you go to apply for a short-term loan on top of that, the potential lender offering the short-term loan would be in second position to your current line of credit lender.

Blanket Lien

blanket lien is a specific type of lien, but a lien in general is a legal claim written into the fine print of small business loans. They help protect lenders by providing some security in the event a borrower defaults and can’t repay them. 

Bridge Loan

A commercial bridge loan is typically a short-term loan that a borrower can use while waiting for approval for another type of business funding—typically of larger amounts, lower interest rates, and longer times to funding.

APR

APR stands for annual percentage rate. As it relates to small business lending, APR is the annual rate charged for borrowing funds. (In other contexts, APR can be the annual rate that’s earned through an investment.) An APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan.

Factor Rate

A factor rate is a piece of loan terminology that you might come across when applying to short-term loans or merchant cash advances. It’s a way that a lender can quote the price of the loan—but it’s different from an interest rate or an APR.

Prepayment Penalty

A prepayment penalty, sometimes referred to as an early payoff penalty, occurs in the form of a fee when you pay back your loan before your predetermined schedule. Not all lenders utilize this penalty. 

Collateral

Collateral is an asset that acts as security for a loan. If you default on your loan, the lender can take possession of the collateral to liquidate it and recoup their losses. Not all loans require traditional collateral but almost all will be secured in some way

Personal Guarantee

A personal guarantee is a legal promise that an individual makes in regards to repaying credit issued to a business. If the business cannot repay the debt, the individual will be required to personally repay the loan. 

Loan Amortization Schedule

A loan amortization schedule illustrates how a borrower will pay back their loan. It outlines each payment that will occur throughout the life of the loan, helping the borrower understand the specific impact of the loan on their day-to-day budget and on their long-term bottom line.

Fixed Interest Rate

When you have a fixed interest rate, the interest rate you are quoted when you first take out the loan will remain the same throughout the life of the loan. 

Adjustable Interest Rate

An adjustable interest rate is mainly used for bank loans and SBA loans. This type of interest rate can fluctuate during the life of the loan and is determined by the market prime rate. 

Simple Interest Rate

The simple interest rate, also referred to as a nominal interest rate, is the interest the borrower pays the lender on top of the principal balance. 

Origination Fee

Lenders charge an origination fee for the processing of paperwork and to verify the information on a loan application. The origination fee may be expressed as a flat fee or as a percentage of the loan amount.

Secured Loan

A secured loan refers to a loan that is secured by a personal guarantee or a valuable asset that can be used as collateral, helping mitigate risk for the lender. 

Unsecured Loan

Unlike a secured loan, an unsecured loan doesn’t require collateral. Because the lender cannot mitigate their risk with collateral, they may require a personal guarantee or will file a UCC-lien on their business. Typically, unsecured loans have higher interest rates than secured loans.

Accounts Payable

Sometimes you’ll hear accounts payable referred to as “current liability”. Accounts payable refers to short-term debt that the borrower will need to pay off in the near future. 

Accounts Receivable

The term accounts receivable refers to the payments that you’re owed. Essentially, accounts receivable are outstanding invoices.

The Bottom Line

This list of loan terminologies just scrapes the surface of all the different loan jargon out there.

When you’re shopping for a business loan, you could come across many more terms not included in this list. Hopefully, these definitions help you start out on the right foot.

When you come across a term you don’t understand during your loan process, it’s crucial that you take time to dig into what it means and how it affects your business financing. Run a quick internet search, talk to a financial advisor, or consult your accountant. It always pays off to be in the know and read the fine print.

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What Is DBA (Doing Business As) and When to File One

If you’re starting a business for the first time, you have important legal decisions to make. But you’re (probably) not a lawyer—and you might be unfamiliar with all the legal terms and acronyms that get thrown around, from choosing between an LLC or sole proprietorship to filing a DBA. 

In this article, we’ll focus on the acronym DBA. Registering your DBA alone doesn’t legally protect your business, but it might be legally required, depending on the state, city, or county in which you operate, as well as your business entity.

Below, we’ll dig deeper into the DBA meaning, when your business needs one, and a few more reasons why filing a DBA is a good idea for any business.

What Does DBA Mean?

DBA stands for “doing business as.” It’s also referred to as your business’s assumed, trade, or fictitious name.

Filing for a DBA allows you to conduct business under a name other than your own—your DBA is different from your name as the business owner, or your business’s legal, registered name.[1] That’s because when you form a business, the legal name of the business defaults to the name of the person or entity that owns the business. That is, unless you register your business as a certain legal entity (more on that below), or if you rename and register your business with a DBA.

So, if Laura Smith wants to start a tech repair business, her business will operate under her own name—unless Laura chooses to register her DBA name as “Laura’s Tech Repair Shop.” After registering her DBA, Laura’s full name isn’t legally attached to her business’s name.

Also keep in mind that, depending on where you live, you’ll need to comply with your state DBA requirements.

Which Businesses Need a DBA?

Now that you know the DBA meaning, your next question is likely, “Do I need a DBA?” Not all businesses do—it depends upon a combination of the business’s legal entity, the locale’s requirements, and the business owner’s preference.

Sole Proprietorships and Partnerships

If you’re a sole proprietorship or general partnership, you’ll need to file a DBA if you want your company to operate under a name that’s not your full, legal name, or your partner’s name. That’s because sole proprietorships and general partnerships are unincorporated, and they don’t need to file entity formation papers or a business entity name with the state. (Though they do still need to acquire the necessary business licenses and permits.)

So, they and their business are one in the same entity, which means they and their business have the same name, too—unless they file a DBA. 

Franchises

While franchise owners don’t need a DBA, it is common they file one in order to establish their identity as a local business. Say, for example, you bought a local Burger King franchise. Franchisees tend to form as LLCs or corporations, so you form a franchise under 123 Business LLC, but you make your DBA “Burger King” in order to let your state know that you are “doing business as” the franchise you joined.

Other Legal Entities

Unless their state, city, or county requires them to, corporations (both S-corps and C-corps), limited partnerships, and limited liability companies (LLCs) technically don’t need to file a “doing business as” name. Unlike sole proprietorships and general partnerships, these business types have already registered their entities and a business name with the state.

However, any business formed under one of these entities still has the option to register a DBA name. That would allow them to do business under a name other than the name on their incorporation documents. 

The most common case of a corporation or LLC registering a DBA name is when the business wants an alternate name for a specific line of their business. By filing a name for a new branch of the business, the corporation doesn’t have to form a whole new business just to operate under a different name. For example, John’s Cosmetics Inc. might want to have a separate name for their upcoming skincare line, “John’s Skincare Solutions.” This saves an expanding business both the money and time it takes to launch a whole new business under an additional LLC or corporation.

Also keep in mind that if you register a DBA without first forming some type of legal entity, your state will automatically recognize your business as a sole proprietorship.

6 Advantages of Filing a DBA

You should file a DBA if you don’t want to operate under your own name or the name under which your business is legally registered. Besides these scenarios, there are a few crucial reasons why you should consider registering a DBA name.

Makes Business Banking Much Easier

We recommend that every business owner opens a business bank account separate from their personal bank account. That’s because separating your business and personal finances will protect your personal assets in case of a lawsuit, preserve your personal credit score if your business fails, make your bookkeeping and taxes that much easier, and generally make you look more professional in the eyes of your clients (and small business lenders).  

But if you’re operating a sole proprietorship or general partnership, you’d run into a roadblock here: If you haven’t registered your business with the state, you don’t have an employer identification number (EIN). And without an EIN, you can’t open a business bank account.

And that’s just one reason why DBAs come in handy: When you file a DBA, you’ll also get an EIN. Problem solved.

Keeps Your Business Legally Compliant

The added clarity of separating your finances (and names) isn’t the only benefit of a DBA name. Registering your DBA name can also help keep your business compliant.

Owners of LLCs or corporations have certain legal protections such as safeguarding the owner’s personal assets if the business is sued. But if you operate your business under a name other than what’s on your incorporation documents and didn’t file, those legal protections won’t hold. So, if you’re incorporated as John’s Cosmetics Inc. and sign a contract with a client as John’s Skincare Solutions, without registering the latter as your DBA, then that contract won’t hold up.

And although a DBA doesn’t provide you with legal protections in itself, it does further separate you from your business. In the unlikely scenario that your business is sued, for instance, you could offer up your DBA as evidence that your business and its assets are an entity separate from you and your assets.

One last thing—some clients might require that you have a DBA in order to contract with you, or some business lenders might require that you have one before extending any small business loans to your business.

Your Name Defines Your Brand

Your business name isn’t everything, and many successful businesses have been built off the backs of pretty straightforward names (think HomeGoods, for instance). 

But your brand name is the public’s first impression of your business. Ideally, your business’s name should reflect your product or service, and give people a reason to become paying customers. If sole proprietor Laura Smith kept her business’s name as just “Laura Smith,” who would know what she offered until they walked into her shop? And why would they feel compelled to walk into that shop at all?

Choosing the perfect name for your business before you’ve even opened your doors can be hard, though. When your business is in its infancy, who knows where you’ll be in five years? If you’re struggling to come up with an awesome name to file as a DBA, try a business name generator for a little inspiration.

Opens up Expansion Possibilities

As we’ve mentioned, registering a DBA allows businesses to operate multiple firms under one ownership, without having to form a separate business entity each time they expand. If there’s any hope that your original venture will want to expand into multiple websites, stores, services, restaurants, and so on, you’ll want to register each under a separate DBA name.

Note that if your business expands to other states, you’ll need to file a foreign qualification in each new state. If you don’t, you could face steep penalties. Your business’s legal name in the states where you qualify will be the name on your company’s certificate of authority. If you want to use a different name, you will have to register a DBA in that state.

You Want to Launch a Website

You can file a DBA in order to transact business under your company’s domain name. This is useful in the event your company name is not available as a domain name, or if you want to expand your business into ecommerce.

Easier to Register a Business Name

When it comes down to it, filing a “doing business as” name is the easiest way for sole proprietorships to register their business’s name, and establish their businesses as entities separate from themselves. It’s also relatively inexpensive.

How to File a DBA Name

DBA requirements vary by state, county, city, and business structure, but in general, registering a DBA comes with paperwork and filing fees anywhere from $10 to $100. You’ll either go to your county clerk’s office to file your paperwork, or you’ll do so with your state government.

In some states, all you have to do is go to the county clerk’s office or state government office. In others, you might also have to place a fictitious name ad in a local newspaper for a certain amount of time.[2] This fulfills the “public notice” requirement for some states—giving the local area an official announcement of your business name.

One logistical restriction to note: Your “doing business as” name can’t have a corporate ending such as “Inc,” “LLC, or “Corp.” That gives the impression that your business is a corporation or has some type of corporate status, when in fact it doesn’t.

Other than that, there aren’t any restrictions on what you can file for a DBA name. It’s probably best to do a simple business name search within your jurisdiction to make sure no other business has your DBA name, though.

Tips for Filing

Now that you know how to file a DBA, let’s explore a handful of need-to-know tips about DBAs:

  • In order to get a DBA as an LLC or corporation, you typically need to provide a certificate of good standing.
  • Some states allow you to pay online, while others may require a money order or cashier’s check. In addition, some states will allow you to file your paperwork online, and others want notarized documents.
  • If you operate under an assumed name that has not been registered, you can get hit with big fines from your state regulatory agency.
  • In many states, you must renew after a set amount of time. Be sure to stay on top of when you must renew your DBA, as letting it lapse can have a severe impact on your business from a marketing perspective.
  • Certain states also require you to file a new DBA if the information provided in the original filing changes, such as a change in officers (for a corporation), partners (for a general partnership), or members (for an LLC). Note that in some states, you can simply file an amendment under these circumstances.
  • In most cases, it is not necessary to hire a business attorney to help you file. The process is simple enough that most business owners can handle it on their own. However, if you’re confused about the process or have a more complicated business situation, it’s always a good idea to seek professional help.

Frequently Asked Questions

1. Is a DBA a legal entity?

No, a DBA is not a legal entity. If you register a DBA without first forming some type of legal entity, your state will automatically recognize your business as a sole proprietorship.

2. How do I get a DBA for my business?

Depending on your state, county, city, and business structure, you’ll either go to your county clerk’s office to file the paperwork to apply for a DBA or you’ll do so with your state government.

In some states, all you have to do is go to the county clerk’s office or state government office. In others, you might also have to place a fictitious name ad in a local newspaper for a certain amount of time. This fulfills the “public notice” requirement for some states—giving the local area an official announcement of your business name.

You’ll usually hear back with approval in one to four weeks, depending on your jurisdiction. Once you’ve been approved for your DBA name, you’re all set to start operating your business under your trade name.

3. How much does it cost to start a DBA?

DBA requirements vary by state, county, city, and business structure, but in general, registering a DBA comes with paperwork and filing fees anywhere from $10 to $100.

4. Does a DBA have to file taxes?

Again, a DBA is not a legal entity, but you will have to file taxes whether you filed for a DBA or not. Your business structure will determine how often your business has to file taxes. Sole proprietorship file taxes annually. Partnerships, LLCs, and corporations submit annual tax returns to the IRS but may also have to pay quarterly taxes if they expect to owe taxes at the end of the year. Businesses must also submit tax returns to their state and some states may require quarterly or annual tax returns.

The Bottom Line

Filing a DBA name isn’t hard—you just need to work within your state or county’s requirements to go about it the right way. It’s usually best to get this all done before you operate under your intended “doing business as” name—somewhere between 30 and 60 days before you open your doors.

You’ll usually hear back with approval in one to four weeks, depending on your jurisdiction. Once you’ve been approved for your DBA name, you’re all set to start operating your business—meaning you can open your doors, take on new clients, and set up your business bank account.

After that, make sure you’re staying compliant by operating under your business name and check with your state government offices to see if you need an annual renewal.

Article Sources:

  1. SBA.gov. “Choose Your Business Name
  2. LegalZoom.com. “How to Place an Ad in a Paper When Creating a New DBA

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This post was originally published on this site

Business vs. Personal Credit Cards: How They Differ

Finding and using the right business credit card can be a helpful way to pay for daily expenses, earn rewards, and build business credit. If, however, you’re wondering what the difference is between business vs. personal credit cards—you’re not alone.

Although there are a number of similarities between the two types of credit cards, understanding the differences will help you decide whether a business or a personal credit card is better suited for your needs.

So, what are the differences? We’re here to help you find out.

In this guide, we’ll break down a thorough comparison of business credit cards vs. personal credit cards—plus, we’ll offer some of our top picks so you have a place to start with your potential business credit card search.

7 Differences Between Business vs. Personal Credit Cards

As we mentioned, business credit cards and personal credit cards are very similar.

First and foremost, these two types of credit cards work in the same way: Issuers extend you a credit line which gives you the ability to make purchases and pay your balance at the end of the month. Both business and personal credit cards accrue interest in the same way—if you don’t pay your balance in full at the end of the month, you’ll accrue interest on the amount you owe.

In addition, when you make purchases on your credit card—depending on the card—you have the potential to earn rewards, cash back, or other perks.

With these similarities in mind, let’s now explore how these two types of cards differ.

Here are seven important differences to understand when it comes to business vs. personal credit cards.

1. Business credit cards are designed for commercial use and will include business-specific features and tools.

The first, and perhaps most obvious difference between business and personal credit cards, is that business credit cards are specifically designed for business use. Personal credit cards, on the other hand, are designed for consumer use.

Other than the name, you’ll find that business credit cards include certain features, perks, and tools that are designed for business owners and that you’re unlikely to find with personal credit cards.

As an example, you’ll find that many business credit cards include free cards for employees (sometimes with spending limits) which is not a feature you would need if you were an individual looking for a consumer card.

In addition, and as we’ll discuss in greater detail below, business credit cards often have rewards programs designed to allow business owners to earn in places and categories where they spend most.

Moreover, you’ll often find that business credit card issuers include business expense and tracking tools with their accounts—similarly, many issuers, like Chase, for example, offer their business credit cards in conjunction with their business bank accounts.

In certain cases, you might be able to access additional rewards or perks for using a business bank account and a business credit card from the same issuer.

2. A business credit card application will ask for information unique to your business.

Another essential difference between business credit cards vs. personal credit cards is that the application for a business credit card will ask for business-specific information. Although you can apply for most business credit cards quickly and easily online (just as you would with a personal credit card), you’ll find that these applications will ask for information such as:

  • Your business’s legal name and contact information
  • Industry type
  • Business entity or legal structure
  • Time in business and number of employees
  • Federal Tax ID (aka EIN)
  • Annual business revenue

Of course, as personal credit cards are designed for individuals, you won’t see these types of fields on a consumer credit card application. However, a business credit card application will ask you for certain personal information as well. To this point, it’s important to note that most business credit cards will require a personal guarantee.

Although this guarantee may be found in the fine print of your agreement, it essentially holds you, the individual, responsible for any debts you create using the card, even though it’s a business credit card.

Therefore, if at any time, your business is unable to pay the balance on the card, you, the individual, will be responsible for making the payments—just as you would as an individual with your personal credit card.

Refer to our guide for more information on business credit card requirements.

3. Consumer protections might not apply to your business credit card.

Next, one of the more technical differences between business credit cards and personal credit cards is that business credit cards aren’t monitored and controlled as closely as personal credit cards are.

Specifically, consumer protection laws—like the Credit Card Act of 2009—usually don’t apply to your business through a business credit card. This means that your business credit card’s APR could be subject to change without you knowing it. Similarly, you could also incur much higher fees if you pay your bill late.

Although this doesn’t happen often, it could have a big impact on what you pay in full—and this is especially true if you often carry a balance. 

In addition, these protections also have the potential to impact the way your balance payments are applied. If you’re paying different interest rates on the same amount on a personal credit card, the issuer legally has to apply the payment to the highest rate first—this will drive what you pay down in interest. The same is not necessarily true with a business credit card.

The issuer could apply your payment to the balance that has the lowest interest balance, leaving the most expensive part of your debt accruing interest charges.

This being said, most business credit card issuers extend the same consumer protection policies to business credit card holders as a courtesy—so it shouldn’t be a top concern.

It is important to note this difference, though, as issuers are not legally bound to those same consumer protection laws. Therefore, you should always read your credit card agreement (business or personal) thoroughly before you sign up.

4. Business credit cards can have higher limits—but also higher rates and fees.

First, because business credit card applications ask for your business and personal income, you’ll usually find that you can access a higher credit limit with a business credit card vs. a personal credit card. As you might expect, this can be particularly useful for businesses as they often both make more money and spend more money than consumers.

On the other hand, however, you’ll also find that business credit cards are more likely to have higher APRs and fees (as well as shorter 0% intro APR periods) compared to personal credit cards. Although some of these fees correspond to the level of perks you receive with the card, the same isn’t necessarily true for interest rates. In general, business credit cards have higher APRs than personal credit cards.

This being said, however, you only have to worry about a higher APR if you plan on carrying a balance from month to month. Plus, although some business credit cards have high annual fees, there are just as many competitive business credit cards with no annual fees.

5. Business credit cards can affect both your business credit and your personal credit.

As you likely know, your borrowing behavior with your personal credit card affects your personal credit report. One of the biggest differences between business vs. personal credit cards, however, is that business credit cards have the potential to affect both your business credit report and your personal credit report.

Why is this the case?

Well, first and foremost, your spending with your business credit card affects your business credit score. In fact, using a business credit card responsibly is a great way to build business credit, as your credit card issuer will report your history to the business credit bureaus—Dun & Bradstreet, Experian, etc.

Some credit card issuers, like Capital One, for example, will also report your business credit card activity to the personal credit bureaus as well. In this case, your spending will affect both types of credit.

Although this can be beneficial if you’re spending responsibly—as you’ll be able to improve your personal and business credit scores—it can be problematic if you have issues with your credit card. If you have spending problems and your credit history is reported to both the consumer and business credit bureaus, both your business and personal credit scores will be negatively impacted.

Therefore, before you opt for a business credit card, it’s important to understand how the card issuer reports spending history.

Learn more about the differences between business credit vs. personal credit.

6. Business credit cards have rewards geared toward businesses.

As we mentioned above, one of the largest benefits of business credit cards vs. personal credit cards is the business-specific rewards programs that are associated with many different business credit cards.

With business credit cards, you’ll find rewards programs that not only offer cash back or rewards points, but those that allow you to earn for spending in business-related categories, such as:

  • Office supplies
  • Computer hardware and software
  • Phone and internet services
  • Rideshare services

Therefore, instead of earning rewards in consumer categories—restaurants, groceries, shopping, etc.—business credit card reward programs give you the potential to earn more for where you spend most.

In addition, many business credit card issuers offer competitive travel rewards cards—with perks designed to benefit those who travel for business frequently.

Use our guide to learn more about the best business credit card rewards.

7. Business credit cards can come with additional perks for business owners.

Finally, on top of the standard rewards programs that you’ll find with many business credit cards, you’ll find that compared to personal credit cards, business credit cards have the potential to offer a variety of other perks.

For instance, some business credit cards include perks such as:

  • Baggage, travel, and car rental insurance
  • Airport lounge access
  • Extended warranties, purchase protection, and return protections
  • Ticket discounts and access to special events and experiences

Plus, if you opt for a travel business credit card, or a co-branded business credit card (like the Southwest business credit card) you’ll find even more benefits related to that specific type of card.

Moreover, as we mentioned briefly above, most business credit card accounts also include access to tools that help you manage your business expenses and spending—cash flow tools, detailed insights and reports, account alerts, fraud protection, and more.

Although you might find some of these tools (or similar ones) with a personal credit card, the ones you receive with a business credit card are specifically designed for business financial management.

Can I Use a Personal Credit Card for Business?

With all of the differences between business vs. personal credit cards in mind, you might be wondering about the possibility of using a personal credit card for your business.

When it comes down to it, the answer is yes—you can use a personal credit card for business. However, for a number of reasons, it’s much more advantageous to use a business credit card for your business over a personal credit card.

In addition to some of the benefits we’ve outlined above—business-specific rewards and perks, the ability to build business credit, etc.—using a business credit card for your business saves you the possible bookkeeping, tax, and legal problems that can be associated with mixing your personal and business finances.

In fact, at the end of the day, using a business credit card is a great way for new business owners to separate their finances, as well as begin to establish business credit.

Therefore, although smaller business owners, especially sole proprietors and freelancers, may be tempted to use a personal credit card vs. a business credit card, it’s worth at least exploring your business credit card options—especially with all of the competitive, no-annual-fee business credit cards on the market.

Top Business Credit Card Options

So, after comparing business vs. personal credit cards, you may decide that a business credit card is the right option for you. So, where do you start your search?

Although there are a variety of options out there, you might begin by looking at the cards in these categories:

0% Intro APR Cards

Although business credit cards often have shorter 0% intro APR periods compared to personal credit cards, there are still a handful of options to choose from if you’re looking for a period that allows you to carry a balance without accruing interest.

In particular, you might consider the American Express Blue Business Cash or Blue Business Plus, both of which have a 12-month 0% intro APR period on purchases. Of course, after the intro period expires on these cards, you’ll receive an APR that will vary based on the market and your creditworthiness.

This being said, however, both of these Amex business credit cards also give you the ability to earn a variety of rewards—and neither requires an annual fee.

Compare the best 0% intro APR business credit cards.

No-Annual-Fee Cards

If one of your top concerns between business vs. personal credit cards is paying a high annual fee, you’ll want to look into cards like the Chase Ink Business Cash, Chase Ink Unlimited, and Capital One Spark Cash Select.

All three of these cards have no annual fee—plus, they each give you the ability to earn rewards, whether cash back or bonus points. Additionally, both of these Chase cards offer a 12-month 0% intro APR period, similar to the Amex cards discussed above.

With the Capital One Spark Cash select, on the other hand, you’ll have access to a shorter 0% intro APR period, only nine months, but you’ll also have no foreign transaction fees, no balance transfer fees, and a $0 fraud liability guarantee.

Compare the best no-annual-fee business credit cards.

The Bottom Line

Ultimately, when choosing between a business credit card vs. personal credit card, it’s important to understand the differences we’ve reviewed here. After all, fully understanding these differences will help you choose what’s best for your business and find the right credit card for your unique needs.

Although there may be a few circumstances in which using a personal credit card for business expenses is okay—in general, you should separate your business and personal finances by keeping all purchases for your company on a business credit card.

Plus, by doing so, you’re improving your business credit score along the way—which will undoubtedly benefit your business in the long run.

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35 Work Ethic Quotes for Small Business Owners

35 Work Ethic Quotes for Small Business Owners

What’s a successful entrepreneur’s secret recipe for starting their own business?

For many, it’s the combination of a great idea, a motivated team, the time to invest in the startup (and some money here and there), and a healthy dose of hard work.

That last ingredient—work ethic—is often what makes or breaks a business owner and their company. So to keep you motivated as you start and grow your business, we asked entrepreneurs: “What work ethic quotes keep you and your employees pushing on?”

Here’s what they had to say.

The Best Work Ethic Quotes for Entrepreneurs

work ethic quotes

1. “I have not failed. I’ve just found 10,000 ways that won’t work.”

—Thomas Edison, American inventor and businessman

Takeaway: “This quote keeps me motivated because it encourages persistence. As an entrepreneur, you are going to fail and make mistakes. That’s natural and part of the process of developing a company that benefits its stakeholders.

“Mistakes are one of the best ways to learn and improve. The key is to avoid making the same errors repeatedly. As long as you keep trying and adapting to the feedback you receive, eventually, you will reach your goals. It’s important not to look at mistakes as failures but instead as signs on a map that help you get to where you want to go.” —Bob Ellis, owner of Massage Tables Now

work ethic quotes

2. “It always seems impossible until it’s done.”

—Nelson Mandela, anti-apartheid activist, political leader, and philanthropist

Takeaway: “There’s always a point in a big project where it feels like it will never be completed, that this is the time when I’ve bitten off more than I can chew. This quote reminds me to stay the course, and that if I just keep moving forward—even though it seems impossible at the moment—I’ll meet my goal.” —Marc Roche, founder of Annuities HQ

3. “Measure twice, cut once.”

—Proverb

Takeaway: “[This work ethic quote] means double-check everything before making a decision because once made, sometimes there is no coming back. ‘Finish what you start.’ It’s simple but effective.” —Krystle Phillips, general manager of Roll Ice Cream

work ethic quotes

4. “Never stop learning—learn something new every day.”

—Robinson Cano, American professional baseball player

Takeaway: “This is how we stay on top of the market and are able to offer innovative, consistent services that make our clients happy and, as a result, bring success to our company.”  —Gideon Lipnickas, founder of New Concept 180

work ethic quotes

5. “Whether you think you can or you think you can’t, you are right.”

—Henry Ford, American entrepreneur and founder of Ford Motor Co.

Takeaway: “In addition to promoting self-confidence and believing in ourselves, this Henry Ford quote inspires our team to go ahead and do the things that seem impossible. We believe that the key to success is embracing new challenges and tackling them with courage, and we pursue this philosophy in our everyday work where we make our clients’ websites more profitable.”—Sarunas Budrikas, CEO of Angle180

work ethic quotes

6. “We are all judged by what we finished, not by what we started.”

—Origin unknown

Takeaway: This [work ethic] quote sums the values of my company perfectly. We believe that our work should speak for itself, and we don’t make a big deal of promoting ourselves—we just deliver on what we promise, making sure that our clients are happy with the services they receive.

“Working hard to keep our standards high and finishing every project to our clients’ liking is what leads our company to success. In fact, most of our clients come to us nowadays, because they have seen our past work and want the same quality of work for themselves.” —Val Slajus, owner of VIS Exterior

7. “The only place success comes before work is in the dictionary.”

—Vince Lombardi, American football coach

Takeaway: “This is one of the most favorite motivational quotes that I even have on the poster hanging next to my desk. It reminds me that everything worth having requires work and effort. In our modern society, a lot of people expect instant gratification for anything they’re doing. The problem is though that it doesn’t work like this in business.

“Often, you put the effort into a project, a traffic source, etc. but you don’t get the results fast. Only if you don’t give up and stay consistent, you’ll reap the outcomes and rewards. That said if you want to succeed, you have to be ready to put in the required work” —Irina Rauchenwald, co-owner of Super Cali Funnel Istic

work ethic quotes

8. “Life is like riding a bicycle. To keep your balance, you must keep moving.”

—Albert Einstein, theoretical physicist

Takeaway: “Almost every business will come under difficult times–stress, struggle, and uncertainty abounds. I find this Albert Einstein quote a wonderfully simple way of reminding myself that, no matter what happens, you just have to carry on. Success doesn’t happen overnight, and when it does happen it’s not through lack of trying.

“The important thing for everyone to remember is that whatever obstacles you face in business and life in general, the best way to overcome them is through working hard to carry on.” —Matt Franks, managing director of Dreambooth

work ethic quotes

9. “Work smarter, not harder.”

—Allen F. Morgenstern, industrial engineer

Takeaway: “That quote has always motivated both me and my staff to find better, smarter ways to get things done.” —Andrew Schrage, CEO of Money Crashers

10. “To progress again, man must remake himself. And he cannot remake himself without suffering. For he is both the marble and the sculptor. In order to uncover his true visage he must shatter his own substance with heavy blows of his hammer.”

—Alexis Carrel, surgeon, biologist, and Nobel Prize winner

Takeaway: “This is a quote we often go back to when we’re trying to create change within our organization. Change is often painful! It’s very tempting to give up and take an easier path, even when we know it isn’t the right choice.

“This quote really reinforces that real, lasting change isn’t easy or else it would have already happened.” —Adam Sanders, founder and director of Successful Release

work ethic quotes

11. “There is no substitute for hard work.”

—Thomas Edison, American inventor and businessman

Takeaway: “We are a small SEO agency that provides a wide range of services to a wide range of clients. As rewarding as this is, it also means that our workloads can often swell, rapidly. I have this Thomas Edison quote in a frame in the office, because, as simple as it is, it sums up the whole working world.

“There simply is no substitute for hard work—no machine can replace the stress, graft, and eventual satisfaction that comes with working hard to do a job well.”—Steve Pritchard, managing director of It Works

work ethic quotes

12. “The harder I work the luckier I get.”

—Samuel Goldwyn, film producer

Takeaway: “My father—an entrepreneur himself—always said this quote, and it motivates me because it works. Whenever my business encounters turbulence or lack of opportunity, I double down and work twice as hard. And it has paid off!” —John Kinskey, founder of AccessDirect

13. “”Do not try to become a person of success, but try to become a person of value.”

—Albert Einstein, theoretical physicist

Takeaway: “This old Einstein quote has been tried and tested, and for sure, it works. Anytime a deal does not go our way or a project yields little return or a marketing campaign flounders, I always remind myself that it is not so much about success, but the value we are offering.

“My employees have adapted the mentality as well, and interestingly, the more we focus on offering value, the more success finds us in unexpected ways!” — Reuben Yonatan, founder and CEO of GetVoIP

work ethic quotes

14. “Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.”

—Samuel Beckett, novelist and playwright

Takeaway: “This Samuel Beckett quote reminds me that failure is often looked as very negative—however, it’s actually a positive. Failure can increase self-awareness and allow both founders and employees to learn things about their business or operations that they would have never learned if they didn’t fail.” —Jeremy Goldman, founder of Firebrand Group

work ethic quotes

15. “The question isn’t who is going to let me; it’s who is going to stop me.”

—Ayn Rand, writer and philosopher

Takeaway: “This Ayn Rand quote shows how starting and running a small business is very much like a battle—there are obstacles that seem impossible at times.

“It’s nice to be able to take a deep breath, center yourself, and think about your heroes—the businesspeople and accomplished individuals who’ve succeeded—and therefore remind you that you can, too.” —Michael Mignogna, CEO of Minyona

16. “Work harder on yourself than you do on your business.”

—Jim Rohn, entrepreneur, author, and motivational speaker

Takeaway: “[This is] my favorite motivational and inspirational quote that has stayed with me throughout my whole career. I have applied this method of thinking as I allocate my time to my business. It’s important for me to focus on working on myself, developing new skills, finding areas of weakness, and improving on them.

At the end of the day, my companies can all go bankrupt and I can lose everything, but nobody can ever take away my skill level, knowledge, and experience.”—Jason Akatiff, co-founder of Boundery

work ethic quotes

17. “Work hard. Have fun. Make history.”

—Jeff Bezos, founder and CEO of Amazon

Takeaway: “I believe that having fun at work is the best. Work can be boring and mundane. It’s important to have fun at the office. It keeps people motivated and engaged. A nice balance of hard work and a fun environment makes all the difference. It motivates everyone.” —Deborah Sweeney, CEO of MyCorporation

work ethic quotes

18. “We are stronger together than we are alone.”

—Walter Payton, American professional football player

Takeaway: “What that truly means is that we have to always make sure that we are working together. No one person is better or greater than the next. As a team, we will continue to reach our goal and continue to have success because we see each other as one team together.” —Kay Matthews, founder of The Shades of Blue Project

19. “All roads that lead to success have to pass through hard work boulevard at some point.”

—Eric Thomas, motivational speaker, author, and minister

Takeaway: “There are a lot of challenges that come our way that hinder us from achieving our success and reaching our goals. With this being said, I always remind myself and my team that challenges and hurdles are a big part of success.

“I know that every business and every person in this world is going through a lot of difficult times during their lifetime but this will all be part of their success in the future. We have to openly embrace every obstacle and face them with our heads and hopes high because it will help and mold us to become better in what we are doing.” —Sonya Schwartz, founder of Her Norm

work ethic quotes

20. “Whistle while you work!”

—Snow White and the Seven Dwarfs (song written by Frank Churchill and Larry Morey)

Takeaway: “Inspired by the jolly Seven Dwarfs, our startup’s leadership team uses this phrase regularly to remind our staff that we want them to enjoy and feel great about what they do. People who dread going to work are motivated only by a sense of survival, fear, and obligation.

“They may get the required work done, but they will never have that creative energy that produces innovative ideas and extraordinary results. Additionally, individual mindsets (whether positive or negative) are infectious and can permeate entire departments and organizations.” —Robin Salter, CMO at Kwipped

work ethic quotes

21. “Every morning in Africa, a gazelle wakes up. It knows it must outrun the fastest lion or it will be killed. Every morning in Africa, a lion wakes up. It knows it must run faster than the slowest gazelle, or it will starve. It doesn’t matter whether you’re the lion or a gazelle—when the sun comes up, you’d better be running.”

—Origin unknown, popularized by Thomas Friedman and Christopher McDougall

Takeaway: “This is very important to internalize in the world of business. If you’re not out there hustling and doing the best you can, someone else will be there to run right past you.” —Manoj “Marty” Puranik, founder, president, and CEO of Atlantic.Net

22. “If you want to build a ship, don’t drum up the men to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.”

—Antoine de Saint-Exupéry, writer, poet, and aviator

Takeaway: “As a leader, it’s important to create a vision that everyone can share. This quote shows the power of purpose; how employees that are connected to the organization’s mission will be more engaged and motivated.”—Jenna Alburger, founder of Outlier Creative

work ethic quotes

23. “Only those who never stand up, never fall down.”

—John Kavanagh, professional mixed martial artist

Takeaway: “This John Kavanagh quote encourages our team to stand up daily, to make mistakes, and to move forward. We know that short-term failure is a key ingredient to long-term success.

“When our team is working on a difficult project, we reference this quote to remind ourselves that it’s okay to fall 100 times—as long as we stand back up 101 times.” —Neil Mclaren, owner of Vaping.com

24. “The difference between greed and ambition is a greedy person desires things he isn’t prepared to work for.”

—Habeeb Akande, British writer and historian

Takeaway: “I always think of this through anything I do—whether its a negotiation—or if I’m ever feeling bad when I take an hour break in the middle of a working day, etc.

“I remind myself I’m working hard to fulfill my dreams, I’m not just thinking of my dreams.” —Antonio Wedral, CEO and co-founder of NOVOS

work ethic quotes

25. “Poor planning on your part does not constitute an emergency on mine.”

—Bob Carter, geologist and philanthropist

Takeaway: “We use this quote to take the pressure off our support team. Our goal is to provide high-quality work. Not shoddy, sloppy work. Sometimes a client calls in with an idea and wants it implemented yesterday. This attitude puts undue pressure on the support team, and instead of doing quality work, they do shoddy work.

“This quote allows them to take a breath and not absorb the rushed energy being presented by the client. We will still do what is needed for the client but only after setting expectations on when it will be delivered.” —Shannon Kuykendall, CEO of Up Automation

work ethic quotes

26. “Morgenstund hat Gold im Mund.”

—German proverb

“My favorite business quote as it relates to work ethic is German and translates into, “Morning hour has gold in its mouth,” much like “Early bird catches the worm.” It’s amazing how much you can get done in the early morning hours when most people are still asleep.

“It’s also when my mind is the clearest. Take advantage of the extra time you have to make your business rise above the competition.”—Christoph Seitz, CEO of CFR Rinkens

27. “The difference between ordinary and extraordinary is that little extra.”

—Jimmy Johnson, American football player, coach, and broadcaster

Takeaway: “As a small business owner with limited resources, it can be tempting to say that we have done a decent job with the available resources and leave it like that. However, many times we find that going that extra mile can make so much difference in customer experience which results in more recurring business and more referrals.

“These customers also go on to become loyal supporters and the best spokesperson for your business. Eventually, our team realized that resources will always be limited and it is up to the team to get innovative to maximize the available resources and deliver the best for our customers.” —Albert Lee, founder of Home Living Lab

work ethic quotes

28. “Things turn out best for the people who make the best out of the way things turn out.”

—Origin unknown, popularized by John Wooden and Art Linkletter

Takeaway: “I started my business 12 years ago and we instantly brought in millions of sales in our first year. But when the recession hit, we got hit hard. Sales plummeted and I had to reduce my staff from 22 to five to make it work.

“Though we have not gotten back to where we were, we are doing fairly well—and hopefully we’ll be back on top in the next years. This quote reminds me and my team that we just don’t give up, and we keep on keeping on.” —Sandy Stein, president of Finders Key Purse

work ethic quotes

29. “Don’t let your talents get you where your character can’t keep you.”

—Eric Thomas, motivational speaker, author, and minister

Takeaway: “This reminds me to always operate and run my company ethically and with integrity and to encourage my clients to do the same. This is so motivating to me because we see so many businesses fail because of the lack of character of the leaders.

This quote keeps me motivated to always do the right thing no matter what.” —Stacy Roberts, founder of SMR Leadership Solutions

30. “There is no growth in the comfort zone.”

—Jocko Willink, retired U.S. Navy SEAL and author

Takeaway: “[This is a] great one I think of often and keep on my whiteboard and the top of all notebooks. I love this mentality and it reminds me to never allow myself or my team to grow complacent in our business.” —Matt Vetter, vice president of Schafer Construction

work ethic quotes

31. “Success is never final, failure is never fatal. It’s courage that counts.”

—John Wooden, American basketball player and coach

Takeaway: “While it’s important to celebrate the small victories and assess the damage of failures, this John Wooden quote always reminds me that there’s still more work to do. It motivates me to continue striving for success even after we have achieved it. There’s always a new market to tap or an innovative process to implement—success is never final, so we continue to keep working.

“It also helps me and my team in the times when things inevitably don’t work out as we expect them to. In those moments, this quote serves as a reminder to learn from the mistakes and work even harder going forward—failure is never fatal, so we pick ourselves up and keep going.” —Evan Harris, co-founder and CEO of SD Equity Partners

work ethic quotes

32. “When people are financially invested, they want a return. When people are emotionally invested, they want to contribute.”

—Simon Sinek, author and motivational speaker

Takeaway: “This Simon Sinek quote resonates with me because it’s true—when my employees are satisfied, they put in more time and energy toward improving their performance and productivity. My employees feel their importance and a sense of accountability to their task.” —Lisa Chu, owner of Black N Bianco

33. “I’ve always had a great work ethic, even when I was washing dishes.”

—Leon Bridges, American singer, songwriter, and record producer

Takeaway: “This quote [stands] out and motivates me every day to do the right thing. How I interpret it and get motivated by it is that whatever you do, whether it’s something small or big, do it to 100% of your abilities, skills, and talent. Never half-ass a job, ever.” —Benjamin Nguyen, owner of Full Color Cleaners

work ethic quotes

34. “Talk less. Do more.”

—Origin unknown

Takeaway: “While ideas are great, everybody has them but very few take action—which is why I feel this quote is so empowering. I find a great sense of accomplishment and pride when I’m able to look back after a hard day of work and see all that I was able to achieve.”—Matt Edstrom, head of marketing at BioClarity

work ethic quotes

35. “You have to learn the rules of the game. And then you have to play better than anyone else.”

—Dianne Feinstein, U.S. senator

Takeaway: “We operate in a complicated industry, and there are a lot of players vying for attention. It isn’t just about learning your business—you have to play (execute) better than everybody else. We bring this quote up at every weekly meeting, and it is a great way to maintain direction and vision.” —Jan Bednar, CEO of ShipMonk

Applying These Work Ethic Quotes to Your Business

When it comes down to it, there’s no doubt that starting and running a business requires a strong work ethic—after all, it’s not always easy to be a small business owner.

This being said, after reading about how these successful entrepreneurs have applied different work ethic quotes to their businesses, we hope you can take the quotes that resonate with you and apply them to your day-to-day business operations.

Looking for more inspiration? Check out our list of favorite small business quotes.

The post 35 Work Ethic Quotes for Small Business Owners appeared first on Fundera Ledger.

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How to Write a Business Plan in 8 Steps (Plus Template)

If you’re just starting a business, you need a business plan. In many ways, your business plan is your roadmap—it not only guides you and other key stakeholders as you grow your business, but it also shows investors, lenders, or potential partners where your business is headed. Therefore, a successful business requires a well-thought-out business plan.

Although the prospect of writing a business plan may seem intimidating, it doesn’t have to be. As long as you take some time, include essential information, and follow a handful of simple steps, you’ll be on your way to creating the perfect plan. To help you through the process, we’ve developed this guide on how to write a business plan, step by step. We’ll take you through each step and section so that you’ll be able to get yours completed in no time.

How to Write a Business Plan: 8 Steps to Follow

Regardless of the kind of business you’re starting, a business plan is used as an organization tool, a guide for you to follow, and a document that tells external parties exactly what your business is and what it does.

This being said, although this definition gives you an overall answer to the question—”What is a business plan?”—it doesn’t provide much information on how to create one. When it comes down to it, you might start your business plan in any number of ways, but generally, this document is broken down into eight core sections.

Therefore, as you’re learning how to write a business plan, the best way to approach these sections—especially if you’ve never created a business plan before—is to take each section as a step to walk through one at a time.

Max Babych, CEO at SpdLoad, agrees with this approach saying:

“A business plan can simply be considered as answers to a number of questions. Try to answer only a few questions at a time. Preparing a small part of a business plan at a time is easier than locking yourself in your office for several weeks to complete the job immediately and completely.”

Then, once you’ve completed each section, your end result will be a comprehensive analysis of your company, as it is now and as you hope it will be in the future.

Step 1: Create your executive summary.

With all of this in mind, the first step you’ll want to take when learning how to write a business plan is to create your executive summary. This executive summary will be the first chapter in your business plan—it will explain what your business does, where your business currently stands, where you want to take your business in three to five years, and why you’ll be successful.

Although this seems like a significant amount of information, the executive summary doesn’t need to be more than one or two pages in length. However, just because this is a short section of your plan doesn’t mean it’s unimportant. In fact, it might be the most important part of your business plan. Some investors might only ask for your executive summary when deciding whether to work with your business—so you’ll want to ensure that it can stand on its own.

Keep in mind that any information that doesn’t answer the “what, where, and why” statements we listed above shouldn’t be included in your executive summary. You can make this step of your business plan simpler by sticking to the following six pieces of information, as recommended by the SBA:

  • Mission statement: In no more than a paragraph, your mission statement should explain what your business is and the overarching goals you have.
  • General company information: State when your business was formed, the name of any founders and their roles, the number of employees, and any locations.
  • Highlights: Next, include examples (with graphs and charts) of any growth you’ve seen since starting the business. This could be financial market highlights or key milestones of the business. You should think of this part of your executive summary as evidence supporting why you’ll be successful. If you’re a startup, you might not have any numbers to show here. If that’s the case, give information on your experiences and highlights from your past endeavors.
  • Products and services: Briefly describe what you actually sell and who you sell it to. If you don’t have a product just yet, describe your plans for your product offering.
  • Financial information: If you’re looking for business financing, you’ll want to include your funding goals at the end of your executive summary. Be sure to include any information about banks or lenders you’ve worked with so far.
  • Future plans: Summarize where you’re planning on taking your business in the future.

Remember—although it may seem extensive, this is first and foremost a summary, so you’ll want to keep it short and sweet. At this point, you still have seven steps left to complete, so you’ll have plenty of time to get into the details later. With this first step, you’re showing readers what they’re getting into. However, it’s also important to remember that as the first step—and a brief one—every word of your executive summary counts. If you haven’t put enough thought into your business plan, it will show.

If you’re struggling with writing your executive summary right off the bat, try working on it after you’re done writing your business plan from start to finish—that way, you’ll have a solid grasp of the details and will be better equipped to summarize them.

Consult our guide for more details on how to write an executive summary for your business plan.

Step 2: Add your company overview.

The second step you’ll want to take when writing a business plan is to add your company overview. Although this step may sound similar to what you just wrote in the executive summary, the company overview is a top-level look into the structure of your business and what you do.

When writing your company overview, therefore, you can think about breaking it down like this:

  • What does your business do: Start your company overview section with a few sentences describing what your business does. You can think of this part as your elevator pitch in writing. The first piece of your company overview is intended to give readers and investors a general sense of your business.
  • Industry and marketplace of your business: Next, you’ll want to explain the nature of the industry and marketplace that your business services. Where do you fit in? What is the need that your business is specifically serving, and how do you meet that need? Again, your explanation of your marketplace offering should be brief and concise.
  • The legal structure of your business: Once you’ve given your elevator pitch and explained your value proposition, you’ll want to describe the legal structure of your business. Are you an S-Corp or C-Corp, or LLC? Be sure to explain what kind of business entity your company is and provide an overview of your ownership structure as well.

Remember, just like the executive summary, you’ll want to keep your company overview short—again, this isn’t the section to dive deep into the details.

Essentially, a business plan’s company overview gives a quick—but catchy—pitch about what you do, who you serve, and why you’ll be able to serve them. Plus, this section also includes a brief look into the existing legal and ownership structure of your business so potential investors know what they’re getting into.

Review the following guide for more information on writing your company overview.

Step 3: Perform your market analysis.

Your next step is to perform an in-depth analysis of your industry, market, and competitors. Whereas the first two sections were high-level overviews, this section is where you’ll start to get into the details.

The purpose of the market analysis is to allow investors to come away feeling confident that you, the business owner, have a solid understanding of the dynamics of your industry, market, and competitors.

To display this understanding, your market analysis should include the following sections:

  • Industry description: Give the reader a look into your industry. Describe how big it is, how it has grown in the past, how industry leaders predict it will grow in the future, and other important trends and characteristics. Then, list out the important players in your industry.
  • Target market overview: You’ve looked at your industry as a whole, now you’ll want to discuss your target market, or target audience.
  • Target market characteristics: Who are the customers in your target market, and what are their needs? Who is currently trying to serve those needs? Where is your target market located? Is this a niche market? What’s the key demographic you’re serving? These are the questions you should be answering as you give in-depth information on your target market.
  • Target market size and growth: You should also give readers a look into how big your target market is. Try to give as much data as possible into how your target market makes purchases in the overall industry—how many, how often, and at what time of the year. Once you’ve looked into the current state of your target market, give a sense of the projected growth of your market. You can reference the SBA’s guide for more information on how to conduct market research to get these numbers.
  • Your market share potential: Now that you know what your target market looks like without you, what will it look like with you? How much market share do you expect to gain in your targeted geographic area?
  • Market pricing: By conducting this market research, you can give the best estimate of how you should be pricing your products, how you should distribute your product, and how you can get ahead with promotional strategies.
  • Barriers: Be sure to include any barriers to market entry you might come across. This might be regulation, changing technology, high investment outlays, or lack of personnel in the area.
  • Competitor research: Now that you’ve looked into your target market as a whole, you can narrow in on your top competitors. Look at their market share, strengths and weaknesses, any barriers they present, partnerships, and so on.

Due to the data, research, and amount of information involved in this section, when you’re learning how to write a business plan, this step may very well take the longest. However, as such a crucial piece to your overall business plan, you’ll want to be sure it contains all the necessary details, is well-researched, and will show readers that you’re knowledgable about your specific market, the market demand, and your business’s role in that market.

When we talked to business owner Athan Slotkin, about his top tips on how to write a business plan, he highlighted the importance of this section:

“You need to clearly spell out the logic for why you are attacking a market opportunity in a certain way—part of that is derived from customers’ needs—and the other part from the fact that your competitors aren’t meeting these needs. Help your audience see what you see.”

Use our comprehensive market analysis guide for more information on writing this part of your business plan.

Step 4: Define your business’s organization.

What’s the next step in writing a business plan? Defining your business’s organization and management structure.

This section explains who does what in your business, what everyone’s background is, and what their past experiences bring to the team.

Here’s what you need to break down:

  • Organizational structure: Before you dive into the details of each stakeholder, explain where they fit into the whole picture. The start of this section should include an organizational chart showing how your business is structured. This will illustrate that you know who is managing what aspect of your business.
  • Ownership structure: You’ve mentioned this before in your company overview, but here, you should go into a little more depth on how your company is legally structured. Explain who owns what, and how much they own.
  • Background of owners and board of directors: Next, explain the background of your team, managers, partners, and board of directors. These backgrounds will prove to potential investors that you’ve surrounded yourself with individuals who can and will make your business a success.
  • Hiring need: If your team isn’t that big right now, you’ll probably need to expand in the future. List out any key hires you’ll need to make in order to achieve your goals.

Step 5: Describe your products and services.

After you’ve described your business’s organizational structure, it’s time to dive into the product or service your business provides. With this step, your goal is to lay out your plans for positioning your product.

When writing a business plan, you can start off this part by describing your service or product and who it’s intended for. What need does it specifically fulfill?

To break this down further, here’s exactly what this section should contain:

  • A description of your product or service: Include the details of your product here, and highlight what makes your product or service stand out. Be sure to speak toward how your product serves the needs of your customers and how it’s different than your competitors. This is all about framing the problem as well as the solution your business is offering.
  • Current status of products: Explain where your offering currently stands. Is it just in the idea stage or do you have a final product ready to go to market? Give a realistic and honest picture of how developed your core product or service is.
  • Product development research and goals: If your product is still in the ideation or creation phase, describe how you’ll bring it to a finalized product. What research and development activities need to be done before you get to market? Also, if you have any plans for future products you’d like to research and develop, note them here.
  • Intellectual property: This mostly applies to technology or scientific companies, but if you have intellectual property that is proprietary to your business and crucial for your success, you should explain that in your product development section. Note if you have patents or are in the patent application process.
  • Sourcing and fulfillment: Do you rely on other vendors to provide your product or service? If so, be sure to make that clear when you’re writing a business plan. Include information about where you’re sourcing your products, where any inventory or materials are coming from, how you receive them, and how often you need fulfillment.

Ultimately, this is the section of your business plan reserved for letting the core of your business—your product or service—shine.

Step 6: Explain your marketing and sales plan.

Now that you’ve given all the crucial details of your core product offering, the next step in learning how to write a business plan is explaining how you’ll sell and market your product or service.

Let’s start with the marketing side. How will you create customers and get them interested in your business?

In general, here’s what the marketing part of this section might look like:

  • Positioning: The first part of your marketing plan covers how you’re positioning your business and products. The way you position your brand determines how customers find and interact with you. Are you a free service? Or the service that can guarantee quality? This is what makes you stand out against your competitors in a branding sense.
  • Promotion: After you’ve explained how you’ll uniquely position yourself, now explain where you’ll get the word out and how you’ll reach your customers. This involves any plans you have for packaging your product, advertising the product (online or in traditional media sources), dealing with public relations, or engaging in content marketing practices.

Once you have a marketing framework explained, now dive into your sales plan:

  • Sales force: Describe who will be selling your product. Do you need a sales force? If so, how big does your sales team need to be? Who will train them? Now’s the time for you to put on the hat of a chief sales officer.
  • Selling strategy: Give an overview of how you will sell your product or service. Will your team be cold-calling potential customers? Or attend sales meetings in person? This is how you’ll start and close the deal. Be sure to describe what the sales funnel looks like for your business.

Although you might not know exactly how your sales and marketing will play out just yet, or which channels will be most successful for you, you’ll nevertheless want to give a clear and concise overview of how you plan on selling your product.

As Phil Strazzulla, founder of SelectSoftware, told us with regard to his top tip for how to write a business plan:

“The most important part of any business plan is listing the key hypotheses that need to be proven for the new venture to work, as well as the tests that will be run to prove or disprove these hypotheses.”

Therefore, as your business progresses and can test your sales and marketing hypothesis and as you learn more, you can come back to this section and change or adjust information as necessary.

Refer to our guide for more information on how to write a marketing strategy.

Step 7: Detail your financial plan and projections.

Although this section comes at the end of your business plan, it can be the most important part of the entire document. With this step, therefore, you’ll detail your financial plan and projections—giving a look into the current state of your finances and mapping out where you’d like to be financially in the future.

If you’ve been in business for a little while now, you’ll use financial data from past performance in this section. If you have previous data to show, you should include the following financial statements:

Even if you don’t have any previous financial data from your company, you need to include financial projections in this section. Financial projections are either supported by your past data, or they’re determined by research and analysis on the industry and your top competitors.

This being said, when you’re forecasting your business’s financials, you’ll want to include these essential documents:

Typically, a thorough business plan has financial projections for the first 12 months of business, but also takes a longer outlook and illustrates a plan for the next three to five years. To get into all of the details involved with creating a financial projection, you might decide to consult a business accountant or other financial advisor.

The last part of your financial plan should include any funding needs your business has or will have in the future.

Whether you plan to get funding through equity financing with angel investors or venture capital firms, or through debt financing with small business loans, here’s what you need to include in a funding request:

  • The funding amount you need right now
  • Any funding you’ll need in the future
  • The purpose and impact of the funds (working capital, equipment purchases, franchising fees, acquiring a business, etc.)

With this piece of your financial plan, a potential investor reading your business plan will be able to determine exactly how any financial contributions they make will impact the business. And if you specifically need a business plan for funding purposes, this guide can help.

Finally, this is also the section where you’ll want to include graphs and charts to visually illustrate your business’s current financial situation and plans for the future.

Step 8: Add an appendix.

When you look at all of the steps involved in writing a business plan, this final step may seem inconsequential—however, that’s not the case. Although the appendix will be at the very end of your business plan, it will also hold all of the supporting information you didn’t include thus far in your document.

Specifically, if you have any additional data points, charts, footnotes, or further explanations that are essential to creating a complete plan, you’ll include those in the appendix. You might also add any contracts, legal documents, business licenses or permits, and product pictures in this section.

Moreover, the appendix is also a great place to insert your own resume and resumes of any key members of your management team—that way your readers can refer to the appendix if they need more—but aren’t distracted by long text explanations or confusing numbers while parsing through the plan.

As small business expert and consultant Sophia Sunwoo explained to us with regard to how to write a business plan:

“Remember that you are telling a story of your unique vision. There’s nothing more disruptive to a great story than a bunch of tables, graphs, historical context, and images that snap the reader out of the world your story is creating. Any additional information that is ‘nice to have’ but not completely aligned with the core purpose of the business plan should be pushed to the Appendix, where the reader can choose to digest this additional information at will.”

Logistically, therefore, the appendix should begin with a table of contents that breaks down the sections of your business plan, followed by the additional information that corresponds to each section.

Business Plan Template and Examples

As we mentioned early on, although this is one of the most common ways to write a business plan, it’s not the only way. Therefore, as you’re learning how to write a business plan for yourself, you might find it helpful to consult different templates and examples.

If you’re searching for business plan templates, you’ll find various options online, including fillable PDFs, Word documents, and software platforms. For a great place to start, you can download our business plan template here.

For more business plan examples, you might refer to any of these resources:

You might also perform some research to see if you can find a business plan example that corresponds to your unique industry. To this point, if you’re looking for the best way to streamline your business plan processes, you might opt to invest in business plan software.

With most business plan software solutions, you’ll have access to a variety of pre-designed templates that you can edit and customize for your business. Some business plan software systems will include industry-specific examples, as well as educational materials to walk you through the process of starting and creating your own plan.

Use our guide here to compare the best business plan software solutions.

The Bottom Line

There you have it—as we’ve broken down how to write a business plan, step-by-step, you now have the tools you need to create a comprehensive business plan.

The best place to start is to thoroughly research your industry, competitors, and financials so that you’ll have the bulk of information you’ll need to reference and include in your business plan available as you sit down to write it.

Once you get to writing, remember to be concise and efficient, keep your audience in mind, and if you’re struggling, refer to a business plan template or example that we mentioned above.

Our final tip? Dive right in. This crucial business document won’t write itself, so it’s time to get going—and once you’re done, this will be one more thing you can check of your starting a business checklist.

The post How to Write a Business Plan in 8 Steps (Plus Template) appeared first on Fundera Ledger.

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