nike business plan 2022

Investor News Details

Nike, inc. reports fiscal 2022 fourth quarter and full year results.

BEAVERTON, Ore.--(BUSINESS WIRE)-- NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2022 fourth quarter and full year ended May 31, 2022.

• Fourth quarter reported revenues were $12.2 billion, down 1 percent compared to prior year and up 3 percent on a currency-neutral basis*
• NIKE Direct reported revenues for the fourth quarter were $4.8 billion, up 7 percent compared to prior year and up 11 percent on a currency-neutral basis
• Wholesale reported revenues for the fourth quarter were $6.8 billion, down 7 percent compared to prior year and down 3 percent on a currency-neutral basis
• Gross margin for the fourth quarter decreased 80 basis points to 45 percent.
• Diluted earnings per share was $0.90 for the fourth quarter
• The Company announced its Board of Directors has authorized a new four-year, $18 billion program to repurchase shares of NIKE's Class B Common Stock

“NIKE’s results this fiscal year are a testament to the unmatched strength of our brands and our deep connection with consumers," said John Donahoe, President and CEO, NIKE, Inc. “Our competitive advantages, including our pipeline of innovative product and expanding digital leadership, prove that our strategy is working as we create value through our relentless drive to serve the future of sport."**

Fourth quarter NIKE Direct revenues grew 7 percent on a reported basis and 11 percent on a currency-neutral basis, led by 25 percent growth in EMEA, 43 percent growth in APLA and 5 percent growth in North America, partially offset by a decline in Greater China. NIKE Brand Digital grew 15 percent on a reported basis and 18 percent on a currency-neutral basis, driven by double digit growth in APLA, North America and EMEA. NIKE-owned stores declined 2 percent on a reported basis and increased 1 percent on a currency-neutral basis.

“In this dynamic environment, NIKE's unrivaled strengths continue to fuel our momentum,” said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. "Two years into executing our Consumer Direct Acceleration, we are better positioned than ever to drive long-term growth while serving consumers directly at scale."**

Non-recurring Items Impacting Comparability in the Fourth Quarter

Fourth quarter results contain several non-comparable items, including non-recurring charges recorded in Other (income) expense, net, totaling approximately $150 million, associated with the deconsolidation of our Russian operations , and the transition of our businesses in Argentina, Chile and Uruguay to strategic distributor models.

Fourth Quarter Income Statement Review

• Revenues for the NIKE Brand were $11.7 billion, down 1 percent on a reported basis and up 3 percent on a currency-neutral basis, led by 20 percent growth in EMEA.
• Revenues for Converse were $593 million, down 1 percent on a reported basis and up 3 percent on a currency-neutral basis, due to wholesale revenue declines offset by growth in our direct to consumer business.
• Gross margin decreased 80 basis points to 45.0 percent, primarily due to higher inventory obsolescence reserves in Greater China and elevated freight and logistics costs, partially offset by strategic pricing actions, favorable changes in net foreign currency exchange rates, including hedges, and margin expansion in our NIKE Direct business.
• Demand creation expense was $1.1 billion, up 6 percent, primarily due to increased sports marketing expenses and continued investments in digital marketing to support heightened digital demand.
• Operating overhead expense increased 8 percent to $3.0 billion, due to higher strategic technology investments, and an increase in NIKE Direct variable costs and wage-related expenses.
• The effective tax rate was (4.7) percent compared to 18.6 percent for the same period last year, due to a shift in our earnings mix and a non-cash, one-time benefit related to the onshoring of our non-U.S. intangible property.
• Net income was $1.4 billion, down 5 percent, and Diluted earnings per share was $0.90, down 3 percent compared to prior year.

Fiscal 2022 Income Statement Review

• Revenues for the NIKE Brand were $44.4 billion, up 5 percent on a reported basis and 6 percent on a currency-neutral basis, driven by double-digit growth in NIKE Direct, partially offset by slight declines in wholesale revenues.
• NIKE Direct revenues were $18.7 billion, up 14 percent on a reported basis and up 15 percent on a currency-neutral basis, led by NIKE Brand digital growth of 18 percent and NIKE-owned stores were up 10 percent.
• Revenues for Converse were $2.3 billion, up 6 percent on a reported basis and up 7 percent on a currency-neutral basis, led by double-digit growth in our direct to consumer business, partially offset by lower wholesale revenues.
• Gross margin increased 120 basis points to 46.0 percent, primarily due to margin expansion in our NIKE Direct business, a higher mix of full-price sales and favorable changes in net foreign currency exchange rates, including hedges, partially offset by elevated freight and logistics costs and higher inventory obsolescence reserves in Greater China in the fourth quarter.
• Demand creation expense was $3.9 billion, up 24 percent compared to prior year, primarily due to normalization of spend against brand campaigns and continued investments in digital marketing to support heightened digital demand.
• Operating overhead expense increased 11 percent to $11.0 billion due to higher strategic technology investments, and an increase in wage-related expenses and NIKE Direct variable costs.
• The effective tax rate was 9.1 percent, compared to 14.0 percent for the same period last year, due to a shift in our earnings mix and a non-cash, one-time benefit related to the onshoring of our non-U.S. intangible property.
• Net income was $6.0 billion, up 6 percent, and Diluted earnings per share was $3.75, up 5 percent compared to prior year.

May 31, 2022 Balance Sheet Review

• Inventories for NIKE, Inc. were $8.4 billion, up 23 percent compared to the prior year period, driven by elevated in-transit inventories due to extended lead times from ongoing supply chain disruptions, partially offset by strong consumer demand.
• Cash and equivalents and short-term investments were $13.0 billion, $479 million lower than prior year, as free cash flow was offset by share repurchases and dividends.

Shareholder Returns

NIKE continues to have a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 20 consecutive years of increasing dividend payouts.

In the fourth quarter, the Company returned approximately $1.5 billion to shareholders, including:

• Dividends of $481 million, up 11 percent from prior year.
• Share repurchases of $1.1 billion, reflecting 8.5 million shares retired as part of the four-year, $15 billion program approved by the Board of Directors in June 2018.

In fiscal 2022, the Company returned approximately $5.8 billion to shareholders, including:

• Dividends of $1.8 billion, up 12 percent from prior year.
• Share repurchases of $4.0 billion, reflecting 27.3 million shares retired. As of May 31, 2022, a total of 77.4 million shares for $8.7 billion had been repurchased under the current program.

In June 2022, the Board of Directors authorized a new four-year, $18 billion program to repurchase shares of NIKE's Class B common stock. The Company's new program will replace the current $15 billion share repurchase program, which will be terminated in fiscal year 2023. Repurchases under the Company's new program will be made in open market or privately negotiated transactions in compliance with the Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements and other relevant factors. The new share repurchase program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended at any time at the Company's discretion.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on June 27, 2022, to review fiscal fourth quarter and full year results. The conference call will be broadcast live via the Internet and can be accessed at http://investors.nike.com . For those unable to listen to the live broadcast, an archived version will be available at the same location through 9:00 p.m. PT, July 15, 2022.

About NIKE, Inc.

NIKE, Inc., based near Beaverton, Oregon, is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Converse, a wholly-owned NIKE, Inc. subsidiary brand, designs, markets and distributes athletic lifestyle footwear, apparel and accessories. For more information, NIKE, Inc.’s earnings releases and other financial information are available on the Internet at http://investors.nike.com . Individuals can also visit http://news.nike.com and follow @NIKE.

View source version on businesswire.com : https://www.businesswire.com/news/home/20220627005703/en/

Investor Contact: Paul Trussell [email protected]

Media Contact: KeJuan Wilkins [email protected]

Source: NIKE, Inc.

Nike Business Model: Not a business but an inspiration

Born in a family of runners, Nike has always been a household name. I would spend a considerable amount of time trying new models and visiting the Nike Website for any possible discounts.

Quite recently, I finished Phil Knight’s Memoir- Shoe Dog. The story behind the brand speaks of resilience. Nike entered an already dominated market, faced supply-chain issues, financial problems, and lawsuits.

Each hurdle had the potential to put them out of business, but they fought against all odds and emerged to be the most dominant player in the sportswear market. Today, let us analyze the industry and the business model & strategies that made Nike a success story.

The Sportswear Industry

The sportswear industry in the world is dominated by Nike, Adidas, Asics, and UnderArmour. The global sportswear market size is projected to reach US$ 113190 million by 2026, from US$ 93160 million in 2020, at a CAGR of 3.3% during 2021-2026.

The sportswear industry saw a hit during the COVID 19 pandemic; however, it fared far better than the rest of the apparel industry. There was a shift in the sales pattern; people started to buy sportswear for indoor sports rather than outdoor sports.

The industry saw a change in their customer base- there was an increase in women buyers, and currently, more than 50% of buyers are women. Moreover, the pandemic shifted the public’s focus towards physical health and the importance of an active life, which boosted sales for the sportswear industry.

The industry is highly competitive as there is a shortage of raw materials and incredible demand. This problem causes an imbalance in the supply chain. New companies often do not have the funds to handle such an imbalance. Nike faced the same issue for a very long time and was floating due to supply-chain delays but eventually dealt with it after it introduced the idea of “futures” to its stockholders.

The problem was then resolved after the cash inflow when the company became public. However, even a small market share in this segment can yield good profits. Nike was not the first to enter this market, but with its innovative designs and marketing strategies, it managed to make its way to the top. Nike doesn’t sell shoes. It sells an idea with its marketing strategy!!

Nike’s Outsourcing Business Model

Nike has a mass-market business model which caters to sports enthusiasts. The product categories are broadly shoes, sports apparel, and accessories. Their first products were running shoes, given that Phil Knight was a runner himself.

Before they went public, they opened their Apparel line, which has been equally successful. They ventured out to Basketball sneakers and slowly created a demand for shoes as footwear used for daily use.

Nike Inc. (originally known as Blue Ribbon Sports) first started as a reseller for Onitsuka Tiger shoes from Japan. Post their fallout, they outsourced their manufacturing from 300 independent suppliers in 35 countries such as China, Vietnam, Thailand, etc. Today, there are 1096 Nike retail stores worldwide, apart from E-commerce and online platforms. They sell their products in 170 countries across the world. Nike currently has a brand value of 34.8Bn USD.

They have the highest market share in the shoes and sports apparel department. They were the first American shoe-selling company to open their warehouse and sell their products in the Chinese market. Countries such as India, Italy, Mexico, and Argentina have manufacturing units catering to local markets. This move significantly lowers the supply chain woes and makes Nike accessible all over the world.

Value Proposition

Nike’s business model focuses on Innovation and Customization. Despite the sportswear being outsourced, Nike maintains strict quality checks. It spends a lot of resources and time for designing, research, and development.

Bill Bowerman (Nike’s early partner) would often use waffle irons to experiment with shoes! Their designs are admirable- anyone who has a pair of Nike’s Air Zooms can vouch for this. They introduced the world to Air-Cushioning technology in shoes.

There is a special team- Nike Explore Team Sport Research Lab, which is responsible for innovations. It employs researchers with doctorates in biomedical engineering, biomechanics, kinesiology, mechanical engineering, physics, physiology, and systems science. The company maintains advisory boards and research committees consisting of athletes, trainers, coaches, orthopedists, podiatrists, equipment managers, and experts who can guide the product design and development process.

Customization is another feature that Nike provides. NikeID is a service that allows buyers to customize their shoes. They can choose colors, sports style, and traction. One can visit Nike by You, Custom shoes and have a shoe tailored to their needs and likes.

Brand positioning and Advertising

When Knight first started Nike, he did not believe in the power of advertising. Funny how things change, Nike spent 3.59 billion U.S. dollars only on advertising and promotional events in 2020. Nike roughly spends 10% of its revenue on advertising. However, their marketing strategy often reminds me of a verse from the book and their spirit throughout the book.

I’d tell men and women in their mid-twenties not to settle for a job or a profession or even a career. Seek a calling. Even if you don’t know what that means, seek it. Phil Knight

The first employees of the firm were Shoe dogs. Bill Bowerman was Phil Knight’s track coach. Jeff Johnson and Phil Knight went for 13-mile runs when they met to discuss strategies. All of them loved running and shoes. Their love for running pushed them to sell shoes and build amazing designs for runners around the world.

They were passionate about the cause and reflected the same in their marketing strategies. More than advertising their shoes, they advertise running and sports. They are master storytellers; they create demand for themselves by inspiring people to take up sports.

Another amazing strategy that makes the brand alluring is that it is inclusive and takes a firm stand on social issues. Nike was one of the first brands to release Pro Hijab, a product for Muslim women in sports. They’ve encouraged women empowerment and involvement of women in sports- their social media channel NikeWomen inspires women to take up sport and a healthy lifestyle.

Nike’s worldwide fan following is certainly anchored to its essence of standing for social justice over and over again. The recent decision of  Nike to split with soccer player Neymar  based on an allegation raised by a female employee of sexual harassment by the soccer player affirms the brand’s willingness and effort to stick to social norms.

Check out this story on how Nikes stand for social justice has created a powerful  node  in its  brand association .

The company supported and debuted an ad campaign centered on Colin Kaepernick. He was a former NFL player who refused to stand for the national anthem before his games in protest of racism and discrimination in America. The sport boycotted him due to political pressure, but Nike debuted an ad campaign supporting the cause right after the event.

When Nike first started, celebrity endorsements were considered one-way tickets to putting a brand’s shoes on the map. Nike has indeed continued to follow this particular strategy and has the world’s leading athletes to promote its products, including Tiger Woods, Michael Jordan, Cristiano Ronaldo, Rafael Nadal, and many more. In the 2016 Olympics, In the category of shoe brands- Nike had the highest number of players who won medals.

Wrapping up

Shoes are one of the world’s oldest creations. One thing that can be observed is how Nike has always been a pioneer in innovating shoes and sports apparel. Nike has built a business model that observes trends and always stayed relevant to the market.

Entrepreneurs can surely take a leaf out of Nike’s books. Stay resilient, relevant, do not be intimidated by competition, and sell a vision rather than a product.

-AMAZONPOLLY-ONLYWORDS-START-

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-AMAZONPOLLY-ONLYWORDS-END-

Manasvi is an aspiring entrepreneur - always on hunt for problems she can solve. She’s an education, business and public policy enthusiast. She loves spending her weekends teaching underprivileged children or on her couch reading books.

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Nike Business Model

The Nike Business Model is based on producing and selling athletic and sports products, including footwear, clothing, equipment — and also some services. Everything is under one of the most famous brands in the world. Let’s take a closer look at how and why Nike company has become so relevant in the business world.

A brief history of Nike

Nike was first founded as “Blue Ribbon Sports” in January 1964 by Phil Knight, a student at the University of Oregon and track athlete, along with his coach Bill Bowerman. The company was officially rebranded as Nike in May 1971, which is the Goddess of Victory in Greek mythology.

Headquartered in Beaverton, Oregon, Nike is one of the most well-succeeded sports brands globally, manufacturing shoes and sportswear, but the story behind its foundation is that, before that, Adidas and Puma — both of them German brands — completely dominated the sneakers market, in every single sport.

So, Knight decided to introduce cheap, but high-quality running shoes, and he achieved it through a partnership with Onitsuka Tiger (now known as Asics), a Japanese running shoes company, as its U.S. distributor.

In the ’70s, the partnership between Blue Ribbon Sports and Onitsuka collapsed, so Knight decided it was time for its own line of footwear. The company was relabeled as  Nike, and the worldwide-famous swoosh design was first used in 1971.

After that, Nike thoroughly conquered the sneakers market of sports footwear. Some of its main achievements include Michael Jordan’s signature footwear, the Air Jordan (1984), as well as renowned marketing campaign slogans, such as “There is no finish line” (1977) and “Just do it” (1988). The Nike marketing strategy has been pivotal in establishing the brand’s dominance, and nowadays, it controls an impressive 38% of the global sports market.

Who Owns Nike

Nike is owned by one of its co-founders, Phil Knight, the Chairman Emeritus. The company also has Mark Parker as the Executive Chairman and John Donahoe as the President and CEO.

Nike’s Mission Statement

“ Our mission is what drives us to do everything possible to expand human potential. We do that by creating groundbreaking sports innovations, by making our products more sustainably, by building a creative and diverse global team, and by making a positive impact in communities where we live and work”.

How Nike makes money

Nike is the largest footwear and apparel seller in the world, and its revenue is generated mainly from these sales. Although its footwear items are designed especially for athletic purposes, with massive investment in innovation and high-quality products, most of them are usually worn on a daily basis, for leisure times.

Nike also sells sports equipment and accessories, such as balls, eyewear, bags, gloves, digital devices, and more, as well as recreational articles for many physical and outdoor activities. The company targets men, women, young athletes, and kids — in order of revenue. And Nike’s product subdivides into six categories: Running, Basketball, Jordan Brand, Soccer, Training, and Sportswear (lifestyle products), being Running, Jordan, and Sportswear are the strongest ones in revenue.

Nike’s Outsourcing

Nike doesn’t actually produce the items it sells. Its manufacturing is all outsourced, mostly outside the United States. They are more than 300 external independent suppliers, in over 35 countries, such as Vietnam, China, Indonesia, and Thailand.

Manufacturers in India, Argentina, Italy, Mexico, and Brazil are also contracted to produce for local markets. In spite of its large supply chain and manufacturing network, Nike still focuses on maintaining the quality and innovative character of its products, investing heavily in research and development.

Nike’s Business Model challenges

• Competition: Sports articles and apparel market is marked by massive competition, not only in the USA but all over the globe, both in marketing and supply chain — because the amount of suppliers for high-quality raw materials is limited. This competition leads to a great investment in research and development and in marketing and sales, in order to stand out;
• Trends: Nike’s success relies on anticipating customers’ demands. But these changing preferences are not always easy to predict. So, there is no certainty that every new product will gain the expected acceptance in the market. Therefore, it requires a great expenditure in adjusting the mix to keep profitable. Moreover, Nike relies on experts in several areas in order to produce innovative articles, such as engineers, physiologists, designers, biochemists, chemists, orthopedists, coaches, etc.;
• Global risks: Some global conditions and changes can have either positive or negative impacts on sales, such as economic crises or recessions (especially in emerging nations), environmental policies, trade regulations, data security and privacy, and more.

Nike’s Business Model Canvas

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Nike’s Customer Segments

Nike markets to anyone who wants to buy athletic and sports apparel, footwear, and equipment. Geographically speaking, Nike’s market is divided into four main divisions, also in order of revenue:

• North America
• EMEA (Europe, Middle East, and Africa)
• Greater China
• APLA (the Asia Pacific and Latin America)

Nike’s Value Propositions

Nike offers products to inspire anyone to become an athlete. Their products heavily rely on the quality, innovation, and status of the brand. This is the foundation of the brand, and it is exactly what the customers seek when they buy a Nike. The company offers a great variety of items, for many different sports and activities.

But, indeed, what matters for the audience is acquiring a product that has been heavily studied and developed from the best raw materials and technology available. Also, they want to carry the successful reputation the brand states, since athletes such as Michael Jordan, Tiger Woods, and Cristiano Ronaldo speak for the company.

Nike’s Channels

Nike uses many different channels for marketing . Its main channel is the brick-and-mortar stores, especially the Nike-branded ones. The company has an extensive sales network, with 1,152 physical stores throughout the world (numbers of 2019).  Nike also has an e-commerce platform, which serves more than 45 countries.

Besides that, Nike employs other channels, such as social media, digital, print, and TV advertising, brand events, and heavy sponsorship of athletes and teams. Therefore, its marketing expenses usually reach over $3.5 billion a year ($3,753 million in 2019).

Nike’s Customer Relationships

The relationship with the customers is practically restricted to self-service. The customer will check the product in a store (online or offline), and buy and use it. There will be some interaction with a salesperson when needed. Moreover, there is a FAQ session on the website and customer support via phone, e-mail, or live chat. Nike also has Nike ID, which is a personalization service that brings Nike products closer to customers’ desires.

Nike’s Revenue Streams

The revenue streams of the company are the sales of its products: footwear, apparel, equipment, and accessories. The total revenue reached $39,117 million, in 2019.

Nike’s Key Resources

Nike’s key resources  consist of:

• Physical structures : Five distribution centers in Memphis and others in California;
• Human resources: Nike Explore Tea Sports Research Lab, with more than 40 researchers that work on innovations;
• Intellectual property : Third-largest design patent portfolio in the United States.

Nike’s Key Activities

The main key activity of the company is designing and developing the products. In order to achieve that, other activities are involved, such as research (about materials, technologies, and trends/behavior) and negotiation with the suppliers. Additionally, marketing, sales, and advertising are essential for this business model .

Nike’s Key Partners

As Nike relies on outsourced contractors to manufacture its articles, these manufacturers are surely its most important key partners . They are more than 145 footwear factories and over 400 apparel factories, mostly outside the United States. Besides that, other partners include some universities and institutions in North America, Europe, and Asia for sports and scientific research.

Nike’s Cost Structure

The largest expenses for Nike are the costs of sales (mostly inventory and warehousing), that account for more than $21 billion per year. Additionally, around $3 billion is for marketing, including advertising and promotion costs, sponsorship, media, brand events, and retail brand presentation. Other general and administrative expenses cost over $500 million a year.

Nike’s SWOT Analysis

Below, there is a detailed  swot analysis  of Nike:

• Production costs: Since Nike’s business model outsources almost all its production, the company has reduced its operational costs, significantly, and focused its efforts and capital on marketing and sales. However, that doesn’t mean Nike has lost control over production quality. It only relies on suppliers that can support the brand’s standards;
• Minor sales variations: The demand for Nike’s products doesn’t fluctuate a lot during the year. The sales of fashion products and apparel usually remain equivalent all throughout the months. Due to some major campaigns, the company sometimes experiences a sudden rise. But, in these cases, there have been many studies, and it is ready to meet the demand;
• Quality: As Nike produces higher quality products, compared to most of its competitors , the company is also able to raise prices. This works out precisely because the quality has made the brand achieve a strong and reliable reputation, resulting in market-leading;
• Speed: For sales to succeed, the companies must transform ideas into products on the shelves as fast as possible. Nike, through its processes, has accomplished this efficiency, keeping its audience engaged and avoiding losses.

-> Read more about Nike’s SWOT Analysis .

Nike’s business model success rests on the sum of innovation and marketing. The company faces some strong players in the market — such as Adidas or Under Armour. That’s why the brand maintains its focus on research and development. Its future plans, for instance, are to increase the use of sustainable material, a strategy to grow popularity and engage the audience. 

Daniel Pereira

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The Leading Source of Insights On Business Model Strategy & Tech Business Models

Nike Business Model: Demand Generation As Core Asset

Nike follows a wholesale strategy combined with a very strong direct distribution strategy . The company makes money primarily from footwear, which represented over 64% of its total revenues in 2023, followed by apparel (27%). The most successful Nike brand is the Jordan Brand, which in 2023 generated $6.6 billion in revenue. Nike is the master of demand creation and generation through its influencer campaigns, where athletes become an inspiration for everyday people.

Table of Contents

Nike Vision and Mission

Nike’s main ability was creating an empire out of running shoes.

That might sound like a trivial statement. Yet, before Nike, no major US brand had done that.

In addition, Nike created a whole business ecosystem around shoes. 

And it all starts by creating demand! 

As the pandemic hit the world, Nike highlighted in its 2021 Shareholders’ Letter: 

This was the year we brought to life our Consumer Direct Acceleration strategy . As part of CDA, we successfully realigned our organization and began investing in our highest-growth areas. Part of that investment is our new consumer construct of Men’s, Women’s and Kids’, which aligns us against the biggest opportunities we see ahead of us. We’re putting resources behind our end-to-end digital transformation across the value chain as we unlock more growth and efficiency for the business.

And it further highlighted: 

Our momentum is driven by the underlying strengths we enjoy – the competitive advantages that allow us to navigate whatever dynamics we face. Those strengths include our commitment to innovation , our digital advantage, and three brands in Nike, Jordan and Converse that create deep and meaningful connections with consumers across the globe.

What products does Nike sell?

Nike has nine essential categories:

• NIKE Basketball,
• The Jordan Brand,
• Football (Soccer),
• Men’s Training,
• Women’s Training,
• Action Sports,
• Sportswear (our sports-inspired lifestyle products)

Men’s Training includes baseball and American football product offerings.

Nike also markets products designed for kids, as well as for other athletic and recreational uses such as cricket, lacrosse, tennis, volleyball, wrestling, walking, and outdoor activities.

Nike distribution and manufacturing

NIKE has six significant distribution centers located in Memphis, Tennessee, two of which are owned and four of which are leased.

Nike is supplied by approximately 127 footwear factories located in 15 countries. The largest single footwear factory accounted for about 8% of the 2017 NIKE Brand footwear production.

All of Nike’s footwear is manufactured outside of the United States by independent contract manufacturers who often operate multiple factories.

In 2017 Vietnam, China, and Indonesia manufactured approximately 46%, 27%, and 21% of total NIKE Brand footwear, respectively.

Nike revenues breakdown

Additional revenues also come from brands Nike managed independently, like Converse , which generated over $2.5 billion in 2022.

Nike distribution is divided across wholesalers and sales to its direct stores.

For a bit of context, Nike generated over $25 billion in 2022 by selling directly to Wholesalers, while it generated almost $19 billion through NIKE Direct. 

By 2023, in terms of distribution , 64% of shoes were sold through Wholesalers, while 44% were through NIKE Direct. 

Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses not part of a geographic operating segment.

NIKE Brand wholesale equivalent revenues consist of:

• Sales to external wholesale customers.
• And internal sales from our wholesale operations to our Direct to Consumer operations, which are charged at prices that are comparable to prices charged to external wholesale customers.

Others include all unisex products, equipment, and other products not allocated to Men’s, Women, and Young Athletes.

Men’s sales represent most of Nike’s total revenues.

While the Jordan brand is by far the most successful, with over $5 billion in revenues in 2022.

In 2023, North America represented the central geography for sales.

The most successful segment is still footwear, which was the fastest growing and represented 66% in 2021.

Nike spending on-demand creation

One key ingredient of Nike’s success seems to be demand creation.

Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, television, digital and print advertising, brand events, and retail brand presentation.

Demand creation passed the $3.8 billion mark in 2022.

As the footwear, Nike’s segment recorded a massive leap in sales. 

This is still the key ingredient secret, for Nike, as Steve Jobs explained many years ago: 

How does it work? Nike explained:

The Company records demand creation expense for these amounts when the endorser achieves the specific goal. Certain contracts provide for variable payments based upon endorsers maintaining a level of performance in their sport over an extended period of time (e.g., maintaining a specified ranking in a sport for a year). When the Company determines payments are probable, the amounts are reported in Demand creation expense ratably over the contract period based on the Company’s best estimate of the endorser’s performance.

Yet the extent that actual payments to the endorser differ from the Company’s estimate due to changes in the endorser’s performance, and increased or decreased demand creation expense may be recorded in a future period.

Other contracts provide for royalty payments to endorsers based upon a predetermined percent of sales of particular products.

Through cooperative advertising programs, the Company reimburses customers for certain costs of advertising the Company’s products.

Key takeaways

• NIKE is a massive footwear powerhouse comprising Nike, Jordan, and Converse brands.
• The company followed a wholesale distribution strategy . However, it has strengthened its direct sales channel, playing a more critical role in recent years. The company is moving toward direct distribution .
• Footwear is the main engine for the company, together with the Jordan brand , which generated over $5 billion in 2022!

Key Highlights

• Nike’s Business Strategy: Nike employs a combination of wholesale and direct distribution strategies. While it traditionally followed a wholesale approach, it has been increasingly focusing on its direct distribution through NIKE stores and its e-commerce platform (SNKRS) since 2020.
• Revenue Sources: The majority of Nike’s revenue comes from footwear sales, accounting for over 62% of revenues in 2022. Apparel contributes about 29%, followed by equipment and other categories.
• Jordan Brand Success: The Jordan Brand is a standout success, generating $5.2 billion in revenue in 2022. It operates on a demand generation business model, leveraging the iconic brand to boost the sales of footwear and apparel.
• Distribution Centers and Manufacturing: Nike has several distribution centers, and its footwear is manufactured primarily outside the United States through independent contract manufacturers. Major manufacturing countries include Vietnam, China, and Indonesia.
• Global Revenue Breakdown: In 2022, North America was the leading geography for Nike sales, followed by EMEA, Greater China, and the rest of the world.
• Demand Creation Strategy: Nike is known for its demand creation strategy , spending significant amounts on advertising, endorsement contracts, and promotional events. This strategy helps create consumer interest and drive sales.
• Revenue Growth: Nike’s revenues have continued to grow, reaching over $46 billion in 2022, driven by demand creation and the popularity of its footwear offerings.
• Mission and Vision: Nike’s mission is to expand human potential through innovative sports products, sustainable practices, a diverse global team, and positive community impact. Its vision is to bring inspiration and innovation to every athlete in the world.
• Nike’s Impact: Nike’s influence extends beyond its products, as the company focuses on innovation , digital advantages, and meaningful connections with consumers through its brands, including Nike, Jordan, and Converse.
• Converse Brand: Converse, an independent brand under Nike, generated over $2.5 billion in revenue in 2022. It follows both wholesale and direct distribution strategies.
• Product Categories: Nike offers a range of products in categories such as running, basketball, football (soccer), training, action sports, sportswear, and golf, catering to various sports and lifestyles.
• Commitment to Innovation: Nike’s strengths include a commitment to innovation, a digital advantage, and deep connections with consumers through its brands.
• Endorser Contracts: Nike’s demand creation expenses include costs related to endorsement contracts with athletes. Payments are made based on specific goals and performance levels achieved by endorsers.
• Creating an Empire: Nike revolutionized the sportswear industry by creating a massive empire out of running shoes, with footwear as the driving force behind its success.
• Direct-to-Consumer Approach: Nike’s Consumer Direct Acceleration strategy involves investing in its highest-growth areas, including a focus on men’s, women’s, and kids’ product segments, as well as enhancing its digital transformation for more growth and efficiency.
• Continuous Growth: Nike’s direct sales have shown steady growth , increasing by over 50% from 2020 to 2022, emphasizing the company’s evolving distribution strategy .
• Emphasis on Footwear: Footwear remains a central focus for Nike, being the fastest-growing segment and contributing significantly to the company’s overall revenue.
• Wholesale and Direct Sales: Nike balances its sales between wholesalers and direct stores, aiming to strengthen its direct distribution channel while maintaining relationships with wholesalers.

What kind of business model Nike use?

Nike is a footwear company, which primarily makes money selling footwear via wholesale customers that distribute the Nike brands across the globe. As of 2020, almost 63% of revenues came from footwear and 28.8% in apparel.

What is Nike's core business?

Nike’s core business is footwear. The most successful Nike brand is the Jordan Brand, which in 2021 brought over $4.7 billion in revenues to the company. Nike is the master of demand creation and generation through its influencer campaigns, where athletes become an inspiration for everyday people.

How does Nike make a profit?

Nike generated over $5.7 billion in revenues in 2021. Thanks to its most profitable segments (primary thanks to footwear and apparel).

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Nike - Statistics & Facts

A short introduction to nike, key insights.

Detailed statistics

Nike's net income worldwide 2005-2023

U.S. revenue of Nike from 1988 to 2023

Nike brand profile in the United States 2024

Editor’s Picks Current statistics on this topic

Apparel & Shoes

Nike's global revenue 2005-2023

Global sales of the top performance apparel, accessories, and footwear companies 2023

Sports & Fitness

Footwear segment revenue of Nike, adidas & Puma 2010-2022

Further recommended statistics

Market overview.

• Premium Statistic Value of the global footwear market from 2018 until 2028
• Premium Statistic Wholesale sales of athletic footwear in the U.S. 2008-2023
• Premium Statistic Wholesale sales of sports apparel in the U.S. 2008-2023
• Premium Statistic Value of the leading global apparel brands 2023
• Premium Statistic Global sales of the top performance apparel, accessories, and footwear companies 2023
• Premium Statistic Global sales growth forecast of top athletic wear companies 2024
• Premium Statistic American customer satisfaction index: athletic shoe companies 2010-2022

Value of the global footwear market from 2018 until 2028

Footwear market revenue worldwide from 2018 to 2028 (in billion U.S. dollars)

Wholesale sales of athletic footwear in the U.S. 2008-2023

Athletic footwear wholesale sales in the U.S. from 2008 to 2023 (in billion U.S. dollars)

Wholesale sales of sports apparel in the U.S. 2008-2023

Sports apparel wholesale sales in the U.S. from 2008 to 2023 (in billion U.S. dollars)

Value of the leading global apparel brands 2023

Value of the leading 10 apparel brands worldwide in 2023 (in million U.S. dollars)

Sales of the biggest athletic apparel, accessories and footwear companies worldwide in 2023 (in million U.S. dollars)

Global sales growth forecast of top athletic wear companies 2024

Sales growth forecast of the leading athletic apparel, accessories and footwear companies worldwide in 2024

American customer satisfaction index: athletic shoe companies 2010-2022

The American customer satisfaction index scores for athletic shoe companies in the U.S. from 2010 to 2022

Financial performance

• Basic Statistic Nike's global revenue 2005-2023
• Basic Statistic Global revenue share of Nike in 2023, by product type
• Basic Statistic Domestic sales share of Nike worldwide from 2016 to 2023
• Basic Statistic Global revenue of Nike from 2016 to 2023, by sales channel
• Basic Statistic Global gross profit of Nike from 2014 to 2023
• Basic Statistic Gross profit margin percentage of Nike worldwide from 2014 to 2023
• Basic Statistic Nike's net income worldwide 2005-2023
• Basic Statistic NIKE Direct revenue worldwide 2009-2023
• Premium Statistic nike.com: E-Commerce net sales from 2014 to 2024
• Basic Statistic Revenue of Converse worldwide 2010-2023

Nike's global revenue 2005-2023

Nike's revenue worldwide from the fiscal years of 2005 to 2023 (in million U.S. dollars)

Global revenue share of Nike in 2023, by product type

Revenue share of Nike worldwide in the fiscal year of 2023, by product category

Domestic sales share of Nike worldwide from 2016 to 2023

Nike's revenue share of U.S. and non-U.S. markets from the fiscal years of 2016 to 2023

Global revenue of Nike from 2016 to 2023, by sales channel

Nike's revenue worldwide from the fiscal years of 2016 to 2023, by sales channel (in million U.S. dollars)

Global gross profit of Nike from 2014 to 2023

Nike's gross profit worldwide from the fiscal years of 2014 to 2023 (in million U.S. dollars)

Gross profit margin percentage of Nike worldwide from 2014 to 2023

Nike's gross margin rate worldwide from the fiscal years of 2014 to 2023

Nike's net income worldwide 2005-2023

Nike's net income worldwide from the fiscal years of 2005 to 2023 (in million U.S. dollars)

NIKE Direct revenue worldwide 2009-2023

Nike brand's direct-to-consumer revenue worldwide from the fiscal years of 2009 to 2023 (in billion U.S. dollars)

nike.com: E-Commerce net sales from 2014 to 2024

E-Commerce net sales of nike.com from 2014 to 2024 (in million US dollars)

Revenue of Converse worldwide 2010-2023

Revenue of Converse worldwide from the fiscal years of 2010 to 2023 (in million U.S. dollars)

Revenue by region

• Basic Statistic Nike's revenue worldwide 2017-2023, by region
• Basic Statistic U.S. revenue of Nike from 1988 to 2023
• Basic Statistic Nike's North American revenue 2009-2023, by segment
• Basic Statistic Nike's revenue in EMEA 2016-2023, by segment
• Basic Statistic Nike's revenue in Greater China 2009-2023, by segment
• Basic Statistic Nike's revenue in Asia Pacific & Latin America from 2016 to 2023, by segment

Nike's revenue worldwide 2017-2023, by region

Nike's revenue worldwide from the fiscal years of 2017 to 2023, by region (in million U.S. dollars)

Nike's revenue in the United States from the fiscal years of 1988 to 2023 (in million U.S. dollars)

Nike's North American revenue 2009-2023, by segment

Nike's North American revenue from the fiscal years of 2009 to 2023, by segment (in million U.S. dollars)

Nike's revenue in EMEA 2016-2023, by segment

Nike's revenue in Europe, the Middle East and Africa (EMEA) from the fiscal years of 2016 to 2023, by segment (in million U.S. dollars)

Nike's revenue in Greater China 2009-2023, by segment

Nike's revenue in Greater China from the fiscal years of 2009 to 2023, by segment (in million U.S. dollars)

Nike's revenue in Asia Pacific & Latin America from 2016 to 2023, by segment

Nike's revenue in Asia Pacific and Latin America from the fiscal years of 2016 to 2023, by segment (in million U.S. dollars)

Key figures

• Basic Statistic Number of Nike stores globally 2009-2023
• Basic Statistic Number of Nike's retail stores in the U.S. 2009-2023
• Basic Statistic Number of Nike's non-U.S. retail stores 2009-2023
• Basic Statistic Total number of employees working for Nike 2009-2023
• Basic Statistic Nike's marketing expenses worldwide from 2014 to 2023

Number of Nike stores globally 2009-2023

Total Nike retail stores worldwide from 2009 to 2023

Number of Nike's retail stores in the U.S. 2009-2023

Number of Nike's retail stores in the United States from the fiscal years of 2009 to 2023

Number of Nike's non-U.S. retail stores 2009-2023

Number of Nike's non-U.S. retail stores from the fiscal years of 2009 to 2023

Total number of employees working for Nike 2009-2023

Number of employees of Nike worldwide from the fiscal years of 2009 to 2023

Nike's marketing expenses worldwide from 2014 to 2023

Nike's advertising and promotion costs from the financial years of 2014 to 2023 (in billion U.S. dollars)

Competitors

• Basic Statistic The adidas Group's net sales worldwide from 2000 to 2023
• Basic Statistic Global share of adidas retail sales in 2023, by region
• Basic Statistic Share of adidas' net sales worldwide in 2023, by product type
• Basic Statistic Global revenue of Puma 2000-2023
• Basic Statistic Share of Puma's sales worldwide in 2023, by region
• Basic Statistic Share of Puma's consolidated sales worldwide in 2023, by product category
• Basic Statistic Under Armour's net revenue worldwide 2008-2024
• Basic Statistic Under Armour's net sales share worldwide in 2024, by region
• Basic Statistic Under Armour's net sales share worldwide in 2024, by product category

The adidas Group's net sales worldwide from 2000 to 2023

The adidas Group's net sales worldwide from 2000 to 2023 (in million euros)

Global share of adidas retail sales in 2023, by region

Global distribution of adidas retail net sales in 2023, by region

Share of adidas' net sales worldwide in 2023, by product type

Net sales share of adidas worldwide in 2023, by product category

Global revenue of Puma 2000-2023

Global consolidated sales of Puma from 2000 to 2023 (in billion euros)

Share of Puma's sales worldwide in 2023, by region

Puma's sales share worldwide in 2023, by region

Share of Puma's consolidated sales worldwide in 2023, by product category

Share of Puma's net sales worldwide in 2023, by segment

Under Armour's net revenue worldwide 2008-2024

Net revenue of Under Armour worldwide from the fiscal years of 2008 to 2024 (in billion U.S. dollars)

Under Armour's net sales share worldwide in 2024, by region

Net revenue share of Under Armour worldwide in 2024, by geographical region

Under Armour's net sales share worldwide in 2024, by product category

Net sales share of Under Armour worldwide in 2024, by product category

Nike brand profile

• Premium Statistic Nike brand profile in the United States 2024
• Premium Statistic Nike brand profile in the UK 2023
• Premium Statistic Nike brand profile in Germany 2024

Nike brand awareness, usage, popularity, loyalty, and buzz among sneakers owners in the United States in 2024

Nike brand awareness, usage, popularity, loyalty, and buzz among sportswear owners in the United States in 2024

Nike brand profile in the UK 2023

Nike brand awareness, usage, popularity, loyalty, and buzz among sneakers owners in the UK in 2023

Nike brand awareness, usage, popularity, loyalty, and buzz among sportswear owners in the UK in 2023

Nike brand profile in Germany 2024

Nike brand awareness, usage, popularity, loyalty, and buzz among sneakers owners in Germany in 2024

Nike brand awareness, usage, popularity, loyalty, and buzz among sportswear owners in Germany in 2024

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Nike SWOT 2024 | SWOT Analysis of Nike

Company: Nike CEO: John Joseph Donahoe Founders: Phil Knight and Bill Bowerman Year founded: 1964 Headquarter: Beaverton, Oregon Employees (FY23): 83,700 Type: Public Ticker Symbol: NKE Revenue (FY23): US$51.21 Billion Profit | Net income (FY23): US$5.07 Billion

Products & Services: Apparel | Athleisure | Footwear | Sports Equipments | Accessories Competitors: Adidas | Under Armour | Allbirds | New Balance | Sketchers | Puma | Fila | ASICS | Lululemon | Fabletics | Victoria Secrets | Vans

Did you know? Nike swoosh logo is inspired by the Greek goddess of victory, Nike

Table of Contents

An Overview of Nike

Nike, Inc. is an American multinational corporation. Nike is headquartered in Beaverton, Oregon, USA . It was found by Bill Bowerman and Phil Knight in the year 1964 . The company specializes in athletic wear, providing footwear, apparel, athletic equipment, and accessories.

Nike’s primary goal is to supply athletes with exceptional products and wearable that aids them in better sports performance . However, due to the success, Nike has gotten the company now provides athleisure wear as well. Currently, John Donahoe is the CEO of Nike.

SWOT Analysis of Nike

Here’s a detailed breakdown of Nike SWOT analysis. 

Nike’s Strengths – Internal Strategic Factors

1. Strong Brand Awareness   and Brand Value

Nike is one of the most recognizable brands in the world as its name alone is memorable, easy to pronounce, and very unique. Its swoosh symbol is easily recognized by everyone. According to Interbrand global brand ranking report, Nike is ranked at # 9 position with a brand value of $53.7 Billion .  

2. Huge Customer base

Nike has millions of customer from around the world who loyally follow Nike’s trends, participate in Nike events, and even provide customer feedback. Due to its huge popularity, Nike’s market cap has grown to $142.2 billion as of March 2024.

3. America’s Favorite Sneaker Brand

Nike is the most popular and favorite sneaker brand in the U.S., according to a consumer insights survey by Statista.

4. Aimed For Sustainability

Nike’s CEO Mark Parker has addressed that they will continue to acknowledge the environmental issues in the communities. The CEO ensures that Nike will help to contribute in finding a solution against these environmental issues.

5. Iconic Relationships

Nike’s long-term partnership with Michael Jordan has proved to be beneficial in terms of sales for the company. Their collaboration resulted in “ Air Jordan 1 Shoes ”. Additionally, Nike teamed up with the famous basketball player to help design the “Air Jordan 1 Shoes”.

6. Side Brands

Nike’s ability to maintain and enhance its side brands such as converse and Hurley have enabled it to enjoy unparalleled success for decades.

7. Low Manufacturing Cost

Most of Nike’s footwear is manufactured in foreign countries. In the fiscal year 2023, Vietnam produced 50% , Indonesia produced 27% , and China produced 18% of total Nike’s footwear. Other operations are in Argentina, Brazil, India, Italy, and Mexico.

8. In-house Professionals

Nike has a professional team that designs its shoes and other athletic accessories. Nike believes their business has flourished due to their thorough research, design, and development efforts.

9. Superior Marketing Capabilities

Nike has excellent marketing campaigns. The brand heavily relies on demand creation expense , which includes advertisement, promotion, endorsement contracts, media print and complimentary products. In the fiscal year 2021, 2022 and 2023, Nike spent $3.1 billion, $3.8 billion, and 4.06 billion respectively. The brand has successfully utilized social media and marketing campaigns to target more customers .

10. Black Community Support

The brand has excellent marketing campaigns and released “ Don’t Do It ” ad campaign in support of Black communities against racism.

11. High Market Share

Nike is a market leader in footwear industry . Nike has captured approximately   39% of the global athletic footwear market and 13% of global athletic apparel market.

Nike’s Weaknesses – Internal Strategic Factors

1. Poor Labor Conditions in Foreign Countries

In the last 20 years, Nike has been consistently targeted regarding their poor labor conditions. These issues include forced labor, child labor, low wages, and horrific working conditions that were deemed “ unsafe ”.

2. Retailers Have a Stronger Hold

Nike’s retail sector makes Nike weak due to its sensitivity against pricing. 56% of Nike products are sold directly to wholesalers or retailers . With retailers serving as their core customers, Nike does not put up a fight against their pricing structures whatsoever.

3. Pending Debts

Although Nike’s income statements prove to be prosperous, a quick glance at their balance sheet could paint a different picture. Nike is still facing financial threats. As of FY23, Nike’s total long term debt was $8.9 billion

4. Lawsuits

• Recently, a former employee accused Nike of discrimination based on his Croatian origin.
• Four former female Nike employees filed a class-action lawsuit   against the company in August 2018. According to these women, Nike has a toxic company culture for women. The women filed their case against the sportswear company claiming that the company violated the Equal Pay Act . The women said the company engaged in systematic gender pay bias where men were paid more than women for the same amount of work.

5. Lack of Diversification

Nike’s over-dependence on sporting footwear and apparel or lack of diversification is a major weakness. During the pandemic, major sporting events were canceled or postponed. If there is a similar crisis in the future, Nike’s losses can be catastrophic.

6. Contradicting Strategies

Nike pledged to shift all its facilities to 100% renewable energy with net-zero carbon emissions under the “ Move to Zero ” scheme. While the strategy is great and welcomed, it contradicts Nike’s strategy that favors innovation over sustainability. This creates the perception that Nike is not committed to addressing climate change and its pledge is just a marketing stunt.

7. Dependency on North America especially US Market

Even after having established itself globally, Nike still relies on the U.S Market in terms of sales and revenue. In the fiscal year 2023, about 44 % of Nike’s sales came from the North America , while the rest of 56% came globally. Despite its fame, Nike depends on the U.S for substantial sales and growth.

8. Sexual Harassment

Former female employees also pointed out that sexual harassment and misconduct was very common in the company. The New York Times conducted interviews  with 50 former and present Nike employees to investigate the company culture. Through the interviews, it was established that Nike did have a toxic working environment, where sexual misconduct was rampant.

Multiple female employees reported that they had complained to the HR but saw no action being taken from their part. The women were left devastated and felt unsafe while working at Nike. Some even left their jobs. The entire controversy has significantly affected the company’s image.

9. End of Iconic Tiger Woods & Nike Partnership

Tiger Woods’ 27-year Nike partnership has come to an end. In a world where brands compete to bring the most sought-after celebrity for their brand endorsements, Nike has lost a golf legend .

Woods was the face of Nike Golf brand, and Nike Golf’s revenue ranged from approximately $600 – 800M from fiscal 2006-2017. Experts believe Nike has more to lose in the long term after cutting ties with Woods.

Nike’s Opportunities – External Strategic Factors

1. Emerging Markets

Although Nike already has a presence in many foreign countries, there is still plenty of opportunities for Nike. This is because emerging markets like India, China, and Brazil are gradually flourishing.  

2. Innovative Products

Although Nike has produced many products, there is still a lot to innovate. Nike has extended its reach in technology in association with fitness and health. Products like wearable technology that monitors physical activities, is the first step in building innovative technology products . Combining technology with athletic wear can prove to be beneficial as it is an aspect of the fashion industry that still hasn’t been explored much.

3. Efficient Integration

The supply and production of Nike’s products depend on independent manufacturers. The brand can either acquire a few of these or make some of its own for a more efficient and streamlined supply chain.

4. Cutting ties with big retailers

Nike has decided to cut ties with some of the biggest multi-brand retailers and wholesale partners. According to the report , Nike will no longer work with wholesale retailers such as Zapoo’s , Dillard’s , Fred Meyer , Bob’s Stores , etc. The step is taken for better product positioning and greater customer experience.

5. Acquired Artificial Intelligence Start-up

With its vast financial resources, Nike can acquire small or medium companies or startups. It recently acquired predictive analytics platform – Celect to expand its online sales capabilities and predict customer’s shopping behavior.

6. Merges with the Metaverse

Recently, Nike acquired RTFKT, a digital shoe-making company . Yes, you heard that right, the company designs shoes, but for the virtual stratosphere only. However, RTFKT also claimed that it partnered with FEWOCiOUS (a young artist) to sell real shoes along with their digital versions. Nike is banking on the opportunity to market their digital shoes on the Metaverse , where players can use their Metamask wallets to purchase different types of in-game merchandize.

7. Exiting From Wholesale Distribution

Recently, Nike announced it’s going to be exiting the wholesale distribution market in the U.S. The company plans to only market its products at Nike stores , app , and websites .  According to Nike, the move away from distributors is going to help them double their profit margins . Moreover, Nike will also have the opportunity to spearhead the customer shopping experience as well as control prices .

8. Nike to End Use Of Kangaroo Leather For Its Shoes

Nike has announced a significant move that will please both animal rights activists and consumers. The athletic apparel giant will no longer use kangaroo skins in their shoes, ending a controversial practice. The decision comes after Puma made a similar move weeks ago. 

Instead of kangaroo leather, Nike will use synthetic material in its new line of Tiempo football boots, the Tiempo Legend Elite, set to launch this summer.  The company also ended its partnership with its sole kangaroo leather supplier in 2021, reflecting its commitment to more sustainable and ethical practices.

9. Consumer Direct Strategy

Nike has accelerated the consumer-direct strategy, which means shifting its focus to digital business and subsequently closing physical stores. In fiscal year 2023, 44 %  of its Nike revenue comes from online sales. Clearly, the pandemic is shaping up how Nike interacts with its customers.

Nike’s Threats – External Strategic Factors

1. Counterfeit Products

Counterfeit products can significantly affect the revenue and reputation of Nike. The company deals globally and the risk of counterfeit products has become higher. A number of merchandisers and retailers offer counterfeit Nike products at lower prices.

The low-priced products are made from low-quality materials but still have the Nike label. This can tarnish the image of the brand as the customers might feel that Nike has started producing low quality products.

2. Increased Competition

Although, Nike is a dominating the athletic industry, competition, and new emerging brands (On, Hoka etc.) are still potential threats to the company. Due to high competition, Nike has to spend more money on marketing and advertising to differentiate itself.

Nike spent $4.06 Billion specifically on marketing and demand generation in fiscal year 2023. To overpower competition, Nike’s safest bet is to design innovative products that are tailored according to the needs of athletes.

3. Marketing Budget Pressure

Companies like Under Armour  , Adidas  and Lululemon are spending more on marketing and advertising campaigns, increasing the pressure on Nike.

4. Currency Foreign Exchange Risks

Since the brand operates globally, it is affected by fluctuating foreign exchange rates. Nike reports its financial earnings in U.S dollars. This affects its revenue as the U.S dollar is exposed to volatility against other financial currencies.

5. Patent Disputes

Regardless of whether a company is wrong or right, patent disputes are hotly and fiercely contested in the public domain and expose some dirty secrets about sides in the dispute. Nike and Adidas have been engaged in a fierce patent disputes   over Primeknit and Flyknit shoes in U.S. and German courts.

6. Economic Uncertainty

Regardless of the industry, all companies are susceptible to the negative effects of a global recession . During lockdown, Nike had reported a decline in sales  and sales can drop further in the future if the recession strikes as hard as predicted by experts.

7. Trade Tensions

Nike depends on different markets across the world evidenced by the recent increase in its stocks rallied by an increase in sales in China . With China and the US as its biggest markets, a large chunk of Nike’s sales will be threatened if the trade tensions between the two giants escalate.

8. Patent Conflict towards Adidas Primeknit Shoes

In an appeal to a U.S. agency, Nike filed a complaint that Adidas has been infringing on the company’s Flyknit shoe technology patent. The company also stated that the German shoe manufacturer had used Nike’s Flyknit tech in 49 shoe designs (which uses Primeknit tech).

However, according to an Adidas representative , the company will fight these claims and stated that Adidas has started using their Primeknit technology after numerous years of research and development. 

9. Risk to Kangaroo Population

Nike has been accused of putting the Australian kangaroo population at risk of extinction. The leading athletic brand uses kangaroo skin to manufacture leather football shoes . Animal rights activists and advocates have urged Nike to rethink its strategies and to use plant-based alternatives . So far, Nike hasn’t responded to these allegations.

10. Nike Faces A Wave Of Retail And Warehouse Thefts

Nike experiences a surge in theft crimes throughout its supply chain, including warehouse and train thefts. According to the National Retail Foundation, retail theft has become a massive problem in the United States, with an estimated cost of $95 billion.

The company has reported that thieves are stealing from shelves and vehicles. This forced Nike to close a popular outlet store in its hometown of Portland. In addition, two suspects were arrested in Memphis for stealing Nike merchandise worth about $60,000 from five rail cars. Despite having 369 stores across the United States, including outlets and Converse stores, Nike finds it hard to prevent theft along its entire supply chain. 

11. Nike Sues Lululemon Over Patent Infringement

Nike has filed a complaint in Manhattan federal court against Canadian athletic apparel company, Lululemon, alleging patent infringement of at least four footwear products. 

Nike claims that Lululemon’s Blissfeel, Chargefeel Mid, Chargefeel Low, and Strongfeel footwear have caused economic harm and irreparable injury to the company.  

Although this isn’t the first time Nike sued Lululemon for patent infringement, the recent complaint alleges that three patents have been infringed, including one addressing the performance of footwear when force is applied.  While the company seeks unspecified damages, Lululemon has yet to comment on the matter. 

12. Decline in Demand for Classic Shoe Brands

Nike faces tough competition with running shoe competitors like On , Hoka , and New Balance. The analyst believes that the company’s heavy reliance on classic shoes like Air Jordan and Pegasus led to complacency , and it needs to catch up on innovation . There is declining interest in wearing Air Jordan sneakers, and they are not as cool anymore .

Nike plans to scale back classics and introduce new products to attract customers from rival brands.

Final Thoughts

The fiscal year 2023 proved to be successful for Nike. Although the brand is still in debt, the next few years look promising. Nike has grown exponentially in the last decade.

From releasing new product lines to building new brands, to outsourcing, and establishing a global presence alone is an extraordinary achievement.

Through this SWOT analysis of Nike, you will be able to understand the business model of the brand .

 References & more information

Xu, V. Your favorite Nikes might be made from forced labor. Here’s why . The Washington Post.

• Cara Salpini. Nike is on track to make $50 billion this year. How much is that, really? Retail Dive
• Interbrand – Best Global Brands

A management consultant and entrepreneur. S.K. Gupta understands how to create and implement business strategies. He is passionate about analyzing and writing about businesses.

28 comments

Cancel reply.

This article was very interesting. Thank you. The article was enlightening.

Dorrene, Thanks for your positive feedback, I am glad you liked it.

It’s to easy to understand and explain to others.. Thanks it will help me my upcoming presentation. 😃

Thank you Gargi, I have been through business school not so long ago, so I can totally relate to you. I am guessing the presentation is for school?

No. I m persuing MBA integrated..

Great, All the best for your MBA!

Lot of clarity in the format – the SWOT is explained.

Using for my management program – Leadership & People Management. It’s a great help. Thanks.

Hi Choo Patrick,

I am glad you liked our analysis. Thank you !

i want to know the publisher of this analysis

Hi Ap, here are the details

Date of Publish : Dec 17, 2018 Author : SG

Quick and to the point. Good read. Thank You

Oasis, I am glad you liked it !

who wrote this article ? can i know the name? very grateful analysis.

Thanks Taku, I am glad you liked our analysis. – SG

why is there no reference?

Hi Divya, Most of the information is from Nike’s annual report and few points have embedded hyperlinks for references.

top analysis

THIS HELPED ME A LOT!

Hey, who is the author of this report and what year was it finalized. I need this info for citations.

Hey Justin,

Author: S.K Gupta First published: December 17, 2018 Last updated: Oct 06, 2020

Hey! loved it, read it in my class!

Hi Aden, Glad you loved it, happy reading !

Hey this was super helpful for a school project. Thank you.

Thanks Nicholas for the feedback, glad to see it was helpful. Happy Reading 🙂

I really love your work thank you this was so helpful to help me help another person but not me thank you for this thank you.

Dear Mr. Gupta , Thanks for publishing this excel report about Nike, do you have the latest BCG matrix about Nike’s product. If yes, can you share to me me on my below email

Hi Ahmed, Glad you liked Nike swot analysis, Unfortunately, we don’t have the latest BCG matrix on Nike.

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How to Use Instagram for Business and Drive Results in 2024

Everything you need to know about using Instagram for business — from setting up your account to creating a winning strategy.

Table of Contents

Is your business still “like”-ing the idea of using Instagram, rather than confidently sliding into the DMs of the platform’s full potential? It’s high time to stop scrolling and start strategizing.

If you’re wondering how to use Instagram for business in 2024 , we’ve got you covered. In this guide, we’ll share the top strategies to help your brand thrive on the ever-evolving platform.

Bonus: Claim your free pack of 15 creative Instagram post templates made by Hootsuite’s professional graphic designers. Easily customize them in Canva, and start getting more engagement today.

How to set up Instagram for business in 4 steps

Using Instagram for business is a bit different than using a personal account. But don’t worry, it’s not rocket science! Follow these 4 simple steps to get your brand up and running on Instagram.

1. Switch to an Instagram business account

Before you start using Instagram for business, you need to create an Instagram account for business. It’s free and anyone can do it.

Here’s how to switch your existing Instagram account to a business account:

• From your profile, tap the hamburger (three lines) menu icon in the upper-right corner.
• Tap Settings and privacy . Then, scroll down until you see the Account type and tools menu.
• Next, click Switch to a professional account to change the account you’re logged into into an Instagram business account.
• Tap Continue (you may need to tap it multiple times as Instagram previews the available features of a professional account).
• Select a Category and use the slider to choose whether to show it on your profile, then tap Done .
• Choose Business (unless it makes sense for you to choose Creator ), and tap Next .
• Use the slider to opt in or out of promotional emails from Instagram for professional accounts, then tap Next .
• Add or edit relevant contact details, then use the slider to choose whether to show your contact information on your profile, then tap Next (or tap Don’t use my contact info to skip this step).
• If you plan to connect your Instagram business account with a Facebook business page, follow the prompts to connect your account to your Facebook Page. This is technically optional, but it’s necessary in order to use Instagram shopping features or run ads on Instagram .
• Next, you’ll be prompted to add additional features to your account, like telling Instagram your goals, adding details to your portfolio, and growing your audience. If you want to save this for later, tap the X in the top left corner to close this window and return to your profile.

If you’re interested in making an Instagram account for business simply sign up for a new Instagram account , and convert it to an Instagram business account.

You can have up to five Instagram accounts , so go ahead and keep your personal Instagram account personal if that’s what you prefer. Learn more about the difference between Instagram business and creator accounts .

2. Add business information to your bio

In 150 characters or less, your Instagram bio should describe your brand and showcase your brand voice . We’ve got a full guide to creating an effective Instagram bio for business (complete with templates), but here’s a quick video to walk you through the basics:

Also be sure to make the most of the other components of your Instagram business profile:

• Profile pic: Most brands use their logo. Your profile photo displays as 110 x 110 pixels (cropped to a circle), but it’s stored at 320 x 320, so that’s the size you should upload.
• Link in bio: Link to your website, your latest blog post, a current campaign or a Link Tree .
• Contact information: If you didn’t add contact info during your account creation, you can do so at any time by tapping Edit profile . Instagram will then add a Contact button to your profile.
• Action buttons: If relevant, you can add a button that allows customers to book or reserve appointments or to order food. To use this feature, you need an account with one of Instagram’s partners . Tap Edit profile , then scroll down to Action Buttons.
• Story highlights and covers: Instagram Story highlights are another way to maximize your profile real estate by providing more information about your brand, products, or services. Organize Stories into saved collections, then add some polish with Highlight covers.

Create. Schedule. Publish. Engage. Measure. Win.

3. Connect your product catalog

To tag products in Instagram content, or to run certain kinds of Instagram ads, you need to create a product catalog. You can do this in Meta’s Commerce Manager.

• Head to Commerce Manager and click Start Now , then select Create a catalog and click Get started again.
• Select Ecommerce , then click Next.
• If you have a shop on an ecommerce platform like Shopify or BigCommerce, click Connect to an ecommerce platform and follow the prompts to create your catalog. Otherwise, click Upload product info , name your catalog and click Next.
• Click View catalog to open your catalog, then Add items to start adding products.

We’ve got a whole post on using Commerce Manager if you’d like more details on how this tool works.

4. Turn on Instagram shopping

Once your catalog is full of products, it’s time to turn on Instagram’s shopping features.

• Go to the Get started page.
• Select Get started .’
• Click Create a shop , then Get started , then Next.
• Review the pre-selected sales channels and add or subtract accounts as needed.
• Choose the account/sales channel you want to connect your shop to. If you’re already selling on Shopify or another partner platform, change your Checkout method to reflect this . When everything is set up, click Next.
• Next, choose the countries you want to ship your products to. Note that Instagram Shopping is not available everywhere. You can choose from available countries in the drop-down menu.
• Add in your business email . This is where you’ll get any communication about your Instagram Shop.
• Select your business portfolio or create a new one. Click Next .
• Select the catalog you want to use for your shop and click Next . To select a catalog, it must meet catalog eligibility requirements for shops. You can’t switch this catalog later. Note: If you don’t have a catalog already, you won’t see this step.
• Look over your shop details, review and agree to the Seller Agreement and click Finish setup to complete creating your shop.

We’ve got a full blog post explaining everything you need to know about Instagram Shopping if you want to focus on this particular aspect of using Instagram for business.

How to use Instagram for business: 8 strategies

Standing out as a business on Instagram can be, well, tough. Use these Instagram for business tips to make it easier.

1. Research your audience

A good social media strategy starts with a sound understanding of your audience.

Instagram’s audience demographics give you an overall picture of who uses the platform. For example, 18-34-year-olds represent the largest ad audience on the site.

However, that doesn’t mean your specific audience on Instagram will be made up of 18-to-34-year-olds. For example, looking at the audience insights for my own Instagram account, I can see that my audience skews older than the Instagram average:

You can find demographic information on your existing audience using Instagram Insights , Meta Business Suite , or Hootsuite Analytics . But, if you’re just getting started using Instagram for business, you might not have a large enough following to gain meaningful insights here yet.

In that case, take a look at the demographics of your audience on other social channels and of your existing customer base. While this won’t translate exactly to Instagram, it should give you a sense of who’s interested in your business and what you have to say.

Understanding your audience puts you in a better position to create targeted content and business captions for Instagram that resonate. Since audience research is an important foundation for your content strategy, we’ve got a whole post dedicated to helping you find your target market .

2. Figure out your content mix

Now that you know who your audience is, you need to determine what to share with them. Rather than posting random content whenever the mood strikes, you need to develop a content strategy that speaks to your audience and keeps them engaged, all while contributing to real business goals .

While you should certainly post some promotional content to get people excited about your products and drive sales, you also need to provide content that builds community and sparks engagement.

That might mean including user-generated content or other curated resources , sharing insider expertise about your industry, or joining in on a trending meme. (But tread carefully here—only join in on trends that are appropriate for your brand voice.)

i am wearing a disguise pic.twitter.com/HlWFQb8P22 — no name (@nonamebrands) October 31, 2022

Look for opportunities to develop themes or regular installments that you can build into a series. “Content buckets” allow you to check certain boxes without having to overthink creation. The more planning you do upfront, the better you’ll be able to produce regular content and respond to last-minute or unplanned events.

3. Schedule your content in advance

From Reels to Stories to posts, there are many options when it comes to Instagram content.

The best way to create a unified strategy is to schedule your content across all Instagram surfaces (and other social platforms) using a content calendar . Or, take it up a level and schedule all your content to publish automatically at the right time using a tool like the Hootsuite Publisher . Yes, you can even schedule Stories and Reels in advance.

The added advantage here is that you can create your content in dedicated blocks of time and schedule it to post at the best time for your audience . Even if that time is outside business hours, on the weekend, or in the middle of the night.

4. Tag products

When you share content about your products on Instagram, tagging makes it much easier for people to learn more or buy. You can tag up to 20 products in a photo feed post.

Source: Tory Burch

To tag products, create your Instagram post or Reel as usual. Then, on the final screen before posting, tap Tag products . You can tag products from your own shop or someone else’s, which creates great opportunities for collaboration and cross-promotion.

In Stories, you can tag products using the Product link sticker.

Source: Pat McGrath

5. Track your results (and learn from wins and losses)

With an Instagram for business account, you have access to the platform’s built-in analytics tools to help you understand how well different types of content perform.

There are several other analytics tools available, including Hootsuite’s , that can track longer time frames, automate reporting and make it easier to compare Instagram metrics across other social media platforms.

No matter which social media marketing tools you use, the important thing is to check in regularly to learn what kind of content resonates best with your target audience. You’ll start to see patterns about what generates the most engagement, as well as what kinds of social media content increase views beyond your existing follower base. ( Hint: Try Instagram Reels .)

Use these lessons to hone your content strategy over time.

6. Treat Instagram as a customer service channel

Success on Instagram requires you to engage with your followers rather than just blast content out and hope someone likes it. One important component of this two-way communication is monitoring your DMs for questions, comments, and customer service requests.

Instagram business accounts have access to a couple of DM features that make managing customer service easier on the platform. First, your inbox is divided into Primary and General tabs to make it easier to keep track of your messages. And second, you can create saved replies to commonly asked questions that you can access via keyboard shortcuts.

Hootsuite Inbox makes it even easier to manage your DMs by allowing you to assign messages to the appropriate team members . Or, create templated replies to common questions to save your team time and effort.

Manage all your messages stress-free with easy routing, saved replies, and friendly chatbots. Try Hootsuite’s Inbox today.

7. Automate content creation

The average Instagram business account posts 1.55 times per day on the main feed.

That’s a lot of content!

Luckily, manual content creation is now a thing of the past. These days, it’s easy to speed up content creation processes like copywriting and graphic design with the help of generative AI tools .

OwlyWriter AI is Hootsuite’s latest generative AI tool, free to all Hootsuite users. Use OwlyWriter to generate quick social media captions , and get inspiration for your posts across platforms.

You can also leverage outside tools like ChatGPT, Dall-E, Midjourney, and more. But, because OwlyWriter is oh-so convenient in your Hootsuite dashboard, we recommend starting there. Check out our blog on the best AI content creation tools here .

Always remember, content generated by AI should always be seen as a starting point, not a finished product . Be sure to check over any AI generated content for accuracy, brand voice, style, and tone before posting.

OwlyWriter AI instantly generates captions and content ideas for every social media network. It’s seriously easy.

8. Elevate your grid aesthetics

Looking to make your Instagram grid stand out from the crowd? With Hootsuite’s Instagram Grid integration , you can make a totally aesthetic Instagram grid in just a few clicks.

Here’s how it works:

• Seamless planning: Planning your grid layout has never been easier. With Instagram Grid, you can visualize how your posts will look together , ensuring a cohesive and visually appealing grid.
• Drag-and-drop simplicity: Want to rearrange your grid? No problem. With easy-to-use drag-and-drop functionality , you can experiment with different layouts until you find the perfect arrangement.
• Scheduled posts: Say goodbye to last-minute scrambling. With Hootsuite, you can schedule your grid posts in advance , ensuring that your grid remains active and engaging even when you’re busy.
• Curate like a pro: Discover and curate high-quality content right from the Hootsuite dashboard. Whether it’s user-generated content, AI hashtag suggestions , or trending topics, we’ve got the tools you need to keep your grid fresh and relevant.
• Track your success: With Hootsuite’s analytics dashboard, you can track engagement metrics and understand what resonates with your audience. Use these insights to refine your grid strategy and drive even more engagement.

FAQs about using Instagram for business

Is instagram for business free.

It’s free to set up an Instagram business account, promote your business, and even set up an Instagram shop.

The only fees for Instagram business accounts are ad costs if you choose to run Instagram ads , and selling fees if you use Commerce Manager to allow your customers to check out and complete their purchase within the Meta platform.

There is also no fee to use Instagram Shopping to tag products and direct users to your website to buy them.

What is the difference between personal and business Instagram?

The difference between personal and business Instagram accounts is pretty straightforward. Personal accounts are great for sharing your daily life and connecting with friends and family. But, if you’re running a business or want to promote or sell a product, a business account on Instagram offers tools like analytics, shopping, and advertising to help you reach your goals.

What is the best time to post on Instagram for business?

The best time to post on Instagram for your business depends on who you’re trying to reach and what you’re sharing. Mornings generally bring the most engagement for brand accounts, though certain industries, like real estate, retail, or entertainment accounts, may see more success posting in the evening.

Check out our comprehensive guide on the best times to post on every social network to learn more.

How does Instagram work for business?

By switching your personal profile to a business account, you unlock a treasure trove of tools to boost your business. Get free access to features like Instagram Insights, which lets you peek into who’s engaging with your business on Instagram, or Commerce Manager, which lets you tag and sell products directly on Instagram. It’s like having your own personal business assistant right at your fingertips!

What are the disadvantages of using Instagram for business?

While business Instagram accounts are a great way to sell products and be seen, there are a few drawbacks to consider.

First, increased competition among businesses on the platform can make it tough to secure organic reach. Second, managing a business account requires consistent effort, and eventually you may want to consider hiring a social media manager . Third, unlike personal accounts, where updates are more flexible, business profiles carry the weight of reputation and customer perception. Be sure to read up on managing social media crises before you get started.

Save time managing Instagram for business using Hootsuite. From a single dashboard, you can schedule and publish posts, carousels, Stories, Reels, and ads directly to Instagram — and engage your audience, measure performance, and handle all your other social media profiles. Try it free today.

Easily create, analyze, and schedule Instagram posts, Stories, Reels, and Threads with Hootsuite. Save time and get results.

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Hannah Macready is a freelance writer with 12 years of experience in social media and digital marketing. Her work has appeared in publications such as Fast Company and The Globe & Mail, and has been used in global social media campaigns for brands like Grosvenor Americas and Intuit Mailchimp. In her spare time, Hannah likes exploring the outdoors with her two dogs, Soup and Salad.

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How Much Does it Cost to Start a Business?

8 min. read

Updated April 25, 2024

What will it cost to start your business? This is a key question for anyone thinking about starting out on their own. You’ll want to spend some time figuring this out so you know how much money you need to raise and whether you can afford to get your business off the ground.

Most importantly, you’ll want to figure out how much cash you’re going to need in the bank to keep your business afloat as you grow your sales during the early days of your business. 

Typical startup costs can vary depending on whether you’re operating a  brick-and-mortar store, online store, or service operation . However, a common theme is that launching a successful business requires preparation.

And while you may not know exactly what those expenses will be, you can and should begin researching and estimating what it will cost to start your business.

• How to determine your startup costs

Like when developing your  business plan , or  forecasting  your initial sales, it’s a mixture of  market research ,  testing , and informed guessing. Looking at your competitors is a good starting point. Once you feel your initial estimates are in the ballpark, you can start to get more specific by making these three simple lists.

1. Startup expenses

These are expenses that happen before you launch and start bringing in any revenue. Here are some examples:

• Permits and Licenses: Every business needs a license to operate, just like a driver needs one to drive. Costs vary depending on industry and location.
• Legal Fees: Getting your business structure set up (sole proprietorship, LLC, etc.) might involve consulting a lawyer and at least will involve the basic business formation fees.
• Insurance: Accidents happen, and insurance protects your business from unforeseen bumps.
• Marketing and Branding: The ways to spread the word about your product or service. They could involve creating a website, creating business cards, or promoting social media.
• Office Supplies : Pens, paperclips, that all-important stapler – the essentials to keep your business humming.
• Rent/Lease: If you need to rent space for your business before you start selling, include those expenses in your list as well.

2. Startup assets

Next, calculate the total you need to spend on assets to get your business off the ground. Assets are larger purchases that have long-term value. They’re typically significant items that you could resell later if you needed or wanted to.

Here are a few examples:

• Equipment:  Think ovens for a bakery, cameras for a photography business, or computers for a tech startup.
• Inventory:  If you’re selling products, you’ll need to stock up before opening your doors (or your online store).
• Furniture and Decorations:  Desks, chairs, that comfy couch in the waiting room – creating a functional and inviting workspace might involve some upfront investment.
• Vehicles: If your business requires a vehicle to deliver your product or service, be sure to account for that purchase here.

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Why separate assets and expenses?

There’s a reason that you should separate costs into assets and expenses. Expenses are deductible against income, so they reduce taxable income. Assets, on the other hand, are not deductible against income.

By initially separating the two, you potentially save yourself money on taxes. Additionally, by accurately accounting for expenses, you can avoid overstating your assets on the balance sheet. While typically having more assets is a better look, having assets that are useless or unfounded only bloats your books and potentially makes them inaccurate. 

Listing these out separately is good practice when  starting a business  and leads into the final piece to consider when determining startup costs. 

3. Operating Expenses

Finally, figure out what it’s going to cost to keep your doors open until sales can cover expenses. Create a list that estimates monthly expenses, such as:

• Payroll (including your own salary)
• Marketing and advertising
• Loan payments
• Insurance premiums
• Office supplies
• Professional services
• Travel costs
• Shipping and distribution

Then, based on your revenue forecasts , calculate how many months it will take before your sales can cover all those monthly expenses. Multiply that number of months by your monthly operating expenses to determine how much you’re going to need to cover operating expenses as your business starts.

This number is often called “ cash runway ” and is a critical number – you need enough cash to fund those early red ink months. This number is how much cash you need to have in your checking account when you open your doors for business.

Calculating how much startup cash you need

To figure out how much money you need to start your business, add the asset purchases, startup expenses, and operating expenses over your cash runway period. This is your total startup costs, and it’s better to overestimate than underestimate these costs.

It often makes sense to invest the time to build a slightly more detailed starting costs calculation. Assuming you start making some sales and those sales grow over time, your revenue will be able to help pay for some of your operating expenses. Ideally, your sales contribute more and more over time until you become profitable.

To do a more detailed calculation, you’ll want to invest the time in a detailed financial forecast where you can experiment with different scenarios. If you do this, you’ll be able to see how much it will cost to start your business with different revenue growth rates. You’ll also be able to experiment with different funding scenarios and what your business would look like with different types of loans.

• Funding Starting Costs

You can cover starting costs on your own, or through a combination of loans and investments.

Many entrepreneurs decide they want to raise more cash than they need so they’ll have money left over for contingencies. While that makes good sense when you can do it, it is difficult to explain that to investors. Outside investors don’t want to give you more money than you need, because it’s their money.

You may see experts who recommend having anywhere from six months to a year’s worth of expenses covered, with your starting cash. That’s nice in concept and would be great for peace of mind, but it’s rarely practical. And it interferes with your estimates and dilutes their value.

Of course, startup financing isn’t technically part of the starting costs estimate. But in the real world, to get started, you need to estimate the starting costs and determine what startup financing will be necessary to cover them. The type of financing you pursue may alter your startup or ongoing costs in a given period, so it’s important to consider this upfront.

Here are common financing options to consider:

• Investment : What you or someone else puts into the company. It ends up as paid-in capital in the  balance sheet . This is the classic concept of business investment, taking ownership in a company, risking money in the hope of gaining money later.
• Accounts payable : Debts that are outstanding or need to be paid after a certain time according to your balance sheet. Generally, this means credit-card debt. This number becomes the starting balance of your balance sheet.
• Current borrowing : Standard debt, borrowing from banks,  Small Business Administration , or other current borrowing.
• Other current liabilities : Additional liabilities that don’t have interest charges. This is where you put loans from founders, family members, or friends. We aren’t recommending interest-free loans for financing, by the way, but when they happen, this is where they go.
• Long-term liabilities : Long-term debt or long-term loans.
• Other considerations for estimating startup costs

Pre-launch versus normal operations

With our definition of starting costs, the launch date is the defining point. Rent and payroll expenses before launch are considered startup expenses. The same expenses after launch are considered operating or ongoing expenses.

Many companies also incur some payroll expenses before launch because they need to hire people to train before launch, develop their website, stock shelves, and so forth.

Further Reading: How to calculate the hourly cost of an employee

The same defining point affects assets as well. For example, amounts in inventory purchased before launch and available at launch are included in starting assets. Inventory purchased after launch will affect  cash flow , and the balance sheet; but isn’t considered part of the starting costs.

So, be sure to accurately define the cutoff for startup costs and operating expenses. Again, by outlining everything within specific categories, this transition should be simple and easy to keep track of.

Your launch month will likely be the start of your business’s fiscal year

The establishment of a standard fiscal year plays a role in your analysis. U.S. tax code allows most businesses to manage taxes based on a fiscal year, which can be any series of 12 months, not necessarily January through December.

It can be convenient to establish the fiscal year as starting the same month that the business launches. In this case, the startup costs and startup funding match the fiscal year—and they happen in the time before the launch and beginning of the first operational fiscal year. The pre-launch transactions are reported as a separate tax year, even if they occur in just a few months, or even one month. So the last month of the pre-launch period is also the last month of the fiscal year.

• Aim for long-term success by estimating startup costs

Make sure you’ve considered every aspect of your business and included related costs. You’ll have a better chance at securing loans, attracting investors, estimating profits, and understanding the cash runway of your business.

The more accurately you layout startup costs and make adjustments as you incur them, the more accurate vision you’ll have for the immediate future of your business. 

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

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Free Business Plan Template for Small Businesses (2024)

Use this free business plan template to write your business plan quickly and efficiently.

A good business plan is essential to successfully starting your business —  and the easiest way to simplify the work of writing a business plan is to start with a business plan template.

You’re already investing time and energy in refining your business model and planning your launch—there’s no need to reinvent the wheel when it comes to writing a business plan. Instead, to help build a complete and effective plan, lean on time-tested structures created by other  entrepreneurs and startups. 

Ahead, learn what it takes to create a solid business plan and download Shopify's free business plan template to get started on your dream today. 

What this free business plan template includes

• Executive summary
• Company overview
• Products or services offered
• Market analysis
• Marketing plan
• Logistics and operations plan
• Financial plan

This business plan outline is designed to ensure you’re thinking through all of the important facets of starting a new business. It’s intended to help new business owners and entrepreneurs consider the full scope of running a business and identify functional areas they may not have considered or where they may need to level up their skills as they grow.

That said, it may not include the specific details or structure preferred by a potential investor or lender. If your goal with a business plan is to secure funding , check with your target organizations—typically banks or investors—to see if they have business plan templates you can follow to maximize your chances of success.

Our free business plan template includes seven key elements typically found in the traditional business plan format:

1. Executive summary

This is a one-page summary of your whole plan, typically written after the rest of the plan is completed. The description section of your executive summary will also cover your management team, business objectives and strategy, and other background information about the brand. 

2. Company overview

This section of your business plan will answer two fundamental questions: “Who are you?” and “What do you plan to do?” Answering these questions clarifies why your company exists, what sets it apart from others, and why it’s a good investment opportunity. This section will detail the reasons for your business’s existence, its goals, and its guiding principles.

3. Products or services offered

What you sell and the most important features of your products or services. It also includes any plans for intellectual property, like patent filings or copyright. If you do market research for new product lines, it will show up in this section of your business plan.

4. Market analysis

This section includes everything from estimated market size to your target markets and competitive advantage. It’ll include a competitive analysis of your industry to address competitors’ strengths and weaknesses. Market research is an important part of ensuring you have a viable idea.

5. Marketing plan

How you intend to get the word out about your business, and what strategic decisions you’ve made about things like your pricing strategy. It also covers potential customers’ demographics, your sales plan, and your metrics and milestones for success.

6. Logistics and operations plan

Everything that needs to happen to turn your raw materials into products and get them into the hands of your customers.

7. Financial plan

It’s important to include a look at your financial projections, including both revenue and expense projections. This section includes templates for three key financial statements: an income statement, a balance sheet, and a cash-flow statement . You can also include whether or not you need a business loan and how much you’ll need.

Business plan examples

What do financial projections look like on paper? How do you write an executive summary? What should your company description include?  Business plan examples  can help answer some of these questions and transform your business idea into an actionable plan.

Professional business plan example

Inside our template, we’ve filled out a sample business plan featuring a fictional ecommerce business . 

The sample is set up to help you get a sense of each section and understand how they apply to the planning and evaluation stages of a business plan. If you’re looking for funding, this example won’t be a complete or formal look at business plans, but it will give you a great place to start and notes about where to expand.

Lean business plan example

A lean business plan format is a shortened version of your more detailed business plan. It’s helpful when modifying your plan for a specific audience, like investors or new hires. 

Also known as a one-page business plan, it includes only the most important, need-to-know information, such as:

• Company description
• Key members of your team
• Customer segments

💡 Tip: For a step-by-step guide to creating a lean business plan (including a sample business plan), read our guide on how to create a lean business plan .

Benefits of writing a solid business plan

It’s tempting to dive right into execution when you’re excited about a new business or side project, but taking the time to write a thorough business plan and get your thoughts on paper allows you to do a number of beneficial things:

• Test the viability of your business idea. Whether you’ve got one business idea or many, business plans can make an idea more tangible, helping you see if it’s truly viable and ensure you’ve found a target market. 
• Plan for your next phase. Whether your goal is to start a new business or scale an existing business to the next level, a business plan can help you understand what needs to happen and identify gaps to address.
• Clarify marketing strategy, goals, and tactics. Writing a business plan can show you the actionable next steps to take on a big, abstract idea. It can also help you narrow your strategy and identify clear-cut tactics that will support it.
• Scope the necessary work. Without a concrete plan, cost overruns and delays are all but certain. A business plan can help you see the full scope of work to be done and adjust your investment of time and money accordingly.
• Hire and build partnerships. When you need buy-in from potential employees and business partners, especially in the early stages of your business, a clearly written business plan is one of the best tools at your disposal. A business plan provides a refined look at your goals for the business, letting partners judge for themselves whether or not they agree with your vision.
• Secure funds. Seeking financing for your business—whether from venture capital, financial institutions, or Shopify Capital —is one of the most common reasons to create a business plan.

Why you should you use a template for a business plan

A business plan can be as informal or formal as your situation calls for, but even if you’re a fan of the back-of-the-napkin approach to planning, there are some key benefits to starting your plan from an existing outline or simple business plan template.

No blank-page paralysis

A blank page can be intimidating to even the most seasoned writers. Using an established business planning process and template can help you get past the inertia of starting your business plan, and it allows you to skip the work of building an outline from scratch. You can always adjust a template to suit your needs.

Guidance on what to include in each section

If you’ve never sat through a business class, you might never have created a SWOT analysis or financial projections. Templates that offer guidance—in plain language—about how to fill in each section can help you navigate sometimes-daunting business jargon and create a complete and effective plan.

Knowing you’ve considered every section

In some cases, you may not need to complete every section of a startup business plan template, but its initial structure shows you you’re choosing to omit a section as opposed to forgetting to include it in the first place.

Tips for creating a successful business plan

There are some high-level strategic guidelines beyond the advice included in this free business plan template that can help you write an effective, complete plan while minimizing busywork.

Understand the audience for your plan

If you’re writing a business plan for yourself in order to get clarity on your ideas and your industry as a whole, you may not need to include the same level of detail or polish you would with a business plan you want to send to potential investors. Knowing who will read your plan will help you decide how much time to spend on it.

Know your goals

Understanding the goals of your plan can help you set the right scope. If your goal is to use the plan as a roadmap for growth, you may invest more time in it than if your goal is to understand the competitive landscape of a new industry.

Take it step by step

Writing a 10- to 15-page document can feel daunting, so try to tackle one section at a time. Select a couple of sections you feel most confident writing and start there—you can start on the next few sections once those are complete. Jot down bullet-point notes in each section before you start writing to organize your thoughts and streamline the writing process.

Maximize your business planning efforts

Planning is key to the financial success of any type of business , whether you’re a startup, non-profit, or corporation.

To make sure your efforts are focused on the highest-value parts of your own business planning, like clarifying your goals, setting a strategy, and understanding the target market and competitive landscape, lean on a business plan outline to handle the structure and format for you. Even if you eventually omit sections, you’ll save yourself time and energy by starting with a framework already in place.

Business plan template FAQ

What is the purpose of a business plan.

The purpose of your business plan is to describe a new business opportunity or an existing one. It clarifies the business strategy, marketing plan, financial forecasts, potential providers, and more information about the company.

How do I write a simple business plan?

• Choose a business plan format, such as a traditional or a one-page business plan. 
• Find a business plan template.
• Read through a business plan sample.
• Fill in the sections of your business plan.

What is the best business plan template?

If you need help writing a business plan, Shopify’s template is one of the most beginner-friendly options you’ll find. It’s comprehensive, well-written, and helps you fill out every section.

What are the 5 essential parts of a business plan?

The five essential parts of a traditional business plan include:

• Executive summary: This is a brief overview of the business plan, summarizing the key points and highlighting the main points of the plan.
• Business description: This section outlines the business concept and how it will be executed.
• Market analysis: This section provides an in-depth look at the target market and how the business will compete in the marketplace.
• Financial plan: This section details the financial projections for the business, including sales forecasts, capital requirements, and a break-even analysis.
• Management and organization: This section describes the management team and the organizational structure of the business.

Are there any free business plan templates?

There are several free templates for business plans for small business owners available online, including Shopify’s own version. Download a copy for your business.

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• Best overall
• Best for cruises
• Best for reputation
• Best for preexisting conditions
• Best for digital nomads
• Best low-cost
• Best for road trips
• How we reviewed travel insurance companies

Ultimate Guide to Choosing the Best Travel Insurance in June 2024

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate insurance products to write unbiased product reviews.

Traveling is an adventure, a leap into the unknown, a story waiting to unfold. But every story needs a safety net, and that's where travel insurance comes in. In this guide to the best travel insurance, we'll embark on a journey to help you better understand travel insurance and uncover the benefits that make it an indispensable companion for any traveler.

Our Picks for the Best Travel Insurance Companies

Best overall: nationwide travel insurance.

• Runner-Up: AXA Assistance USA
• Best for Cruises: Travel Guard
• Best Reputation:  C&F Travel Insured
• Best for Pre-existing Conditions:   Tin Leg Travel Insurance
• Best for Digital Nomads:   WorldTrips Travel Insurance
• Best Low-Cost Option:   Trawick International Travel Insurance

Best for Road Trips: Travelex Travel Insurance

How we rate travel insurance »

Compare the Best Travel Insurance Companies

The best travel insurance companies offer comprehensive coverage options for a wide range of people and needs. For this guide, we looked at coverage options, customizability, and the best companies for specific situations, such as pre-existing conditions.

Here are Business Insider's picks for the best travel insurance companies in 2024. 

• Trip cancellation coverage of up to 100% of trip costs (for cruises) or up to $30,000 (for single-trip plans)
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Three cruise-specific plans to choose from
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Annual travel insurance plans available
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Strong trip cancellation coverage
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Cancel for any reason coverage available
• con icon Two crossed lines that form an 'X'. CFAR insurance not available with every single plan
• con icon Two crossed lines that form an 'X'. Medical coverage is lower than what some competitors offer

Nationwide Travel Insurance offers many of the standard benefits you might see with a travel insurance policy. This can include things like trip cancellation coverage, so you can recover pre-paid costs or trip interruption in the event your vacation is interrupted by an unexpected event. There's also baggage delay coverage and medical coverage.

• Cancel for any reason coverage available

Nationwide Travel Insurance is of the largest players in the travel insurance space, offering nearly endless options for any customer on the travel spectrum, including annual travel insurance plans which can offer frequent travelers the flexibility to "set it and forget it" on their travel insurance coverage.

Nationwide Essential also offers some of the most affordable policies in the market compared to similar plans from competitors, which makes it a great pick for just about anyone. Buyers can discuss bundling options as Nationwide also sells homeowners, auto, pet, and other insurance products. Its travel insurance quoting is just as easy as it has been with other Nationwide insurance products.

Read our Nationwide Travel Insurance review here.

Best Travel Insurance Runner-Up: AXA Assistance USA

• Trip cancellation coverage of up to 100% of the trip cost
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Generous medical evacuation coverage
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Up to $1,500 per person coverage for missed connections on cruises and tours
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Covers loss of ski, sports and golf equipment
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Generous baggage delay, loss and trip delay coverage ceilings per person
• con icon Two crossed lines that form an 'X'. Cancel for any reason (CFAR) coverage only available for most expensive Platinum plan
• con icon Two crossed lines that form an 'X'. CFAR coverage ceiling only reaches $50,000 maximum despite going up to 75%

AXA Assistance USA keeps travel insurance simple with gold, silver, and platinum plans. Emergency medical and CFAR are a couple of the options you can expect. Read on to learn more about AXA.

• Silver, Gold, and Platinum plans available
• Trip interruption coverage of up to 150% of the trip cost
• Emergency medical coverage of up to $250,000

AXA Assistance USA  offers consumers a great option for no-stress travel insurance: low-priced plans, generous coverage limits on key categories including primary insurance on lost luggage, and up to 150% reimbursement for qualifying trip cancellations.

While add-ons are limited and rental car coverage is not included by default on cheaper plans, AXA is a perfect fit for travelers who don't plan to drive (or who already hold a travel credit card with rental car coverage), and don't need any additional bells and whistles.

Read our AXA Assistance USA Travel Insurance review here.

Best for Cruises: AIG Travel Guard

Trip cancellation coverage for up to 100% of the trip cost and trip interruption coverage for up to 150% of the trip cost

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Trip cancellation coverage of up to 100% of the cost, for all three plan levels
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. CFAR covers up to 75% of total trip costs (maximum of $112,500 on some plans) 
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Medical coverage of up to $500,000 and evacuation of up to $1,000,000 per person
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Includes COVID coverage 
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Above average baggage loss and delay benefits
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. High medical evacuation coverage
• con icon Two crossed lines that form an 'X'. Premiums may run slightly higher than competitors

Travel Guard is a well-established and highly rated name in the travel insurance industry. It offers three main coverage options to choose from, and in general its policies have above-average coverage for baggage loss and baggage delays, plus high medical evaluation coverage limits.

• Trip cancellation coverage for up to 100% of the trip cost
• Trip interruption coverage for up to 150% of the trip cost
• Preexisting medical conditions exclusions waiver must be purchased within 15 days of initial trip payment
• Annual travel insurance plan and Pack N' Go plan (for last-minute trips) available

Travel Guard is well-known insurance provider, and a great fit for travelers who want to ensure that they can get their money back in the event of canceled or interrupted travel plans.

While the company's policies can be pricey compared to its competitors, the high medical and evacuation limits make AIG a solid choice for older travelers who value peace of mind and simplicity over highly customizable plans that may be bolstered with medical upgrades.

Read our AIG Travel Guard review here.

Best for Reputation: C&F Travel Insured

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Offers 2 major plans including CFAR coverage on the more expensive option
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Cancellation for job loss included as a covered reason for trip cancellation/interruption (does not require CFAR coverage to qualify)
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Frequent traveler reward included in both policies
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Up to $1 million in medical evacuation coverage available
• con icon Two crossed lines that form an 'X'. Medical coverage is only $100,000
• con icon Two crossed lines that form an 'X'. Reviews on claims processing indicate ongoing issues
• C&F's Travel Insured policies allow travelers customize travel insurance to fit their specific needs. Frequent travelers may benefit from purchasing an annual travel insurance plan, then adding on CFAR coverage for any portions of travel that may incur greater risk.

While every travel insurance company has negative reviews about its claims process, C&F Travel Insured 's claims process has a consistent stream of positive reviews. One customer wrote that C&F processed a claim within 48 hours. Additionally, C&F regularly responds to customer reviews within one business week, making reviews a consistent way to reach the company.

Additionally, in C&F's fine print, it mentions that any claims that take more than 30 days to pay out will begin to accrue interest at 9% APY.

C&F's reputation isn't the only thing to speak highly of. It offers an array of add-ons uncommon in the travel insurance industry, such as Interruption for Any Reason insurance and CFAR coverage for annual plans. C&F also offers discounts for children on its Protector Edge plan and free coverage on its Protector plan.  

Read our C&F Travel Insured review here. 

Best for Pre-Existing Conditions: Tin Leg Travel Insurance

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Policy coverage includes most pre-existing health conditions
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Generous medical and evacuation amounts for peace of mind
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. COVID coverage included by default on all insurance plans
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Offers a wide range of plans for various budgets and travel needs
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Some plans offer CFAR, “cancel for work reasons,” financial default, and unemployment coverage
• con icon Two crossed lines that form an 'X'. Limited add-on coverage options
• con icon Two crossed lines that form an 'X'. Baggage loss and delay coverage is low compared to competitors

Tin Leg travel insurance offers eight travel insurance plans to meet the unique needs of travelers.

• Tin Leg was founded in 2014 by the travel insurance industry experts at Squaremouth. Designed to meet the most common needs of travelers, these policies offer comprehensive Trip Cancellation and Trip Interruption benefits, and a range of Emergency Medical and Medical Evacuation limits.

Tin Leg Travel Insurance is a great fit for travelers with medical issues in particular. Seven of Tin Leg's eight travel plans include coverage for pre-existing conditions as long as you purchase your policy within 15 days of your initial trip payment.

Thanks to coverage for pre-existing medical conditions as well as for potential COVID-19 infection while traveling, this company offers some of the best financial investment options for travelers who are or will be exposed to higher health risks and issues.

Read our Tin Leg Travel Insurance review here.

Best for Digital Nomads: WorldTrips Travel Insurance

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Affordable base plans that can be customized with add-ons including rental car, pet care, hunting and fishing, and vacation rental coverage
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Insurance plans available for international student travelers
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Trip delay coverage benefit that kicks in after just five hours
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Pre-existing conditions waiver can be purchased within 21 days of initial trip payment
• con icon Two crossed lines that form an 'X'. Lower medical, evacuation and accidental death limits
• con icon Two crossed lines that form an 'X'. Limited, secondary baggage loss coverage although baggage protection can be upgraded at a low cost
• con icon Two crossed lines that form an 'X'. No special coverages for pets, sports equipment, etc.

WorldTrips has been a reputable travel insurance provider for more than 20 years. Unsurprisingly, it boasts an A+ rating from the Better Business Bureau and positive reviews from thousands of customers.

• Travel medical insurance (Premium, Group, Annual, and International Student options)
• Trip cancellation insurance
• Trip protection insurance

WorldTrips Travel Insurance has affordable premiums, highly customizable add-ons, and generous coverage for core categories of travel insurance. All this makes it a great option for digital nomads, students studying abroad and backpackers.

However, travelers should keep in mind that plans are not particularly flexible, and coverage amounts are limited unless you plan ahead to pay for the areas and amounts that you need.

Read our WorldTrips Travel Insurance review here.

Best for Affordability: Trawick International Travel Insurance

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Useful for adventurous travelers headed to higher-risk destinations
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Affordable plans with varying levels of coverage
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. 10-day free look option
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Generous baggage loss replacement policy
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Trip delay coverage kicks in after just six hours
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Some policies allow a CFAR add-on
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Up to $1 million medical evacuation coverage limit
• con icon Two crossed lines that form an 'X'. Baggage and trip delay coverages don’t kick in until after the 12-hour mark
• con icon Two crossed lines that form an 'X'. International student policies available for temporary stints abroad
• con icon Two crossed lines that form an 'X'. Complaints about claims not being paid or involving an intermediary to resolve claims

Trawick International travel insurance offers plans customized to diverse travelers' needs. We look at coverage options, claims processing, pricing, and other important factors for savvy travelers.

• Travel medical insurance
• Trip protection and cancellation
• International student insurance
• Visitor medical insurance (for traveling to the US)

Trawick International Travel Insurance is another insurance provider with robust medical travel insurance  that can help higher-risk and anxious travelers find peace of mind while on the road. This company offers one of the most generous medical evacuation policies in the market, although travelers will need to remember to add on rental car coverage if they need it.

Read our Trawick Travel Insurance review here.

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Options to cover sports equipment
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Option to increase medical coverage
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Can cancel up to 48 hours before travel when CFAR option is purchased
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Affordable coverage for budget-conscious travelers
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Includes generous baggage delay, loss and trip delay coverage
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Optional "adventure sports" bundle available for riskier activities
• con icon Two crossed lines that form an 'X'. Only two insurance plans to choose from
• con icon Two crossed lines that form an 'X'. Medical coverage maximum is low at up to $50,000 per person
• con icon Two crossed lines that form an 'X'. Pricier than some competitors with lower coverage ceilings
• con icon Two crossed lines that form an 'X'. Some competitors offer higher medical emergency coverage

Travelex travel insurance is one of the largest travel insurance providers in the US providing domestic and international coverage options. It offers a basic, select, and America option. Read on to learn more.

• Optional CFAR insurance available with the Travel Select plan
• Trip delay insurance starting at $500 with the Travel Basic plan
• Emergency medical and dental coverage starting at $15,000

Travelex Travel Insurance  offers three plans:

• Travel Basic
• Travel Select
• Travel America

The Travelex America plan is meant for trips limited to the U.S., but it has the highest coverage limits in many areas compared to its other programs. If you're flying somewhere, the lost baggage limits are higher. Its natural strengths shine for road trippers, though. Travelex America adds coverage for roadside service and rental car coverage for unexpected accidents. It also covers pets should you be involved in an accident while on the road.

While your standard auto insurance does extend to car rentals within the U.S. for a limited time, any accident would affect future rates. Travelex would eliminate the risk of reporting to your auto insurance provider for minor incidents within its purview.

Read our Travelex Travel Insurance review here.

Introduction to Travel Insurance

Why travel insurance is a must-have.

The unpredictable nature of traveling – from flight cancellations to medical emergencies – can turn your dream vacation into a nightmare. Travel insurance acts as a personal safeguard, ensuring that unexpected events don't drain your wallet or ruin your trip.

Understanding Different Types of Travel Insurance

Not all travel insurance policies are created equal. From single-trip travel insurance policies to annual travel insurance plans , from minimal coverage to comprehensive protection, understanding the spectrum of options is your first step in finding the right fit for your journey.

Key Features to Look for in Travel Insurance Coverage

Travel insurance for medical emergencies.

Imagine falling ill in a foreign country; daunting, right? A robust travel insurance plan ensures you don't have to worry about how much emergency medical care while traveling will cost, even in the most remote corners of the globe. This coverage will often come in tandem with emergency medical evacuation coverage.

Trip Cancellation and Interruption Benefits

Life is full of surprises, some less pleasant than others. Trip cancellation and interruption coverage ensures that you're not left out of pocket if unforeseen circumstances force you to cancel or cut your trip short. You may also look for cancel for any reason and interruption for any reason options, which will reimburse you for a percentage of your nonrefundable fees, but expands the covered reasons you can cancel a trip. You can find our guide on the best CFAR travel insurance companies here.

Coverage for Personal Belongings and Baggage Loss

Losing your belongings is more than an inconvenience; it's losing a piece of your world. Insurance that covers personal belongings and baggage loss ensures that you're compensated for your loss, helping you to rebound and continue your adventure.

Support and Assistance Services

In times of trouble, having a lifeline can make all the difference. Look for insurance that offers 24/7 support and assistance services, giving you peace of mind that help is just a phone call away. Also, check websites that field customer reviews like Trustpilot, the Better Business Bureau, and InsureMyTrip , to see how well a company responds to customer requests.

Choosing the Best Travel Insurance

Reputation and reliability of the travel insurance provider.

A provider's reputation is not just about being well-known; it's about reliability, customer satisfaction, and the ability to deliver on promises. Researching and choosing a reputable provider is a cornerstone in ensuring your safety and satisfaction.

Understanding the Policy's Fine Print

The devil is in the details, and understanding the fine print of what your travel insurance policy covers is crucial. Be aware of coverage limits, exclusions, and the process for filing a claim to avoid any unpleasant surprises.

Customer Reviews and Feedback

In the age of information, customer reviews and feedback are goldmines of insight. Learn from the experiences of others to gauge the reliability and customer service of the insurance provider you're considering. While the ratings are important, you should also look at whether or not a company responds to customer complaints.

How to Get the Most Out of Your Travel Insurance

Knowing your policy inside out.

Familiarize yourself with every aspect of your policy – what it covers, what it doesn't, how to file a claim, and who to contact in an emergency. Being informed means being prepared. 

Steps to Take When a Problem Arises

If you face an issue during your travels, knowing the immediate steps to take can make all the difference. Keep important contacts and your policy details handy, and remember, your insurance provider is there to assist you.

How to Pick the Best Travel Insurance Company for You

There isn't a one-size-fits-all policy that works perfectly for every traveler. Young, healthy solo travelers can opt for much cheaper plans that offer bare-bones coverage, while families juggling complex itineraries will do best by investing in a robust policy that can help defray any costs associated with lost baggage, delayed transportation or other trip-impeding obstacles.

That being said, you can't go wrong with a travel insurance provider that boasts a reputable history and offers a wide range of customizable plans. In some cases, you may be comparing plans that are only a few dollars' apart from each other. In such situations, you should generally opt for the insurance company that offers the strongest customer service. It's also worth considering whether or not the travel insurance provider has been reviewed by other travelers with similar itineraries to your own. 

An insurance aggregator like InsureMyTrip or Squaremouth is one of the best tools for searching travel insurance policies. Once you input the specifics of your travel itinerary, you'll be able to see hundreds of search results to compare the ones that catch your eye. If the options are too overwhelming, use the filters to the left of your search page to eliminate as many irrelevant plans as possible.

How We Reviewed the Best Travel Insurance Companies

To come up with our list of the best travel insurance companies, we evaluated each insurer based on the following factors:

Guide Methodology: What We Considered

Policy Types

Travel insurance is essential, but often underused partly because people aren't getting what they want. Business Insider's 2023 travel study showed 10.65% of travelers surveyed bought cancel for any reason insurance. Cost may be a factor, but in many cases, the coverage is more affordable than you might think. Regardless, companies must offer a diverse range of coverage options. We award five stars to companies offering all standard coverages and additional options like pet and sports equipment protection.

Our 2023 travel study indicated the majority of purchases were made through the travel provider (ex: flight protection insurance when you're purchasing your airline tickets). While these may be sufficient for some customers, we look for companies offering a more comprehensive range of services.

According to the U.S. Travel Insurance Association, the average cost of travel insurance will be between 4% and 8% of total travel expenses. Anything beyond that price point should include additional benefits beyond the standard inclusions, such as CFAR protection or upgraded medical coverage. Anything below that 4% threshold may leave you lacking important or sufficient coverage in an emergency.

Convenience and Flexibility

Whether you're an infrequent traveler or a suitcase warrior, a good travel insurance company should have you covered. In many cases, you might not even have to talk to a person in order to purchase your policy.

Many people think of travel insurance in context with specific trips, but most of these top contenders sell both single-trip and multi-trip policies, also known as annual travel insurance. Some companies also offer plans specifically designed for cruisers, students abroad, and business travelers. (Read our guide to the best cruise travel insurance companies for more details.) Finally, all of these providers offer multiple options for getting the specific areas and amounts of coverage that you want.

Claims Handling

Most travelers never have a large claim. Premiums are low, and it provides peace of mind for the just in case situations. So they leave reviews based on their reduced stress levels. But what happens if you lose your luggage or have to stay a few extra days due to an unexpected accident? Will your insurance carrier cover your claim without all the hassle? We check real customer reviews to sort this out for you.

Ease of Use and Support

When purchasing, during your trip, and throughout the claims process, you may need extra support. Does the company have a 24/7 help line? Does it have an online or mobile system allowing you to self-manage? Essentially, what are the options when you need help? We look at the big picture to evaluate the average customer experience with each company.

You can read our full insurance rating methodology for even more details.

Best Travel Insurance FAQs

There isn't a one-size-fits-all solution for every traveler. Determine the benefits that are most important to you, like baggage delay coverage, medical coverage, and trip delay coverage, then look for a company with solid customer ratings, especially when it comes to processing claims.

Travel insurance will pay out if you experience a covered event, such as a travel delay or delayed or lost baggage. If you're looking to get travel insurance for a specific reason, such as needing to potentially cancel your trip due to work reasons, make sure your policy will cover you in that situation before purchasing it. You should also check customer reviews to see other travelers' claims experiences, as it varies wildly from company to company.

The average cost of travel insurance is 4% to 8% of your total trip cost, so it could vary widely depending on where you're traveling and the length of your trip. Your age, the number of people in your group, and other factors can also influence how much you'll pay.

Most comprehensive travel insurance policies include travel medical coverage that can come in handy if an emergency occurs and you need medical evacuation. Some travel insurance plans offer more specialized coverage for travelers with pre-existing conditions , so shop around if medical coverage is a top priority for you. 

$100,000 should be a sufficient medical coverage limit for travel insurance. If you're planning on doing extreme sports or anything particularly risky on your trip, you may want to increase your coverage level. A high medical coverage limit is especially useful when you're purchasing cruise travel insurance, since medical evacuations are more involved at sea.

Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards .

Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.

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