5 stages of business plan

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What is the business life cycle (the five stages of business).

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The Business Life Cycle

The Business Life Cycle is a strategy roadmap that tracks a company's growth, maturity, and decline. The Business Life Cycle is split into five stages and provides strategic insights at each stage.

Stage One: Development and Startup

The first stage of any business life cycle is the development and startup stage. This critical phase lays the groundwork for the business's future journey , making it essential for potential investors and stakeholders to understand.

Conceptualization of the Business Idea

At the heart of any business lies a unique idea or solution . This is the seed that, when properly nurtured, grows into a successful enterprise. Entrepreneurs identify a gap in the market or an unmet need that their product or service can fulfill. The conceptualization process also involves thinking about how the product or service will differ from competitors. This phase is characterized by creativity, innovation, and risk-taking.

Take, for instance, the genesis of Airbnb. The founders, unable to afford their rent, identified a unique solution – turning their living room into a bed and breakfast for attendees of a local conference. This innovative concept laid the foundation for a multi-billion dollar business.

Planning and Feasibility Study

Once the idea is in place, the next step involves conducting a feasibility study and crafting a solid business plan. This includes market research to gauge demand, analyzing competition, establishing pricing, and mapping out operational needs. It helps determine whether the business idea can be viable in real-world scenarios.

In the case of Airbnb, the founders validated their concept by hosting three guests during the conference. The success of this 'prototype' gave them the confidence to proceed.

Role of Early-stage Financing

Financing plays a pivotal role in the startup stage. Businesses typically don't generate a profit at this point, making external financing necessary. Funding may come from a variety of sources including personal savings, family and friends, angel investors, or venture capitalists. This seed funding enables businesses to carry out their plans, develop their product or service, and bring it to market.

Airbnb initially bootstrapped their venture, but as their idea gained traction, they attracted funding from Y Combinator, a renowned startup accelerator, marking their official entry into the world of venture capital.

Risks and Challenges in the Development and Startup Stage

Despite the excitement and potential rewards, the startup stage presents numerous risks and challenges. The business model might be unproven, the market could be unpredictable, and the competition fierce. There's always the risk of running out of funds before the business can generate a sustainable income. Moreover, attracting customers and convincing them to trust a new brand can also be challenging.

Airbnb faced its share of challenges in its early days, from being an unknown entity in a well-established hotel industry to struggling to secure its initial users. However, their innovative marketing tactics and robust user experience helped them overcome these hurdles.

Case Study: Successful Business During the Startup Stage

Airbnb serves as a compelling case study of a successful business during the startup stage. Their unique idea coupled with their understanding of the market allowed them to disrupt the traditional lodging industry.

Airbnb's success during the startup stage was due to a combination of factors: a unique and scalable business idea, a comprehensive feasibility study, timely acquisition of early-stage financing, and the resilience to navigate initial risks and challenges. Their journey encapsulates the dynamic and multifaceted nature of the development and startup stage in the business life cycle.

Stage Two: Growth

As a business starts to find its feet, it enters the growth stage. The enterprise expands, market share increases, and profits start to accumulate. Sound cash flow management is crucial in this phase as the inflow and outflow of cash determine the survival and expansion of the company.

Consider the meteoric growth of Facebook. After it went public in 2012, Facebook had the capital to grow significantly, acquiring companies like Instagram and WhatsApp, and diversifying its revenue streams .

Stage Three: Maturity

Once a business has carved out a comfortable market position and exhibits stable recurring revenue, it has reached maturity. At this juncture, businesses must be inventive in exploring new opportunities for growth while effectively managing assets and resources.

For instance, Microsoft, a tech giant, reached maturity years ago but continues to innovate with ventures like Azure and Microsoft Teams . Microsoft’s ongoing success demonstrates the importance of strategic planning during the maturity stage.

Stage Four: Decline or Renewal

Not all businesses remain prosperous indefinitely. Whether due to market saturation, increased competition, or external factors, a business may face a decline. However, strategies like cost-cutting, diversification, and market penetration can help reverse the downward trend . Private equity firms can step in, providing the needed capital and expertise to restructure and revamp the business.

Take the example of LEGO, which faced a severe decline in the early 2000s . Through restructuring and a renewed focus on its core product, LEGO navigated through the decline, demonstrating an inspiring renewal story.

Stage Five: Exit or Succession

Eventually, all businesses reach a stage where original owners or stakeholders might choose to exit. Choosing the right exit strategy—be it acquisition, Initial Public Offering (IPO), or management buyout—is critical. This is where investment bankers excel, assisting in orchestrating the optimal exit.

Family-owned businesses, like Walmart, underscore the importance of succession planning . From Sam Walton, the founder, to his son Rob Walton, and now his grandson-in-law, Greg Penner, Walmart's leadership has smoothly transitioned through generations, maintaining a consistently strong market presence.

Understanding the business life cycle can guide financial and investment strategies at each stage. This knowledge proves invaluable for finance professionals, aiding in the evaluation of business potential and growth opportunities. Keep honing this understanding to thrive in the ever-changing business landscape.

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The Five Stages Of Your Business Lifecycle: Which Phase Are You In? As your business grows and develops, so too do your business aims, objectives, priorities and strategies– and that's why an awareness of what stage of the business life cycle you are currently in can be helpful.

By Neil Petch Feb 29, 2016

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.

From the moment you make the decision to set up a business , you're in the "business lifecycle." This will see you journey from idea to startup, and if successful, through to the growth and maturity phases.

While it's fair to say that business is never not challenging, a look at each of the stages of the business lifecycle highlights a unique set of obstacles to deal with and overcome. You will have to be flexible in your thinking and adapt your strategy as you move along. Indeed, different approaches are required for market penetration versus, for example, what may be required to achieve growth or retain market share.

According to the recent Startup Genome Report , an estimated 90% of those startups that fail do so primarily due to self-destruction. It was their founders' own bad choices or lack of preparedness rather than so-called "bad luck" or market conditions that were out of their control. Understanding your position in the business lifecycle just might help you stay a bit ahead of the game here and defy the odds, as you anticipate the potential challenges and obstacles that are upon you or are on the way depending on what phase you are in or about to transition to.

Simply put, as your business grows and develops, so too do your business aims, objectives, priorities and strategies – and that's why an awareness of what stage of the business lifecycle you are currently in can be helpful.

Stage 1: Seed And Development

This is the very beginning of the business lifecycle, before your startup is even officially in existence. You've got your business idea and you are ready to take the plunge. But first you must assess just how viable your startup is likely to be.

At this stage, you should garner advice and opinion as to the potential of your business idea from as many sources as possible: friends, family, colleagues, business associates, or any industry specialists you may have access to. Ultimately the success of your business will come down to many factors– including your own abilities, the readiness of the market you wish to enter and, of course, the financial foundation in place (how are you going to finance your launch?).

In some ways, this is the soul-searching phase. It's where you take a step back and consider the feasibility of your business idea, and also ask yourself if you have what it takes to make it a success.

Related: You Have Nothing To Lose (And Everything To Gain) By Putting Yourself Out There

Stage 2: Startup

Once you have thoroughly canvassed and tested your business idea and are satisfied that it is ready to go, it's time to make it official and launch your startup. Many believe this is the riskiest stage of the entire lifecycle. In fact, it is believed that mistakes made at this stage impact the company years down the line, and are the primary reason why 25% of startups do not reach their fifth birthday.

Adaptability is key here, and much of your time in this stage will be spent tweaking your products or services based on the initial feedback of your first customers. It can even get to the point where you are making so many changes to your offering that you start to feel a bit of confusion. That's just noise, and the main advice here is to power through the blurriness, because extreme iterations upfront will naturally seem confusing. Rest assured the clarity will once again come.

Stage 3: Growth And Establishment

If you're at this stage, your business should now be generating a consistent source of income and regularly taking on new customers. Cash flow should start to improve as recurring revenues help to cover ongoing expenses, and you should be looking forward to seeing your profits improve slowly and steadily.

The biggest challenge for entrepreneurs in this stage is dividing time between a whole new range of demands requiring your attention– managing increasing levels of revenue, attending to customers, dealing with the competition, accommodating an expanding workforce, etc.

Hiring smart people with complementary skillsets is necessary to make the most of your company's potential during this phase, and so any good founder will be spending a lot of time directly involved in the recruitment process.

It is essential that you start to come into your role as head of the company in this stage. While you'll still be on the front lines often enough, you need to be aware of how your expanding and highly qualified team is going to be taking over a great deal of the responsibilities that were previously tightly under your control. It is your job now to start establishing real order and cohesion as you mobilize the teams according to clearly defined and communicated goals.

Related: Seven Things To Look Out For When Going For Your Second Raise

Stage 4: Expansion

At this stage you might feel there is almost a routine-like feel to running your business. Staff is in place to handle the areas that you no longer have the time to manage (nor should you be managing), and your business has now firmly established its presence within the industry. Here you might start to think about capitalizing on this certain level of stability by broadening your horizons with expanded offerings and entry into new geographies.

Businesses in this stage often see rapid growth in both revenue and cash flow as the blueprint has now been established, but be warned about getting too comfortable. In business, if you are not moving forward you are moving backwards, and without a constant, almost nervous itch or desire to expand, complacency can set in, and you might get caught off guard.

There are, of course, two sides to this coin, with the other involving a risk of expanding too carelessly. While there is no crystal ball and it is very hard to get an idea of what will be the results of your undertakings, you can give yourself the best possible chance of continued success through careful planning . Look at your resources, be realistic about the effort and cost and potential returns, and always keep an expert eye on how expansion might impact the current quality of service you provide your existing customers.

Remember, while having a successful business model behind you is undoubtedly an advantage, it is not a guarantee that it will work elsewhere within other markets, or that new offerings will result in the same success. The business graveyard is littered with organizations that took on too much and failed. Your task is indeed to take on new challenges as you look to constantly expand, but measure your risk and do your best to secure the company for all eventualities.

Stage 5: Maturity And Possible Exit

Having navigated the expansion stage of the business lifecycle successfully, your company should now be seeing stable profits year-on-year. While some companies continue to grow the top line at a decent pace, others struggle to enjoy those same high growth rates.

It could be said that entrepreneurs here are faced with two choices: push for further expansion, or exit the business . If you decide to expand further, you will need to ask yourself the same questions you did at the expansion stage: Can the business sustain further growth? Are there enough opportunities out there for expansion? Is your business financially stable enough to cover an unsuccessful attempt at expansion?

And, perhaps most importantly, are you the type of leader who is up for the task of further expansion at this stage? In fact, many companies change leadership here, bringing in a seasoned CEO who is more fit to navigate the new challenges .

Many at this stage also look to move on through a sale. This could be a partial or full sale, and of course depending on the company type (for example, public or private), the negotiation may be a whole new journey in itself.

Navigating The Business Lifecycle

Not all businesses will experience every stage of the business lifecycle, and those that do may not necessarily experience them in chronological order. For example, some businesses may see astronomical growth right after startup, and the founders may decide to cash out right away, jumping straight to that "exit" stage.

For many companies, though, there will be some sort of resemblance to the stages defined above, and awareness may help you anticipate what is coming next and how you can best prepare yourself and your team to maximize your chance of success . Making the right decisions at each stage is another thing altogether, however, and that will require your usual mix of gut instinct and practical business sense.

Related: Start Up Like A Pro: Careem Co-Founders Offers Tips and Tricks For Entrepreneurs

Founder and Chairman, Virtugroup

Neil Petch actively assists over 300 entrepreneurs and startups to conceive, plan, and build their businesses on a monthly basis.

After launching Virtuzone as the first private company formation business in the region over 10 years ago, Neil has led the company to set up more than 16,000 businesses, making it the largest, fastest-growing and best-known setup operator in the Middle East.

As the chairman of the holding company, Virtugroup, Neil also leads VirtuVest, an in-house angel investment vehicle; Virtuzone Mainland, a provider of directorship services, corporate sponsorship and facilitator of local Dubai and Abu Dhabi company setups; and Next Generation Equity, a citizenship-by-investment firm. Virtugroup has invested in and supported the growth of multiple companies and delivered passports in over 10 different jurisdictions. Virtugroup also enjoys partnerships with Dubai FDI, the Chamber of Commerce, Dubai Holdings (ARN), VFS, Regus, Etisalat, KPMG, Aramex and Beehive, and has received awards from Arabian Business and Entrepreneur Magazine, among others.

In addition to starting up businesses, Neil has held leadership roles in several companies. He helped establish ITP, the largest media publishing house in the Gulf, which he oversaw growing from two to 600 employees. At ITP, he spearheaded the launch of over 60 digital and print titles, including Time Out, Harper’s Bazaar, Arabian Business, Ahlan and Grazia.

As Managing Director of ENG Media, Neil launched the Coast FM radio station and numerous magazines, including MediaWeek. For the last seven years, Neil has also served as Chairman of GMG, the world’s first interbank financial brokerage based out of Dubai, with offices in DIFC and London. Due to his extensive knowledge and expertise, Neil has been appointed a member of the ‘Ease of Banking’ panel organised by the Chamber of Commerce.

Having lived in over a dozen countries and with a career spanning over 25 years in the UAE, Neil has the ability to merge astute cultural insight with fresh thinking, leveraging his seasoned business acumen, intuition and black book to repeatedly bring ideas to living, breathing success stories.

Neil has appeared in BBC (Dubai Dreams) and ITV (Piers Morgan) features on Dubai, as well as programmes on BBC World and Sky. He has participated as a judge on the radio programme Falcons’ Lair, an entrepreneurship reality show loosely based on the BBC production Dragons’ Den, as well as a similar TV competition hosted by MAD Talks. He now hosts Starting Up on Dubai Eye 103.8FM, the only national weekly show for the startup community in the world’s startup capital.

Neil also lends his in-depth market insight to fellow entrepreneurs and helps cultivate Public Private Partnerships as a Task Force Member of the Advisory Council, a coalition of key decision-makers and prominent movers of the UAE business landscape, led by EMIR and the Ministry of Economy.

He is also a regular speaker, panelist, and economic commentator, specialising in the SME sector.

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The 5 Stages of Business Growth (2023 Ultimate Guide)

What is Business Growth?

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As an entrepreneur, you have undoubtedly heard about business growth and how it can transform your company. In this guide, we will explore the five stages of business growth that most businesses experience. We will also discuss the importance of business planning and the factors that affect business growth.

Business growth is the process of expanding a company's size, revenue, and market share. It involves increasing a company's customer base, improving its products and services, and enhancing its operational efficiency.

Business growth is essential for companies that want to remain competitive and profitable. It enables businesses to expand their reach, improve their products and services, and increase their revenue.

The five stages of business growth are Existence, Survival, Success, Takeoff, and Maturity. Each stage represents a different level of growth, and businesses must overcome unique challenges in each stage to progress to the next level.

In the Existence stage, businesses are just starting and have limited resources. They focus on developing their concept, building a minimum viable product (MVP), and validating their business idea.

• Concept development: The business is still in the early stages of conceptualizing its product or service.
• Business idea validation: The company is testing its idea in the market to see if it has potential.
• Building a minimum viable product (MVP): The business is developing a product or service that is viable enough to be tested in the market.
• Limited financial resources: Businesses in this stage often struggle to secure financing, making fund operations and marketing difficult.
• No established customer base: The business has not yet built a customer base, making it challenging to generate revenue.
• Lack of awareness about the brand: Since the business is just starting, it has yet to establish a strong brand identity and recognition.
• Focus on market research: This helps businesses better understand their target audience and needs.
• Find alternative sources of funding: Crowdfunding, grants, and personal savings are some alternatives to traditional financing.
• Create a marketing plan: Even with limited resources, businesses can develop a marketing plan to promote their product or service.
• Dropbox: Dropbox started with a simple idea – cloud storage. The founders tested their concept in the market and received positive feedback. They then built a minimum viable product (MVP) that was tested with a small group of users. Dropbox grew from a small startup to a company valued at over $10 billion.
• Warby Parker: Warby Parker began as a simple idea to sell affordable and stylish eyeglasses online. The founders validated their idea by testing it in the market and found that there was a demand for affordable eyewear. They then built an MVP and launched their business. Today, Warby Parker is a successful online eyewear retailer.

In the Survival stage, businesses have established a customer base and are generating revenue. However, they still face significant challenges, including intense competition, cash flow problems, and operational inefficiencies.

• Establishing a customer base: The business has successfully acquired a group of customers willing to pay for its products or services.
• Generating revenue: The business is making enough money to sustain its operations.
• Identifying and addressing operational issues: The company is aware of its operational inefficiencies and is taking steps to address them.
• Intense competition: As the business becomes more successful, competitors will likely emerge, making it harder to stand out.
• Cash flow problems: Businesses in this stage often struggle with cash flow issues as they try to balance revenue and expenses.
• Operational inefficiencies: The company may face inefficiencies in its operations, resulting in higher costs and lower profitability.
• Improve operational efficiency: Businesses can optimize their operations by implementing systems and processes to reduce costs and increase productivity.
• Focus on customer retention: Retaining existing customers is often more cost-effective than acquiring new ones.
• Expand the product or service offering: Diversifying the product or service offering can help businesses stay competitive and increase revenue.
• Mailchimp: Mailchimp started as a small email marketing company that served local businesses. The company grew rapidly, and by the Survival stage, it had established a significant customer base. However, Mailchimp faced intense competition from larger email marketing providers. To survive, Mailchimp diversified its product offering by adding additional marketing tools and services, such as social media advertising and automation.
• Warby Parker: Warby Parker faced significant challenges in the Survival stage, including intense competition and cash flow problems. To address these challenges, the company expanded its product offering by adding sunglasses and opened brick-and-mortar stores, allowing customers to try on glasses before purchasing them.

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In the Success stage, businesses have established themselves in the market and are generating consistent revenue. They are profitable, and their customer base continues to grow.

• Established brand identity: The business has a recognizable brand identity that resonates with its target audience.
• Consistent revenue: The business is generating steady income and is profitable.
• Growth potential: The company has identified and is ready to invest in growth opportunities.
• Scaling operations: As the business grows, it may have issues scaling its operations to meet demand.
• Maintaining a competitive edge: Established companies often face competition from new entrants in the market.
• Managing growth: The company must balance growth opportunities with maintaining profitability and financial stability.
• Invest in scalable systems and processes: This enables the company to manage growth efficiently and maintain profitability.
• Continuously innovate: Established companies must continue to innovate and develop new products and services to stay competitive.
• Focus on employee retention: Keeping talented employees is crucial for maintaining the company's culture and driving growth.
• Airbnb: Airbnb is a company that has experienced significant success in recent years. The company has established itself as a major player in the hospitality industry, generating billions of dollars in revenue each year. Airbnb has invested heavily in technology and created scalable systems and processes to manage its growth. The company has also expanded its product offering to include experiences and other travel-related services.
• Patagonia: Patagonia is an outdoor apparel company that has established itself as a leader in a sustainable fashion. The company's commitment to sustainability and ethical business practices has resonated with customers, helping it to achieve success. To manage its growth, Patagonia has focused on employee retention and creating a strong company culture. The company has also expanded its product offering to include more sustainable clothing and outdoor gear.

In the Takeoff stage, businesses are experiencing rapid growth and are rapidly expanding their operations.

• Rapid growth: The company is experiencing exponential growth, with revenue increasing at a fast pace.
• Expanding operations: The company is developing its operations and may enter new markets or launch new products.
• Increased visibility: The company's brand is gaining more visibility and recognition in the market.
• Managing growth: As the company experiences rapid growth, maintaining control and managing the expansion effectively can be challenging.
• Maintaining company culture: As the company grows, it can be challenging to maintain the same company culture that helped it to achieve success in the early stages.
• Securing financing: Financing is critical for sustaining growth, but obtaining funding at this stage can take time.
• Create a growth plan: The company should have a clear growth plan outlining its future goals and objectives.
• Build a strong team: The company needs to build a team of talented individuals who can help to manage the expansion and maintain the company's culture.
• Secure financing: The company needs to secure financing to sustain growth, which may involve seeking out investors or taking out loans.
• Uber: Uber is a company that has experienced rapid growth and has disrupted the transportation industry. To manage its growth, Uber has focused on building a solid team and securing financing from investors. The company has also expanded its operations to new markets worldwide, offering new services such as food delivery and bike sharing.
• Zoom: Zoom is a video conferencing company that has experienced explosive growth in recent years. The company's user base multiplied during the COVID-19 pandemic as remote work and virtual meetings became the norm. To manage its growth, Zoom has focused on building a solid team and scaling its operations to meet demand.

In the Maturity stage, businesses have achieved a high level of success and have become established players in the market.

• Established brand recognition: The company has a well-established brand recognized by customers.
• Consistent revenue: The company is generating consistent income and is profitable.
• Limited growth potential: The company may have limited growth potential in its current market.
• Stagnation: The company may experience stagnation as it reaches the limits of its growth potential.
• Competition: Established companies face intense competition from new entrants in the market.
• Managing decline: Eventually, all businesses will face a decline in revenue and profitability, and managing this decline can be challenging.
• Diversify the product or service offering: Diversifying the product or service offering can help to maintain revenue and profitability.
• Explore new markets: The company can explore new markets to find new growth opportunities.
• Focus on innovation: Innovating and developing new products and services can help to differentiate the company from its competitors.
• Coca-Cola: Coca-Cola is a company that has achieved a high level of success and is recognized around the world. To maintain its position in the market, Coca-Cola has diversified its product offering, launching new beverages and expanding into new markets. The company has also focused on innovation, developing new products such as Coca-Cola Zero Sugar and investing in sustainable packaging.
• McDonald's: McDonald's is a fast-food restaurant chain that has become a global icon. To maintain its position in the market, McDonald's has diversified its menu, offering healthier options and introducing new items based on regional tastes. The company has also focused on innovation, introducing new technology such as self-order kiosks and mobile ordering.

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Numerous factors can affect a business's growth trajectory, both internal and external.

Internal factors are those that are within the control of the company. These factors include:

• Management structure: The company's management structure can significantly impact its ability to grow. A well-structured management team can help to guide the company through different stages of growth.
• Employee performance: The performance of employees can impact the company's ability to grow, as a skilled and motivated workforce can help to drive growth.
• Financial management: Effective financial management is critical for a company's growth, enabling it to allocate resources efficiently and make strategic investments.

External factors are those that are outside of the control of the company. These factors include:

• Economic conditions: Economic conditions can impact a company's growth, as a recession or economic downturn can make it challenging to generate revenue and secure financing.
• Political factors: Political factors such as changes in regulations or government policies can impact a company's ability to grow.
• Technological advancements: Technological advancements can create new growth opportunities but can also disrupt established industries and business models.
• Kodak: Kodak is a company that failed to adapt to technological changes and the market, ultimately leading to its decline. Kodak was once a dominant player in the photography industry, but it failed to embrace digital photography and was slow to transition to new technologies.
• Amazon: Amazon is a company that has experienced tremendous growth by capitalizing on technological advancements and changes in consumer behavior. Amazon's innovative business model, including online retail, cloud computing, and streaming media, has enabled the company to grow rapidly and disrupt numerous industries.

Effective business planning is critical for businesses seeking growth. A well-designed business plan can guide a company's growth and ensure it stays on track to achieve its goals and objectives.

Effective planning can help businesses grow in the following ways:

• Setting goals and objectives: A business plan helps to establish clear goals and objectives for the company, which can help to align the team and drive growth.
• Identifying potential problems: Business planning enables companies to identify potential issues and develop strategies to mitigate them, reducing the risk of failure.
• Allocating resources: A business plan helps companies allocate resources effectively, ensuring that resources are directed towards activities that drive growth.

A successful business plan typically includes the following elements:

• Executive summary: A brief company overview and its goals and objectives.
• Business description: A detailed description of the company's products or services, target market, and competitive landscape.
• Market analysis: An analysis of the market, including market size, trends, and competition.
• Marketing and sales strategies: A description of the company's marketing and sales strategies, including advertising, promotions, and pricing.
• Financial projections: A forecast of the company's financial performance, including revenue, expenses, and profitability.

Understanding the five stages of business growth and the factors that affect growth can help businesses plan for success. By identifying the challenges and opportunities presented by each stage, companies can develop strategies to overcome obstacles and achieve sustainable growth. Effective planning and execution are critical for success, and businesses that invest in these areas are more likely to achieve their goals and thrive in a competitive marketplace.

Hady has a passion for tech, marketing, and spreadsheets. Besides his Computer Science degree, he has vast experience in developing, launching, and scaling content marketing processes at SaaS startups.

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How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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From Idea to Maturity, the Five Stages of Business Growth

Whether attempting to increase market share, improve profitability or add staff, every company is trying to grow. Doing so means navigating complex challenges and finding inventive routes forward during that business growth process.

Following are the five stages of the business lifecycle and the steps you can take to increase your chance of success along the way.

Development Stage

Whether you’re pursuing a lifelong dream, or you’ve identified an unmet need in a specific market, taking the initial steps to start your own business can be an exciting time. But with so many factors to consider, the process can also be confusing and challenging. If you’ve made the decision to take the entrepreneurial leap, doing so with a clear plan in place—a roadmap of sorts—will help guide you along the way and prepare you for the inevitable twists and turns that come with starting, and growing, a new business.

So, where do you start? Your best bet is to develop a detailed business plan. Whether you’re in need of funding, a set of goals (and timelines to meet them), a detailed customer profile, or all the above, statistics show that new business owners who start off with a plan are twice as likely to succeed as those that don’t.

With countless resources online to choose from, settling on a specific business plan template can feel a bit overwhelming. But remember, there are no right or wrong answers. The best first step is simply to take one. To help you get started, take a look at this comprehensive, step-by-step business plan resource from Inc. Magazine .

Remember, every business is unique, and your business plan will be as well. One thing that every plan should include, however, is a realistic reflection of your company’s aspirations. It’s also important to understand that most successful business plans regularly evolve over time as reviews are performed, milestones are reached, marketing plans are modified, and new targets and objectives are identified.

While business plans can go a long way in helping you build a business that’s more attractive to outside investors, during these early stages of a business, it’s important to continue creating a foundation that sets you up for success, regardless of outside interests.

That foundation will look different depending on your business’ focus and your ultimate goals, but here are a few items to consider when setting yourself up to take your first big steps into the market:

• Identify how your concept/product/idea fills a need in the market
• Gauge how well accepted it will be in the market
• Determine your ideal outcome – from profits to adoption-rate to overall effectiveness

Start-up Stage

Once you have a plan in place, it’s time to put it into action—kicking off the next stage of business growth: the start-up stage. During this time, you will test the viability of your big ideas—as well as the effectiveness of your capabilities—and this stage can represent a series of make-or-break moments for many small business owners.

But we’re not talking pass/fail tests here. If things aren’t progressing the way you want or need them to be, it’s okay to reassess and pivot as you go. This flexibility will allow you to figure out what changes need to be made to build a healthier, more resilient business. And a large part of building a stronger business comes with attracting (and holding on to) a team that shares your vision and mission—one that can help you do the work necessary to carry out your collective plan.

At this important stage of development, the people you hire can have a lasting, positive impact on the culture, values, and performance that defines your business. That’s why it’s important to build a team that doesn’t just share your goals, but also has the skillset and diversity of ideas necessary to help you achieve them. It’s a tall task, to be sure, but it is possible. And if you’re struggling to find (or attract) the employees you need to make it all happen, there are experienced, outside resources, like G&A, who can help you navigate the recruiting process and build a pipeline of experienced talent.

Another key to creating and maintaining positive momentum, is having the necessary capital on hand to make it all happen. Whether raising money, finding investors, or managing cash flow, knowing your options, and maximizing their potential, can go a long way toward giving you the stability you need to help get your business off the ground.

Read about five different funding options to consider from Forbes .

Ultimately, the start-up stage is when you start to put all the pieces together. As you continue to establish the core elements of your business, a few key areas to focus on include:

• Establishing a customer base and market presence
• Managing accounts in a way that best suits your operation
• Navigating the way your funds are sourced and allocated

Growth Stage

Once you’ve hit a comfortable groove, you’ll be ready to look ahead to the next phase—growing your small business.

The potential for growth is an exciting prospect but knowing how (and when) to make it happen can be a bit of a strategic balancing act. Matching the pace of your increased cash flow and client base without losing sight of the core tenets of your business, for instance, is a struggle that many successful companies have had to navigate.

So, before you fully lean into a growth spurt, take time to review and recalibrate your existing business plan to match your new reality. Doing so can help you more easily determine what is necessary from both a financial and interpersonal perspective. This practice can also provide you with a better understanding of what you’ve achieved, while helping you identify unforeseen opportunities or specific areas for improvement in your business model before plotting your growth strategy.

These strategies from Small Business Development Center experts across the country can help get the ball rolling.

There is no one-size-fits-all solution when planning your next steps, but here are a few simple questions that can help guide your way:

• What’s your small business best at right now?
• What’s driving profits?
• What does the current competitive landscape look like?
• What are current market conditions?

As a growing business, your goal is to identify your market differentiators and what’s driving your profits, then come up with strategies to efficiently expand both.

Expansion Stage

Characterized by a new season of rapid growth and increasing distribution channels, your expansion stage is when you test the boundaries of what is possible for your small business.

At this point in the life of your business, finding ways to increase your market share or revenue streams requires a very detailed understanding of your company’s strengths and what they’re worth on the open market. With that understanding in place, you can begin your evaluation of potential expansion routes and chart a course into new markets to reach new customers. To see how that expansion might look for your business, check out these recommendations from the U.S. Small Business Administration (SBA) .

Regardless of the shape your expansion takes, the key to doing so successfully is to understand the limits of your business while aiming to maximize its potential. One expansion solution, for example, might involve merging with or acquiring another business. Here, the SBA explains the difference between the two and their functions; but these are just two of the many options at your disposal. Expanding with success means finding the solution that best fits your unique business.

Maturity Stage

When your company reaches the maturity stage, it’s the result of a lot of hard work and perseverance, along with a business idea that has proven its worth. Through strategic planning and maneuvering, you and your team created the perfect climate for success—helping you to evolve from start-up to industry standard bearer. It’s now, for mature businesses, that the importance of growth merges with the need for retention and other business interests.

Although maturity is considered a final stage for business growth, it is not a finish line, or a time to sit back, put the evolving strategies and planning aside and coast along for years to come. Businesses are living, breathing entities. Long-term success requires inspiration, continued commitment, and an ability to meet the needs of an ever-changing world and customer base with new products and ideas. Stagnation, at this point, invites greater competition and makes reacting to market trends more cumbersome.

There are any number of ways to keep your offerings fresh and navigate a potential decline stage. Here are a few creative suggestions from the small business section of the Houston Chronicle .

Another way to help ensure continued momentum, is to revisit your business plan once again, and determine whether pivoting to a new expansion stage or considering an exit strategy is the way forward. Evolution, expansion, and reinvention are the hallmarks of any business with a long history of success. If you take into consideration what’s right for you, your team, and your business, the sky's the limit.

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As your company grows, so do your responsibilities. For administrative support, access to better, more affordable benefits, comprehensive HR expertise, and more time to focus on the strategic direction of your business, HR outsourcing could be a great option for you and your team. For more information on what a PEO can offer your business, contact one of our experienced business advisors

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Navigate the 5 stages of business growth for ultimate success

Learn how to navigate the five stages of business growth and implement best practices and strategies to gain a competitive edge in saturated markets.

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Every business evolves through distinct stages, and understanding each one is vital to achieving sustained success.

Recognizing where your company stands in its growth cycle is like reviewing a road map of your journey’s progression. In business, this journey is full of twists and turns. But anticipating challenges and opportunities can make the difference between becoming an industry leader and succumbing to competitive pressure.

Common challenges that emerging companies face include market penetration, changing technologies, and employee management difficulties. When you successfully conquer these obstacles, you can establish an organizational foundation that supports your long-term objectives and set up a legacy for your name and brand.

Read on to familiarize yourself with the stages of business growth, from inception to maturity, and learn to make informed decisions so your company thrives at every step of the journey.

The 5 stages of business growth

By understanding the business lifecycle, you can identify where you stand and act according to challenges and opportunities. Here are the five critical stages of growth and how to navigate them.

1. Existence

Also called the startup phase, this is where the founder or owner does the heavy lifting and runs most operations. With a lack of investors and sponsors, owners also self-fund the business, rarely formally planning profits or expecting significant returns. For every venture in this phase, entrepreneurs grapple with finding a niche and brand identity, developing products and services, and securing initial customers.

Say a tech startup releases an innovative social media app. In the existence stage, the company focuses on proof of concept and gains user traction through marketing and beta testing . The startup also refines their offerings based on early responses and feedback to meet a newly acquired target audience’s evolving needs.

As you navigate this stage, prioritize adaptability, conduct thorough market research, and plan a sustainable business growth strategy that ensures a steady cash flow. Even if your company generates revenue, the likelihood of profits is low in its nascent stage.

To sustain existence, you must find investors and other funding sources while growing a small business from the ground up. Here are a few more tips to navigate this stage:

• Market validation. Thoroughly research the market to validate your product or service. You might use minimum viable products (MVPs) to test concepts before developing them and refine your offerings based on customer feedback.
• Lean methodologies. Adopt lean principles and agile development to minimize waste and focus on creating MVPs. Engage with potential customers through surveys, interviews, and A/B testing , and pivot if necessary before progressing to the next stage.

2. Survival

The survival stage marks a crucial juncture where the company transitions from existence to stability. At this point, they have a viable brand and are well-positioned to successfully deliver products and services to a dedicated customer base. Plus, the company now has a few employees, with the founder overseeing significant structural changes and decisions.

Following a breakthrough into the industry, the company’s focus shifts toward long-term survival, where the business must establish consistent and reliable revenue streams. These are still early company growth stages, so it’s unlikely you’ll make profits. Still, a realistic objective is to break even and earn enough to cover operational expenses and replace outdated assets like technology and resources. Without breaking even, the business risks running out of capital, which could force you to sell the company or its assets.

To maintain survival, you must create a robust business model that prioritizes cost-effective strategies, streamlines daily workflows , and diversifies revenue streams:

• Cost-effective strategies. Identify areas where you can maximize output with the fewest possible resources. You can also leverage artificial intelligence (AI) for tasks like marketing and personalization, allowing employees to focus on growth.
• Streamlined workflows. Consider developing a scalable enterprise web application tailored to your company’s specific needs. An in-house web app offers a centralized location for project management, communication, and collaboration that allows you to monitor and execute tasks in one place.
• Diversified revenue streams. Explore additional income streams, like partnerships and complementary products and services, to reduce dependency on one revenue source. For example, a software-as-a-service business can expand into related applications or services.

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This is when the company starts to thrive and solidify their presence in the market with steady profits and growing customer acquisition. Now an established company, the organization has the reputation and assets to ensure a healthy financial future.

If the business progresses to this point, it has the resources to hire more employees and a few managers to acquire projects and assume some of the owner’s decision-making. You’ll also find an expanded structure, with accounting departments, real-time marketing strategies , and multiple teams working together.

Now, the emphasis is on retaining customers, training teams, and investing in scalable technologies:

• Customer retention. Satisfied customers lead to repeat business and a positive reputation through word-of-mouth marketing . Implement loyalty programs, offer discounts, and address issues promptly to keep existing customers happy and appeal to potential target audiences.
• Training employees. With more employees and expanding departments, there’s a risk of organizational silos forming and impeding progress. To avoid this, proactively encourage a culture of open communication and knowledge-sharing to enhance teamwork and innovation. Host regular workshops to develop skill sets and be transparent about the company’s current opportunities and challenges to help employees grow with the business .
• Technology investments. These investments include connecting automation software , data visualization tools, and real-time analytics platforms to your digital channels. With the right solutions, you can effectively gather insights and make data-driven decisions to improve your content.

This stage often introduces several challenges, like quality sacrifices that cause customer dissatisfaction. But once you achieve stability, with risk-mitigation procedures and the know-how to weather turbulent times, you can continue cruising steadily.

In the takeoff stage, companies experience exponential growth, often propelled by innovative strategies, market trends, or breakthrough products. These situations allow you to leverage explosive expansion , but you must manage the increased demand and maintain an organizational culture amid scaling .

Also consider building your company’s network, perhaps by merging with another organization or acquiring a smaller business to expand your brand’s umbrella. Or you could develop new products and services or move into new markets.

For example, a streaming company introduces an appealing subscription-based model that achieves meteoric growth, resulting in the business receiving global recognition and becoming a dominant player in the entertainment industry.

Regardless of the industry, here are a few best practices to capitalize on in the takeoff stage:

• Build scalable infrastructure. Leverage your success and increased demand by scaling operations and entering new markets. And after developing an enterprise website, consider exploring cloud solutions to accommodate employees globally.
• Engage in strategic partnerships. Identify potential partners through industry events, networking, and market research. Forming strategic partnerships is an optimal way to expand reach and penetrate new markets. Ensure you collaborate with companies, sponsors, and investors whose ideas align with your business’s long-term goals.

5. Resource maturity

Finally, you have an established target market, loyal customers, and organizational structures that run like clockwork. As you approach the maturity stage, your primary goal is to optimize resources — like revenue, human capital, and partnerships — for long-term sustainability.

Whether snowballing into success or plateauing into stability, you must continue adopting new technologies and practices to thrive through industry fluctuations. Saturated and new markets both bring stiff competition, but planning while refining existing procedures can help you maintain a competitive edge and keep your business scaling.

Here are three ways to prepare to keep evolving maturely and sustain long-term success:

• Build a positive working environment. Foster a culture of innovation to stay competitive and keep employees motivated. Encourage them to contribute ideas, invest in new and existing talent, and stay ahead of industry trends. For example, you might invite industry experts to conduct seminars and educate your workforce. With the right support, teams maintain high productivity levels for continued growth and expansion.
• Diversify. Diversify product, service, and content offerings to adapt to your target audience’s changing needs and market dynamics. Regular industry analyses show new market opportunities, allowing you to exploit gaps and trends to solve pain points before competitors.
• Focus on the long-term vision. As success unfolds and stabilizes, review and refine your company’s long-term vision. Set ambitious yet realistic goals and achieve them by investing in employee development , sustainable practices, and social responsibility to cement your position as a market leader.

The best tools for your business growth strategy

New technologies come in many shapes and forms, but a website is an indispensable tool for your company’s growth trajectory — it’s the face of your brand and the touchpoint that makes or breaks a potential customer’s first impression.

With Webflow Enterprise , you can create an intuitive interface that shapes brand perception, engages visitors, and kickstarts your brand’s digital ecosystem. Whether scaling a small business or maturing as an enterprise, Webflow provides the versatility to adapt and thrive.

From the startup stage and beyond, tell your story with Webflow and grow your business today.

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The Business Planning Process: 6 Steps To Creating a New Plan

In this article, we will define and explain the basic business planning process to help your business move in the right direction.

What is Business Planning?

Business planning is the process whereby an organization’s leaders figure out the best roadmap for growth and document their plan for success.

The business planning process includes diagnosing the company’s internal strengths and weaknesses, improving its efficiency, working out how it will compete against rival firms in the future, and setting milestones for progress so they can be measured.

The process includes writing a new business plan. What is a business plan? It is a written document that provides an outline and resources needed to achieve success. Whether you are writing your plan from scratch, from a simple business plan template , or working with an experienced business plan consultant or writer, business planning for startups, small businesses, and existing companies is the same.

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The Better Business Planning Process

The business plan process includes 6 steps as follows:

• Do Your Research
• Calculate Your Financial Forecast
• Draft Your Plan
• Revise & Proofread
• Nail the Business Plan Presentation

We’ve provided more detail for each of these key business plan steps below.

1. Do Your Research

Conduct detailed research into the industry, target market, existing customer base,  competitors, and costs of the business begins the process. Consider each new step a new project that requires project planning and execution. You may ask yourself the following questions:

• What are your business goals?
• What is the current state of your business?
• What are the current industry trends?
• What is your competition doing?

There are a variety of resources needed, ranging from databases and articles to direct interviews with other entrepreneurs, potential customers, or industry experts. The information gathered during this process should be documented and organized carefully, including the source as there is a need to cite sources within your business plan.

You may also want to complete a SWOT Analysis for your own business to identify your strengths, weaknesses, opportunities, and potential risks as this will help you develop your strategies to highlight your competitive advantage.

2. Strategize

Now, you will use the research to determine the best strategy for your business. You may choose to develop new strategies or refine existing strategies that have demonstrated success in the industry. Pulling the best practices of the industry provides a foundation, but then you should expand on the different activities that focus on your competitive advantage.

This step of the planning process may include formulating a vision for the company’s future, which can be done by conducting intensive customer interviews and understanding their motivations for purchasing goods and services of interest. Dig deeper into decisions on an appropriate marketing plan, operational processes to execute your plan, and human resources required for the first five years of the company’s life.

3. Calculate Your Financial Forecast

All of the activities you choose for your strategy come at some cost and, hopefully, lead to some revenues. Sketch out the financial situation by looking at whether you can expect revenues to cover all costs and leave room for profit in the long run.

Begin to insert your financial assumptions and startup costs into a financial model which can produce a first-year cash flow statement for you, giving you the best sense of the cash you will need on hand to fund your early operations.

A full set of financial statements provides the details about the company’s operations and performance, including its expenses and profits by accounting period (quarterly or year-to-date). Financial statements also provide a snapshot of the company’s current financial position, including its assets and liabilities.

This is one of the most valued aspects of any business plan as it provides a straightforward summary of what a company does with its money, or how it grows from initial investment to become profitable.

4. Draft Your Plan

With financials more or less settled and a strategy decided, it is time to draft through the narrative of each component of your business plan . With the background work you have completed, the drafting itself should be a relatively painless process.

If you have trouble writing convincing prose, this is a time to seek the help of an experienced business plan writer who can put together the plan from this point.

5. Revise & Proofread

Revisit the entire plan to look for any ideas or wording that may be confusing, redundant, or irrelevant to the points you are making within the plan. You may want to work with other management team members in your business who are familiar with the company’s operations or marketing plan in order to fine-tune the plan.

Finally, proofread thoroughly for spelling, grammar, and formatting, enlisting the help of others to act as additional sets of eyes. You may begin to experience burnout from working on the plan for so long and have a need to set it aside for a bit to look at it again with fresh eyes.

6. Nail the Business Plan Presentation

The presentation of the business plan should succinctly highlight the key points outlined above and include additional material that would be helpful to potential investors such as financial information, resumes of key employees, or samples of marketing materials. It can also be beneficial to provide a report on past sales or financial performance and what the business has done to bring it back into positive territory.

Business Planning Process Conclusion

Every entrepreneur dreams of the day their business becomes wildly successful.

But what does that really mean? How do you know whether your idea is worth pursuing?

And how do you stay motivated when things are not going as planned? The answers to these questions can be found in your business plan. This document helps entrepreneurs make better decisions and avoid common pitfalls along the way. ​

Business plans are dynamic documents that can be revised and presented to different audiences throughout the course of a company’s life. For example, a business may have one plan for its initial investment proposal, another which focuses more on milestones and objectives for the first several years in existence, and yet one more which is used specifically when raising funds.

Business plans are a critical first step for any company looking to attract investors or receive grant money, as they allow a new organization to better convey its potential and business goals to those able to provide financial resources.

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Other Helpful Business Plan Articles & Templates

Business Life Cycle

The five stages of a business' life

What is the Business Life Cycle?

The business life cycle is the progression of a business in phases over time and is most commonly divided into five stages: launch, growth, shake-out, maturity, and decline. The cycle is shown on a graph with the horizontal axis as time and the vertical axis as dollars or various financial metrics. In this article, we will use three financial metrics to describe the status of each business life cycle phase, including sales , profit , and cash flow .

Image: CFI’s FREE Corporate Finance Class .

Phase One: Launch

Each company begins its operations as a business and usually by launching new products or services . During the launch phase, sales are low but slowly (and hopefully steadily) increasing. Businesses focus on marketing to their target consumer segments by advertising their comparative advantages and value propositions. However, as revenue is low and initial startup costs are high, businesses are prone to incur losses in this phase.

In fact, throughout the entire business life cycle, the profit cycle lags behind the sales cycle and creates a time delay between sales growth and profit growth. This lag is important as it relates to the funding life cycle, which is explained in the latter part of this article.

Finally, the cash flow during the launch phase is also negative but dips even lower than the profit. This is due to the capitalization of initial startup costs that may not be reflected in the business’ profit but that are certainly reflected in its cash flow.

Phase Two: Growth

In the growth phase, companies experience rapid sales growth. As sales increase rapidly, businesses start seeing profit once they pass the break-even point. However, as the profit cycle still lags behind the sales cycle, the profit level is not as high as sales. Finally, the cash flow during the growth phase becomes positive, representing an excess cash inflow.

Phase Three: Shake-out

During the shake-out phase, sales continue to increase, but at a slower rate, usually due to either approaching market saturation or the entry of new competitors in the market . Sales peak during the shake-out phase. Although sales continue to increase, profit starts to decrease in the shake-out phase. This growth in sales and decline in profit represents a significant increase in costs. Lastly, cash flow increases and exceeds profit.

Phase Four: Maturity

When the business matures, sales begin to decrease slowly. Profit margins get thinner, while cash flow stays relatively stagnant. As firms approach maturity, major capital spending is largely behind the business, and therefore cash generation is higher than the profit on the income statement .

However, it’s important to note that many businesses extend their business life cycle during this phase by reinventing themselves and investing in new technologies and emerging markets. This allows companies to reposition themselves in their dynamic industries and refresh their growth in the marketplace.

Phase Five: Decline

In the final stage of the business life cycle, sales, profit, and cash flow all decline. During this phase, companies accept their failure to extend their business life cycle by adapting to the changing business environment. Firms lose their competitive advantage and finally exit the market.

Corporate Funding Life Cycle

In the funding life cycle, the five stages remain the same but are placed on the horizontal axis. Across the vertical axis is the level of risk in the business; this includes the level of risk of lending money or providing capital to the business.

While the business life cycle contains sales, profit, and cash as financial metrics, the funding life cycle consists of sales, business risk, and debt funding as key financial indicators. The business risk cycle is inverse to the sales and debt funding cycle.

At launch, when sales are the lowest, business risk is the highest. During this phase, it is impossible for a company to finance debt due to its unproven business model and uncertain ability to repay debt. As sales begin to increase slowly, the corporations’ ability to finance debt also increases.

As companies experience booming sales growth, business risks decrease, while their ability to raise debt increases. During the growth phase, companies start seeing a profit and positive cash flow, which evidences their ability to repay debt.

The corporations’ products or services have been proven to provide value in the marketplace. Companies at the growth stage seek more and more capital as they wish to expand their market reach and diversify their businesses.

During the shake-out phase, sales peak. The industry experiences steep growth, leading to fierce competition in the marketplace. However, as sales peak, the debt financing life cycle increases exponentially. Companies prove their successful positioning in the market, exhibiting their ability to repay debt. Business risk continues to decline.

As corporations approach maturity, sales start to decline. However, unlike the earlier stages where the business risk cycle was inverse to the sales cycle, business risk moves in correlation with sales to the point where it carries no business risk. Due to the elimination of business risk, the most mature and stable businesses have the easiest access to debt capital.

In the final stage of the funding life cycle, sales begin to decline at an accelerating rate. This decline in sales portrays the companies’ inability to adapt to changing business environments and extend their life cycles.

Understanding the business life cycle is critical for investment bankers, corporate financial analysts, and other professionals in the financial services industry. You can benefit by checking out the additional information resources that CFI offers, such as those listed below.

Additional Resources

Thank you for reading this guide on the 5 stages of a business or industry life cycle. To help you advance your career, check out the additional CFI resources below:

• Corporate Development
• Careers in Corporate Development
• Diffusion of Innovation
• M&A Process Overview
• See all valuation resources
• See all commercial lending resources
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Understanding the 5 Stages of Business Growth

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Scaling a business is a weighty goal, and fledgling small businesses face challenges that are determined by a range of variables—business and industry type, leadership and management capability, business size, technology and infrastructure capability, and market volatility, to name a few. 

And yet, market analysts have identified some key patterns in the growth phase of small businesses of all types—patterns that, if studied and anticipated, can give you a roadmap to the growth stages of your current or future small business venture. 

Here we’ll identify the steps of company growth, giving you a clearer idea of what to expect in your current or future small business growth.

The 5 stages of business growth

From a neighborhood restaurant with a small five-person waitstaff to a $15 million startup tech, small businesses of all types experience the same stages of business growth. These growth phases are:

• Establish existence: This is the first phase of a business and involves delivering the initial product or service offering, securing customers and clients, and consistently delivering the product or service. 
• Survive to thrive: In this phase of company growth, the business has established that it has a viable product or service. Its focus has shifted to retaining the existing customer base and building consistency in its product or service offering.
• Build on success: Businesses at this stage face a new line of decision-making. They use existing clientele and accomplishments to continue to scale up or direct the company to a sustainable level with new personnel that allows more hands-off ownership.
• Identify expansion: In this phase, companies look for ways to rapidly expand and finance that expansion.
• Reach maturity: Companies in the maturity phase have managerial talent, well-developed systems, and substantial financial resources—their chief concern is how to manage their financial gains and maintain their entrepreneurial spirit.

Having an understanding of the framework of business growth is a powerful tool in preparing for your business expansion. Let’s take a deeper dive into each phase of growth. 

Stage 1: Establish existence

Setting up a viable business means first having a valuable product or service. Company ownership should be wholly focused on establishing their first clients or customers and should be asking themselves some key questions:

• Are we able to find enough customers, deliver our products, and provide service well enough to be a profitable business?
• Are we able to expand from our key early clientele to a more extensive, broader sales base?
• Do we have enough capital and cash resources to support this startup phase?

Businesses in this phase are straightforward—the ownership performs most if not all duties and may hire out or contract subordinates who they directly supervise. Formal systems and sophisticated processes are minimal or nonexistent, and the primary focus is to stay alive. 

Unsurprisingly, companies in this phase are volatile, and many companies don’t make it out of this phase as ownership fails to receive a commensurate return on their time, energy, and capital investment. 

Ownership at this level requires nimble and flexible decision-making—establishing a customer base that may not be your ideal clientele can make the difference in building a bedrock cash flow that supports your business while you continue to grow. 

Additionally, companies in this stage may find a higher demand for an ancillary product or service than their initial or main product or service offering. For example, a neighborhood restaurant may find higher traffic during lunch than at dinner and may decide to focus resources on serving their lunchtime clientele. In any case, agile decision making is crucial in this growth stage. 

Stage 2: Survive to thrive

Companies in the survival stage have proven that they have a profitable product or service and have an established customer base. Their focus needs to shift to retaining customers and addressing the relationship between revenue and expenses. Ownership in this growth phase should be asking themselves these questions:

• In the short term, are we able to generate enough revenue to cover the repair or replacement of our capital assets as they age or break down?
• Are we able to at least generate enough revenue to remain in operation and still support growth to the point that gives us a return on our time and energy investment?

The surviving business is still defined by its owner and may have a small supporting cast of managers or overseers. However, this supporting cast functions mainly as executors of the owner’s well-defined mission, rather than autonomous decision-makers. As such, the business is still defined primarily by its ownership, and systems development is minimal. 

Surviving businesses are still vulnerable—they may stay at this stage for extended periods as they earn marginal returns or go out of business when the owner retires or gives up. They could also fold entirely or go on to be sold, sometimes at a fair or exorbitant price, and sometimes at a loss to the owner. Companies who make it through the survival phase can move on to the next stage.

Stage 3: Build on success

By this stage, the company is a proven viable business model. The company is consistently gaining new business, retaining existing business, and has systems in place. The primary concern of ownership at this growth stage is whether to exploit the company’s accomplishments to continue to expand or keep the company sustainable and profitable while ownership scales back their hands-on engagement. 

Company owners in the success phase, though less vulnerable than at earlier stages, still have important decisions to make. Some common questions success-level ownership considers may include:

Would scaling right now give us higher or lower margins? 

Say, for example, you’re the owner of a wine production facility, and you self-manage logistics and shipping. Scaling up, in this case, might mean expanding your delivery to handle global orders. It’s possible, then, that global shipping, while serving more clientele, may deliver a lower margin per unit due to increased labor costs and increased shipping costs. Does that lower margin make sense for you to pursue? 

Would scaling right now continue to deliver a quality product or service?

Many luxury and crafts-focused products experience this conflict of priority: Does increased production equate to the same level of quality that built our success? 

For example, a chef and restaurant owner may get an opportunity to distribute their special sauce in grocery stores nationwide. The initial product offering—a homemade sauce from a passionate chef—is what built the success. A mass-produced version of the sauce manufactured in a factory likely won’t deliver the same product to consumers. Is our chef okay with distributing an inferior product with his name on it, and is the increased revenue worth the tradeoff? In every case, it depends on the goals of ownership and the demands of the market.

Are there any other commitments or ventures where I could be experiencing a higher return on my time and energy?

Sometimes company owners realize they’d like to step back from their company and spend more time with their family. Sometimes they may feel inspired to start a new business venture, born of the knowledge and experience of their current venture. Sometimes they may decide that they’d like to run for public office. In all cases, these owners must determine if they are going to use their successful business as a platform for growth and expansion or as a support vehicle for their other endeavors.

Analyze and manage risk and strategize growth opportunities with an <strong>Ansoff matrix</strong>.

Stage 4: Identify expansion

If a company owner decides to go the direction of growth, then the expansion phase brings the new priority of rapid expansion and means of financing that expansion. The key concerns of expansion-minded owners include:

Are there responsibilities that can be delegated to managers or other personnel? Can we maintain the effectiveness of management during rapid growth? Owners must be able to delegate tasks as the company becomes increasingly complex and as demands scale with the business.

Will there be enough cash to support the high demands that expansion brings? Answering “no” to this question comes with a whole host of undesirable outcomes, including making rushed and desperate investments, collecting too much debt, or just burnout. 

Companies in the “identifying expansion” stage are fully developed: They have departments or divisions and separations between sales and production, and the organization is decentralized. 

The company is at a pivotal point: Ownership that can effectively navigate the rapid growth phase can find themselves in big business. If not, the company may scale back to become a sustainable, smaller-scale company, or it may even be sold off. Also on the table: New company ownership or creditors may opt to remove the original owner or entrepreneur and replace them with management talent that steers the expansion phase. 

Stage 5: Reach maturity

Companies in the maturity phase have successfully scaled, and now their primary focus is on consolidating revenue gains from rapid expansion and maintaining the young spirit. Mature companies have done their strategic planning, have a talented management team, and have separated ownership from the company, both financially and operationally. 

The biggest risks of companies at this phase are entering a low-risk state of sustainability and neglecting innovation in the process, a state called ossification. Mature businesses must remain adaptive, anticipating market changes and using their market share to affect market changes. 

As you join a growing business or start your own business, keeping this framework in mind will help you prepare for every phase of your growth and eliminate the biggest obstacle in entrepreneurship—uncertainty. Taking control of your company’s future is as simple as knowing what to expect as you grow. 

When you're ready to build your business, review our 4 best practices.

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Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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5 Stages Of The Business Life Cycle & How To Prepare For Each

Want to know more about the business life cycle? Explore these five main stages, learn how to prepare for each of them and see real-life examples.

Did you know that around 20% of startups fail during the first year of operations?

Understanding the key stages of the business life cycle is essential to ensuring that your business avoids that fate.

It is important to identify at which stage of the business life cycle your enterprise is, because that will define the direction of your operations and inform your company’s strategic planning. 

In this post, we will cover the evolutionary process of an average business, from the inception of the business idea to its decline, and explore how the business life cycle is different from business growth .

We will also identify examples and discuss the most important areas to focus on during each stage of the life cycle.

Let’s jump right in!

Table of Contents

What Is A Business Life Cycle?

A business life cycle is a cyclical representation of the stages an average business goes through from seeding to decline and renewal.

This evolutionary overview helps entrepreneurs and leaders optimize growth through the key stages, increasing the value of their business.

Stages Of Business Life Cycle vs. Business Growth:  How Are They Different?  

The main differences between the stages of a business life cycle and business growth are the way their stages are categorized and the way in which they are utilized.

While sometimes used interchangeably, these terms represent different takes on the evolution of a business, are used by different types of business owners and each have a distinct set of stages.

Take a look at the key differences between the two in the table below:

As shown above, a small and medium sized business owner will value and strive to achieve the four business growth stages: startup, growth, expansion and maturity. This is done in a bid to harness prolonged growth and keep their brand relevant for years to come.

Meanwhile, serial entrepreneurs will track the business life cycle as they aim to receive maximum profits for their business once it has reached its peak.

What Are The 5 Stages Of A Company Life Cycle?

The evolution of entrepreneurial ventures spans various phases, from planting the seeds of a business idea to reaching maturity and in some cases, decline. The five cyclical stages in a business’s existence are:

1. Seed & Development

Your business’s life cycle begins with an idea. Before your business has sprouted to life, you are ready to plant your business seed and nurture it to success.

Called the seed stage in reference to seed funding, it is during this phase that entrepreneurs search for the investors that will financially support their startup .

During this period, you’ll need to ask yourself whether your business idea will provide both short-term return-on-investment (ROI) and long-term profits.

Goal: Making an estimate of your idea’s business feasibility – that is, if it’s worth developing into an actual business.

Challenge : 42% of startups fail due to a lack of demand for their products or services. As such, identifying and pursuing a market niche that offers sustainable demand is the main challenge at the seed stage.

What to focus on:

• Reach out to investors: Financial support at this stage is crucial, so try to find individuals or organizations that may be interested in your project enough to provide monetary assistance. This will involve a great deal of market and economic research to establish the project’s feasibility.
• Create a business plan: It is always important to analyze and firmly establish the strengths, weaknesses, opportunities and threats your business may encounter in the market you intend to enter. The financial foundation of your launch will be a large factor in the success of your business, so try to plan that as much as possible, to the very last detail.
• Garner advice and opinion from professionals: Experienced industry specialists and entrepreneurs you may have access to, as well as business associates, friends and colleagues who are competent in this regard, can provide valuable insight and opinions on the potential of your business idea. Inquire about their main takeaways from the seed funding stage of their own projects and the biggest obstacles they had to overcome. 
• Consider the market and your role in it: Ask yourself if the market is ready to accept your business and if your concept, product, service or idea can fill an existing need in the market. How can your idea soothe the pain points of your prospective customers and clients?

At the startup stage of the business lifecycle, you’ll need funding from investors, banks or your own back pocket.

Regardless of where your funding comes from, extreme flexibility, adaptability and resourcefulness are your best friends at this stage. It’s a period of testing, failing and trying again.

The startup stage is usually marked by:

• Adapting your business model to the changing perspectives of the market and the feedback of your first customers
• Learning how to turn a profit
• Outlining your strategy and work processes
• Business formation and incorporation

Due to so many changes and alterations, you may feel a sense of confusion at this stage. Resist the urge to dwell on it, trust the process and power your way through: difficulties are natural at this stage and the path will be much clearer soon enough.

Goal : Making your business operational, sustainable and, most of all, profitable.

Challenge : Only 15.8% of businesses manage to move from the startup stage to the growth stage within a year. The main challenge of this stage is to develop a business model that will turn a profit, attract new customers and retain employees. 

• Establish a business structure: At the beginning of the startup stage, your employees are likely wearing many hats. Everybody does a little bit of everything, which is a prerogative for any new enterprise, but a corporate structure must exist in order for the company to keep growing beyond this phase.
• Consistently implement new ideas: During the startup phase, you spend your time meeting people and coming up with new ways to sell your products or services. Listening to customer feedback and trying new ideas will provide clarity on what aspect of your product(s) or service(s) to focus on in the future. 
• Figure out a sustainable cash flow: This is the right time to come up with a business model that provides a consistent cash flow that will, in turn, provide consistent growth and the ability to retain old employees and hire new ones.
• Face and overcome various challenges: Managing cash reserves and sales expectations, while establishing a customer base and a market presence are some of the biggest trials you will have to confront with decisiveness at this particular stage of the business life cycle. 

3. Growth 

At the growth stage of the business life cycle, your enterprise begins to solidify its place in the market. Your business strategy begins to settle and your clients are able to explain your business model to other prospects.

Businesses at this stage tend to have:

• Customers and clients of 7+ years
• Strong cash flow and profits
• Low turnover

This is the path toward making the most of your business potential: as you grow into the role of your company’s leader, a competent team of highly-qualified individuals should take over a number of big responsibilities.

Goal : Maximizing your profits and your customer base; creating a solid, intricate corporate and team structure. Achieving this would support your business in making the jump from growth to maturity, something only 30% of firms achieve each year.

Challenge : Addressing the new demands of your business, such as attending to new customers, expanding your workforce, m anaging revenue and o utperforming the competition. 

• Turn your focus inward: The key point here should be building a team by hiring quality people to run segmented operations. As the manager of your business, you should spend time on whatever helps the company grow and anticipate barriers that could decelerate this growth. Through a well-established recruitment process, create order and cohesion with clearly defined objectives.
• Strengthen your customer relationships: Your high-profile employees should take a more proactive stance toward client relationships as well as internal processes. Both experienced senior leaders and workers at lower levels should partake in helping your clients become advocates, thus pushing your enterprise to grow even further.
• Require investments: To deliver your business into the maturity stage, the growth phase needs investment. Outside investment capital is what you will likely have to require through either investors or debt. In the case of the former, you will gain advisors and give up equity. With the latter, you retain equity and sign personal guarantees with banks for funding. 

4. Maturity

The main characteristics of a business at the maturity stage are:

• Annual growth of around 5%
• Tenured employees of around 8 years
• Branches or subsidiaries

This is the period of the biggest level of security you as a business manager may feel since starting out. This security stems from professional management running a daily business, stable annual profits and relative predictability of the overall business situation. 

Your business is consistent and dependable, can defend its market position and expand into new verticals through the sheer power of brand recognition. This, alongside a strong cash position, makes your business attractive for acquisitions and mergers.

As a decision-maker, this may leave you with two choices: to reinvest in your company and its sustainability, or to exit and cash out to begin new ventures.  

Goal : Deciding the future of your business and your involvement in it. Over half of businesses at this stage will remain in the maturity phase year-on-year as they maximize profits and assess their options.

Challenge : Analyzing the potential benefits and drawbacks of each choice and making an informed decision.

• Expanding the business: Before deciding on this step, ask yourself if the business can sustain more growth. What are the market opportunities, if any, for another expansion? Can you cover the possible failure financially? Are you, as a leader, fit to navigate the challenges that new expansion would bring?
• Finding an exit strategy: This step will require a great deal of internal and external company position analysis. You, along with the management team, must communicate the right information at the right time, to the right people. You can perform this exit through a partial or full sale of the business. How the sale process will turn out will depend on the type of business you have and the decisions you make about moving forward.

5. Renewal/Decline

After a period of stability and success, a business may start to decline in revenue, profits, internal structure and external brand reputation .

A sure sign of any company’s decline is when leaders and owners no longer show an inclination toward investing in people or technology, but instead look at what they can take from the business as they plan their withdrawal.

However, renewal efforts should really begin before the decline phase sets in – good business leaders should be able to anticipate the change in business and market beforehand. 

Goal : Reinventing your business by innovating and reinvesting or cashing out.

Challenge : T aking an honest, timely look and identifying the spectrum on which your business falls – investing and expanding or selling and exiting.

• Assemble a team of people who are experts on mergers and acquisitions:  This should include accountants, lawyers, investment bankers and other relevant parties who can see to it that the merger process checks all legal and financial boxes.
• Talk with sales and marketing about reinvesting: They can help figure out how to meet emerging changes in the market and whether there is capacity within the company to meet these changes. This might include modifying current offerings or inventing a completely new business model, which is both time-consuming and costly. 

3 Real-Life Business Life Cycle Examples

Having looked at each of the five business life cycle stages in depth, let’s analyze some real world examples of businesses and their owners who either got it right or wrong.

1. Blockbuster

Founded in 1985, Blockbuster’s rapid early-life growth led to the video rental chain operating with nearly 3,600 stores in 1993. Having reached growth and maturity within just eight years, Blockbuster was subject to a merger worth $8.4 billion in 1994.

Over the next decade, Blockbuster continued its market domination and reaches peak maturity. However, the rise of Netflix, paired with failed takeover bids for Hollywood Video and Circuit City, led to falling sales.

Blockbuster had reached its infamous decline.

By 2010, the company had filed for bankruptcy and as of 2023 there is just one Blockbuster store remaining , located in Oregon.

Elon Musk’s earliest ventures are a blueprint for successful business life cycle management. Having founded the online business directory Zip2 in 1995, he sold the company just four years later for $307 million .

However, it was PayPal where Musk made his billions. Originally named X.com (a URL which now leads to Twitter ), the online payments company was founded by Musk in 1999.

Following a merger with Confinity, rapid growth and a name change to PayPal, the business was sold to eBay for $1.5 billion in 2002.

A gigantic deal at the time, PayPal’s market value spiked to $362 billion 2021 before slumping to $70 billion in 2023 – perhaps 20 years after Musk sold his stake PayPal has finally reached its decline stage.

3. Linktree

Founded in 2016, Linktree is a link in bio tool, allowing businesses and content creators to advertize all of their content in one place.

Today, Linktree is used by over 35 million users, and its most recent valuation places the company at $1.3 billion .

Linktree continues to grow by adding new features like payments and Shopify integration, and only time will tell if its owners choose to sell once it reaches maturity.

Business Life Cycle Stages: Takeaways

Understanding the business life cycle and your position in it makes it that much easier to predict pending roadblocks and, with careful planning, stay one step ahead of these challenges.

The 5 stages of the business life cycle are:

• Seed and development
• Renewal/Decline

Business aims, strategies and objectives are not set in stone – they change as your business and the surrounding market change. Being aware of what stage of the business life cycle you’re at can help with anticipating what’s coming around the bend.

The key takeaways across all stages of the business life cycle include:

• Consider your business’s place in the market
• Establish your company’s business structure
• Listen to feedback and adjust your business model
• Find a sustainable cash flow
• Turn your focus inward toward recruiting quality people and delegating key duties 
• Expand the business or find an exit strategy
• Reinvest to innovate or sell to maximize profits

The mixture of business acumen, instinct and the ability to interpret the signs of change in your environment will all impact the precision of your decision-making when moving from stage to stage.

Regardless of what life cycle stage your business is experiencing, our team of expert consultants are on hand to guide you through its decision-making complexities. Contact us online , call us at (800) 206-9413 or fill in our request a quote form below to learn more about our bespoke consulting services.

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CEO & Founder

Gabriel is a hands-on leader and digital expert focused on providing strategies that grow brands online. He has worked with Fortune 500 companies and reputable startups, including Google, Microsoft, SONY, NFL, NYU, P&G, Fleet Bank and NASA. In addition to columns in Forbes, Entrepreneur, The New York Times and American Express, Gabriel has made numerous media appearances, from Bloomberg and Reuters to ABC News and CNN.

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• What is strategic planning? A 5-step gu ...

What is strategic planning? A 5-step guide

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. In this article, we'll guide you through the strategic planning process, including why it's important, the benefits and best practices, and five steps to get you from beginning to end.

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. The strategic planning process informs your organization’s decisions, growth, and goals.

Strategic planning helps you clearly define your company’s long-term objectives—and maps how your short-term goals and work will help you achieve them. This, in turn, gives you a clear sense of where your organization is going and allows you to ensure your teams are working on projects that make the most impact. Think of it this way—if your goals and objectives are your destination on a map, your strategic plan is your navigation system.

In this article, we walk you through the 5-step strategic planning process and show you how to get started developing your own strategic plan.

How to build an organizational strategy

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What is strategic planning?

Strategic planning is a business process that helps you define and share the direction your company will take in the next three to five years. During the strategic planning process, stakeholders review and define the organization’s mission and goals, conduct competitive assessments, and identify company goals and objectives. The product of the planning cycle is a strategic plan, which is shared throughout the company.

What is a strategic plan?

A strategic plan is the end result of the strategic planning process. At its most basic, it’s a tool used to define your organization’s goals and what actions you’ll take to achieve them.

Typically, your strategic plan should include: 

Your company’s mission statement

Your organizational goals, including your long-term goals and short-term, yearly objectives

Any plan of action, tactics, or approaches you plan to take to meet those goals

What are the benefits of strategic planning?

Strategic planning can help with goal setting and decision-making by allowing you to map out how your company will move toward your organization’s vision and mission statements in the next three to five years. Let’s circle back to our map metaphor. If you think of your company trajectory as a line on a map, a strategic plan can help you better quantify how you’ll get from point A (where you are now) to point B (where you want to be in a few years).

When you create and share a clear strategic plan with your team, you can:

Build a strong organizational culture by clearly defining and aligning on your organization’s mission, vision, and goals.

Align everyone around a shared purpose and ensure all departments and teams are working toward a common objective.

Proactively set objectives to help you get where you want to go and achieve desired outcomes.

Promote a long-term vision for your company rather than focusing primarily on short-term gains.

Ensure resources are allocated around the most high-impact priorities.

Define long-term goals and set shorter-term goals to support them.

Assess your current situation and identify any opportunities—or threats—allowing your organization to mitigate potential risks.

Create a proactive business culture that enables your organization to respond more swiftly to emerging market changes and opportunities.

What are the 5 steps in strategic planning?

The strategic planning process involves a structured methodology that guides the organization from vision to implementation. The strategic planning process starts with assembling a small, dedicated team of key strategic planners—typically five to 10 members—who will form the strategic planning, or management, committee. This team is responsible for gathering crucial information, guiding the development of the plan, and overseeing strategy execution.

Once you’ve established your management committee, you can get to work on the planning process. 

Step 1: Assess your current business strategy and business environment

Before you can define where you’re going, you first need to define where you are. Understanding the external environment, including market trends and competitive landscape, is crucial in the initial assessment phase of strategic planning.

To do this, your management committee should collect a variety of information from additional stakeholders, like employees and customers. In particular, plan to gather:

Relevant industry and market data to inform any market opportunities, as well as any potential upcoming threats in the near future.

Customer insights to understand what your customers want from your company—like product improvements or additional services.

Employee feedback that needs to be addressed—whether about the product, business practices, or the day-to-day company culture.

Consider different types of strategic planning tools and analytical techniques to gather this information, such as:

A balanced scorecard to help you evaluate four major elements of a business: learning and growth, business processes, customer satisfaction, and financial performance.

A SWOT analysis to help you assess both current and future potential for the business (you’ll return to this analysis periodically during the strategic planning process). 

To fill out each letter in the SWOT acronym, your management committee will answer a series of questions:

What does your organization currently do well?

What separates you from your competitors?

What are your most valuable internal resources?

What tangible assets do you have?

What is your biggest strength? 

Weaknesses:

What does your organization do poorly?

What do you currently lack (whether that’s a product, resource, or process)?

What do your competitors do better than you?

What, if any, limitations are holding your organization back?

What processes or products need improvement? 

Opportunities:

What opportunities does your organization have?

How can you leverage your unique company strengths?

Are there any trends that you can take advantage of?

How can you capitalize on marketing or press opportunities?

Is there an emerging need for your product or service? 

What emerging competitors should you keep an eye on?

Are there any weaknesses that expose your organization to risk?

Have you or could you experience negative press that could reduce market share?

Is there a chance of changing customer attitudes towards your company? 

Step 2: Identify your company’s goals and objectives

To begin strategy development, take into account your current position, which is where you are now. Then, draw inspiration from your vision, mission, and current position to identify and define your goals—these are your final destination. 

To develop your strategy, you’re essentially pulling out your compass and asking, “Where are we going next?” “What’s the ideal future state of this company?” This can help you figure out which path you need to take to get there.

During this phase of the planning process, take inspiration from important company documents, such as:

Your mission statement, to understand how you can continue moving towards your organization’s core purpose.

Your vision statement, to clarify how your strategic plan fits into your long-term vision.

Your company values, to guide you towards what matters most towards your company.

Your competitive advantages, to understand what unique benefit you offer to the market.

Your long-term goals, to track where you want to be in five or 10 years.

Your financial forecast and projection, to understand where you expect your financials to be in the next three years, what your expected cash flow is, and what new opportunities you will likely be able to invest in.

Step 3: Develop your strategic plan and determine performance metrics

Now that you understand where you are and where you want to go, it’s time to put pen to paper. Take your current business position and strategy into account, as well as your organization’s goals and objectives, and build out a strategic plan for the next three to five years. Keep in mind that even though you’re creating a long-term plan, parts of your plan should be created or revisited as the quarters and years go on.

As you build your strategic plan, you should define:

Company priorities for the next three to five years, based on your SWOT analysis and strategy.

Yearly objectives for the first year. You don’t need to define your objectives for every year of the strategic plan. As the years go on, create new yearly objectives that connect back to your overall strategic goals . 

Related key results and KPIs. Some of these should be set by the management committee, and some should be set by specific teams that are closer to the work. Make sure your key results and KPIs are measurable and actionable. These KPIs will help you track progress and ensure you’re moving in the right direction.

Budget for the next year or few years. This should be based on your financial forecast as well as your direction. Do you need to spend aggressively to develop your product? Build your team? Make a dent with marketing? Clarify your most important initiatives and how you’ll budget for those.

A high-level project roadmap . A project roadmap is a tool in project management that helps you visualize the timeline of a complex initiative, but you can also create a very high-level project roadmap for your strategic plan. Outline what you expect to be working on in certain quarters or years to make the plan more actionable and understandable.

Step 4: Implement and share your plan

Now it’s time to put your plan into action. Strategy implementation involves clear communication across your entire organization to make sure everyone knows their responsibilities and how to measure the plan’s success. 

Make sure your team (especially senior leadership) has access to the strategic plan, so they can understand how their work contributes to company priorities and the overall strategy map. We recommend sharing your plan in the same tool you use to manage and track work, so you can more easily connect high-level objectives to daily work. If you don’t already, consider using a work management platform .  

A few tips to make sure your plan will be executed without a hitch: 

Communicate clearly to your entire organization throughout the implementation process, to ensure all team members understand the strategic plan and how to implement it effectively. 

Define what “success” looks like by mapping your strategic plan to key performance indicators.

Ensure that the actions outlined in the strategic plan are integrated into the daily operations of the organization, so that every team member's daily activities are aligned with the broader strategic objectives.

Utilize tools and software—like a work management platform—that can aid in implementing and tracking the progress of your plan.

Regularly monitor and share the progress of the strategic plan with the entire organization, to keep everyone informed and reinforce the importance of the plan.

Establish regular check-ins to monitor the progress of your strategic plan and make adjustments as needed. 

Step 5: Revise and restructure as needed

Once you’ve created and implemented your new strategic framework, the final step of the planning process is to monitor and manage your plan.

Remember, your strategic plan isn’t set in stone. You’ll need to revisit and update the plan if your company changes directions or makes new investments. As new market opportunities and threats come up, you’ll likely want to tweak your strategic plan. Make sure to review your plan regularly—meaning quarterly and annually—to ensure it’s still aligned with your organization’s vision and goals.

Keep in mind that your plan won’t last forever, even if you do update it frequently. A successful strategic plan evolves with your company’s long-term goals. When you’ve achieved most of your strategic goals, or if your strategy has evolved significantly since you first made your plan, it might be time to create a new one.

Build a smarter strategic plan with a work management platform

To turn your company strategy into a plan—and ultimately, impact—make sure you’re proactively connecting company objectives to daily work. When you can clarify this connection, you’re giving your team members the context they need to get their best work done. 

A work management platform plays a pivotal role in this process. It acts as a central hub for your strategic plan, ensuring that every task and project is directly tied to your broader company goals. This alignment is crucial for visibility and coordination, allowing team members to see how their individual efforts contribute to the company’s success. 

By leveraging such a platform, you not only streamline workflow and enhance team productivity but also align every action with your strategic objectives—allowing teams to drive greater impact and helping your company move toward goals more effectively. 

Strategic planning FAQs

Still have questions about strategic planning? We have answers.

Why do I need a strategic plan?

A strategic plan is one of many tools you can use to plan and hit your goals. It helps map out strategic objectives and growth metrics that will help your company be successful.

When should I create a strategic plan?

You should aim to create a strategic plan every three to five years, depending on your organization’s growth speed.

Since the point of a strategic plan is to map out your long-term goals and how you’ll get there, you should create a strategic plan when you’ve met most or all of them. You should also create a strategic plan any time you’re going to make a large pivot in your organization’s mission or enter new markets. 

What is a strategic planning template?

A strategic planning template is a tool organizations can use to map out their strategic plan and track progress. Typically, a strategic planning template houses all the components needed to build out a strategic plan, including your company’s vision and mission statements, information from any competitive analyses or SWOT assessments, and relevant KPIs.

What’s the difference between a strategic plan vs. business plan?

A business plan can help you document your strategy as you’re getting started so every team member is on the same page about your core business priorities and goals. This tool can help you document and share your strategy with key investors or stakeholders as you get your business up and running.

You should create a business plan when you’re: 

Just starting your business

Significantly restructuring your business

If your business is already established, you should create a strategic plan instead of a business plan. Even if you’re working at a relatively young company, your strategic plan can build on your business plan to help you move in the right direction. During the strategic planning process, you’ll draw from a lot of the fundamental business elements you built early on to establish your strategy for the next three to five years.

What’s the difference between a strategic plan vs. mission and vision statements?

Your strategic plan, mission statement, and vision statements are all closely connected. In fact, during the strategic planning process, you will take inspiration from your mission and vision statements in order to build out your strategic plan.

Simply put: 

A mission statement summarizes your company’s purpose.

A vision statement broadly explains how you’ll reach your company’s purpose.

A strategic plan pulls in inspiration from your mission and vision statements and outlines what actions you’re going to take to move in the right direction. 

For example, if your company produces pet safety equipment, here’s how your mission statement, vision statement, and strategic plan might shake out:

Mission statement: “To ensure the safety of the world’s animals.” 

Vision statement: “To create pet safety and tracking products that are effortless to use.” 

Your strategic plan would outline the steps you’re going to take in the next few years to bring your company closer to your mission and vision. For example, you develop a new pet tracking smart collar or improve the microchipping experience for pet owners. 

What’s the difference between a strategic plan vs. company objectives?

Company objectives are broad goals. You should set these on a yearly or quarterly basis (if your organization moves quickly). These objectives give your team a clear sense of what you intend to accomplish for a set period of time. 

Your strategic plan is more forward-thinking than your company goals, and it should cover more than one year of work. Think of it this way: your company objectives will move the needle towards your overall strategy—but your strategic plan should be bigger than company objectives because it spans multiple years.

What’s the difference between a strategic plan vs. a business case?

A business case is a document to help you pitch a significant investment or initiative for your company. When you create a business case, you’re outlining why this investment is a good idea, and how this large-scale project will positively impact the business. 

You might end up building business cases for things on your strategic plan’s roadmap—but your strategic plan should be bigger than that. This tool should encompass multiple years of your roadmap, across your entire company—not just one initiative.

What’s the difference between a strategic plan vs. a project plan?

A strategic plan is a company-wide, multi-year plan of what you want to accomplish in the next three to five years and how you plan to accomplish that. A project plan, on the other hand, outlines how you’re going to accomplish a specific project. This project could be one of many initiatives that contribute to a specific company objective which, in turn, is one of many objectives that contribute to your strategic plan. 

What’s the difference between strategic management vs. strategic planning?

A strategic plan is a tool to define where your organization wants to go and what actions you need to take to achieve those goals. Strategic planning is the process of creating a plan in order to hit your strategic objectives.

Strategic management includes the strategic planning process, but also goes beyond it. In addition to planning how you will achieve your big-picture goals, strategic management also helps you organize your resources and figure out the best action plans for success. 

Related resources

How Asana streamlines strategic planning with work management

How to create a CRM strategy: 6 steps (with examples)

What is management by objectives (MBO)?

Write better AI prompts: A 4-sentence framework

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EntreLeadership: What Are the 5 Stages of Business?

14 Min Read | May 24, 2024

Ever heard of an ultramarathon? It’s a race that’s anywhere from 30 to more than 200 miles long. So to go from couch potato to distance runner, you’d have to commit to loads of blood, sweat and tears. Could you do it? Absolutely! But only with a great plan and the guts to keep going.

The same is true of growing a successful business. A load of hard work stands between the dream that got you started and the impact you want to make. Pushing through the challenges can be exciting and exhausting. Some days you feel on fire. Others you’re completely burned out and even disconnected from your dream. No wonder roughly one business shuts down for every business that opens. 1 Hello, Debbie Downer.

So, how do you beat odds like that? First, understand that every business goes through growing pains. And those pains look different depending on the stage of business you’re in. The secret is to have a plan—a way to identify your stage of business so you know what to expect and what to focus on to carve a path through each challenge.

What is EntreLeadership?

That’s what the EntreLeadership system helps you do. The term “EntreLeadership” (pronounced ON-tray-leadership) represents both the passion of an entrepreneur and the character of a leader. And the EntreLeadership system is the proven way for business owners to lead a team, grow a business, and build a legacy.

This system includes the Stages of Business . These are the same five stages small-business leader Dave Ramsey scratched and clawed his way through as he grew his business into a national brand—Ramsey Solutions. Working with and coaching leaders and business owners for more than three decades has also helped us recognize the universal challenges and opportunities that define the Stages of Business (or what some call the business life cycle) and how to move from one stage to the next.

As you learn and apply the real-life principles and processes Dave learned through the school of hard knocks, you can grow your business from the one-person daily grind of the Treadmill Operator (stage one) and build a life-changing legacy (stage five). Even better, you’ll be equipped not just to build any ol’ business but to scale a business with soul.

Ready to Level Up Your Business?

Find out your Stage of Business with our free assessment and get free resources to help you level up by focusing on the right things at the right time.

What to Expect in Your Business Life Cycle

Before we take a deep dive into the Stages of Business, there’s one more fact every serious business owner must face: There’s no easy button or shortcut for running and growing a thriving business. You have to push through the five unavoidable stages of business. And each stage has a unique set of challenges and requires you to master a new set of skills. 

Yep, that’s right—once you overcome one hurdle, your reward is a new hurdle to clear. So if you’re looking for a get-rich-quick scheme or a way to just sit back and coast through running your business, you’ve come to the wrong place.

Related article : What Is Work Ethic (and How to Build a Strong One in Your Team)?

You probably thought running a business sounded fun—until you realized it would actually run you. Discover the EntreLeadership System—the small-business road map that takes the guesswork out of growth.

Now, are you ready for some good news? Here it is: Applying the five Stages of Business will help you avoid the headaches and hassles of trying other systems that don’t work. (And there are a lot of bad business theories and systems out there that’ll get you nowhere.)

Even better than that, working through these five Stages of Business will help you build a business that means something to you—something that changes lives, families and even communities. Heck, you can even change the world. To advance through the stages, you also have to focus on six drivers. We won't hit on the 6 Drivers of Business here, but get familiar with them so you're clear on how to propel forward faster. 

Ready to get a little dirt under your fingernails? Let’s go!

The Five Stages of Business are:

• Treadmill Operator
• Trailblazer
• Peak Performer
• Legacy Builder

Stage 1: Treadmill Operator

Congratulations! This is the first stage of business, and if you’re here, you’re no longer a wantraprenuer. You’ve worked your tail off and beaten the odds. You’re in business. But the thing is, you’re also stuck in the role of chief everything officer.

Unless you inherited or bought a company, most leaders start in the Treadmill Operator stage. This can be a super exciting place for a season, but that’s exactly what it should be—a season. This isn’t a stage you want to camp out in forever. If you do, it’ll wear you out and take you down.

You might be a Treadmill Operator if:

• You work all day doing the thing that makes the money. Then at night, you do the paperwork, pay vendors, take care of emails, and try to collect payment.
• There’s more to-do list than there is day, so important things like going to your kid’s soccer games or taking your spouse on a date feel nearly impossible.
• Your success—being good at lots of things and afraid to pass off responsibilities—has trapped you in your business.
• You’re burned out.

What’s the primary Treadmill Operator business problem?

Too much of the business relies on you. Your core revenue comes from you doing the thing your business is built on.

What can you look forward to when you overcome the problem?

Most of the business results are generated without you.

Key things to learn:

If earning all the revenue falls on you, you really don’t own a business—you own a job. If you want to lead a business that thrives, you have to stop letting your business run you and start running your business. Then, and only then, most of your business results can be generated without you. You probably already know that, so the question is: “How do I get off this flipping treadmill?” These are the critical skills you have to learn to move past this stage:

• Time management
• Business budgeting

You’ve got to do plenty of other things to stay in business, like pay the light bill and provide good customer service. But not developing these four skills will hold you back more than anything else. Once you generate margin with your time and money, hire reliable help, and get nonessentials off your plate, you can squeeze in time for marketing and strategic planning that will help you increase your impact.

You’ll also grow your business enough to afford to bring on more team members. Remember, the less you need to be the doer, the more you can be the leader. In short, you’ll work your way off the treadmill and into leading a team. And that will land you right in the Pathfinder stage.

Stage 2: Pathfinder

The biggest blessings in business are the people. And the biggest burdens? Also the people. In the Pathfinder stage, you are now 100% in the people business, which comes with a special set of challenges to overcome.

You might be a Pathfinder if:

• Running your business feels like a game of whack-a-mole. You’re herding cats and putting out fires all day, and your results are all over the place.
• You struggle with some team members who don’t do things the way they need to or don’t care about the business like you do.
• The mission you’re on, the values you live by, and the vision you have for your business are second nature to you but not to your team. That keeps you from moving in a shared direction.

What’s the primary Pathfinder business problem?

You lack clear direction.

Your team is engaged in a shared direction.

Playwright and Nobel Prize winner George Bernard Shaw said the biggest misconception about communication is that it has happened. That’s the risk you run at the Pathfinder stage. To keep you and your team aligned, you need to define and master these critical areas for your business:

• Mission/vision
• Core values
• Role clarity
• Communication

It’s not enough to have mission, vision and values statements in a binder somewhere or even on a poster in the hall. At the Pathfinder stage, you have to work to plant all of that into the hearts and minds of every team member so it shapes their actions and decision-making. That means you get to become the chief reminding officer. And if you get sick of reminding your team of your mission, vision and values—good! That means you’re just starting to repeat them enough.

What’s another leadership task you now get to take on? Getting work done and achieving goals with and through a group of people . You’ll start to see better communication and people influence happen as you master the Pathfinder stage. And as you and your team all pull together in the same direction, you’ll build momentum that leads you to the Trailblazer stage of business.

Related article :  Mastermind Groups: What Are They, and How Can They Help You Grow Your Business?

Stage 3: Trailblazer

One thing you’ll notice as you hit the Trailblazer stage in your business is speed—as in work’s coming at you almost faster than you can keep up with. You and your team have the tiger by the tail, but it could turn around and bite you if you’re all stretched too thin to manage it.

You might be a Trailblazer if:

• You’re moving fast and making gains, but you don’t have a clear plan of where you’re going (let alone how to get there). You’re more reactionary than intentional.
• You’re ready to develop leaders who are so in sync with you that they can finish your sentences.
• You get glimpses of ways you could scale your business but are thrilled and terrified because you lack repeatable processes.
• You know company culture matters but don’t have time to build it.

What’s the primary Trailblazer business problem?

You lack the leaders and plan to scale your business.

You have a leadership team who’s executing a plan that’s scaling your business.

In this stage, your number one aim is to create a strategic, scalable plan along with a solid leadership team to get ’er done. To help you manage the speed and scope of your business, you need bulletproof processes and systems that get repeatable results at scale. In the early days, getting stuff done by brute force was fine, but it’s time to work smarter, not just harder. (If someone told you blazing new trails so you can grow your business isn’t hard work, they lied to you). Your most important objectives now become:

• Process improvement
• Leadership development
• Intentional culture
• Organizational maturity

Once you build a leadership team that functions as one team with one dream, you’re on your way to making your desired future a reality. And when you level up your leadership, your systems and your company culture, you’ll naturally blaze on to the next stage, which is the peak of your potential Related article : Leadership Development: What It Is and 7 Signs You Need to Invest in Leadership Team Development

Stage 4: Peak Performer

At this stage of the business life cycle, you’re no longer a one-person show. You’re part of an entire company that’s thinking about how to serve people, grow profits, and take performance to the next level. You’ve got the wind to your back, and you’re sailing. Well done! But there’s a tricky new challenge just waiting to take that wind right out of your sails. It’s called complacency.

You might be a Peak Performer if:

• Business is doing great, but you risk relying more on what you’ve already done well than what you need to do next to stay competitive.
• You can afford to be more hands off in the daily operations of delivering your product or service.
• You’re investing most of your time in developing leaders.
• Your team is all in with fulfilling your mission.

What’s the primary Peak Performer business problem?

Your business has become too comfortable.

You and your team have a relentless culture of getting better.

As your business continues to grow, Peak Performers empower a deep bench of leaders to carry out the mission, vision and strategy of the business. But no matter how successful you are, you have to keep fighting for your business and its culture. Running on autopilot slowly weakens the culture that got you this far.

Maybe you’ve heard this saying from author and humorist Mark Twain, “I’m in favor of progress; it’s change I don’t like.” Peak Performers can never afford to shy away from change. So how do you stay on top of your game? You learn how to sustain success through change by digging deep into your business so you can:

• Reconnect to your mission
• Inspire your team
• Reflect and respond
• Disrupt the marketplace

You’re a freaking Peak Performer. Now’s definitely not the time to get too comfortable, or we guarantee your team will too. Lean into why you got into business in the first place, and share your why with your team. That’ll get them more fired up to do work that matters!

You’ll also want to stir some things up at this stage—maybe even break some old habits so you can see your business through fresh eyes. As you reinvent your business (yes, again) and hopefully even generate some market disruption, you’ll create a wave of change instead of being crushed by it. That will lead you to the final stage of the business cycle: Legacy Builder.

Stage 5: Legacy Builder

If you’re a Legacy Builder, you’ve got a lot to be proud of! You’ve built a solid business through a never-quit, servant-leadership attitude, and you’re preparing for the day you’ll hand your company over to a new leader. You want to keep your business in good hands when you step down, but here’s a hard truth: For many business owners, there’s a big difference between what they want and what they’re set up to get.

You might be a Legacy Builder if:

• You spend a lot of energy wondering who should take over your business and how to ready the team for when you step down.
• You’re concerned with how to equip a key leader (and your team) to carry on the work you started with drive, passion and energy.
• You’re looking at your financials and wondering how to value your business.

What’s the primary Legacy Builder business problem?

You don’t have a succession plan—or you have one but haven’t started rolling it out.

The business is successfully running without needing you there.

The Legacy Builder stage can be the most rewarding stage as you reflect on what you’ve built and its impact on others. But to truly be a giant whose shoulders a new generation can stand on, you need a solid succession plan that covers these key areas:

• Reputation transfer
• Financial transfer
• Legal transfer
• Leadership transfer

Those are some big mountains to conquer. We get it. Handing over your business and leadership is a mind game. This is your baby. You’ve spent more than your fair share of sleepless nights and trials by fire growing it into something you’re proud of. And you don’t want anything or anyone to screw that up.

That’s all the more reason to invest a ton of energy into a smooth transfer of trust, power and client care—and to ensure your finances are in order. The last thing you want is to feel like you have to sell your business to your kids to fund your retirement.

When you knock this stage out of the park, you’ll see a new generation of strong, smart, integrity-driven leaders ready to take what you built even further. And you’ll be free to pursue your next big adventure.

What’s Next: Go the Distance

When you have a clear understanding of the stage of business you’re in, you’ll more clearly see how your business is winning, where it’s stuck, and what to do to level up. That’s where EntreLeadership can help.

The stuff you just learned isn’t a far-fetched theory from someone who’s never made payroll. It’s been proven by thousands of business leaders steadily climbing from Treadmill Operator to Legacy Builder. On top of that, it’s the best way to lead your team, grow your business, and create a world-class culture.

• Subscribe to  The EntreLeadership Podcast for advice that can boost your business no matter what stage it's in.
• If you already know your stage of business and you’re ready for more support, join EntreLeadership Elite to accelerate your progress toward the next stage.
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Your Guide To The 5 Stages of Business Growth

At a glance, one might think that – due to their different products, services, people, ideas, and industries – all small businesses are too different to arrange into any particular categories.

However, this quick assessment couldn't be further from the truth because the truth is that all businesses go through stages of development as they progress from startup to maturity, according to Neil C. Churchill and Virginia L. Lewis who developed the concept of business growth stages [1] .

In this sense, businesses can be compared to people who are all unique in their own ways, but who all go through the same growth stages as they mature from infancy to adulthood.

While you might not be able to categorize their unique attributes, you can categorize businesses by their stage of growth. In doing so, you can also determine the challenges that the business is most likely to face and the business growth strategies that offer the greatest likelihood of success, according to your business growth stage. 

As a result, knowing your business's growth stage can help you execute all of your company's strategic processes – from expanding into new markets and exploring new products or services to perfectly timing new hires and training your existing employees at the right time to level up in order to avoid costly employee turnover. 

To determine your small business's current growth stage and to better recognize how to prepare your business for the future and the next stage of development, take a look at the following five stages of business growth [2] . 

The 5 Stages of Business Growth

1. Existence

In the first stage of business growth, a company is a true startup in every sense of the word. In this stage, the owner basically is the company. All businesses in the existence stage face a few common challenges which include: 

• Determining whether or not their product or service will be accepted and/or desired by enough customers to remain viable
• Finding out whether or not the company will actually be able to create sound enough processes to deliver their products or services to an acceptable standard
• Determining whether the company will be scalable and able to meet the customer demand as it increases

In this stage, the business owner is responsible for just about everything, even if they are able to hire a few employees to assist with these early processes.

Read More: Leveraging a Growth Mindset for Business Growth

The goal during the existence stage is simply to survive because many do not. In this initial phase, it's easy to fail because there are so many reasons why brand-new businesses do not survive past the startup phase. The business might never gain enough traction with customers , the business could run out of operating capital, or the owner might simply wear out under the immense demands on finances , time, and energy in addition to the pressure of attempting to run a startup. 

2. Survival

During the survival stage, your business is tested by determining, first, whether you are able to break even and, second, whether you are able to generate profits sufficient for reinvesting and growing the business. 

"In the Survival Stage, the enterprise may grow in size and profitability and move on to Stage III. Or it may, as many companies do, remain at the Survival Stage for some time, earning marginal returns on invested time and capital, and eventually go out of business when the owner gives up or retires. "

- Neil C. Churchill [3]

• Use the business as a platform for growth and continue reinvesting, expanding, and even using the business's success and assets to finance and fund additional growth. 
• Maintain the status quo, keep the company operational, and use the profits to fund other pursuits or interests.

4. Take-Off

Rising to these challenges will ensure your business is able to support its rapid expansion and not grow too fast.  

 💡 Pro Tip : Cash is king in this stage. Will there be enough cash to meet the demands your new growth brings? A s a business owner, you should always be looking at a cash flow forecast that predicts what the next year, quarter, month, or even week is probably going to look like.  

Read More: Save Your Small Business With These Cash Flow Strategies

82% of U.S Businesses fail due to cash flow problems! Download the CEO’s Guide to Improving Cash Flow for 28 Ways To Improve Your Cash Flow Management…

 5. Resource Maturity

During this stage, business owners should focus on streamlining operations through budgeting and strategy while continuing to maintain their original entrepreneurial spirit that will help the owner to continue setting short-term and long-term goals so that the company avoids becoming stagnant. 

A Back Office Designed to Grow With Your Business

In order to make data-based, strategic decisions and effectively lead your business to a successful future, it's necessary to have a scalable back office that can save you time and resources while also providing you with the timely financial reports and secure bookkeeping and accounting processes that you need to run your business. 

With a smart outsourced accounting solution, you can work with a team of experts to create the exact back office that your business needs according to your current company size, growth stage, and goals.

Outsourced accounting saves your growing business money by avoiding hiring high-cost full-time employees without the need to compromise on quality. As a result, outsourcing gets you access to bookkeeping and accounting professionals with loads of experience in your industry at a fraction of the cost of hiring an in-house team. 

With this type of high-powered, automated back office, you can be a successful business leader and step confidently into the next growth stage your business faces. 

[1] https://hbr.org/1983/05/the-five-stages-of-small-business-growth

[2] https://www.forbes.com/sites/maneetahuja/2021/08/02/insights-on-the-five-stages-of-small-business-growth/?sh=27e44035630b

[3] https://site-453261.mozfiles.com/files/453261/Harvard_Business_Review_-_The_5_Stages_Of_Small_Business_Growth.pdf  

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How to Write a Business Plan

How to plan for the 5 stages of small business growth

The five stages of small business growth:

• Stage 1: Existence
• Stage 2: Survival
• Stage 3: Success
• Stage 4: Takeoff
• Stage 5: Maturation

From the initial startup stage to launch, and from expansion to maturity, your small business will go through many stages of growth. No small business ever stays the same.

To address the unique needs, opportunities, and challenges of those stages, you need to understand what can happen during each and how to set goals at each point to get the most out of that potential period of growth.

1. Stage 1: Existence

The first stage involves formalizing your business idea into a viable startup . In this seed stage, create a business plan , develop the business, and craft a roadmap for your company. This stage also involves deciding on the product or service you plan to sell to fuel your company’s revenues and profitability.

When your business is just starting out, your strategic growth initiatives should focus on finding the right customers and convincing them to buy your products or services. That means researching who might benefit from what you’re selling and determining why your offer alleviates those pain points. You’ll also need to define your vision and values, which will frame your brand identity and help your target audience better understand what you stand for.

2. Stage 2: Survival

After you’ve launched your business and your target audience knows you exist, the next stage can be the most challenging. That’s because only a small percentage of businesses make it through their first year — let alone the next five years.

Even if you offer a product or service that’s in demand, you’ll need to do more to sustain the company in the early stages. You must increase new revenue to help the company move from relying on outside funding or your bootstrapping efforts.

Your business development goals should include identifying the most efficient ways to sustain your current growth over the long term and through various economic cycles. Developing customer relationships beyond the first purchase can help fuel that revenue.

Focus your marketing efforts on building credibility and trust, extending brand awareness, and creating loyal new customers. At this stage, it can help to have influencers who convince others of your company’s value.

3. Stage 3: Success

Your business model has shown signs of market acceptance. This stage is a turning point. It’s when you determine how to maintain that success while continuing to grow. You could exploit the company’s current accomplishments and expand operations. Alternatively, you might decide to focus on the company’s current stability and profitability.

Before picking a path, consider factors like competitive pressure as well as market demand. What are your audience’s current needs, and how could those needs change in the future? How robust are your current operational efficiencies? Can they support an expansion into new markets ?

This will help you pinpoint cost and productivity improvements that add to your profit margin. Making any changes now could also better position your company for growth whenever you decide to expand.

4. Stage 4: Takeoff

During this stage, you’ll need to focus on creating rapid growth by adding new products or services or expanding into new territories. You might even be able to acquire smaller competitors.

Growing quickly through either of these two strategies will usually require a significant cash infusion. Your options might include a strategic partnership with another brand, an initial public offering of stock, or further investor assistance.

Companies sometimes struggle if they reach this stage because they tend to grow too quickly or run out of cash to fund growth opportunities. Outside assistance and additional or new leadership can help steer the company through this challenging growth stage.

5. Stage 5: Maturation

At some point, your business will mature — but you shouldn’t look at this fifth stage as the final one. It’s true that many companies languish in this stage as leadership struggles to figure out the best way to continue growing. Stagnant revenues could indicate that market conditions have changed. What you offer may no longer be relevant to your audience whose needs or issues have perhaps evolved.

To remain relevant, research what’s changed and how to pivot. In doing so, you may find yourself back at the survival stage, looking for a way to add a product or service or expand into a new territory or audience. You may even want to consider an exit strategy, such as selling your company or merging with another.

Management factors influence business growth

These are general guidelines to follow for each of the stages of business growth, but keep in mind that every company develops in its own way, based on specific management factors. Business growth depends on the financial, human, systems, and business resources available. Having a solid and sustainable source for these resources helps a new business owner respond to the opportunities and challenges during each of these stages.

As the owner of the business, your goals, operational and managerial capabilities, and strategic acumen also play a key role in how your company responds to each opportunity and challenge that appears along the business lifecycle . To ensure you’re an asset that stimulates your company’s growth, continue to assess what you’re doing, get outside advice from an advisor, and continue learning and developing to improve your own capabilities.

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1 Comments:

More than a year ago

Great learning experience. There is precious information you have shared about 5 stages of small business growth. Business growth depends on the principles you applied and the vission and mission.

• Stages of the business lifecycle

Stages of the Business Lifecycle

Whether you are a new business owner or have run your small business for years, it is wise to familiarize yourself with the five cycles of change: startup, growth, maturity, transition and succession. This applies to small retail shops and online business alike, as every type of business may go through several or all of these stages.

Why do you want to start your own business? Maybe your family needs additional income or you’re unfulfilled by your current job and want to work for yourself. Whether it’s out of necessity or desire, you need to evaluate your skills, expertise and the level of risk you want to take on before starting a new venture. This also applies to people who may feel obligated to take over a family business.

According to the U.S. Bureau of Labor Statistics , only half of small businesses survive past five years. As one would expect, after the first few relatively challenging years, businesses tend to become more successful and survival rates improve. These statistics hold true across different industries, including manufacturing, retail trade, food service, hotel and construction.

As a prospective business owner, you should familiarize yourself with what to expect. And remember, no matter the stage, it’s important to take stock of how your company is performing and do everything in your power to stay competitive and successful. Each stage brings new challenges that owners need to address to protect their businesses, and new opportunities to grow and improve.

Before you start a business, you need to be realistic about how much money you’ll need to get up and running. Startup costs can include inventory, office space, equipment, anticipated tax costs and employee payroll. Being passionate about something — owning a restaurant, beauty salon, technical service or construction company — is not enough on its own to guarantee success. The length of time it takes to start a business often depends on the type of business and the location. If it is just one person and no loans are required, it could take as little as a month or two to get started. If it is a larger company with employees and startup funding is required, it could take up to a year to get the business off the ground.

During the first stage, it’s important to research the market and competitive landscape, write a business plan and secure funding .

First-time business owners will need to understand the essential steps to follow as they launch their new venture.

• Research the market and competitive landscape. Figure out who your main competitors will be and what your ideal customers look like. You can research this by conducting phone or face-to-face interviews, online surveys or focus groups with potential customers to get their feedback. Consider asking them why they purchase a specific product or service, what they like or don’t like about competitors’ products and what price they would be willing to pay for what your company plans to offer.
• Identify what you’ll sell. Whether you plan to offer a product, service or both, narrow in on what you’ll sell and how you’ll make it different from your competitors’ offerings. Even if you’re selling identical products or services, you could distinguish yourself with your location, customer service or shopping experience.
• Write a business plan. A business plan is a roadmap for the future of your company and often outlines the goals for the first, third and fifth years in business. If you need outside investors to loan you money in order to get started, they will need to review your business plan and financial statements before investing.
• Set financial goals. Get specific about how much money you’ll need to invest, borrow, spend and can reasonably make during your first year in business. Some businesses aren’t profitable for the first few years while they build their reputation and customer base. You’ll need a plan for covering expenses during that time.
• Consider partnership. If you don’t have the funds or expertise to launch a business on your own, consider partnering with someone who has complementary skills or money to invest. A potential partnership could develop over time and offset your startup costs with additional funding from a partner. Another possibility is that you are hired by an owner of a company who wants to sell the business in the future and offers you the opportunity to buy the business in a phased buying process. Instead of needing to have cash on hand for an upfront sale, the owner might offer you a stake in the business for investing a number of years as an employee. This could be a good solution for an aging owner to transition the business and secure the future of their employees, as well as their own retirement.
• Secure funding. From getting small business loans to crowdfunding campaigns, there are many ways you can raise money to start your company.
• Create your business. Make it official by choosing a business name and creating your business entity . You could have to register your business; get federal and state tax identification numbers, permits or licenses; and may want to file for trademarks, copyrights or patents. You can also set up a bank account to manage the business’s money.
• Hire employees. If you hire workers, you’ll want to make sure you’re following state and federal employment laws and learn about managing employees . The U.S. Department of Labor website is a good resource for learning more about labor laws.
• Build your customer base. Once your business is up and running, you’ll want to focus on building your customer base. You can do this by providing excellent customer service, special deals and offering incentives to new customers. A marketing campaign can also help, and it could be as simple as handing out a printed coupon or offering incentives like two-for-one sales.
• Market your product or service. It’s also important to promote your new business and build awareness of the business, which you can do by creating a website, social media accounts and marketing at community or industry events. If you have the budget, consider starting an advertising campaign. You can do this online, in local newspapers or wherever else you think your ideal customers will see the advertisements.
• Monitor cash flow. Keeping an eye on incoming and outgoing cash (i.e., cash flow ) is critical to managing a business. Often, unexpected business expenses can put owners into a cash-flow crunch that can impact their ability to pay suppliers and employees.

If your business has hit major milestones during the startup stage and achieved sales goals, your business can begin to explore opportunities for growth. Once your business has established a customer base and become known for a product or service, you can focus on ways to grow your sales and operations.

During a growth stage, your business may begin to make more money, breaking even, becoming profitable or increasing profitability.

If your product or service is taking off, it could be time to look for more funding from investors so you can expand your business. You may need to invest in equipment, hire more employees to expand your best-performing products or services. It may also be time to discontinue or try to improve the products or services that haven’t been selling well.

Throughout the startup stage, most of the burden of running the business might have been on you as the owner. If your business is growing, you may be able to hire and train employees to help manage day-to-day functions. With this staff in place, you’ll have more time to focus on marketing the business and managing others.

This could also be a good time to focus on investing more money into your emergency fund , to help pay for unexpected setbacks or invest in upcoming opportunities.

After several years in business, your company may hit a stage of maturity when it’s more stable and profitable. This is the third stage in the life cycle of a business.

When you first started your business, you may have taken a limited salary. Now, as an owner, you can most likely start taking a regular salary from the company.

Mature businesses should have strong brand recognition and a secure or growing customer base that allows them to expand product lines into new or existing markets.

At this point, you can count on your employees to manage the day-to-day operations as you focus on long-term goals.

The transition stage represents a period where a company must deal with change. The transition may be positive or negative, and it could be due to many factors, including:

• Declining sales
• Changing market conditions that are impacting the business
• A shift in customers’ preferences
• An opportunity for rapid growth
• A personal situation

For some businesses, a larger competitor moving in nearby or a slowing desire for their product or service could result in declining sales. When you’re faced with these threats, you need to figure out how to retain and attract customers.

The transition stage can also be a period of immense growth. Once your business becomes well-known, you may have opportunities to partner with much larger companies or groups of customers. Before taking on a large order from a bigger company or national chain store, make sure you can meet the demand in addition to your other orders coming in. When a small company gets a big break by landing a huge order, it can be an opportunity for growth and increase awareness about your company. Conversely, if you are unable to meet the demand, it could damage your reputation and business.

You may need extra funds to invest in production and sales staff, but it could be months before you reap the rewards of the sales. Managing these large outflows and inflows of money can be a challenge that you’ll need to address to survive a period of rapid growth.

With your long-term goals in mind, you may want to focus on creating tactical plans to guide your immediate responses during a transition. A tactical plan will take your business’s strengths and weaknesses, along with external threats and opportunities, into account; this can help you come up with solutions to problems or opportunities. Each of these solutions can help you achieve those long-term goals.

The final stage of a business’s life cycle is when an owner decides to close, sell or bring in a successor to take over the company.

Owners may decide to move on for a variety of reasons. You might want to try something new, your business may be in decline or you could be dealing with personal or health issues. Or, your business might be doing great, and you think you could get a great price and then retire.

For small business owners, a successor is often a family member, friend or current employee who wants to take over and run the business. However, you could also try to sell your business to someone who you don’t already know.

You may also want to sell the entire business to the person, or retain partial ownership and receive income from the business’s profits even though you’re no longer involved with the day-to-day operations. Some business owners agree to stay on and help train the new owner during the transition.

The sale process can vary depending on the type of business and where it’s located, but it often involves several steps:

• Determine the business’s worth. Evaluate the value of the business based on its assets and sales. A small business may be worth several times its yearly sales, but the value can vary depending on the specifics of the situation. You can hire a professional or company to help determine the business’s value if you’re unsure of what to do. Look for someone who has experience evaluating similar businesses and can use that experience to guide the valuation. If you are determining the value on your own, review some of the steps in the process that you will need to complete.
• Prepare your financial documents. Potential buyers will want to review your business’s records, financial statements and tax returns to get a better understanding of the business’s financial situation and sales history. Make sure all your documents are ready and accurate.
• Find prospective buyers. You may be able to list your business for sale online or in local publications. You could also work with a business broker, a professional who can match sellers with potential buyers in exchange for a cut of the sale price.
• Get financing in order. Many business buyers will need to take out a loan to buy your business. You may also have to lend the buyer money by allowing the buyer to pay you part of the selling price, plus interest, over time. Seller-financing can be important because it shows the buyer, and the other lenders, that you believe in the business’s future.
• Negotiate the terms of the sale. As with many transactions, expect the buyer to negotiate the sale price and terms of the agreement. You may want to hire professionals who have managed small business sales before, including an accountant and attorney, to review everything before the final sale.
• Close the deal. Once you come to an agreement, it’s time to make the sale official by signing the legal contracts that turn over control and ownership to the buyer. These contracts can be difficult to write and understand, and your attorney should likely be involved in this final step.

If you’re unable to find a seller or can’t get a high enough price for your business, you may want to pass the business on to a family member, friend or employee for free. You could still retain partial ownership and have an income from the business.

Or, if the business is already declining and you think it won’t survive for much longer, you may want to close the business completely rather than selling or passing it on.

Closing a business can be a straightforward process if it doesn’t have a lot of debt. You can sell the business assets and end contracts, and may need to file paperwork with your state government to disband your business entity (if you created one). If you don’t officially disband the entity, you may need to continue to pay state filing fees or taxes.

If you can’t afford the business’s debt, you may want to try and work with the creditors to pay over time or settle for a lower amount. Bankruptcy may also be an option depending on the amount of debt and the business’s and your personal financial situation.

Disclaimer: No Legal Advice Intended This site provides general information related to creating and running a business. The content of this site is for informational purposes only and not for the purpose of providing legal or tax advice or opinions. The contents of this site, and the viewing of the information on this site, should not be construed as, and should not be relied upon for, legal, financial or tax advice in any particular circumstance or fact situation. No action should be taken in reliance on the information contained on this site, and Visa Inc. disclaims all liability in respect to actions taken or not taken based on any or all of the contents of this site to the fullest extent permitted by law. You should contact an attorney to obtain advice with respect to any particular legal or tax issue or problem, including those relating to your current or potential business. The contents of this site have been developed for a U.S. audience.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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The 5 Stages of Entrepreneurship

Published: January 25, 2023

Entrepreneurship isn’t for the faint-hearted. Of course, the thrills of creating an effective business, working on your own terms, and enjoying financial freedom are rewarding. However, turning your idea into a profitable business is no simple task.

There will be hurdles to overcome. However, depending on your business idea, it may take months or years to scale these challenges and reach the finish line. Sadly, most entrepreneurs never see success. Nearly 75% of startups fail, according to Harvard Business Review . 

The good news: Your business doesn’t have to be another casualty. In this post, you’ll learn the five stages of entrepreneurship and the common pitfalls you should avoid in each. You’ll also see real-life examples of entrepreneurs at each stage. 

What are the five stages of entrepreneurship?

The “Five Stages of Entrepreneurship” is a simple framework that helps new founders to understand the entrepreneurship journey. The stages include ideation, planning, execution, scaling, and hypergrowth.

The Five Stages of Entrepreneurship

Starting a business can seem like a daunting task. That’s especially true if you start the process without a roadmap. 

The Five Stages of Entrepreneurship divide the startup journey into more manageable chunks. Each stage of your entrepreneurial enterprise will come with unique challenges. You’ll also need to complete certain foundational steps to set your business up for success. 

Below, we explore the five stages of entrepreneurship and the common challenges to expect at each stage.

Stage 1: Ideation

Ideation is the first stage of every entrepreneurial journey. The goal here is to identify and validate a profitable business idea.

Here are three common ways entrepreneurs develop ideas: 

• Considering what they’re passionate about. For a role model, turn to Nike Co-founder Phil Knight . His interest in shoes and sports strongly influenced his decision to start the athletic shoe company.
• Identifying a problem in an existing market. This is how the idea for Uber came about. Travis Kalanick and Garrett Camp were returning from a LeWeb, an annual tech conference. It was a cold winter night, and unfortunately, they couldn’t get a cab. So they asked themselves, “What if you could request a ride from your phone?” The rest is history.
• Focusing on niche markets . A niche market is a small, underserved segment of a large and established market. Jacamo, for instance, is a clothing retail company targeting larger (and taller) men who typically struggle to find large-sized, fashionable clothes.

After an initial brainstorming session, you’ll need to narrow your scope and focus on one idea. We’ll explain how you can validate concepts below. 

Idea Validation

Ensuring the viability of your idea is essential. When you confirm the market need for your product, you avoid the risk of pouring your resources into a business idea that’s a dud.

Most entrepreneurs skip this crucial step. They assume there’s a market for their product without validating their hypothesis. The result? They build a product that no one wants, causing their businesses to die in infancy. 

A CB Insights Report reveals this is one major reason businesses fail. Don’t make the same mistake. If you’re unsure of a market’s potential for your idea, think twice before committing resources to it.

How to Validate Your Business Idea

One way to validate your idea is to evaluate the performance of similar businesses. A perfect example is Chanty. 

Chanty is a communication and team collaboration app that went head-to-head with companies like Slack. When Chanty came on the scene, Slack was already dominating the market and raking in millions of dollars in revenue. This proved to Dmytro Okunyev, Chanty’s Founder, that they could get a slice of the market. 

You can also validate your ideas during discussions with trusted peers. As David Darmanin , Founder of Hotjar, says, “Step one of validating an idea is reaching out to your personal networks and gauge response. This differs from approaching friends and family who will always want to be nice to you.” 

You can contact your network via email, social media, and many online communities. Done right, you can get free and unbiased advice that’ll help you iterate on your business idea quickly.

The lean start-up methodology also provides a comprehensive approach to testing business ideas. To learn more about the lean start-up, read this book by entrepreneur Eric Ries .

Stage 2: Planning

Just as architects need building plans to construct a new building, entrepreneurs need business plans to create successful businesses.

Developing a business plan helps you estimate costs, identify risks, and set up risk mitigation measures. A written business plan is even more essential if you’re seeking investors in your company. Potential investors want to see the extent to which you envisioned your business. 

For this reason, put lots of thought into your plan, create a document that’s thorough, and consider your long-term goals. 

Note that you don’t need to write a 37-page business plan or have a 15-year forecast before you begin building your business. As Mark Zuckerberg said , “Ideas don’t come out fully formed. They only become clearer as you work on them. You just have to get started.” 

So if you don’t have a five-year vision of your business yet, don’t let that stop you from taking the first few steps while you flesh out the big picture.

Stage 3: Execution

Like a plane stuck on a runway, many budding entrepreneurs often generate some momentum, but they never lift off. As a result, many innovative ideas never become a reality. 

The fact is, ideas are a dime a dozen, but execution is rare. To succeed, you’ll need to become adept at putting a plan into action.

At least once per day, I hear a great business idea (often web3). But then I tell people -- Excellent, you have a great idea... now you have to execute on it! Most people fail at this stage, and can't turn a great idea into great execution -- which is what really matters — Brian D. Evans (@BrianDEvans) May 16, 2022

Starting a business is risky and scary. And that feeling of uncertainty — the fear of failure and of making mistakes is one of the major reasons entrepreneurs hesitate to execute. 

If you’ve identified and planned out your big idea, you’re probably filled with the excitement of “what could be” and the fear of “what if it doesn’t work?” simultaneously. 

You’re not alone. Founders like Dmytro Okunyev had these mixed emotions, too. 

I wasn’t very certain that my idea would work, but step by step, small win by small win, I gained that confidence. Now we are in the ivy league of communication platforms. #chanty #software #marketing — Dmytro Okunyev (@dmytrookunyev) February 12, 2021

Today, Chanty is thriving because Dmytro mustered the courage to move forward with his plans despite the uncertainties. 

So, recognize that your plan isn’t foolproof. You will make mistakes. But just as you can’t paddle a boat tied to the dock, you can’t steer your business toward your vision until you launch and tackle your mistakes head-on.

As Mark Zuckerberg explains : “Don't even bother trying to avoid mistakes because you're going to make tons of mistakes… The important thing is actually LEARNING QUICKLY from whatever mistakes you make and not giving up.”

Moving too slow or too fast is dangerous. So caution is necessary either way. Develop a good sense of when to act fast, get rid of your desire for perfection, and know when to slow down.

Will Rogers, a popular American vaudeville performer, puts it more humorously: “Even if you’re on the right track, you’ll get run over if you just sit there.”

The bottom line: business is trial and error. Make peace with the fact that you’ll make mistakes. Take small calculated bets. Learn from the resulting failures and move forward. 

If you believe in your idea, you’ve tested it, the timing feels right, and you have assembled your team , then launch!

Stage 4: Scaling

At this point, you’ve successfully launched your business, you’ve achieved product-market fit , and sales are steady — but your business hasn’t reached the heights you imagined. You desire to expand faster. 

So you face an important question: “Should you bring in external investors and give up equity or bootstrap your business, i.e. self-fund through personal savings, debt, or customer funding?”

Founders of successful companies often bootstrap in their early days, but eventually, they accept outside investment. However, outliers like Spanx bootstrapped their way to a unicorn valuation after founder Sara Blakely started the undergarment company using only $5,000 of her personal savings.

Bootstrapping relies on a lot of sweat equity. This can mean taking on more stress than an investor-funded company. Blakely, for instance, learned to write her own patent from reading books so she could save $3,000 in legal fees. 

Bootstrapping has a huge but sometimes overlooked upside. Besides giving you full control of your business, the lack of capital forces you to find smart ways to grow your company.

Heavy funding covers up problems that ought to be obvious to the founders. Paradoxically, this sometimes leads to start-up death. On the flip side, accelerated growth is one major benefit that investor-backed start-ups enjoy. GitHub , an internet hosting service for software development, is an example of a business that scaled fast , thanks to external funding. 

Tom Preston-Werner, Chris Wanstrath, and PJ Hyett founded GitHub in 2008 and funded it for four years. In 2012, they got their first VC investment of $100 million and raised another $250 million in 2015. By October 2018, their annual recurring revenue was between $200-$300 million. Microsoft bought GitHub for $7.5 billion in the same year.

Whether your bootstrap or get investor backing, three factors are crucial for scaling your business quickly:

• Building effective systems. A system is a structure that fuels the smooth running of your business without your presence or supervision. These systems clearly outline how your company operates.
• Learning to lead. Learn to sell a vision to your team. You must be able to inspire others to act. This way, you leverage other people’s talents and experience to achieve results. Alone, you can only go so far.
• Track your profitability. It’s not unheard of to find a business with $50 million in revenue but $200k in profit. That’s why you shouldn’t focus on growing sales alone. Instead, obsessively track your margins and brainstorm ways to increase them.

To learn more about how to build systems, read:

• The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It
• Built to Sell: Creating a Business That Can Thrive Without You 

Stage 5: Hypergrowth

Hypergrowth is a season of rapid and exponential growth that companies experience as they scale. Specifically, an organization experiences hypergrowth when its Compound Annual Growth Rate (CAGR) exceeds 40% and remains so for at least a year, according to the World Economic Forum . 

For context, “normal growth” companies have a CAGR of 20%. “Rapid growth” companies have a CAGR of 20% to 40%. Some companies that have achieved hypergrowth include Amazon, Slack, Stripe, Zoom, Uber, and Bolt.

Achieving hypergrowth is desirable but challenging. One common setback is the risk of employee burnout from overwork. A prolonged period of unprofitability is another prevalent challenge. 

Amazon, for instance, was unprofitable for its first 20 years . It became profitable only in the mid-2010s. If investors had pulled out or stopped injecting cash into Amazon, its collapse would have been inevitable.

However, “Jeff had earned so much faith from his shareholders that investors [were] willing to patiently wait for the day when he decides to slow his expansion and cultivate healthy profits,” writes Brad Stone in his acclaimed book, The Everything Store.

This pattern of pursuing hypergrowth at the expense of short-term profitability is the norm with high-growth businesses. As of 2019, 64% of unicorns that IPO-ed since 2010 are unprofitable, according to TechCrunch . But investors don’t seem to care.

To enter this phase of exponential growth, focus on the following three factors.

1. Product Innovation

Hypergrowth is demand-driven. So unless you build a product that customers love, you’ll never get there. Harsh, but true. 

Customer-centricity is an obsession for (all) hypergrowth businesses, not just a “core value” they hang on the walls. They constantly leverage empathy, data, and customer feedback to build the best products. 

2. Agile and Scalable Systems

What got you to $10 million in ARR won’t get you to $900 million. The systems that run small businesses efficiently will not support your hypergrowth. 

Uber had to overhaul its driver onboarding process multiple times to support its hypergrowth. Until 2013, intending drivers had to go to a local office to complete some paperwork. Then they morphed into an online application process that allowed drivers to sign up without visiting a local office. 

And when they began international expansion , the company had to design another process to accommodate the differences in regulations across host countries.

3. A Core Team

Hypergrowth is driven by hyper-effort. That’s why long work hours are common in hypergrowth companies. It’s a hard grind. And if you don’t have a team that shares your passion and believes in your mission, you’re not going far.

Whatever you do, don’t try to achieve hypergrowth too fast. Companies attempting to scale prematurely often push their operational capabilities to the limit, increase their stress levels, and hurt their business reputation. 

To learn more about hypergrowth, read:

• Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

The bottom line is this: if you have an idea for a product that helps people solve a problem, don’t ignore it. Test it. Iterate until you get product-market fit. Combine that with a thoughtfully planned business strategy, a dedicated team, and a group of experienced mentors, and your business could become an enormous success story.

The process of growth will be demanding and painful. And sometimes, the people closest to you won’t share your vision. Nike’s controversial ad offers advice on what to do when people scorn you.

As Steve Jobs said, “The people who are crazy enough to think they can change the world are the ones who do.”

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2 Essential Templates For Starting Your Business

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What are the 5 stages of a business life cycle?

Just as a seed must be planted before a tree can flourish, a business doesn't spring to life fully formed. There are generally five stages in a business entity life cycle , and each stage has differing and unique entity management needs.

The 5 stages of a business life cycle Stage 1: Seed and development

So, you've had a great idea for a business ' congratulations! You're officially at the seed stage. Now you need to plant that business seed and start to nurture it so that it can grow into a successful business. This first stage of the business entity lifecycle is sometimes called the seed stage and sometimes the development stage, depending on the sector and the industry. It's where you take your idea and start to assess whether it's worth developing into an actual business. A business plan soon follows once key target areas are identified and a strategy is developed. It's here that you ask yourself :

• Does this concept, product or idea fill a need in the market?
• Will it be accepted in the market?
• How do I establish a business structure?
• Will this idea yield me any profits?

Once you've analyzed the market and the concept and decided that it's still worth pursuing, your seed is in the ground and you move on to the next phase of business entities.

Stage 2: Startup

Businesses usually go one of two ways at the startup phase: They seek funding, either from a bank or another investor, or they decide to 'bootstrap' and work within their means initially. At any rate, startups must be incredibly resourceful and flexible regardless of funding ' it's a matter of iterating, testing and learning, and trying again, knowing that you are unlikely to have everything perfect from the outset. Startups must be committed to doing it over and over again until they get it right. Startup business entities face many challenges , including:

• Managing cash reserves
• Managing sales expectations
• Accounting management
• Establishing a customer base
• Establishing a market presence

It's also at this stage that you'll start to pay closer attention to entity management. You won't have many processes in place yet, but the beginnings of your governance and compliance function will start to appear. It's important to think about things like the appropriate entity type for your business, and the right jurisdiction in which to incorporate. In the US, many venture capital firms will require a startup to be incorporated in Delaware ; in the UK , one-person startups may work as a sole trader, while groups may incorporate a limited liability company.

Stage 3: Growth and establishment/survival

The growth phase is where our business solidifies its place in the market and its view on the world. Your business strategy will start to settle down more, though many at this stage of the business entity lifecycle will embark on a stage of aggressive and quick growth ' it all depends on the end goal for the business entity. It's also where entity management starts to get more intense, as the focus is turned inward, and the initial blocks of the growing company begin to build. Recruitment drives bring both experienced senior leaders and lower-level workers into the fold, and client relationships are strengthened. Your clients become advocates and help you to grow your business, too. There's an oft-quoted statistic that nine out of every 10 startups fail. To make sure your business entity is the one in 10 that succeeds, you'll require investment to grow and mature your business. It's likely you'll seek outside investment capital or build up a debt profile. Either way, entity management must be tight, whether it's to ensure any personal guarantees signed with banks don't negatively impact directors, or whether it's to track and manage the equity given to investors.

Stage 4: Expansion

Your business has become routine, and your confidence has grown. You've got great leaders and workers helping to build your business further, and your position in the industry is established. Now's the time to start thinking about the next phase: Expand further and keep growing, or maybe even plan for your exit. It's here that businesses often see rapid growth in both revenue and cash flow as they get more comfortable with how they do things, but it's important not to get complacent. Ensure compliance and governance is given the priority it needs in your business entity, and keep a robust corporate record ' investors, auditors and regulators could all ask to view your entity data at any minute. As you expand, keep in mind that just because your business worked in one jurisdiction does not mean that it will automatically work elsewhere. Each new office should be treated as a new startup, with the appropriate level of research and analysis undertaken to inform any expansion strategies.

Stage 5: Maturity and possible exit

A mature business doesn't have to be one that's hitting the headlines as the talk of the town. Sometimes, a mature business chugs along with sustainable profit growth and loyal employees reaching long service leave time. Many mature businesses have a strong cash position, which makes them an attractive target for mergers or acquisitions. The business may also reach a position where it devolves into spin-offs for other products or services, and grows into a wider subsidiary group. Business owners at this final stage of the business entity lifecycle are focused on:

• How long the business can maintain and manage the appropriate rate of cash flow
• Expanding the business
• Finding and executing an exit strategy

Whether exit or further expansion is the end goal, entity data again plays a pivotal role. Any exit will involve robust analysis of the company's position both internally and externally, and the entity managers must be ready to efficiently and effectively get the right information to the right people at the right time.

Manage the five stages of a business life cycle with technology

So, what are the five stages of a business life cycle? Whether you're at seed, startup, growth, expansion or exit, you'll need to have strong entity management and an ability to interrogate real-time entity data that you know is accurate and up to date. Entity management software can help your business throughout its lifecycle by:

• Storing entity information and documents in a highly secure format to create a single source of truth
• Creating organizational charts to highlight gaps in entity data
• Managing the ongoing accuracy of the corporate record using compliance calendars, reminders and workflows for better data
• Reporting on governance and compliance requirements and electronically filing statutory forms into global regulatory bodies
• Integrating data from multiple business units like legal, tax, finance, treasury and compliance to build a single system of record for all corporate governance

Diligent Entities , a secure, cloud-based entity management software, also closely integrates with the board portal and secure file-sharing platform to create the Governance Cloud , helping you to fulfill modern governance requirements and deliver the right information at the right time. Get in touch and request a demo to see how Diligent Entities can help you, no matter which stage of a business life cycle you are currently at.

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The Five Stages of Small-Business Growth

• Neil C. Churchill
• Virginia L. Lewis

No researcher has explored the earliest period of a business’s development in detail—until now.

Categorizing the problems and growth patterns of small businesses in a systematic way that is useful to entrepreneurs seems at first glance a hopeless task. Small businesses vary widely in size and capacity for growth. They are characterized by independence of action, differing organizational structures, and varied management styles.

• NC Neil C. Churchill was a professor and leader in the field of innovation and entrepreneurship, holding positions at Carnegie-Mellon, Harvard Business School, Babson, INSEAD, and the Anderson School at UCLA.
• VL Virginia L. Lewis is a senior research associate of the Caruth Institute at SMU.

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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.

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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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How To Start A Business In 11 Steps (2024 Guide)

Updated: Apr 7, 2024, 1:44pm

Table of Contents

Before you begin: get in the right mindset, 1. determine your business concept, 2. research your competitors and market, 3. create your business plan, 4. choose your business structure, 5. register your business and get licenses, 6. get your finances in order, 7. fund your business, 8. apply for business insurance, 9. get the right business tools, 10. market your business, 11. scale your business, what are the best states to start a business, bottom line, frequently asked questions (faqs).

Starting a business is one of the most exciting and rewarding experiences you can have. But where do you begin? There are several ways to approach creating a business, along with many important considerations. To help take the guesswork out of the process and improve your chances of success, follow our comprehensive guide on how to start a business. We’ll walk you through each step of the process, from defining your business idea to registering, launching and growing your business .

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The public often hears about overnight successes because they make for a great headline. However, it’s rarely that simple—they don’t see the years of dreaming, building and positioning before a big public launch. For this reason, remember to focus on your business journey and don’t measure your success against someone else’s.

Consistency Is Key

New business owners tend to feed off their motivation initially but get frustrated when that motivation wanes. This is why it’s essential to create habits and follow routines that power you through when motivation goes away.

Take the Next Step

Some business owners dive in headfirst without looking and make things up as they go along. Then, there are business owners who stay stuck in analysis paralysis and never start. Perhaps you’re a mixture of the two—and that’s right where you need to be. The best way to accomplish any business or personal goal is to write out every possible step it takes to achieve the goal. Then, order those steps by what needs to happen first. Some steps may take minutes while others take a long time. The point is to always take the next step.

Most business advice tells you to monetize what you love, but it misses two other very important elements: it needs to be profitable and something you’re good at. For example, you may love music, but how viable is your business idea if you’re not a great singer or songwriter? Maybe you love making soap and want to open a soap shop in your small town that already has three close by—it won’t be easy to corner the market when you’re creating the same product as other nearby stores.

If you don’t have a firm idea of what your business will entail, ask yourself the following questions:

• What do you love to do?
• What do you hate to do?
• Can you think of something that would make those things easier?
• What are you good at?
• What do others come to you for advice about?
• If you were given ten minutes to give a five-minute speech on any topic, what would it be?
• What’s something you’ve always wanted to do, but lacked resources for?

These questions can lead you to an idea for your business. If you already have an idea, they might help you expand it. Once you have your idea, measure it against whether you’re good at it and if it’s profitable.

Your business idea also doesn’t have to be the next Scrub Daddy or Squatty Potty. Instead, you can take an existing product and improve upon it. You can also sell a digital product so there’s little overhead.

What Kind of Business Should You Start?

Before you choose the type of business to start, there are some key things to consider:

• What type of funding do you have?
• How much time do you have to invest in your business?
• Do you prefer to work from home or at an office or workshop?
• What interests and passions do you have?
• Can you sell information (such as a course), rather than a product?
• What skills or expertise do you have?
• How fast do you need to scale your business?
• What kind of support do you have to start your business?
• Are you partnering with someone else?
• Does the franchise model make more sense to you?

Consider Popular Business Ideas

Not sure what business to start? Consider one of these popular business ideas:

• Start a Franchise
• Start a Blog
• Start an Online Store
• Start a Dropshipping Business
• Start a Cleaning Business
• Start a Bookkeeping Business
• Start a Clothing Business
• Start a Landscaping Business
• Start a Consulting Business
• Start a Photography Business
• Start a Vending Machine Business

Most entrepreneurs spend more time on their products than they do getting to know the competition. If you ever apply for outside funding, the potential lender or partner wants to know: what sets you (or your business idea) apart? If market analysis indicates your product or service is saturated in your area, see if you can think of a different approach. Take housekeeping, for example—rather than general cleaning services, you might specialize in homes with pets or focus on garage cleanups.

Primary Research

The first stage of any competition study is primary research, which entails obtaining data directly from potential customers rather than basing your conclusions on past data. You can use questionnaires, surveys and interviews to learn what consumers want. Surveying friends and family isn’t recommended unless they’re your target market. People who say they’d buy something and people who do are very different. The last thing you want is to take so much stock in what they say, create the product and flop when you try to sell it because all of the people who said they’d buy it don’t because the product isn’t something they’d buy.

Secondary Research

Utilize existing sources of information, such as census data, to gather information when you do secondary research. The current data may be studied, compiled and analyzed in various ways that are appropriate for your needs but it may not be as detailed as primary research.

Conduct a SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities and threats. Conducting a SWOT analysis allows you to look at the facts about how your product or idea might perform if taken to market, and it can also help you make decisions about the direction of your idea. Your business idea might have some weaknesses that you hadn’t considered or there may be some opportunities to improve on a competitor’s product.

Asking pertinent questions during a SWOT analysis can help you identify and address weaknesses before they tank your new business.

A business plan is a dynamic document that serves as a roadmap for establishing a new business. This document makes it simple for potential investors, financial institutions and company management to understand and absorb. Even if you intend to self-finance, a business plan can help you flesh out your idea and spot potential problems. When writing a well-rounded business plan, include the following sections:

• Executive summary: The executive summary should be the first item in the business plan, but it should be written last. It describes the proposed new business and highlights the goals of the company and the methods to achieve them.
• Company description: The company description covers what problems your product or service solves and why your business or idea is best. For example, maybe your background is in molecular engineering, and you’ve used that background to create a new type of athletic wear—you have the proper credentials to make the best material.
• Market analysis: This section of the business plan analyzes how well a company is positioned against its competitors. The market analysis should include target market, segmentation analysis, market size, growth rate, trends and a competitive environment assessment.
• Organization and structure: Write about the type of business organization you expect, what risk management strategies you propose and who will staff the management team. What are their qualifications? Will your business be a single-member limited liability company (LLC) or a corporation ?
• Mission and goals: This section should contain a brief mission statement and detail what the business wishes to accomplish and the steps to get there. These goals should be SMART (specific, measurable, action-orientated, realistic and time-bound).
• Products or services: This section describes how your business will operate. It includes what products you’ll offer to consumers at the beginning of the business, how they compare to existing competitors, how much your products cost, who will be responsible for creating the products, how you’ll source materials and how much they cost to make.
• Background summary: This portion of the business plan is the most time-consuming to write. Compile and summarize any data, articles and research studies on trends that could positively and negatively affect your business or industry.
• Marketing plan: The marketing plan identifies the characteristics of your product or service, summarizes the SWOT analysis and analyzes competitors. It also discusses how you’ll promote your business, how much money will be spent on marketing and how long the campaign is expected to last.
• Financial plan: The financial plan is perhaps the core of the business plan because, without money, the business will not move forward. Include a proposed budget in your financial plan along with projected financial statements, such as an income statement, a balance sheet and a statement of cash flows. Usually, five years of projected financial statements are acceptable. This section is also where you should include your funding request if you’re looking for outside funding.

Learn more: Download our free simple business plan template .

Come Up With an Exit Strategy

An exit strategy is important for any business that is seeking funding because it outlines how you’ll sell the company or transfer ownership if you decide to retire or move on to other projects. An exit strategy also allows you to get the most value out of your business when it’s time to sell. There are a few different options for exiting a business, and the best option for you depends on your goals and circumstances.

The most common exit strategies are:

• Selling the business to another party
• Passing the business down to family members
• Liquidating the business assets
• Closing the doors and walking away

Develop a Scalable Business Model

As your small business grows, it’s important to have a scalable business model so that you can accommodate additional customers without incurring additional costs. A scalable business model is one that can be replicated easily to serve more customers without a significant increase in expenses.

Some common scalable business models are:

• Subscription-based businesses
• Businesses that sell digital products
• Franchise businesses
• Network marketing businesses

Start Planning for Taxes

One of the most important things to do when starting a small business is to start planning for taxes. Taxes can be complex, and there are several different types of taxes you may be liable for, including income tax, self-employment tax, sales tax and property tax. Depending on the type of business you’re operating, you may also be required to pay other taxes, such as payroll tax or unemployment tax.

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When structuring your business, it’s essential to consider how each structure impacts the amount of taxes you owe, daily operations and whether your personal assets are at risk.

An LLC limits your personal liability for business debts. LLCs can be owned by one or more people or companies and must include a registered agent . These owners are referred to as members.

• LLCs offer liability protection for the owners
• They’re one of the easiest business entities to set up
• You can have a single-member LLC
• You may be required to file additional paperwork with your state on a regular basis
• LLCs can’t issue stock
• You’ll need to pay annual filing fees to your state

Limited Liability Partnership (LLP)

An LLP is similar to an LLC but is typically used for licensed business professionals such as an attorney or accountant. These arrangements require a partnership agreement.

• Partners have limited liability for the debts and actions of the LLP
• LLPs are easy to form and don’t require much paperwork
• There’s no limit to the number of partners in an LLP
• Partners are required to actively take part in the business
• LLPs can’t issue stock
• All partners are personally liable for any malpractice claims against the business

Sole Proprietorship

If you start a solo business, you might consider a sole proprietorship . The company and the owner, for legal and tax purposes, are considered the same. The business owner assumes liability for the business. So, if the business fails, the owner is personally and financially responsible for all business debts.

• Sole proprietorships are easy to form
• There’s no need to file additional paperwork with your state
• You’re in complete control of the business
• You’re personally liable for all business debts
• It can be difficult to raise money for a sole proprietorship
• The business may have a limited lifespan

Corporation

A corporation limits your personal liability for business debts just as an LLC does. A corporation can be taxed as a C corporation (C-corp) or an S corporation (S-corp). S-corp status offers pass-through taxation to small corporations that meet certain IRS requirements. Larger companies and startups hoping to attract venture capital are usually taxed as C-corps.

• Corporations offer liability protection for the owners
• The life span of a corporation is not limited
• A corporation can have an unlimited number of shareholders
• Corporations are subject to double taxation
• They’re more expensive and complicated to set up than other business structures
• The shareholders may have limited liability

Before you decide on a business structure, discuss your situation with a small business accountant and possibly an attorney, as each business type has different tax treatments that could affect your bottom line.

Helpful Resources

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There are several legal issues to address when starting a business after choosing the business structure. The following is a good checklist of items to consider when establishing your business:

Choose Your Business Name

Make it memorable but not too difficult. Choose the same domain name, if available, to establish your internet presence. A business name cannot be the same as another registered company in your state, nor can it infringe on another trademark or service mark that is already registered with the United States Patent and Trademark Office (USPTO).

Business Name vs. DBA

There are business names, and then there are fictitious business names known as “Doing Business As” or DBA. You may need to file a DBA if you’re operating under a name that’s different from the legal name of your business. For example, “Mike’s Bike Shop” is doing business as “Mike’s Bikes.” The legal name of the business is “Mike’s Bike Shop,” and “Mike’s Bikes” is the DBA.

You may need to file a DBA with your state, county or city government offices. The benefits of a DBA include:

• It can help you open a business bank account under your business name
• A DBA can be used as a “trade name” to brand your products or services
• A DBA can be used to get a business license

Register Your Business and Obtain an EIN

You’ll officially create a corporation, LLC or other business entity by filing forms with your state’s business agency―usually the Secretary of State. As part of this process, you’ll need to choose a registered agent to accept legal documents on behalf of your business. You’ll also pay a filing fee. The state will send you a certificate that you can use to apply for licenses, a tax identification number (TIN) and business bank accounts.

Next, apply for an employer identification number (EIN) . All businesses, other than sole proprietorships with no employees, must have a federal employer identification number. Submit your application to the IRS and you’ll typically receive your number in minutes.

Get Appropriate Licenses and Permits

Legal requirements are determined by your industry and jurisdiction. Most businesses need a mixture of local, state and federal licenses to operate. Check with your local government office (and even an attorney) for licensing information tailored to your area.

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Open a Business Bank Account

Keep your business and personal finances separate. Here’s how to choose a business checking account —and why separate business accounts are essential. When you open a business bank account, you’ll need to provide your business name and your business tax identification number (EIN). This business bank account can be used for your business transactions, such as paying suppliers or invoicing customers. Most times, a bank will require a separate business bank account to issue a business loan or line of credit.

Hire a Bookkeeper or Get Accounting Software

If you sell a product, you need an inventory function in your accounting software to manage and track inventory. The software should have ledger and journal entries and the ability to generate financial statements.

Some software programs double as bookkeeping tools. These often include features such as check writing and managing receivables and payables. You can also use this software to track your income and expenses, generate invoices, run reports and calculate taxes.

There are many bookkeeping services available that can do all of this for you, and more. These services can be accessed online from any computer or mobile device and often include features such as bank reconciliation and invoicing. Check out the best accounting software for small business, or see if you want to handle the bookkeeping yourself.

Determine Your Break-Even Point

Before you fund your business, you must get an idea of your startup costs. To determine these, make a list of all the physical supplies you need, estimate the cost of any professional services you will require, determine the price of any licenses or permits required to operate and calculate the cost of office space or other real estate. Add in the costs of payroll and benefits, if applicable.

Businesses can take years to turn a profit, so it’s better to overestimate the startup costs and have too much money than too little. Many experts recommend having enough cash on hand to cover six months of operating expenses.

When you know how much you need to get started with your business, you need to know the point at which your business makes money. This figure is your break-even point.

In contrast, the contribution margin = total sales revenue – cost to make product

For example, let’s say you’re starting a small business that sells miniature birdhouses for fairy gardens. You have determined that it will cost you $500 in startup costs. Your variable costs are $0.40 per birdhouse produced, and you sell them for $1.50 each.

Let’s write these out so it’s easy to follow:

This means that you need to sell at least 456 units just to cover your costs. If you can sell more than 456 units in your first month, you will make a profit.

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There are many different ways to fund your business—some require considerable effort, while others are easier to obtain. Two categories of funding exist: internal and external.

Internal funding includes:

• Personal savings
• Credit cards
• Funds from friends and family

If you finance the business with your own funds or with credit cards, you have to pay the debt on the credit cards and you’ve lost a chunk of your wealth if the business fails. By allowing your family members or friends to invest in your business, you are risking hard feelings and strained relationships if the company goes under. Business owners who want to minimize these risks may consider external funding.

External funding includes:

• Small business loans
• Small business grants
• Angel investors
• Venture capital
• Crowdfunding

Small businesses may have to use a combination of several sources of capital. Consider how much money is needed, how long it will take before the company can repay it and how risk-tolerant you are. No matter which source you use, plan for profit. It’s far better to take home six figures than make seven figures and only keep $80,000 of it.

Funding ideas include:

• Invoice factoring: With invoice factoring , you can sell your unpaid invoices to a third party at a discount.
• Business lines of credit: Apply for a business line of credit , which is similar to a personal line of credit. The credit limit and interest rate will be based on your business’s revenue, credit score and financial history.
• Equipment financing: If you need to purchase expensive equipment for your business, you can finance it with a loan or lease.
• Small Business Administration (SBA) microloans: Microloans are up to $50,000 loans that can be used for working capital, inventory or supplies and machinery or equipment.
• Grants: The federal government offers grants for businesses that promote innovation, export growth or are located in historically disadvantaged areas. You can also find grants through local and regional organizations.
• Crowdfunding: With crowdfunding , you can raise money from a large group of people by soliciting donations or selling equity in your company.

Choose the right funding source for your business by considering the amount of money you need, the time frame for repayment and your tolerance for risk.

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You need to have insurance for your business , even if it’s a home-based business or you don’t have any employees. The type of insurance you need depends on your business model and what risks you face. You might need more than one type of policy, and you might need additional coverage as your business grows. In most states, workers’ compensation insurance is required by law if you have employees.

Work With an Agent To Get Insured

An insurance agent can help determine what coverages are appropriate for your business and find policies from insurers that offer the best rates. An independent insurance agent represents several different insurers, so they can shop around for the best rates and coverage options.

Basic Types of Business Insurance Coverage

• Liability insurance protects your business against third-party claims of bodily injury, property damage and personal injury such as defamation or false advertising.
• Property insurance covers the physical assets of your business, including your office space, equipment and inventory.
• Business interruption insurance pays for the loss of income if your business is forced to close temporarily due to a covered event such as a natural disaster.
• Product liability insurance protects against claims that your products caused bodily injury or property damage.
• Employee practices liability insurance covers claims from employees alleging discrimination, sexual harassment or other wrongful termination.
• Workers’ compensation insurance covers medical expenses and income replacement for employees who are injured on the job.
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Business tools can help make your life easier and make your business run more smoothly. The right tools can help you save time, automate tasks and make better decisions.

Consider the following tools in your arsenal:

• Accounting software : Track your business income and expenses, prepare financial statements and file taxes. Examples include QuickBooks and FreshBooks.
• Customer relationship management (CRM) software : This will help you manage your customer relationships, track sales and marketing data and automate tasks like customer service and follow-ups. Examples include Zoho CRM and monday.com.
• Project management software : Plan, execute and track projects. It can also be used to manage employee tasks and allocate resources. Examples include Airtable and ClickUp.
• Credit card processor : This will allow you to accept credit card payments from customers. Examples include Stripe and PayPal.
• Point of sale (POS) : A system that allows you to process customer payments. Some accounting software and CRM software have POS features built-in. Examples include Clover and Lightspeed.
• Virtual private network (VPN) : Provides a secure, private connection between your computer and the internet. This is important for businesses that handle sensitive data. Examples include NordVPN and ExpressVPN.
• Merchant services : When customers make a purchase, the money is deposited into your business account. You can also use merchant services to set up recurring billing or subscription payments. Examples include Square and Stripe.
• Email hosting : This allows you to create a professional email address with your own domain name. Examples include G Suite and Microsoft Office 365.

Many business owners spend so much money creating their products that there isn’t a marketing budget by the time they’ve launched. Alternatively, they’ve spent so much time developing the product that marketing is an afterthought.

Create a Website

Even if you’re a brick-and-mortar business, a web presence is essential. Creating a website doesn’t take long, either—you can have one done in as little as a weekend. You can make a standard informational website or an e-commerce site where you sell products online. If you sell products or services offline, include a page on your site where customers can find your locations and hours. Other pages to add include an “About Us” page, product or service pages, frequently asked questions (FAQs), a blog and contact information.

Optimize Your Site for SEO

After getting a website or e-commerce store, focus on optimizing it for search engines (SEO). This way, when a potential customer searches for specific keywords for your products, the search engine can point them to your site. SEO is a long-term strategy, so don’t expect a ton of traffic from search engines initially—even if you’re using all the right keywords.

Create Relevant Content

Provide quality digital content on your site that makes it easy for customers to find the correct answers to their questions. Content marketing ideas include videos, customer testimonials, blog posts and demos. Consider content marketing one of the most critical tasks on your daily to-do list. This is used in conjunction with posting on social media.

Get Listed in Online Directories

Customers use online directories like Yelp, Google My Business and Facebook to find local businesses. Some city halls and chambers of commerce have business directories too. Include your business in as many relevant directories as possible. You can also create listings for your business on specific directories that focus on your industry.

Develop a Social Media Strategy

Your potential customers are using social media every day—you need to be there too. Post content that’s interesting and relevant to your audience. Use social media to drive traffic back to your website where customers can learn more about what you do and buy your products or services.

You don’t necessarily need to be on every social media platform available. However, you should have a presence on Facebook and Instagram because they offer e-commerce features that allow you to sell directly from your social media accounts. Both of these platforms have free ad training to help you market your business.

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To scale your business, you need to grow your customer base and revenue. This can be done by expanding your marketing efforts, improving your product or service, collaborating with other creators or adding new products or services that complement what you already offer.

Think about ways you can automate or outsource certain tasks so you can focus on scaling the business. For example, if social media marketing is taking up too much of your time, consider using a platform such as Hootsuite to help you manage your accounts more efficiently. You can also consider outsourcing the time-consumer completely.

You can also use technology to automate certain business processes, including accounting, email marketing and lead generation. Doing this will give you more time to focus on other aspects of your business.

When scaling your business, it’s important to keep an eye on your finances and make sure you’re still profitable. If you’re not making enough money to cover your costs, you need to either reduce your expenses or find ways to increase your revenue.

Build a Team

As your business grows, you’ll need to delegate tasks and put together a team of people who can help you run the day-to-day operations. This might include hiring additional staff, contractors or freelancers.

Resources for building a team include:

• Hiring platforms: To find the right candidates, hiring platforms, such as Indeed and Glassdoor, can help you post job descriptions, screen résumés and conduct video interviews.
• Job boards: Job boards such as Craigslist and Indeed allow you to post open positions for free.
• Social media: You can also use social media platforms such as LinkedIn and Facebook to find potential employees.
• Freelance platforms: Using Upwork, Freelancer and Fiverr can help you find talented freelancers for one-time or short-term projects. You can also outsource certain tasks, such as customer service, social media marketing or bookkeeping.

You might also consider partnering with other businesses in your industry. For example, if you’re a wedding planner, you could partner with a florist, photographer, catering company or venue. This way, you can offer your customers a one-stop shop for all their wedding needs. Another example is an e-commerce store that partners with a fulfillment center. This type of partnership can help you save money on shipping and storage costs, and it can also help you get your products to your customers faster.

To find potential partnerships, search for businesses in your industry that complement what you do. For example, if you’re a web designer, you could partner with a digital marketing agency.

You can also search for businesses that serve the same target market as you but offer different products or services. For example, if you sell women’s clothing, you could partner with a jewelry store or a hair salon.

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To rank the best states to start a business in 2024, Forbes Advisor analyzed 18 key metrics across five categories to determine which states are the best and worst to start a business in. Our ranking takes into consideration factors that impact businesses and their ability to succeed, such as business costs, business climate, economy, workforce and financial accessibility in each state. Check out the full report .

Starting a small business takes time, effort and perseverance. But if you’re willing to put in the work, it can be a great way to achieve your dreams and goals. Be sure to do your research, create a solid business plan and pivot along the way. Once you’re operational, don’t forget to stay focused and organized so you can continue to grow your business.

How do I start a small business with no money?

There are several funding sources for brand-new businesses and most require a business plan to secure it. These include the SBA , private grants, angel investors, crowdfunding and venture capital.

What is the best business structure?

The best business structure for your business will depend entirely on what kind of company you form, your industry and what you want to accomplish. But any successful business structure will be one that will help your company set realistic goals and follow through on set tasks.

Do I need a business credit card?

You don’t need one, but a business credit card can be helpful for new small businesses. It allows you to start building business credit, which can help you down the road when you need to take out a loan or line of credit. Additionally, business credit cards often come with rewards and perks that can save you money on business expenses.

Do I need a special license or permit to start a small business?

The answer to this question will depend on the type of business you want to start and where you’re located. Some businesses, such as restaurants, will require a special permit or license to operate. Others, such as home daycare providers, may need to register with the state.

How much does it cost to create a business?

The cost of starting a business will vary depending on the size and type of company you want to create. For example, a home-based business will be less expensive to start than a brick-and-mortar store. Additionally, the cost of starting a business will increase if you need to rent or buy commercial space, hire employees or purchase inventory. You could potentially get started for free by dropshipping or selling digital goods.

How do I get a loan for a new business?

The best way to get a loan for a new business is to approach banks or other financial institutions and provide them with a business plan and your financial history. You can also look into government-backed loans, such as those offered by the SBA. Startups may also be able to get loans from alternative lenders, including online platforms such as Kiva.

Do I need a business degree to start a business?

No, you don’t need a business degree to start a business. However, acquiring a degree in business or a related field can provide you with the understanding and ability to run an effective company. Additionally, you may want to consider taking some business courses if you don’t have a degree to learn more about starting and running a business. You can find these online and at your local Small Business Administration office.

What are some easy businesses to start?

One of the easiest businesses to start also has the lowest overhead: selling digital goods. This can include items such as e-books, online courses, audio files or software. If you have expertise in a particular area or niche, this is a great option for you. Dropshipping is also a great option because you don’t have to keep inventory. You could also buy wholesale products or create your own. Once you create your product, you can sell it through your own website or third-party platforms such as Amazon or Etsy.

What is the most profitable type of business?

There is no one answer to this question because the most profitable type of business will vary depending on a number of factors, such as your industry, location, target market and business model. However, some businesses tend to be more profitable than others, such as luxury goods, high-end services, business-to-business companies and subscription-based businesses. If you’re not sure what type of business to start, consider your strengths and interests, as well as the needs of your target market, to help you choose a profitable business idea.

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Katherine Haan is a small business owner with nearly two decades of experience helping other business owners increase their incomes.

The state of AI in 2023: Generative AI’s breakout year

You have reached a page with older survey data. please see our 2024 survey results here ..

The latest annual McKinsey Global Survey  on the current state of AI confirms the explosive growth of generative AI (gen AI) tools . Less than a year after many of these tools debuted, one-third of our survey respondents say their organizations are using gen AI regularly in at least one business function. Amid recent advances, AI has risen from a topic relegated to tech employees to a focus of company leaders: nearly one-quarter of surveyed C-suite executives say they are personally using gen AI tools for work, and more than one-quarter of respondents from companies using AI say gen AI is already on their boards’ agendas. What’s more, 40 percent of respondents say their organizations will increase their investment in AI overall because of advances in gen AI. The findings show that these are still early days for managing gen AI–related risks, with less than half of respondents saying their organizations are mitigating even the risk they consider most relevant: inaccuracy.

The organizations that have already embedded AI capabilities have been the first to explore gen AI’s potential, and those seeing the most value from more traditional AI capabilities—a group we call AI high performers—are already outpacing others in their adoption of gen AI tools. 1 We define AI high performers as organizations that, according to respondents, attribute at least 20 percent of their EBIT to AI adoption.

The expected business disruption from gen AI is significant, and respondents predict meaningful changes to their workforces. They anticipate workforce cuts in certain areas and large reskilling efforts to address shifting talent needs. Yet while the use of gen AI might spur the adoption of other AI tools, we see few meaningful increases in organizations’ adoption of these technologies. The percent of organizations adopting any AI tools has held steady since 2022, and adoption remains concentrated within a small number of business functions.

Table of Contents

• It’s early days still, but use of gen AI is already widespread
• Leading companies are already ahead with gen AI
• AI-related talent needs shift, and AI’s workforce effects are expected to be substantial
• With all eyes on gen AI, AI adoption and impact remain steady

About the research

1. it’s early days still, but use of gen ai is already widespread.

The findings from the survey—which was in the field in mid-April 2023—show that, despite gen AI’s nascent public availability, experimentation with the tools  is already relatively common, and respondents expect the new capabilities to transform their industries. Gen AI has captured interest across the business population: individuals across regions, industries, and seniority levels are using gen AI for work and outside of work. Seventy-nine percent of all respondents say they’ve had at least some exposure to gen AI, either for work or outside of work, and 22 percent say they are regularly using it in their own work. While reported use is quite similar across seniority levels, it is highest among respondents working in the technology sector and those in North America.

Organizations, too, are now commonly using gen AI. One-third of all respondents say their organizations are already regularly using generative AI in at least one function—meaning that 60 percent of organizations with reported AI adoption are using gen AI. What’s more, 40 percent of those reporting AI adoption at their organizations say their companies expect to invest more in AI overall thanks to generative AI, and 28 percent say generative AI use is already on their board’s agenda. The most commonly reported business functions using these newer tools are the same as those in which AI use is most common overall: marketing and sales, product and service development, and service operations, such as customer care and back-office support. This suggests that organizations are pursuing these new tools where the most value is. In our previous research , these three areas, along with software engineering, showed the potential to deliver about 75 percent of the total annual value from generative AI use cases.

In these early days, expectations for gen AI’s impact are high : three-quarters of all respondents expect gen AI to cause significant or disruptive change in the nature of their industry’s competition in the next three years. Survey respondents working in the technology and financial-services industries are the most likely to expect disruptive change from gen AI. Our previous research shows  that, while all industries are indeed likely to see some degree of disruption, the level of impact is likely to vary. 2 “ The economic potential of generative AI: The next productivity frontier ,” McKinsey, June 14, 2023. Industries relying most heavily on knowledge work are likely to see more disruption—and potentially reap more value. While our estimates suggest that tech companies, unsurprisingly, are poised to see the highest impact from gen AI—adding value equivalent to as much as 9 percent of global industry revenue—knowledge-based industries such as banking (up to 5 percent), pharmaceuticals and medical products (also up to 5 percent), and education (up to 4 percent) could experience significant effects as well. By contrast, manufacturing-based industries, such as aerospace, automotives, and advanced electronics, could experience less disruptive effects. This stands in contrast to the impact of previous technology waves that affected manufacturing the most and is due to gen AI’s strengths in language-based activities, as opposed to those requiring physical labor.

Responses show many organizations not yet addressing potential risks from gen AI

According to the survey, few companies seem fully prepared for the widespread use of gen AI—or the business risks these tools may bring. Just 21 percent of respondents reporting AI adoption say their organizations have established policies governing employees’ use of gen AI technologies in their work. And when we asked specifically about the risks of adopting gen AI, few respondents say their companies are mitigating the most commonly cited risk with gen AI: inaccuracy. Respondents cite inaccuracy more frequently than both cybersecurity and regulatory compliance, which were the most common risks from AI overall in previous surveys. Just 32 percent say they’re mitigating inaccuracy, a smaller percentage than the 38 percent who say they mitigate cybersecurity risks. Interestingly, this figure is significantly lower than the percentage of respondents who reported mitigating AI-related cybersecurity last year (51 percent). Overall, much as we’ve seen in previous years, most respondents say their organizations are not addressing AI-related risks.

2. Leading companies are already ahead with gen AI

The survey results show that AI high performers—that is, organizations where respondents say at least 20 percent of EBIT in 2022 was attributable to AI use—are going all in on artificial intelligence, both with gen AI and more traditional AI capabilities. These organizations that achieve significant value from AI are already using gen AI in more business functions than other organizations do, especially in product and service development and risk and supply chain management. When looking at all AI capabilities—including more traditional machine learning capabilities, robotic process automation, and chatbots—AI high performers also are much more likely than others to use AI in product and service development, for uses such as product-development-cycle optimization, adding new features to existing products, and creating new AI-based products. These organizations also are using AI more often than other organizations in risk modeling and for uses within HR such as performance management and organization design and workforce deployment optimization.

AI high performers are much more likely than others to use AI in product and service development.

Another difference from their peers: high performers’ gen AI efforts are less oriented toward cost reduction, which is a top priority at other organizations. Respondents from AI high performers are twice as likely as others to say their organizations’ top objective for gen AI is to create entirely new businesses or sources of revenue—and they’re most likely to cite the increase in the value of existing offerings through new AI-based features.

As we’ve seen in previous years , these high-performing organizations invest much more than others in AI: respondents from AI high performers are more than five times more likely than others to say they spend more than 20 percent of their digital budgets on AI. They also use AI capabilities more broadly throughout the organization. Respondents from high performers are much more likely than others to say that their organizations have adopted AI in four or more business functions and that they have embedded a higher number of AI capabilities. For example, respondents from high performers more often report embedding knowledge graphs in at least one product or business function process, in addition to gen AI and related natural-language capabilities.

While AI high performers are not immune to the challenges of capturing value from AI, the results suggest that the difficulties they face reflect their relative AI maturity, while others struggle with the more foundational, strategic elements of AI adoption. Respondents at AI high performers most often point to models and tools, such as monitoring model performance in production and retraining models as needed over time, as their top challenge. By comparison, other respondents cite strategy issues, such as setting a clearly defined AI vision that is linked with business value or finding sufficient resources.

The findings offer further evidence that even high performers haven’t mastered best practices regarding AI adoption, such as machine-learning-operations (MLOps) approaches, though they are much more likely than others to do so. For example, just 35 percent of respondents at AI high performers report that where possible, their organizations assemble existing components, rather than reinvent them, but that’s a much larger share than the 19 percent of respondents from other organizations who report that practice.

Many specialized MLOps technologies and practices  may be needed to adopt some of the more transformative uses cases that gen AI applications can deliver—and do so as safely as possible. Live-model operations is one such area, where monitoring systems and setting up instant alerts to enable rapid issue resolution can keep gen AI systems in check. High performers stand out in this respect but have room to grow: one-quarter of respondents from these organizations say their entire system is monitored and equipped with instant alerts, compared with just 12 percent of other respondents.

3. AI-related talent needs shift, and AI’s workforce effects are expected to be substantial

Our latest survey results show changes in the roles that organizations are filling to support their AI ambitions. In the past year, organizations using AI most often hired data engineers, machine learning engineers, and Al data scientists—all roles that respondents commonly reported hiring in the previous survey. But a much smaller share of respondents report hiring AI-related-software engineers—the most-hired role last year—than in the previous survey (28 percent in the latest survey, down from 39 percent). Roles in prompt engineering have recently emerged, as the need for that skill set rises alongside gen AI adoption, with 7 percent of respondents whose organizations have adopted AI reporting those hires in the past year.

The findings suggest that hiring for AI-related roles remains a challenge but has become somewhat easier over the past year, which could reflect the spate of layoffs at technology companies from late 2022 through the first half of 2023. Smaller shares of respondents than in the previous survey report difficulty hiring for roles such as AI data scientists, data engineers, and data-visualization specialists, though responses suggest that hiring machine learning engineers and AI product owners remains as much of a challenge as in the previous year.

Looking ahead to the next three years, respondents predict that the adoption of AI will reshape many roles in the workforce. Generally, they expect more employees to be reskilled than to be separated. Nearly four in ten respondents reporting AI adoption expect more than 20 percent of their companies’ workforces will be reskilled, whereas 8 percent of respondents say the size of their workforces will decrease by more than 20 percent.

Looking specifically at gen AI’s predicted impact, service operations is the only function in which most respondents expect to see a decrease in workforce size at their organizations. This finding generally aligns with what our recent research  suggests: while the emergence of gen AI increased our estimate of the percentage of worker activities that could be automated (60 to 70 percent, up from 50 percent), this doesn’t necessarily translate into the automation of an entire role.

AI high performers are expected to conduct much higher levels of reskilling than other companies are. Respondents at these organizations are over three times more likely than others to say their organizations will reskill more than 30 percent of their workforces over the next three years as a result of AI adoption.

4. With all eyes on gen AI, AI adoption and impact remain steady

While the use of gen AI tools is spreading rapidly, the survey data doesn’t show that these newer tools are propelling organizations’ overall AI adoption. The share of organizations that have adopted AI overall remains steady, at least for the moment, with 55 percent of respondents reporting that their organizations have adopted AI. Less than a third of respondents continue to say that their organizations have adopted AI in more than one business function, suggesting that AI use remains limited in scope. Product and service development and service operations continue to be the two business functions in which respondents most often report AI adoption, as was true in the previous four surveys. And overall, just 23 percent of respondents say at least 5 percent of their organizations’ EBIT last year was attributable to their use of AI—essentially flat with the previous survey—suggesting there is much more room to capture value.

Organizations continue to see returns in the business areas in which they are using AI, and they plan to increase investment in the years ahead. We see a majority of respondents reporting AI-related revenue increases within each business function using AI. And looking ahead, more than two-thirds expect their organizations to increase their AI investment over the next three years.

The online survey was in the field April 11 to 21, 2023, and garnered responses from 1,684 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. Of those respondents, 913 said their organizations had adopted AI in at least one function and were asked questions about their organizations’ AI use. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP.

The survey content and analysis were developed by Michael Chui , a partner at the McKinsey Global Institute and a partner in McKinsey’s Bay Area office, where Lareina Yee is a senior partner; Bryce Hall , an associate partner in the Washington, DC, office; and senior partners Alex Singla and Alexander Sukharevsky , global leaders of QuantumBlack, AI by McKinsey, based in the Chicago and London offices, respectively.

They wish to thank Shivani Gupta, Abhisek Jena, Begum Ortaoglu, Barr Seitz, and Li Zhang for their contributions to this work.

This article was edited by Heather Hanselman, an editor in the Atlanta office.

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Actor Ian McKellen, 85, is looking forward to returning to work after his fall off a London stage

LONDON (AP) — Actor Ian McKellen said Tuesday he is looking forward to returning to work after he toppled off a London stage mid-performance and was hospitalized.

McKellen, 85, said he was “hugely indebted” to medics who treated him after the tumble on Monday night during a performance of “Player Kings” at London’s Noel Coward Theatre.

“They have assured me that my recovery will be complete and speedy and I am looking forward to returning to work,” he said on the social media platform X, formerly known as Twitter.

Performances on Tuesday and Wednesday were canceled after the accident and are scheduled to resume on Thursday.

The stage and screen veteran, who played Gandalf in the  “Lord of the Rings”  films, cried out in pain after the fall, according to a BBC journalist at the theater. McKellen was playing the roguish John Falstaff in “Player Kings,” an adaptation of William Shakespeare’s two “Henry IV” history plays, directed by Robert Icke.

Theatergoers were startled when McKellen lost his footing and fell off the stage in a fight scene involving Toheeb Jimoh’s Prince Hal and Henry Percy, played by Samuel Edward-Cook.

“Sir Ian seemed to trip as he moved downstage to take a more active part in the scene,” audience member Paul Critchley told the PA news agency, saying it was a shock. “He picked up momentum as he moved downstage which resulted in him falling off the stage directly in front of the audience.”

Staff and two doctors in the audience helped the actor, the theater said in a statement. The theater was evacuated and the performance was canceled.

McKellen played Magneto in the “X-Men” films and is one of Britain’s most acclaimed Shakespearean actors, with roles including Richard III, Macbeth and King Lear.

He has won a Tony Award — for “Amadeus” — several Olivier Awards, and has been nominated for two Academy Awards, five Emmys and several BAFTA awards.

Copyright 2024 The Associated Press. All rights reserved.

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Introducing Apple Intelligence, the personal intelligence system that puts powerful generative models at the core of iPhone, iPad, and Mac

New Capabilities for Understanding and Creating Language

Image Playground Makes Communication and Self‑Expression Even More Fun

Genmoji Creation to Fit Any Moment

New Features in Photos Give Users More Control

Siri Enters a New Era

A New Standard for Privacy in AI

ChatGPT Gets Integrated Across Apple Platforms

Text of this article

June 10, 2024

PRESS RELEASE

Setting a new standard for privacy in AI, Apple Intelligence understands personal context to deliver intelligence that is helpful and relevant

CUPERTINO, CALIFORNIA Apple today introduced Apple Intelligence , the personal intelligence system for iPhone, iPad, and Mac that combines the power of generative models with personal context to deliver intelligence that’s incredibly useful and relevant. Apple Intelligence is deeply integrated into iOS 18, iPadOS 18, and macOS Sequoia. It harnesses the power of Apple silicon to understand and create language and images, take action across apps, and draw from personal context to simplify and accelerate everyday tasks. With Private Cloud Compute, Apple sets a new standard for privacy in AI, with the ability to flex and scale computational capacity between on-device processing and larger, server-based models that run on dedicated Apple silicon servers.

“We’re thrilled to introduce a new chapter in Apple innovation. Apple Intelligence will transform what users can do with our products — and what our products can do for our users,” said Tim Cook, Apple’s CEO. “Our unique approach combines generative AI with a user’s personal context to deliver truly helpful intelligence. And it can access that information in a completely private and secure way to help users do the things that matter most to them. This is AI as only Apple can deliver it, and we can’t wait for users to experience what it can do.”

Apple Intelligence unlocks new ways for users to enhance their writing and communicate more effectively. With brand-new systemwide Writing Tools built into iOS 18, iPadOS 18, and macOS Sequoia, users can rewrite, proofread, and summarize text nearly everywhere they write, including Mail, Notes, Pages, and third-party apps.

Whether tidying up class notes, ensuring a blog post reads just right, or making sure an email is perfectly crafted, Writing Tools help users feel more confident in their writing. With Rewrite, Apple Intelligence allows users to choose from different versions of what they have written, adjusting the tone to suit the audience and task at hand. From finessing a cover letter, to adding humor and creativity to a party invitation, Rewrite helps deliver the right words to meet the occasion. Proofread checks grammar, word choice, and sentence structure while also suggesting edits — along with explanations of the edits — that users can review or quickly accept. With Summarize, users can select text and have it recapped in the form of a digestible paragraph, bulleted key points, a table, or a list.

In Mail, staying on top of emails has never been easier. With Priority Messages, a new section at the top of the inbox shows the most urgent emails, like a same-day dinner invitation or boarding pass. Across a user’s inbox, instead of previewing the first few lines of each email, they can see summaries without needing to open a message. For long threads, users can view pertinent details with just a tap. Smart Reply provides suggestions for a quick response, and will identify questions in an email to ensure everything is answered.

Deep understanding of language also extends to Notifications. Priority Notifications appear at the top of the stack to surface what’s most important, and summaries help users scan long or stacked notifications to show key details right on the Lock Screen, such as when a group chat is particularly active. And to help users stay present in what they’re doing, Reduce Interruptions is a new Focus that surfaces only the notifications that might need immediate attention, like a text about an early pickup from daycare.

In the Notes and Phone apps, users can now record, transcribe, and summarize audio. When a recording is initiated while on a call, participants are automatically notified, and once the call ends, Apple Intelligence generates a summary to help recall key points.

Apple Intelligence powers exciting image creation capabilities to help users communicate and express themselves in new ways. With Image Playground, users can create fun images in seconds, choosing from three styles: Animation, Illustration, or Sketch. Image Playground is easy to use and built right into apps including Messages. It’s also available in a dedicated app, perfect for experimenting with different concepts and styles. All images are created on device, giving users the freedom to experiment with as many images as they want.

With Image Playground, users can choose from a range of concepts from categories like themes, costumes, accessories, and places; type a description to define an image; choose someone from their personal photo library to include in their image; and pick their favorite style.

With the Image Playground experience in Messages, users can quickly create fun images for their friends, and even see personalized suggested concepts related to their conversations. For example, if a user is messaging a group about going hiking, they’ll see suggested concepts related to their friends, their destination, and their activity, making image creation even faster and more relevant.

In Notes, users can access Image Playground through the new Image Wand in the Apple Pencil tool palette, making notes more visually engaging. Rough sketches can be turned into delightful images, and users can even select empty space to create an image using context from the surrounding area. Image Playground is also available in apps like Keynote, Freeform, and Pages, as well as in third-party apps that adopt the new Image Playground API.

Taking emoji to an entirely new level, users can create an original Genmoji to express themselves. By simply typing a description, their Genmoji appears, along with additional options. Users can even create Genmoji of friends and family based on their photos. Just like emoji, Genmoji can be added inline to messages, or shared as a sticker or reaction in a Tapback.

Searching for photos and videos becomes even more convenient with Apple Intelligence. Natural language can be used to search for specific photos, such as “Maya skateboarding in a tie-dye shirt,” or “Katie with stickers on her face.” Search in videos also becomes more powerful with the ability to find specific moments in clips so users can go right to the relevant segment. Additionally, the new Clean Up tool can identify and remove distracting objects in the background of a photo — without accidentally altering the subject.

With Memories, users can create the story they want to see by simply typing a description. Using language and image understanding, Apple Intelligence will pick out the best photos and videos based on the description, craft a storyline with chapters based on themes identified from the photos, and arrange them into a movie with its own narrative arc. Users will even get song suggestions to match their memory from Apple Music. As with all Apple Intelligence features, user photos and videos are kept private on device and are not shared with Apple or anyone else.

Powered by Apple Intelligence, Siri becomes more deeply integrated into the system experience. With richer language-understanding capabilities, Siri is more natural, more contextually relevant, and more personal, with the ability to simplify and accelerate everyday tasks. It can follow along if users stumble over words and maintain context from one request to the next. Additionally, users can type to Siri, and switch between text and voice to communicate with Siri in whatever way feels right for the moment. Siri also has a brand-new design with an elegant glowing light that wraps around the edge of the screen when Siri is active.

Siri can now give users device support everywhere they go, and answer thousands of questions about how to do something on iPhone, iPad, and Mac. Users can learn everything from how to schedule an email in the Mail app, to how to switch from Light to Dark Mode.

With onscreen awareness, Siri will be able to understand and take action with users’ content in more apps over time. For example, if a friend texts a user their new address in Messages, the receiver can say, “Add this address to his contact card.”

With Apple Intelligence, Siri will be able to take hundreds of new actions in and across Apple and third-party apps. For example, a user could say, “Bring up that article about cicadas from my Reading List,” or “Send the photos from the barbecue on Saturday to Malia,” and Siri will take care of it.

Siri will be able to deliver intelligence that’s tailored to the user and their on-device information. For example, a user can say, “Play that podcast that Jamie recommended,” and Siri will locate and play the episode, without the user having to remember whether it was mentioned in a text or an email. Or they could ask, “When is Mom’s flight landing?” and Siri will find the flight details and cross-reference them with real-time flight tracking to give an arrival time.

To be truly helpful, Apple Intelligence relies on understanding deep personal context while also protecting user privacy. A cornerstone of Apple Intelligence is on-device processing, and many of the models that power it run entirely on device. To run more complex requests that require more processing power, Private Cloud Compute extends the privacy and security of Apple devices into the cloud to unlock even more intelligence.

With Private Cloud Compute, Apple Intelligence can flex and scale its computational capacity and draw on larger, server-based models for more complex requests. These models run on servers powered by Apple silicon, providing a foundation that allows Apple to ensure that data is never retained or exposed.

Independent experts can inspect the code that runs on Apple silicon servers to verify privacy, and Private Cloud Compute cryptographically ensures that iPhone, iPad, and Mac do not talk to a server unless its software has been publicly logged for inspection. Apple Intelligence with Private Cloud Compute sets a new standard for privacy in AI, unlocking intelligence users can trust.

Apple is integrating ChatGPT access into experiences within iOS 18, iPadOS 18, and macOS Sequoia, allowing users to access its expertise — as well as its image- and document-understanding capabilities — without needing to jump between tools.

Siri can tap into ChatGPT’s expertise when helpful. Users are asked before any questions are sent to ChatGPT, along with any documents or photos, and Siri then presents the answer directly.

Additionally, ChatGPT will be available in Apple’s systemwide Writing Tools, which help users generate content for anything they are writing about. With Compose, users can also access ChatGPT image tools to generate images in a wide variety of styles to complement what they are writing.

Privacy protections are built in for users who access ChatGPT — their IP addresses are obscured, and OpenAI won’t store requests. ChatGPT’s data-use policies apply for users who choose to connect their account.

ChatGPT will come to iOS 18, iPadOS 18, and macOS Sequoia later this year, powered by GPT-4o. Users can access it for free without creating an account, and ChatGPT subscribers can connect their accounts and access paid features right from these experiences.

Availability

Apple Intelligence is free for users, and will be available in beta as part of iOS 18 , iPadOS 18 , and macOS Sequoia  this fall in U.S. English. Some features, software platforms, and additional languages will come over the course of the next year. Apple Intelligence will be available on iPhone 15 Pro, iPhone 15 Pro Max, and iPad and Mac with M1 and later, with Siri and device language set to U.S. English. For more information, visit apple.com/apple-intelligence .

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Cat Franklin

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