how to write a business plan for a holding company

Holding Company Business Plan Template

Written by Dave Lavinsky

Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their holding companies. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a holding company business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Holding Company Business Plan?

A business plan provides a snapshot of your holding company as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Holding Company

If you’re looking to start a holding company, or grow your existing holding company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your holding company in order to improve your chances of success. Your holding company business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Holding Companies

With regards to funding, the main sources of funding for a holding company are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

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How to write a business plan for a holding company.

If you want to start a holding company or expand your current one, you need a business plan. Below are links to each section of your holding company business plan template:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of holding company you are operating and the status. For example, does your holding company include multiple startups or does it include established companies?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the industry in which you’re competing. Discuss the businesses you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of holding company you are operating.

For example, you might operate one of the following types of holding companies:

• Pure Holding Company : this type of holding company owns a controlling interest in one or more other companies but does not itself produce goods or services, or participate in any additional business operations.
• Mixed Holding Company: this type of holding company owns a controlling interest in one or more other companies and also operates its own business, providing goods or services.
• Immediate Holding Company: this type of business owns controlling interest in one or more other companies, and is itself controlled by another holding company.
• Intermediate Holding Company: this type of business owns controlling interest in one or more other companies, and is a subsidiary of a larger corporation.

In addition to explaining the type of holding company you will operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, amount of monthly revenue, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

While this may seem unnecessary, it serves multiple purposes.

First, researching the holding company industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your holding company business plan:

• How big are the industry(ies) in which you’re competing (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your holding company? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your holding company business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individual businesses such as banks and restaurants, other holding companies and larger corporations.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other businesses that provide the same products and services as your company.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors.

With regards to direct competition, you want to describe the other businesses with which you compete.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What types of businesses do they control?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide better services?
• Will you provide services that your competitors don’t offer?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

For a holding company business plan, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of holding company that you documented in your Company Analysis. Then, detail the specific products and services you will be offering.

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the products and services you offer and their prices.

Promotions : The final part of your holding company marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Advertising
• Partnering with applicable websites
• Social media marketing

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your businesses, including running individual businesses, scouting companies to buy interest in, meeting with potential clients, and managing any legal and financial responsibilities for the companies you currently control.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your first and second controlling interests, or when you hope to reach $X in revenue. It could also be when you expect to expand your holding company to form multiple subsidiary companies or parent groups.  

Management Team

To demonstrate your holding company business’ ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in managing holding or investment companies and individual operating companies. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing holding and/or investment companies or successfully running legal or financial businesses.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you purchase controlling interest in one new company per quarter or per year? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $150,000 on acquiring a business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $150,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a holding company business:

• Location build-out including design fees, construction, etc.
• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or plans you are working on for controlling another business.  

Putting together a business plan for your own holding company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful holding company business.  

Holding Company Business Plan FAQs

What is the easiest way to complete my holding company business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Holding Company Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of holding company you are operating and the status; for example, are you a startup, do you have a holding company that you would like to grow, or are you operating a chain of holding companies?

Don’t you wish there was a faster, easier way to finish your Holding Company business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how Growthink’s professional business plan consulting services can create your business plan for you.

Other Helpful Business Plan Articles & Templates

Holding Company Business Plan Template

Written by Dave Lavinsky

Holding Company Business Plan

You’ve come to the right place to create your Holding Company business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Holding Companies.

Below is a template to help you create each section of your Holding Company business plan.

Executive Summary

Business overview.

Caldwell Corporation, located in Los Angeles, California, is a newly established holding company that was formed to be the controlling stockholder in other companies it has invested in. It will initially control the Caldwell Group (Caldwell Products, Caldwell Entertainment, and Caldwell Technology) but will invest in other companies in the future. Caldwell Corporation will own assets in both public and private companies, ranging from real estate and manufacturing to entertainment and technology. The company solely performs oversight and is not involved in managing or day-to-day operations.

Caldwell Corporation is run by Timothy Caldwell. He has founded and run all the companies in the Caldwell Group with tremendous success. He is starting the Caldwell Corporation to create a more central point of control over his businesses and make it easier to invest in companies that will support the overall Caldwell Corporation mission.

Caldwell Corporation will provide a number of benefits and services to its subsidiaries. Those benefits include risk mitigation, asset protection, tax minimization, central control, flexibility for growth and development, and succession planning.

The primary benefit for Caldwell Corporation is to minimize the risk for its subsidiaries that forming and operating a company entails. If the subsidiary were to be sued, the liability would not exist, as the holding company would assume the risk as it is a controlling shareholder. Risk management is enhanced by dividing its assets across multiple companies.

Customer Focus

The initial focus will be to control the companies in the Caldwell Group. After that, Caldwell Corporation will primarily serve small to midsize companies across the United States. The demographics of these companies are as follows:

• Must have profits of at least $3 million per year
• Must be in business for at least two years
• Must have a board of directors in place
• Must be in a growing industry
• Has not been audited by the IRS or SEC

Caldwell Corporation will target new and growing businesses that show a growing profit margin for its shareholders.

Management Team

Caldwell Corporation is led by Timothy Caldwell. Over the past ten years, Timothy has started and successfully led the Caldwell Group of companies: Caldwell Products, Caldwell Entertainment, and Caldwell Technology. Now, he wishes to create a holding company to develop a more central point of control over his businesses as well as any companies that he will invest in in the future. Since he has run these three companies himself for the past ten years, he has an in-depth knowledge of their operations and financials.

Timothy is assisted by his executive team that runs the Caldwell Group of companies: Taylor Fisher (CFO), Andy Carrell (COO), Shelby Smith (CMO), and Dave Reddings (CTO).

Success Factors

Caldwell Corporation will be able to achieve success by offering the following competitive advantages:

• Senior Leadership: Timothy Caldwell is an active player in the stock market and is adept at studying companies and assessing their financial volatility.
• Oversight: While Caldwell Corporation will not act as an official oversight of leadership of the companies it acquires, the company will be available and able to provide knowledge and expertise when requested.
• Tax Minimization: Caldwell Corporation is skilled at providing tax scenarios for its companies that are more beneficial to the shareholders. It involves moving corporate locations to tax-friendly states, finding loopholes, and maximizing available tax credits.
• Asset Protection: Caldwell Corporation will employ the best legal, tax, and accounting teams to ensure that all entities involved are not burdened with heavy tax fines, lawsuits, or bankruptcies.

Financial Highlights

Caldwell Corporation is seeking a total funding of $300,000 of debt capital to launch. The capital will be used for funding office buildout, legal fees, overhead expenses, and working capital.

• Office design/build-out: $50,000
• Legal fees and retainer: $50,000
• Three months of overhead expenses (payroll, rent, utilities): $150,000
• Working capital: $50,000

Company Overview

Who is caldwell corporation, caldwell corporation history.

Timothy Caldwell incorporated Caldwell Corporation as an S-Corporation on 1/10/2023. Soon after, he found an office location that will serve as the headquarters of the company.

Since its incorporation, Caldwell Corporation has achieved the following milestones:

• Found an office location and signed a Letter of Intent to lease it
• Developed the company’s name, logo, and website
• Engaged a legal and accounting team

Caldwell Corporation Services

Industry analysis.

Holding companies have fared well for decades and are expected to continue to perform well for the foreseeable future. Success will be driven by strong company leadership, robust and efficient operational models, and talent management.

Holding companies offer numerous benefits to their subsidiaries. These include risk mitigation, asset protection, tax minimization, central control, flexibility for growth and development, and succession planning. With so many benefits, numerous companies join or create holding companies every year.

Some of the most high-profile companies benefit from a holding company. Some examples include Google, which is controlled by Alphabet, and the high-profile companies (like Dairy Queen and Duracell) that are controlled by Berkshire Hathaway. With so many profitable companies benefiting from the arrangement, holding companies are bound to continue to succeed in the future.

Customer Analysis

Demographic profile of target market.

Caldwell Corporation will primarily serve small to midsize companies across the United States. There are numerous startup businesses or organizations that have been in business for at least two years that have already achieved profits exceeding at least $2 million. These companies are in industries such as entertainment, technology, and real estate.

Customer Segmentation

Caldwell Corporation will primarily target the following three customer segments:

• Technology companies
• Entertainment companies
• Real estate ventures

Competitive Analysis

Direct and indirect competitors.

The following businesses have the same business profile as Caldwell Corporation, thus providing either direct or indirect competition for customer clients:

Lithium Holdings

Lithium Holdings buys and grows mid-sized technology companies. Upon acquiring technology companies, Lithium Holdings delivers high-quality equipment along with janitorial and technology supplies. As a veteran-owned company, they are able to tap into the veteran and military-owned community. Lithium offers a much-needed layer of oversight for mid-sized technology companies that do not have the operational expertise or bank account for operational expenses. Lithium Holdings has the financial backing and creditworthiness to apply for small business loans for the technology companies it acquires. The company is able to provide a strategic growth plan for a technology company that it otherwise does not have. At this time, the company focuses on companies in the southwestern United States but may grow to other regions as their geographic footprint allows.

Deer Holdings

In business for over 50 years, Deer Holdings has acquired, invested in, grown, and sold companies across various industries. Today, Deer Holdings invests in businesses that operate within the real estate, infrastructure, and financial services space. Deer’s real estate companies are specifically focused on infrastructure assets, single-family rentals, federal and state low-income housing, tax credits, large living communities, mixed-use communities, development, and military communities.

Deer’s financial services companies focus on providing debt capital to owners of multifamily, senior housing, office, retail, technology, and self-storage properties through proprietary loan products as well as products offered through Fannie Mae, Freddie Mac, and FHA. They also focus on companies that deliver high-quality investment ideas and investment banking services to institutional investors and corporate clients. In addition to real estate and banking, Deer has invested in a multitude of companies that are within the energy and utility industries. One of their most successful companies is an electrical contractor and owner of utility systems that specializes in the provision of services to the military under privatization contracts.

Greenfield Companies

Greenfield Companies is a multinational conglomerate that operates in the United States. Headquartered in Los Angeles, Greenfield prefers to invest in companies in long-term investments in publicly traded companies and has recently begun to invest in wholly-owned subsidiaries. Their diverse range of businesses includes confectionery, retail, railroads, home furnishings, home products, jewelry, retail clothing, and several regional electric and gas utilities.

Greenfield was established over a hundred years ago when it got its start investing in textile manufacturers and railroads. The company was one of the few large shareholder companies that were able to survive the Great Depression, despite it being a freshman company at the time. Throughout the decades, Greenfield has maintained being a family-led company, with the great great great grandson of Benjamin Greenfield now at the company’s helm.

Greenfield Companies is a major player in the stock market and is often studied as a model of how to ride market volatility during recessions and instability in the national economy.

Competitive Advantage

Caldwell Corporation enjoys several advantages over its competitors. Those advantages include the following:

Marketing Plan

Caldwell Corporation seeks to position itself as a premier holding company in the Los Angeles area. Subsidiaries can expect to place their interests in the companies’ hands so they can focus on providing the specific products and services that it intends to specialize in.

Brand & Value Proposition

The Caldwell Corporation brand will focus on the company’s unique value proposition:

• Proven leadership
• Complete asset protection
• Beneficial tax scenarios
• Oversight and accountability
• Knowledgeable team of experts

Promotions Strategy

Caldwell Corporation expects its target market to be companies operating in certain industries. The company’s promotion strategy to reach these companies includes:

Industry Publications

Caldwell Corporation will invest in strategically placing ads in industry publications such as newsletters, magazines, and journals. The target audience for these publications usually includes the decision-makers in their companies.

Social Media

Caldwell Corporation will invest heavily in a social media advertising campaign. The brand manager will create the company’s social media accounts and invest in ads on social media. It will use targeted marketing to appeal to the target demographics. It will focus mainly on LinkedIn social media accounts rather than other social media channels like Facebook and Instagram.

Website/SEO

Caldwell Corporation will invest heavily in developing a professional website that displays all of the benefits the holding company has to offer. It will also invest heavily in SEO so that the brand’s website will appear at the top of search engine results.

Industry Conferences

Caldwell Corporation will participate in all of the industry conferences and tradeshows to network with decision-makers of certain companies. This will be done to increase brand awareness and recognition.

Operations Plan

The following will be the operations plan for Caldwell Corporation.

Operation Functions:

• Timothy Caldwell will be the CEO of Caldwell Corporation. He will continue to run his other companies while handling the general operations of Caldwell Corporation.
• Taylor Fisher has been Tim’s CFO for several years and will take on this role for Caldwell Corporation. He will handle all the concerns related to finances, investments, and taxes.
• Andy Carrell is the COO of Tim’s other companies and will assist Caldwell Corporation with the operations and administrative aspects of the business.
• Shelby Smith has been Tim’s CMO for several years and will expand her role to help with the marketing efforts for Caldwell Corporation.
• Dave Reddings has been Tim’s CTO for several years and will handle all the major decisions and actions relating to technology.

Milestones:

The following are a series of steps that lead to our vision of long-term success. Caldwell Corporation expects to achieve the following milestones in the following six months:

4/202X            Finalize lease agreement

5/202X            Design and build out Caldwell Corporation

6/202X            Hire and train initial staff

7.202X            Kickoff of promotional campaign

8/202X            Launch Caldwell Corporation

9/202X            Reach break-even

Financial Plan

Key revenue & costs.

Caldwell Corporation’s revenues will come primarily from its stockholder distributions. The company will acquire various subsidiaries. It will position itself to be the majority stockholder and will receive quarterly and annual distributions.

The office lease, office equipment, supplies, and labor expenses will be the key cost drivers of Caldwell Corporation. The major cost drivers for the company’s operation will consist of salaries, equipment, lease, taxes, and overhead expenses. Ongoing marketing expenditures are also notable cost drivers for Caldwell Corporation.

Funding Requirements and Use of Funds

Caldwell Corporation is seeking a total funding of $300,000 of debt capital to open the holding company. The capital will be used for funding office buildout, legal fees, overhead expenses, and working capital.

Key Assumptions

Below are the key assumptions required in order to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.

• Annual office lease: $20,000

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Holding Company Business Plan FAQs

What is a holding company business plan.

A holding company business plan is a plan to start and/or grow your holding company business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Holding Company business plan using our Holding Company Business Plan Template here .

What are the Main Types of Holding Companies?

There are a number of different kinds of holding companies , some examples include: Pure Holding Company, Mixed Holding Company, Immediate Holding Company, or Intermediate Holding Company.

How Do You Get Funding for Your Holding Company Business Plan?

Holding Company businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Holding Company Business?

Starting a holding company business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Holding Company Business Plan - The first step in starting a business is to create a detailed holding company business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your holding company business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your holding company business is in compliance with local laws.

3. Register Your Holding Company Business - Once you have chosen a legal structure, the next step is to register your holding company business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your holding company business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Holding Company Equipment & Supplies - In order to start your holding company business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your holding company business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Holding Company Business Plan PDF Template (Free Download)

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Last Updated on January 4, 2024 by Arif Chowdhury

In the fast-paced and ever-evolving world of business, a well-crafted business plan is crucial for holding companies looking to thrive. A holding company business plan serves as a roadmap, guiding your organization toward its goals and ensuring strategic decision-making.

It provides a comprehensive overview of your corporation, including an executive summary, operational plan, income statement, platform company details, balance sheet projections, and more.

Crafting a compelling holding company business plan involves carefully outlining the key components that will drive your success. From providing a brief yet informative summary of your business plans and business strategy to describing the unique value proposition it offers, each section of your company analysis plays a vital role in capturing investors’ attention and securing partnerships to achieve your business goals.

With a clear roadmap in place, you can navigate the complex landscape of holding companies with confidence.

Here is the download link of your Holding Company Business Plan PDF Template.

Business History and Services Offered by Holding Companies

Holding corporations, also known as parent companies, have come a long way in the business world, evolving and growing over time. The company structure of holdings has played a significant role in their success.

These business entities, such as corporations, have become an integral part of various industries, offering a diverse range of services to their subsidiaries. This business overview is important to understand the role of these entities within their parent company.

Let’s delve into the fascinating history of holding companies and explore the wide array of services they provide to further their corporation’s business plan and mark their presence in the market.

Evolution and Growth of Holding Companies

Holding companies have witnessed significant evolution throughout history. Originally, they emerged as a means for wealthy individuals or families to consolidate their assets under one entity.

This consolidation allowed the corporation to exercise control over multiple businesses in their holdings while minimizing risk and maximizing profits. Over time, holding companies expanded their holdings beyond individual businesses, venturing into new industries and sectors. The corporation’s scope grew as it explored different sections of the market.

Today, holding companies such as Berkshire Hathaway led by Warren Buffett, and Alphabet Inc., the parent corporation of Google, are recognized as powerful players in the business world. These successful holding companies have achieved remarkable growth through strategic investments, mergers, acquisitions, and diversification into various sectors. The company business and corporation holdings have played a significant role in their success.

Diverse Range of Services Provided by Holding Companies

One of the key advantages offered by holding corporations is their ability to provide a wide range of services to their subsidiaries and holdings. By leveraging their expertise and resources across multiple businesses, holding companies facilitate collaboration and synergy among different entities within their portfolio.

Holding companies, also known as corporations, play a crucial role in fostering collaboration and synergy among the various entities they hold.

Here are some common services that holding companies offer:

• Financial Management: Holding corporations excel at managing finances across all subsidiaries under their holdings. They optimize capital allocation strategies, streamline financial reporting processes, and ensure efficient use of resources.
• Strategic Planning: Developing long-term plans for every subsidiary in their holdings and corporate portfolio is a critical function of holding companies. They evaluate the holding company’s market trends, spot business growth prospects, and create all-encompassing plans that will propel the organization to success.
• Operational Support: From supply chain management to human resources support, holdings corporations provide operational assistance to individual businesses within their network. This support helps subsidiaries optimize their operations, enhance efficiency, and achieve economies of scale.
• Technology Integration: Technology integration and investments are common areas of expertise for holding firms. These holdings make them a major player in the tech sector because they frequently concentrate on technology integration and investments. The company uses its experience to deploy state-of-the-art technologies among its various subsidiaries, facilitating innovation and smooth cooperation among its holdings.
• Industry Expertise: Holding companies contribute expertise and experience unique to their industry. For example, a holding firm or other technology-focused corporation can offer its tech industry subsidiary companies insightful advice and assistance.

Examples of Successful Holding Companies

Several prominent holding companies, including corporations, have achieved remarkable success in various industries. Let’s take a look at two notable examples:

• Berkshire Hathaway, a renowned corporation led by investor Warren Buffett, is a prime example of a successful holding company. With diverse holdings ranging from insurance corporations (GEICO) to consumer goods corporations (Coca-Cola), Berkshire Hathaway exemplifies the power of vertical integration and strategic investments.
• Alphabet Inc., the influential corporation and parent company of Google, has transformed multiple industries through its subsidiaries such as YouTube, Waymo (self-driving cars), and Verily (life sciences). Alphabet Corporation’s focus on innovation and technological advancements has propelled its subsidiaries to great heights.

Recommended Reading: Handyman Business Plan PDF Template (Free Download)

Quick Note: Unlocking synergies and amplifying growth, joint business plans (JBPs) offer a dynamic roadmap for holding companies. By fostering collaboration among subsidiaries, JBPs streamline strategies, synchronize goals, and leverage collective strengths. This cooperative approach enhances innovation, bolsters market presence, and optimizes resources, magnifying the overall success of a holding company’s diverse portfolio.

Market Analysis and Competitive Analysis for Holding Companies

To create a solid business plan for your holding corporation, it’s crucial to conduct thorough market research and analyze the competition within the industry. This will help your corporation identify opportunities for growth and gain a competitive edge in the market.

Understanding market trends and customer preferences is also essential in determining the focus areas of your corporation.

Conducting thorough market research to identify opportunities for growth

Market research plays a vital role in developing an effective business plan for your corporation. By conducting comprehensive research, you can gather valuable insights about your target market, including their needs, preferences, purchasing behavior, and how it relates to your corporation.

This information will guide your corporation in identifying potential growth opportunities and developing strategies to capitalize on them.

During the market research process, consider gathering data on key aspects such as demographics, psychographics, geographic location, and corporation of your target audience.

Explore factors like market size, growth rate, and any emerging trends that could impact your corporation’s operations.

Analyzing competition within the industry to gain a competitive edge

Analyzing your direct competitors, including corporations, is essential in understanding how they operate and what sets them apart from others in the industry. By evaluating the strengths and weaknesses of your corporation, you can identify areas where your holding company can excel or differentiate itself.

Start by identifying who your main competitors are – those offering similar services or targeting similar markets. Analyze their business models, pricing strategies, marketing efforts, and customer satisfaction levels.

This analysis will provide valuable insights into what works well in the industry and help you determine how to position your holding company effectively.

Understanding market trends and customer preferences about holding companies

Keeping up with current market trends is crucial for any successful business. The same applies to holding companies. Stay informed about changes happening within the industry that may affect customer preferences or alter the demand for specific services.

For example, if there is a growing trend towards sustainable investing or increased interest in technology-focused holdings, it’s important to adapt your business plan accordingly. By aligning your services with market trends and customer preferences, you can position your holding company as a relevant and attractive option for potential clients.

To stay updated on market trends, consider subscribing to industry publications, attending conferences or webinars, and engaging with experts in the field. This will help you gain insights into the latest developments and make informed decisions for your holding company’s growth.

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Sales Strategies and Revenue Streams for Holding Companies

To succeed as a holding company, it is crucial to develop effective sales strategies tailored specifically to the unique needs and challenges of this business model.

Exploring various revenue streams available to holding companies can greatly contribute to their financial success.

Developing Effective Sales Strategies

One must consider the diverse portfolio of subsidiary businesses under its umbrella. Each subsidiary may have its target customers, products or services, and marketing approach.

The holding company needs to understand the individual strengths and weaknesses of each subsidiary to leverage cross-selling opportunities effectively.

Here are some key considerations when developing sales strategies for a holding company:

• Identify target customers : Analyze the market segments that each subsidiary serves and identify potential synergies among them. This will help in identifying new customer segments that can benefit from multiple offerings within the holding company structure.
• Leverage conglomerates strategy : Utilize the power of a diversified portfolio by cross-promoting products or services across subsidiaries. This can create additional value for customers and increase revenue streams by tapping into existing customer bases.
• Invest in marketing : Develop a comprehensive marketing plan that highlights the unique selling propositions of each subsidiary while also showcasing the benefits of being part of a larger holding company. This will help build brand awareness and attract potential customers who value the stability and expertise offered by a well-established conglomerate.
• Explore potential acquisitions : As a holding company, actively seek out potential acquisitions that align with your overall business strategy. Acquiring complementary businesses can not only expand your product or service offerings but also provide access to new markets or customer segments.

Exploring Revenue Streams

Holding companies have various avenues through which they generate revenue beyond simply owning shares in their subsidiaries. Understanding these revenue streams is essential for creating an effective business plan.

Here are some common revenue streams for holding companies:

• Dividends : Holding companies can earn income through dividends paid by their subsidiary businesses. This is a direct result of the holding company’s ownership stake in these subsidiaries.
• Capital gains : Selling shares in subsidiary companies at a profit exceeds the holding company’s initial investment, allowing the holding company to make money. Gains in capital can have a major impact on a holding company’s overall profitability.
• Management fees : Some holding companies provide management services to their subsidiaries in exchange for fees. These fees can be based on a percentage of revenue or profit generated by the subsidiary, providing an additional source of income for the holding company.
• Exit strategy : Restructuring subsidiaries into distinct organizations or selling them as a whole through initial public offerings (IPOs) are two more exit methods that holding companies may use to make money. This enables the holding company to produce significant returns on investment and monetize the assets it has produced.

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Funding Options and Financial Planning for Holding Companies

To ensure the smooth operations and future growth of a holding company, it is crucial to have a solid financial plan in place. This involves identifying various funding options that can support the company’s expansion plans and mitigate financial risks.

Creating a comprehensive financial plan that accounts for both short-term goals and long-term sustainability is essential.

Identifying Different Funding Options

There are several funding options available. It’s important to explore these options to determine which ones align with the company’s objectives and requirements.

Some common funding options include:

• Equity Financing: This involves raising capital by selling shares of the holding company to investors. It provides an opportunity for investors to become partial owners of the business while providing funds for expansion or acquisitions.
• Debt Financing: Holding companies can also secure loans from banks or other financial institutions to finance their operations or investment opportunities. Debt financing allows companies to access capital without diluting ownership but comes with interest payments and potential debt obligations.
• Internal Cash Flow : Utilizing internal cash flow generated from existing holdings can be an effective way to fund new investments or cover overhead expenses within the holding company.
• Asset Sales : Selling underperforming assets or non-core businesses within the holding’s portfolio can generate funds that can be reinvested in more lucrative opportunities.

Creating a Comprehensive Financial Plan

A robust financial plan is vital for any holding company as it helps guide decision-making processes, manage resources effectively, and ensure long-term sustainability.

Here are some key elements that should be included in a comprehensive financial plan:

• Financial Projections: Developing realistic projections based on historical data and market trends helps estimate future revenues, costs, and profitability. These projections serve as benchmarks for tracking performance against targets.
• Balance Sheets and Income Statements : Regularly reviewing balance sheets and income statements provides insights into the financial health of the holding company. It helps identify areas of improvement, assess liquidity, and monitor profitability.
• Diversification Strategies : Holding companies can mitigate financial risks by diversifying their holdings portfolio across different industries or asset classes. This strategy helps reduce dependence on a single investment and provides opportunities for growth in various sectors.
• Asset Protection Measures : Implementing appropriate asset protection measures safeguards the holdings from potential risks or legal liabilities. This may involve establishing separate legal entities for each investment to limit liability exposure.

Mitigating Financial Risks

Financial risks are inherent in any business, including holding companies. However, some strategies can be employed to mitigate these risks and protect the company’s financial stability:

• Risk Assessment : Conducting thorough risk assessments allows holding companies to identify potential threats and develop contingency plans accordingly.
• Cost Control : Monitoring overhead expenses and implementing cost control measures help optimize cash flow and improve profitability.
• Capital Structure Analysis : Analyzing the optimal capital structure ensures that the right mix of debt and equity is utilized to minimize financing costs while maintaining financial flexibility.

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Organizational Structure and Management Team in Holding Companies

To run a successful holding company, it is crucial to design an efficient organizational structure that aligns with the goals and objectives of the company.

This structure serves as the foundation for managing subsidiary businesses effectively and ensuring smooth operations across all divisions.

Designing an efficient organizational structure

Careful consideration must be given to its legal structure, horizontal integration, and overall company operations. The goal is to create a framework that allows for central control while providing autonomy to individual subsidiaries.

One approach is to divide the company into different sections or divisions based on industry or business type. Each division can then have its management team responsible for overseeing the operations within its specific area.

Another option is to establish an advisory board consisting of key members from each subsidiary. This board can provide guidance and strategic direction while ensuring collaboration between different parts of the organization.

Having a central office that oversees overall operations, finance, and governance can help maintain consistency and coordination among subsidiaries.

Building a strong management team

A strong management team is essential for the success of any holding company. It should consist of individuals with diverse skill sets who can effectively oversee subsidiary businesses and drive growth.

Key members of the management team should possess expertise in areas such as finance, marketing, operations, and strategy. This ensures that all aspects of the business are well-managed.

The team should also have individuals who excel in leadership roles and can inspire and motivate employees within each subsidiary.

By carefully selecting individuals with complementary skills and experiences, a well-rounded management team can be formed that brings together different perspectives and fosters innovation.

Establishing clear lines of communication

Effective communication is vital within a holding company as it connects subsidiaries, management teams, stakeholders, and investors. Clear lines of communication ensure transparency, facilitate decision-making processes, and enable timely dissemination of information.

• Regular meetings , both within the management team and between subsidiaries, should be scheduled to discuss progress, challenges, and opportunities.
• Utilizing technology platforms such as project management tools or collaboration software can enhance communication efficiency.
• It is important to establish open channels for feedback and encourage a culture of open dialogue within the organization.

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Writing an Effective Business Plan for a Holding Company

To ensure the success of your holding company, it is crucial to have a well-structured and comprehensive business plan. This will serve as a roadmap for your company’s growth and provide a clear direction for its operations.

Structuring Your Business Plan

There are several key elements that you should address:

• Executive Summary : Begin with a concise summary of your holding company’s purpose, goals, and unique value proposition. This section should provide an overview of your entire business plan.
• Market Analysis : Conduct thorough research on the industries in which your subsidiary companies operate. Identify market trends, competitors, and potential growth opportunities.
• Financial Projections : Include detailed financial projections for both the holding company and its subsidiaries. This should cover revenue forecasts, expense budgets, cash flow analysis, and any potential risks or challenges.
• Management Team : Highlight the qualifications and experience of your management team members who will be overseeing both the holding company and its subsidiaries.
• Subsidiary Companies : Provide individual profiles for each subsidiary within your holding company structure. Include information about their products or services, target markets, competitive advantages, and growth strategies.

Professional Language with Clarity

While writing your business plan, it is important to strike a balance between using professional language and maintaining clarity and conciseness:

• Use industry-specific terminology where appropriate but avoid jargon that may confuse readers who are not familiar with the industry.
• Clearly articulate your vision, mission statement, and core values in simple terms that can be easily understood by anyone reading the plan.
• Break down complex financial information into digestible sections with clear explanations so that stakeholders can easily comprehend the financial projections.

Additional Tips

Here are a few additional tips to consider when crafting your holding company’s business plan:

• Keep it concise: Aim for a document that is clear, concise, and easy to navigate. Avoid unnecessary fluff or lengthy paragraphs that may overwhelm readers.
• Use visuals: Incorporate charts, graphs, and tables to present data and financial information in a visually appealing manner. This can help readers grasp complex information more easily.
• Seek professional assistance: If you are unsure about certain aspects of writing the business plan or need guidance, consider seeking assistance from professionals such as consultants or mentors who have experience in the field.

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Key Takeaways

Well done on finishing the portions of your business plan for your holding company! You’ve made a lot of progress in laying the groundwork for your business.

You are well on your road to success if you have defined your organizational structure, identified revenue streams, and conducted a market analysis. It’s time to put everything together now and create a strong business plan that will attract investors and direct your expansion.

Don’t forget to highlight your holding company’s unique value proposition in your business strategy. Emphasize how your services are unique from those of your rivals and the advantages that clients will experience from working with you.

Use real-life examples and success stories to demonstrate how you can help businesses thrive in today’s competitive landscape. Ensure that your financial projections are realistic, and backed by thorough research and analysis.

Frequently Asked Questions (FAQs)

What should i include in my holding company business plan.

In your holding company business plan, be sure to include sections such as an executive summary, a description of services offered by holding companies, market analysis, sales strategies, funding options, organizational structure, management team details, and financial projections.

These elements provide a comprehensive overview of your business model and demonstrate its potential for success.

How can I make my holding company stand out from competitors?

To differentiate your holding company from competitors, focus on developing a unique value proposition. Identify what sets you apart in terms of services offered or target market specialization.

Emphasize the benefits clients will gain by choosing you over other options available in the market.

What are some effective sales strategies for holding companies?

Effective sales strategies for holding companies include building strong relationships with potential clients through networking events or industry conferences. Providing exceptional customer service is also crucial in retaining existing clients and attracting new ones.

Leveraging digital marketing techniques like content creation and social media engagement can help generate leads and increase brand visibility.

How do I determine the right funding options for my holding company?

When determining the right funding options for your holding company, consider factors such as your financial needs, risk tolerance, and long-term goals.

Explore traditional options like bank loans or seek out investors who align with your business vision. Crowdfunding platforms can also provide an alternative avenue for raising capital.

What should I look for in a management team for my holding company?

When assembling a management team for your holding company, seek individuals with diverse skill sets and experience in relevant industries.

Look for leaders who are adaptable, strategic thinkers, and possess strong communication skills. A well-rounded team will help ensure effective decision-making and drive the success of your holding company.

Holding Company Business Plan Template [Updated 2024]

Holding Company Business Plan Template

If you want to start a Holding Company or expand your current Holding Company, you need a business plan.

The following Holding Company business plan template gives you the key elements to include in a winning business plan. It can be used to create a real estate holding company business plan, an intermediate holding company business plan, or a mixed holding company business plan

You can download our business plan template (including a full, customizable financial model) to your computer here.

Below are links to each of the key sections of a successful holding company business plan. Once you create your plan, download it to PDF to show banks and investors.

I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan

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Holding Company Business Plan Home I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan

Holding Company Business Plan: How to Start and Run a Successful Holding Company

A holding company can be a game-changing investment strategy. It allows you to own multiple companies, diversify your portfolio, and access new business opportunities. But successful management requires a solid business plan. Don’t just hold stock; be smart, strategic, and profitable. Learn how to start and run a successful holding company with our expert guidance.

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Do you want to enter the business world but aren’t sure where to start? Have you considered creating a holding company? A holding company is an excellent way to invest in multiple companies and spread risk. It’s also a great way to gain control of assets and manage your investments strategically. However, creating and running a successful holding company isn’t easy. It requires meticulous planning and solid knowledge of the business world. In this article, we’ll guide you on formulating a holding company business plan and equip you with the tools you need to make your holding company thrive. Join us as we explore the ins and outs of holding companies, and discover how you can pave your way to business success.

Table of Contents

1. introduction: why a holding company is the ultimate business model, 2. identify your niche: finding the right industry for your holding company, 3. business plan basics: key elements to include in your holding company business plan, 4. funding your holding company: tips for raising capital and financing your ventures, 5. building the right team: hiring and managing your holding company staff, 6. managing risk: strategies for balancing risk and opportunity in your holding company portfolio, 7. investing for success: how to identify and evaluate potential investments for your holding company, 8. building strong relationships: the importance of networking and partnership development in holding company management, 9. staying up to date: keeping abreast of industry trends and changes in regulations, 10. evaluating performance: measuring your holding company’s success and adjusting your strategy accordingly, 11. expanding your reach: steps for scaling up your holding company operations.

• 12. Conclusion: The Future of Holding Companies and Why You Should Start Yours Today.

Our Readers Ask

Final thoughts.

A holding company is the ultimate answer if you’re looking for a business model that provides exceptional benefits like tax savings, limited liability, and financial freedom. With a holding company, you can efficiently structure and manage your businesses, enjoy tax benefits, and focus on business growth while maintaining separate legal entities for each business.

A holding company exemplifies flexibility, scalability, and ease of management. From the start, the holding company structure provides significant advantages like increased control, ease of asset protection, and the ability to establish subsidiary businesses easily. The holding company structure allows you to protect all of your businesses from potential lawsuits legally, and its marketability is second to none since it can attract and protect investors’ assets and streamline how you operate. If you want to take your business to the next level, a holding company offers a practical and comprehensive business model that guarantees flexibility, agility, and protection.

The first step in setting up a holding company is finding the right industry to invest in. This is crucial as specializing in a particular niche has various benefits. First, it allows the company to focus on a specific area, becoming experts in the field and maximizing its growth potential. Second, it enables the company to build a reputation in the market and establish itself as a reliable and specialized player. Several factors must be considered to identify a suitable niche, including market size, profitability, and industry trends.

In addition, the niche ought to align with the company’s core values and vision. For instance, investing in the renewable energy sector is ideal for a holding company that values sustainability. Researching and analyzing the industry’s competition is crucial to identify gaps and opportunities. With this in mind, a holding company can evaluate and select the industry that best fits its strategy and goals. Doing so makes them one step closer to building a successful holding company with a solid foundation in a specific industry.

Identifying a niche is the cornerstone of a holding company’s success. It sets the direction, strategy, and goals for the business. Hence, it is critical to approach the process with a clear understanding of the company’s values, goals, and market trends. The right niche will enable the company to stay ahead of the competition, maximize profitability, and grow sustainably. With a well-thought-out niche, it’s easier for a holding company to stay on track and make sound investment decisions.

When starting a successful holding company, writing a comprehensive business plan is essential. A well-crafted business plan will provide a roadmap for your company’s success and communicate your vision to potential investors. But where do you begin? Here are some key elements that should be included in your holding company business plan:

1. Executive Summary: This section should briefly overview your holding company, its mission, and its objectives. It should also summarize the key points of your business plan.

2. Company Description: Here, you should provide a detailed description of your holding company, including its history, mission statement, and goals. You should also explain what sets your company apart from others and why investors should be interested in your business.

3. Market Analysis: In this section, you’ll need to research the market you are entering and explain how your holding company plans to compete. This will involve analyzing your target market, identifying your competitors, and assessing the demand for your services.

4. Management Team: Investors will want to know who will run the show, so it’s essential to include a section on your management team. This should include biographies of your key personnel, including their experience and expertise.

5. Financial Plan: Finally, you’ll need to create a financial plan that includes revenue projections, cash flow statements, and balance sheets. Investors will want to see that your holding company is financially viable and has a clear plan for growth.

By including these key elements in your holding company business plan, you’ll be setting yourself up for success. A well-crafted business plan can be the difference between securing funding and struggling to get your business off the ground. So, take the time to create a comprehensive, persuasive business plan that communicates your vision and sets you apart from the competition.

Raising capital and financing your holding company can be a daunting task, but with the right strategies, it can become a seamless process. One of the most effective ways to finance your holding company is through equity funding. This involves selling a portion of your company’s ownership in exchange for capital to finance your ventures. Equity financing has proven to be highly beneficial for startups and holding companies looking to generate substantial amounts of funding quickly. It doesn’t require repayment, unlike loans. Venture capital firms and angel investors are great resources for equity financing. They are always on the lookout for innovative and promising ventures to invest in. However, to successfully secure equity financing, you’ll need a robust business plan and a solid understanding of your business’ financials.

Another funding option you can explore is a business loan. Business loans require you to pay back the borrowed amount, but they are less expensive compared to other financing options. Furthermore, business loans don’t require you to give up ownership of your company. The Small Business Administration (SBA) is a government agency that offers business loans to small businesses, including holding companies. However, to qualify for an SBA loan, your business must meet certain criteria, such as being a for-profit entity and having a good financial standing. Other funding options you can consider include crowdfunding, factoring, and grants. Whatever financing option you choose, ensure that it aligns with your business goals and doesn’t compromise your overall financial well-being.

Finding and managing the right team is crucial to the success of any holding company. As you start the hiring process, it’s essential to have a clear understanding of the skills and experience you need from potential staff members. Determine the core competencies, personality characteristics, and qualifications you want them to possess. Create job descriptions that include specific requirements for each position, and review resumes and cover letters carefully to identify potential candidates that match your criteria.

In selecting candidates for your holding company staff, prioritize diversity and inclusiveness. Seek out individuals who come from different backgrounds and cultures and who can offer unique perspectives. A diverse staff can strengthen your company’s culture and creativity. Once you’ve built your team, managing it effectively is crucial. Provide your staff with clear expectations and guidelines, and hold them accountable for meeting their goals. Encourage open communication and a collaborative work environment where creativity, innovation, and risk-taking are encouraged. Building a solid team takes time and effort, but it’s well worth it when it comes to achieving your company’s goals.

No investment portfolio is immune to risks. As a holding company, you hold multiple assets and investments from different sectors and industries. This diversification could mean higher financial gains but also introduces more significant challenges in managing risks. Your success as a business depends on your ability to balance risks and opportunities in your portfolio effectively. Here are some strategies to help you mitigate risks and protect your investment:

– Conduct thorough research on your investments and potential acquisitions: Knowing the market trends, competitors, and regulations surrounding your investments is crucial in identifying potential risks. Scrutinize the financial history and projected growth of the companies you plan to acquire to ensure their stability and compatibility with your portfolio. – Set realistic and achievable goals: Unreasonable targets could lead to reckless and hasty decisions that increase your risks. Focus on long-term profitability, and consider your overall portfolio instead of individual investments. Balance your investment mix by allocating funds to different sectors, such as real estate, bonds, stocks, and other industries, to reduce your exposure to significant losses. Keep your risk appetite within acceptable levels that align with your business objectives and values.

Incorporating these strategies into your risk management approach can keep your portfolio secure and profitable. Remember, taking on risks is an inevitable part of growing your business, but mitigating them can make all the difference. As the captain of your holding company, seize opportunities while managing your risks effectively to keep sailing toward financial success.

When it comes to investing for success, there are a plethora of potential investments you can consider for your holding company. But not all investments are created equal. In order to identify and evaluate the best opportunities for your company, you need to have a strategic and thorough approach.

Start by considering your overall investment objectives and goals. What do you hope to achieve through your investments? Are you looking for long-term growth or short-term gains? Once you have a clear understanding of your goals, you can start evaluating potential investments using criteria such as the industry, financials, management team, and competitive landscape. It’s also instrumental in looking for investments with a competitive advantage, such as proprietary technology or innovative solutions. By conducting a comprehensive analysis of potential investments, you can mitigate risk and maximize returns, setting your holding company up for long-term success.

In the world of holding company management, building strong relationships is crucial for success. Networking and partnership development allow holding companies to establish connections with other businesses and individuals, creating opportunities for growth and expansion. A strong network can provide access to valuable resources, including funding and expertise, while partnerships can lead to collaborations on new projects and ventures.

Networking and partnership development also helps to establish credibility and trust within the industry. By connecting with other businesses and individuals, holding companies can demonstrate their expertise, reliability, and commitment to excellence. Additionally, partnerships can provide access to new markets and customers, allowing companies to expand their reach and increase their revenue streams.

To build a successful network and partnerships, holding companies must focus on establishing strong relationships based on mutual respect and common goals. This involves being proactive in seeking out connections and opportunities, attending industry events and conferences, and engaging with other businesses and individuals on social media and other platforms. Companies must also be willing to invest time and resources in building these relationships, including collaborating on projects and sharing knowledge and expertise. Ultimately, networking and partnership development are critical components of holding company management, providing a pathway to success and growth in today’s competitive business landscape.

One sure way to stay competitive in today’s fast-paced business world is by keeping up with industry trends and regulatory changes. Whether your business is in technology, healthcare, finance, or any other industry, staying ahead of the curve is vital to success. By staying current, you can better anticipate market shifts, adapt to new regulations, and make informed decisions for your business.

To stay up to date, start by subscribing to industry publications, attending conferences, and joining professional organizations. You can also network with other professionals in your field to gain insight into the latest developments. Additionally, make use of online resources such as blogs, podcasts, and LinkedIn groups. By consistently educating yourself about the latest trends and changes, you can be confident that your business is well-positioned for success.

In conclusion, staying up to date with industry trends and regulatory changes is essential in today’s fast-paced business world. Whether you’re a business owner, manager, or employee, taking the time to stay current can pay dividends in the long run. By using a combination of resources, including industry publications, networking, and online resources, you give yourself a competitive edge and the opportunity to be at the forefront of innovation in your industry. Invest in staying up to date, and you’ll reap the rewards.

Evaluating the performance of your holding company is crucial to determine whether your current strategy is effective or if adjustments need to be made. Measuring your success requires various indicators, such as financial metrics, customer satisfaction, and employee engagement. Collecting data and analyzing it regularly will help you identify areas of improvement and make informed decisions to maximize your resources and achieve your goals.

One way to measure your financial performance is to use key performance indicators (KPIs). These metrics can include revenue growth, profit margins, return on investment (ROI), and cash flow. Comparing your KPIs to industry benchmarks or your own historical data can provide valuable insight into your financial health. Additionally, measuring customer satisfaction through surveys or social media engagement can help you understand how your brand is perceived and how to improve your customer experience. Finally, monitoring employee engagement through feedback and performance reviews can help you retain top talent and ensure a cohesive team culture. By regularly evaluating your performance and adjusting your strategy accordingly, you can ensure your holding company’s continued success.

As your holding company grows, it’s essential to expand your reach and scale up operations for continued success. Here are some actionable steps to take:

– Diversify your portfolios: Invest in a range of assets to mitigate risk and increase potential returns. This could include stocks, real estate, or private equity. – Acquire complementary companies: Look for companies that can enhance your existing offerings or provide new opportunities. This can help you expand into new markets and diversify revenue streams. – Develop strategic partnerships: Collaborating with other businesses can help you access new customers, resources, and expertise. Consider partnering with companies in related industries or with similar target audiences.

Additionally, make sure you have the right infrastructure in place to support your expansion. This might mean investing in new technology, hiring more staff, or outsourcing specific tasks. By taking these steps, you can position your holding company for long-term growth and success.

12. The Future of Holding Companies and Why You Should Start Yours Today

In conclusion, it’s safe to say that holding companies are the way of the future. They offer numerous advantages in terms of risk diversification, taxation optimization, and asset protection. Moreover, they are ideally suited for entrepreneurs who want to establish themselves as key players in their respective markets.

If you’re still on the fence about starting your own holding company, consider this: you’re missing out on a unique opportunity to create substantial wealth and achieve financial freedom. By owning and managing multiple businesses, you’ll be able to leverage your expertise and resources more effectively. You’ll also be able to take advantage of economies of scale and scope, which are critical in today’s hyper-competitive business environment. Overall, there has never been a better time to start your own holding company, so why wait? Take the first step today and reap the rewards tomorrow.

Q: What is a holding company, and why should someone start one?

A: A holding company is a type of business that owns and manages a group of subsidiary companies. Unlike traditional companies, holding companies are not involved with the day-to-day operations of their subsidiary companies. Instead, they provide a platform for businesses to grow and succeed in a competitive market. Starting a holding company allows you to diversify your investments and increase your profits by creating a portfolio of businesses that work together.

Q: What are the key elements of a successful holding company business plan?

A: First and foremost, a successful holding company business plan should clearly define your goals and objectives. You should also research your target market, competition, and industries you are interested in. Your plan should also identify the types of businesses you want to acquire, the financing needed, and the management structure you will use to oversee your subsidiaries.

Q: How can you finance a holding company?

A: Financing a holding company can be challenging, but there are several options available. You can fund your holding company through equity investments, bank loans, or by issuing corporate bonds. You can also leverage the capital of your subsidiary companies to finance the growth of your holding company.

Q: What are some of the benefits of running a holding company?

A: Running a holding company allows you to create a diversified portfolio of businesses that can generate income from multiple sources. This can help to reduce risks and increase profits. It also allows you to have a bird’s eye view of your subsidiary businesses, enabling effective management of their day-to-day operations. Additionally, a holding company can provide tremendous tax benefits, especially if you set it up as an LLC.

Q: What are some of the challenges of running a holding company?

A: Running a holding company comes with its own set of challenges. Managing multiple businesses can be complex, and it requires a strong management team with exceptional communication skills. Finding the right businesses to acquire can also be challenging, as it requires in-depth industry knowledge and expertise. Additionally, each subsidiary will likely have its own unique business challenges, which the holding company will need to address. In short, the key to successfully running a holding company is having a solid plan, a strong team, and the ability to navigate a constantly evolving business landscape.

In conclusion, a holding company can be a powerful tool for building a portfolio of businesses that work together to create a profitable enterprise. While there are some challenges, with the right team, resources, and strategy, you can successfully start and run a holding company that generates substantial profits and helps you achieve your business goals.

Starting and running a successful holding company requires a combination of strategic planning, risk management, and an unwavering commitment to excellence. As an entrepreneur in this space, you must be willing to take calculated risks, leverage your network, and stay ahead of the curve to stay competitive. With a clear vision, a sound business plan, and a dedication to your goals, you, too, can build a thriving holding company empire that stands the test of time. So what are you waiting for? Take the leap, set your sights high, and let your dreams take flight!

Business Writer

A dynamic business writer with a talent for uncovering the latest trends and innovations in the world of startups and entrepreneurship. With a background in finance and a passion for storytelling, Morgan’s articles offer a unique perspective on the challenges and opportunities facing today’s business leaders.

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How to Start a Holding Company? A Comprehensive Guide

March 20, 2023

Adam Hoeksema

Recently we have been seeing a significant increase in the number of clients that own a holding company with multiple business units, or would like to build a holding company and have come to us for help building a pro forma financial model that will consolidate the individual businesses into one set of financial projections for the holding company as a whole.  Since we have been seeing this trend lately, I wanted to dig in to learn as much as I could about holding companies, the different use cases, types and models.  While I am doing research I always enjoy writing down what I learn in an effort to give others a shortcut in learning.  

The research time also informs how we build our financial models to try to meet the needs of different use cases.  You can check out our Holding Company Financial Model here . 

So with that in mind, I am going to do a deep dive on holding companies and plan to cover the following topics:

What is a Holding Company? 

Holdco vs. holding company, platform company, parent company, why start a holding company, holding company liability protection , holding co tax efficiency, holding company operational efficiency , access to capital for holding companies, shared resources and expertise, holding company board governance, holding company exit strategy , typical holding company structures.

• Corporation
• Limited Liability Company (LLC)
• Partnership:
• Offshore holding company
• How to setup a holding company

Acquisition of Holdco Subsidiaries

• Acquisition strategies
• Multi Unit Businesses
• Roll Up Acquisitions
• Vertical Integration
• Horizontal Integration
• How to find businesses to buy
• Loan funding for acquisitions

Holding Company Business Plan

• Equity funding for acquisitions

Seller Financing

• Due diligence for buying businesses

Holding Company Financial Modeling

With that as a roadmap, let’s dig in!

A holding company is a unique type of business structure that allows investors and entrepreneurs to diversify their investments, minimize liability, and optimize operational efficiencies.  

Defining Common Holding Company Terms

There are a number of terms that all mean the same or similar things when it comes to holding companies.  Here are a few you should know: 

Holdco is simply an abbreviation of the term "holding company." There is no difference between the two, and they can be used interchangeably.

A platform company is a company that serves as the foundation for a holding company to make strategic acquisitions in a specific industry, aiming to create a dominant position or achieve economies of scale.  Typically, the platform company is the first company that you might acquire or build when implementing a roll up acquisition strategy . 

A parent company is a business entity that owns and controls one or more subsidiary companies. In the context of a holding company, the parent company is the holding company itself.

With some of that terminology out of the way, let’s talk about why you might want to start a holding company. 

Starting a holding company can offer several advantages to business owners and investors. Here are some good reasons to consider creating a holding company:

Holding companies can help protect the assets of the parent company and its subsidiaries by isolating liabilities. If one subsidiary faces legal or financial trouble, the holding company structure can prevent these issues from impacting other subsidiaries or the parent company.

A holding company can provide tax benefits through the consolidation of taxable income and losses across subsidiaries, which can lead to a lower overall tax liability. Additionally, holding companies may benefit from tax incentives and favorable tax treatment in certain jurisdictions.  

If the holding company owns 100% of the subsidiaries, the subsidiaries may be treated as disregarded entities for tax purposes.  This means you can file a single consolidated tax return according to Little John Law.  

A holding company can consolidate administrative functions, such as accounting, HR, and legal services, across its subsidiaries. This allows for cost savings, streamlined processes, and improved resource allocation.  This can also help you compete for talent.  Imagine if you owned four separate companies that could each budget $100,000 per year for a CFO.  If each entity was looking to hire a separate CFO it could be difficult to find quality talent for $100,000 per year, but if the four companies were part of a holding company and the holding company hired one CFO to handle the CFO function for each of the four entities now you could hire a very talented, $300,000 per year CFO and still have $100,000 left over between the four entities.  

Holding companies can have easier access to capital due to their diversified assets and reduced risk profile. This enables them to raise funds for investments, acquisitions, or other growth initiatives more readily.

A concrete example could be that the holding company secures a line of credit that can be drawn upon by any of the subsidiaries as needed.  Due to the size and diversification, the bank may offer a lower interest rate and more favorable terms than if each individual subsidiary tried to establish their own independent line of credit. 

A holding company can pool resources, such as intellectual property, technology, and industry expertise, across its subsidiaries, fostering innovation and operational improvements.

For example, if one subsidiary identifies a unique way to run Facebook ads that provides a strong ROI, they can train the other subsidiaries to implement a similar strategy in their market. 

Most small businesses probably don’t have a board of directors or advisory board.  With a holding company structure you might be able to recruit talented board members and advisors to support the holding company as a whole thereby allowing each of the subsidiaries to benefit from that board structure and advice. 

Additionally, a holding company can establish a centralized management structure, improving oversight, strategic planning, and decision-making across its subsidiaries.

A holding company can provide an effective exit strategy for business owners, allowing them to sell individual subsidiaries or the entire holding company, depending on their objectives.  

This can be a real advantage.  Let’s say you have a business that manufactures equipment and you have another business that installs and services the equipment.  Although you could combine the functions into one business entity that manufactures, installs and services or repairs equipment, when it comes time to sell the business, your list of potential buyers that want to purchase the combined business is likely to be much smaller than the list of potential buyers that would be interested in acquiring the manufacturing or the services business only.  Having these entities separate from the start can give you more options when it comes time to exit. 

I am not going to dig too deep into this or advise you one way or the other because I am not an attorney!  I just wanted to mention that there are different types of company structures that can be used for a Holdco.  Some of the most common holding company structures are:

• Partnership

How to Setup a Holding Company

Here's a step-by-step guide to set up a holding company:

• Choose a Business Structure: Most holding companies are either LLCs (Limited Liability Companies) or corporations.  Each has its benefits depending on the purpose and size of the operations. Research the benefits and drawbacks of each in your jurisdiction.
• Choose a Location: Research which jurisdiction (country or state) is most suitable for your purposes. Some locations offer more favorable tax conditions or legal protections for holding companies.
• ‍ Draft and File the Necessary Paperwork: For corporations, this usually means filing "Articles of Incorporation." For LLCs, it’s typically "Articles of Organization." Ensure you provide all necessary details, like business purpose, names and addresses of the initial directors or members, and other relevant information.
• Obtain an EIN or Equivalent:   In the U.S., this is called an Employer Identification Number (EIN) and is obtained from the IRS. It's like a social security number for businesses.
• Open a Business Bank Account: Using a separate bank account for your holding company is essential for keeping finances distinct and clear.
• Develop a Strong Operating Agreement or Bylaws: For LLCs, this is an Operating Agreement, detailing how the company will function and be managed. For corporations, these are Bylaws.
• Transfer Assets: If you have existing businesses or assets that you want the holding company to own, you'll need to transfer them. This can involve selling them to the holding company or contributing them as capital.  We can dive into the various options next.

How to Transfer Assets to a Holding Company

Once you have your holding company setup, there are various ways to transfer assets to your holding company. You should certainly consult with your attorney to determine which is best for your situation. Here are some common ways to transfer assets to a holdco.

Transferring assets to a holding company is a critical step in setting up the structure. There are several methods to do so, each with its own implications. Here are some common methods to transfer assets:

• ‍ Sale: The operating company sells its assets to the holding company. This can be done at fair market value.  A sale may trigger taxes if there's a gain on the assets being sold. It's crucial to have documentation supporting the sale, especially if the transaction involves related parties.
• ‍ Contribution in Exchange for Equity: The owner of the assets contributes them to the holding company in exchange for shares or membership interests in the holding company. This method can sometimes be structured to defer or avoid immediate tax consequences, especially if certain requirements are met.
• Loan or Capital Lease: The operating company can lend assets to the holding company or enter into a lease agreement. This ensures that the holding company has the use of the assets while the operating company retains ownership. The holding company would then pay rent or loan payments to the operating company.
• Drop Down: An operating company can "drop down" assets into a subsidiary holding company.  This can be done through a contribution, sale, or a combination of both.
• Mergers and Reorganizations: More complex corporate reorganizations can be used to transfer assets to a holding company. These can often be structured in a way that defers tax implications. Examples include a tax-free merger or a type of reorganization under specific provisions (e.g., in the U.S., under Sections 368 or 351 of the Internal Revenue Code).
• Gift:  For private holdings or family businesses, assets can sometimes be gifted to the holding company. However, this can have gift tax implications.
• Trusts: In certain situations, especially for estate planning purposes, assets may be transferred into a trust, and the holding company might be the beneficiary or operate in conjunction with the trust.
• Spin-off or Split-off: In more complex corporate structures, assets can be transferred to a holding company through a spin-off or split-off. This separates a part of the business from the parent company and transfers it to the holding company.
• Asset for Asset Exchange: The holding company can trade other assets of equal value with the operating company.

When considering transferring assets to a holding company, it's essential to be aware of the potential tax consequences, liability concerns, and other implications. This is especially true when transferring assets between related entities, as authorities often scrutinize such transfers to ensure they are done at arm's length and are not merely attempts to evade taxes or defraud creditors.

Always consult with legal and tax professionals before making decisions about transferring assets to a holding company. They can provide guidance tailored to your specific situation and jurisdiction.

Acquisition of Subsidiaries

Now I want to get into the different strategies and mechanics of growing or acquiring businesses within a holding company structure.  

Acquisition Strategies

There are a number of reasons why you might have a holding company structure and a number of strategies or types of businesses that the holdco might hold.  I am going to run through some of the most common use cases. 

1. Multi Unit Businesses

One common use case for a holding company could be that you started a business in one location and you decided to open a second location of the same type of business.  Maybe you opened a coffee shop on the south side of the city and you want to open a second location on the north side of the city.  When opening the second location it may make sense to open a holding company that would own 100% of the first business entity and then set up a separate entity for the second location to be wholly owned by the holding company as well.  

Using a separate entity + Holdco structure for multiple location businesses makes a lot of sense.  You can more easily see the performance of each unit and you can more easily sell one unit without selling all the units.  

2. Roll Up Acquisitions

Roll up acquisitions are growing in popularity, especially for private equity firms.  The idea is to roll up a number of similar businesses and benefit from shared resources, operational efficiency and access to capital, etc.  For example, you might buy a laundromat as an initial platform company, optimize and perfect your operating model, and then raise capital to go out and acquire many more laundromats across a geographic area. 

3. Franchises

There are many franchise concepts where a single unit will not generate enough income for the owner to make a living, but these types of concepts can lend themselves to a holding company structure where an individual owner opens or acquires many units of a franchise concept. 

4. Vertical Integration

Vertical integration is another business strategy in which a holding company structure can be used.  To implement a vertical integration strategy a company will expand its operations by acquiring or controlling other companies involved in different stages of the same production or distribution process. This strategy involves either acquiring or merging with companies that operate upstream or downstream in the value chain.

5. Upstream Integration

Upstream integration involves acquiring or controlling suppliers or companies that produce raw materials, components or intermediate products, which the acquiring company uses in its production process. This allows the company to have more control over the quality, price, and availability of inputs, reducing supply chain risks and costs.

6. Downstream Integration

Downstream integration, on the other hand, involves acquiring or controlling distributors or retailers who sell the company's products to end-users. This strategy enables the company to have greater control over the marketing, distribution, and pricing of its products and services, which can increase efficiency and profitability.

Vertical integration can be beneficial for companies because it can reduce transaction costs, improve coordination and communication within the supply chain, and create efficiencies in production and distribution. 

7. Horizontal Integration

Horizontal integration is a business strategy in which a company expands its operations by acquiring or merging with other companies that operate in the same industry and at the same stage of the value chain. This means that the companies acquired or merged with are typically competitors or companies with similar products or services.

The purpose of horizontal integration is to achieve economies of scale, increase market share, and gain more control over the market. By consolidating the market, the acquiring company can reduce competition, increase its bargaining power with suppliers and customers, and improve profitability

Horizontal integration can take different forms, such as mergers, acquisitions, joint ventures, or strategic alliances. The success of horizontal integration depends on several factors, such as the degree of market concentration, the level of competition, the cultural fit between the companies, and the ability to manage the integration process.

Now that we have outlined 5 of the most common ways that a holding company can be used, let’s talk about about identifying, financing, and closing a purchase of a business. 

How to Find Businesses to Buy

Depending on your business strategy there are a few ways to identify businesses to acquire:

• Hire a Business Broker - Much like hiring a real estate agent when trying to buy a house, you can hire a business broker who can take your wishlist and help you identify businesses that meet your requirements that may be available for sale.  Sunbelt Business Brokers is one of the larger business broker networks in the US, of course you can do your own Google research to find a business broker near you. 
• Browse Business Listing Websites - There are many websites that list businesses for sale where you can directly browse and sort by industry, size, location, etc. BizBuySell is one of the largest business directories or businesses listed for sale. 
• Cold Outreach - You might want to acquire a business that isn’t listed for sale, maybe you want to acquire a competitor or a business that is within your supply chain.  These strategic acquisitions will likely take a cold outreach from you to the current owner. 

Once you have identified a business that you would like to purchase you will need to identify how you plan to finance the acquisition.  Financing an acquisition is often done with a mix of debt and equity.  Let’s look at your options in more detail. 

Loan Funding for Acquisitions

If you are looking to acquire a small business and need $5 million or less in loan funding, the SBA offers a competitive loan product.  There are banks that specialize in SBA lending for acquisitions specifically.  I typically suggest that you Google “Top SBA Lenders in ______” and fill in your state.  You will probably find a list of the banks that made the most SBA loans in your state over the last 12 months.  This is a great place to start. 

Learn more about How to Finance an Acquisition . 

Your lender may ask you for a business plan for your holding company, especially if you are looking for an SBA loan, but what exactly should you include in a HoldCo business plan? 

A holding company business plan is going to be unique in the sense that you may have a business plan for the holding company as a whole, but you are also likely to have a business plan for each business that is held by the parent company. If your lender asks you for a business plan for your holding company I would suggest the following outline:

Executive Summary:

• Company Description: Brief overview of the holding company.
• Mission and Vision: Define the long-term goals and the company's reason for existence.
• Objectives: Short-term goals and targets.

Company Structure:

• Legal Structure: Details on whether the holding company is an LLC, corporation, or another structure.
• Ownership Information: Who are the principal owners and their percentage of ownership.

Business Model:

• Business Activities: Unlike other business models, holding companies own assets or shares in other companies. Define the types of businesses or assets the holding company plans to acquire or invest in.
• Revenue Model: How the holding company expects to generate revenue (dividends, asset appreciation, royalties, rents, etc.)

Market Analysis:

• Target Industries: Which sectors or industries does the holding company intend to invest in?
• Market Trends: Current and projected trends in those industries.
• SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats related to the holding company and its investments.

Investment Strategy:

• Acquisition Criteria: Guidelines for acquiring new assets or companies (size, industry, profitability, etc.).
• Management Approach: Whether the holding company will be actively involved in the management of its subsidiaries or be a passive investor.
• Exit Strategy: Under what circumstances will the holding company divest from its investments?

Asset Management:

• Monitoring and Reporting: How will the holding company monitor the performance of its assets?
• Risk Management: Strategies to manage risks associated with each investment.
• Diversification Strategy : How will the holding company diversify its investments to protect against industry-specific risks?

Financial Projections:

• Projected Income Statement: Expected revenues (like dividends or interest income) and expenses.
• Balance Sheet Forecast: Expected assets, liabilities, and owner's equity over time.
• Cash Flow Statement: Expected inflows and outflows of cash.
• ROI Projections: Return on investment expectations for the assets/companies under the holding company.

Operational Plan:

• Location: Where the holding company is based and reasons for that specific location (e.g., tax advantages).
• Human Resources: Any staff required to manage the holding company's operations and their roles.

Exit Strategy:

• How and when the primary stakeholders plan to sell or otherwise exit their ownership in the holding company, and potential scenarios or conditions prompting this.

Equity Funding for Acquisitions

It is unlikely that you will acquire a business with 100% financing which means you will need to invest some equity into the deal.  This could come from your personally, from savings at the Holding Company, or you could look for investors.  

You could start a search fund which is a unique way to bring on investors to help you acquire a larger business than you might be able to acquire on your own.  

Lastly, you can negotiate with the seller such that the seller would provide some of the financing for the acquisition through a seller’s note.  For example, you might agree to buy a business for $1,000,000.  You could borrow $800,000 through an SBA loan, invest $100,000 of your own capital, and finance the remaining $100,000 with a seller’s note.  

Learn more about how to use seller’s notes with SBA . 

Due Diligence for Buying Businesses

Once you have the financing lined up and agree on basic deal terms, you will need to complete due diligence.  Think of this like the inspection when you are buying a house.  Just like you want to have an inspector check to make sure your house is on a strong foundation, doesn’t have a termite problem, and doesn’t need a major repair any day, you will want to have a due diligence expert conduct due diligence on your acquisition target.  This might seem frustrating and a delay to you and the seller, but it is important.  DueDilio is a marketplace of experts that can help you complete due diligence items like a Quality of Earnings report. 

Since the purpose of acquiring or starting multiple companies that are consolidated in a holding company is often due to the financial benefits of the holdco structure, you are likely going to want to build a financial model for your holding company.  We have built two financial model templates that can help you with different aspects of your holding company.  

• Acquisition Pro Forma Template
• Holding Company Pro Forma Template

Our acquisition template will help you model the specific details of each acquisition, you will want to use a separate copy of the template for each unit that you acquire. 

But once you acquire multiple units you will want to build a pro forma that allows you to add projections for each business unit within the holding company and then see the consolidated financial statements for the holding company.  Our HoldCo projection template will help you do just that!  

As you get into the thick of it, if you ever need help customizing a model for your specific situation, we offer custom financial modeling services as well.

About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 50,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

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How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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How to create a business plan: examples & free template.

This guide has been designed to help you create a winning plan that stands out in the ever-evolving marketplace. U sing real-world examples and a free downloadable template, it will walk you through each step of the process.

Table of Contents

How to Write a Business Plan

Executive summary.

The Executive Summary serves as the gateway to your business plan, offering a snapshot of your venture’s core aspects. This section should captivate and inform, succinctly summarizing the essence of your plan.

Example: EcoTech is a technology company specializing in eco-friendly and sustainable products designed to reduce energy consumption and minimize waste. Our mission is to create innovative solutions that contribute to a cleaner, greener environment.

Overview and Business Objectives

This part of the plan demonstrates to investors and stakeholders your vision for growth and the practical steps you’ll take to get there.

Company Description

Include information about the company’s founders, their expertise, and why they are suited to lead the business to success. This section should paint a vivid picture of your business, its values, and its place in the industry.

Define Your Target Market

Example: Our target market comprises environmentally conscious consumers and businesses looking for innovative solutions to reduce their carbon footprint. Our ideal customers are those who prioritize sustainability and are willing to invest in eco-friendly products.

Market Analysis

Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.

SWOT Analysis

Competitive analysis.

In this section, you’ll analyze your competitors in-depth, examining their products, services, market positioning, and pricing strategies. Understanding your competition allows you to identify gaps in the market and tailor your offerings to outperform them.

Organization and Management Team

Example: EcoTech’s organizational structure comprises the following key roles: CEO, CTO, CFO, Sales Director, Marketing Director, and R&D Manager. Our management team has extensive experience in technology, sustainability, and business development, ensuring that we are well-equipped to execute our business plan successfully.

Products and Services Offered

Marketing and sales strategy.

Describe the nature of your advertising campaigns and promotional activities, explaining how they will capture the attention of your target audience and convey the value of your products or services. Outline your sales strategy, including your sales process, team structure, and sales targets.

Logistics and Operations Plan

Inventory control is another crucial aspect, where you explain strategies for inventory management to ensure efficiency and reduce wastage. The section should also describe your production processes, emphasizing scalability and adaptability to meet changing market demands.

Financial Projections Plan

In the Financial Projections Plan, lay out a clear and realistic financial future for your business. This should include detailed projections for revenue, costs, and profitability over the next three to five years.

Income Statement

The income statement , also known as the profit and loss statement, provides a summary of your company’s revenues and expenses over a specified period. It helps you track your business’s financial performance and identify trends, ensuring you stay on track to achieve your financial goals.

Cash Flow Statement

Tips on Writing a Business Plan

3. Set realistic goals: Your business plan should outline achievable objectives that are specific, measurable, attainable, relevant, and time-bound (SMART). Setting realistic goals demonstrates your understanding of the market and increases the likelihood of success.

FREE Business Plan Template

To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.

What is a Business Plan?

Why you should write a business plan, what are the different types of business plans.

In today’s fast-paced business world, having a well-structured roadmap is more important than ever. A traditional business plan provides a comprehensive overview of your company’s goals and strategies, helping you make informed decisions and achieve long-term success. There are various types of business plans, each designed to suit different needs and purposes. Let’s explore the main types:

Using Business Plan Software

Enloop is a robust business plan software that automatically generates a tailored plan based on your inputs. It provides industry-specific templates, financial forecasting, and a unique performance score that updates as you make changes to your plan. Enloop also offers a free version, making it accessible for businesses on a budget.

Business Plan FAQs

What is a good business plan, what are the 3 main purposes of a business plan, can i write a business plan by myself.

We also have examples for specific industries, including a using food truck business plan , salon business plan , farm business plan , daycare business plan , and restaurant business plan .

Is it possible to create a one-page business plan?

How long should a business plan be, what is a business plan outline, what are the 5 most common business plan mistakes, what questions should be asked in a business plan.

A business plan should address questions such as: What problem does the business solve? Who is the specific target market ? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?

What’s the difference between a business plan and a strategic plan?

How is business planning for a nonprofit different.

Holding Business Plans

Financial holding company business plan.

Domino Comptech Holdings purchases profitable existing businesses with a history of strong revenue production. DCH provides the management, marketing, and financial expertise to assist in continuing to maintain a strong and steady growth pattern.

Holding Company Business Plan

JTB Technologies is the holding company for 3 related sub-corporations, doing technology, catalog sales, and manufacturing for multiple industries.

Are you looking to expand your business holdings into owning stock in other organizations? You may want to consider establishing a holding, or parent company to do so. While it may not produce or sell goods or services, it is still beneficial to have a solid business plan in place in order to succeed. Check out our holding company and financial holding company sample plans to get started.

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Holding Company Business Plan Sample

Published Jul.30, 2018

Updated Apr.23, 2024

By: Noor Muhammad

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Table of Content

Do you want to start holding company?

Are you planning to start a holding company? In the corporate world, mergers and acquisitions are part of doing business and for any holding company to succeed, it must strategize itself to tap into existing business opportunities. The key role of a holding company is buying and owning shares or stocks in other companies with an aim of obtaining returns on their investment and controlling company corporate affairs. This is a highly strategic business and to succeed, a good holding company business plan that clearly outlines your acquisition strategy should be put in place. A large financial base and a team of experienced investment experts are key for business success.

Executive Summary

2.1 the business.

The business holding company will be registered as Benton Holdings and will have its headquarters in downtown Manhattan, New York. The business is owned by Mark Ford who is an experienced Investment Expert.

2.2 Management Team

Mark Ford, the owner of Benton Holdings is an experienced investment expert with in-depth knowledge of the U.S merger and acquisitions industry. He boasts of over 15 years of experience in the investment industry and has worked for various top blue chip U.S. companies.

2.3 Customer Focus

With his caliber of experience, Mark has extensive technical and industry knowledge on investment having worked in numerous holding companies as an advisor. With these skills, he has the right customer segment in perspective.

2.4 Business Target

Mark Ford has been in the industry for long and knows how acquisitions for investment are handled and the best strategies to use to reach out to the appropriate business targets.

Company Summary

3.1 company owner.

Mark Ford is an experienced investment analyst whose career has spanned almost two decades. In the course of his career, Mark worked for numerous top brands such as JP Morgan Chase, Citigroup and NYSE (New York Stock Exchange) among others.

3.2 Aim of Starting the Business

Corporates take various strategic decisions to help advance their course towards profitability and achieving financial goals. Mergers and acquisitions happen for various reasons and holding companies have a good opportunities to capitalize on these arrangements to generate revenue. A holding company business plan also doesn’t offer any products or services, its mandate is to simply find opportunities to invest in other businesses. Mark is aware of the dynamics and knows how to start a holdings company .

3.3 How the Business will be started

Benton Holdings will be started based on a careful market research to identify opportunities available for the holding company. Mark has the technical and business skills but has sought help from financial gurus to craft a detailed comprehensive analysis.

Services for Customers

Benton holdings is being formed purposely to scout for investment opportunities and find the best areas for the company to purchase stocks or shares with a view of making profits and getting revenue. Opening a holding company is a fairly straightforward process but the key is to have the right strategies in place to generate revenue. In order to get the best deals on the market, Mark aims to have the best team in place and a great financial base for Benton Holdings to successfully focus on its services and realize its objectives. For a business holding company to enjoy a good market share, in-house acquisition strategies must take precedence to get the right results. Benton Holdings will be launched to deal with the following areas/ services.

• Securities dealing which involves acquisition of stocks and shares from companies drawn from various economic sectors.
• Merchant banking services which involves provision of capital to new companies in exchange for share ownership
• Investment advisory services
• Security underwriting

Marketing Analysis of Holding Company

We are living in an era where mergers and acquisitions have become a common phenomenon in the corporate world. Businesses including established entities are increasingly looking for strategic partnerships which creates a good opportunity for Benton Holdings to do business and gain revenue. In this business plan for holding company, emphasis has been put on doing an extensive market analysis in order to find markets that are ready for consolidation.

5.1 Market Segment

For Benton Holdings to meet its financial objectives, the company has to identify the right target market and come up with measures to reach out to the intended groups. Acquisitions do not happen on a daily basis and a great amount of skill is required to point out potential acquisitions and how they will be beneficial to a company. How to start your own holding company and run it successfully depends on having a strategic plan to identify the best opportunities.

Business plan for investors

5.1.1. real estate and construction.

There is a real estate boom in New York considering it’s the largest city in the United States. For this reason, some companies both new and established are consistently looking for strategic partners to drive their corporate ambitions. Benton Holdings is well positioned in a city with immense merger and acquisition opportunities to search and find potential acquisitions, carry out a risk analysis and proceed if the deal looks good.

5.1.2 Energy

The world depends on energy to get many things done and this is definitely a lucrative industry for Benton Holdings to look for investment opportunities. Shares in companies within this sector are always on high demand and therefore, Benton Holdings company must adopt the right marketing strategies to demonstrate why they would be the best choice for a company looking for investors. Whether new companies or established entities, this is a great industry with massive revenue potential for Benton Holdings. With the increasing demand and reliance on energy, this is a key industry to focus on when starting a holding company .

5.1.3 Aviation and Automobile

The transport industry is a major economic driver because people have to travel from one place to another on a daily basis. Coincidentally, there are numerous mergers and acquisitions that take place among industry stakeholders with an aim of boosting operations and gaining a greater foothold of the market. New York is a global transport and aviation hub which means there could be investment opportunities that Benton Holdings could explore.

5.1.4 Finance and Information Technology

Every industry now relies on technology to run its operations and achieve business goals. The increasing demand for IT and financial services including the diversification of technology makes this industry lucrative for potential investors to business plan such as Benton Holdings.

5.1.5 Food Manufacturing and Catering

This is a thriving industry with potential to generate good revenue for Benton Holdings if the company can successfully identify the best opportunities to invest in companies in the food industry.

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5.2 Business Target

Benton Holdings plans to offer professional services given the advantage New York City has as a global corporate and financial capital. Despite similar holding companies doing business, Benton Holdings strongly believes there are unexplored opportunities and intends to operationalize this holding company business plan template to realize an annual revenue increase of between 12%-15%.

5.3 Product Pricing

Benton Holdings has varied pricing structures depending on the deal at hand. However, pricing has been determined after carefully studying the market and what competitors are doing to be successful.

Benton Holdings intends to use cost-effective yet highly efficient marketing strategies to generate revenue and successfully venture into new markets. The company intends to put in place strategies that will help identify the right acquisition opportunities. How to start a holding company and have it run successfully depends on a good understanding of mergers and acquisitions.

6.1 Competitive Analysis

Benton Holdings has carried out an intensive market research and identified how to creatively go about any potential acquisitions to beat competitors. It’s all about having an attractive acquisition plan that would make a company want to sell their stake to you.

6.2 Sales Strategy

For Benton Holdings to penetrate the market and handle numerous acquisition plans, the sales strategy below will be helpful in advertising the business.

• Prepare introduction letters and as well as company materials such as brochures and portfolio. Benton Holdings has to find a strategy to distribute these materials to key decision makers especially in industries prone to mergers and acquisitions.
• Take part in high-profile business forums and exhibitions that will help the holding company business plan mingle with other industry stakeholders.
• Have an opening party and ensure invited guests come from targeted market segments. This is an incredible way to create awareness about the business.
• Keep high standards of customer service and have a follow-up structure to ensure all emerging issues and queries are handled effectively
• Use digital media channels such as Google Ads, Twitter and Facebook for marketing

6.3 Sales Forecast

For Benton Holdings to achieve its goals, the holding company has come up with a detailed sales forecast to guide the business on a path towards success.

Personal Plan

Benton Holdings cannot achieve its mandate without having extremely skilled staff to coordinate various kinds of investment portfolios. How to create a holding company business plan must include a well-thought personnel plan.

7.1 Personnel Plan

For Benton Holdings to efficiently carry out its operations, the following staff shall be employed to work in various departments. Mark Ford who is the owner will manage the business on a day-to-day basis as the Chief Executive Officer. The following staff will be hired to work in the holding company business plan.

• Deputy Chief Executive Officer
• Merger and Acquisitions Manager
• Marketing Manager
• 2 Marketing Executives
• 2 Customer Service Executive
• 2 Investment Advisors
• 2 Risk Analysts

7.2 Average Salaries

Benton Holdings intends to pay its staff the following salaries within the first three years of operations.

Financial Plan

Benton Holdings has formulated a comprehensive financial plan that will guide the holding company on how to achieve success and reflect the true state of the company’s financial books. When starting a holding company business plan, it is critical to find out where your capital will come from. In this case, Mark Ford will use his savings, bring on board two investors and fund the remaining budget deficit with a bank loan. The following is a financial breakdown for various parameters for Benton Holdings.

8.1 Important Assumptions

The financial forecast for Benton Holdings is based on the assumptions below.

8.2 Brake-even Analysis

Benton Holdings brake-even analysis is shown in the graph below.

8.3 Projected Profit and Loss

Profit and loss information for Benton Holdings as calculated on a monthly and annual basis is indicated below.

8.3.1 Monthly Profit

8.3.2 Yearly Profit

8.3.3 Monthly Gross Margin

8.3.4 Yearly Gross Margin

8.4 Projected Cash Flow

Below is a summary of Pro forma cash flow, subtotal cash received, subtotal cash spent, subtotal cash from operations and subtotal cash spent on operations.

8.5 Projected Balance Sheet

Below is a Projected Balance Sheet for Benton Holdings that indicates assets, liabilities, capital, long term assets and current liabilities.

8.6 Business Ratios

The following is the Ratio Analysis, Business Ratios and Business Net Worth for Benton Holdings.

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More From Forbes

3 benefits of a holding company—and how to structure your businesses.

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By Nellie Akalp

A holding company cannot be held liable for its subsidiaries’ legal or financial problems.

A holding company is a legal business entity (usually a limited liability company or C Corporation) that owns or has a controlling interest in one or more companies (called “subsidiaries”). Other terms for a holding company include “parent company” and “umbrella company.” Regardless of the wording, a holding company helps to protect its individual subsidiaries’ assets and limit liability risks across all of its subsidiaries.

Besides owning other business entities, a holding company may also own other assets, such as:

• Stock and securities
• Real estate

Why form a holding company, what’s the connection between a holding company and its subsidiaries, and what entity type is best for a holding company? We’ll discuss those considerations in this article. I also encourage business owners to seek legal and tax guidance from an attorney and accounting professional to help them make informed decisions about structuring multiple businesses.

Relationship between a holding company and its subsidiaries

Each subsidiary under a holding company is set up as its own separate company. So, if subsidiaries are formed as corporations or limited liability companies (LLCs), each one must file articles of incorporation or articles of organization with the state, have its own set of bylaws or LLC operating agreement, have its own bank accounts, run its own payroll, and maintain its own financial records.

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Best 5% interest savings accounts of 2024.

Typically, a holding company serves as the owner and administrator of its subsidiary entities but has no direct operations tied to them. Subsidiaries each have their own management for running the day-to-day business, while the holding company’s management owns its assets and oversees the subsidiaries’ bigger-picture policies and decisions. Generally, one subsidiary’s activities do not affect a holding company’s other subsidiaries’ activities.

Advantages of a holding company

Lessen liability.

Entrepreneurs typically form a holding company to limit liability risks when owning multiple businesses. Each subsidiary is protected from the legal claims against and debts of the other subsidiaries.

Likewise, a holding company cannot be held liable for its subsidiaries’ legal or financial problems, provided it has not actively participated in the operations of those subsidiaries or guaranteed debts of the subsidiary. However, if the holding company or its subsidiaries pierce the corporate veil—e.g., committed fraud, were negligent in some way, or didn’t follow through on their entity compliance requirements with the state—the holding company, and possibly the holding company’s owners, might be at risk legally or financially.

Attract investors

There could be funding and growth advantages, too. Because the subsidiaries under a holding company are their own legal entities and protected from the liability of the other subsidiaries, it may be easier to attract investors or partners for those individual businesses than if all were set up as a single entity with many divisions.

And, if the holding company seeks financing, it may be able to obtain a loan with a lower interest rate than its individual operating companies because of its robust financial position.

Optimize tax efficiency

In general, C Corporation subsidiaries file their own tax returns and pay dividends to their holding company without creating a tax liability for the parent company as it would if those dividends were paid to individuals. The holding company can then disburse those profits to its shareholders or reinvest them in its other subsidiaries—choosing what’s optimal for their tax and growth goals.

Alternatively, the profits, losses, and tax liabilities of subsidiaries regarded as disregarded entities (e.g., LLCs, partnerships) for tax purposes get reported via a consolidated federal tax return filed by the holding company.

C Corporation subsidiaries can also be reported on a consolidated return if they submit IRS Form 1122 (Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return).

If a holding company files a consolidated tax return, the profits of one or more subsidiaries can be offset by the losses of others. That can help lower the tax burden collectively for the companies under the parent company.

Keep in mind that while subsidiaries don’t have to file their own federal tax returns when they’re part of the holding company’s consolidated return, they may have to file their own returns at the state level. States’ tax laws vary, so it’s critical to research the rules that apply to your situation. For example, an LLC holding company (not taxed as an S-Corp) in California would still be required to file a separate Form 568 (Limited Liability Company Return of Income) for each subsidiary LLC.

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C Corporation or LLC as a holding company?

There’s much to consider when structuring multiple businesses under a holding company. First and foremost is what entity type to choose for the parent company.

C Corporation

A C Corporation is a separate legal and tax-paying entity from its owners (shareholders). Therefore, it offers the advantage of personal liability protection as all actions of the corporation are tied to the corporation, not its owners. For entrepreneurs who envision growing the business, the C Corp structure allows for raising capital by issuing or selling stock. Also, a C Corp has perpetual existence under state law, so an incorporated parent company can survive indefinitely (until it’s formally dissolved).

Basic steps for forming and maintaining a C Corporation

• Designate a registered agent
• File articles of incorporation
• Obtain an EIN
• Appoint a board of directors
• Adopt bylaws
• Apply for business licenses and permits
• Open a business bank account
• Hold board of directors' meetings
• Hold shareholder meetings
• File an annual report

Some potential downsides of forming a C Corporation as a holding company are more paperwork involved to register the entity and more extensive compliance formalities—e.g., adopting bylaws, holding board of directors’ meetings, holding shareholder meetings, filing annual reports, etc. The specific requirements for registering and maintaining a C Corporation vary by state.

And then there’s the double taxation—income is taxed at the corporate level when it’s earned by the corporation and then again at the individual level when distributions are paid to shareholders.

Limited liability company

A limited liability company protects its owners (known as “members”) from personal liability, too. Moreover, it doesn’t have as extensive compliance requirements as a C Corporation.

Basic steps for forming and maintaining an LLC

• File articles of organization
• Create an LLC operating agreement
• Hold member meetings (if required by the LLC operating agreement)

By default, an LLC is taxed as a disregarded entity, and all profits and losses flow through to the business owners. However, if it meets the IRS’s eligibility requirements, it may elect S Corporation or C Corporation tax treatment. Compliance requirements vary by state, but typically an LLC does not need to have an annual meeting or a board of directors unless its operating agreement states otherwise.

Some potential drawbacks to operating as an LLC are that it cannot issue stock to raise capital, and it may not have as many tax deductions as a C Corporation. Also, unless the LLC’s operating agreement has provisions for perpetual existence, state law may require an LLC to be dissolved if one or more of its members dies or leaves the company.

Moving existing LLCs or corporations under a holding company

If changing ownership of a C Corporation from individuals to a holding company, the procedures described in that corporation’s bylaws should be followed. If the holding company is a corporation, that might involve a share-for-share exchange whereby the shareholders swap their shares in the operating company for shares in the holding company (presuming the shareholders are the same in the operating corporation and the holding corporation).

If changing ownership of an LLC from individuals to a holding company, the procedures described in the LLC’s operating agreement should be followed to make that change. Usually, that entails creating a buyout or liquidation of the operating LLC to change ownership from the individual(s) to the holding company.

Things get more complicated with an operating LLC taxed as an S Corporation The shareholders of an S Corporation may only be individuals, a qualified single-member LLC, certain trusts, estates, and certain exempt organizations. In other words, the shareholders of an S Corporation cannot be a partnership or a corporation unless the operating S Corporations qualify for QSub (qualified subchapter S subsidiary) election. QSub election basically allows QSubs to be treated as disregarded entities for federal income tax purposes and be collapsed into a holding company that’s a partnership or a corporation.

Choosing the right business structure

Structuring multiple businesses can be complex from a tax and legal standpoint. It’s essential to get guidance from professionals who can help you understand your options and how they will impact you and your companies.

About the Author

Nellie Akalp is a passionate entrepreneur, business expert, professional speaker, author, and mother of four. She is the founder and CEO of CorpNet.com , a trusted resource and service provider for business incorporation, LLC filings, and corporate compliance services in all 50 states.

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Home » Sample Business Plans » Real Estate

How to Write a Real Estate Investment Holding Business Plan [Sample Template]

Are you about starting a real estate investment holding company? If YES, here is a complete sample real estate investment holding company business plan template & feasibility report you can use for FREE .

A holding company is a company whose interest is to buy and own the stocks of other companies with the aim of getting returns on their investment and also controlling the affairs of the company. As a matter of fact, holding companies serve as investment vehicles for investors.

Holding companies do not go through the stress of starting a business from the scratch, they are specialists in buying over a company that they know has the potential to make profits not only in the short run but also in the long run. You will need a large financial base if you truly want to successfully run your own holding company and you will also need investment experts to be part of your team.

The first step you need to take if you want to start your own holding company is to conduct extensive research on holding companies in and around you. The truth is that there loads of stuffs you need to learn if you intend making a success from this business.

So, in order to get started, take out time to read up all you can find on holding companies and investment vehicles. Below is a sample holding company business plan template that can help you to successfully write your own with little or no hassle.

A Sample Real Estate Investment Holding Company Business Plan Template

1. industry overview.

Holding companies can be classified under the Venture Capital and Principal Trading industry and this industry comprises of firms and investment consultants that act as principals in the buying or selling of financial contracts. Principals in this context are investors who trade (buy or sell) for their own account, rather than on behalf of their clients.

This industry consists of holding companies, venture capital firms, investment clubs and viatical settlement companies, and does not include investment bankers, securities dealers and commodity contracts dealers trading as principals.

It is a fact that the Venture Capital and Principal Trading industry is growing faster than most industries in the financial services sector not only in the united states but across the global market. Industry value added (IVA), a measure of the industry’s contribution to the overall economy, is projected to increase at a 6.9 percent annualized rate over the next 10 years.

Indeed, the Venture Capital and Principal Trading industry is a very large and thriving industry not only in the developed nations, but also in developing and under developing countries of the world. Statistics has it that the Venture Capital and Principal Trading industry in the United States of America is worth $106 billion, with an estimated growth rate of 4.2 percent.

There are about 29,069 registered and licensed venture capital firms in the United States and they are responsible for employing about 74,814 people. It is important to state that there are no companies with a dominant market share in this industry; the industry is open to fair competition.

Over and above, the main reasons for starting a holding company is to own shares of other companies with the aim of forming a corporate group. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies.

2. Executive Summary

Gregory Peters Holding Company, LLC is a registered, licensed and accredited holding company that will be based in New York City – New York.

The company will be involved in acquiring large percentage of shares of companies with the potential to doing pretty well. We are aware that running a standard holding company can be demanding which is why we are well trained, certified and equipped to perform excellently well.

Gregory Peters Holding Company, LLC is a client – focused and result driven holding company that plays by the rules and also provides broad-based services. We will offer trusted and profitable services to all our individual and corporate clients at local, state, national and international levels. We will ensure that we work hard to meet and surpass our clients’ expectations whenever we take control of any company.

At Gregory Peters Holding Company, LLC, our client’s best interest would always come first, and everything we do is guided by our values and professional ethics. We will ensure that we hire professionals who are well experienced in stock exchange and other investment portfolios with good track record of return on investments.

Gregory Peters Holding Company, LLC will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible. We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.

Our plan is to position the business to become one of the leading brands in the investment and business management line of business in the whole of New York City, and also to be amongst the top 20 holding companies in the United States of America within the first 10 years of operation.

This might look too tall a dream but we are optimistic that this will surely be realized because we have done our research and feasibility studies and we are enthusiastic and confident that New York is the right place to launch our holding company before expanding our investment portfolio.

Gregory Peters Holding Company, LLC is founded by Gregory Peters and his business partners for many years Lindsay Thomas. The organization will be managed by both of them since they have adequate working experience to manage such business.

Gregory Peters has over 15 years experience working at various capacities as a venture capitalist for leading investment banks and related firms in the United States of America. Gregory Peters graduated from both University of California – Berkley with a Degree in Accounting, and University of Harvard (MSc.) and he is an accredited and certified venture capitalist.

3. Our Products and Services

Gregory Peters Holding Company, LLC is a company that is established with the aim of buying off the shares of companies with the potential of growth with the aim of taking over the companies and effectively managing them. We also acquire and hold properties and hard assets that yield positive cash flow annually.

4. Our Mission and Vision Statement

• Our vision is to build a holding company brand that will become one of the top choices for investors in the whole of New York City – New York. Our vision reflects our values: integrity, service, excellence and teamwork.
• Our mission is to position the business to become one of the leading brands in the holding company line of business in the whole of New York City, and also to be amongst the top 20 holding companies in the United States of America within the first 10 years of operations.

Our Business Structure

Ordinarily we would have settled for less than a handful of full staff members, but as part of our plan to build a standard holding company in New York City, we have perfected plans to get it right from the beginning which is why we are going the extra mile to hire qualified, competent, honest and hardworking employees to occupy all the available positions in our firm.

The picture of the kind of holding company we intend building and the business goals we want to achieve is what informed the amount we are ready to pay for the best hands available in and around New York as long as they are willing and ready to work with us to achieve our business goals and objectives.

Below is the business structure that we will build Gregory Peters Holding Company, LLC;

• Chief Executive Officer
• Venture Capitalists Consultants

Admin and HR Manager

Risk Manager

• Marketing and Sales Executive

Chief Financial Officer (CFO)/Chief Accounting Officer (CAO)

• Customer Care Executive/Front Desk Officer

5. Job Roles and Responsibilities

Chief Executive Office:

• Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions; providing educational opportunities.
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for fixing prices and signing business deals
• Responsible for providing direction for the business
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization

Venture Capitalist Consultants

• Provides market research and implementing new investment product and strategies
• Creates research and review platforms for new, existing and potential investment products
• Exceeds client expectations with returns on investments
• Works closely with analysts and traders to ensure trading strategy is carried out correctly
• Constructs and reviews performance reports to show to investors
• Works directly with marketer to relay investment strategy and risk measures for website and other forms of marketing for hedge fund
• Performing due diligence, visits and assessing investment management firms and quantitatively analyzing investment pools
• Has extensive knowledge of industry policies and regulations set in place by the SEC
• Focuses on capital introductions and networking to sign up new investors to your fund
• Plans, designs and implements an overall risk management process for the organization;
• Risks assessment, which involves analyzing risks as well as identifying, describing and estimating the risks affecting the business;
• Risks evaluation, which involves comparing estimated risks with criteria established by the organization such as costs, legal requirements and environmental factors, and evaluating the organization’s previous handling of risks;
• Establishes and quantifying the organization’s ‘risk appetite’, i.e. the level of risk they are prepared to accept;
• Risks reporting in an appropriate way for different audiences, for example, to the board of directors so they understand the most significant risks, to business heads to ensure they are aware of risks relevant to their parts of the business and to individuals to understand their accountability for individual risks;
• Corporates governance involving external risk reporting to stakeholders;
• Carries out processes such as purchasing insurance, implementing health and safety measures and making business continuity plans to limit risks and prepare for if things go wrong;
• Conducts audits of policy and compliance to standards, including liaison with internal and external auditors;
• Provides support, education and training to staff to build risk awareness within the organization.
• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Designs job descriptions with KPI to drive performance management for clients
• Regularly hold meetings with key stakeholders to review the effectiveness of HR Policies, Procedures and Processes
• Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
• Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
• Defines job positions for recruitment and managing interviewing process
• Carries out staff induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Oversees the smooth running of the daily office activities

Marketing/Investor Relations Officer

• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of relevant projects.
• Writes winning proposal documents, negotiate fees and rates in line with company policy
• Responsible for handling business research, marker surveys and feasibility studies for clients
• Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
• Develops, executes and evaluates new plans for expanding sales
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps to increase sales and growth for the company
• Responsible for preparing financial reports, budgets, and financial statements for the organization
• Creates reports from the information concerning the financial transactions recorded by the bookkeeper
• Prepares the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper
• Provides managements with financial analysis, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions
• Responsible for financial forecasting and risks analysis
• Performs cash management, general ledger accounting, and financial reporting for one or more properties
• Responsible for developing and managing financial systems and policies
• Responsible for administering payrolls
• Ensures compliance with taxation legislation
• Handles all financial transactions for the company
• Serves as internal auditor for the company

Client Service Executive/Front Desk Officer

• Welcomes guests and clients by greeting them in person or on the telephone; answering or directing inquiries
• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the manager in an effective and timely manner
• Consistently stays abreast of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients
• Receives parcels/documents for the company
• Distributes mails in the organization
• Handles any other duties as assigned by the human resource and admin manager

6. SWOT Analysis

Gregory Peters Holding Company, LLC engaged the services of a core professionals in the area of business structuring to assist our organization in building a well – structured holding company that can favorably compete in the highly competitive investment industry.

Part of what the team of business consultants did was to work with the management of our organization in conducting a SWOT analysis for Gregory Peters Holding Company, LLC. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Gregory Peters Holding Company, LLC;

Our strength lies in the power of our team; our workforce. We have a team that can go all the way to give our clients value for their money (good returns on their investment) and also to increase our annual returns; a team that is trained and equipped to pay attention to details and to deliver excellent jobs. We are well positioned and we know we will attract loads of clients (accredited investors) from the first day we open our doors for business.

As a new holding company, it might take some time for our organization to break into the market and gain acceptance especially from big – time investors in the already saturated Venture Capital and Principal Trading industry, that is perhaps our major weakness. So also, we may not have the required cash to give our business the kind of publicity we would have loved to.

• Opportunities:

The opportunities in the Venture Capital and Principal Trading industry is massive considering the number of big and small companies who would need financial support from holding companies to grow their business and increase their profits. As a standard and accredited holding company, we are ready to take advantage of any opportunity that comes our way.

Holding companies and their operations involve a large amount of cash and it is known to be a high – risk venture hence, whoever chooses to manage it must not just have a solid investment background, but must also know how to handle risks and discover potential thriving businesses and opportunities. The truth is that if you are not grounded in risk management as a holding company, you may likely throw away peoples’ monies and investment.

Just as in any other business and investment vehicles, economic downturn, unstable financial market and unfavorable government economic policies can hamper the growth and profitability of venture capitalist firms.

7. MARKET ANALYSIS

• Market Trends

A close watch at the Venture Capital and Principal Trading industry that holding company is a part of, shows that in the dawn of recessionary declines, the industry is expected to continue on a path to growth, but not without a few more ups and downs. This group of firms and individuals has benefited from rising security prices and increasing merger and acquisition activity over the last five years.

As a result of this trend, Venture Capital and Principal Trading industry revenue is expected to grow over the five-year period at an annualized rate of 9.1 percent to $42.9 billion in 2016. The revenue growth for the industry was restrained in the early part of the period as the industry was reluctant to bounce back from the financial crisis and subsequent recession of the prior period that caused stock markets and business activity to dramatically contract in the United States and of course in the global market.

On the average, it is trendy to find holding companies employ strategies that can help them reduce market risk specifically by shorting equities or through the use of derivatives.

8. Our Target Market

The main reasons for starting holding companies is to provide funding and oversight functions for established companies with great potential of making profits and growing big in the future. So, your responsibility is not just to raise capital but also to look for companies where the capital can be invested and it will generate good returns over a period of time. The truth is that it takes a core professional to be able to identify a company that has the potential to grow and become profitable if funds and pumped into it.

As a standard, accredited and licensed holding company, Gregory Peters Holding Company, LLC offers a wide range of investment portfolio management services hence we are well trained and equipped to manage and provide oversight functions for established companies.

Our target market cuts across businesses and investors that have the required capital to invest in companies and other investment portfolios. We are coming into the industry with a business concept that will enable us produce good returns on investment for ourselves and our clients.

Below is a list of organizations that we have specifically designed our products and services for;

• Accredited Investors
• Investment Clubs
• Top corporate executives
• Corporate Organizations/Blue Chip Companies

Our Competitive Advantage

Despite the fact that holding companies and venture capitalist investment strategies gives huge returns on investment, it is indeed risky venture. If you drive through the street of New York City, you will come across several holding companies and related business ventures; this goes to show you that there are competitions in the industry.

For you to survive as a holding company, you should be able to come up with workable investment and business management strategies that will help you attract the required cash / capital and above all you should be a good risks manager and one that can spot a potential thriving business from afar.

We are quite aware that to be highly competitive in the Venture Capital and Principal Trading industry means that we should be able to give good returns on investments to our clients, turn around the fortunes of a dying company, spot potential successful business ideas and invest in them, our clients should be satisfied with our investment strategies and we should be able to meet their expectations.

Gregory Peters Holding Company, LLC might be a new entrant into the holding industry in the United States of America, but the management staff and owners of the business are considered gurus. They are licensed and highly qualified portfolio management experts in the United States. These are part of what will count as a competitive advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and objectives.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Gregory Peters Holding Company, LLC is established with the aim of maximizing profits in the Venture Capital and Principal Trading industry and we are going to go all the way to ensure that we do all it takes to attract clients on a regular basis.

Gregory Peters Holding Company, LLC will generate income by offering the following investment related services;

• Returns generated from our shares/stocks
• Investing in financial contracts on own account
• Participating in investment clubs (group of people who pool their money to make investments)
• Mineral royalties or leases dealing (as principal in dealing to investors)
• Oil royalty dealing (as principal in dealing to investors)
• Viatical settlement (purchasing life insurance policy at a discount to later collect the death benefit)
• Venture capital (investing in startups and small businesses with long-term growth potential)
• Trade in financial products
• Related investment consulting and advisory services

10. Sales Forecast

One thing is certain, there would always be accredited investors, small scale and medium scale businesses and wealthy individuals who would need the services of tested and trusted holding firms.

We are well positioned to take on the available market in New York City and other key cities in the United States of America and we are quite optimistic that we will meet our set target of generating enough income from the first six months of operation and grow the business and our clientele base beyond New York City to other cities in the United States of America.

We have been able to examine the holding industry, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projection is based on information gathered on the field and some assumptions that are peculiar to similar startups in New York City.

• First Fiscal Year: $750,000
• Second Year: $ 1.5 Million
• Third Year: $3 Million

N.B : This projection is done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor offering same services as we do within the same location. Please note that the above projection might be lower and at the same time it might be higher.

• Marketing Strategy and Sales Strategy

We are mindful of the fact that there are stiff competitions amongst holding companies in the United States of America, hence we have been able to hire some of the best business developers to handle our sales and marketing.

Our sales and marketing team will be recruited based on their vast experience in the industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall goal of the organization. We will also ensure that our return on investment and excellent job deliveries speaks for us in the market place; we want to build a standard that will leverage on word of mouth advertisement from satisfied clients.

Our goal is to grow our holding company to become one of the top 20 holding firms in the United States of America which is why we have mapped out strategy that will help us take advantage of the available market and grow to become a major force to reckon with not only in New York City but also in other cities in the United States of America.

Gregory Peters Holding Company, LLC is set to make use of the following marketing and sales strategies to attract clients;

• Introduce our business by sending introductory letters alongside our brochure to corporate organizations, startups, accredited investors, entrepreneurs and key stake holders in New York City and other cities in The United States
• Advertise our business in relevant financial and business-related magazines, newspapers, TV and radio stations.
• List our business on yellow pages ads (local directories)
• Attend relevant international and local finance and business expos, seminars, and business fairs et al
• Create different packages for different category of clients in order to work with their budgets and still deliver good returns on investment
• Leverage on the internet to promote our business
• Engage direct marketing approach
• Encourage word of mouth marketing from loyal and satisfied clients

11. Publicity and Advertising Strategy

The uniqueness of the holding industry is such that it is the result they produce that helps boost their brand awareness. Holding companies are strategic when it comes to inviting investors to invest in a project or when it comes to acquiring a struggling company.

It will be out of place to boost your holding company brand if you have not proven your worth in the industry. If you have successfully proven that you have what it takes to operate a successful holding company, then your next port of call is to strategically engage the media to help you promote your brand and also to create a positive corporate identity.

We have been able to work with our brand and publicity consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to take the holding industry by storm which is why we have made provisions for effective publicity and advertisement of our holding company.

Below are the platforms we intend to leverage on to promote and advertise Gregory Peters Holding Company, LLC;

• Place adverts on both print (community based newspapers and magazines) and electronic media platforms
• Sponsor relevant community based events/programs
• Leverage on the internet and social media platforms to promote our brand
• Install our billboards on strategic locations all around New York City
• Ensure that all our workers wear our branded shirts and all our vehicles are well branded with our company’s logo et al.

12. Our Pricing Strategy

Holding companies are known to generate income from returns on their investment in companies, hence there are no pricing models for this type of business. But on the other hand, they tend to negotiate with their financial partners on percentage whenever they invest their hard-earned money in an investment vehicle handled by a venture capitalist firm.

At Gregory Peters Holding Company, LLC we will ensure that we give good returns on investment (ROI) and always maximize profits.

• Payment Options

The payment policy adopted by Gregory Peters Holding Company, LLC is all inclusive because we are aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Gregory Peters Holding Company, LLC will make available to her clients;

• Payment via bank transfer
• Payment with cash
• Payment via credit cards/Point of Sale Machines
• Payment via online bank transfer
• Payment via check

In view of the above, we have chosen banking platforms that will enable our clients make payment for investment without any stress on their part.

13. Startup Expenditure (Budget)

The cost of starting a holding company is in the two – fold; the cost of setting up the office structure and of course the capital meant for investment. The amount required to invest in this line of business could range from 1 Million US Dollars to even multiple Millions of Dollars. So, you must employ aggressive strategies to pool such cash together.

As regards the cost of setting up the office structure, your concern should be to secure a good office facility in a busy business district; it can be expensive though, but that is one of the factors that will help you position your hedge fund firm to attract the kind of investors you need.

This is the financial projection and costing for Gregory Peters Holding Company, LLC;

• The total fee for incorporating the business in the United States of America – $750
• The budget for basic insurance policy covers, permits and business license – $2,500
• The Amount needed to acquire a suitable Office facility in a business district 6 month (Re – Construction of the facility inclusive) – $40,000
• The Cost for equipping the office (computers, software applications, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $5,000
• The cost for purchase of the required software applications (CRM software, Accounting and Bookkeeping software and Payroll software et al) – $10,500
• The Cost of Launching your official Website – $600
• Budget for paying at least three employees for 3 months plus utility bills – $10,000
• Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,500
• Investment fund – $1Million Dollars
• Miscellaneous: $1,000

Going by the report from the market research and feasibility studies conducted, we will need $150,000 excluding $1M investment capital to successfully set up a medium scale but standard holding company in the United States of America.

Generating Startup Capital for Gregory Peters Holding Company, LLC

Gregory Peters Holding Company, LLC is a business that will be owned and managed by Gregory Peters and his business partner Lindsay Thomas. They may likely welcome other partners later which is why they decided to restrict the sourcing of the startup capital for the business to just three major sources.

These are the areas we intend generating our start – up capital;

• Generate part of the start – up capital from personal savings
• Source for soft loans from family members and friends
• Apply for loan from my Bank

N.B: We have been able to generate about $150,000 ( Personal savings $100,000 and soft loan from family members $50,000 ). Please note that we have perfected plans to generate $1 million dollars from accredited investors whose names can’t be mentioned for obvious reasons.

14. Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business, then it won’t be too long before the business close shop.

One of our major goals of starting Gregory Peters Holding Company, LLC is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to give investors under our business good returns on their investment.

We will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner of our business strategy.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more as determined by the board of the organization. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

• Business Name Availability Check: Completed
• Business Incorporation: Completed
• Opening of Corporate Bank Accounts various banks in the United States: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of all forms of Insurance for the Business: Completed
• Securing a standard office facility in New York City: Completed
• Conducting Feasibility Studies: Completed
• Generating part of the start – up capital from the founder: Completed
• Applications for Loan from our Bankers: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents: In Progress
• Design of The Company’s Logo: Completed
• Printing of Promotional Materials: Completed
• Recruitment of employees: In Progress
• Purchase of the needed software applications, furniture, office equipment, electronic appliances and facility facelift: In progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business (Business PR): In Progress
• Health and Safety and Fire Safety Arrangement: In Progress

More on Real Estate

Sample Holding Company Business Plan

Do you need help starting an investment holdings company? If YES, here is a sample holding BUSINESS PLAN SAMPLE.

They say failing to plan is planning to fail. It is about a similar matter that we seek to draw your attention to. Many times, businesses fail due to a lack of proper planning. We will focus on a holding company with this holding company business plan sample.

A holding company is a parent company that may not produce and advertise goods and services of its own but has the sole purpose of owning authorized financial assets of other private companies to form a single entity.

Need to write a plan for your venture? Download a FREE Business Plan PDF Sample to develop a template for your own startup.

The parent company operates by holding enough voting assets or stock to predominate subsidiary companies by influencing the management of the companies. Subsidiary companies can be corporations, Limited Liability Companies, Partnerships, or sometimes government or state owned enterprises.

HOLDING COMPANY BUSINESS PLAN SAMPLE

A holding company performs only investing, financing, and managing activities other business activities such as purchasing of goods and services are carried out by the operating company.

Starting up a holding business is an easier task if you do it right.

Here is a sample business plan for starting a holding company.

• Analyze your Business Needs

Reduction of taxes and assets security are the two most common benefits of a holding company. A holding company can provide assets security of highly valuable assets of subsidiary companies, you should consider the benefits you want to gain from starting up a holding company. The holding company also loans assets to subsidiary companies to perform their operating functions.

• Decide your Business Structure

Holding companies are mostly of two structures, a corporation or a Limited Liability Company (LLC). To provide assets with maximum security and for more profitable taxation you may decide to form two Limited Liability

Companies in different states, a holding company, and a subsidiary company.

The holding company would not be held responsible for the drawbacks of the subsidiary companies if you register and operate them as two individual entities. A limited liability company is not a corporation as it is the combination of the flow-through income of a sole proprietorship and the fixed liability of a corporation.

• Register your Holding Company

Make sure your holding company conforms with all laws and tax regulations of setting up a holding company in your state.

After deciding your business structure, you will need to register your business with your state by providing details such as; business name, agent’s name, and an article of incorporation or article of association which contains important business information such as the purpose and goals of the business and officers or agent’s names and address.

You’ll need a unique name for your business , most holding companies have ‘holding’ attached to their company names.

• Finance your Business

The subsidiary or operating companies need affirmation from your holding company that they are not at risk.

Financing of the holding company is very important, you may seek financing from partners or other sources as you will need funds to start up a holding company.

The valuables of subsidiary companies are stored with the holding company, you should create separate company accounts for the parent and subsidiary companies and store all funds to be used for your holding company in its account.

• Keep Records of your Company

Records should be kept on business dealings between your holding company and its subsidiary companies, the records of your holding company should be kept aside from that of the subsidiary company, employees working under the subsidiary company should also be paid by it as the holding company would only concern itself with the general control of the subsidiary.

Employ the services of an accountant who would keep tabs on transactions between the holding company and subsidiary company. The accountant would manage the cash flow and present accounting records from time to time.

Importance of keeping records;

• To supervise the development of your holding company.
• To prepare income and expenses statement and balance sheet.
• Monitor tax returns.
• To explain items on cash returns.

Sales of goods and services are categorized as an operating activity; these activities should be carried out by subsidiary companies. Holding companies should not carry out operating activities as they will not be held for creditors of the companies. The only condition where a holding company would be held responsible for the debts of its subsidiary is when the two companies are so entwined.

When starting up a holding company, most of the cash in the holding and operating companies should be kept in the holding company. The subsidiary company can receive loans from the holding company when it’s needed, but the holding company should not be subjected to the drawbacks of the subsidiary company.

• Taking up Subsidiary Companies

You may have decided to set up your holding company to hold the shares of your operating company, but if not, you should take up smaller upcoming companies.

As named, the main function of a holding company is to hold. You may decide to set up a holding company for your smaller companies for its added benefits. Plan your business properly, take down business strategies, goals, and objectives as well as business information for a successful holding company.

INVESTMENT HOLDING COMPANY BUSINESS PLAN EXAMPLE

This article will make this sample available for entrepreneurs having challenges in putting together a good plan for their holding businesses.

All you need to do is to read through this sample to get a better understanding of how it should be done. Keeping it simple is an effective way to avoid common mistakes. It is also necessary to state that a feasibility study is vital to the success of your plan.

• Executive Summary

Veritable holdings are the holding company for two major insurance corporations. These are Gateway Insurance and Hedge Secure. We own the outstanding stocks of these corporations. This allows for a significant reduction of risks of our two clients; Gateway Insurance and Hedge Secure.

We are not in any way involved in the production of goods. We are a service-oriented business that serves only the interests of our clients.

• Our Services

Our services are client-specific. We are in business to provide holding services for outstanding stocks. We are looking at expanding our corporate group to include more corporations. Through our services, we eliminate risks to varying degrees.

By owning the major shares of these businesses, usually 80%, we enable these businesses to claim tax-free dividends.

The holding services provided by Veritable Holdings are tailored to fit the most important needs of our partners.

Through the adoption of global best practices, we will have a business model that is highly effective and efficient.

• Our Mission

Our mission is not only to provide the best holding services to businesses within our corporate group but to also provide the same and even better-improved services to future partners.

Our financing will be sourced mainly through borrowed funds. The loan application process has begun in earnest.

We seek to raise the sum of $12,000,000.00 payable in 20 years. This has an interest rate of 2%.

• SWOT Analysis

This is crucial to how effective our services are in the long run. We have commissioned a reputable business solutions services company to handle this aspect. The findings have given us a better perspective on what needs to be done.

These are shown as follows;

We have identified areas of our strength to be our understanding of how the holding industry works. The strength of our business lies in our partnerships. We have a strong sense of commitment to the ideals of excellent service delivery and client satisfaction.

A good number of our hired professionals have worked with major and successful holding firms in the past. The experience gained has been immense and will be greatly beneficial to our smooth take-off.

We are coming in at a time when the stock market is at its lowest ebb. The recent crash in stock prices has made the stock market less attractive to investors. This was mainly caused by a recession experienced in the economy. There are clear signs of recovery but it is very slow in picking up. The slower it takes, the more we will be exposed to risks.

However, we have set a defined risk level beyond which we will activate our due diligence by pulling our stops until when conditions improve.

• Opportunities

The opportunities ahead are far more than the likely risks we may face. As a reputable holding company in the making, we will be providing exceptional services as a strategy to build confidence in our business partners as having the ability to deliver. We will position ourselves as the preferred holding partners for future business relationships.

Threats are in the form of negative regulatory policies that may be introduced at any point before or during the commencement of business operations. An additional and more sinister threat presents itself in the form of a global economic recession. Its effects are ravaging! Although this does not happen often, it still is a threat we are faced with.

• Profit Projections

Profitability is an important aspect of doing business. We have been careful to measure our level of profitability relating to current demands for our services. A reputable business solutions provider was commissioned to conduct this analysis.

The findings have been positive as it has shown steady growth in profits as summarised in the chart below;

• First Financial Year.        $9,000,000.00
• Second Financial Year.   $15,000,000.00
• Third Financial Year.       $30,000,000.00
• Competitive Advantage

Our competitive advantage arises from our exceptional services driven by excellence and a strong desire to make our clients happy.

To ensure that our team of professionals put in their best, we commit to providing the best working conditions that promote productivity. This is in addition to the creation of an attractive remuneration package which is purely for motivation.

• Marketing Strategy

Our marketing strategy is geared towards doing business with the right kind of people. We have a world-class marketing team that will design and coordinate all our marketing activities and efforts.

There you go! Our holding company business plan sample provides you with the help you need in writing yours. Before writing your plan, you need to have learned as much as is necessary for your business through your feasibility study. This will make your plan more accurate and precise.

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Should I Form a Holding Company for My Businesses?

Do you own multiple businesses .

Many small business owners have several businesses. If you are in that situation, you may want to consider setting up a holding company as an overall entity. The reason for doing that would be to keep the liability of the businesses separate, and manage them together.

What is a Holding Company?

A holding company is a company (usually a corporation) that owns a controlling interest in one or more companies, called subsidiaries.  A holding company might be called an "umbrella" company or a parent company. The holding company doesn't do anything except manage the companies under its umbrella.

A holding company can own subsidiary companies that hold:

• Shares of stock in a corporation
• Securities, like stocks, bonds, and mutual funds
• Intangible assets like patents and copyrights
• Real estate
• Vehicles or equipment
• In other words, anything that has value  

Each type of asset could be set up as a separate business. For example, you could form one business to hold real estate, and another to hold a fleet of delivery vehicles.

What are the Types of Holding Companies?

A holding company holds part of another company's stock.

A parent holding company owns enough stock (usually 51%) to control election to the board of directors.  

A holding company is considered a personal holding company (PHC) under IRS rules if it meets two tests:

• An Income Test: At least 60% of the company's adjusted ordinary gross income for the tax year is from dividends, rent, interest, and royalties
• A Stock Ownership Test: If five or fewer individuals own a majority of the company's stock at some point during the latter half of the tax year  

A PHC may be subject to a special PHC tax if at least 60% of its adjusted ordinary gross income for the tax year is PhC income. Schedule PH for the corporate tax return is used to determine if this tax must be paid.  

Do I Need a Holding Company?

If your multiple businesses are very small with few assets (like an online business), it seems a lot of expense and trouble to form a holding company. Another possibility is to form just one company and then to have several "projects" within that LLC. You could then file a fictitious name ("doing business as") designation for each of these projects. 

The advantage of a holding company over separate companies is that losses in one company can be used to offset profits in another, while still keeping the liabilities separate.

How Do I Start a Holding Company?

Before you start a holding company, you'll have to decide what type of company legal structure you want. The two most common types of companies are LLCs and corporations. Starting a holding company as an LLC or a corporation is a fairly painless task, but you should get the help of an attorney to make sure you do it correctly.

As you set up your holding company, you will need to find a board of directors to manage the holding company and oversee the subsidiaries. These people should be familiar with the holding company concept.

Are There Restrictions on LLC's Owning Corporations? 

Different business legal entities can own each other, but there are restrictions. From the standpoint of a state, there are usually no restrictions - an LLC can own a C corporation, for example. The restrictions come from the IRS. If an LLC is an owner of a corporation, the LLC must elect C corporation tax status.  

An LLC cannot own an S corporation because only individuals and certain trusts and estates can own this type of corporation.   

A sole proprietorship is not eligible to own another company because it isn't registered with a state and its tax status is limited. 

This article on Who Can Own a Businesshas more detailed information on what kinds of companies or individuals can own businesses.

Is a Holding Company Liable for Acts of a Subsidiary?

In general, the liability of a holding company for one subsidiary's actions relates to the degree of control the holding company has over the operations of the subsidiary. In United States v. Bestfoods , in 1998, the Supreme Court held unanimously that a holding company isn't liable for acts of a subsidiary if the parent didn't actively participate in, and have control over , the actions of the subsidiary, but there are exceptions, and state laws govern these issues.  

The most important exception is if the corporate veil is pierced , meaning that the action was outside the normal activities of a business (fraud or negligence, for example). In this case, the owners of both the subsidiary and the holding company could be sued.

More important, if you set up the individual companies within your holding company correctly, the liability for debts won't affect all the others. For example, if one subsidiary is set up to own real estate, and it goes bankrupt, the other companies should not be affected by the bankruptcy.

What about Taxes for Holding Companies?

The individual business entities each file their own tax report and the reports. Each business files a tax return, and the losses and gains of each business are added up and placed on the holding company's tax return. So a loss by one entity can be used to offset a profit by another on the holding company's tax return.

This is a complex issue, with liability and taxes to consider. Before you form a holding company, talk to an attorney and a CPA who are familiar with the laws and accounting for holding companies. Discuss your current situation and future plans to make sure everything you do is according to all federal and state laws and regulations

Wolters Kluwer. " Using a Holding Company – Operating Company Structure to Help Mitigate Risk ." Accessed Sept. 1, 2020.

Cornell Legal Information Institute. " Holding Company ." Accessed Sept. 1, 2020.

IRS. " Definitions for Closely Held Corporation, Personal Holding Company, and Personal Service Corporation ." Accessed Sept. 1, 2020.

IRS. "Instructions for Schedule PH (Form 1120). U.S. Personal Holding Company (PHC) Tax." Accessed Sept. 1, 2020.

IRS. " S Corporations ." Accessed Sept. 1, 2020.

InVigorLawGroup. " When is a Parent Company Liable for the Acts of a Subsidiary ?" Accessed Sept. 1, 2020.