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Want to know how write a business plan? Not sure what needs to go in each section or how long it should be? Read on to find out.

How to Write a Business Plan

Every small business has a beginning. It’s an exciting time with a lot to look forward to.

But the launch of every small business is not created equal.

If you want to make sure your business gets started off on the right foot, you need to make sure that launch includes a critical element: a well-crafted business plan.

Creating a business plan is an integral part of starting a business. It’s an A-to-Z guide to running your business the way you want (and need, for it to be successful).

That’s why in this guide, we’ll show you everything you need to know about writing a business plan, including:

• What is a business plan? 
• The 8 steps to writing your business plan
• How long should a business plan be?
• Business plan examples

So, let’s start with the obvious question:

What Is a Business Plan?

A business plan is a guide of sorts, both for you and those interested in your business (i.e. potential investors), that lays out your plan for growing and developing your business. 

It tells the story of who you are as a company, what your goals are, and how you’re going to get there. And it does all that while being as thorough as possible. 

Goals should have dates, a detailed marketing plan to back that up.

A product strategy that makes it clear why you’re selling what you’re selling and how you’re going to make it better.

And, finally, a financial plan that shows how you’re going to manage all that money your business is going to be making.

If there is any part of running a business that you’re unfamiliar with, this will be the point that you’ll want to start doing some research, as you’ll need a basic grasp of everything from marketing, product development, financials, and your organizational structure to create a good business plan. 

What Needs to Be In a Business Plan? 8 Steps to Writing a Business Plan

Now that we’ve got that out of the way, what are you supposed to put into your business plan? 

There are 8 things every good business plan should have.

They are:

1. Executive summary
2. Company overview
3. Market analysis
4. Organizational structure
5. Product strategy
6. Marketing strategy
7. Financial plan
8. Appendix

With a thorough description of each of these areas, you’ll have a detailed business plan in place that should not only guide you in your business’ development but make you look good with investors. 

How to Write a Business Plan: A Step-by-Step Guide

Creating a business plan can seem a bit overwhelming when you consider everything that goes into one. 

But if you take it one part at a time, you’ll find the plan coming together before you know it. 

Now, let’s jump into those 8 steps we just talked about and do just that: break each part down into easy steps to follow.

And remember: If you’re unsure of anything right now, just write down what you do know about each section. Later, you can come back and flesh that section out. 

With that said, here are the 8 parts of every business plan:

1. Write an executive summary

First, you’ll want to write your executive summary.

An executive summary is a summary of where your business is now and where you want it to go. If you’re trying to interest investors, this is also a good place to add a little bit about what makes you stand out as a company and why your company is going to be a success.

How long should it page? About a page is fine, though it could be longer.

If that feels impossible, consider that your executive summary is exactly that: a summary. It’s not a thorough breakdown.

Think of your executive summary as the prelude to the rest of your business plan. Later, you’ll go more into your product, marketing, positioning, and financials. For now, just give them an effective and concise summary of the most important parts.

What are those? The SBA recommends the executive summary of a business plan includes these 6 pieces of information:

1. Mission statement: Describe your business and its goals in a paragraph.
2. General company information: This includes the date of your company’s formation, the owners/founders, their roles, and how many employees you have.
3. Highlight successes: Place any notable data (in visual form such as a graph) regarding the growth of your business. Remember, your business plan should impress potential investors (unless you’re solely doing it for your own use, in which case this can be skipped), so you’ll want to offer something that signals you’re bound for success if you have it or other positive notes about why you’ll be successful if you don’t have that.
4. Products and/or services: Describe your product or service and your market.
5. Financials: This section is important if you’re looking for investors as you’ll list your funding goals as well as anyone you’ve already worked with in the past to secure funding. 
6. Plans and goals: What are your goals for the future. The last part of your executive summary should mention what those goals or plans are.

This first section might seem like a doozy, but keep in mind that it’s arguably the most important section of your business plan because it summarizes everything that will come after it. 

The great part about starting with this too is that it will help give you a better idea of what you’re going to put in each of the proceeding sections, making the rest of the business plan go smoothly. 

2. Complete your company overview

Next is your company overview. Consider this the basic information that those interested in your business will need to know about how you function.

That includes: 

• What does your business do? You spent a lot of time selling your business in the previous section, now you need to make it crystal clear what your business does. 
• Your market: Who do you sell to? What is the need you’re serving? How are you serving that need?
• Your business type (legal structure): Explain what business structure you are and why you’ve decided to choose that structure. Also, list how ownership is divided and managed. 

Make sure your answers to these points are to the point. This is an overview, like the last section, so you don’t have to spill all the details (not until later). 

However, you also want to make sure it paints an attractive view of your company if you’re preparing this to acquire funding.

3. Do a market analysis

Next on the list is a market analysis. This is an analysis of your industry, your competitors, and any other important information relative to your market. 

Now is when we move from concise overviews to more detailed breakdowns of the major areas of a business, so you’re going to want to make sure to get into the nitty-gritty here and show that you understand the market you’re stepping into. 

And if you’re just doing this for your own use, it’s a great exercise it making sure you know enough about your industry and market as a whole. 

Make sure to include this information in your market analysis:

• Industry summary: List the basic information about your industry: its size, growth, current health, and any data connected to it related to trends or anything else. 
• Target market demographics: Now focus in on your target market: who specifically are you selling to? Beyond that, you’ll want to talk about who your customers are, where they’re located, and any other information relative to demographics.
• Target market size: How big is your target? How fast is it growing? These are also questions you’ll want to answer in this section. 
• Target market behavior: Where does your target market make purchases? When do they buy? List anything related to your market’s behavior. 
• Market share: How much market share do you predict being able to capture? 
• Pricing tolerance: You’ll also want to know everything you can about what you can and should be pricing your product at. 
• Market entry conditions: What barriers are there to entering your target market? You need to be aware of these before jumping in, whether it’s licensing, regulations, expertise in personnel, etc. 
• Competitors: Who are your competitors? What makes them stand out? How will you be better than them and/or stand apart? What are their strengths and weaknesses?

As you might be able to tell already, this is possibly the most research-intensive part of the entire business plan.

However, having said that, the research you’ll be doing to complete this section is invaluable, even necessary, to your business’ success. 

Leave out even one of the above sections and you’ll be flying in dark without all the information you’ll need to make smart decisions as your business grows and is presented with challenges. 

4. Define your organizational structure

Moving on from your market analysis, the next deep-dive is into your organizational structure. 

This section is all about defining what kind of system your business uses to manage itself. 

Who does what? Who reports to who? How do your teams break up? These are just some of the questions you’ll want to answer. 

Here’s everything you’ll need to define:

• Organizational structure: Create a visual document/chart of some kind that shows how your business is structured, including who has what role and who is in charge of managing what part of the business. 
• Ownership: If you have partners, how does ownership break down? Who is responsible for what? 
• Backgrounds: Detail the backgrounds of all notable team members including partners, managers, and your board of directors. This section can be quite long, and that’s okay. Make sure not to leave anyone out. 
• Future hires: How does your team need to expand in the future? What key roles do you need to fill on the way to accomplishing your goals?

5. Define your product strategy

Now let’s move on to your product strategy. This mostly has to do with product development and the research involved in positioning your product within your market. 

Here’s everything to include in this section:

• A general overview of the product and/or service: What product or service(s) do you offer? What need does it fill in your market for your target customer?
• Product development stage: Is your product complete and ready to ship? Have you sold units/acquired customers already? Is it just in the ideation stage? If it’s the latter, describe what you’ll be doing to complete the product or service offering to have it ready to ship. 
• Patents / Intellectual property: If your product or service depends upon a patent or some kind of intellectual property, explain what where they stand. 
• Sourcing and fulfillment: Who is making the product? Where are you shipping it from? Make sure this is clear to you now there are no problems down the line when it’s time to start selling. 

Remember that as you craft this section, like all the other sections, you want to show that you know what you’re talking to if you’re preparing your business plan for potential investors. 

Make your product, service, or idea look good and explain why you believe it will be successful. 

6. Define your marketing strategy

Next, with your market and product sections complete, you’re well-prepared to move on to defining your marketing strategy.

In this section, include any and all relevant information related to how you’re going to market your product or service. 

This includes: 

• Advertising and promotion: How will you market your product or service? This section is likely to be on the longer end as you should be detailing not just how but why. 
• Positioning: How will you be positioning your product or service? What is your reasoning supporting this decision? 
• Sales strategy: How will your sales team function? Will you have one at all? How will they work with marketing? At what stage will they begin interacting with the customer and what kind of overall sales process will be implemented? 
• Validation markers: You should have several hypothesis or tests in place to validate your offering, it’s positioning, and marketing and sales efforts. Without these things in place, there’s no way to know if your product or service is a success or failure and no reference point to come back to to make improvements. 

This is one of the main sections you may yet have quite a few question marks on. As we mentioned earlier, don’t worry. Just do your best to fill out as much of this section as possible, do the necessary research, then come back and finish it later if necessary. 

7. Write your financial plan

The final step in terms of the written information you need to provide for your business plan, it’s time to dive into the financial side of things.

How much does your product cost to source? How much are you selling it for? How many units can you move in a month? What is your overhead and other costs? These are just some of the questions you’ll want to answer.

If your business has been around for a bit, the best place to start is your current financial reports. Things like your profit and loss report, income and revenue statements, accounts receivable and payable, and any other financial reports.

And if you don’t have anything, create something that shows projections for important financial figures such as sales and revenue. Just make sure you’re not making numbers up out of thin air. Support these projections with market and competitor research. 

These are some of the documents you can include relevant to projecting future financials:

• Cash flow forecast
• Projected income
• Capital expenditure budget

If including projections, make sure to include them for the next 12-month period as well as either 3 or 5 years at least for a more long-term view.

With those projections out of the way, you’ll also want to include a section on funding. If you’re looking to acquire investors or will be investing a portion of your own funds, here is where you’ll outline exactly what you’ll need.

Make sure to include:

• How much funding you’ll need to get started
• Projected future funding needs
• And what those funds will be used for

After reading this section of your business plan, an investor should come away with a clear understanding of why you need funding and what acquiring that funding will allow you to do for the business.

8. Include an appendix 

The final step in good a business plan is less new information as it is the place where you stuff all those things that are important but might not have fit anywhere else: an appendix.

In this appendix, you’ll want to stash any and all important data or other supporting information you didn’t include throughout your plan already. 

That includes additional: 

• Data: Charts, graphs, you name it.
• Details: Anything relevant to your business that may not have fit anywhere else.
• Legal documents

• Additional images: If you’re a restaurant, additional menu item images, you get the idea. 
• Resumes: If your plan may have been lacking in supporting data or you simply think it will help, you can include your resume and the resume of any of your founders or key managers as a supporting document.

Anything that you feel is important or valuable but just didn’t quite fit in the plan should go here. And since it’s a gathering of somewhat random items, make sure to include a table of contents to make this section easier to navigate. 

How long should a business plan be?

At this point, one of the questions you might be left with is: exactly how long does my business plan need to be?

Fortunately, that’s an easy question to answer:

As long as it needs to be to succinctly outline or define each major aspect of your business. 

The SBA suggests a business plan be no more than 50 pages. However, that all depends whether you’ll have investors reviewing that plan or not. If it’s just for your own personal use, even a few pages can suffice. 

Your marketing plan might be a few detailed paragraphs. Then again, it might be a bit more involved and require several pages. 

Ultimately how long each section will be will depend on what you need to say and your ability to break down that information as succinctly as possible (without leaving out any vital information). 

Business plan examples: What does a business plan look like?

Now that you know how to write a business plan, let’s go over some business plan samples.

We know that was a lot of steps, and it might not be entirely clear what your business plan should look like, so we’ve gathered some great samples as additional resources that you can review to get a better idea of what your business can look like.

Keep in mind that if you use any kind of software that allows you to put together a business plan, such as:

• LivePlan
• GoSmallBiz
• Planguru

then you won’t need to worry about looking over samples as they will guide you through the process. Still, it can be nice to see an example to make sure you’re creating your business plan right. 

With that said, here are a few business plan examples to help you get a better idea of how your completed plan should look: 

• Tech company business plan sample
• Software company business plan sample
• Retail store business plan sample

For the most part, business plans are the same across industries, with only small differences.

Keep in mind that once your business plan is complete, take some time to show it to everyone from your business partners to key personnel to get their feedback. 

The more eyes who are directly connected to your company’s goings-on who look at it, the better it will be and the more buy-in you’ll be able to get right from the get-go in terms of your company mission and direction of each major moving part.

Get the Startup Capital Your Business Needs with Excel Capital

Now you know how to write a proper business plan, there’s only one thing left to do: create it.

Take the steps we’ve broken down here and start writing a business plan of your own one step at a time, making sure that each section is as comprehensive as possible.

After all, this is going to serve as a guidebook of sorts that will help direct your entire business’ dealings for years to come, so it’s worth taking some time to make it right.

Getting things right is also important with regards to funding.

With the right funding in hand, you can grow and establish your business faster and keep things running smoothly.

At Excel Capital, we offer a variety of business funding tools, many which you can be approved on with low or no credit and fund in as little as 24-48 hours.

Apply to get the funding your business needs with Excel Capital today:

Get the capital your business needs without the hassle. Apply for a small business loan with Excel Capital: Apply Now

Bizfi: The Rise (and Fall) of a Fintech Trailblazer

The year was 2005. 

A brand-new company– Merchant Cash and Capital (MCC), later known as Bizfi– was shaking up both the financial and technology industries in the United States with a revolutionary new approach to conducting business (especially online).

The mission for Merchant Cash and Capital was simple and straightforward in these early days. MCC would act as a purchaser of future credit card sales, a brand-new concept in 2005 and a move that laid down the foundation for the future financial technology movement of today.

Growing rapidly in the first five years of its existence, Merchant Cash and Capital founder Stephen Sheinbaum decided to establish a secondary operation– Next Level Funding– that acted as a broker for small business owners and entrepreneurs that were having a tough time getting financing in the middle of the Great Recession. 

Next Level Funding was going to help drive business to Bizfi, still then Merchant Cash and Capital, and accelerate the growth of their unsecured business loans through direct calling or telemarketing and other online sales channels.

The fintech movement takes off

At this stage in the early history of the fintech movement, online businesses were beginning to take off, opening up a world of opportunity for entrepreneurial endeavors that simply hadn’t existed before. 

Shopping online had finally “gone mainstream” and people were familiar with– and maybe more importantly comfortable with– sending their personal, private, and payment information to strangers over the internet.

On the flip side of things, traditional lenders and business owners were anything but familiar with these online enterprises. 

They remembered the Dot Com Bubble of the 1990s– and the way it blew up in many business owner’s faces– and looked more than a little bit skeptically at what people were calling the true power of the Internet and how it might revolutionize business forever.

Combine that with the fact that the Great Recession was in full swing (peaking in 2008, three years after Merchant Cash and Capital was founded) and traditional businesses were folding left and right and creditors were finding more people defaulting on their loans than ever before, and it’s easy to see why a company like Merchant Cash and Capital was able to swing in on a chandelier and start gobbling up market share.

Bizfi is formed

It took 10 years of rapid expansion to decide that it was time to bring both Merchant Cash and Capital and Next Level Funding under the same roof, operating them as a new single entity.

Under the leadership of founder Stephen Sheinbaum, the organization was restructured and reorganized, offices were consolidated, and the workforce was brought under a single roof. And, at the same time, there was rapid expansion. 

Ten years from MCC’s founding, 2015 saw Merchant Cash and Capital and Next Level Funding merge under the same roof of the Bizfi moniker. 

And, as it would have it, success for the company formally known as Merchant Cash and Capital came very, very easy.

By the time 2016 rolled around even the most old-school and traditional of lenders recognized just how powerful, important, and influential the fintech industry was going to be. 

Bizfi had a huge head start on the rest of the pack, as according to industry reports they were one of the largest originators of merchant cash advance packages in existence at the time.

And then, just like that… the company disappeared almost completely. 

What drove Bizfi out of business?

Within less than a year of the time that it seemed inevitable they would take their place as a top player in a quickly growing industry, Bizfi was out of business. 

Journalists that had been following the meteoric rise were stunned. Industry experts couldn’t figure out what had happened and even those that had been working with Bizfi were shocked to learn that they were going to be shuttering their doors forever just when things looked like they were poised to take off like a rocket.

A postmortem is still being conducted on the company formerly known as Bizfi, partly due to the fact that it didn’t cease operations until late 2017, and much of what happened during the period between 2016 and 2017 that could have changed the company’s fate so drastically remains unclear.

One thing, however, is certain: Between 2016 and early 2017, Bizfi had grown too large far too quickly and that led to several factors that would eventually spiral out of control. 

Several factors likely contributed to driving Bizfi out of business, but there were primary red flags among those factors. 

Here are some of the primary factors that led to Bizfi going out of business:

They hired too many too quickly that did not have enough underwriting experience

Prioritizing closing deals, Bizfi hired quickly but not effectively, choosing to hire many who didn’t have enough underwriting experience. This led to a cascade of negative effects. 

First, underwriting managers were incentivized to fund as many deals as possible.

That might sound obvious, but they were encouraged to close deals to cover up their default percentage even if the deal didn’t make sense business-wise. 

As a result, they funded too many large deals with too high a risk. 

They funded deals for brokerages, also known as ISO shops, that shouldn’t have been funded, especially considering the size of the deal.

They lent heavily to young businesses

Bizfi was known at the time for offering entrepreneurs that only had six months of business experience under their belt and monthly revenues of at least $15,000 highly favorable financial packages that likely didn’t befit their financial or business standing. 

They found many new entrepreneurs who wanted to take advantage of their services, but those same deals quickly ran their businesses into the ground. 

After all, nearly 75% of all new businesses will eventually fail. Lending to such young businesses large cash sums was unheard of due to the risk, and unfortunately, Bizfi became a reason why that’s the case. 

They lent heavily in high-risk industries

Similarly, Bizfi also became a popular financing option with some of the riskier industries in the entrepreneurial world:

• Brick-and-mortar retail shops
• Restaurants and bars
• Health and fitness centers
• And business service operations 

These together made up the bulk of the Bizfi clientele, though each of those industries is considered high risk, high turnover, and has a high likelihood of failure in the first five years (SBA).

Eventually, Bizfi was sending more money out the door than they were bringing in, even though the bulk of their loans were short-term with sky-high interest rates. 

Compared to traditional lenders with 10% APR packages, Bizfi routinely offered loans that carried an APR of 150% or more– interest rates that most entrepreneurs found next to impossible to meet with any real consistency or regularity.

Eventually, Bizfi began searching for outside investment, especially as the business markets started to cool across the globe. Institutional interest in the fintech industry continued to remain strong, but many of these larger operations had little to no interest investing in a company as overextended as Bizfi had become.

And by July of 2017, the Bizfi party was officially declared over.

Bizfi closes its doors

In July of 2017, according to sources close to the company, all remaining employees were given a 90-day notice that the company was to cease operations and terminate their employment. 

It was the culmination of a series of layoffs, this the largest at more than 200 layoffs– many of which had been original employees at Merchant Cash and Capital or Next Level Funding.

In a CNBC interview in 2015, Bizfi founder Stephen Sheinbaum said that they had hopes of securing an equity investment that would allow them to go public by the following year in 2017. However, that investment never became a reality. 

July 2017: Bizfi sells its marketplace and other assets to World Business Lenders

Following the wave of layoffs, the assets held by Bizfi were divvied up and sold off, with many of them purchased at deeply discounted prices by World Business Lenders or WBL (formerly one of the top competitors for Bizfi in the fintech space). 

According to Bizfi founder Stephen Sheinbaum, who joined WBL as a managing director in July of 2017, WBL purchased the Bizfi brand, marketplace and other pieces of the company. 

August 2017: Bizfi sells its portfolio to Credibly

One month later, in a separate deal, Bizfi sold the servicing rights to its $250 million dollar portfolio and 5,200 merchants to another fellow competitor, Credibly.

“Acquiring the servicing rights of BizFi’s portfolio is a testament to our data-driven approach and laser focus on the working capital needs of small businesses,” Credibly founder and Co-CEO Ryan Rosett said in a press release. “We welcome our new customers and are committed to ensuring that their growth capital needs are met.”

According to a Bloomberg report, the deal allows Credibly to offer additional capital to that existing 5,200 customer base.

If you’re looking for accounting software that makes doing your own business accounting easier or looking to replace your accountant, both QuickBooks and Quicken are tried-and-true options that can’t be overlooked.

But which is better? And how do you know which is specifically better suited for your needs? 

That’s the purpose of this guide: to give you a detailed breakdown of both QuickBooks and Quicken so you know what their strong points are and which you should choose. 

Table of contents:

1. QuickBooks vs. Quicken: A “Quick” Summary
2. When Quicken is better
3. When QuickBooks is better

QuickBooks vs. Quicken: A “Quick” Summary

Before we dive into our detailed review, for those who want the summarized version (or a “quick” summary– pun intended), we’ve broken down the essential points below.

If you rather not wade through a list of benefits and features and just want to get the short of it, this is for you: 

When to use QuickBooks

QuickBooks is by far the more robust accounting software. If your only reason for needing business accounting software is for, well, accounting, then QuickBooks is the better option by far.

QuickBooks is perfectly suited for small businesses while also having the necessary features to support you as you grow, no matter what direction your business goes. 

Check out QuickBooks.

When to use Quicken

While QuickBooks is the more expansive business tax software, Quicken has a niche that is sure to be attractive to some small business owners: it’s a great personal finance tool.

If you’re a sole proprietor, or just a solo business owner, an accounting + personal finance software might be a good fit for you. 

Quicken is also well-suited for those who own rental property as it gives you the ability to track tenants and manage your lease terms and rental rates. 

However, if these odd benefits aren’t of value to you, QuickBooks is hands-down the better software. 

Check out Quicken.

Quicken vs. QuickBooks: A summary of features

Here’s a breakdown of all key features available with QuickBooks/Quicken: 

Quicken Home & Business

Quicken’s Home & Business version is ideal for small business owners who need basic business accounting software but who also want to take advantage of Quicken’s useful personal finance features. 

On the business accounting side, Home & Business offers reports such as profit & loss and cash flow, helps you maximize tax savings, and will categorize your expenses. 

In addition to these business accounting features, you’ll have an effective personal finance manager as well. You’ll be able to create personal budget goals, track your spending, and even manage any financing you have.

Quicken Home & Business has one version and costs $100 for one year, as opposed to QuickBooks’ monthly setup. 

QuickBooks Small Business

QuickBooks Small Business, or QuickBooks Online, is the online version of QuickBooks accounting software. As opposed to Quicken’s Home & Business version, which offers a balance of basic personal and business features, QuickBooks offers a comprehensive suite of business features. 

There are several versions of QB’s online software, each proceeding plan offering a few additional features you may or may not care for, from adding additional users onto your account to printing 1099’s.

Depending on which plan you go with, QuickBooks by intuit will cost from $20 to $150 per month, including a $25 Simple Start, $40 Essentials, $70 Plus, and a $150 Advanced plan. 

Quicken vs. QuickBooks: When Quicken is better

So far, we’ve summarized the main takeaway of the comparison between QuickBooks and Quicken. 

However, if you’re looking for a more specific breakdown of what key benefits and drawbacks each software has, we’ll cover that in these next two sections. 

First, here’s where Quicken shines over QuickBooks:

Quicken is more affordable

One of the biggest differences between Quicken and QuickBooks is the fact that QB charges monthly, while Quicken’s software is an annual license.

What that means is you’ll only be paying $100 a year for Quicken’s Home & Business, but you’ll need to purchase it every year. However, with QuickBooks, you’ll likely be paying between $25-70 each month, which can quickly add up to far more than what you would pay with Quicken.

Quicken can track your finances (both business and personal)

If you need, or want, a single software that tracks both your business and personal finances, Quicken is a great option. 

With its mix of key personal finance and business accounting features, if you’re a solo business owner that works from home (or some equivalent), Quicken might give you everything you need in a single software. 

With Quicken, in addition to its basic accounting features, you can track investments, loans, and spending while managing your business accounting, though only if you do a few minor transactions here and there (otherwise it can get very messy). 

Quicken vs. QuickBooks: When QuickBooks is better

While Quicken is more affordable and offers the ability to track personal finances and do your business accounting in one place, QuickBooks stands above it in most regards.

Here’s when QuickBooks is better: 

QuickBooks has more robust accounting features

While Quicken has some definite positives, if you’re looking for a true business accounting software, it falls short in many ways.

QuickBooks offers business accounting features such as payroll, time management, inventory management, purchase orders, and automated invoice features.

In addition to these features, with QB you also have access to a slew of integrations for various accounting software that can make the software even more powerful. 

QuickBooks has better accessibility and usability

Of the two, QuickBooks is generally the more polished. The interface is cleaner and simpler and it’s easier to find what you need. 

Quicken, on the other hand, can seem a bit busy mostly because of its personal finance features, which just become an obstacle to wade through if you have no use for them. 

In addition to this, QuickBooks lives in the cloud, whereas Quicken is a basic desktop software. That means whatever happens to your computer, your information is safe. It also means you can access your software with QuickBooks even if you’re offline, something you can’t do with Quicken.

Quicken or QuickBooks: What is better for your business? 

Whether Quicken vs. Quickbooks is better mostly depends on how much use you can get out of their personal finance features.

If you have no use for personal accounting features, and instead just want the best business accounting software available, QuickBooks is the perfect option.

However, if you’re a solo business owner who manages all their own finances, something like Quicken can be incredibly useful in bringing everything together into one interface, making it easy to manage everything. 

Just make sure to remember the importance of keeping your business and personal finances separate. 

Finance has an integral part to play in a business. At a basic level, sufficient financing ensures that businesses have enough cash flow to maintain daily operations. This also assists in investment-related decisions, and facilitates smooth spending. A business’s ability to secure financing is essential for realizing tactical and strategic objectives.

Money greases the wheels of all businesses; it’s imperative that finances are carefully managed to ensure uninterrupted business activity, access to capital, and the ability to leverage opportunities as they arise. In an ideal world, businesses would generate sufficient revenue streams from sales of goods and services to cover costs. Businesses routinely face challenges in the marketplace, particularly with capital investments which require loans and other forms of financing.

The infancy stages of a business

Companies either succeed or they fail. What happens is largely dependent on a business’s ability to finance itself during the different stages of its life-cycle. There are typically 3 phases in a business life-cycle, notably the start-up phase, the growth phase, and the maturity phase. During the start-up phase of a business’s operations, financing comes from a variety of sources notably the owner/founder’s personal savings account, assistance from friends and family, small bank loans, and even credit cards.

If the business plan is ironclad, the business owner may be able to attract significant investment from angel investors, venture capitalists, and other sources of financing. For example, an entrepreneur may be willing to relinquish equity in the company for capital financing. This is a commonly used method by business owners who have a great business plan and investors who are eager to hitch their wagon to the business.

The growth phase of a business

During the growth phase of the business life-cycle, financing is equally important. Growth a.k.a. expansion necessitates significant investment in a business’s operations. Further, human resources are needed and this requires significant investment.

It is possible for businesses to tap into cash flow, but this precludes shareholders from taking dividends. External capital sources are essential during this phase of operations. Several options currently exist, including venture capital firms, but they can be detrimental to the owner’s equity and control over the company.

Fortunately, entrepreneurs who opt for this method of financing will receive a substantial advance upfront. Other options include bank loans. It is worth pointing out that interest can be deducted from all taxable income, meaning that debt-financed capital is inexpensive. If a business is listed on the stock exchange, the issuance of shares serves as an effective way to generate a stash of cash. A word of caution is advised: the business must be a proven performer.

During the growth phase, there is another method of generating financing, particularly for companies involved in selling high-end products including vehicles, machinery, equipment, luxury goods and the like. Unlike a convenience store cash business, luxury items or big-ticket items are typically paid off over time.  Assuming an invoice value of $100,000 on day 0, a company may not want to ‘carry’ the customer’s debt obligation for several weeks or months.

An effective way to obtain financing during the growth phase and the mature phase of a business is invoice financing. This financing method is primarily geared towards B2B organizations where the terms are 30, 60, or 90 days in duration. Invoice financing is a product of the invoices that are due to be paid to a business.

It is highly effective at maintaining a stable cash flow. Invoice financing comprises multiple different products for financing accounts receivable. This typically takes the form of invoice factoring – a form of invoice financing. Assuming a company is owed $100,000, invoice factoring can ensure that 80% of that amount is paid upfront by the invoice factoring company ($80,000) and the balance is paid back over time (30, 60, or 90 days) less the factoring fee (for example 0.5% – 2%).

The reason why businesses use invoice financing is to boost cash flow immediately so that day-to-day operations can be taken care of and the business doesn’t run into a negative cash flow situation. Invoice financing isn’t that difficult to implement, provided the debtors are trustworthy and have an established and verified relationship with the SME.

The mature phase of a business

During the mature phase of a business’s life-cycle, it typically has a proven track record of performance. This means that it is likely a creditworthy business, and able to tap short-term capital loans and financing from a variety of sources. If the business has a healthy balance sheet and income statement, it is much easier to access capital from a variety of markets such as equities markets, capital markets, and bond markets.

Other forms of financing such as peer-to-peer financing and investment financing remain on the table. As a rule, you can expect the infancy stage of the business to be funded primarily by the owner, close friends and family. As the business grows, other financing options open up, including bank loans, business loans, non-bank lenders, angel investors, and invoice financing options too. Once a business has an established presence with credible clients, invoice financing is a particularly attractive option available to business owners.

Working as a contractor has a lot of things going for it. You get to work flexible hours, the income is typically better, and you’re basically your own boss.

As a contractor, you also happen to carry specific responsibilities, among them purchasing contractors insurance.

Some states and industries may not require contractors insurance, but if you care about your business, you should get insurance protection regardless of whether it’s a requirement or not.

And if you’re a general contractor, then it’s even more imperative to have contractors insurance coverage. As the prime contractor of a construction project, a general contractor stands to benefit immensely from having the right contractors insurance policies.

The responsibilities of a general contractor

The overall operations of a construction site fall under the supervision of a general contractor. The management of employees,  acquiring construction business loans , dealing with contractors and suppliers, and reporting on a project’s progress to those that commissioned the project are also part of a general contractor’s responsibilities.

Being the one in charge of an entire construction project means a general contractor is responsible for lots of workers, subcontractors, equipment, tools, and materials. The job is so massive in scope that not getting the proper type of contractors insurance coverage for any of them would be the height of irresponsibility, at the very least.

So what benefits can a general contractor get from contractors insurance?

Protection from claims

Construction is one of the most dangerous professions in the world. Thousands of construction workers worldwide suffer injuries while on the job. Workers can also cause injuries or property damage to third parties within the construction site when, say, a tool slips from their hands. If you’re the general contractor of a project when the things mentioned above take place, you can expect claims and lawsuits to head in your direction.

However, if your company has workers’ compensation insurance, any employee injured while working for you won’t have to worry about the expenses for their medical treatment. And if they lose wages because of their inability to work, workers’ compensation will cover it. With workers’ compensation, there would be no need for you to pay what is due them out of pocket.

As for third parties that suffer injuries or sustain property damage in the middle of your construction project, any claim they make can be paid for by general liability insurance, if you have one. Even if claims turn into lawsuits, your general liability policy will cover your legal expenses as well as the compensation the court might award your employees if it rules in their favor.

Protection for tools, equipment, and materials

The tools, equipment, and materials in a construction site can prove to be tempting for thieves. In fact, theft is not uncommon in construction sites. You wouldn’t want to lose them to these people. You wouldn’t want them to suffer any kind of damage as well. You are, after all, responsible for all of them, being the general contractor.

However, if you have a builders risk insurance policy that provides protection for tools, equipment, and materials, you will have one less thing to worry about. Builders risk insurance also provides coverage for the structure itself. So if fire, wind, lightning, hail, explosion, vandalism, and vehicles or aircraft cause any damage to the structure, you can rest assured that most builders risk insurance policies will pay for it

Compliance with state requirements

As mentioned above, not all states require contractors insurance, but most of them do. As a general contractor, you would want your entire project to be compliant with regulations set forth by the state within which you’re operating. Having general liability insurance, workers’ compensation insurance, and other types of contractors insurance is resounding proof that you are, indeed, following state laws.

Reputation boost

Clients, in general, will always want protection for any project they’re paying for, and that’s why they usually hire contractors with the proper insurance coverage. In all likelihood, they’ll only choose from a pool of insured contractors, and ignore everyone else. Having the right contractors insurance policies assures you then that your company’s name will be in that shortlist for any major construction project.

Peace of mind

Few things can give a general contractor peace of mind better than proper contractors insurance coverage. Considering the risks involved in construction, you’ll be more at peace knowing that if anything untoward ever happens with your ongoing construction project, your contractors insurance provider will always have your back.

While no one purchases contractors insurance and actively wishes that they get to use it, having that kind of coverage prepares you for any complications that might take place. In an industry that can be particularly stressful for its players, having contractors insurance policies can make you feel confident that your business will go on, even when somebody gets hurt or property gets damaged, stolen or lost.

Why should you check your business credit report?

Unlike your personal credit report, business credit is a bit more of an unknown.

How does it work? When does it come into play? How do I read my business credit report (because, if you haven’t seen yours yet, it’s somewhat different from a personal credit report)?

Your business credit report works largely the same way your personal credit report does: it serves as a tool for obtaining financing, in this case for your business, and sometimes for obtaining supplies from vendors. 

For those reasons alone, your business credit report is critically important to your business. 

Without a good business credit score, it will be much more difficult to obtain funding for your business when it needs it and it could cripple your ability to obtain supplies at ideal prices depending on your industry and type of business. 

So, you should not only check your business credit report now for potential errors and so that you understand what might be affecting your score, but make it a habit of checking up on it annually. 

But you probably have a few more questions about how your business credit report works. So, below, we’ll be covering:

1. The 3 major business credit reports
2. How to pull your business credit report
3. Reading your business credit report 
4. 3 Tricks to improve your business credit

First, let’s talk about the 3 major business credit bureaus and how they score your business.

The 3 major business credit reports

When it comes to your business credit report, there are 3 primary agencies and their associated credit reports: 

1. Dun & Bradstreet
2. Experian
3. Equifax

Each of the above agencies provides a form of business credit report to gauge your business’ creditworthiness. However, each does so a bit differently (with its own entirely unique scoring model), and that’s really where business credit reports vary from personal credit.

Here’s more information about each agency and how their scoring system works: 

Dun & Bradstreet

Dun Bradstreet, or D&B, offers a comprehensive report that offers your D&B rating and D&B PAYDEX Score in addition to several other metrics. 

PAYDEX is D&B’s business credit scoring method, which uses a number system from 1 to 100, the higher the score the better. 

Preferably, you want a score of 80 or above, which means that your business generally makes payments on time and is in good standing. If your score is 49 or below, you’re considered a high credit risk.

Experian

Experian has several reports including its Business Credit Advantage Report, which provides financial scores, payment history, and even tips for improving your score. 

No matter which report you get, they use what they call their Intelliscore system, which uses a similar 1-100 scoring model as D&B’s but takes into account a wider range of factors than either D&B or Equifax:

However, these differences aside, a score of 76 or higher– almost identical to D&B’s 80– is the number to shoot for as it signifies that you’re at a low risk of defaulting on your loans. 

Experian also offers a financial stability risk score, which scores your business from 1 (best) to 5 (worst) based on the stability of the business as a whole:

Equifax

Equifax’s Small Business Credit Report collects your company’s payment history, credit utilization, score, and other information. 

Their scoring model is more similar to the personal credit scoring numbering system in that numbers range from 101-992, the higher the number the lower the risk and therefore better. 

Similar to Experian financial stability risk rating, Equifax also offers a Business Failure Score that measures how likely your business is to close within the next 12 months, with scores ranging from 1,000-1,880. Again, the higher the number the lower the calculated risk, so you want as high a number as possible for both scores. 

How to pull your business credit report

Unlike personal credit, there is no federal program in place that requires agencies to offer you one free credit report annually.

That means you’ll need to pay for your business credit report no matter how you slice it, but the process is simple and straightforward and you can obtain it directly from each of the three reporting agencies. 

• Experian
• Equifax
• Dun & Bradstreet

Alternatively, you can sign up for free updates to your business credit report in many places (such as D&B here). However, you’ll probably still want to get that first business credit report copy so you know how you’re looking. 

Reading your business credit report 

All three main business credit reporting agencies offer some form of business credit report which you can obtain at a price. 

No matter which agency you go with, they’ll include mostly the same basic information, though there will be some differences.

Keep in mind that if your business is too recent, there may be no information listed. Similar to 9002 or 9003 credit with personal credit reports, you may simply not have enough credit history to have generated a score yet. 

Here’s an overview of the primary information you should find on your business credit report no matter who you go with:

Company information

Your business credit report will typically list information such as your business name, address, phone number, type of business, and parent companies.

However, in addition to that information, you’ll also find SIC/NAICS codes that specify your industry, key employees, and annual revenue/sale volume numbers.

Payment history

Your payment history will likely be separated into several sections such as commercial payment history (loan payments, leases, insurance) and supplier payments, though it may also be a summary:

Just as with your personal credit, your payment history plays a critical part in calculating your business credit score. Which, in turn, affects your ability to be approved with lenders. 

For that reason, this is one of, if not the, most important section to pay attention to. What does your payment history look like? Are there any smudges? Does everything show as on-time or do you have payments that show as past-due or, worse, in collections? Are you being consistent in paying down any balances? 

No matter what your situation, work on getting back to current and stay there with all your vendors, lenders, and other payments.

Public records

Another important part of your business credit report that mirrors a personal credit report is public records.

This includes items such as:

• Judgments
• Liens
• Bankruptcies
• Lawsuits

Each of these can negatively affect your business credit, so it’s important to which of these items you can take care of, which it’s having the item removed, paid off, or other. 

As with your payment history, public records and legal issues are used to determine your risk status for financing, so make sure to clean up or get rid of any of these that might show up as soon as possible. 

If you have any kind of lien of bankruptcy on your report, lenders may use that as an automatic rejection or, if nothing else, it may serve as a major check against your perceived creditworthiness. 

3 Tricks to improve your business credit

Now that you have all the information you need to get up to date on your business credit, it’s time to turn your attention to what steps you can take to make improvements. 

Here are 3 tricks you can use to improve your business credit: 

1. Use vendors that report to the business credit bureaus

It’s harder to find ways to improve your business credit than it is with personal credit. With personal credit, anything you finance is likely going to be reported to the major credit bureaus. 

However, with business credit, that’s not necessarily the case. 

The answer? Search out vendors in your industry who are known to report to the business credit bureaus.

Most industries have at least one major vendor who reports. For example:

• Cintas for restaurants, healthcare, and more
• Snap-on for automotive and other mechanical industries
• John Deere for landscaping
• Uline for shipping supplies
• Quill for office supplies

By ordering the supplies your business needs regularly from a company that reports to the business credit bureaus, you can start building your credit through purchasing the supplies your business needs to operate on a regular basis. 

2. Open a business credit card 

Personal credit cards improve your personal credit. Business credit cards do the same for your business credit. 

If you’re running a business, it’s best to take advantage of every benefit available to you. Business credit cards often have special perks that personal credit cards don’t have. 

Plus, while many credit card companies that offer business credit cards also report to the personal credit bureaus, some don’t. That means you can safely work on your business credit without risking your personal credit. 

To find out more about the best business credit cards and which report to the personal credit bureaus, read our guide on the best business credit cards. 

3. Have old UCC’s removed or terminated

A UCC lien is typically filed on your business when you receive a business loan or other type of financing. Simply, a UCC lien is a claim on certain assets by a lender in the event that you can’t fulfill your debt.

In particular, pay attention concerning any UCC liens on your business credit as these may be there in error. 

If the lien is for a debt you’ve paid off, your lender may not have requested the removal of the UCC filing from your report. In that case, it’s a simple matter of requesting its removal. 

Stay on top of your business credit

Business credit is foreign to most new business owners, and because it functions a bit differently, it can be confusing.

However, the basic idea is the same: your business credit is an important factor that will determine your ability to obtain financing (in this case, for your business). 

As a result, you should do everything you can to not only find out what the condition of your business credit is but take steps to improve it and then continue to monitor it for changes moving forward. 

To succeed in business, you need every edge you can get. Staying on top of your business credit is an easy way to do just that. 

To learn more about improving your credit to get approved for business financing, read What are the 4 C’s of Credit For Getting a Business Loan?

Starting a new business is exciting, but it’s easy to forget some of the more technical work that needs to get done.

Things like getting a business license and figuring out your business taxes might not be fun, but they’re essential to the long-term success of your business. 

The only problem is, the path for obtaining a small business license in your state isn’t always clear. Every state is different, from having an online portal to requiring applications be submitted to a specific authority.

However, if you know where to look and what you need to apply, the whole process becomes much easier. Hence, this guide. 

Below, we’ll cover everything you need to know about getting a business license, including:

• What is a business license?
• Industries that require business licensing
• How much does a business license cost? 
• Applying for a business license 
• How to get a business license (in all 50 states)

Let’s get started.

What is a business license? 

If you’re new to starting your own business and you’re not exactly sure what the purpose of a business license is, this section is for you.

A business license is a legal document that gives you the authority to operate a business in your chosen state. That’s about all there is to it.

However, when it comes to actually acquiring a business license, it’s not quite so simple.

That’s because, in many states, there is no “business license”. Instead, it might be a “business permit”, “seller’s permit”, or even a collection of 2-3 licenses and permits you need to obtain to operate your business all depending on your state and industry.

We know, that can make the whole process sound a bit confusing. Fortunately, we’ve simplified everything in this guide, so you’ve got nothing to worry about (read on). 

Industries that require business licensing

As mentioned above, what licenses you need to operate your business depend partly on what state you’re operating in, but also what industry. 

For example, a business which offers alcohol will likely need to obtain a liquor license, a restaurant may need that in addition to a food service license, and a construction company will probably need a general contractor license.

Because each state is different, it’s important to contact your local state authority (or use their online resources) to find out what you’ll need for sure (see your corresponding state’s section below). 

Here are some industries that typically require special licensing:

• Spirits and alcohol
• Transportation
• Radio and T.V
• Firearms
• Nuclear energy
• Agriculture
• Commercial fishing

How much does a business license cost?

Because the type of business licensing required changes based on state, in addition to countless other unseen factors, the price of obtaining a business license varies from state-to-state as well.

There are two factors which come into play (typically) when it comes to paying for a business license: 

• The initial license cost: $50-100 for a business license in most states

• And renewal

Renewal fees tend to be the same as the initial license cost, but they can be less in some cases. 

When you’re getting a business license, it’s typically just for 1 year, with renewal required every year thereafter.

However, as with everything else, this is all dependent upon the type of license(s) and the state. So, check with your local authority to know exactly how much your licensing needs will cost. 

How to apply for a business license

As we’ll talk about in a moment, the application process is a bit different for each state. However, the overarching steps involved are roughly the same. 

Here’s a simple breakdown of the steps involved to apply for a business license in most states:

1. Check your state’s regulations before applying for a business license. Depending on your type of business, other licenses and documents may be required to operate. Learn everything you’ll need to get your business started in advance so you’re well-prepared. 
2. Submit application with additional documentation. You’ll likely need to submit additional documentation along with your application. Check what those documents are to make sure you have them in order. After that, make sure you’re submitting your application in the right place. 
3. Wait for approval. For most states, after applying you’ll need to wait for word of your approval. During this time, state business licensing authorities will double-check the application and additional documentation you provided. 

Now, let’s talk about how to get a business license in your state.

How to get a business license in your state: A guide to all 50 states 

Obtaining a business license, no matter the state, typically only requires a few basic steps.

However, because it’s different for each state, the whole process can be incredibly confusing. 

That’s why we’ve done the work for you. We’ve found out exactly how to apply for a business license in each of the 50 states. So, no matter what state you live in, you’ll find the information you need to get your business license below. 

To find out how to get your state’s business license equivalent, click on the map, dropdown, or text summary below: 

Or you can click the dropdown below to select your state:

Please selectAlabamaAlaskaArizonaCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming

Here’s a summary of instructions for obtaining business licensing in all 50 states (listed in alphabetical order): 

How to get a business license in Alabama

Use Alabama’s official AtlasAlabama for information on licenses, business tax numbers, and other useful resources for getting your business started. 

How to get a business license in Alaska

Visit Alaska’s Department of Commerce to find out everything you need for obtaining your business license as well as to apply for and renew your license online. 

How to get a business license in Arizona

Arizona’s Department of Revenue website has information on everything from what licenses you’ll need to how much you’ll pay. You can also apply using their online portal. 

How to get a business license in California 

Use California’s official CalGold portal to get specific instructions on how to get a business license in CA. Simply enter your information and the portal will give you relevant instructions. 

How to get a business license in Colorado 

Colorado’s Business Express online portal offers all the information you’ll need to apply for business licenses online as well as having instructions for manual application. 

How to get a business license in Connecticut

Connecticut’s New Business Checklist is a detailed guide that offers steps for applying for a business license in Connecticut. 

How to get a business license in Delaware 

Delaware has a great One Stop Business Registration & Licensing portal with a useful questionnaire that will direct you to the necessary documents and application resources. 

How to get a business license in Washington D.C.

D.C.’s Business Center has a great guide for figuring out exactly what licenses you’ll need to obtain to become fully established. Once you’ve reviewed that, use their Business License guide to apply for a business license online. 

How to get a business license in Florida

You can obtain information on types of business licenses and apply online at Florida’s Department of Business and Professional Regulation and online portal. To get started select your type of business from the drop-down and the site will guide you through instructions for your industry. 

How to get a business license in Georgia 

Most businesses can apply for business licensing online through Georgia’s online portal licensing service. For more information on what licenses you need and whether you can apply online, see Georgia’s official business license page. 

How to get a business license in Hawaii 

Hawaii’s Business Express is one of the better online portals among the states. Simply follow the instructions and you’ll be guided to which types of licensing you need and how to apply.

How to get a business license in Idaho 

Start by getting information on what licenses and permits your business needs at the official Idaho state website. Once you’re done, you can apply online for your necessary licensing and permits at their official online portal. 

How to get a business license in Illinois 

Check Illinois official state site for information on your specific licensing needs. If you’re having trouble finding the licensing information you need (the page is a bit of a pain to scroll through), you can use the search icon at the top right.

How to get a business license in Indiana 

Indiana’s licensing regulations are a bit more complicated than most states, but their official state website has put together a well-organized Business Owner Guide that makes it pretty easy to find the information you need as well as instructions for how to get started (and links where relevant). 

How to get a business license in Iowa

Most businesses need a unique type of license based on the industry in Iowa, which their Business License Information Center helps you identify and find next-steps for. 

How to get a business license in Kansas 

Kansas’ Business Center provides all the information you’ll need to get your licensing squared away. However, if legal structures are a bit confusing, check out this guide for more information. 

How to get a business license in Kentucky 

Kentucky has a great One Stop Business Portal that will help you get information on what exact licenses and permits you need as well as help you apply online.

How to get a business license in Louisiana 

Louisiana’s Business Services resource has all the information you’ll need to figure out what licenses and permits you’ll need. To gain access to their online application services, you’ll need to create a separate account to access their online portal. 

How to get a business license in Maine 

Unlike most states, Maine handles its business licensing at the city level. However, Maine’s local government resource will help you identify the right town/city that your business resides in to help get you pointed in the right direction.

How to get a business license in Maryland 

Maryland’s Department of Commerce has a great one-stop portal that makes it easy to identify which licenses you’ll need and apply online. They even have a great welcome video to get you started that helps break everything down. 

How to get a business license in Massachusetts 

Massachusetts’ licenses and permits page will help you find which licenses you’ll need to operate. Once you’ve reviewed that, use their Starting a New Business guide for additional resources for getting started. 

How to get a business license in Michigan 

Some businesses don’t need licensing in Michigan. To find out if you’ll need licensing to operate, check Michigan’s official licensing search. For additional information, review Michigan’s official Guide to Starting and Operating a Small Business. 

How to get a business license in Minnesota

Minnesota’s online licensing tool will help you find out which licenses and permits you need to operate in Minnesota. You search by topic, agency, or alphabetically.

How to get a business license in Mississippi 

Getting licensed in Mississippi can be a bit confusing as some businesses need both state and local licensing, some only state licensing, and others no licensing at all. To find out what licenses you may need and whether you’ll need to get licensed at the state and/or local level, see Mississippi’s official Small Business Development Center’s FAQ.

How to get a business license in Missouri 

Missouri’s online portal offers information on getting licensed in the state as well as the ability to apply online. 

How to get a business license in Montana

Review Montana’s official state licenses by industry list to find out when licensing you’ll need. You may also need to get licensed at the city level depending on your industry. 

How to get a business license in Nebraska 

Nebraska’s Licensing Division has information on what industries need state-level licensing. If your business doesn’t require state-level licensing, check with your local city governance for information on whether you need to get licensed at the city level. 

How to get a business license in Nevada 

Nevada’s SilverFlume Business Portal has everything you’ll need, including a complete guide to what licensed you may need and how to get licensed 

How to get a business license in New Hampshire 

Review this list at NH’s official Department of Revenue licensing FAQ. If your business doesn’t show up, contact your local city government to find out what licensing you may need beyond that. 

How to get a business license in New Jersey 

New Jersey’s Business Action Center is a complete guide and resource for getting licensed in the state. For more information on where you need to go to obtain specific licenses and permits, see their License and Certification Guide.

How to get a business license in New Mexico 

New Mexico’s licensing portal allows you to apply online. However, keep in mind that licensing may differ between industries and the state vs. local level, so you should also check with local authorities to find out for sure what you’ll need to have in place. 

How to get a business license in New York 

New York’s business wizard has information on what licenses and permits are needed to operate in the state as well as instructions for applying. 

How to get a business license in North Carolina 

NC has an easy-to-use state website and a great business planning checklist to help get you started towards getting licensed and set up in general. 

How to get a business license in North Dakota 

All information regarding licensing, including which licenses are necessary for your business and how to apply, can be found on the North Dakota state website here. 

How to get a business license in Ohio 

Ohio’s Small Business Development Center has everything you need to find out which licenses you need, how to get licensed, and how to register with the Secretary of State (a requirement for Ohio businesses). 

How to get a business license in Oklahoma

Oklahoma has more varied license requirements, which you can find instructions for obtaining on the Department of Commerce’s Business Licensing and Operating Requirements page. 

How to get a business license in Oregon 

If you’re in need of more information than just licensing, Oregon’s starting a business guide will help walk you through several important steps to getting yourself established (#6 explains licensing). 

How to get a business license in Pennsylvania 

The Pennsylvania Licensing System is Penn’s one-stop portal for everything related to licensing. Using the portal, you’ll be able to find out which licenses you need to get started as well as steps to applying for all relevant licenses and permits. 

How to get a business license in Rhode Island 

Rhode Island has two great resources for getting your business started. Their starting a business guide walks you through everything you’ll need to start your business. Second, the Department of Business Regulation has a handy list of license needs and the ability to apply online. 

How to get a business license in South Carolina 

Like many states, SC runs their licensing on the city level. However, you can visit South Carolina’s licensing, permits, and registration page for information on getting licensed and their one-stop portal to get the process started. 

How to get a business license in South Dakota 

South Carolina doesn’t have a central portal for information on licensing, but they have a handy PDF guide on licensing and registration here. Visit South Dakota’s official state website for more information on getting your business started. 

How to get a business license in Tennessee 

Tennessee’s business registration and licensing page has all the information you’ll need to figure out which type of license you’ll need to operate (there are a few unique types of licenses) and how to apply. 

How to get a business license in Texas 

The official Texas state website has information on getting licensed via their home page (under Work). For more information on how to get a license and what licenses and permits you might need, see their guides and resources page. 

How to get a business license in Utah 

Utah’s official Business Licensing and Registration guide has specific instructions for getting licensed in the state. For more information on getting your business started in Utah, check out their Government Requirements page. 

How to get a business license in Vermont 

Start by looking at Vermont’s professional regulation page for information on what licenses you’ll need to get set up in the state. Vermont doesn’t have an official licensing portal, they instead direct you to the SBA’s Apply for licenses and permits page. 

How to get a business license in Virginia 

For steps on launching a business in Virginia, read their business one stop guide which gives information on starting a business in Virginia. Step number 4 will get you started with specific instructions for getting licensed. 

How to get a business license in Washington 

Washington state’s online business licensing portal offers a simple but straightforward guide to everything you’ll need to get licensed, including when you’ll need a license and how to apply. 

How to get a business license in West Virginia 

West Virginia’s online business portal can help you figure out the specific licenses you’ll need as well as direct you to where you need to apply to get started obtaining those licenses. 

How to get a business license in Wisconsin 

Review Wisconsin’s online business portal to find out what licenses and permits you might need. In addition, you can use their portal apply online and find additional resources.

How to get a business license in Wyoming

Wyoming business permitting and licensing has the perfect online guide that will get you started on the process to getting a business license in Wyoming. For additional questions which the page does not answer, contact the Wyoming Business Outreach Coordinator.

Obtaining your business license– simplified

Obtaining a business license can seem complicated. And, if you don’t know where to look for information on your state’s business license application process, it definitely can be. 

However, with specific information for getting a business license based on your state, the process becomes much simpler.

Just getting your business started? Check out these guides:

• Small Business Taxes: Last Minute Tips Before Filing Your Business Tax Returns
• Top 7 Best Small Business Checking Accounts
• Small Business Statistics for 2019
• Small Business Resources for Entrepreneurs

How much does a liquor license cost?

So, you’re planning to get a liquor license. 

Whether you’re a preexisting restaurant looking to add alcohol to your menu or a new bar or liquor store preparing to open up, a liquor license can be costly, anywhere from $300 to $14,000 depending on the state.

However, the sale of liquor can be highly profitable as well, with larger profit margins than most goods.

With that said, applying and being approved for a liquor license takes some work.

That’s why in this guide, we’ll walk you through every you need to obtain an alcohol license, no matter which of the 50 states you’re applying for it in (as well as individual resources for each state).

As well as:

• How to get a liquor license in all 50 states
• Obstacles to getting a liquor license
• How to prepare your liquor license application
• And What to include with your liquor license application

First, let’s break down the basic steps necessary for obtaining a liquor license to elucidate the process: 

How to get a liquor license

Exactly what steps are required for you to get a liquor license depend on what state you’re operating in. 

However, the steps are largely the same, so here’s a quick overview to give you a better idea of what the process will look like:

1. Contact your state’s liquor board or governing body to determine what specific type of alcohol license you’ll need (most states have several different kinds)
2. Submit your application along with the necessary paperwork
3. Wait while your state’s ABC (Alcohol Beverage Control) board reviews your application (up to 6 months)
4. Upon approval, pay your license fee to activate your license
5. Renew your liquor license regularly, anywhere between annually to tri-annually depending on the state and license

Now that we’ve clarified the process, let’s talk a bit about some of the challenges involved in obtaining a liquor license. 

The Challenges of obtaining an alcohol license

While the process we laid out above is pretty straightforward, there are several potential challenges along the way that may come up.

Knowing what these challenges are in advance can help you either avoid or plan for them, making the whole process faster and more pain-free. 

The liquor business is highly regulated, as you might imagine. That’s where most of the challenges arise. 

For example, in some states, certain types of alcohol licenses are restricted, meaning only a certain number of businesses may hold that liquor license.

That means if there are no available spots, you may have to go fishing around for a business that is willing to sell their license to you, adding a layer of difficulty to obtaining your license. 

Another potential challenge is location-based. Some states have restrictions in place for offering liquor within a certain vicinity of schools. So, if you’re close to a nearby high school, you may need to consider another location or forgo the license altogether. 

In addition to this, because liquor licenses take up to 6 months for approval, if an issue arises in your application it could mean more delays and a very long wait to finally obtain your license.

These challenges aside, getting a liquor license is relatively straightforward, provided you know where to go to obtain information for obtaining a license in your state. 

How to Get a Liquor License in All 50 States

While obtaining a liquor license is a bit of a difficult process, it can prove to be worth the wait and effort for many businesses.

The only thing left to do at that point is to find out how to obtain a liquor license in your state. 

The National ABC Association state list and directory includes a list of all 17 participating states and can give you information about obtaining a liquor license, including liquor pricing and other details, if your state falls within their jurisdiction. 

However, for a complete directory of all 50 states, including where to find out more information about how to get an alcohol license in your state, click on the below map, dropdown, or see the text list below this with a summary of instructions for all 50 states: 

Or you can click the dropdown below to select your state:

Please selectAlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming

Here’s a summary of instructions for obtaining a liquor license in all 50 states:

How to get an Alabama liquor license

To get a liquor license in Alabama, complete a pre-application along with necessary checklist. Once that’s done, set up an appointment with Alabama’s ABC licensing office for your county. 

Price: $100 – $1,000 (Depending on the type of license)

How to get an Alaska liquor license 

To get a liquor license in Alaska, complete and notarize your liquor license application and display it at your place of business for 10 days before submitting you the Alaska ABC board.

Price: $50 – $2,500 (Depending on the type of license)

How to get an Arizona liquor license 

To get a liquor license in Arizona, review the types of licenses here then use the Arizona Department of Liquor portal to register for an account and submit your application. 

Price: $100 – $2,000 (Depending on the type of license)

How to get an Arkansas liquor license 

To get a liquor license in Arkansas, review the types of licenses with the Arkansas ABC, then mail your completed application to the Arkansas ABC office along with:

• Background check
• ABC seminar attendance proof
• And entertainment form

Price: $100 – $3,000 (Depending on the type of license)

How to get a California liquor license 

To get a liquor license in California, you can apply at the nearest California ABC office. 

How to get a Colorado liquor license 

To get a liquor license in Colorado, review steps with the Colorado Department of Revenue’s Liquor & Tobacco Enforcement website. They have a portal where you can submit your application, but you must first be approved at the local government level first (see link for instructions). 

How to get a Connecticut liquor license 

To get a liquor license in Connecticut, review the types of licenses and complete this application, then submit your application along with payment to a drop box at the Department of Consumer Protection Self-Service Center. 

Price: $60 – $2,750 (Depending on the type of license)

How to get a Delaware liquor license 

To get a liquor license in Delaware, apply using the OABCC’s (Office of Alcoholic Beverage Control Commissioner) online portal. 

How to get a Florida liquor license 

To get a liquor license in Florida, review the types of licenses here, fill out your application, then submit it along with supporting documentation and application fee to your local Alcohol, Beverage, & Tobacco Division office.

Price: $400 application fee

How to get a Georgia liquor license 

To get a liquor license in Georgia, you must obtain a local alcohol license, state alcohol license, and a Federal Basic Permit. First, apply for a local license with local government authorities, then apply for a state license here through the Georgia Tax Center portal. 

Price: $10 – $1,000 (Depending on the type of license)

How to get a Hawaii liquor license 

To get a liquor license in Hawaii, it all depends on what county your business sits in. For liquor licenses for the country of Honolulu, visit the Honolulu Liquor Commission to view the types of available licenses and submit your application. 

Price: $45 – $5,940 (Depending on the type of license)

How to get an Idaho liquor license 

To get a liquor license in Idaho, submit your application and documentation to the Idaho state ABC. Keep in mind that obtaining a liquor license in Idaho is known for being more difficult in many other states due to a heavily restricted quota system (which many states have, but is not nearly as strict). 

How to get an Illinois liquor license 

To get a liquor license in Illinois, visit the Liquor Control Commission’s portal for application and instructions. 

Price: $750 

How to get an Indiana liquor license 

To get a liquor license in Indiana, view the types of licenses and application instructions at the ATC (Indiana Alcohol and Tobacco Commission) online portal, where you can also submit your application. 

How to get an Iowa liquor license 

To get a liquor license in Iowa, use the State of Iowa Alcoholic Beverages Division online portal to view licenses, applications, and submit online. 

How to get a Kansas liquor license 

To get a liquor license in Kansas, use the Kansas Department of Revenue’s ABC department online portal to view licenses and apply online. 

How to get a Kentucky liquor license 

To get a liquor license in Kentucky, use the Kentucky ABC online portal to view licenses and application information (applications must be mailed or faxed). 

Price: $30 – $7,730 (Depending on the type of license)

How to get a Louisiana liquor license 

To get a liquor license in Louisiana, view the types of licenses here and submit an application. The Louisiana Office of Alcohol and Tobacco Control requires you display your intent to apply for a license in a local newspaper as well. 

Price: $320 for beer and liquor permit within a city

How to get a Maine liquor license 

To get a liquor license in Maine, follow these instructions from the Maine Bureau of Alcoholic Beverages & Lottery Operations.

How to get a Maryland liquor license 

To get a liquor license in Maryland, fill out the application here and follow these instructions at the Comptroller of Maryland’s website.

Price: $600 application fee

How to get a Massachusetts liquor license 

To get a liquor license in Massachusetts, complete an application plus a CORI (Criminal Offender Record Information) form. Whether you can apply online or not depends on what city you’re applying in. 

Price: $200 application fee

How to get a Michigan liquor license 

To get a liquor license in Michigan, download the license application at the Michigan Department of Licensing and Regulatory Affairs website here and review the instructions. 

Price: Up to $1,000

How to get a Minnesota liquor license 

To get a liquor license in Minnesota, start by contacting your local government for an application. Once you’ve been approved, you can submit your application to the Minnesota Department of Public Safety Alcohol and Gambling Enforcement. 

How to get a Mississippi liquor license 

To get a liquor license in Mississippi, complete this application then submit it to the Mississippi ABC office. 

Price: $45 – $9,025 (Depending on the type of license)

How to get a Missouri liquor license 

To get a liquor license in Missouri, complete this application and submit it to one of 3 labelled Alcohol and Tobacco Control offices depending on your location. 

Price: $300 application fee

How to get a Montana liquor license 

To get a liquor license in Montana, follow the Montana Department of Revenue’s online portal instructions. 

Price: $400 – $800 (Depending on the type of license) + $400 processing fee

How to get a Nebraska liquor license 

To get a liquor license in Nebraska, complete the Nebraska State liquor license application here and mail it to the Nebraska Liquor Control Commission.

Price: $400 application fee

How to get a Nevada liquor license 

To get a liquor license in Nevada, call your local county office that handles business licenses and complete an application here. Contact the Nevada Alcoholic Beverage Control if you have trouble locating the correct office. 

Price: $500 application fee

How to get a New Hampshire liquor license 

To get a liquor license in New Hampshire, fill out this form to request an application. Once you’ve received your application, follow these instructions depending on what type of license you need. 

Price: $100 filing fee

How to get a New Jersey liquor license 

To get a liquor license in New Jersey, contact your local ABC board for a copy of the application and review these application instructions. 

Price: $200 filing fee

How to get a New Mexico liquor license 

To get a liquor license in New Mexico, it is suggested you get in contact with liquor license broker as there are a limited number of liquor licenses in the state of NM due to a quota system. You can find more information here. 

Price: $200 application fee

How to get a New York liquor license 

To get a liquor license in New York, review the types of licenses here as well as instructions on how to apply. Fingerprint cards are required to apply and you must notify your municipality of your intent to apply for a liquor license by using a Standardized Notice Form. You can then submit your application after waiting 30 days.

How to get a North Carolina liquor license 

To get a liquor license in North Carolina, use their ABC online portal for all information related to license types and application submission. 

Price: $100 – $1,000 (Depending on the type of license)

How to get a North Dakota liquor license 

To get a liquor license in North Dakota, submit this application and use the key at the bottom of the document to determine the exact licensing fee, then send the application to the Office of the Attorney General. 

How to get an Ohio liquor license 

To get a liquor license in Ohio, review these steps provided by the Ohio state government. 

Price: Up to $2,344 + $100 processing fee 

How to get an Oklahoma liquor license 

To get a liquor license in Oklahoma, use the ABLE (Alcoholic Beverage Laws Enforcement) commission portal. 

Price: $55 application fee

How to get an Oregon liquor license 

To get a liquor license in Oregon, review the type of license you’ll need, then find the corresponding application here and follow the outlined instructions. The OLCC (Oregon Liquor Control Commission) will then give you a copy of your application to take to your local city government. 

How to get a Pennsylvania liquor license 

To get a liquor license in Pennsylvania, email ra-lblicensingmod@pa.gov to request an access code to the PLCB+ portal. Once you receive it, register through the portal system to get all the information you need. 

How to get a Rhode Island liquor license 

To get a liquor license in Rhode Island, use the state’s ELicensing portal. Register for a new account and you’ll be able to review the types of licenses and submit your application.

How to get a South Carolina liquor license 

To get a liquor license in South Carolina, review the types of licenses for SC then submit your application to the Department of Revenue. 

Price: $5 – $2,200 (Depending on the type of license) + $200 – $300 filing fee

How to get a South Dakota liquor license 

To get a liquor license in South Dakota, contact your county auditor for all basic information (you can find more information here). 

How to get a Tennessee liquor license 

To get a liquor license in Tennessee, review the TABC’s license type list. To get your application started, use the TABC’s RLPS portal or Regulatory Licensing and Permitting System.

How to get a Texas liquor license 

To get a liquor license in Texas, use the TABC portal to select the type of license and obtain the necessary application and instructions. 

How to get a Utah liquor license 

To get a liquor license in Utah, review the Utah ABC website for types of licenses and application information.

Price: Vary, up to $10,000 (Depending on the type of license)

How to get a Vermont liquor license 

To get a liquor license in Vermont, use the VDLC’s portal to review license types and get instructions for submitting your application. 

How to get a Virginia liquor license 

To get a liquor license in Virginia, review the Virginia ABC website’s 3 types of licenses and application details. You’ll be required to display notice of your application on your premises for 10 days and in a local paper for 2 days. 

Price: $195 for on-premise retail license application 

How to get a Washington liquor license 

To get a liquor license in Washington, visit the WSLCB (Washington State Liquor and Cannabis Board) website and follow the instructions. Washington is one of only a handful of states where you can submit your application online. Contact the Department of Revenue to request more information at 1-800-451-7985 or BLS@dor.wa.gov.

Price: $75 filing fee 

How to get a West Virginia liquor license 

To get a liquor license in West Virginia, review the types of licenses then submit your application by mail with fingerprint cards, bond fee, and a copy of your health permit to the West Virginia Alcohol Beverage Control Administration. Contact WV’s ABC office at 304.356.5500 or abcc.licensing@wv.gov. 

Price: $100 – $2,650 (Depending on the type of license) + $1,000 or $5,000 bond

How to get a Wisconsin liquor license 

To get a liquor license in Wisconsin, contact your basic city clerk for information (not much more information is given than that). Wisconsin’s Department of Revenue oversees licensing, so see here for more information. 

How to get a Wyoming liquor license 

To get a liquor license in Wyoming, use their Eliquor portal (one of the only states with such a service). Once you’ve registered, you’ll be emailed information and login details where you can review all necessary information and take next steps. 

How to prepare your liquor license application

Now that you have the basic information you need for obtaining a liquor license in your state, it’s time to prepare to submit your license application.

Before applying, it’s important to prepare all possible documentation you may need. Even if you’re not 100% sure what your state’s board will request of you, getting everything you could need prepared in advance will simplify the process and remove possible headaches.

Here are documents you should consider getting in order before filing your liquor license application:

Basic information:

•  Employer identification number

Licenses:

• Business license
• Music license (Only applicable if you’ll be playing copyrighted music)

Permits:

• Zoning permit
• Sales tax permit
• Alcohol tax permit 
• Food handler’s permit (Only applicable if you serve food)
• Building permit 
• Signage permit 
• Health permit 

You never know what might be requested of you when submitting your application, so getting everything together in advance, even the above items that you may not end up needing, to make sure nothing holds up your application.

What to include with your liquor license application 

Now, let’s review the required documents.

With your application ready to be submitted, you’ll need to make sure to send it off with everything required by your state’s liquor authority. 

What these documents or other requirements are will differ based on the state, but the license application should outline what these documents are.

If you’re unsure, make sure to call your state’s liquor authority to ask before submitting your application.

Here are additional requirements to keep an eye out for in addition to your state application: 

• Processing fee
• Signed lease agreement
• Estimated alcohol sales
• DBA or CoGS (Your state may require a Certificate of Good Standing from your Secretary of State if you’re a corporation. Alternatively, a DBA will usually suffice if you’re a sole proprietor or partnership)

If you submit your liquor license application without all the necessary documents, your application will likely be placed on hold until the documents are received.

Considering it can take up to 6 months for an unobstructed application, it’s important to make sure you have everything readily available so you don’t end up adding unnecessary time to that already long wait. 

What is the approval process like? 

Once you’ve submitted your license application, all that’s left to do is wait.

The approval process of each state is different, however, this is an overarching process that most states follow, more or less:

• Application is processed and delivered to relevant authorities for review
• Check for available licenses
• A background check is processed
• Authorities review the premises
• A public hearing is conducted in the case of complaints
• When everything is resolved, the application is accepted and the license issued within 4-8 months depending on the state and type of license

Provided everything goes well with your application, you’ll have your alcohol license within the next several months and be ready to start offering drinks at your business. 

Obtaining a liquor license can be time consuming and difficult, but the rewards can also far outweigh the difficulty it takes to get it, making it more than worth the effort. 

Running a business requires a continuous assessment of operations followed up by strategic and informed modifications. That’s just a fancy way of saying you need to know every aspect of your business to avoid surprises and to make necessary changes. There are several tools you can use to do this, one of them being the accounts receivable turnover ration. Despite the relatively long name, it is actually very easy to calculate and will give you some very useful insights about your business.  When reviewing your Accounts receivable aging report to forecast your cash flow its important to understand the account receivable ratio and find ways to improve it.

What is the accounts receivable turnover to be exact?

Very simply, the accounts receivable turnover is a ratio used to compare how well your business issues credit to its customers and how effective it is at collecting those debts. It is nearly impossible to run a business without issuing a credit to your customers, you probably do the same with your suppliers, but the idea is to make sure you collect that debt. Otherwise, your cash flow will suffer and running the business will become difficult.

The accounts receivable turnover thus helps you determine if your business is good at collecting debts from customers and if not, where to make some changes. Not only does this help your business operations, but will also be a factor when you’re ever applying for a business loan. Therefore, it is very important to know how you can calculate the ratio on your own and understand your business even better. 

How do you calculate the accounts receivable turnover ratio?

To find the ratio, you should use the formula:

net credit sales / average accounts receivable

The net credit sales section represents all revenue generated by the business as a result of sales made on credit by its customers. For that reason, the number should not include any revenue generated from cash sales. Also exempt from the value should also be sales returns and allowances. Sales returns and allowances are issued to customers due to problems with shipment, services or transactions, which is why they are not included in the net credit sales figure. 

You should be easily able to calculate the net credit sales from the balance sheet or income statement using this formula:

sales on credit – sales returns – sales allowances

Once you have the above figure, move on to the second part – average accounts receivable. This is the amount of money your business is owed by its customers. Values for accounts receivables should also be available from the balance sheet. The accounts receivable turnover is usually calculated over an annual period, so you should also find the average accounts receivable over a period of a year. To do so, add the accounts receivable numbers from the balance sheet at the start and at the end of the year, then divide it by 2 to find the average. You can use this formula:

(beginning accounts receivable + ending accounts receivable) / 2

With these two figures in hand, simply divide the two to find the final result using the formula shown above.

How about an example?

Although the formula is quite simple, it is always easier to understand through a hypothetical example. Consider a small business that manufactures car parts that had quite a good year with $1,500,000 in total revenue. Of this, $250,000 was comprised of cash sales while there was $50,000 in returns and $20,000 in allowances. The net credit sales would then be:

$1,500,000 – $250,000 – $50,000 – $20,000 = $1,180,000

At the start of the year, accounts receivable indicated $180,000 while the end of year value showed $240,000. Thus, average accounts receivable would be:

($180,000 + $240,000) / 2 = $210,000

Consequently, the company’s accounts receivable turnover would be:

$1,180,000 / $210,000 = 5.6

What does this Account Receivable Turnover number mean?

In the above example, a 5.6 accounts receivable turnover meant that the company turned over accounts receivable in 65 days throughout the year on average. If the value was, say, 11.2, it would mean that accounts receivables were turned over every 33 days or so. From this, you can tell that a higher accounts receivable turnover ratio means that a company is turning over its debt quicker and is more effective at collecting a debt. 

Having a poor accounts receivable turnover ratio is not advisable because it generally signals that the business is not collecting what it is owed. If such a situation were to continue for several years, then the company would eventually have to write it off as bad debt. That is money lost from the business, and the cash flow will take a hit and operations would become more difficult. In the worst-case scenario, the business would have to shut down because there wouldn’t be enough money to pay for essential services and staff. 

Because every business wants to have a high accounts receivable turnover ratio, it may be important to look at some of the factors that could affect the value. 

Quality of customers

Companies are always keen to find out about their customers’ credit rating in order to establish whether they are going to pay their debt and how quickly they do so. When a company does not pay attention to this factor, it ends up issuing credit to bad customers who delay payment or completely foregoing payment. In the end, your company swallows the cost and suffers a loss, which is why it is so important to understand the quality of customers you lend to. 

Debt collection

Even with an elite clientele, you will still need to put some effort in collecting what you are owed. Big companies have entire debt collection departments to ensure they are paid for the credit they extend. But even smaller companies can devise more effective ways of collecting debt rather than sit and wait. 

Dependence on cash

Those businesses that depend mainly on cash will always have better accounts receivable turnover than credit businesses. This is something to consider once you’re done making your calculations.

Now that you know what it takes, you can make the necessary steps to improving your company’s accounts receivable turnover. On the other hand, you should not aim for the maximum accounts receivable turnover ratio either. To achieve such a feat would mean being very aggressive with your debt collection and turning down any potential customer with slightly lower credit rating. Of course, this is not what you want, and business is all about taking risks, but it’s just a matter of understanding what your risk appetite is. 

Why is the  accounts receivable turnover ratio important to know for your business?

With the accounts receivable turnover ratio in hand, you will know how well your business is at collecting debt. Knowing this should direct you on how you can improve your debt collection policies, filter less desirable clients in the future or both. In the end, it is all about improving the cash flow of your business because that is absolutely crucial to its success and even existence. For instance, you may decide to cut back on some expenses for some time until the ratio goes higher to ensure you have enough cash flow to run the business. 

Besides debt, unsecured business loan providers also look at the accounts receivables as collateral instead of profit. By improving the accounts receivable turnover ratio, your business will be eligible for higher loans and at more favorable terms. 

To make this formula even more effective for your business, always keep tracking it so that you can make consistent changes whenever necessary for the company’s financial health. 

In this Guide we Explore Landscaping Equipment Funding Types

As a business owner, you are going to have a lot of different decisions to make on a day-to-day basis – with each and every one of them significantly informing how your business grows and whether or not you are able to make as much money with this operation as you’d like to.

Some of these decisions as a landscaping company are pretty simple and straightforward. Updating your website, buying new business cards, or rolling out new advertising and marketing campaigns are pretty much no-brainer decisions all smart and savvy business owners make.

Others, like whether or not you should buy, rent, or lease landscaping equipment – the landscaping equipment that allows you to have a business in the first place – are nowhere near as easy to decide on.

To better help you navigate the sometimes rough and rocky roller coaster of picking between which pieces of equipment you buy, which you rent, and which you lease out we have put together this quick guide.

Let’s dig right in!

So whats the difference between Buying, Renting and Leasing Landscaping Equipment?

For starters, it’s important to understand that there is a world of difference between buying, renting, and leasing landscaping equipment – even if the end result (your landscapers actually using the equipment) is identical.

On top of that, your business, your financial goals, and how you see your business growing over the next five or 10 years will significantly inform these decisions as well. You’ll really want to combat these decisions from a multi-angle and holistic kind of approach rather than just going with a short-term solution.

Buying Equipment

Buying landscaping equipment is never going to be an inexpensive proposition when it comes to cash flow – particularly if you are pretty much a seasonal operation that can count on three months (at least) of downtime or slow time where your equipment is just sort of sitting around costing you money rather than making you money and having to put up all the funding upfront taking away from the working capital reserved for your business operation.

Deals can be found on last years models, preowned equipment, and the like to be sure. But for the most part you are going to be ponying up a premium to get your hands on total ownership of this equipment, and most of the time that just isn’t a financially smart move to make – at least in the early stages of building a landscaping company, anyway.

Renting Equipment

Oftentimes confused with landscaping equipment leasing, the truth of the matter is landscaping equipment rental agreements are quite a bit different than a leasing program from top to bottom.

Rentals are almost always short-term in nature (we are talking about just a couple of days or at most a week or two), very expensive compared to leasing and even purchasing equipment, but may be ideal in certain situations.

For example, maybe you have a very specific project that requires very specialized equipment that you do not use all that frequently. In these circumstances renting equipment becomes a no-brainer decision – giving you access to the professional landscaping tools and equipment you need to get the job done without having to spend a mountain of money buying or leasing equipment you might not use again for quite a while.

Bottom line, renting landscaping equipment is a smart and savvy decision on an “as needed” kind of basis. Buying and leasing are much better options for the “bread and butter” tools you’ll use day in and day out.

Leasing Equipment

With how expensive landscaping equipment for sale can be (especially newer equipment) the overwhelming majority of landscaping operations choose to lease equipment before they even think about buying something.

Sure, you can find great deals on used landscaping equipment that might help cut down on the overall cost of ownership upfront. But even then you might be ponying up $50,000 or more for a piece of equipment that you could have leased for a few hundred or a few thousand dollars each month – letting you use that tool to make you money and essentially pay itself off along the way.

Another huge advantage in leasing commercial landscaping tools is that you’ll always have access to the latest and greatest tools and technology in the industry. Keeping a short lease allows you to consistently upgrade to the most efficient and professional landscaping equipment.

Landscaping companies that purchase their commercial lawn equipment out right may have brand-new toys for a couple of years. But as they continue to pay off those expensive loans their equipment gets older and older – and by the time they own their tools out right those machines are legacy tools that have been leapfrogged by more modern solutions.

With leasing, that’s never a problem. Your lease expires, the equipment is returned, and you lease new models with new advances, new technology, and ways of helping you make money more efficiently.

At the end of the day, the right business lending organization can help set you up with the kinds of financing packages you need to secure top-tier professional landscaping tools and equipment leases without having to deal with any headache or hassle whatsoever.

For most operations, this is the way to go!