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BigCommerce vs. Shopify: Best Online Store Platforms for Small Business
Running a successful online business starts with choosing the right e-commerce platform that makes it simple for customers to browse, shop, and checkout seamlessly.
Whether you're selling products or services, your website is the foundation of your digital storefront, and picking the best platform can make or break your growth.
In 2025, small businesses will have more options than ever, but two platforms will stand out as industry leaders: BigCommerce and Shopify. Both offer powerful tools to launch, manage, and scale an online store but cater to different needs and budgets.
The right platform should make it easy to:
- Build a professional online store without coding
- Manage inventory, payments, and shipping efficiently
- Scale as your business grows
- Optimize for conversions and customer experience
For many entrepreneurs, Shopify consulting services (like those from trusted partners such as DigitalSuits) help streamline store setup, customization, and long-term optimization.
But how does Shopify compare to BigCommerce regarding pricing, features, and flexibility? Which one is the Best Online Store Platform for Small Businesses wanting to implement an e-commerce store?
In this guide, we'll break down each platform's key differences, pros, and cons to help you decide which is the best online store platform for small business success.
Whether you prioritize ease of use, scalability, or advanced selling features, we'll help you make the right choice for your brand.
Let's dive in.
What us eCommerce?
Choosing the Right Foundation for Your Business
The digital revolution has transformed retail, giving small businesses unprecedented access to global markets. No longer constrained by the high costs of physical storefronts, today's entrepreneurs can launch, manage, and scale their businesses entirely online—starting with the right e-commerce platform. The platform you choose will shape everything from your store's design and functionality to checkout efficiency and long-term growth potential.
For small businesses, this decision is critical.
A well-optimized platform can streamline operations, enhance customer experience, and drive sales, while the wrong choice may lead to technical headaches, unnecessary expenses, or scalability roadblocks. Unlike traditional brick-and-mortar setups, where location and foot traffic dictate success, e-commerce success hinges on your digital infrastructure. Your website isn't just a storefront; it's your sales team, inventory manager, and checkout counter.
However, launching an online store involves more than just selecting a platform. Once you've chosen between leading solutions like Shopify or BigCommerce (two of the best online store platforms for small businesses), the next step is integrating seamless logistics. Fast, reliable shipping is non-negotiable for customer satisfaction, and partnering with a cost-effective delivery service ensures your orders reach buyers promptly.
Here's a pro tip: Leverage integrations to save time and streamline operations.
Many platforms, including Shopify and BigCommerce, sync effortlessly with shipping carriers and fulfillment services—some even offer built-in partnerships.
Whether you're a startup testing the waters or an established brand scaling up, the proper e-commerce foundation—paired with smart logistics—sets the stage for sustainable growth. In the next section, we'll compare Shopify and BigCommerce in depth, helping you decide which platform aligns with your business goals.
Types of e-commerce platforms
Understanding the distinctions between software-as-a-service (SaaS) and open-source solutions is crucial when selecting an e-commerce platform.
SaaS platforms are cloud-based solutions managed by third-party providers. Businesses subscribe to these services, which include hosting, maintenance, and security. This model offers quick deployment and user-friendly interfaces, making it ideal for companies seeking a hassle-free setup. However, customization is often limited to the vendor's options, and ongoing subscription fees are required.
Open Source platforms provide access to their source code, allowing businesses to extensively host and modify their online stores. This flexibility enables tailored solutions to meet specific needs. However, it demands significant technical expertise for setup, customization, and maintenance. While the Software may be free, hosting, development, and security costs can accumulate.
Key Differences:
- Cost - SaaS involves predictable subscription fees covering various services, whereas Open Source may have lower initial costs but can incur higher expenses over time due to additional requirements.
- Customization - Open Source offers extensive customization through direct code access, while SaaS provides limited customization within the vendor's framework.
- Technical Requirements - SaaS platforms handle technical aspects, reducing the need for in-house expertise. In contrast, Open Source platforms require dedicated technical resources for effective management.
Bigcommerce vs Shopify
1. Bigcommerce
Whether you're a growing startup or an established enterprise, BigCommerce delivers a powerful, all-encompassing e-commerce platform packed with enterprise-grade features.
As a leading open SaaS solution, it combines the best of both worlds: the simplicity and reliability of cloud-based software with the customization freedom of open-source systems.
- Enterprise-Grade Features, Scalable for SMBs - Access premium marketing, analytics, and design tools—all supported by industry-leading experts.
- Open SaaS Flexibility - Enjoy the low maintenance of SaaS (including built-in hosting) while retaining control over customization—perfect whether you want hands-on management or a more hands-off approach.
- Headless Commerce Ready - Run multiple storefronts across different platforms (like WordPress or DXPs) from a single BigCommerce backend. Focus on crafting unique shopping experiences while BigCommerce handles the complex commerce engine.
No Hidden Costs, Unlimited Growth Potential
- 65+ integrated payment gateways
- 600+ app integrations
- Unlimited bandwidth and extensive file support
- Zero transaction fees (unlike some competitors)
From seamless omnichannel selling to robust B2B functionality, BigCommerce eliminates technical barriers so you can focus on scaling your business. It's not just a platform—it's a growth partner.
Key Features:
- No transaction fees – Keep more of your revenue
- Quick setup – Launch your store in just 9 steps with their guided onboarding
- Unlimited products, storage & bandwidth – Scale without restrictions
- Multi-channel selling – Seamlessly sell on Facebook, Instagram, Amazon, eBay, and Google Shopping
- High-converting themes – Professionally designed for better UX and sales
- Mobile-optimized checkout – Fast, responsive, and secure single-page checkout
- Free SSL & HTTPS – Enhanced security at no extra cost
- Built-in product reviews & blogging – Boost trust and SEO without extra apps
- Advanced promotions – Discounts, coupons, vouchers, and gift cards
- Powerful analytics – Professional reporting tools included
BigCommerce Advantages:
- No hidden fees – Unlike Shopify, no extra charges on third-party payments
- B2B & wholesale-ready – Built-in solutions for bulk orders and business buyers
- Free app marketplace – Many integrations available at no cost
- 30-day free trial – Test the platform risk-free
Potential Drawbacks:
- Sales-based pricing – Costs increase as revenue grows, not based on features
- Limited free themes – Premium themes cost 145–145–235
- High payment processing fees – If using BigCommerce Payments
- Expensive premium apps – Some integrations cost $1,000+/month
- Mixed customer reviews – Some complaints about support on Trustpilot
Final Verdict
BigCommerce is a powerful all-in-one solution, especially for B2B, wholesale, and high-volume sellers. It includes more built-in features than Shopify, reducing app dependency. However, watch out for rising costs as your sales grow and premium add-ons.
Ideal For: Brands that want enterprise power without enterprise complexity, especially those planning multichannel expansion or needing advanced customization without coding headaches.
2. Shopify
Perfect for startups and small brands, Shopify Lite stands out as the quickest way to launch a professional online store. Its user-friendly interface and robust app ecosystem make it ideal for entrepreneurs who want to start selling fast while maintaining room to grow.
Why Shopify Works for Small BusinessesInstant Store Setup
- Launch a polished store in hours with 70+ mobile-optimized themes
- No technical skills needed thanks to intuitive drag-and-drop tools
Endless Customization:
- Expand functionality with 6,000+ apps in the Shopify App Store
- High-volume merchants can access premium solutions via Shopify Plus Partners
Omnichannel Selling Made Simple:
- Sell directly on Facebook, Instagram, Amazon, and other channels from one dashboard
- Shopify Lite option lets you add "Buy Buttons" to existing websites or blogs
Product Limitations:
- Max 100 SKUs per product
- Only 3 variant options (e.g., size, color, material)
Scalability Constraints:
- Headless commerce possible but restricted by API call limits
- Transaction fees apply unless using Shopify Payments
- Unlimited product listings - Sell as many items as you need
- Complete website & blog - Use your custom domain for a branded experience
- Built-in payment processing - Accept payments seamlessly with Shopify Payments
- Free SSL security - All stores include HTTPS encryption at no extra cost
- 24/7 customer support - Get help anytime via chat, email or phone
- Promotional tools - Create discount codes and special offers
- Omnichannel selling - Includes POS for in-person sales and Facebook Shop integration
- Shipping solutions - Access numerous carrier integrations and apps
- Multi-channel sync - Manage inventory across Amazon, eBay and other platforms
See all features on Shopify's official website
Advantages of Shopify:
- Risk-free trial - 3 days free, then only £1/month for first 3 months
- Extensive customization - Thousands of apps and themes available
- Streamlined payments - Shopify Payments simplifies card transactions
- No product limits - List unlimited items on any pricing plan
- Transparent pricing - Clear monthly rates with no hidden fees
Potential Drawbacks:
- Additional costs - Monthly fees, payment processing, and premium apps can accumulate
- Basic blogging - Not as robust as dedicated platforms like WordPress
- Platform lock-in - Migrating to another system may require technical work
Our Recommendation
Shopify is ideal for merchants wanting a hassle-free, all-inclusive ecommerce platform. With its free trial and low introductory rate, it's a risk-free way to launch your online store quickly. The extensive app marketplace allows you to add functionality as your business grows.
Before a feature-to-feature comparison, it is necessary to know the philosophies of Shopify and BigCommerce.
- Shopify is renowned for ease of use, an app store having plenty of apps, and utmost importance to simplicity and extensibility of design. Shopify is commerce-friendly in size but is particularly liked by start-ups and mid-sized brands.
- BigCommerce includes robust native capabilities, which is a good fit for big enterprises needing complex customization and growth but not relying as much on third-party apps.
The two options will simplify e-commerce but will do so in ways that impact usability, cost, and future space for growth.
When comparing BigCommerce and Shopify, it's essential to consider their features, pricing, and ideal use cases to determine the best fit for your online store.
Below is a comprehensive comparison:
Feature | BigCommerce | Shopify |
Pricing | - Standard: $29.95/month - Plus: $79.95/month - Pro: $299.95/month - Enterprise: Custom pricing | - Basic: $29/month - Shopify: $79/month - Advanced: $299/month - Plus: Custom pricing |
Transaction Fees | No transaction fees | 0.5% to 2% per transaction unless using Shopify Payments |
Sales Limits | - Standard: Up to $50,000/year - Plus: Up to $180,000/year - Pro: Up to $400,000/year | No sales limits |
Staff Accounts | Unlimited | 2 to 15, depending on the plan |
Abandoned Cart Recovery | Available on Plus and higher plans | Available on all plans |
SEO Capabilities | Full URL customization; robust SEO features | Limited URL customization; strong SEO features |
Themes and Design | 12 free themes; paid themes range from $150 to $399 | 9 free themes; paid themes range from $100 to $350 |
App Store | Approximately 1,346 apps | Over 8,000 apps |
Customer Support | 24/7 support via chat and email; phone support on Plus plan | 24/7 support via chat, email, and phone |
Ideal Use Cases | - Businesses seeking extensive built-in features - Companies aiming to avoid transaction fees - Stores requiring advanced SEO capabilities | - Entrepreneurs desiring ease of use and quick setup - Businesses looking for a vast app ecosystem - Stores planning to scale rapidly without sales limits |
Key Considerations for Your Online Store
Launching an e-commerce store is about more than just selling products—it's about creating a seamless shopping experience that reaches customers wherever they prefer to shop.
The right e-commerce platform doesn't just facilitate transactions; it provides a complete ecosystem to manage, grow, and optimize your business.
From web hosting and inventory management to payment processing and shipping integrations, selecting the right platform requires careful evaluation.
Here are the most critical factors to consider:
1. Robust Security Features
As online shopping grows, so do security risks. Your platform must prioritize customer data protection with:
- SSL certification for secure transactions
- PCI compliance for payment security
- Fraud prevention tools to minimize risks
- Regular data backups to prevent loss
Opt for platforms built with secure, object-oriented programming to ensure strong built-in protections.
2. Built-In SEO Tools
Since most shoppers begin their journey on search engines, your platform should support SEO optimization with:
- Customizable URLs and metadata
- Blog integration for content marketing
- Customer review functionality
- Fast page loading speeds
3. Mobile-Optimized & Responsive Design
With 46% of shoppers using smartphones during their purchase journey (Google, 2022), your store must deliver a flawless experience across all devices. A responsive design ensures your site automatically adapts to desktops, tablets, and mobile screens without requiring separate versions.
4. Scalability for Growth
Even if you're starting small, your platform should grow with your business. Look for:
- Flexible product and inventory limits
- Support for high traffic volumes
- Easy upgrades to advanced plans
5. Omnichannel Selling Capabilities
Modern shoppers expect a unified experience across social media, marketplaces, and your website. Choose a platform that integrates with:
- Social commerce (Instagram, Facebook, TikTok)
- Online marketplaces (Amazon, eBay)
- POS systems for brick-and-mortar sales
Which Platform is Right for Your Business?
Factor | Shopify | BigCommerce |
Ease of Use | Beginner-friendly | More complex but feature-rich |
Customization | Extensive app marketplace | More built-in features |
SEO | Requires apps for advanced SEO | Strong native SEO features |
Pricing | Strong native SEO features | No transaction fees, revenue-based tiers |
Scalability | Great for startups & mid-sized brands | Ideal for high-volume sellers |
Best For | Businesses looking for flexibility & ease of use | Large businesses needing built-in features |
Wrapping up
The decision between BigCommerce and Shopify is based on your business requirements.
Shopify's ease of use and flexibility make it the best option for small and medium-sized businesses, while BigCommerce high-end seller features are designed for high-volume merchants.
For companies that require professional services with Shopify consulting, companies like DigitalSuits give tailored services to optimize online stores, enhance user experiences, and result in e-commerce success.
In the end, both websites have good weapons to aid businesses succeed in a competitive e-commerce environment — the secret is finding the one that aligns with your business strategy and growth plan.
FAQ: BigCommerce vs. Shopify – Top Questions Answered
1. Which is cheaper for small businesses: Shopify or BigCommerce?
Shopify's basic plan starts at 29/month, while Big Commerce's Standard plan begins at 29/month, while Big Commerce's Standard plan begin sat 29.95/month. However, BigCommerce includes more built-in features (like abandoned cart recovery), while Shopify often requires paid apps for advanced functionality—potentially increasing costs.
2. Which platform is easier to use for beginners?
Shopify wins for simplicity with its intuitive drag-and-drop editor and beginner-friendly setup. BigCommerce has a steeper learning curve but offers more built-in tools, reducing long-term app dependencies.
3. Can I sell on social media with both platforms?
Yes! Both integrate with Facebook, Instagram, and TikTok. Shopify has a slight edge with its "Shop" app and smoother Instagram Shopping setup, while BigCommerce offers stronger multi-channel selling for eBay, Amazon, and Walmart.
4. Which platform is better for SEO?
BigCommerce has stronger native SEO features (automated sitemaps, URL customization). Shopify requires apps like Yoast for similar optimization. Both support blogs, but BigCommerce's built-in tools save time.
5. How do transaction fees compare?
Shopify charges 0.5–2% transaction fees unless you use Shopify Payments. BigCommerce has zero transaction fees on any payment gateway—a major cost-saver for high-volume sellers.
6. Which scales better for fast-growing businesses?
BigCommerce excels with unlimited products, variants, and API calls. Shopify caps variants (100 SKUs/product) and throttles API requests, making BigCommerce better for complex catalogs or rapid scaling.
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Setting up a new business is no walk in the park, and when it comes to financial support small business owners often struggle to find the help they truly need.
A good question is whether you are confident your small business can survive its first five years—or even the first year. According to the U.S. Bureau of Labor Statistics, 1 in 5 small businesses fail within the first year, often due to poor financial planning and lack of strategic support.
Starting a business in 2025 means navigating a rapidly evolving economy, rising costs, and tighter competition. While passion and innovation are essential, your financial plan will ultimately determine your success.
Even the most exciting ideas can fall apart without a clear strategy for managing cash flow, expenses, and funding.
This article will guide you through building a brilliant financial plan tailored for small business success in 2025.
Whether launching a new venture or refining your current operations, you'll learn how to align your budget with your goals, forecast more accurately, and gain the financial stability needed to grow.
With the right plan, you'll gain investor confidence, make smarter decisions, and future-proof your business for the challenges ahead.
What is a Financial Plan for a Business?
What is a financial plan for a business? It's a strategic tool that helps determine whether a business idea is financially viable and provides a roadmap to maintain long-term financial health.
A financial plan is a crucial part of any business plan, offering clarity and direction as the business evolves. It typically includes three core financial statements: the income statement, the balance sheet, and the cash flow statement.
Each of these sections comes with a brief explanation or analysis to help interpret the numbers.
Together, they provide insight into profitability, liquidity, and overall financial stability—key metrics every business needs to track.
Who Needs a Financial Plan?
Financial planning isn't just for the wealthy—it's a valuable tool for anyone looking to take control of their financial future.
Regardless of your income or life stage, having a structured financial plan helps you set clear objectives, stay focused, and feel confident about your path.
A personalized financial plan offers more than just guidance—it acts as a roadmap to help you navigate major life events and unexpected changes.
Whether saving for a home, preparing for retirement, or adjusting to new financial responsibilities, a solid plan ensures you're making informed decisions.
You'll find financial planning especially beneficial if you're:
- Buying your first home or upgrading your current one
- Experiencing a significant change in income or expenses
- Starting or growing a family
- Thinking ahead to retirement and long-term savings
- Organizing your assets through estate or legacy planning
A proactive approach to your finances helps you reach your goals and builds resilience, allowing you to adapt to life's curveballs with greater ease and security.
Understanding the Role of a Financial Plan in Business Success
If you're starting a new business and wondering what a financial plan is, it's more than just budgeting—it's a strategic roadmap that outlines how your business will manage income, control costs, and reach long-term financial goals.
A financial plan brings clarity and control to your operations by linking daily decisions to your company's vision.
The importance of financial planning for small businesses cannot be overstated. According to the U.S. Bureau of Labor Statistics, around 20% of small businesses fail within the first year, often due to poor financial management.
A solid financial plan can help avoid this fate by providing insight into cash flow, funding needs, and operational priorities.
So, what is a financial plan example?
It could include projected income statements, balance sheets, cash flow forecasts, expense breakdowns, and growth targets. These documents serve internal strategy and inspire confidence among lenders, investors, and stakeholders.
A good financial plan helps businesses:
- Manage cash flow more efficiently to avoid shortfalls
- Set realistic goals and map out scalable growth strategies
- Present a strong, credible financial position to stakeholders
Ultimately, a financial plan enables small businesses to stay agile, make informed decisions, and achieve lasting success—even in uncertain economic environments.
Why Is a Financial Plan Important to Your Small Business?
A solid financial plan not only boosts your confidence in managing your business but also gives you clearer insights into how to allocate resources effectively.
It reflects a commitment to responsible spending and demonstrates your company's ability to meet its financial responsibilities.
With a financial plan, you can assess how specific decisions may impact revenue and identify when it's appropriate to use reserve funds.
Also, a financial plan is a powerful asset when presenting your business to potential investors. It highlights how your organization manages expenses, generates income, and plans for growth.
Most importantly, it provides a clear picture of your current financial position and outlines what's needed—through sales or investment—to achieve key financial goals.
Financial Plan for Beginners?
1. Develop a Sales Forecast
A critical component of any business financial plan is the sales forecast—an estimate of the revenue your business expects to generate over the next three years.
Start by building a spreadsheet that outlines each quarter of your fiscal year. Include key columns for product or service names, unit prices, units expected to be sold, and projected revenue.
If your business is already up and running, review past sales reports to identify seasonal trends or growth patterns you can use to inform future projections.
For startups without existing sales data, begin by calculating your cost of production per item or service. From there, estimate how much you plan to sell based on market research, competitor benchmarks, or industry demand.
Not confident in your manual forecasting skills? There are plenty of tools and software solutions available that can help you automate and refine your sales projections with greater accuracy.
A sales forecast estimates your future revenue and is crucial for building a solid financial plan.
Here's how to create one:
- Set up a spreadsheet to track products, prices, and projected sales.
- Use past sales data to identify trends (if your business is already operating).
- Estimate unit sales and pricing based on market research for new businesses.
- Forecast monthly revenue for the first year, then annually for Years 2 and 3.
- Use tools like QuickBooks or LivePlan to improve accuracy.
- Compare your forecast to industry benchmarks to ensure it's realistic.
This helps demonstrate your business's potential profitability to investors and lenders.
A well-prepared sales forecast isn't just for internal planning—it also builds confidence with potential investors or lenders.
It demonstrates that your business has a clear growth trajectory and can generate consistent revenue, making it more attractive for financial backing.
2. Outline Your Business Expenses
After completing your sales forecast, the next step is to create a detailed breakdown of your business expenses.
This section shows investors that your business can realistically afford to produce its products or services and maintain profitability. Ideally, your total expenses should remain below your projected revenue.
Start by identifying all your business costs and categorizing them into fixed and variable expenses:
- Fixed costs remain consistent throughout the year—examples include rent, insurance, and salaries.
- Variable costs fluctuate depending on operations and sales volume, such as marketing, shipping, or raw materials.
While some costs like production or rent may be straightforward, others—like taxes or maintenance—may require estimation.
Your expense forecast helps assess financial feasibility and ensures you're planning for both predictable and unexpected costs.
3. Build a Cash Flow Statement
A cash flow statement outlines the movement of money into and out of your business over a specific period.
It's a key component of your financial plan, as it shows whether your company generates enough income to cover its operating expenses and obligations.
The goal is to maintain positive cash flow, which means more money is coming into the business than going out. This signals healthy financial management and ensures you can pay bills, invest in growth, and handle unexpected costs.
To create a cash flow statement:
- Use historical profit and loss records to calculate incoming revenue and outgoing expenses.
- If you're a startup, make realistic projections using your estimated sales and known expenses.
- Always account for potential payment delays from clients or vendors. Adding a buffer for late invoices helps you avoid cash shortfalls.
Being conservative and realistic in your estimates helps you prepare for real-world financial conditions.
A clear cash flow projection gives investors confidence in your business's financial stability and helps you stay in control of your financial health.
4. Create an Income Projection Forecast
An income projection, a profit and loss forecast, provides a forward-looking snapshot of your business's expected revenue, costs, and net profit over a specific period. It's a crucial part of your financial plan, especially when presenting to investors or lenders who want to understand your business's long-term viability and profitability.
This document includes your projected sales, the direct costs of producing those goods or services, and your estimated operating expenses. The result is a forecast of your expected net income—essentially showing whether your business will be profitable.
If your business is already up and running, focus your forecast on the upcoming year.
For new ventures, consider projecting income over two to three years to demonstrate sustainability and growth potential.
To build an accurate forecast:
- Use sales forecasts and expense estimates as the foundation.
- Base your projections on industry trends and historical data, if available.
- Factor in seasonal variations, economic conditions, and potential business developments.
- Consider using financial forecasting software or consulting a financial advisor for added accuracy.
A well-prepared income forecast builds credibility and can significantly improve your chances of securing funding or investor interest.
Download the free financial projections template excel for a great starting poin.t
5. Build a Forecasted Balance Sheet
A forecasted balance sheet offers a snapshot of your company's projected financial position by outlining what it owns (assets) and what it owes (liabilities).
This document is essential for investors, lenders, and stakeholders to evaluate your business's financial stability and net worth over time.
Assets represent everything your business owns that has value, such as cash, inventory, accounts receivable, equipment, real estate, and intellectual property. Liabilities include financial obligations like loans, taxes, unpaid wages, or outstanding vendor payments.
To create your forecasted balance sheet:
- Start by listing all expected assets, including cash balances, office equipment, inventory, property, and receivables.
- Next, outline projected liabilities, such as credit lines, loan repayments, outstanding invoices, or payroll obligations.
- Subtract total liabilities from total assets to calculate your projected equity or net worth.
A positive balance sheet—where assets outweigh liabilities—demonstrates financial health and signals to investors that your business is solvent and capable of meeting its obligations.
Conversely, if liabilities exceed assets, it may raise red flags about your ability to manage debt.
Having a clear and realistic balance sheet projection not only builds credibility but also helps you plan for future capital needs and operational investments effectively.
Here is a simple balance sheet template excel, feel free to use this financial projections template excel.
6. Identify Your Break-Even Point
Understanding your break-even point is crucial for evaluating the financial viability of your business. It represents the level of sales needed to cover all your expenses—where your total revenue equals total costs. Only after crossing this threshold will your business begin generating profit.
Determining your break-even point gives you a clear financial target and helps you make informed pricing, budgeting, and investment decisions. It also reassures potential investors that your business can become self-sustaining within a reasonable timeframe.
To calculate your break-even point, subtract your variable costs from the unit selling price, then divide your total fixed costs by that result. The formula looks like this:
Break-Even Point = Fixed Costs / (Unit Price – Variable Cost per Unit)
For example, if your fixed costs are $100,000, and each unit you sell brings in $50 in profit after covering variable costs, you'd need to sell 2,000 units to break even.
Most successful businesses break even within two to three years. If your projections show it may take significantly longer—say five years or more—it could signal the need to reassess your business plan or reduce operating costs.
Also consider including an exit strategy in your financial plan. This helps mitigate risks and outlines a path to minimize losses should your business not perform as expected.
7. Plan for Contingencies + (contingency plan template word)
Every business faces unexpected challenges—from sudden market downturns and supply chain disruptions to equipment failure or economic shifts.
That's why it's essential to build contingency planning into your financial strategy.
A contingency plan includes setting aside a financial buffer (often referred to as an emergency fund) to cover unforeseen expenses without derailing your operations. Many financial experts recommend having three to six months of operating costs set aside as a safeguard.
Beyond savings, consider preparing alternative revenue streams or flexible cost-reduction strategies you can implement quickly if revenue drops. This might include renegotiating vendor contracts, scaling back non-essential spending, or leveraging credit lines responsibly.
A solid contingency plan increases investor confidence and gives your team peace of mind—knowing you're prepared for the unexpected.
It's not just about weathering storms, but staying agile and resilient enough to pivot when necessary, keeping your business on track for long-term success. Download out free contingency plan template word.
5 Steps of Financial Planning
1. Define Your Financial Goals
Start by asking yourself: Where do I want to be in 5, 10, or even 20 years? Whether owning a home, retiring early, travelling the world, or funding your child's education, having a clear vision helps shape your financial plan.
Break down your aspirations using the S.M.A.R.T. method:
- Specific: Clearly state what you want (e.g., "Save for a down payment on a house").
- Measurable: Assign a number or milestone (e.g., "Save $30,000 in 3 years").
- Attainable: Make sure the goal is realistic based on your income and expenses.
- Relevant: Focus on what matters most to you and your long-term lifestyle.
- Time-Based: Set a target date for each goal to stay accountable.
Use a digital notebook or spreadsheet to list and categorize your goals into short-term (1–2 years), mid-term (3–5 years), and long-term (5+ years). This will help you prioritize where to start saving and how much to allocate monthly toward each goal.
A great way to boost your financial literacy is through online MBA finance programs. These programs offer practical, flexible education tailored to real-world business needs. Whether you're planning for growth or just managing your first year of revenue, sharpening your financial skills gives you a competitive edge and a better shot at long-term stability.
2. Assess Your Risk Tolerance
Understanding your risk tolerance is essential when creating a financial plan that suits your lifestyle and goals.
Risk tolerance is your comfort level with investment ups and downs—how much loss you're willing to accept in pursuit of higher returns.
Your tolerance depends on factors such as:
- Your age – Younger individuals can typically handle more risk since they have time to recover from market fluctuations.
- Your financial goals – Short-term goals often require safer investments, while long-term goals may benefit from more growth-focused strategies.
- Your income and savings – The more financial stability you have, the more flexibility you may feel when taking risks.
- Current economic conditions—Inflation, interest rates, and political stability can all affect how much risk you're comfortable with.
Use an online risk tolerance quiz or calculator to get a quantified score. This helps align your investments with your comfort level and expected returns.
Consider this score when choosing between conservative options like bonds, balanced mutual funds, or higher-risk investments like stocks or crypto.
Understanding your risk tolerance ensures your financial strategy is realistic, sustainable, and aligned with your peace of mind—even when markets fluctuate.
3. Analyze Your Cash Flow
A solid financial plan starts with knowing exactly where your money is going.
Cash flow analysis tracks the money coming into your accounts (income) and what's going out (expenses). This step helps you identify spending patterns and areas for improvement.
Start by reviewing your last 3–6 months of bank statements.
Categorize your spending into:
- Essential expenses - Rent or mortgage, utilities, groceries, insurance, transportation.
- Discretionary expenses - Dining out, subscriptions, shopping, entertainment.
Once categorized, subtract your total expenses from your income to see your net cash flow.
Use budgeting apps like YNAB, Mint, or Excel templates to automate your tracking. Set a monthly review reminder to stay accountable.
After this analysis, you may find non-essential costs that can be reduced or eliminated. Even small changes—like cutting unused subscriptions or reducing takeaway meals—can free up cash for savings, investments, or emergency funds.
Understanding your cash flow gives you control over your finances, prevents overspending, and ensures your financial plan is based on accurate, real-world data.
4. Protect Your Assets
Protecting what you own is a critical part of any strong financial plan.
Start by calculating your net worth—the total value of your assets (home, car, savings, investments) minus your liabilities (loans, credit card debt). This gives you a clear picture of what needs protection.
Once you understand your financial standing, evaluate your insurance coverage:
- Homeowners or renters insurance for property and personal belongings.
- Auto insurance with sufficient liability coverage.
- A Personal Liability Umbrella Policy (PLUP) for extra protection in case of major claims or lawsuits.
- Life insurance—either term (for affordable temporary coverage) or permanent (whole, universal, or variable universal life), depending on your long-term needs and family situation.
- Long-term care insurance to protect your retirement savings from healthcare-related expenses later in life.
Review your insurance policies annually or when your life circumstances change (e.g., marriage, new home, children).
Speak with an independent insurance advisor to ensure you're neither underinsured nor overpaying.
With the proper protection in place, you're shielding your financial future from unexpected events—and giving yourself peace of mind.
5. Evaluate Your Investment Strategy
Your investment strategy should align with your financial goals, timeline, and risk tolerance.
Begin by identifying your approach:
- Active Investing involves hands-on management, frequent trading, and efforts to outperform the market. This strategy demands time, expertise, and often higher fees.
- Passive Investing focuses on long-term growth by tracking market indexes (like the S&P 500), often through ETFs or index funds. It typically involves lower costs and less frequent trading.
- Define your investment goals - Are you saving for retirement, a home, or college tuition?
- Consider your time horizon - The longer your timeline, the more risk you may be able to take.
- Evaluate your current portfolio - Is it diversified? Are your investments aligned with your goals?
- Rebalance your portfolio regularly to maintain your desired asset allocation.
If you're unsure which path suits you best, consult with a financial advisor or consider a hybrid approach, where part of your portfolio is passively managed and another part actively managed.
Choosing the right strategy is not just about returns—it's about aligning your investments with your life goals and peace of mind.
Key Challenges Small Businesses Face When it Comes to Financial Planning
- Unpredictable Cash Flow - Many small businesses experience irregular income streams, especially in the early stages. This makes it difficult to forecast revenue and plan for future expenses. Late payments from clients or seasonal fluctuations can leave businesses scrambling to cover costs.
- Limited Resources and Budget - Small businesses often lack dedicated financial experts or advanced tools. With limited time, staff, and money, financial planning is either put on hold or handled by someone without formal training in accounting or finance.
- Lack of Financial Literacy - Many small business owners are passionate about their product or service but may not fully understand financial statements, forecasting, or budgeting. This can lead to poor decision-making and prevent the business from growing sustainably.
- Difficulty Accessing Capital - Securing loans or investment requires detailed financial plans and projections. Small businesses that struggle to create professional financial documents may find it hard to gain the trust of investors or lenders.
- Overestimating Revenue, Underestimating Expenses - A common trap is being overly optimistic. Overestimating how much revenue will come in and underestimating how much things cost can result in shortfalls and missed targets.
- Economic and Market Volatility - Changes in interest rates, inflation, or supply chain disruptions can derail financial forecasts. Small businesses are more vulnerable to external shocks, making contingency planning even more important.
- Scaling Without a Plan - Rapid growth without financial controls can be just as dangerous as stagnation. Businesses that grow quickly may overextend themselves, take on too much debt, or fail to manage increased operational costs.
Best Tools and Resources for Small Business Financial Planning
Here's a list of some of the best tools and resources for small business financial planning, including top-rated financial planning apps that help manage budgets, cash flow, forecasting, and more:
#1. QuickBooks
Best for: Accounting & financial reporting
A go-to tool for small businesses, QuickBooks helps with expense tracking, payroll, invoicing, and generating financial statements. It also offers forecasting tools and integrates with many other apps.
Why it's great: Easy to use, scalable, and trusted by millions of businesses.
#2. Xero
Best for: Online accounting & collaboration
Xero is a cloud-based accounting software ideal for small businesses that want real-time collaboration with bookkeepers and accountants.
Why it's great: User-friendly interface, strong financial reporting features, and great for managing cash flow.
#3. Wave
Best for: Free accounting and invoicing
Wave offers free invoicing, accounting, and receipt scanning tools. It's perfect for solopreneurs and freelancers just starting out with financial planning.
Why it's great: No monthly fee, intuitive layout, and ideal for basic financial needs.
#4. LivePlan
Best for: Creating business plans & financial forecasting
LivePlan helps businesses build professional business plans and financial projections. It's a great tool if you're pitching to investors or lenders.
Why it's great: Pre-built templates, industry benchmarks, and easy forecasting features.
#5. PlanGuru
Best for: Advanced forecasting & budgeting
PlanGuru is designed for in-depth financial analytics and 3–10 year forecasts. It's more advanced than most small business tools and ideal for growing companies.
Why it's great: Budgeting, forecasting, and reporting all in one platform with powerful analytics.
Wrapping up
Financial planning isn't just for big corporations—it's the secret weapon that helps small businesses thrive.
When you take the time to understand your costs, stay informed, monitor your cash, and invest in solid systems, you set your business up for long-term success. The earlier you start building that financial foundation, the stronger your business becomes.
You don't need to be a financial wizard to make smart choices.
You just need the right mindset, some good habits, and a commitment to staying proactive. With these ten steps in place, you'll be ready to lead your business with clarity, confidence, and control.
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Jill Romford
I am a digital nomad, lover of exploring new places and making friends.
I love to travel and I love the internet. I take pictures of my travels and share them on the internet using Instagram.
Traveler, entrepreneur, and community builder. I share my insights on digital marketing and social media while inspiring you to live your fullest life.
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