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7 Best Business Exit Strategies to Consider When Selling

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Business Exit Strategies

Selling your business is an important decision and not one to take lightly. However, some strategies might be better for you than others. You should always research the best business exit strategy for you and your company before making a final decision.  

These strategies may depend on your company’s stage, the industry it operates in, or your personal goals for the future. Here are 7 exit strategies to consider when selling your business.

What Is Business Exit Strategy?

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An exit strategy for a company is an entrepreneur’s strategic plan to sell their company ownership. An exit strategy allows entrepreneurs and investors alike to reduce or liquidate their stake in a business and make it easier to make money. 

If unsuccessful, an exit strategy limits what will be lost. Exit strategies can also be seen from investors’ perspectives; they may have one when planning to cash out investments.

These are two different things: Business exit strategies should not be confused with trading exit strategies used in securities markets.

  • A business exit strategy is a company owner’s plan to sell or share it with other investors.
  • Initial public offerings, strategic acquisitions, and management buyouts are among the more common exit strategies an owner might pursue.
  • If the business is profitable, an exit strategy lets the business owner reduce their stake or completely get out of a potentially lucrative investment.
  • Implementing an exit strategy or “exit plan” can save a struggling business from experiencing too much financial loss.

So, The exit strategy you choose will depend on your own situation and what type of business you have. There are a variety of options, so it is important to know the different types available before coming up with an action plan.

Understanding The Business Exit Strategy

To start, entrepreneurs should have an exit plan outlined in their business plan before going into business. Choosing the type of exit strategy can also influence development decisions. 

For example, suppose you want to retain control or some involvement in the company after your departure. In that case, a management buyout might be better for you than an initial public offering (IPO). The best option is determined by several factors, including how difficult each one is and which will deliver the best ROI.

A strategic acquisition means giving up ownership responsibility and retaining specific control measures such as decision-making power. At the same time, IPOs are often seen as “the holy grail” because they often come with great prestige and high payoffs. On the other hand, bankruptcy is seen as a less desirable way to end a business.

One of the critical aspects of an exit strategy is business valuation. Some specialists can help business owners (and buyers) examine a company’s financials to determine a fair value. 

The transition managers assist sellers with their strategies for exiting their businesses by offering assistance on finding third-party financing, preparing corporate and personal exits, and more.

7 Business Exit Strategies You Should Consider When Selling 

When it comes to selling your business, you need an exit strategy.  To help make this decision easier for you, here are seven different ones that may be worth considering depending on the situation surrounding your sale:

Step-1: Liquidity

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Liquidation is the process of closing down and disposing of a company’s assets. Liquidations are often used when they cannot be sold through any business, usually because they are intrinsically dependent on one employee or owner or have poor strategy/performance.

Business owners should consider restructuring a company rather than liquidation as an exit strategy. 

Liquidating a business will often generate low returns and not recognize the value of current clients, while restructuring can optimize the sale process.

Exit Strategy: Gradual Liquidation

What is gradual liquidation in business exit strategy, and how does it differ from regular liquidation? The first type of exit strategy is a long-term process, where the owner wants to wind down their business. Gradual liquidation occurs over an extended period like monthly or quarterly payments. It’s most common for owners who wish to sell all their assets and pay off debt at a fixed price to end up with something after the sale has been completed. This kind of slow transition out will also make employees feel secure about job stability.

The most popular strategy for business owners is to systematically take profits out of their company when it comes to exit strategies. This will be done by either paying large salaries and bonuses or through dividend payments. 

The operation of the business will slow down until it is no longer sustainable. Small-business owners often want to reduce their workload slowly towards retirement choose this gradual liquidation method.

To avoid major mistakes, they may make while on a steep learning curve after selling their business, like not finding new buyers or overpaying taxes.

Liquidity Management In Business Exit Strategy Has Three Common Aspects

There are three different ways to manage liquidity in your organization, depending on the needs and goals of your organization:

  • All of the balances of your organization are placed into one account through physical concentration.
  • Multiple accounts are held in the same bank in notional pooling, but these accounts are combined when calculating interest.
  • The bank performs a periodic sweeping process on overlay structures at the end of the day, typically encompassing multiple accounts.

Gradual Liquidation is a method of reducing inventory by selling it off at regular intervals. This type of liquidation can be done in two ways: through decreasing the number produced or increasing the amount sold, which will eventually decrease supply and increase demand. 

Strategy 1: A Focus On Physical Activity

It is often hard to gain visibility and manage assets when split up into different accounts. However, there is a simple way to better control the flow of liquid assets by physically consolidating them into one central account or location. 

When you consolidate liquid assets, it gives you a clear line of sight over them- making it easier for management purposes. The benefits include more easily managing risk since only one account needs to be addressed and simplifying the process if your company operates with more than one currency.

A single automated cash position system like Trovata.io, can consolidate and normalize all your bank accounts, regardless of currency. 

Talking to one of our experts about how an automated cash management platform would help you understand how much money there is in your account at any given time. We hope that you will make more informed decisions for the future.

Strategy 2: The Concept Of Notional Pooling

Notional pooling is a strategy that balances their respective accounts, unlike physical concentration. Banks combine the balances and convert them to one currency with notional pooling. 

This presents a potential solution for organizations with too many different accounts and currencies to implement a physical concentration strategy- by leveraging notional pooling. 

Larger organizations can mitigate FX conversion costs without consolidating accounts and corporate relationships. 

An important consideration when deciding on this alternative approach is that it only works in some countries (countries permit not) or will typically attract attention from auditors or tax agencies if an organization addresses global markets.

For these reasons and others mentioned so far, not all companies should pursue this approach when designing their international cash management policies. Instead, what’s recommended for more advanced firms are multinational banking services offered by banks like Loomis International LTD., specialized providers of cross-border money transfers such as World First UK Ltd., although there are other solutions available depending on specific needs.

Strategy 3: Using Overlay Structures

Overlay structures are precious in balancing physical concentration and notional pooling. You can mitigate some of the risks associated with notional pooling and empower more distributed organizations to keep their funds spread out by using an overlay structure strategy. 

Because this technique relies on sweeps for aggregation into cash data, duplicate data is a significant difficulty. If you have missing cash data, these delays might produce a large visibility gap for your treasury staff, which can grow over time.

Step-2: Deal Structure

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A deal structure is a binding agreement outlining the rights and obligations of both parties in an M&A. It states what each party will be entitled to and what it is obliged to do under the agreement. In essence, a deal structure can simply be referred to as the terms and conditions of an M&A.

M&A Deal Structure: The Basics

Mergers and acquisitions involve the coming together (synergizing) of two business entities to become one for economic, social, or other reasons. A merger or acquisition is possible only when both parties are willing to agree on terms that have been agreed upon in advance. These terms are known as an M&A deal structure.

Deal structuring is one of the steps in a merger or acquisition. It consists of ranking all parties’ objectives, ensuring that their top-priority goals are met, and considering how much risk each party must take. Initiating this process requires all parties to state:

  • Their stance in the negotiations
  • Risks that are observable and what can be done to manage them;
  • They can tolerate how much risk they are willing to take; and
  • Negotiations may be canceled in certain circumstances.

The process of creating a proper M&A deal structure can be very complex and challenging because of the number of different factors to consider. 

These factors include preferred financing methods, corporate control, business plans, market conditions, antitrust laws, and accounting policies. Hiring the right kind of financial advice or legal expertise in these areas will make this process less complicated for you.

Structuring M&A Deals

There are three known ways to be structured when it comes to a merger. The first is an asset acquisition, the second is by purchasing stocks, and the third is with unions. All three of these methods can also be combined to achieve a more creative or flexible deal structure than you would think.

  1. Asset Acquisition

In an asset acquisition, the buyer purchases the selling company’s assets. If it prefers a cash transaction, this is usually an excellent deal if they have selected which assets they want to purchase.

Asset acquisitions may offer the following advantages:

  • The buyer chooses whether to buy certain assets from the seller and not others.
  • Even after the sale of the company, the remaining unsold assets and liabilities remain on the books.

The following are disadvantages of asset acquisitions:

  • Some non-transferable assets, such as goodwill, cannot be acquired by the buyer.
  • The seller and the buyer may incur high taxes due to asset acquisition.
  • Additionally, the deal may take longer to close than other structures. 
  1. Stock Purchase

The buyer acquires In-stock purchases, a majority share of the seller’s voting shares. In other words, control of assets and liabilities is transferred to the buyer.

Stock purchase acquisitions have the following advantages:

  • A stock purchase deal minimizes taxes, especially for the seller.
  • Since negotiations are less complicated, closing a stock purchase deal is more accessible.
  • There is a possibility that it is less expensive.

Stock purchase acquisitions have the following disadvantages:

  • Legal or financial liabilities may accompany a stock purchase acquisition.
  • There may also be problems with uncooperative minority shareholders.
  1. Merger

Though the term merger is often used interchangeably with the acquisition, a merger is an agreement between two separate business entities as one new entity. A merger can be less complicated than an acquisition because all liabilities, assets, etc., become the new entity.

In structuring a deal, there are advantages and disadvantages and other influencing factors that need to be considered to reach conclusions on what method should be adopted.

Step-3: Strategic Buyers

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A strategic buyer is someone in the same industry as your company who wants to buy you out. Often, they’re competitors, suppliers, or clients for what you provide. Their main goal is to find a company that does things similar to theirs and likely has products and services aligned with their operations.

Financial buyers and strategic buyers are not the same. A strategic buyer is preferred for small-medium-sized companies especially. Here’s a quick list of reasons why you should sell your company to a strategic buyer:

  1. Getting a better deal;
  2. Faster closure of deals;
  3. A higher degree of closing certainty; 
  4. Providing clients with better opportunities;
  5. A long-term agreement;
  6. Technically, this is an ability to make decisions that will affect the success of a strategic buyer.

Step-4: Partnerships and Joint Ventures

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A joint venture is a business organization that lasts for a specific period, while partnerships are one partner business. The former ends when its purpose is completed, whereas the latter continues until all partners agree to dissolve it. 

One difference between them lies in what happens when there’s disagreement among partners, with partnership disputes being settled by arbitration or litigation and joint ventures typically involving some form of the buyout agreement. Each party has the right to exit on completion at their discretion based on set rules.

Step-5: M&A – Mergers and Acquisitions 

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Merging can result from two similar companies joining forces or being bought by a larger one. It is a win-win situation when bordering companies have complementary skills, ultimately saving resources by combining. A giant company creates better and faster growth in revenue than creating new products organically.

  • It is common for the terms “mergers” and “acquisitions” to be used interchangeably, but their meanings are different.
  • A company acquires another outright through an acquisition.
  • Combining two firms creates a new legal entity under one corporate name, subsequently becoming a new legal entity.
  • By studying similar companies in an industry and using metrics, a company can be objectively valued.

M&A has historically been most common among large corporations who can afford to make such transactions without impact on their own stock price or ability to compete effectively with smaller businesses.

Acquisitions and Mergers: Types

M&A transactions include the following types of transactions:

1. Mergers

When two companies decide to merge, the boards of directors for both companies approve the combination and seek shareholders’ approval. For example, in 1998, a merger deal occurred between Compaq and Digital Equipment Corporation whereby Compaq merged into Digital Equipment Corporation. 

The ticker symbol for the pre-merger company was CPQ which later became HPQ after it joined with Hewlett Packard’s (HWP) ticker symbol.

2. Acquisitions

A simple acquisition means the acquiring company obtains a majority stake in the acquired firm and does not change its name or alter its organizational structure. An example of this type of transaction is Manulife Financial Corporation’s 2004 acquisition of John Hancock Financial Services, wherein both companies preserved their names and organizational structures.

3. Consolidations 

Consolidation is joining two companies together to create a new company. Core businesses are combined, and old corporate structures are abandoned to make this happen. For example, in 1998, Citicorp and Travelers Insurance Group announced a consolidation that led to Citigroup.

4. Tender Offers 

A tender offer is when a company offers to purchase the outstanding stock of another firm at a specific price rather than the market price. Acquiring companies typically communicate their requests directly to other firms’ shareholders, bypassing management and boards of directors. 

For example, in 2008, Johnson & Johnson offered Omrix Biopharmaceuticals worth $438 million. Though acquiring firms may continue, existing- especially if dissenting shareholders- most tender offers resulted in mergers.

5. Assets acquired

One company acquires the assets of another company. The acquiring firm must obtain approval from its shareholders. This type of purchase is typical during bankruptcy proceedings, wherein other companies bid for various assets of the bankrupt company liquidated upon the final transfer to acquirers.

6. Management Acquisitions

A management acquisition may be a buyout created by the company’s executives. The majority of shareholders must approve it, typically financed with debt. A well-known example of this type of purchase was in 2013 when Dell Corporation founder Michael Dell took over his company again after a 13-year hiatus from day to time operations.

Step-6: MEBO – Management and Employee Buyouts 

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A MEBO is a corporate restructuring initiative involving managerial and non-managerial employees buying out a company and concentrating ownership into a small group.

The benefits of MEBO

  • When select employees and management join forces to take over an existing company, it is called management and employee buyout (MEBO).
  • As an exit strategy or a means of taking a publicly-traded company private, MEBOs may be used.
  • MBOs can be difficult to arrange and structure when management and employees have competing interests and preferences.

Understanding Employee Buyouts and Management Buyouts

A MEBO is generally used to privatize a publicly-traded company. Still, it can also be used as the exit strategy for venture capitalists or other shareholders in an already private firm. An owner may want to sell their division that is not part of its core business and instead use this type of buyout by bringing greater efficiency and job security for employees.

MEBOs are often seen to bring greater efficiency because they can provide added job security, motivating employees enough to give more effort to improve profitability.

An internal team will pool their resources together like savings or capital to fund such a purchase from one of its members who wish to retire while still retaining some level of control over his former asset. This kind of output was generated using TextAloud.

Step-7: IPO – Initial Public Offering

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An IPO benefits private investors looking to make money off of their investment in a company. Investors who’ve invested in a company during the pre-IPO period can sell their shares for profit, watch the share value grow, or cut losses before quitting an unprofitable investment. 

The exit route given by an IPO happens because it gives them something they don’t have yet: control of this particular situation and the chance to cash out on any shares they’re holding onto from when the business was privately owned.

The benefits of IPOs

  • IPOs provide private investors with a way to sell off their stake in the company.
  • Private investors cannot sell their shares during a lock-in period. Typically, it lasts between three and 24 months.
  • Investing in companies by private investors is called private equity (PE). 
  • In many cases, these private entities are under pressure from their investors (people who own equity in these private investment firms) to cash in on their investments.
  • Following the lock-in period, investors typically sell shares in portions rather than all at once.

The IPO process is typically divided into three stages: pre-deal roadshow, book building, and pricing. But there are many more points to consider.

IPO: A Quick Overview

  • IPOs can serve as an exit strategy for private investors.
  • After the lock-in period expires, private equity (PE) investors can sell their investments to the public.
  • It is widespread for sales of this type to return enormous profits, with returns many times larger than the initial investment.
  • It is still possible for the private investor to own a part of the private equity (PE) and thus have a stake in the company.
  • Private investors often sell stocks in batches to avoid drastic price drops.

Conclusion 

Selling your business is an important decision and not one to take lightly. A business exit strategy allows entrepreneurs and investors alike to reduce or liquidate their stake in a business. If unsuccessful, an exit strategy limits what will be lost. Here, we have discussed the 7 exit strategies to consider when selling your business. The following guide aims to provide you with all the information you need to know about the business exit strategy.

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Business

The Top 10 Print-On-Demand Companies For 2022

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print-on-demand companies

Many print-on-demand companies enable you to begin selling custom products in minutes. These companies can assist you with the following:

Is this intriguing? print-on-demand can bring your unique ideas to life with little hassle. Each print-on-demand company has an impressive catalog of products, shipping requirements, and unique features that will influence your choice. 

Before getting started, you must answer a crucial question: What is the most appropriate print-on-demand company for you? 

There are many print-on-demand companies to choose from and many things to consider. This post will look at the 10 best print-on-demand companies of 2022.

What are print-on-demand Companies?

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A print-on-demand (or ‘POD’) company provides an entire eCommerce fulfillment solution, including sourcing and storing products, printing products, packaging materials, and shipping them to customers. 

In addition to printing and shipping orders, print-on-demand companies provide all other fulfillment services. 

All you need to do is create attractive designs and package and sell products online using print-on-demand services.  

The majority of print-on-demand companies provide items such as:

  • Hoodies
  • Mugs
  • Towels
  • Phone cases
  • Notebooks
  • Stationery
  • Posters
  • Stickers
  • Packs
  • Labels

Sometimes, print-on-demand companies offer less conventional print-on-demand merchandise options like: 

  • Sneakers, boots, and flip flops
  • Yoga pants, leggings, joggers, jeans, jackets, and sweatshirts 
  • Bedsheets, blankets, pillows, and throws 
  • Watches and jewelry 
  • Kitchen, garden, and kids’ items
  • Headphones and speakers
  • Bags and bottles 
  • Face masks

You can see some print-on-demand product examples from the image below:

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How print-on-demand Works?

You can design and sell white-labelled products using print-on-demand companies. You can sell t-shirts, bags, mugs, books, and more using this model. 

Upload your pictures, associate your POD provider with your e-commerce website, and you’re set. You can start selling t-shirts, bags, and mugs with just a few clicks. 

You don’t have to keep stock since you can sell per order without investing. You can also use these services to handle order fulfillment and shipping. 

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Types of print-on-demand Companies

There are two common types of print-on-demand companies: 

  • Print-on-demand services: You may sell products on your website and third-party marketplaces like Etsy via print-on-demand services. 
  • Print-on-demand marketplaces: These are devoted print-on-demand platforms where you can sell your designs on products alongside other sellers. 

We will be focusing on print-on-demand services in this post. 

Why? Because when you sell on an eCommerce marketplace, you can’t establish a unique brand, resulting in a challenge for you to distinguish your products from your competitors and expand a sustainable business. 

However, selling products via your website can build a loyal customer base and grow your business without limitations.

Why Is print-on-demand Great for eCommerce Businesses?

Starting an online dropshipping business is relatively simple, with print on demand. You don’t need to invest anything at the outset, so there are no setup costs. No inventory needs to be stocked, so there’s considerably less danger. 

In some cases, orders don’t need to be processed immediately, making them possible to be fulfilled free of charge. Shipping and order fulfillment can be problematic for a newcomer to online retail. 

print-on-demand resolves these issues, allowing you to begin selling immediately. You can earn a passive income without worrying about storage, packing, or shipping as orders come in.

However, print-on-demand is not entirely hands-off. In the crowded marketplace of online retail, there are an endless number of merchants. In other words, marketing requires time, effort, and money. 

There are some potential downsides to print-on-demand, however. By not purchasing in bulk, wholesale costs might end up being higher. You would also lose profits by not buying bulk, but your risk would be lower. 

There are many other benefits to purchasing in bulk. Packaging and shipping are typically taken care of for you when you buy wholesale, which can deprive you of some of your creativity and control. 

As an artist, you can also make money. To create an entire purchasing experience, many POD firms prohibit you from customizing your experience. It’s especially advantageous for companies that want to profit from their brands by providing custom-designed merchandise. 

For example, designers can provide their fans with an opportunity to purchase custom-designed items.

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The Top 10 print-on-demand Companies for 2022

In identifying the best print-on-demand companies, we took into consideration a variety of factors. The most critical factors were pricing plans and features. Here are the 10 best print-on-demand companies in 2022:

1. Printful

Best For: For brand new and veteran entrepreneurs who want a versatile, well-rounded starter kit that can increase with them, this is a good option.

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Printful is a famous print-on-demand company. You can use the service’s many tools to turn your ideas into hot-selling items. As a result, you can focus on designing products, marketing, and selling without worrying about printing and shipping logistics. 

Printful will handle all of your printing and shipping requirements. You can access 293 items, including t-shirts, tank tops, caps, hoodies, and face masks. You can make them from scratch or upload them from Printful, which has 80 million images available for $1 that you can use. 

With the assistance of the mockup generator built into Printful, customisation is straightforward, and the service integrates with all the most popular platforms, including Shopify and Etsy. Products are also typically available for shipping in two to five business days.

Features

  • Printful provides a free tool that you can use with Printful to create mockups and product designs. 
  • Printful integrates with major eCommerce platforms and online marketplaces and offers Printful API. 
  • Once you receive the order, there are no upfront fees, fulfillment, and shipping costs. 
  • Because there are no order minimums, you can freely experiment with products and designs until you find the sweet spot.
  • You can sell custom-designed products under your brand.

Pricing

You can print sublimation, embroidery, cut, sewn garments, and direct-to-garment on Printful. Printful charges customers only when they receive an order. The company charges shipping and handling fees after your order. 

You can add tear-away tags, inserts, and stickers to your packaging for a branded customer experience for an additional fee.

2. Printify

Best For: Anyone looking for a print-on-demand company that allows you to find a printing partner that ships a particular product from a specific region of the world.

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With an extensive network of print-on-demand suppliers worldwide, Printify makes it easy to source the best supplier for fast and economical shipping in your country. 

You may, of course, choose to source from a different supplier if you prefer longer or higher-quality shipping times. This company offers more than 300 products that may be printed directly onto clothing. 

With Printify, online businesses have a guaranteed method to sell their handcrafted items because Printify handles all the printing, shipping, and other duties. Rather than struggling to build their brand and deal with growing delivery requests, online vendors can now rely on Printify.

Features

  • See realistic previews of your designs before uploading them to Printify. 
  • Shopify, Etsy, and eBay integrations enable you to see how your designs will look in real life. 
  • You can also use Printify’s APIs to integrate Printify with other sites and build your products. 
  • Printify’s self-service help center will teach you how to use the platform correctly and resolve common issues. 
  • Printify offers a 20% discount on all products.

Pricing

There are three pricing structures offered by Printify: Free, Premium, and Enterprise. 

The free program allows merchants to create as many product designs as they want, but there is a limit of five stores per account. 

The premium package at $29/month comes with the same benefits as the free program plus a 20% discount on all products and 10 stores per account. 

The enterprise package includes unlimited stores per account, a dedicated account manager, and API integration tailored to merchants’ needs.

3. SPOD

Best For: SPOD is the place to go for people who are new to print-on-demand and want fast, easy shipping and great prices. Customers can personalize their items, such as a t-shirt with a picture of their dog, using one of the best personalization tools available.

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SPOD provides entrepreneurs with backup worldwide. SPODs’ print-on-demand services have been perfected over the years to make them cost-effective, convenient, and reliable. 

SPOD has five production and delivery centers in the US, three in Europe, and two in North America. Seven quality brands are currently supported by SPOD so that you may obtain various items. 

SPOD’s partnership with Spreadshirt allows it to draw on 20 years of industry knowledge and provide reliable services.

Features

  • SPOD offers fast turnaround and delivery through its fast production and simple integration processes.
  •  It integrates Shopify, Order Desk, WooCommerce, Magento, or the SPOD API to allow quicker delivery times.
  • SPOD offers assistance with its help center, which delivers actionable information on how to utilize its services.
  • SPOD provides a variety of items, including men’s, women’s, child’s, and baby’s accessories and items. 
  • The shipping calculator lets you see how much it will cost to ship products to your customers.

Pricing

There is no charge for using SPOD. You pay once a customer places an order.

4. Redbubble

Best For: For artists looking to sell custom merchandise.

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Redbubble is a print-on-demand company that caters to up-and-coming artists and designers. It operates on its website without linking to other marketplaces or online shops. 

You may look elsewhere if you already have an online store or want to sell your goods on several platforms

Redbubble allows you to create your storefront on the website, which you may tailor to your company’s image. Redbubble has a vast merchandise catalog, including clothes, accessories, household items, and gifts. 

Because the marketplace is popular, you will have an easier time attracting your first customers. 

You can upload your artwork and select from a variety of products in both the general marketplace and your store. After someone purchases a product with your design, you receive payment and maintain 100% ownership of it.

Features

  • You can print on anything ranging from clothing to accessories with Redbubble’s extensive range of printed products. 
  • There are a lot of free printable images.
  • The company uses an impressive 256-bit SSL encryption.
  • Redbubble handles return with a single click of a button. 
  • You can choose between standard and expedited delivery options.

Pricing

With Redbubble, you determine your profit margins and a base price for each item. It offers free shipping worldwide and a free return policy, guaranteeing customer satisfaction. 

You are paid once a month, as long as you have earned at least $20. If you haven’t, your payment continues to the next month. 

You can receive your earnings via bank transfer or PayPal if you are based outside the United States, United Kingdom, or Australia.

5. CustomCat

Best For: CustomCat has one of the largest product catalogs on this list, so it is best for sourcing hard-to-find items.

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CustomCat is a print-on-demand company based in the US. This print-on-demand company offers several print methods, including sublimation, direct-to-garment printing, 3D dyes, and sublimation. Orders are ready to ship in about two or three business days with CustomCat.

CustomCat also has an extensive print-on-demand merchandise catalog — so it’s a good choice if you’re looking for unique print-on-demand items.

Features

  • Anyone can see that Custom Cat offers among the lowest prices on print-on-demand sites.  
  • You can find 500 items to print on at Custom Cat’s site, which is way more than the average POD service.  
  • You can get 24/7 support for any problem, from ordering a product to choosing the correct t-shirt.
  • Shopify, WooCommerce, and API are all options for integration. You may also use orders by CSV.

Pricing

There are no monthly fees with WooCommerce, Etsy, BigCommerce, CSV, or API Client app users. For Shopify users, both free and paid plans are available. 

The $30 monthly Shopify app subscription does not include a free trial. The free CustomCat Lite version has the same impressive functions as the paid version, except you’ll have to pay $2 for each catalog item. 

6. T-Pop

Best For: Looking for a quality print-on-demand company with an ethical and eco-friendly supply chain and business practice in Europe.

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T-Pop, a print-on-demand firm based in Europe, is committed to the environment by using “zero plastic” packaging and 100% recycled paper packing slips. They take all measures to ensure their supply chain is environmentally responsible. 

Stanley/ Stella, the firm’s leading supplier, participates in the Fair Wear Foundation, an organization that promotes labor compliance in producing apparel goods. T-Pop’s on-demand printing services are focused on apparel and accessories. 

Everything from the packing slip to the packaging will include your brand when your customers receive their items. 

Features

  • You can import products from Shopify, WooCommerce, and Etsy into T-Pop with a few clicks. 
  • You can also get your package and packing slip customized with your logo and social media links for free. 
  • T-Pop delivers eco-friendly products, prints in an eco-friendly manner, and packages in an eco-friendly way. 
  • You can see real-time reports on your order status through the T-Pop dashboard.

Pricing

Every order will cost you money for a product, printing, and shipping expenses.

7. Sellfy

Best For: Anyone looking for an all-in-one solution, Sellfy is the best choice.

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Sellfy is a well-known eCommerce platform in Asia and Europe. Sellfy was initially established to provide digital products but has expanded to print-on-demand POD services. 

Traditional POD processes are different from their approach in that they do not solely focus on delivering outcomes. Instead, they want to build an entire business. Digital downloads, physical goods, and subscriptions are available through the platform. 

Besides providing print-on-demand services, they also offer the tools you’ll need to set up a beautiful store. You can send product updates to customers by email, create discount codes, and upsell items during checkout. 

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Sellfy looks after all the product shipping and manufacturing of your POD items. You may also personalize labels, text, graphics, and the color of your stuff. Sellfy’s product creation process includes this service. The various customization alternatives are dependent on the product type. 

Sellfy manually re-creates the file during this conversion to create an embroidery pattern based on the correct thread, stitch, and design. Once you’re satisfied with the final design of your product, you may immediately list it on your online shop. 

To sell on your Sellfy store, you’re not restricted to using only your Sellfy store. You may embed product links virtually anywhere, including websites you’ve created on other platforms like Squarespace, Wix, WordPress, and more.

Features

  • All the functionalities and visuals of an online store are already set up in an instant online store. 
  • There are no storage limitations; hence users can host as many digital products as they want at their stores. 
  • There are no transaction fees. 
  • You can integrate your Sellfy store on your website, social media, blogs, and more. 
  • It’s simple to use.

Pricing

Selly has four pricing plans: a free program, starter, business, and premium.

The free plan offers 10 products, physical products, and print-on-demand items.

A $19/month starter plan includes a range of digital products, subscriptions, unlimited product support, and 2,000 email credits. 

A $49/month business plan includes upselling, store migration, customizable branding, and cart abandonment. 

The $99/month premium plan includes priority support, 50,000 email credits, product migration, and upselling. 

8. Teelaunch

Best For: If you are looking for a complete approach to manufacturing high-quality items at affordable prices, Teelaunch is the place to go.

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Teelaunch is another dependable print-on-demand provider that functions as an affiliate and allows you to sell print-on-demand merchandise via Shopify and Etsy. What makes it stand out is the proficiency with which they generate print-on-demand tees mockups. 

You’ll get professional-looking images for marketing materials and even lifestyle shots for some of their goods. They provide you with photographs of many items, including Bluetooth speakers.  

Teelaunch has everything you need to start a print-on-demand company, including a reasonably priced catalog, speedy delivery, and responsive customer help.

Features

  • Customers may personalize products through Teelaunch’s tool by adding their name or uploading a photo. 
  • Teelaunch also offers high-quality professional product mockups, including lifestyle photos for some items. 
  • It offers a responsive customer support team. 
  • Customers can pick from various printing options, including direct-to-garment, cut-and-sew, all-over print, and laser etching.

Pricing

You can download the app for free in the Shopify app store. You pay for what you or your customers order, so there’s no cost. You can profit from the difference between retail and wholesale pricing since you have control over the pricing. 

When shipping, be sure to keep an eye on the expense. International shipments may not be as cost-effective as you would like.

9. Gooten

Best For: If you are looking for the best customer loyalty program, Gooten is the place to go.

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Gooten has optimized its supply chain process to help brands take advantage of print-on-demand manufacturing. Gooten helps businesses scale up and grow by enabling them to print-on-demand. 

VIM loyalty programs are offered to clients who want to stick with the company as it grows larger. You’ll see everything you need to succeed with Gooten, including powerful integrations and a considerable product offering. 

Gooten’s API and integration options are more complex than many print-on-demand companies. This makes it very developer-friendly and gives a lot of flexibility.

Features

  • Gooten’s support center will educate you on how to use the platform’s capabilities to grow your business and integrate it with other shop platforms. 
  • You can also import your products to Shopify, WooCommerce, Etsy, and the Gooten API and test various products in your market. 
  • Because items are delivered to customers four days after purchase, you can expect delivery times to be noticeably faster.
  • The Gooten VIM service is critical to help you get the most out of your enterprise. 

Pricing

Gooten is free of charge to use. You will be charged only for the product and shipping expenses. To receive Gooten VIM services, contact the sales department.

10. Apliiq 

Best For: If you are looking for high-quality products, Apliiq is the one for you.

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Apliiq believes that print-on-demand services can deliver superior apparel quality. The company provides a wide range of high-quality apparel products. 

Fashion-forward base garments, liner hoodies, and over-pocket tees are a few examples of what you’ll find in the Apliiq catalog.

Apart from its private-label subscription service, Apliiq also offers a private-label program tailored exclusively to businesses that only want to sell their branding. 

You can check the company’s shipping policy to see if your items will be competitive in the market. Apliiq uses the best industrial direct-to-garment printers to ensure the highest quality of its prints.

Features

  • Apliiq does embroidery on fleece items such as caps, hats, and t-shirts, as well as private label service. 
  • You can rebrand your items with your company’s tags after they are printed. 
  • The site immediately provides quotes for items that you select. 
  • You can get bulk discounts and guaranteed delivery dates using a progression bulk discount model.

Pricing

Apliiq is free of charge to use. You can check the costs for printing and shipping an item on the Apliiq website without charge. Customers must contact the sales department if they want the private label or guaranteed delivery.

Things to Consider When Choosing a Print-on-Demand Company

The print-on-demand company you choose will significantly impact your business success. As such, you must select the right one. Here are five key factors to consider:

1. Quality Products

It is vital to select a few of your favorite print-on-demand companies and then order a few trial samples to evaluate the quality of the items. In this way, you can determine the quality of the products directly. You should also check whether the ink rubs off easily. 

It would help if you also investigated all the products currently on sale. You never know whether you’ll want to sell more products in the future, so look at the available products. 

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2. Pricing Plans and Flexibility

In our brief reviews, you can see that most print-on-demand companies have one thing in common. The price plans that most of them offer are the same. Aside from Printify, the print-on-demand companies that have both upfront costs and product costs are few. 

What should you be looking for? A print-on-demand company that has flexible pricing plans is an excellent start. 

To assess whether a firm is suitable for you, look for transparent shipping and pricing practices. For example, if you can get a discount on batch orders, you can make a substantial profit. It would help if you also looked for flat shipping rates. 

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Regarding flexibility, the most versatile option is to select a company that integrates with the most applications. 

Unless you have the funds to build your website and utilize APIs to sell unique merchandise, it should be simple to import items.

3. Fast Shipping Times

Consumers now demand rapid delivery times when shopping online, thanks to services like Amazon Prime. So, it’ll be hard to establish a good brand reputation and keep customers happy if delivery takes a long time or products arrive late. 

To avoid this problem, you must select a print-on-demand company with an average delivery time. The ideal delivery time for customers is between one and two weeks.

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We’ve listed the top 10 print-on-demand companies above. But not all of them have manufacturing facilities in the same countries. Their locations significantly affect the delivery dates of print-on-demand companies that operate in countries with similar manufacturing capacities. 

Therefore, you should check whether your preferred firm has a center close to your target market. Additionally, you must check how many work capacities the printing company can handle during busy seasons.

4. Range of products on offer

The number of goods you offer is a significant factor when starting an eCommerce business. The flexibility provided by offering a wide range of goods is also an advantage. Even if you’re a beginner, a comprehensive product line has more opportunities than a limited one. 

If a wide variety of products is available, you may be able to determine which items perform best sales-wise. 

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You may also offer seasonal sales, bundle sales, and provide product recommendations to boost sales. You may also feature niche items in your business.

 As your business grows, your customers will likewise appreciate the value of having a range of goods. The goods must be of high quality, as mentioned above.

5. Reliable Customer Service

The three-party print-on-demand supply chain doesn’t require a lot of complexity, but it still incorporates your customer and a print-on-demand company. There’s no question that one of these parties might encounter difficulties at some point. 

How quickly you can address them may be the difference between success and failure. 

The print-on-demand company must be able to deal with inquiries promptly. You may try contacting the company’s customer service department directly to test how quickly they respond. 

You may also benefit from a self-service help center, which allows you to fix common problems independently.

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Conclusion

The most vital aspect of print-on-demand is that it provides a low-risk method of marketing custom goods. When choosing a print-on-demand company, ensuring that the products they offer and how they operate to match your goals is essential. 

The print-on-demand companies look confusing at first, especially if you want to sell t-shirts and apparel. Once you have determined what you wish, their catalog, pricing, and special features can help you make a decision. 

Hopefully, this guide covers all the information you need to choose the best print-on-demand company for you.

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Branding

20 Best Business Letterhead Examples + Tips For Your Letter

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letterhead examples

Specific business communication techniques have fluctuated over time, while other methods have remained popular. To better grasp the importance of letters and letterhead examples, let’s discuss them. 

The professional look and brand consistency are two advantages of using a business letterhead. You can create impressive documents such as letters, memos, and notes with a letterhead. 

Letterheads today have become visual art, delivering an initial impression of who you are, what you do, and why you do it.

What did you see the last time you received a physical letter from a business? Was it addressed to you? Did you notice prominent colors, a big logo, or any branding that grabbed your attention? 

These factors have a considerable impact on how consumers perceive your brand. By demonstrating that you care about the details, you can establish yourself as a company consumers will want to purchase from. 

Let’s take a closer look at letterheads now. We’ll begin by exploring what they are and how they can benefit your business, then move on to 20 letterhead examples that will inspire your designs.

What is a letterhead?

A company letterhead is a top sheet in a business letter. It consists of the business name, address, contact details, and logo. 

You can utilize it in any letter or document you produce. The letterhead has been used for a long time and is therefore used for business communications

A letterhead is a multipurpose tool that you may use for the following: 

  • Job letters to prospective employees 
  • Notices to the public or specific groups 
  • Invoices and letters to customers 
  • Job notices to potential employees

You may use letterhead to accomplish the following: 

Letters are also helpful in sending information to authorities and other organizations of importance, such as banks and local, state, and federal government agencies. The letterheads you use are the best way to convey your document’s credibility. 

You can also advertise a website for your business using letterheads. Besides sharing important information, online communication is the best and fastest way to connect with your customers.

How can letterhead benefit your business?

The way your customers perceive your business has a significant effect on its ongoing success. Your company’s materials must present an optimistic picture. Your company’s materials are just as important as your logo or online presence. 

Why don’t you bring some of this branding material to your stationery and envelopes? You may be surprised by the effect. 

Here are the reasons why letterheads can benefit your business.

1. Show your professionality

Have you ever received a company letter on a plain white envelope or off-the-shelf printer paper? This kind of letter appears to be unprofessional. Some people will not even bother to open it up. 

The use of premium letterhead indicates that your business is professional and well-organized. It goes a long way from establishing clientele and trust by demonstrating that you care about your business image. 

You can personalize your letterhead to match your company’s image. It is much better than an unmarked envelope. 

It is not a problem if a particular team or employee requires a customized letterhead. You demonstrate your commitment by being a detail-oriented company that cares about providing the best experience.

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2. Market your business

The competitive nature of the marketplace demands that you advertise your brand. Always be on alert for new opportunities to market your service. Professional business letterhead is a powerful marketing tool. 

Whenever someone accepts a letter from you, they see your business’s logo and name. Maintaining brand recognition across all platforms reveals that your company is a serious player in your industry. 

Presenting yourself as an authoritative presence is essential for your business reputation. Because letterhead provides free advertising, you can include your logo and contact information in an eye-catching way. 

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3. Make communications easier

Letterheads can improve communication between clients by providing them with the necessary information for communication. You can include your company logo on an envelope to assist the recipients of your letter in identifying you. 

By doing this, you will establish a dependable line of communication. Using personalized letterheads to place yourself in your company is also a good idea. 

Your personalized letterhead will reinforce your services if you are an account representative or part of the sales team. This will increase client satisfaction and, in turn, client retention and revenue.

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4. Stand out from the competition

The little things can make a big difference when choosing one company over another. You might benefit from a great-looking letterhead if you are seeking to attract new customers

Which letter appears more professional? Which letter attracts the most interest when sending out solicitations to gain clients? 

Your letterhead doesn’t have to be bland. It may be advantageous to improve it with an extra visual element to make it stand out. Don’t pass up an opportunity to stand out.

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5. Appear larger

A slick letterhead design and custom envelopes will make you look like a big company with an extensive infrastructure if you use them. It might help you land more prominent clients that you wouldn’t otherwise. 

By using a custom letterhead, it’s not that you’re deceiving your current or future clients; it’s just that larger companies get more business because of their public perception. 

Smaller businesses should not be afraid to appear strong and capable. Whether you use a dedicated network of professionals or outsource jobs, you don’t need a large in-house team.

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3 Key Elements To Design A Great Letterhead

The 3 keys to making a great letterhead are an appealing logo, a robust brand framework, and document consistency. 

Thanks to the attractive logos, each letterhead design is unique and exciting in the examples below. Your design should reflect your brand, not your graphic designer’s views. Every element of your brand personality should be visible. 

From colors to layout structure, your brand personality should be evident. Tamper-proof templates should prevent logo stretching, rogue fonts, and clashing colors.

Other factors to consider are layout, paper color, quality, and weight.

Prominent, legible company names on letterhead draw the reader’s attention, so it’s essential to ensure they’re visible. It is crucial to choose the paper color cautiously. 

Including inappropriate colors can only distract your readers from your message. Weight and quality are also significant, as they help create a satisfying tactile experience. 

These components are crucial in influencing how a paper feels and how effectively you can utilize it in conjunction with its color and texture.

You can create your business letter using free software like Canva, Template.net, Adobe, and Template Lab

20 Best Letterhead Examples With Logos

Do you want to create a letterhead? Use brand guidelines to determine the format. Add your business logo, colors, and fonts to an existing letter template to create your own

Let’s look at some letterhead examples and see what design ideas we can take away from them.

1. Add a prominent brand logo

You can make your materials recognizable by placing your company logo at the top of your letter. One of the most popular approaches to branded letterheads is a large, bold logo in the upper left corner or centered at the top. 

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The letterhead examples above include the brand’s logo on a dark blue background to make it stand out and separate it from the remainder of the content in the letter without taking up too much space. It appears decorative but not overbearing.

2. Feature one strong color

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Color is an effective method to draw the eye to certain areas of a page or guide the reader’s focus. It can draw the eye in, show the direction throughout the page, and draw attention to its most critical parts. 

Using one color to establish your document is a popular approach. Using more than three colors, however, can overwhelm readers. The letterhead examples use only one shade of blue to emphasize certain page areas.

3. When in doubt, keep it simple

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If you believe that a flashy letterhead design is too much for you, there is nothing wrong with keeping it simple. Include your logo and contact information if you want a more straightforward design. 

If you don’t know which template to use, begin with a simple company letter template that is easier to customize. Your goal is to ensure that anyone who receives your letter recognizes your brand from other company letterheads in your industry.

4. Use directional cues to guide readers

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The use of arrows, lines, and pointing fingers is a type of directional cue. Readers are guided to look in a particular direction based on these indicators. 

While they aren’t necessary for a letterhead, directional cues can help your information move smoothly. An arrow at the top of your letter directs readers to the beginning of the text. 

You can use directional icons and pictures to draw the eye down the page on professional letterhead. Although they may seem like an aesthetic element, directional icons and images effectively draw the eye.

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Footers are dull and straightforward, and they frequently include contact information. You may use colors and fonts that match the letterhead to make your documents feel more cohesive and balanced. 

You may also add some creativity to your footers despite what you think. In this letterhead example, the footer template adds some personality to the letter.

6. Use an illustration or image to frame your letter

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Rather than the standard header or footer, you may use an image to frame your letters. This is a fantastic way to personalize your business communications. You might want to use a photo with a transparent background to blend in with the remainder of your design. 

In letterhead examples, this template for a design firm is creative and balanced, using a flower image in opposite corners. A picture can appeal to the imagination far better than text. 

Some firms use a company letterhead template with a picture. Choose an image that matches your business letterhead, or upload your photo.

7. Experiment with typography

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Regardless of which design you select, it would help if you considered typography to locate a font that is readable, visually pleasing, and consistent with your brand. 

However, if you desire to make an impression, follow the example above and include more edgy text elements in your page design. You may also include your brand on the page, providing each piece has enough space.

8. Use a solid background-color

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By taking a few more risks with your design, you can make your branded letters recognizable at a glance. You can use a solid color background instead of the standard white background on your letters. 

To achieve this, use light text on dark backgrounds and dark text on light backgrounds. Consider the following letterhead to determine if a background color will impact the printing process. The navy blue background and gold text instantly grab your attention in this letter template, making it different from other letterhead examples. 

You do not have to be a designer to choose letterhead templates with a bold background. However, it would help if you kept your branding in mind and the printing impact of the letterhead designs.

9. Pick contrasting colors for your letterhead design

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A custom letterhead design allows you to accentuate your company’s communications with a dash of color. You may emphasize the header, border, and body text by adding colors to them. 

Don’t be afraid to include bold colors and backgrounds in your graphics. Choose two colors that complement each other (opposite colors on the color wheel). 

You don’t have to employ a graphic designer to select colors your customers will associate with your brand. When customizing business letterhead templates, follow your brand’s color scheme. 

The image above shows three contrasting colors making it different from other letterhead examples. 

10. Use a colorful border for your letterhead

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A simple border can tie your design together, especially if you select one of the business letterhead templates available. Consider whether you want to use a simple frame or a more subtle one like charcoal or gray. 

If you want your message to be especially noticeable, you may choose a bold color, but if you’re a solopreneur, you might prefer a more personal letterhead.

 In the above letterhead example, we have used a pink color border which makes it different from other letterhead examples. 

Borders not only look great on personal letterheads but official letterheads as well. Borders are excellent for drawing attention to the edges of a letter, especially the first thing people notice.

11. Go off-center

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Minimal designs are also suitable for unconventional letterheads. In the example above, the letterhead content is located on one side of the page rather than in the center of headers and footers, making it stand out from other letterhead examples. 

You can obtain a similar effect by putting your letterhead text in smaller font size. Readers will not be perplexed by adjacent columns of text if the visual hierarchy is maintained.

12. Draw geometric patterns

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Simple geometric patterns are eye-catching. In Microsoft Word, you can create your pattern by drawing lines and filling them in with colors. These eye-catching geometric designs make excellent business letterhead templates. 

Business letterhead templates already include the shapes you desire, so this is simpler. To keep the design clean and simple, don’t overdo it with text. Don’t include your postal address. 

The geometric elements are for aesthetics, although they can overwhelm any text you place on them. As a result, the letterhead example above looks appealing compared to other basic letterhead examples. 

13. Create a custom-shaped border

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A custom-shaped border can add a cute quirk to your business letters and match your official letterhead. You don’t have to stick with a conventional rectangular border. 

You can use a framing image, dashes instead of straight lines, to create a frame that looks like the page has been turned. You may also use a rounded border on your letterhead template to make your content stand out.

14. Use a color gradient in your header

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Color gradients are becoming popular again. You may add them to your letterhead design if your business communications wish to be on the cutting-edge design trends. 

You may create a professional letterhead by employing a subtle shade gradient instead of a more elaborate one. This business letterhead template uses a slight blue-pink color gradient in the header column. It also uses icons to illustrate the content. 

As a result, the letterhead example above looks appealing compared to other basic letterhead examples. 

Remember that you have to print your company letterhead, so your chosen colors may impact its final cost.

15. Divide your letterhead into columns

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When you don’t know how to structure your page, starting with columns is an excellent way. The header or spine column can be placed proportionately on your page after dividing it into columns. 

Corporate letterhead templates already include columns, so pick one with your desired structure and alter it to your specifications afterward. A line separates the spine column from the letterhead body in the above example.

16. Reposition elements on the page

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It’s possible to make your logo appear like an official seal by placing it at the bottom of the page rather than at the top. You can use a lower logo position to signify your branding. 

The concept may seem simple, but most firms keep to the standard letterhead format, so putting your branding in a different, longer-lasting position may be more effective. 

In the above letterhead example, the firm’s logo is placed at the lower right corner differentiating it from other letterhead examples.

17. Create a visual hierarchy

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Visual hierarchy is a critical principle in design. Visual hierarchy refers to arranging elements on a page to show importance. The visual hierarchy determines the essential data on the page or the information that viewers should read first. 

Your header and footer can contribute to the visual hierarchy of your page. You can emphasize the header and footer by adjusting the font and icon sizes. You can make your title heavier and your footer lighter to increase emphasis. 

This business letterhead example above maintains the same level of intensity while balancing the footer and header.

18. Place a watermark

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A watermark can strengthen the branding on your letterhead without interfering too much with the text. Be sure to increase the transparency enough, so the text remains legible when layered on top. 

The image above shows the logo as the watermark, differentiating it from other letterhead examples. 

19. Add quirky illustrations using icons

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Incorporating icons on your company letterhead can add some creative flair. You may alter the icons to fit the situation if your audience is diverse or your letter’s goal is varied. 

To maintain consistency with your brand’s icon design, choose an icon style and utilize it on all your letters. Icons are an excellent way to add a creative touch to your company letterhead because they are instantly recognizable and understandable by everyone. 

Since they’re so versatile, icons make an excellent addition to corporate letters. Please keep the number of icons low to maintain legibility and avoid overusing them.

20. Leave some space

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Having space around your page elements allows your choices to stand out more. In many cases, impactful designs are the opposite of hectic ones. Readers are spared the mental work of separating different items on the page by using whitespace. 

Furthermore, it gives the page an offbeat feel that draws attention and differentiates the brand from competitors.

Wrapping Up

Make your letterhead an extension of your branding and character, not an afterthought. Make sure your design doesn’t stray too far from the norm, or it will be off-putting. Since creating a letterhead is another chance to reinforce your brand and personality, readers might be more inclined to give your content a closer look. 

If you’re artistically challenged or in a hurry, you may grab one of our expert, simple-to-use letterhead examples. Even if you’re not a creator, you can see from the letterhead examples above that any business can do it. 

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Business

How To Start A Nonprofit Organization In 9 Easy Steps

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How to start a nonprofit

Suppose you are wondering how to start a nonprofit. People like you are inspired to create a nonprofit organization to assist those in need. Establishing or maintaining a charitable organization is not simple, but we applaud your desire to help others. 

In that case, you must know that starting a nonprofit organization can be daunting, time-consuming, and complicated, but a systematic, organized, and stress-free approach can help ensure success. 

Before we continue about how to start a nonprofit, you should be aware of all the phases involved. A foundation might require years of hard work and perseverance to survive. 

We’ve provided a comprehensive guide listing the key steps you must take to start a nonprofit organization in a routine, organized, and hassle-free way.

What is a Nonprofit Organization?

Nonprofits are groups that promote social causes or assist a group of people. For example, they might be a club, association, trade union, social advocacy group, or charity. 

Unlike a for-profit company, a nonprofit does not distribute its profit to its shareholders but recycles it into its business. Nonprofits maintain a consistent mission and are set up without a set expiration date. 

If you want to know how to start a nonprofit for a temporary project that benefits a particular community, consider collaborating with an existing nonprofit organization.

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Types of Nonprofit Organizations

To know how to start a nonprofit, you must know the most common types of nonprofit organizations. The Internal Revenue Service (IRS) outlines 25 tax-exempt nonprofit statuses in the United States. These are a few of the most common:

1. 501(c)(3): The 501(c)(3) designation is the most popular kind of nonprofit organization, which includes any institution serving charitable, religious, educational, scientific, or literary purposes. Private foundations, public charities, and private working foundations are the most frequently encountered 501(c)3 organizations. 

Still, nonprofit corporations, trusts, and limited liability companies, or LLCs, may also be eligible for 501(c)3 status. Nonprofit organizations may not participate in political activities, including lobbying and campaigning.

2. 501(c)(4): 501(c)(4) organizations, including homeowners associations, veterans associations, and civics associations, are classified as social advocacy groups and social welfare organizations. 501(c)(4) organizations may engage in political activities, like lobbying and campaigning, as long as they are concerned with social welfare. 

3. 501(c)(7): Nonprofit 501(c)(7) organizations are social clubs whose purpose is pleasure, recreation, or another nonfinancial endeavor. These groups charge membership fees to cover operating expenses and offer limited access based on geography, religion, or sports affiliation. According to the IRS, these organizations cannot discriminate based on race, color, or religion. 

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How long will it take to form a Nonprofit Organization?

Establishing a nonprofit can be pretty time-consuming, especially if you need to recruit a board of directors, incorporate your nonprofit, and prepare everything required for tax-exempt status in a short amount of time. 

The process for most new nonprofits takes several months. You will file Form 1023 to apply for tax-exempt status, but remember that it might take the IRS up to a year to reply. 

If your nonprofit makes less than $50,000 in annual income, you can file Form 1023-EZ, which will be processed in 2-4 weeks. If you want to know how to start a nonprofit and the time required to create one, there are several legal particulars you’ll have to deal with, and the time it takes depends on where you live. 

Can you earn money from a Nonprofit Organization?

It is accurate that a nonprofit will make a profit, but you must use all of it to cover the costs associated with running the organization and accomplishing its mission. Rent, equipment, and software, as well as marketing expenses and employee wages, are just a few of the costs your organization may face. 

Can you, as the founder, receive a remuneration? In addition to all other workers, you deserve to be compensated for your efforts. The Board of directors can establish a fair wage for you, which will be part of your enterprise’s expenses.

The image shows significant revenue streams for nonprofit organizations.

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9 Steps on How to Start a Nonprofit Organization in 2022

Now, look at the 9 steps you’ll take and everything you’ll need to consider when you want to know how to start a nonprofit organization. 

1. Conduct research

When considering how to start a nonprofit, research and planning is the first and most crucial step to take. 

Even though nearly half of all nonprofits are doomed to failure because they do not put enough time into research and planning, you can increase your chances of success if you ask yourself the following questions:

Has the community demonstrated a need for the type of nonprofit we envision?

The first action to take when you are wondering how to start a nonprofit is to identify the problems in the community and quantify them. You must specify the “demand” and “market” for your nonprofit’s services, just as you would if starting a for-profit firm. The market for foundation grants and the demand for individual donations is highly competitive. 

To gain funding, you must prove that your nonprofit’s services are needed and that they are best positioned to provide them. Working with existing institutions may be more efficient and effective than starting a new one.

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Are There Any Existing Organizations That Already Address This Need?

When considering how to start a nonprofit, it is essential to know your competition. Are there any other organizations already doing what you want to do? Would your organization be able to provide extra value to your local community? 

If two nonprofits have identical missions, they will compete with one another for funding and public backing. Neither would be able to generate sufficient income to have a significant impact. 

You can utilize the National Council of Nonprofitslocator tool to find a nonprofit organization near you. Make sure your efforts aren’t redundant before you launch your organization.

What are the expenses of starting a nonprofit organization?

The Harbor Compliance chart delineates the cost of registering a nonprofit in every state and the time it will take. In addition to the upfront costs, you’ll need to invest time and money to establish your company. 

What infrastructure expenses will your firm incur? Do you require office space? What supplies will you need? Some services, such as health and child care, require special licensure, permits, or certifications. 

When considering how to start a nonprofit and the costs involved in its establishment, we suggest you seek guidance from your state’s nonprofit association or a local attorney experienced in the workings of nonprofits to understand all the statutory and operational demands.

Are you considering alternatives to starting your nonprofit?

The tricky thing about how to start a new nonprofit is establishing and maintaining consistent revenue streams. The majority of new nonprofits have difficulty establishing and maintaining reliable income streams. 

You may still assist a cause you care about by taking the following actions, donating to other nonprofits, collecting donations from your family and friends, organizing an event and donating the proceeds, starting a chapter of an existing nonprofit, joining a nonprofit as a staff member. 

You may also volunteer or serve on another organization’s board, offering consultant services or as a fiscal sponsor.

2. Build a strong foundation

After completing your research, it’s time to build a strong foundation. 

Choose a name for your Nonprofit

If you are thinking about how to start a nonprofit, start by selecting a name for your nonprofit organization. There are many approaches you may use when naming your nonprofit organization. 

Your nonprofit should have a unique name connected to its primary activities. It’s wise to give some thought to this choice, as it will establish the tone and impact your nonprofit’s brand over the years. 

Some states demand that nonprofits have a corporate designator, like Incorporated, Company, Corporation, Limited, or their abbreviations (Inc., Co., Corp., and Ltd, respectively). Inspect your state’s incorporation web page to see if a corporate designator is required for your nonprofit. 

You should also verify with your Secretary of State to see if your desired name is available and with the U.S. Department of Commerce to ensure it is not trademarked.

Come up with a great mission statement

An effective mission statement is crucial for any nonprofit. It can help you define your purpose and inspire your employees and volunteers. It conveys a strong message about your values; if it is written and disseminated, it directs your focus and attention and helps you make future decisions. 

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Here are a few tips for preparing the perfect mission statement:

  • To craft the perfect mission statement, keep it unambiguous, simple, and easy to understand. 
  • It would help if you also strived to keep it brief and to the point. It should, above all, inform people about what you do and lead your team members and stakeholders. 
  • It should be open to input from everyone, frequently reviewed, and distributed to everyone. 
  • It should not be a marketing slogan, use expert phrases, or include buzzwords or generalities.

A strong mission statement is critical to establishing a solid foundation for your plan and attracting the right people to your cause when considering how to start a nonprofit.

Determine vision and organizational values

A vision statement should be a driving force behind your work, motivating you and your team to achieve your organization’s goals. Here are some examples of grand nonprofit vision statements:

  1. She’s the first: Invest in girls.
  2. Alzheimer’s Association: A world without Alzheimer’s disease.

Your organization’s values are principles followed by everyone, including you, your team, your volunteers, your board members, and your supporters. They will guide every decision and activity at every level and corner of your organization.

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3. Create a Business Plan

A business plan is essential for planning purposes, but it is also valuable to anyone considering investing in your company. That is why a business plan holds an important position in the process of how to start a nonprofit. Anyone thinking about backing your organization might ask to see this document before committing.

Regardless of your size or financial standing, a well-crafted nonprofit business plan lays out a route for the coming three to five years of your labor. 

Your nonprofit business plan establishes a blueprint for how you will manage your nonprofit, what duties will be assigned to whom, and how you will accomplish your goals. 

Here are the fundamental components of a nonprofit business plan:

Executive Summary

Your executive summary should be the first section of your business plan and the last one written. 

You will describe your nonprofit’s mission, purpose, and mission in this section, along with a description of how your nonprofit will address the identified need. Before mentioning your programs or services, write about your organization’s mission, vision, and values. 

You can read the best business plan executive summary examples to know how to write one perfectly. 

Programs, Products, and Services

This section describes your nonprofit’s products, programs, and services. Who are your customers? What are your outcome-based objectives, and how will you achieve them? How do your programs and services contribute to a positive trend?

Marketing Plan

Your organization must establish a strong marketing strategy to increase awareness. Your marketing strategy should address the following issues: Who is your target audience (i.e., potential members, donors, and supporters)? Who will you locate these individuals? How will you encourage them to join?

Impact Plan

Your nonprofit’s impact plan should answer the following questions: What are your objectives? What do you need to accomplish? How will you measure success? How will you share your impact with your community? 

Here, impact refers to the positive change that your nonprofit will bring about.

Operational Plan

Your operational plan will guide your nonprofit’s day-to-day operations. Your operational plan should answer the following questions: Where will your office be? What supplies and equipment will you require? How will you deliver your services? What staff and volunteer positions must you fill?

Financial Plan

In addition to cash flow statements, balance sheets, and income statements (if appropriate), compose a budget. What income is guaranteed? Are there any potential revenue streams? 

How much money do you require to start and maintain your business? What startup expenses are there? Are there any deficiencies?

If the process of creating a business plan seems tricky to you, read our article here about how to write a perfect nonprofit business plan. There are many business plan software available to assist you with this process. 

4. Incorporate your Nonprofit

Incorporating is the most crucial step when considering how to start a nonprofit. A 501(c)(3) corporation is a not-for-profit organization formed as a corporation. Nonprofit organizations must reinvest their profits in the cause, while for-profit businesses may distribute them to their shareholders.

Register your organization: To apply for 501(c) status, you must register your organization as a corporation (or, less frequently, as an association or trust) with the US Secretary of State, known as “incorporating.” 

You must include your organization’s bylaws (or regulations specifying how you will administer the firm) and its articles of incorporation (detailing its fundamental structure) in the application. Every state has a different cost for incorporation.

File for EIN: Every organization, for-profit or nonprofit, must obtain an employer identification number (EIN) from the US government; it’s essentially a social security number for your organization. An EIN permits you to open a bank account for your nonprofit venture. You can get an EIN for free online through the IRS website.

File for 501(c) status: After your organization has been appropriately registered with the government, you may apply for one of the several 501(c) statuses, which will make your organization tax-free. 

If you qualify, you will utilize the IRS’s 1023 form (or the 1023-EZ form) to receive one of these statuses. It will require several documents, including your organization’s structure and activities, as well as a filing fee. 

File with your state: Before you begin fundraising, check the attorney general’s office website to see if your state requires nonprofit corporations to file for charitable organization status.

The image shows the difference between a nonprofit and a for-profit organization.

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5. Recruit board of directors

Hiring the perfect Board members is critical in establishing a new nonprofit. The Board will be responsible for ensuring regulatory compliance, making important decisions, supporting everyday operations, hiring employees, and other critical duties. 

Consider which skills, knowledge, abilities, and other characteristics are essential for your nonprofit’s ideal executive director and which are most important to you? When you invite someone to serve on the Board, you must inform them immediately about their role. There should be a smooth onboarding process for your employees and board members. 

It will help if you begin by deciding whether your Board will play an active role in managing your organization (a hands-on Board) or whether it will function as a consulting advisory body (a governing Board). 

States in the United States require a list of board members before incorporation; you can find out more on your state’s website. The board of directors holds an important position in the process of how to start a nonprofit.

6. File for tax-exemptions

Your nonprofit will benefit from tax-free status in addition to federal corporate income tax deductions and bulk-rate postage discounts. Your nonprofit may also seek foundation funding if it is federally tax-exempt. 

Donors will appreciate the benefit of being able to deduct charitable contributions as a result of their status as tax-deductible contributions to your nonprofit organization. 

In addition to being tax-exempt, 29 distinct categories of corporate entities are listed in section 501(c) of the Internal Revenue Code. The 501(c)(3) is the most frequently recognized of section 501(c) exemptions.

The IRS restricts 501(c)(3) nonprofit organizations. 

  • 501(c)(3) organizations cannot benefit private interests, such as the founder, his family, or others connected to him directly or indirectly. 
  • The Internal Revenue Code’s Section 501(c)(3) specifies that 501(c)(3) organizations must be organized and operated primarily for limited, exempt purposes. 
  • Campaign work for and against political candidates is prohibited for 501(c)(3) organizations.

How to apply?

To know how to start a nonprofit and obtain tax-free status, you must register with the IRS as a 501(c) organization. According to the IRS, completing Form 1023 will take about 90 hours to satisfy record-keeping requirements. You can learn if you’re eligible to use Form 1023-EZ here

The application process can take anywhere from three to twelve months to receive a decision, so begin early. It will help if you educate yourself with all IRS resources to help you with your application. These resources will help you in navigating the application process:

Remember that there are fees to apply for tax exemption

  • $600 for Form 1023 
  • $275 for Form 1023-EZ (if you have less than $50,000 in gross receipts and less than $250,000 in assets, you may be eligible for this more straightforward form). 

To finish the procedure, you must register your nonprofit with your state’s tax authority. Every state’s exemption procedures, filing locations, and annual reporting requirements are found on the IRS State Links for Exemption page.

If the above process seems daunting, reach the IRS tax-exempt hotline for assistance. Filing for tax exemptions is essential when thinking about how to start a nonprofit; you must not skip this step.

7. Secure funding for your Nonprofit

Finding and selecting a funding model for a nonprofit organization can be one of the most challenging tasks when considering how to start a nonprofit. A poorly funded nonprofit organization is unlikely to survive long enough to establish a strong fundraising program. You can get funding for your nonprofit in six ways:

Government Grants

Nonprofits can secure startup funding by applying for grants. Grants are given to a nonprofit organization for a particular purpose or program and often focus on a specific population or category of organizations. 

A grantmaker typically grants to a nonprofit organization for a specific objective or project.

You can get started faster with grants than with many other funding resources, but they take a lot of time to apply. Composing a winning grant application takes time, and you might not see the money in your bank account for quite some time.

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Corporate Sponsorships

Corporate sponsorships typically take three forms: 

  • Philanthropic – unconditional donations similar to personal giving. 
  • Event sponsorship – short-term event-based support.
  • Cause marketing – long-term thematic engagement. 

Donor matching is also available, in which corporations match employee donations.

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Crowdfunding

Nonprofit crowdfunding is attracting attention these days, as crowdfunding has become one of the critical ways to raise funds in 2022. You can utilize crowdfunding to fund specific initiatives or general initiatives. 

For example, crowdfunding can be a game-changer if you have a time-sensitive initiative. Many crowdfunding sites are made explicitly for startups; refer to those sites for raising funds

In-Kind Donations

In-kind donations, such as food, clothing, and medicine, are an example of this type of donation. If your organization seeks to provide food, clothing, and water to people in areas affected by natural disasters, you may benefit from getting in-kind supplies. 

Each funding source has its strengths and weaknesses, as well as benefits and pitfalls, which means they all require time and effort. Every nonprofit organization must know about its fundraising strategy. 

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Selling goods and services

Your organization can receive funding through selling branded items or charging for services (e.g., hospitals bill patients, museums request entrance fees, theaters sell tickets, civic organizations collect dues, universities require tuition, and so on).

Membership fees

Individuals contribute money or time to an organization in return for membership. They become affiliated with the organization for a predetermined period (usually one year) and receive certain benefits.

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8. Invest in software

If you are thinking how to start a nonprofit, you must learn about all the systems and tools at your disposal, including fundraising platforms, CRMs, and task managers. However, don’t get too deep into the rabbit hole—you may lose track of all the tools at your disposal. You don’t need every tool in the world to do great work; investing in a few key ones may help you get started faster. 

Here are some tools that we recommend for your nonprofit organization:

Your organization can benefit from using these tools as a legion of helpful robots to handle all the administrative work so you can concentrate on activities that will produce more member value and increase your growth. 

9. Ongoing Compliance

Once you know how to start a nonprofit and successfully establish one, you must keep up with several things to maintain your tax-exempt status.

Register with your state’s agency

Each state has an office responsible for regulating charitable organizations and charitable fundraising (usually the Attorney General). In addition to registering in your state, you might need to register in other states if you plan to raise funds there.

Prepare for annual reporting requirements.

The 990 Form is mandatory for most nonprofit organizations. It collects data on revenue, spending, board members, achievements, and other operational information. The form you file depends on your gross receipts

You must file a 990 Form with the IRS if your gross receipts are over $50,000 (or gross receipts plus total assets). You must file a 990-N form or e-Postcard if your gross receipts are under $50,000.

Each state has its reporting and renewal requirements, so consider how you can keep things running smoothly as you track your organization’s finances and activities.

If you manage personal health data, HIPAA compliance is critical. In addition, you must be PCI compliant if you handle payments with credit or debit cards. You will also have to keep in mind external regulations affecting your industry. 

If your nonprofit works with children, you must conduct criminal background checks on employees who frequently interact with children and follow all standards for storing those records. You must also ensure that your content complies with copyright guidelines by collaborating with a copyright expert.

It is critical to consider concrete growth goals as soon as you’ve been operating for a while. 

Wrapping Up

Setting up your nonprofit organization is just as important as maintaining it alive. Hopefully, this comprehensive guide on “how to start a nonprofit” has given you the understanding, tools, and resources you need to put your passion and vision into action and establish your organization. 

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