Create a Business Plan for Fewer Hassles and Faster Growth

Office Space movie

Writing a business plan can help make sure Office Space doesn’t feel relatable [source].

There’s a famous scene in the cult-classic 1999 movie Office Space where the main character, Peter, is confronted by his boss, Bill. Amidst the dull hum of white-collar cubicle bliss, Bill passive-aggressively asks Peter if he got the memo about putting cover sheets on all “TPS Reports” (if you’ve seen it, you’re probably already chuckling).

Apparently, Peter neglected to include a cover sheet on his most recent TPS report, and Bill wants to make sure he got the memo so he can rectify this moving forward. Note that he’s not even directly asking Peter to make sure he includes a cover in the future. He wants to know if he got the memo. Bill leaves, saying he’ll make sure he sends another copy of the memo to Peter.

The anti-drama is painfully relatable to anyone who has ever held a desk job in a large, corporate bureaucracy. The takeaway from the scene is clear. The cover sheets, the TPS reports—they’re not important. Neither are even difficult to complete. And yet, these minor interruptions and annoyances from his boss form the cadence of Peter’s day. His week. His life. His miserable, soul-sucking life.

All these things are a hassle. These hassles pile up so high that they make him dread going to work every day. They make him feel like a useless cog in a wheel (in truth, he is). And the fact that they are so small and minor individually is what makes them even more infuriating. What literally haunts his dreams are not big things like salary or responsibilities or key projects. No, his nightmares are filled with these daily hassles—with Bill “just checking in” about that latest memo.

If you’re coming up with a business plan for a new venture, there’s a good chance you can relate to this scene. Perhaps it represents what drove you to become an entrepreneur in the first place. Now that you’ve managed to escape Peter’s situation, make sure you don’t replace it with an entirely new set of hassles that you can’t do anything about.

Business planning reduces hassles and friction

There are many reasons to write a business plan, but one of the primary goals is to reduce friction as you build your venture. Friction is anything you rub up against you that creates tension and slows you down. By creating a “low-friction plan,” you can avoid or at least mitigate problems down the road—plus, it’s what potential lenders or investors expect when you approach them for funding.

A good business plan can reduce the hassle in many ways.

Align on a mission statement that ensures all partners understand what you want to accomplish and what is outside of that core. Embrace your financial plan—financial assessments give you a clearer vision of cash flow and what resources might be needed.

Accounting for risk is one of the best ways to reduce friction in the long term. Doing a SWOT analysis is a great way to assess your internal (weaknesses) and external (threats) risks, in addition to strengths and opportunities. When you do an honest, thorough analysis, seeking diverse input, it can illuminate a wide array of risks, giving you the opportunity to explore and mitigate them as you work through your plan.

The layout of a SWOT analysis

When humans are involved, hassles follow

As the scene from “Office Space” demonstrates, though, it’s not always traditional business risks that plague a venture. It’s the daily hassles that can stifle progress and suck away your drive to succeed. Hassles are the inevitable human cost of any venture. Hassle encompasses all the stress and unpleasantness that can come along with a project. Like risks, they’re not necessarily bad—just something to be managed.

Risk is about outcomes. Hassle is the human element. Both can overwhelm you if there isn’t a plan.

Managing hassle may take the form of putting your reputation on the line to get someone to partner with you. It may creep up in the form of a family member who is hurt that you didn’t ask them to help you with a certain project. It could be a small investor who calls you ten times more than your primary funder. Or worse, it might be a business partner who is directly complaining to one of your investors without your knowledge.

In the research for our upcoming book “Fruition: How Great Ideas Come to Life,” we found that the hassle (human) side of your low-friction plan is just as important as the risk (outcome) focus.

The conventional wisdom is to put these hassles in the bucket of small stuff you shouldn’t sweat. But many hassles don’t stay small for long. Hassles can fester day-in-day-out and become a major liability.

That primary investor may tolerate financial risks if the venture is interesting, fun, and potentially rewarding. But if it becomes a hassle? If it creates everyday annoyances? You’ll hear about it. You need to “budget” for these human costs just as you would financial costs, and show others that you’re on top of it.

That’s because hassles can swim around your head as you try to fall asleep at night and fill your mornings with anxiety and dread. Dread is an insidious emotion. It’s not pain—but rather, the anticipation of pain. Research has shown that the dread of pain fires up the same regions of the brain as the pain itself. Yikes.

Techniques to overcome hassles and friction

The most important remedy we’ve effectively already taken care of: being aware of the problems that hassles can create, and being on the lookout as you progress. Consider this your “The More You Know” moment.

Ideally, though, you should anticipate potential hassles like any of the other risks—and take proactive steps to mitigate and plan for them. Like everything else in your business plan, the whole point is to reduce friction. Here are some techniques to guide you.

1. Create your “who inventory”

The “who inventory” lists and briefly describes all the potential players involved with your venture as you progress from the current world to the better, future world that you envision. Take time to catalog everyone with whom you may intersect. Where possible, be specific with names.

Some will be obvious: investors, consumers, business partners, employees.

But let your mind wander through your vision for your business, and you will inevitably come up with many, many more:

  • New suppliers if you expand in year two
  • Government bureaucracies for obtaining permits
  • Compliance professionals with lending institutions
  • Family members (those can be the trickiest of all!)

When you reach a critical mass, earmark and detail potential hassles with anyone on the list. This is a place to be brutally honest (and perhaps keep your conclusions private). Consider personalities and personal histories. Where you have questions or unknowns, reach out to others for their opinions and experiences—a business mentor can be helpful here.

It may be helpful to categorize your list and/or diagram it out over the steps it will take to build and sustain your venture. What’s important is that you spend the time thinking through this and documenting it. Include others to get their input and suggestions. Update it as you go. The final inventory may be somewhat messy, but a mess you can see is better than a mess you are blind to.

2. Go beyond user or buyer personas

Personas are a deep dive into the profile of various players involved in your venturetheir actions, motivations, needs, thoughts, daily life, and more. The goal is to develop a deep knowledge of what makes them tick and what to expect when interacting with them.

Each persona will allow you to play out what to expect and identify potential hassles. After completing the who inventory, choose only the most important to expand on.

Buyer or user personas—fictional representations of your ideal customers based on their demographics and other characteristics—have been used successfully for many years in industries like software development, and you can find many resources and templates online. Typically, they are a more generic profile—such as “angel investor” or “premium consumer”—but you may also find it necessary to hone in on specific individuals.

The primary personas are traditionally created for end users/consumers of your business—your target market. It’s just as important to understand who you are targeting as it is to know who you are not targeting or working with. Many ventures fail because they try to have an appeal that is too broad. They end up lacking focus and never find their place in the market.

As the name suggests, the personas should feel personal. Give each a name and a stock photo. Make them part of your team. Ask questions like, “Would Sandra complain about having to wait 10 minutes for confirmation, given her tight schedule?” Or, “Will Luis call at the first sign of bad news?”

Use these personas to conceptualize the potential hassles you might encounter. Create scenarios and let them play out in your head. Then, plan accordingly.

3. Do a SWOT analysis

A SWOT analysis is a typical part of preparing any business plan, and you may even include it in the main body.

As discussed above, the tendency is to focus only on more “functional” risks like finances or competition. But, don’t forget to consider the human element—the hassles. Use this awareness and the other techniques to bring this part to life and create a more comprehensive analysis.
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Tie it all together

How you take what you’ve learned about your potential hassles and formally integrate it into your business plan will depend on your specific situation. As with any risks you’ve outlined, you likely won’t have a section titled “Hassles”; the learnings should permeate various parts of the plan. Outputs from some of the techniques above may make sense to include in an appendix, and you will at least want to document everything for your own use.

As always, know your audience and focus on what will be most beneficial for them. Investors will want to know that you’ve anticipated what might become a hassle for them (and you) and that you have a plan. You can give your credibility a major boost by showing you’re on top of this part of building your business.

With some foresight and a little healthy paranoia, you can be much better prepared for the journey toward a successful future. Ideally, it’s a future that keeps to a minimum the hassles, friction, and memos about TPS cover sheets.

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John Lavelle

John believes that everyone—from multinational manufacturers to PTA parents—can unleash their ideas and build a better world. He has worked with top consumer packaged goods companies to revolutionize how they innovate and bring their ideas to market. He also has extensive experience leading innovation consulting teams, selling and executing custom research, and econometric forecasting. Along with Chris Adrien, he is co-author of the forthcoming book, “Fruition: How Great Ideas Come to Life.”

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How a Medical Private Practice Can Overcome Obstacles to Success

As I traverse the medical private practice landscape across the U.S. through consultations and speaking engagements, I’ve observed that private practices suffer from a very high failure rate.

According to Dave Chase, author of CEO’s Guide to Restoring the American Dream, 43 percent of healthcare-related businesses fail within their first five years. The only industry that appears to have a higher failure rate is the restaurant industry.  

The main reasons “private practice-preneurs” fail in today’s environment is that they’re simply not identifying their risk factors. Too many health practitioners underestimate the resources that are needed for a successful practice.

Most healthcare practitioners aren’t trained to develop a business as a successful entrepreneur. They’ve built their careers around their passion for health and wellness—not analyzing financial statements and maximizing profits.

But to succeed at building a financially sustainable business, you need a strong organizational foundation. To protect your private practice from failure, take these essential steps upfront.

1. Define your vision of success

Take a moment to consider your true intentions. It’s essential that you define your professional and personal goals and your ideal vision for success.

Begin the vision process by naming your net financial goals so that they’ll lead you to the follow-up step of identifying the how and the when. Determine whether your private practice vision involves using other practitioners in your service delivery method, or if you intend to be a sole proprietor.

2. Set out to run a profitable business

If I could change one thing about our society’s view on service-based business models related to healthcare, it would be the notion that private healthcare practices operating as successful and profitable businesses runs contrary to their mission.

Still, clinicians and healthcare providers are often so invested in their own passion for their work that they overlook the profitability side of the business.

Borrowing a page from investment legend Warren Buffet: Priority #1 is to never lose money, priority #2 is to never lose money, and priority #3 is to never lose money.

3. Invest the time in a solid business plan

There’s enormous value in articulating your vision of the path forward. Writing a business plan—even a Lean Business Plan that’s short and easy to update—will help. It’s proven that companies that do business planning grow 30% faster. Doing so will help you better determine your specific objectives for the business, as well as give you an understanding of how to support sustained growth.

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Some might be tempted to just launch into action and figure out the process of building a business along the way as they go—what we might call “building the airplane while flying it.” Simply put, this is not the most effective or efficient approach.

Start by clearly understanding why you wish to open your own practice.

Part of defining your why is identifying its relationship to other key questions, including:

  • Who is the target demographic?
  • What is your core service or product?
  • When are you looking to start?
  • And how are you going to execute your vision?

Be as specific as possible with your goals and milestones. A well-constructed business plan helps to ensure that you aren’t just spinning your wheels, but are executing against a clearly drawn strategic roadmap that aligns with specific, measurable goals for your business.

If you’re not sure what a medical practice business plan should look like, check out some examples in Bplans’ sample business plan gallery.

4. Create accountability through metrics

It’s one thing to create a plan, but it’s another to execute it and achieve your goals. The secret to executing your private practice strategy is through metrics. Besides thinking through your who, what, where, when, why, and which questions, define what will be the measurable metrics that will tell you when you’ve arrived at your goal.

They should include a time limit—when are you going to achieve that goal? I recommend that you develop weekly, monthly, and quarterly metrics. Key financial metrics include your balance sheet, income statement, and net income. Others include cash flow statement analysis, payer mix, cancellation report, and marketing/referral effectiveness.

You can set up your financial statements in Excel, and a business management tool like LivePlan that connects to your online accounting system and offers a business dashboard can make it quicker and easier.

The added benefit of using metrics is that they help empower your team to be accountable without having to micromanage their every move. Adding incentives for staff to reach their goals can be a helpful motivator.

5. Understand the funding model of health insurance

A fundamental reality that all private practice entrepreneurs must realize is that there’s never a guarantee of coverage.

Do this: Call the phone number on the back of your health insurance card and verify your own benefits for whatever service you’re offering (occupational therapy, speech therapy, chiropractic, and so on).

The bottom line is that you must understand the limiting factors and trends related to medical billing depending on your patient demographics, diagnosis, service offering, and so on. The rule of thumb is 60 percent of your funding should be cash flow positive in 30 days or less from the date of service. This will keep your private practice financially moving in the right direction.

6. Prepare for worst-case scenarios

As you build your strategy, you must be prepared for conditions that could impact your survival. Ask yourself a variety of questions, spanning from what would happen if your best therapist left to go into competition with you, to what if your funding source stopped making payments (Medicaid, etc.)?

Formulate a strategy to overcome these obstacles before they happen. For example, get out ahead of clinical and personnel issues by clearly communicating your expectations with your staff, and articulate policies in both your employee and client packets on everything from HIPAA to expected response times to inquiries.

7. Hire the best staff you can find

A unified team can transform your practice. Hire the best staff you can find—it will pay off. If you have staff members who aren’t fully behind the mission of the practice and are simply clocking in and clocking out each day, they aren’t contributing to the success of the organization.

In particular, I’ve seen this happen when practitioners recruit their friends to work for them. Employees who have a passion for their work, who always act with the company’s best interests in mind, who look for ways to contribute, and who bring new ideas will be vital team members for ensuring the success of the practice.

8. Build a support team to help with essential decisions

Surround yourself with people who can give moral or professional support. They can be employees, friends, consultants and more. As you build your strategy, you need a team who can watch over your shoulder.

Know when to hire help; there’s no need to tackle every challenge alone. Find those with expertise in the areas you know aren’t your strong points. If you’re not sure where to start, SCORE offers a great mentorship program that can help you build your medical practice with confidence.

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Brandon Seigel
Brandon Seigel

Brandon Seigel is an internationally known business coach and president of Wellness Works Management Partners. He currently manages multiple private practices and consults with entrepreneurs and private practices throughout the world. A recognized leader in today’s private practice environment, he is a frequent keynote speaker and trainer for organizations, associations and universities. His new book, The Private Practice Survival Guide: A Journey to Unlock Your Freedom to Success (Rebel Press, February 5, 2019) covers the essential how-to questions of opening a successful private practice. Learn more at or

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Why SWOT Analysis Belongs in Your Business Plan

SWOT analysis

Why add a SWOT analysis into your business plan and the strategic planning process?

I believe in it because the SWOT phase was vital to my planning process as I grew Palo Alto Software from zero to over $5 million in annual sales.

If you’re not familiar with the SWOT matrix, it stands for strengths, weaknesses, opportunities, and threats. Read more about what it is and how to do your analysis, and download our free SWOT analysis template to help you get started.

SWOT analysis example

Here’s an example of what a SWOT analysis can look like.

Real-world examples of SWOT analysis in action

Let me tell you some true stories about SWOT analysis in action, in a real business setting.

The key here is that you should try to avoid performing your SWOT analysis alone in your office. It’s a great tool for bringing your team and your stakeholders in on the conversation.

If you’re holding regular business plan review meetings, SWOT analysis is a good framework for thinking through how you need to adjust your business strategy to meet your goals.

Brainstorm together

I used SWOT sessions every few months to gather my team leaders and engage in brainstorming discussion about our business situation.

We divided the discussion into four parts, opened it up, set the tone as brainstorming—no bad ideas, and no taboos—and had good discussions about all four elements: strengths, weaknesses, opportunities, and threats, as they related to our financials and key metrics, the business climate in our industryand the work we were doing together to grow our business.

Save time

Our SWOT sessions took only an hour or two. We used a whiteboard and worked on bullet points. Just like the Lean Planning approach to business planning, less is more. You don’t need to generate a 40-page report.

The goal of a SWOT analysis is to develop actionable insights—you want to catch opportunities and pitfalls sooner. It’s one way to minimize risk when you’re starting and growing your business.

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Engage your whole team on your strategy and goals

Thinking in SWOT terms put everybody on the team into engagement with the whole business, the broad view of strategy, market, and goals. It seemed automatic to me—the topics themselves, in standard brainstorming mode, invited us all in.

Your business plan should be a roadmap that guides the strategic course of your business. Use SWOT analysis to help people understand how their work translates to the goals and milestones you’re laying out in your business plan.

Gain real, actionable business insights

The SWOT analysis provided a lot of insight.

It was in one of these sessions that somebody suggested that I should change my focus a bit and deal more with the large picture than the specific code. It was also in a SWOT session that we realized we needed to make our product downloadable on the web (back in 1998, when we were among the first). In another session, we realized, as a group, that our key differentiator was the know-how and how-to built into our software. 

If you haven’t done this type of analysis before, check out our SWOT analysis examples article for some tips on how to use it to develop actionable strategies.

SWOT gets people committed, not just involved

In breakfast, the chicken is involved, the pig is committed.

In the business planning process, commitment is essential. Plans need to be implemented, and implementation means commitment. There has to be accountability and peer pressure. You have to follow up on what was planned to make sure that it was actually carried out.

Here are some ways to develop commitment within your team:

You can use the SWOT analysis to bring team members into the strategic discussion—not just the most senior level leaders. Your managers have to be part of the team that discusses the strategy early on, as the first stage of every strategy review and revision.

As you do your SWOT, even if it’s just you, and better yet if it’s with a team, there is an automatic process of moving away from the details and looking at the business in larger, more strategic terms.

I can’t cite research on that, but I can say that I’ve seen that happen dozens of times in my career, first hand, first as a consultant and then later as founder growing my business with a team. People like strategy. They like to be included. And SWOT puts strategy front and center, without requiring lots of buzzwords or windows dressing.

It’s a good strategy summary

The SWOT analysis in your business plan makes a perfect first step of the regular plan review every good business should be doing once a month.

Either by yourself, if it’s just you, or with your team, take a good look at the SWOT. Ask what’s changed in your business.

Normally strengths and weaknesses are long-term, inherent qualities of a business, which can change, but only slowly. Opportunities and threats, on the other hand, are normally external to the business, out in the market and the world. They can change fast. Opportunities come and go, and threats can appear very quickly.

SWOT belongs in your business plan

The bottom line here is that the planning process, for both startups and for growing companies, is about the people more than the plan. Your business plan is there to guide execution. It needs a strategic component like a SWOT analysis, and it should be reviewed and revised regularly.

Whether you’re doing business planning as a way to strategically guide your company, or you’re writing a business plan because you’re seeking funding, conducting a SWOT analysis will help. Funders will want to know you’ve thought through every aspect of your plan. But even if you’re not seeking funding, the strategic planning process—business planning—is proven to help your business grow faster, and a SWOT analysis can help.

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6 Mistakes to Avoid When Writing Your Restaurant Business Plan

restaurant business plan mistakes

If you’re serious about opening a restaurant, you’ll have to draft up a formal and accurate business plan to pitch to banks, investors, and even potential employees.

I won’t lie—writing a formal business plan isn’t exactly a breeze. It takes a lot of time, effort, dedication, knowledge, and passion to get it right. But if starting a restaurant is your goal, a business plan is one of the first steps toward reaching it.

There’s scientific evidence that businesses that plan even grow faster. But, you probably only need a formal business plan if you’re seeking investment funding from an angel investor or a loan from a bank. If you don’t need either of those, putting together a strategic Lean Plan that you can update often and that takes less time to write and maintain is probably a better use of your time.

The reality is that 26 percent of restaurants fail within one year, and 60 percent fail within three. If you want to beat the odds, you need to be prepared for running your restaurant long before the doors open. You can set a clear vision for your restaurant’s path to success with a business plan.

Unfortunately, you can easily make a lot of mistakes when writing up your first business plan. To help you avoid those errors, take a look at some of the most common, and how you can avoid making them yourself.

Mistake #1: Putting in minimal effort

A restaurant business plan is not the midterm essay you wrote in college for that class you didn’t care about. This document actually matters. As such, you can’t push it off until the last minute, half-ass it, and expect good results.

Serious investors will recognize a poorly-constructed business plan when they see one. They’ve earned their money because they know which kinds of businesses (and business leaders) turn a profit and which ones do not. If they look at your business plan (or listen to your investor pitch) and can tell you didn’t put much effort into it, they’ll laugh you right out the door—as they should.

Your restaurant business plan is the key to opening your doors. If you know you want to run a restaurant, prove it. Do the work.

Find your information. Research your competition. Crunch your numbers and put together a realistic sales forecast for your restaurant. Do everything it takes to flesh out a fully-detailed business plan.

Show your effort and it will pay off. Breeze through it and your restaurant may never have its opening day.

Mistake #2: Being too dull and dry

The people reading your business plan don’t have all day. It’s best to get right to the point and make it an interesting read. Remember—more words don’t always make it better!

Throw in some visuals to make your business plan clear and exciting. Some ideas are:

  • Headshots of your restaurant’s leadership team
  • Your restaurant’s logo
  • Photos of your concept or design
  • Drafts of your menu
  • Maps to show your location compared to competitors
  • Any existing or planned marketing collateral
  • Charts and graphs to explain your numbers in a visual way

If you hand in another dry business plan, potential investors will do everything they can to finish reading it before their next meeting or lunch break. That means they’ll probably skip over important details, especially if they’re hidden in overly-complex writing.

It’s crucial to deliver all the details to investors upfront and in an intriguing way. Remember, it’s a human being reading that business plan. Be clear, concise, and get to the point, and they’ll be thankful.

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Mistake #3: Not making your competitive advantage clear

What makes your restaurant special in the company of one million other restaurant locations nationwide?

More importantly, what makes you stand out from the other restaurants in your state, town, or street? Answer: your competitive advantage. If you don’t have one of these, there is absolutely no reason for diners to go to your restaurant over a competitor’s.

On top of building and explaining your competitive advantage, your restaurant’s business plan should have an entire section completely devoted to competitive analysis. This analysis should include how you plan to differentiate yourself from other restaurants, whether it be through menu items, concept, price, location, atmosphere, or management tactics.

Whatever your competitive advantage may be, make sure it is justified, fleshed out, and very difficult to argue against. This will take some time to get right, but your competitive advantage is what will sustain your restaurant longer than others.

Mistake #4: Glossing over the executive summary

Your executive summary acts as the foundation for your entire business plan, and your business plan is the foundation of your restaurant.

So, why would you not take the time to craft an amazing executive summary? Use this opportunity to reel your readers in, show them you are passionate and knowledgeable about the industry, and that you mean business.

Your executive summary should contain your mission, the key facts of your business, your competitive advantage, and the main takeaways readers can expect to see fleshed out when they read your entire business plan.

If you fail to hook someone with an executive summary, or if yours is simply there as a formality, you’ve wasted a huge opportunity to interest investors.

In the immortal words of Eminem: “You only get one shot.” Well said, Slim. Well said.

Mistake #5: Underestimating the value of marketing

In the marketing section of your restaurant business plan, don’t just mention a budget and that you “plan on using social media.”

Marketing is how you make your competitive advantage clear to potential and existing customers.

Consider answering all of the following questions in your marketing section:

  • Will you be offering a customer loyalty program?
  • How do you plan on getting involved with a charity or sponsoring community events?
  • Will you be working with a PR company or a local news outlet?
  • Do you intend to advertise through Google AdWords, social media, or some other paid digital marketing platform? What about print ads?
  • Do you have/plan to have a restaurant website?
  • Will you keep a customer database through your restaurant POS to micro-target your customers and keep track of guest behavior and buyer patterns?
  • Will you use a WiFi marketing tool to boost customer loyalty?

Remember, restaurant marketing is not just about bringing customers in—it’s about bringing them back. Have a plan to leverage your competitive advantage with your target market with modern, creative marketing tools and strategies, and investors will be impressed.

Mistake #6: Guesstimating sales and costs

Nothing drives investors crazier than seeing numbers that don’t make sense. If you simply write that you will do $1 million in sales for your first year, readers will want to know why.

Investors will want to know your financial forecast, your profit margins, your labor expenses, your fixed and variable costs, and so on. Without a clear layout of expected cash flow, investors won’t be thrilled to throw cash your way.

Take as much time as needed to project your sales and expenses as accurately as you can. These numbers can be based on industry standards, historical documents, or numbers from another restaurant you operate. It’s not necessary to be a financial expert—but it wouldn’t be the worst idea to consult one if it means procuring funds for your business.

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Crafting the perfect restaurant business plan

While these mistakes can be simple slip-ups in your first business plan, it’s important to avoid them to the best of your ability. This document can put you in business, but when it isn’t given the attention, dedication, or resources it deserves, it might postpone your grand opening indefinitely. Put ample time, effort, and resources into developing your restaurant business plan and you will soon reap the rewards.

Remember, this business plan is not just for banks and investors; it’s also for you. Writing a business plan is a great way to make the vision for your new restaurant clear and define your path to success. There will always be bumps along the way, but writing a solid, well-researched restaurant business plan will help you make sure you’re moving in the right direction.

If you’re looking for examples of business plans for restaurants, Bplans offers a library of free samples you can download. And to make it easier to get started writing your plan, download our free business plan template.

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AJ Beltis
AJ Beltis

AJ Beltis is a blogger and content marketer for Toast POS, a Boston-based restaurant technology company offering an all-in-one point of sale solution for restaurants nationwide. AJ is a certified inbound marketer committed to connecting restaurants with the resources they need to form successful relationships with their customers. You can follow AJ on Twitter @AJBeltis.

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How to Build a Restaurant Sales Forecast

how to do a restaurant sales forecast

This article is part of our Restaurant Business Startup Guide—a curated list of articles to help you plan, start, and grow your restaurant business!

With restaurants, as with most businesses, there is no single right way to do a sales forecast. The best sales forecast method will vary according to how you manage information, how much past data you have access to, and what special factors drive your business. With this example, I want to show you one way that one person did it, so you can copy this method or use it to inspire your own method or this one with modifications.

For the case sample here, I’m looking at how Magda forecasts her sales for a café she wants to open in an office park. She wants a small locale, just six tables of four. She wants to serve coffee and lunches. She hasn’t contracted the locale yet, but she has a good idea of where she wants to locate it and what size she wants, so she wants to estimate realistic sales. She assumes a certain size and location and develops a base forecast to get started.

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Establishing a base case

She starts with understanding her capacity. She does some simple math. She estimates that with six tables of four people each, she can do only about 24 sit-down lunches in an average day, because lunch is just a single hour. And then she adds to-go lunches, which she estimates will be about double the table lunches, so 48 per day. She estimates lunch beverages as .9 beverages for every lunch at the tables, and only .5 beverages for every to-go lunch.

Then she calculates the coffee capacity as a maximum of one customer every two minutes, or 30 customers per hour; and she estimates how she expects the flow during the morning hours, with a maximum 30 coffees during the 8 to 9 a.m. hour. She also estimates some coffees at lunch, based on three coffees for every 10 lunches. You can see the results here, as a quick worksheet for calculations.

Where do those estimates come from? How does Magda know? Ideally, she knows because she has experience. She’s familiar with the café business as a former worker, owner, or close connection. Or perhaps she has a partner, spouse, friend, or even a consultant who can make educated guesses. And it helps to break the estimates down into smaller pieces, as you can see Magda has done here.

And, by the way, there is a lesson here about estimating and educated guesses: Magda calculates 97.2 coffees per day. That’s really 100. Always round your educated guesses. Exact numbers give a false sense of certainty.

She then estimates monthly capacity. Look at the above illustration and you’ll see that she estimates 22 workdays per month, and multiplies coffees, lunches, and beverages, to generate the estimated unit numbers for a baseline sample month.

So that means the base case is about 1,500 lunches, about 1,000 beverages, and about 2,000 coffees in a month. Before she takes the next step, Magda adds up some numbers to see whether she should just abandon her idea. At $10 per lunch and $2 per coffee or beverage, that’s roughly $15,000 in lunches, $2,000 in lunch beverages, and $4,000 in coffees in a month. She probably calls that $20,000 as a rough estimate of a true full capacity.

She could figure on a few thousand in rent, a few thousand in salaries, and then decide that she should continue planning, from the quick view, like it could be a viable business. (And that, by the way, in a single paragraph, is a break-even analysis.)

From base case to sales forecast

With those rough numbers established as capacity, and some logic for what drives sales, and how the new business might gear up, Magda then does a quick calculation of how she might realistically expect sales to go, compared to capacity, during her first year:

Month-by-month estimates for the first year

From there, it’s using a simple model, like a spreadsheet. She inputs the row definitions, unit sales estimates, average prices, and average direct costs to create a complete sales forecast. The first illustration here shows the table results for sales for the first few months. The numbers come from multiplying projected unit sales times projected average price per unit.

These are all based on Magda’s calculations above, with an additional row added for “other,” which is t-shirts and mugs and such.

And this illustration from LivePlan (you can do this on a simple DIY spreadsheet as well) shows the data input for unit sales of lunches, one of the four rows of sales. Compare the ups and downs of these estimated unit sales to the capacity estimates above; you can see, visually, that they are related. No need, however, to go into the details; that might make it seem more scientific than it really is.

I’m not including an illustration here of price assumptions. They are simple estimated averages over the entire business. Magda estimates lunches at $10 each, coffee at $2 each, and beverages also at $2 each. These are general guesses, based on experience.

Furthermore, you can see here throughout, how she’s working with educated guessing. She isn’t turning to some magic information source to find out what her sales will be. She doesn’t assume there is some magic “right answer.” She isn’t using quadratic equations and she doesn’t need an advanced degree in calculus. She does need to have some sense of what to realistically expect. In this case, she’s worked in a restaurant (or knows somebody who has), so she has some reasonable information to draw on.

The right level of detail

Notice here that Magda doesn’t try to break lunches down into sandwiches, soup, burgers, ham versus cheese, turkey versus beef, or any of that detail. Too much detail doesn’t work well in the real world. Instead, she summarizes and aggregates enough to make a useful forecast that she can track, review, and revise as needed with the ongoing business.

Estimating direct costs

Along with sales, it’s advisable to estimate direct costs, also called COGS, or cost of goods sold, or unit costs. These are costs that the business incurs only in delivering what it sells. In Magda’s case, it’s what she pays for the coffee beans, beverages, bread, meat, potatoes, and other ingredients in the food she serves. For a bookstore, it’s what the book paid for the books it sells. For a taxi business, it’s the gasoline and routine maintenance. Direct costs are useful for comparison basis.

So, with her unit sales estimates already there, Magda needs only add estimated direct costs per unit to finish the forecast. The math is as simple as it was for the sales, multiplying units times per-unit direct cost. Then it adds the rows and the columns appropriately. Here’s the finished example showing direct costs in a table. If you’re following along, Magda estimated per unit direct costs (not shown here) as 50 percent of the sales price for lunches, 20 percent of the coffees, and 35 percent of drinks.

So you can see illustrated here the idea of educated guessing, estimates, and summary. Here too, as with the sales above, Magda doesn’t break down all the possibilities for lunches into details, differentiating the steak sandwich from the veggie sandwich, and everything in between—that level of detail is unmanageable in a forecast.

She estimates the overall average direct cost. Coffees cost an average of 40 cents per coffee, and lunches about $5.00. She estimates because she’s familiar with the business. And if she weren’t familiar with the business, she’d find a partner who is, or do a lot more research.

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How to Write a Business Plan [Updated for 2019]

how to write a business plan

This article is part of both our Business Startup Guide and our Business Planning Guide—curated lists of our articles that will get you up and running in no time!

If you’ve reviewed what a business plan is, and why you need one to start and grow your business, then it’s time to dig into the process of actually writing a business plan.

In this step-by-step guide, I’ll take you through every stage of writing a business plan that will actually help you achieve your goals. If you’re just looking for a downloadable template to get you started, you can skip ahead and download it now. Or, if you just want to see what a completed business plan looks like, check out our library of over 500 free sample business plans.

Download the Business Plan Template today!

3 rules for writing a business plan:

1. Keep it short

Business plans should be short and concise.

The reasoning for that is twofold:

  1. First, you want your business plan to be read (and no one is going to read a 100-page or even 40-page business plan).
  2. Second, your business plan should be a tool you use to run and grow your business, something you continue to use and refine over time. An excessively long business plan is a huge hassle to revise—you’re almost guaranteed that your plan will be relegated to a desk drawer, never to be seen again.

2. Know your audience

Write your plan using language that your audience will understand.

For example, if your company is developing a complex scientific process, but your prospective investors aren’t scientists, avoid jargon, or acronyms that won’t be familiar.

Instead of this:

“Our patent-pending technology is a one-connection add-on to existing bCPAP setups. When attached to a bCPAP setup, our product provides non-invasive dual pressure ventilation.”

Write this:

“Our patent-pending product is a no power, easy-to-use device that replaces traditional ventilator machines used in hospitals at 1/100th the cost.”

Accommodate your investors, and keep explanations of your product simple and direct, using terms that everyone can understand. You can always use the appendix of your plan to provide the full specs if needed.

3. Don’t be intimidated

The vast majority of business owners and entrepreneurs aren’t business experts. Just like you, they’re learning as they go and don’t have degrees in business.

Writing a business plan may seem like a big hurdle, but it doesn’t have to be. You know your business—you’re the expert on it. For that reason alone, writing a business plan and then leveraging your plan for growth won’t be nearly as challenging as you think.

And you don’t have to start with the full, detailed business plan that I’m going to describe here. In fact, it can be much easier to start with a simple, one-page business plan—what we call a Lean Plan—and then come back and build a slightly longer, more detailed business plan later.

how to write a business plan

6 elements to include in a business plan

Now that we have the rules of writing a business plan out of the way, let’s dive into the elements that you’ll include in it.

The rest of this article will delve into the specifics of what you should include in your business plan, what you should skip, the critical financial projections, and links to additional resources that can help jump-start your plan.

Remember, your business plan is a tool to help you build a better business, not just a homework assignment. Here are the basic components of the business plan you’re going to write.

1. Executive summary

This is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. Most people write it last, though.

2. Opportunity

This section answers these questions: What are you actually selling and how are you solving a problem (or “need”) for your market? Who is your target market and competition?

3. Execution

How are you going to take your opportunity and turn it into a business? This section will cover your marketing and sales plan, operations, and your milestones and metrics for success.

4. Company and management summary

Investors look for great teams in addition to great ideas. Use this chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal structure, location, and history if you’re already up and running.

5. Financial plan

Your business plan isn’t complete without a financial forecast. We’ll tell you what to include in your financial plan.

6. Appendix

If you need more space for product images or additional information, use the appendix for those details.

Let’s dive into the details of each section of your business plan and focus on building one that your investors and lenders will want to read.

how to write a business plan

Executive summary

The executive summary of your business plan introduces your company, explains what you do, and lays out what you’re looking for from your readers. Structurally, it is the first chapter of your business plan. And while it’s the first thing that people will read, I generally advise that you write it last.

Why? Because once you know the details of your business inside and out, you will be better prepared to write your executive summary. After all, this section is a summary of everything else you’re going to write about.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. In fact, it’s very common for investors to ask for only the executive summary when they are evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation, and more in-depth financials.

Because your executive summary is such a critical component of your business plan, you’ll want to make sure that it’s as clear and concise as possible. Cover the key highlights of your business, but don’t into too much detail. Ideally, your executive summary will be one to two pages at most, designed to be a quick read that sparks interest and makes your investors feel eager to hear more.

The critical components of a winning executive summary:

One sentence business overview

At the top of the page, right under your business name, include a one-sentence overview of your business that sums up the essence of what you are doing.

This can be a tagline, but is often more effective if the sentence describes what your company actually does. This is also known as your value proposition.


In one or two sentences, summarize the problem you are solving in the market. Every business is solving a problem for its customers and filling a need in the market.


This is your product or service. How are you addressing the problem you have identified in the market?

Target market

Who is your target market, or your ideal customer? How many of them are there? It’s important here to be specific.

If you’re a shoe company, you aren’t targeting “everyone” just because everyone has feet. You’re most likely targeting a specific market segment such as “style-conscious men” or “runners.” This will make it much easier for you to target your marketing and sales efforts and attract the kinds of customers that are most likely to buy from you.


How is your target market solving their problem today? Are there alternatives or substitutes in the market?

Every business has some form of competition and it’s critical to provide an overview in your executive summary.

Company overview and team

Provide a brief overview of your team and a short explanation of why you and your team are the right people to take your idea to market.

Investors put an enormous amount of weight on the team—even more than on the idea—because even a great idea needs great execution in order to become a reality.

Financial summary

Highlight the key aspects of your financial plan, ideally with a chart that shows your planned sales, expenses, and profitability.

If your business model (i.e., how you make money) needs additional explanation, this is where you would do it.

Funding requirements

If you are writing a business plan to get a bank loan or because you’re asking angel investors or venture capitalists for funding, you must include the details of what you need in the executive summary.

Don’t bother to include terms of a potential investment, as that will always be negotiated later. Instead, just include a short statement indicating how much money you need to raise.

Milestones and traction

The last key element of an executive summary that investors will want to see is the progress that you’ve made so far and future milestones that you intend to hit. If you can show that your potential customers are already interested in—or perhaps already buying—your product or service, this is great to highlight.

You can skip the executive summary (or greatly reduce it in scope) if you are writing an internal business plan that’s purely a strategic guide for your company. In that case, you can dispense with details about the management team, funding requirements, and traction, and instead treat the executive summary as an overview of the strategic direction of the company, to ensure that all team members are on the same page.

how to write a business plan


There are four main chapters in a business plan—opportunity, execution, company overview, and financial plan. The opportunity chapter of your business plan is where the real meat of your plan lives—it includes information about the problem that you’re solving, your solution, who you plan to sell to, and how your product or service fits into the existing competitive landscape.

You’ll also use this section of your business plan to demonstrate what sets your solution apart from others, and how you plan to expand your offerings in the future.

People who read your business plan will already know a little bit about your business because they read your executive summary. But this chapter is still hugely important because it’s where you expand on your initial overview, providing more details and answering additional questions that you won’t cover in the executive summary.

The problem and solution

Start the opportunity chapter by describing the problem that you are solving for your customers. What is the primary pain point for them? How are they solving their problems today? Maybe the existing solutions to your customer’s problem are very expensive or cumbersome. For a business with a physical location, perhaps there aren’t any existing solutions within reasonable driving distance.

Defining the problem you are solving for your customers is far and away the most critical element of your business plan and crucial for your business success. If you can’t pinpoint a problem that your potential customers have, then you might not have a viable business concept.

To ensure that you are solving a real problem for your potential customers, a great step in the business planning process is to get away from your computer and actually go out and talk to potential customers. Validate that they have the problem you assume they have, and then take the next step and pitch your potential solution to their problem. Is it a good fit for them?

Once you have described your target market’s problem, the next section of your business plan should describe your solution. Your solution is the product or service that you plan on offering to your customers. What is it and how is it offered? How exactly does it solve the problem that your customers have?

For some products and services, you might want to describe use cases or tell a story about a real user who will benefit from (and be willing to pay for) your solution.

Target market

Now that you have detailed your problem and solution in your business plan, it’s time to turn your focus toward your target market: Who are you selling to?

Depending on the type of business you are starting and the type of plan you are writing, you may not need to go into too much detail here. No matter what, you need to know who your customer is and have a rough estimate of how many of them there are. If there aren’t enough customers for your product or service, that could be a warning sign.

Market analysis and market research

If you are going to do a market analysis, start with some research. First, identify your market segments and determine how big each segment is. A market segment is a group of people (or other businesses) that you could potentially sell to.

Don’t fall into the trap, though, of defining the market as “everyone.” The classic example is a shoe company. While it would be tempting for a shoe company to say that their target market is everyone who has feet, realistically they need to target a specific segment of the market in order to be successful. Perhaps they need to target athletes or business people who need formal shoes for work, or perhaps they are targeting children and their families. Learn more about target marketing in this article.


A good business plan will identify the target market segments and then provide some data to indicate how fast each segment is growing. When identifying target markets, a classic method is to use the TAM, SAM, and SOM breakdown to look at market sizes from a top-down approach as well as a bottom-up approach.

Here are some quick definitions:

  • TAM: Your Total Available or Addressable Market (everyone you wish to reach with your product)
  • SAM: Your Segmented Addressable Market or Served Available Market (the portion of TAM you will target)
  • SOM: Your Share Of the Market (the subset of your SAM that you will realistically reach—particularly in the first few years of your business)

Once you have identified your key market segments, you should discuss the trends for these markets. Are they growing or shrinking? Talk about the market’s evolving needs, tastes, or other upcoming changes to the market.

Your ideal customer

When you have your target market segments defined, it’s time to define your ideal customer for each segment.

One way to talk about your ideal customer in your plan is to use your “buyer persona” or “user persona.” A buyer persona is a fictitious representation of your market—they get a name, gender, income level, likes, dislikes, and so on.

While this may seem like additional work on top of the market segmentation that you have already done, having a solid buyer persona will be an extremely useful tool to help you identify the marketing and sales tactics you’ll need to use to attract these ideal customers.

Key customers

The final section of your target market chapter should discuss key customers.

This section is really only required for enterprise (large) companies that have very few customers. Most small businesses and typical startups can skip this and move on.

But if you selling to other businesses (B2B), you may have a few key customers that are critical to the success of your business, or a handful of important customers that are trend leaders in your space. If so, use this final portion of your target market chapter to provide details about those customers and how they are important to your business’s success.


Immediately following your target market section, you should describe your competition. Who else is providing solutions to try and solve your customers’ pain points? What are your competitive advantages over the competition?

Most business plans use a “competitor matrix” to easily compare their features against their competition. The most important thing to illustrate in this section of your business plan is how your solution is different or better than other offerings that a potential customer might consider. Investors will want to know what advantages you have over the competition and how you plan on differentiating yourself.

One of the biggest mistakes entrepreneurs make in their business plans is stating that they don’t have any competition.

The simple fact is that all businesses have competition. Competitors may not always come in the form of “direct competition,” which is when you have a competitor offering a similar solution to your offering. Often times, you may be dealing with “indirect competition,” which is when consumers solve their problem with an entirely different kind of solution.

For example, when Henry Ford was first marketing his cars, there was very little direct competition from other car manufacturers—there weren’t any other cars. Instead, Ford was competing against other modes of transportation—horses, bikes, trains, and walking. On the surface, none of these things look like real direct competition, but they were how people were to solving their transportation problems at that time.

Future products and services

All entrepreneurs have a vision of where they want to take the business in the future if they are successful.

While it’s tempting to spend a lot of time exploring future opportunities for new products and services, you shouldn’t expand too much on these ideas in your business plan. It’s certainly useful to include a paragraph or two about potential future plans, to show investors where you are headed in the long term, but you don’t want your plan to be dominated by long-range plans that may or may not come to fruition. The focus should be on bringing your first products and services to market.

how to write a business plan


Now that you’ve completed the opportunity chapter, you’re going to move on to the execution chapter, which includes everything about how you’re actually going to make your business work. You’ll cover your marketing and sales plans, operations, how you’ll measure success, and the key milestones that you expect to achieve.

Marketing and sales plan

The marketing and sales plan section of your business plan details how you plan to reach your target market segments (also called target marketing), how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.

Before you even think about writing your marketing plan, you must have your target market well-defined and have your buyer persona(s) fleshed out. Without truly understanding who you are marketing to, a marketing plan will have little value.

Your positioning statement

The first part of your marketing and sales plan is your positioning statement. Positioning is how you will try and present your company to your customers. Are you the low-price solution, or are you the premium, luxury brand in your market? Do you offer something that your competitors don’t offer?

Before you start working on your positioning statement, you should take a little time to evaluate the current market and answer the following questions:

  • What features or benefits do you offer that your competitors don’t?
  • What are your customers’ primary needs and wants?
  • How are your competitors positioning themselves?
  • How do you plan on differentiating from the competition? In other words, why should a customer choose you instead of someone else?
  • Where do you see your company in the landscape of other solutions?

Once you’ve answered these questions, you can then work on your positioning strategy and define it in your business plan.

Don’t worry about making your positioning statement very long or in-depth. You just need to explain where your company sits within the competitive landscape and what your core value proposition is that differentiates your company from the alternatives that a customer might consider.

You can use this simple formula to develop a positioning statement:

For [target market description] who [target market need], [this product] [how it meets the need]. Unlike [key competition], it [most important distinguishing feature].

For example, the positioning statement for LivePlan, our business planning product, is: “For the businessperson who is starting a new company, launching new products or seeking funding or partners, LivePlan is software that produces professional business plans quickly and easily. Unlike [name omitted], LivePlan creates a real business plan, with real insights—not just cookie-cutter, fill-in-the-blank templates.”


Once you know what your overall positioning strategy is, you can move on to pricing.

Your positioning strategy will often be a major driver of how you price your offerings. Price sends a very strong message to consumers and can be an important tool to communicate your positioning to consumers. If you are offering a premium product, a premium price will quickly communicate that message to consumers.

Deciding on your price can feel more like an art than a science, but there are some basic rules that you should follow:

  • Covering your costs. There are certainly exceptions to this, but for the most part, you should be charging your customers more than it costs you to deliver your product or service.
  • Primary and secondary profit center pricing. Your initial price may not be your primary profit center. For example, you may sell your product at, or even below, your cost, but require a much more profitable maintenance or support contract to go along with the purchase.
  • Matching the market rate. Your prices need to match up with consumer demand and expectations. Price too high and you may have no customers. Price too low and people may undervalue your offering.

3 approaches to pricing strategy

  • Cost-plus pricing. You can establish your pricing based on several factors. You can look at your costs and then mark up your offering from there. This is usually called “cost-plus pricing” and can be effective for manufacturers where covering initial costs is critical.
  • Market-based pricing. Another method is to look at the current landscape of competitors and then price based on what the market is expecting. You could price at the high-end or low-end of the market to establish your positioning.
  • Value pricing. Yet another method is to look at a “value pricing” model where you determine the price based on how much value you are providing to your customer. For example, if you are marketing lawn care to busy professionals, you may be saving your customers 1 hour/week. If that hour of their time is valued at $50/hour, your service could charge $30/hour.


With pricing and positioning taken care of, it’s time to look at your promotion strategy. A promotion plan details how you plan on communicating with your prospects and customers. Remember, it’s important that you’ll want to measure how much your promotions cost and how many sales they deliver. Promotional programs that aren’t profitable are hard to maintain in the long term.

Here are a few areas that you might consider as part of your promotional plan:


If you are selling a product, the packaging of that product is critical. If you have images of your packaging, including those in your business plan is always a good idea.

Be sure the packaging section of your plan answers the following questions:

  • Does your packaging match your positioning strategy?
  • How does your packaging communicate your key value proposition?
  • How does your packaging compare to your competition?


Your business plan should include an overview of the kinds of advertising you plan to spend money on. Will you be advertising online? Or perhaps in traditional, offline media? A key component to your advertising plan is your plan for measuring the success of your advertising.

Public relations

Getting the media to cover you—PR—can be a great way to reach your customers. Getting a prominent review of your product or service can give you the exposure you need to grow your business. If public relations if part of your promotional strategy, detail your plans here.

Content marketing

A popular strategy for promotion is engaging in what is called content marketing.

Content marketing is what Bplans is all about. It’s when you publish useful information, tips, and advice—usually made available for free—so that your target market can get to know your company through the expertise that you deliver. Content marketing is about teaching and educating your prospects on topics that they are interested in, not just on the features and benefits that you offer.

Social media

These days, having a social media presence is essentially a requirement for the vast majority of businesses.

You don’t need to be on every social media channel, but you do need to be on the ones that your customers are on. More and more, prospects are using social media to learn about companies and to find out how responsive they are.

Strategic alliances

As part of your marketing plan, you may rely on working closely with another company in a form of partnership.

This partnership may help provide access to a target market segment for your company while allowing your partner to offer a new product or service to their customers.

If you have partnerships already established, it’s important to detail those partnerships in your business plan.


The operations section is how your business works. It’s the logistics, technology, and other nuts and bolts. Depending on the type of business you are starting, you may or may not need the following sections. Only include what you need and remove everything else.

Sourcing and fulfillment

If your company is buying the products it is selling from other vendors, it’s important to include details on where your products are coming from, how they get delivered to you, and ultimately how you deliver the products to the customer—that’s sourcing and fulfillment.

If you are sourcing products from manufacturers overseas, investors are going to want to know about your progress working with these suppliers. If your business is going to be delivering products to your customers, you should describe your plans for shipping your products.


If you are a technology company, it’s critical for your business plan to describe your technology and what your “secret sauce” is.

You don’t have to give away trade secrets in your business plan, but you do need to describe how your technology is different and better than other solutions out there. At a high level, you will want to describe how your technology works. You don’t need to go into excruciating detail here, though—if an investor is interested in more detail they will ask for it, and you can provide that information in your appendix.

Remember, your goal is to keep your business plan as short as possible, so too much detail here could easily make your plan much too long.


For product companies, a distribution plan is an important part of the complete business plan. For the most part, service companies can skip this piece and move on.

Distribution is how you will get your product into the hands of your customers. Every industry has different distribution channels and the best way to create your distribution plan is to interview others in your industry to figure out what their distribution model is.

Here are a few common distribution models that you may consider for your business:

Direct distribution

Selling directly to consumers is by far the most simple and most profitable option.

You could consider passing the savings of selling directly on to your customers or you could simply increase your profit margins. You will still need to cover the logistics of how you will get your products to your customers from your warehouse, but a direct distribution model is usually fairly simple.

Retail distribution

Most large retailers don’t like the hassle of dealing with thousands of individual suppliers.

Instead, they prefer to buy through large distribution companies that aggregate products from lots of suppliers and then make that inventory available to retailers to purchase. Of course, these distributors take a percentage of the sales that pass through their warehouses.

Manufacturers’ representatives

These are typically salespeople who work for a “repping” agency. They often have relationships with retailers and distributors and work to sell your products into the appropriate channel. They typically work on commission and it’s not uncommon for a rep to be necessary for getting a new company access to a distributor or retailer.


This stands for “original equipment manufacturer.” If your product is sold to another company that then incorporates your product into their finished product, then you are using an OEM channel.

A good example of this is car parts suppliers. While large auto manufacturers do build large components of their cars, they also purchase common parts from third-party vendors and incorporate those parts into the finished vehicle.

Most companies use a mixture of distribution channels as part of their plans, so don’t feel that you need to be limited to a single channel. For example, it is very common to both sell direct and via distributors—you can purchase an iPhone directly from Apple, or go into a Target store and get one there.

Milestones and metrics

A business plan is only a document on paper without a real path to get the work done, complete with a schedule, defined roles, and key responsibilities.

While the milestones and metrics section of your business plan may not be long, it’s critical that you take the time to look forward and schedule the next critical steps for your business. Investors will want to see that you understand what needs to happen to make your plans a reality and that you are working on a realistic schedule.

Start with a quick review of your milestones. Milestones are planned major goals. For example, if you are producing a medical device, you will have milestones associated with clinical testing and government approval processes. If you are producing a consumer product, you may have milestones associated with prototypes, finding manufacturers, and first-order receipt.


While milestones look forward, you will also want to take a look back at major accomplishments that you have already had. Investors like to call this “traction.” What this means is that your company has shown some evidence of early success.

Traction could be some initial sales, a successful pilot program, or a significant partnership. Sharing this proof that your company is more than just an idea—that it has actual evidence that it is going to be a success—can be critically important to landing the money you need to grow your business.


In addition to milestones and traction, your business plan should detail the key metrics that you will be watching as your business gets off the ground. Metrics are the numbers that you watch on a regular basis to judge the health of your business. They are the drivers of growth for your business model and your financial plan.

For example, a restaurant may pay special attention to the number of table turns they have on an average night and the ratio of drink sales to food sales. An online software company might look at churn rates (the percentage of customers that cancel) and new signups. Every business will have key metrics that it watches to monitor growth and spot trouble early, and your business plan should detail the key metrics that you will be tracking in your business.

Key assumptions and risks

Finally, your business plan should detail the key assumptions you have made that are important for your businesses success.

Another way to think about key assumptions is to think about risk. What risks are you taking with your business? For example, if you don’t have a proven demand for a new product, you are making an assumption that people will want what you are building. If you are relying on online advertising as a major promotional channel, you are making assumptions about the costs of that advertising and the percentage of ad viewers that will actually make a purchase.

Knowing what your assumptions are as you start a business can make the difference between business success and business failure. When you recognize your assumptions, you can set out to prove that your assumptions are correct. The more that you can minimize your assumptions, the more likely it is that your business will succeed.
how to write a business plan

Company overview and team

In this chapter, you’ll review the structure of your company and who the key team members are. These details are especially important to investors as they’ll want to know who’s behind the company and if they can convert a good idea into a great business.


The old adage is that investors don’t invest in ideas, they invest in people. Some investors even go as far as to say that they would rather invest in a mediocre idea with a great team behind it than a blockbuster idea with a mediocre team.

What this really means is that running a successful business all comes down to getting the work down. Can you actually accomplish what you have planned? Do you have the right team in place to turn a good idea into a great business that will have customers banging down your doors?

The company overview and team chapter of your business plan is where you make your best case that you have the right team in place to execute on your idea. It should show that you have thought about the important roles and responsibilities your business needs in order to grow and be successful.

Include brief bios that highlight relevant experiences of each key team member. It’s important here to make the case for why the team is the right team to turn an idea into a reality. Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before?

A common mistake novice entrepreneurs make in describing the management team is giving everyone on the team a C-level title (CEO, CMO, COO, and so on). While this might be good for egos, it’s often not realistic. As a company grows, you may require different types of experience and knowledge. It’s often better to allow for future growth of titles rather than to start everyone at the top with no room for future growth or change.

Your management team doesn’t necessarily need to be complete in order to have a complete business plan. If you know that you have management team gaps, that’s O.K. In fact, investors see the fact that you know you are missing certain key people as a sign of maturity and knowledge about what your business needs to succeed. If you do have gaps in your team, simply identify them and indicate that you are looking for the right people to fill certain roles.

Finally, you may choose to include a proposed organizational chart in your business plan. This isn’t critical and can certainly live in your business plan’s appendix. At some point, as you explore funding options, you may be asked for an “org chart,” so it’s good to have one. Beyond raising money, an org chart is also a useful planning tool to help you think about your company and how it will grow over time. What key roles will you be looking to fill in the future and how will you structure your teams to get the most out of them? An org chart can help you think through these questions.

Company overview

The company overview will most likely be the shortest section of your business plan. For a plan that you intend to just share internally with your business partners and team members, skip this section and move on.

For a plan that you will share with people outside of your company, this section should include:

  • Mission statement
  • Intellectual property
  • A review of your company’s legal structure and ownership
  • The business location
  • A brief history of the company if it’s an existing company

Mission statement

Don’t fall into the trap of spending a day or more on your mission statement. An hour or two should be plenty of time.

Avoid putting together a long, generic statement about how your company is serving its customers, employees, and so on. Your company mission should be short—one or two sentences at most—and it should encompass, at a very high level, what you are trying to do. Frankly, your mission statement and your overall value proposition might even be the same thing.

Here at Palo Alto Software (makers of Bplans), our mission statement is this: “We help people succeed in business.” It’s simple and encompasses everything we do from the types of products that we build to the kind of marketing that we do.

Intellectual property

This mostly applies to technology and scientific ventures, so just skip this if you don’t need to discuss your patents and other intellectual property.

But, if you have intellectual property that is proprietary to your business and helps your business defend itself against competitors, you should detail that information here. If you have patents or are in the patent application process, this is the place to highlight those patents. Equally important to discuss is technology licensing—if you are licensing core technology from someone else, you need to disclose that in your business plan and be sure to include details of the financial relationship.

Business structure and ownership

Your company overview should also include a summary of your company’s current business structure. Are you an LLCA C-corpAn S-corpA sole proprietor? In a partnership?

Be sure to define provide a review of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Company history

If you are writing a business plan for an existing company, it’s appropriate to include a brief history of the company and highlight major historical achievements. Again, keep this section short—no more than a few paragraphs at most.

This section is especially useful to give context to the rest of your plan, and can also be very useful for internal plans. The company history section can provide new employees with a background on the company so that they have a better context for the work that they are doing and where the company has come from over the years.


Finally, the company overview section of your business plan should describe your current location and any facilities that the company owns.

For businesses that serve consumers from a storefront, this information is critical. Also, for businesses that require large facilities for manufacturing, warehousing, and so on, this information is an important part of your plan.
how to write a business plan

Financial plan

Last, but certainly not least, is your financial plan chapter. This is often what entrepreneurs find most daunting, but it doesn’t have to be as intimidating as it seems. Business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. That said, if you need additional help, there are plenty of tools and resources out there to help you build a solid financial plan.

A typical financial plan will have monthly sales and revenue projections for the first 12 months, and then annual projections for the remaining three to five years. Three-year projections are typically adequate, but some investors will request a five-year forecast.

Following are details of the financial statements that you should include in your business plan, and a brief overview of what should be in each section.

Sales forecast

Your sales forecast is just that—your projections of how much you are going to sell over the next few years.

A sales forecast is typically broken down into several rows, with a row for each core product or service that you are offering. Don’t make the mistake of breaking down your sales forecast into excruciating detail. Just focus on the high-level at this point.

For example, if you are forecasting sales for a restaurant, you might break down your forecast into these groups: lunch, dinner, and drinks. If you are a product company, you could break down your forecast by target market segments or into major product categories.

Your sales forecast will also include a corresponding row for each sales row to cover Cost of Goods Sold, also known as COGS (also called direct costs). These rows show the expenses related to making your product or delivering your service. COGS should only include those costs directly related to making your products, not regular business expenses such as rent, insurance, salaries, etc. For restaurants, it would be the cost of ingredients. For a product company, it would the cost of raw materials. For a consulting business, it might be the cost of paper and other presentation materials.

Personnel plan

Your personnel plan details how much you plan on paying your employees. For a small company, you might list every position on the personnel plan and how much will be paid each month for each position. For a larger company, the personnel plan is typically broken down into functional groups such as “marketing” and “sales.”

The personnel plan will also include what is typically called “employee burden,” which is the cost of an employee beyond salary. This includes payroll taxes, insurance, and other necessary costs that you will incur every month for having an employee on your payroll.

Profit and loss statement

Also known as the income statement, the profit and loss (or P&L) is where your numbers all come together and show if you’re making a profit or taking a loss. The P&L pulls data from your sales forecast and your personnel plan and also includes a list of all your other ongoing expenses associated with running your business.

The P&L also contains the all-important “bottom line” where your expenses are subtracted from your earnings to show if your business is making a profit each month or potentially incurring some losses while you grow.

Download the Business Plan Template today!

A typical P&L will be a spreadsheet that includes the following:

  • Sales (or income or revenue). This number will come from your sales forecast worksheet and includes all revenue generated by the business.
  • Cost of goods sold (COGS). This number also comes from your sales forecast and is the total cost of selling your product. For service businesses, this can also be called cost of sales or direct costs.
  • Gross margin. Subtract your COGS from your sales to get this number. Most profit and loss statements also show this number as a percentage of total sales (gross margin / sales = gross margin percent)
  • Operating expenses. List all of your expenses associated with running your business, excluding the COGS that you already detailed. You should also exclude taxes, depreciation, and amortization. However, you do include salaries, research and development (R&D) expenses, marketing expenses, and other expenses here.
  • Total operating expenses. This is the sum of your operating expenses.
  • Operating income. This is also known as EBITDA, or earnings before interest, taxes, depreciation, and amortization. This is a simple calculation where you just subtract your total operating expenses and COGS from your sales.
  • Interest, taxes, depreciation, and amortization. If you have any of these expense streams, you will list them below your operating income.
  • Total expenses. Add your operating expenses to interest, taxes, depreciation, and amortization to get your total expenses.
  • Net profit. This is the all-important bottom line that shows if you’ve made a profit, or taken a loss, during a given month or year.

Cash flow statement

The cash flow statement often gets confused with the profit and loss statement, but they are very different and serve very different purposes. While the P&L calculates your profits and losses, the cash flow statement keeps track of how much cash (money in the bank) that you have at any given point.

The key to understanding the difference between the two statements is understanding the difference between cash and profits. The simplest way to think about it is when you make a sale. If you need to send a bill to your customer and then your customer takes 30 or 60 days to pay the bill, you don’t have the cash from the sale right away. But, you will have booked the sale in your P&L and shown a profit from that sale the day you made the sale.

A typical cash flow statement starts with the amount of cash you have on hand, adds new cash received through cash sales and paid invoices, and then subtracts cash that you have paid out as you pay bills, pay off loans, pay taxes, etc. This will then leave you with your total cash flow (cash in minus cash out) and your ending cash starting cash + cash in – cash out = ending cash).

Your cash flow statement will show you when you might be low on cash, and when it might be the best time to buy new equipment. Above all, your cash flow statement will help you figure out how much money you might need to raise or borrow to grow your company. Since an operating business can’t run out of cash without having to close its doors, use your cash flow statement to figure out your low cash points and consider options to bring in additional cash.

Balance sheet

The last financial statement that most businesses will need to create as part of their business plan is the balance sheet. The balance sheet provides an overview of the financial health of your business. It lists the assets in your company, the liabilities, and your (the owner’s) equity. If you subtract the company’s liabilities from assets, you can determine the net worth of the company.

Instead of providing additional detail on the balance sheet here, I’ll refer you to this article on building and reading balance sheets.

Use of funds

If you are raising money from investors, you should include a brief section of your business plan that details exactly how you plan on using your investors’ cash.

This section doesn’t need to go into excruciating detail about how every last dollar will be spent, but instead, show the major areas where the investors’ funds will be spent. These could include marketing, R&D, sales, or perhaps purchasing inventory.

Exit strategy

The last thing that you might need to include in your financial plan chapter is a section on your exit strategy.

An exit strategy is your plan for eventually selling your business, either to another company or to the public in an IPO. If you have investors, they will want to know your thoughts on this. If you’re running a business that you plan to maintain ownership of indefinitely, and you’re not seeking angel investment or VC funding, you can skip the exit strategy section. After all, your investors will want to get a return on their investment, and the only way they will get this is if the company is sold to someone else.

Again, you don’t need to go into excruciating detail here, but you should identify some companies that might be interested in buying you if you are successful.

how to write a business plan


An appendix to your business plan isn’t a required chapter by any means, but it is a useful place to stick any charts, tables, definitions, legal notes, or other critical information that either felt too long or too out-of-place to include elsewhere in your business plan. If you have a patent or a patent pending, or illustrations of your product, this is where you’d want to include the details.

Further reading

If you want even more details on creating your business plan, please take a look at these articles. They will guide you through the details of creating a winning plan that will impress your investors:

Business planning tools and downloads

It can be very helpful to view some completed business plans as you go through the planning process. I encourage you to take a look at our sample business plan library and download our free business plan template.

You might also want to check out our business plan template available through our software, LivePlan. You can also check out LivePlan’s business plan consulting, which will give you a professional business plan written by an MBA in five business days.

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SWOT Analysis: How to Identify Your Strengths – Bplans Blog

SWOT analysis

You’re invited to take the SWOT analysis challenge—see if you can complete all five steps in five days or fewer! Then invite your network to do it too. Share this article on LinkedIn, Facebook, or Twitter and use the #SWOT hashtag.

If you’re looking for the rest of the steps in the series, find them here:

As an entrepreneur or small business owner, you want to know your business inside and out so you can make informed, money-making decisions.

A SWOT analysis is a great tool that makes it easier to think through every aspect of your business’s strengths, weaknesses, opportunities, and threats. The point isn’t just to make a list—it’s to use that list to help you start thinking through what you can do to amplify your strengths and opportunities, and mitigate the risks associated with your weaknesses and threats to your business. 

Click here to download our free SWOT Analysis template

We recommend that you invite others into your SWOT process—your business mentor, partner, and your team. As a founder or owner, you probably know more about your business than anyone else. But the deeper you get, the more likely it is that you have a few blind spots. Bringing others to share their point of view is a good way to make sure you’re not missing anything important so you can put together a strategic plan that really works.

Here are a few tips to make the process simple and productive.

1. Use the SWOT matrix framework

A SWOT analysis is usually completed using a four-square template—a matrix. There’s one box for each of the four elements: strengths, weakness, opportunities, and threats.

In this first step, identifying your strengths, you’re only working in the strengths square of the matrix. We offer a free, downloadable SWOT analysis template to make it easy to get started, and here’s a quick example of what a completed SWOT matrix looks like:

SWOT analysis example

2. Review a few SWOT examples

Before you get started on your own strengths analysis, it’s a good idea to review a few SWOT analysis examples from other businesses, just to get oriented to the kinds of things you might include or questions you might ask yourself.

3. Meet with stakeholders, mentors, and your team

To conduct a thorough analysis, ask other people for their perspective.

People do SWOT analyses for a number of different reasons. Maybe you’re putting together a plan for strategic growth, or to scale your company quickly. Maybe you’d like to include a SWOT in a business plan you’re putting together to seek funding. Or maybe you’ve encountered one too many surprises lately and you need to help your company refocus on your mission. Whatever your reasons, don’t just do a SWOT once.

Think about revisiting your SWOT with your business mentor or strategic advisor a few times a year at least. One approach is doing your whole SWOT analysis in a week, doing one step each day. You can do the whole thing in an hour or two, but you’ll probably learn more from the exercise if you give yourselves some time to really think deeply about each aspect.

4. Write down bullet points

During your brainstorming session, you’ll ask each person to supply one bullet point for the category they are working on. For today, each person will share their perspective on of your company’s strengths.

Be sure to write them down, or use Post-It notes and collect them all at the end. Don’t go overboard. Keep each bullet point to a single sentence, and if people have trouble distilling their ideas down to a single statement, take some time to work through that.

If you find weaknesses, opportunities, or threats emerging too, write them down if you must—but wait to discuss them separately. For now, just focus on your strengths.

5. Think about different types of strengths

Before you start listing your business’s strengths, let’s define the parameters a bit. Strengths are positive, internal (meaning within your business) factors that are within your control.

Think of the experience and resources that are available to your business. We’ll cover the external factors in the step on opportunity.

Here are a few strengths categories to think about:

  • Financial resources like revenue streams, investments, diversified income, and grants.
  • Physical assets like buildings and equipment.
  • Intellectual property including patents, copyrights, and trademarks.
  • Human resources such as employees, volunteers, mentors, and so on.
  • Key players, or the most vital members of your team.
  • Employee programs that help your employees excel.
  • Company workflow, or the work practices and processes and how things get done.
  • Company culture, or the values and environment that your company has created.
  • Company reputation, which might include reviews, repeat business, or churn rate.
  • Competitive positionwhere your business is poised in the marketplace.

6. Ask strengths questions to keep ideas flowing

To help you lock in on your company’s strengths, we’ve created a list of questions to help. The questions are broken up by the categories that we just went over. Keep in mind, some of these questions may not apply to your business. If so, skip it and move on, or modify it so it does apply.

Remember, you’re only looking for strengths here, so if you end up with a negative response, hang on to it until you’re looking at your company’s weaknesses or threats. Also keep in mind that your strengths include the things you have already set in place. In this step in your SWOT analysis, try to avoid leaning over into the opportunity section—or talking about the external things that might be of benefit to your business, like an emerging trend in an area that makes your product or service more relevant.

Starter questions:

  • What does your business do well?
  • What do you do that your competition can’t?
  • Why do customers come to you or stay with you?


  • What kind of financial resources do you have?
  • Is your revenue diversified?
  • What kind of investments do you have for the future?
  • How’s your cash flow?
  • Are you meeting your sales forecasts?


  • What kind of assets do you have?
  • What are the benefits of your company’s space and building?
  • What kind of equipment do you own?


  • What kind of intellectual property do you have in your business? List trademarks, patents, and so on.

Human resources:

  • Who are the key players on your team?
  • What do you have in place to attract and retain top talent?
  • How’s your staffing turnover?
  • What kind of professional development opportunities do you offer?

Company workflow:

  • What kind of processes do you have in place that makes your company efficient?
  • Have you been able to save time or resources with a new tool or approach?
  • How good is your team at delegation?

Company culture:

  • What kind of working culture has your company created?
  • How are your company values visible to customers and your team?

Company reputation:

  • How does your clientele or community view your company?
  • How did you achieve your reputation?
  • How are your churn rates, or what is the average lifetime value of your customers?

Competitive position:

  • Does your company have an edge in the marketplace that your competitor doesn’t?
  • What plans do you have in place to improve your market position?

Growth potential:

  • What plans do you have for growth?
  • Do you have the potential to grow in certain sectors where your competitors don’t?
  • What’s the main reason you’re able to grow?

7. Keep your SWOT team on track

Before you sit down with your team or stakeholders, set some ground rules for yourself, as the moderator of the discussion, and for your team, as active, constructive participants.

  1. Be truthful. It probably goes without saying, but if you’re not truthful during this process, the entire analysis won’t be effective.
  2. Allow for feedback. As you’re brainstorming strengths, make sure your employees are comfortable offering their feedback. You may not agree on some strengths, but it’s best to talk them through.
  3. Stay focused. You want to hear many viewpoints, but when you get several people in a room, time can get away from you. Keep the group on task.

Keep your list of strengths handy as you work through the rest of the steps in your analysis. You probably already identified some weaknesses as you thought through the question list. Keep that list close by—especially if the answers to some of them didn’t fall into the strengths category. The next step in your SWOT analysis is to identify your weaknesses.

When you’ve worked through all four areas, the final step is to develop actionable strategies and tactics to take advantage of what you’ve learned. Read more about that here.

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Lisa Furgison
Lisa Furgison

Lisa Furgison is a journalist with a decade of experience in all facets of media.

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How to Create an Expense Budget

how to create an expense budget

This article is part of our Business Startup Guide—a curated list of our articles that will get you up and running in no time!

One of the fundamentals of good business management is managing expenses. That starts with an expense budget. Set your budget as a goal, then review and revise often to stay on track. Being right on budget is usually good, but good management takes the regular review to check on the timing, efficiency, and results of what your business spends.

For the record, we could call it an expense forecast, or projected expenses. Those are the same thing. Regardless of what you call it, when you combine it with projected sales and costs, you have what you need to project your profit or loss.

The key types of expenses in business spending

Expenses make up just one of the three common types of spending in a normal business.

Expenses mostly include operating expenses, like rent, utilities, advertising, and payroll. That’s what I’m talking about in this article.

Direct costs are another type of spending—another way to say it is costs of goods sold (COGS), or what you spend on what you sell. For example, the COGS for a bookstore are the costs of buying the books it resells to its customers. Those go in your sales forecast.  

Repaying debts and purchasing assets is the third type of spending. These affect your cash flow (the amount of real cash you have on hand to pay bills) and your balance sheet, but not your profits—which are left over after you pay your bills.

Free profit and loss template download

Your expense budget

It’s all about educated guessing.

Don’t expect to accurately guess the future. Do use your experience, educated guessing, a bit of research, and common sense to estimate expenses in line with sales and costs and your planned activities.

The math is simple

The illustration here shows a sample expense budget from a soup delivery subscription plan we use as an example.

The math and the logic is simple. Make the rows match your accounting as much as possible. Set timeframes and estimate what expenses will be for each of the next 12 months, and then for the following two years as estimated annual totals.

In the example, the two owners know their business. As they develop their budget, they have a good idea of what they pay for kitchen time, Facebook ads, commissions, office equipment, and so on.

And if you don’t know these numbers for your business, find out. If you don’t know rents, talk to a broker, see some locations, and estimate what you’ll end up paying.

Do the same for utilities, insurance, and leased equipment: Make a good list, call people, and take a good educated guess.

Payroll and payroll taxes are operating expenses

Expenses also include payroll, or wages and salaries, or compensation. They are worth a list of their own. In the case of the soup business in the example above, for payroll, they do a separate list so they can keep track. Payroll is a serious fixed cost and an obligation. Here is the payroll budget associated with the sample plan above.

Notice that the totals from the personnel plan show up in the expense budget. And you can see the estimated benefits expense over and above the gross salary. Employee-related expenses include payroll taxes along with what they budget for health insurance and other benefits.

Don’t worry too much about depreciation

Depreciation is a special case. Traditionally, it counts as an operating expense, but a lot of businesses budget for it separately because it doesn’t actually cost money.

It’s a concept the tax code allows us to deduct as a business expense, in theory to allow for the gradual decline in the value of an asset, or—depending on which expert you follow—to allow money to buy new assets when existing assets become obsolete.

The argument for including it in the expenses is that it gives a more accurate picture of profits. And many people separate depreciation from the other expenses so they can calculate EBITDA, which is earnings before interest, taxes, depreciation, and amortization (which is like depreciation, but for intangible assets).

Bottom line: Include it or not; it’s your choice.

Yes, interest expense is an expense

Because interest is also excluded from EBITDA, many people also exclude it from operating expenses. They list it separately, along with depreciation, to make the EBITDA calculation easier. I say you can do that either way, it doesn’t matter, as long as you include the interest expense in your budget. Because, unlike depreciation, interest does cost money.

Remember the underlying goal

The purpose of the budget is to help you make good decisions.

Set expenses to align with your strategy and tactics, so you do what works best for your long-term progress. Match your accounting categories as much as possible, so you can track later. Keep track of assumptions so when things come out different from plan—and they always do—you can adjust quickly.

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Solopreneurs Can Grow Faster and Smarter With a Lean Business Plan

solopreneur business planning

Congrats! You’ve made the decision to strike out on your own as a solopreneur to start the business you have been dreaming of for months, or even years.

You know exactly what product or service you are going to provide and have been honing your skills. You may want to be a consultant, a coach, a designer, or a writer. You know there is demand.

You know this can work.

But do you really?

Though you may be tempted to immediately throw yourself into your new small business, don’t forget a crucial element: creating a business plan. Yes, the words “business plan” might trigger some dread about epic documents that take a ton of time to produce—but that’s not necessarily what a business plan needs to be.

The Lean Plan for solopreneurs

Even if you’re not thinking about writing a traditional business plan for a bank loan or investor pitch, creating a simple business plan that can act as your strategic roadmap can help you make better business decisions.

To be realistic and smart about your investment of time and resources, you need a well-researched document that will prove to you that your idea is viable and that your time, money, and effort will be well spent.

This shorter, more nimble type of business plan is called a Lean Plan, and you can create one in just a few hours, rather than a few weeks or months. It’s the perfect approach for a solopreneur who’s looking to expand their occasional freelancing gig into being full-time self-employed.

Keep it simple

Your Lean Business Plan is going to get you organized and help you be clean and concise about what your business is and how you’ll run it. This plan is the blueprint for your business and will help you think through your target market (who you’ll sell to) and how you’ll reach them. Keeping it simple helps you in the long run because if it’s easy to review and revise, you’ll be more likely to revisit it, and use it as a tool to grow your business.

The Lean Business Plan Template

Do your research

Before you can make projections for your future solopreneur business, it’s important to get a realistic picture of what you can achieve. Here’s where old-fashioned networking comes in. Don’t just guess how much you can potentially make; talk to real-live people in the field.

For example, you may assume that your earnings could take you into the six-figure range. That’s what they earn at Deloitte, right? Wrong. According to, “The average annual salary for a Business Consultant is $72,900.” Still not chump change, but not what you may have expected, either.

Regardless of what you read and guess, it’s important to talk to experienced individuals who can set you straight with honest expectations. Even if your field is yet-to-exist (talking parakeets on-demand, anyone?), you can still reach out to those with similar business and revenue models.

From there, do an actual sales forecast to model the revenue you think you’ll be able to bring in. Put together a list of your personal expenses for the standard of living you require. Compare the two—this will help you understand how much revenue you’ll need to bring in each month to make your venture your primary work. Don’t forget to factor in self-employed (sole proprietor) taxes!

Profile the competition

Once you have identified and spoken with at least a couple of individuals succeeding in your field, it’s time to dig deeper and profile your competition.

As noted above, because solopreneur small businesses often tend to be extremely niche, you may fail to identify direct competition. That’s O.K. This exercise will help you anyway. Everyone has some kind of competition.

Answer the following questions about your competitors, and try to be as objective as possible:

  • What is this person/business’s competitive edge? Is it the offering itself, or perhaps price, convenience, or another factor?
  • What are their weaknesses or what do they lack? This question will help you determine where to invest the most energy.
  • What about their approach inspires their customers?
  • How do they effectively market their products or services?
  • How can you capitalize on what they are already doing to win customers? For example, if they advertise in a certain publication with much success, can you advertise there, too? 

Essentially, you’re doing a SWOT analysis on your competition—looking at their strengths, weaknesses, opportunities, and threats. You can learn more about SWOT here, and download a free SWOT analysis matrix template here. These profiles will give you a wealth of information that will help you fine-tune your approach.

Profile your ideal customers

Profiling your customer can be a simple or incredibly exhaustive endeavor. Be realistic about how much detail will be helpful to you, and don’t be afraid to go and speak to real people about their likes, preferences, and spending habits—this is about defining your target market through some simple market research.

For solopreneurs, it’s best to start by creating a few realistic buyer (user) personas. A buyer persona is a very specific, fictional representations of your ideal client. Creating a buyer persona can help you better understand your potential clients and see them as real humans. Then you’re better positioned to tailor your products and services, as well as your marketing messages.

Some helpful questions include:

  • What is the background of your ideal client or customer? Are they wealthy? Educated?
  • What are their demographics? Are they young or old? Give a specific age.
  • What motivates them to purchase your product or services?
  • What needs are they looking to fulfill or problems are they looking to solve?

For your solopreneur business, you may start out with as few as one or two personas, and you can always develop additional personas later on.

Clarify your mission and purpose

In today’s idealistic work environment, the word mission or purpose can seem like a catch-all for anything positive about work.

As a solopreneur, more than selling your product or service, you are selling yourself. And without passion and purpose, your customers will not be lining up to buy. Ready to define your purpose? Start by writing your company’s mission statement.

By articulating why you care about your business and the change you will create in the world, you are allowing others to connect emotionally with you and your work. Emotional factors are perhaps the most important elements in the decision-making process.

Include only what’s needed in your Lean Business Plan

Include details that will serve as a guide for your first few months of operation. This will save you a lot of guesswork when difference scenarios pop up (though they always will, and that’s part of the fun of it!).

You can use this list to create your Lean Business Plan outline:

  • Identity: What do you do and who do you do it for (or your mission statement)
  • Problem worth solving
  • Solution
  • Target market (or customer analysis)
  • Competition
  • Sales channels and strategies
  • Marketing strategies
  • Revenue and expense projections, break-even analysis
  • Goals and milestones
  • Team and key roles
  • Partners and resources
  • How the business will be funded

You can also read more about putting together a Lean Plan here,  download a free Lean Planning template here, to make it easier to get started.  

Analyze and adapt

Your business plan should be logical and easy to follow. Be realistic. If after some thought and research you have determined that part (or even all) of your idea is not viable (because of competition, lack of funds, or a weak or nonexistent market), be willing to put it aside or make changes to your business model. Hopefully, that won’t be the case, but be prepared.

As you start your business, you may discover unanticipated challenges. Maybe the competition is steeper than expected, or the market is smaller and less willing to pay than you thought.

You may discover that your core idea is strong, but your entire approach to marketing and sales won’t work.

Successful solopreneurs identify challenges and act quickly to remedy them. The more you can do this upfront, the more energy you will have to devote to actually doing the work that you love.

And don’t view your business plan as a static document. As you refine your strategy, update your plan accordingly. Creating different iterations of your business plan will help you understand past and projected growth, and will keep you on track with a concrete plan and purpose.

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Margaret Kerr-Jarrett
Margaret Kerr-Jarrett

Margaret Kerr-Jarrett is a business writer from Indianapolis who has lived in Jerusalem, Israel for the past five years. In addition to freelancing, she serves as content director for the branding and marketing agency Tribe Creative. Margaret is passionate about bridging the divide between mindfulness and technology, as well empowering people of all types (but especially moms!) to take their skills solo through online businesses and flexible careers.

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How to Write a Business Plan: Use This Checklist to Keep Yourself on Task

business plan checklist

First, why are you writing a business plan? Usually, the reasons fall into one of the following areas:

  • For idea validation: You have a business idea and just need to get all the details on paper so you can start to really understand whether you have a good business model.  
  • For a bank: Do you need a formal business plan to give to your bank as part of your small business loan application?
  • For investors: Are you seeking funding for your startup from angel investors or venture capitalists?
  • For strategic reasons: Does your company need an internal roadmap for growing and managing your business?

How you format your plan and how detailed it will depend on why you’re writing it and who will look at it when you’re done. If you’re looking to validate an idea, start with a very simple one-page pitch. If you’re seeking funding, you’re probably going to need a traditional, formal business plan. If you want to use your business plan as a tool for strategic management and growth, write a Lean Plan so you can update it easily and often.

Here, you’ll find a checklist for writing each of these types of plans, so you can choose the one that fits your particular needs.

If you have any questions, be sure to reach out to us on Twitter @Bplans and we’ll be happy to point you in the right direction.

1. The simplest business plan: A One-Page Pitch

A One-Page Pitch is the simplest business plan you can write.

There’s not much difference between it and the executive summary in the standard business plan—though of course, as the name implies, it should fit onto just one page.

You can use this version of the business plan to validate your idea (more on that here), or to provide investors with a clear and succinct introduction to your business.

You can also use it to get all of your ideas onto paper and distill your thoughts into the essential business plan elements before you begin writing a standard plan. You can create a One-Page Pitch in LivePlanuse this free templateor follow along with the checklist below.

One-Page Pitch checklist:

  • Describe your business in one sentence (what do you do, and who do you do it for?)
  • Describe the problem your potential customers have
  • Describe your solution to the problem—this is your product or service (how does it solve your customer’s problem?)
  • Explain who your target market is and how large it is
  • Describe your competitive advantage (talk about how your customers are solving their problem currently as well)
  • Describe how you will sell to your customers (will it be directly, or via a storefront, distributors, or a website?)
  • Describe what marketing activities you will use to attract customers
  • Detail your business model—this is how you will make money (what are your revenue streams?)
  • List your major initial expenses—startup costs (don’t go into a lot of detail here—it’s early days at this point)
  • List your primary goals and milestones that you want to accomplish over the next few months
  • Outline your management team and any people you want to hire to help you launch your business
  • List any partners and resources you need to help you launch

The Lean Business Plan Template

2. A Lean Plan: A nimble tool for growing your business

Lean Planning is a methodology that will help you grow a better, smarter business a lot faster.

While you can use Lean Planning to help you produce a business plan document, you should think of Lean Planning as a tool, rather than a path to a finished product. If you’ve heard of a business model canvas, a Lean Plan is really a better, more useful version of that idea.

The goal here is to write a business plan that has more detail than a one-page pitch, but that’s still quite brief. It should be a truly useful tool that you review and update regularly. It’s a great framework for reviewing your financial goals and progress on a regular basis. For more resources on Lean Planning, check out this guide.

Lean Business Plan checklist

  • Write a One-Page Pitch (as outlined above—this is how every Lean Plan begins)
  • Test your idea (get out and talk to your potential customers—make sure you’re on the same page as they are)
    • Do they have the problem you think they have?
    • What do they think of your solution?
    • What’s the best way to sell to them?
    • What marketing tactics will work? What won’t work?
  • Review your results (you will likely do this throughout the life of your business)
  • Review your financial performance if you’re already up and running
  • Revise your plan based on what you’ve learned and set new milestones
  • Set your sales forecast and create a budget for your expenses
  • Once you’re up and running, be sure to hold regular plan review meetings to ensure you stay on track

3. The standard business plan

For most people who are pitching a bank or an investor, a standard business plan will be the required format for the business plan. This is the version of the plan these investors are most familiar with, and the version that will give them the most information. It contains all the needed business plan components that banks and investors expect.

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If you want to increase your chances of getting funded, follow this format. Check out our definitive guide on how to write a business plan. You can also download a free business plan template here, or use LivePlan to walk you through writing an investor-ready business plan.

  • Define the opportunity
    • Go into more detail here about the problem and why it is worth solving
    • Discuss your solution to the problem (your product or service)
    • Talk a little more about how you validated your idea and what your future plans look like
  • Write the market analysis summary
    • Include more detailed information about your market segmentation and your target market segment strategy, key customers, future markets, and the competition
  • Outline how you’ll execute the plan
    • Discuss your marketing plan and your sales plan
    • Include information about your location, facilities, technology, equipment, tools, key metrics, and important milestones
  • Write the company and management summary
    • Write about the organizational structure of your company, the management team, any gaps in the team, and your personnel plan
    • Include information on your company’s history, as well as information about ownership
  • Write the financial plan
    • Arguably one of the most important business plan components, this will include:
  • Write the appendix
    • This is the spot for anything that’s important, but that would otherwise bog down someone reading your business plan for the first time; include extra detail, charts and graphs here
  • Write an executive summary (this goes at the beginning of the plan document, but we recommend you write it last)
    • Talk about the problem you are solving, what your solution is (your product or service usually), the market, the competition, and some key financial highlights

Whatever your reasons are for writing a business plan, you should know that it’s scientifically proven that planning makes you more successful. If you’re looking for more information on how to write a business plan, check out our business plan writing guide.

If you have any questions about writing your business plan, or about what format to use, be sure to reach out to us on Twitter @Bplans.

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