Category Archives: Lean Business Plan Step by Step

Lean Business Plan Steps. Just Do It.

Keep it lean. Benefits, definitions, and principles aside, this section takes you step-by-step through the process of creating a lean business plan. It’s four steps: strategy, tactics, essential projections, and concrete specifics. Just do it.

Lean business plan in 4 easy steps

Steps illustrate the business plan step-by-step

Four simple steps. You can do this. You can follow along with the “next page” link on the lower right, to go in order. Or you can click any of these next few links to go to each of the four steps:

  1. Set Your Strategy Your lean business plan starts with simple strategy, usually just bullet point lists, which you write down so you can refer back to it later.
  2. Plan Tactics Tactics are pricing, distribution, promotion, product, financial plans, sales, marketing, and so forth. Set down the tactics in bullet points, so you can refer back to them.
  3. Basic Numbers and Forecasts You really need to manage sales forecasts, cost forecasts, expense budgets, and cash flow. You need that to manage your business. Include it in your lean business plan and then track results and manage the difference between what you planned and what happened.
  4. Execution: Concrete Specifics the final, and maybe most important, business plan step is to add the specifics, the details, the trackable elements, of what is supposed to happen, when, who is responsible, budgets, and so forth. Anything that isn’t tracked is not nearly as likely to happen.

Measure the value of a business plan by the execution it causes.

Lean is a key difference.

Don’t do a full formal business plan if you don’t need it. Just do the lean business plan, and then track results, and follow up with management and steering.

Keep it simple. The lean plan is just what you’ll use. Yes, you should know your market. Yes, you should have a marketing plan. But almost everything in your lean plan is lists or bullet points, for your own use only. Remember, it’s a lean business plan step-by-step.

Lean Business Planning Core Concept

Form Follows Function

Your planning is supposed to fit your business’s needs. It’s not universal. They aren’t all the same. If you don’t need to show it to outsiders, then don’t do more than you will use.

Form follows function

Simple Business Strategy in a Lean Business Plan

Start your lean plan with simple business strategy. Use a simple bullet point list to set down key strategy points. You do this so you can refer back to them when you review results and manage the plan. Use the simple business strategy framework here — problem, solution, market, identity — or any other that works for you. I also like the IMO strategy framework, which is described in detail in the appendices.

Strategy is focus.

Siimple business strategy image
A simple four-point framework for business strategy

I’ve dealt with dozens of strategy frameworks, and every one I’ve known works pretty well if it’s applied correctly. Still, my favorite is the one I developed: IMO. Identity, market, and offering (product or service).

Think of it as the heart of the business, like the heart of the artichoke: it’s a group of three core concepts that can’t be separated: identity, market, and business offering. Don’t pull them apart. It’s the interrelationship between them that drives your business. Each affects the other two.

The Problem You Solve

We forget too often, so start with this: Your business is not about you, what you like to do, or what you want from it. It’s about your customers. And, most important, the problem you solve for your customers.

Theodore Levitt changed marketing with his pivotal piece Marketing Myopia, which includes this important reminder:

People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.

And this also famous quote, about railroads:

They [the railroads] let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business.

Real businesses solve problems and for simple business strategy they have to know what problem they solve. In a social media company that posts updates for its clients, the problem it solves is not social media; it’s getting the word out; getting people to know you. My favorite restaurant doesn’t just feed me a meal; it gives me healthy, delicious food, in a comfortable environment, a place I like to be for an hour or two with my wife.

Decades ago, when I started developing business plan software, I had to remind myself that people don’t want business plan software; they want business plans they can have and execute and work with.

Every business better be solving a problem. If not, it’s continued existence is threatened.

Here’s an example, from a lean business plan related to a subscription soup business:

Simple business strategy the problem you solve

And another example, from a retail bicycle shop:

Simple business strategy, the problem you solve example

Your Business Solution

Your business solution is your product or service. You can already see with the bike shop example how one shop needs one kind of inventory and the other needs a different kind. That’s strategy at work. Your identity influences your choice of market, which influences your choice of product. Your choice of product influences your choice of market. They have to work together.

Understand that you can’t do everything. The bike shop that caters to families and racers is likely to fail. You can’t credibly offer high-end bicycles at bargain prices in a family-friendly atmosphere.  If you say you do, nobody believes you anyhow. The subscription soup business can’t compete with normal fast foods or established sandwich delivery on price and convenience alone. So it offer healthy organic cooked soup delivered to the desks of office workers. In both cases, you see strategic focus.

Seth Godin’s book The Dip is about being the best at one thing. That’s the point of your focus. Since you can’t do everything and even if you could, your customers wouldn’t believe you, then you need to focus on something that you do well, that people want. Be the cheap and practical bars of soap that sell in volume in the big chain stores, or be a finely- packaged, expensive and sweet-smelling soap that sells in boutiques. Don’t try to be both.

Here’s an example from a subscription soup business:

Simple business Strategy: Solution Example

And another example, from a bicycle retail shop:

Simple business strategy: a solution example

The Market

Your identity influences your choice of target market. The bike racer focuses on attracting enthusiasts, offering expensive high-end bicycles and equipment. The couple focuses on attracting parents with kids, concentrating on medium-level bikes, trailers, and family-friendly accessories.

Keep your business focused on specific target markets. That bike racer shop owner has to know his products are too expensive for the families, and the families bother the high-end enthusiasts. The family bike shop can’t scare away its target market with very expensive racing bikes.

Simple business strategy: Bike Shop Market Strategy

Business Identity (Why Us)

Every business has its core identity. How are you different from others? What are your strengths and weaknesses? Your core competence? Your goals? What makes you different?

Tip: Think of a business identity as answering the question: Why Us? Why are we the right people for this business? How do we relate to the problem, solution, and market?

Sample business strategy why us example

As an example, imagine the difference between a bicycle retail store owned and operated by a former professional bike racer, and another one owned and operated by a couple with children who like bicycles as a family activity. The first one will probably stock and sell expensive, sophisticated bicycles for the racing enthusiast and extreme long-distance or mountain biking hobbyist. The second will probably emphasize bicycles for children, bike trailers, carriers, and accessories for families.

Part of your identity is what you want from your business. Some businesses are about your lifestyle or pursuing your passion. Some people want their businesses to grow as big and as fast as they can and are happy to work with investors as owners. Others want to own their own business, even if it has to grow more slowly for lack of working capital. What’s your case? If you’re committed to a second income in a home office, incorporate that into your identity. Don’t look for generalized formulae; let your business be unique. That’s differentiation, and it’s important.

Your team as your identity

As an example, imagine the difference between a bicycle retail store owned and operated by a former professional bike racer, and another one owned and operated by a couple with children who like bicycles as a family activity. The first one will probably stock and sell expensive, sophisticated bicycles for the racing enthusiast and extreme long-distance or mountain biking hobbyist. The second will probably emphasize bicycles for children, bike trailers, carriers, and accessories for families.

Notice please how the owners’ identity affects strategy in strengths and weaknesses, knowledge and focus, and choice of product and target market. The strongest teams set the business identity to reflect vision, ideals, preferences, and skills and backgrounds too. Consider how this team sets the identity for a retail bicycle business:

Sample Bicycle Store Identity Strategy

And our sample soup subscription business sets strategy based on its identity that is a combination of foodies, restaurant experience, values related to local and organic, and startup experience. Compare this team to the team for the bicycle shop:

sample subscription soup strategy identity strategy

You don’t have to tie identity to specific people. Here’s another example from a more generalized strategy, for the soup subscription business, without the pictures:

Roll Them Up Together

These three things are your business strategy. Don’t pull them apart. Don’t take them one at a time. Keep thinking about them. Remember, in planning as well as in all of business, things change. Keep watching for change.

Business Strategy Brainstorming

business strategy brainstorming framework

The following business strategy brainstorming list might help you develop your business strategy. These are topics, tools, and suggestions related to problem, solution, target market, and offering.

Like all business strategy brainstorming, the idea here is to answer these questions as a way to develop your strategy. The ideas will flow. At the beginning, don’t reject anything. Make the lists as long as you can. Then you can go back and refine.

Brainstorming the Problem

  • What business are you really in?
  • Define the problem you solve.
  • What are you doing that needs doing?
  • What are you going to fix that needs fixing?
  • What are customers getting from you? How are they better off for spending money with your business?
  • Who needs your solution to that problem?

Brainstorming the Solution

  • What’s your solution to the problem above?
  • What are the benefits to the target market?
  • What features do you offer?
  • What is different about your solution (think about what they call the secret sauce)?
  • What don’t you do that makes you different? (For example, not all restaurants offer takeout food and drive-through.)
  • Why is your offering better than others?
  • What’s your value proposition? (That’s the benefit you offer, to what target market, at what relative price. For example, the restaurant offers fine dining for people who appreciate the special occasion, at a price premium.)

Brainstorming the Target Market

  • Describe your imaginary ideal target buyer. It’s like writing about a character in a story. Think of gender, occupation, home, car, favorite media, education, age, and economic situation. Know this person (or, if you are selling to other businesses, do the same for a business).
  • Identify your target market as a group of people, kind of buyer, type of company, combination of factors, things people want. It might be “parents of K-6 children,” for example. Or small business owners, or knowledge workers, or women over 50.
  • Define the problem you solve.
  • Who needs your solution to that problem?
  • Who isn’t in your market? For example, if you are an expensive restaurant with white tablecloths and fine gourmet food, you don’t want your market to include families with young children.
  • Who doesn’t have the problem you solve?
  • Who will pay for what you offer?

Brainstorming the Identity

  • Do a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It’s brainstorming, so first list as many points as you can in each category, then pare them down. It’s better with a team, but you can do it yourself too.
  • Identify your core competence. What do you do better than anybody else? What do you like to do? What are you uniquely qualified to do?
  • What makes you different?
  • What’s special about your brand, your logo, your mission, or your vision?

For more on business strategy, aside from this section and the IMO strategy section in the appendices, try this search of business strategy at

Sample Strategy Descriptions

Since this is a first step towards a lean business plan, here’s a reminder: The lean business plan is for internal use only. Don’t sweat the text. Just do very simple descriptions you can keep track of and use as reminders. Here are some examples to help. These are the strategy summaries in the lean business plans of a small business social media consultant, a local bicycle retailer, and a soup subscription business. In each case, you can see how the strategy fundamentals of problem, solution, and market, and the identity in the tag line or mantra at the top. They all work together to define a business strategy.

Sample 1: For a small business social media consultant:

Have Presence Strategy Summary

Sample 2: For a bicycle retailer

LivePlan Strategy Summary

Sample 3: A Soup Subscription Business

Soup Subscription Strategy Summary

Business Strategy is Focus

Strategy is focus
Strategy is focus

There is a very real business use for a strategy summary as part of every business plan, even a lean plan. Since strategy is focus, it leads to some difficult decisions as time goes on. New opportunities arise. Some new opportunities are great additions, offering healthy evolution and growth. Others are dangerous distractions that dilute the business, blur the focus, and bring the business down. The owner, owners, or real core management team have to make these decisions, and they are hard. Normal entrepreneurs want to go into every new market to please everybody they can. So a good strategy summary helps to frame the new opportunities right.

There’s no obvious formula for making these decisions. They don’t teach it in business school. It’s something business owners have to do for themselves. There is always risk and opportunity. So you refer to your strategy summary first, and then think about it.

This should come up in the monthly review sessions I recommend for every lean business planning process for every business. That’s in Section 3, Keeping it Live.

Set Execution Tactics

Strategy needs tactics for execution. In practical terms, this is your marketing plan, your product or service plan, and other tactical plans. Aim for strategic alignment: match your tactics to your strategy. You should be able to think of your business as a pyramid, with strategy at the top, execution tactics in the middle, and concrete specifics at the base, as in the illustration here.

“Strategy without tactics is the slowest route to victory, and tactics without strategy is the noise before defeat.” – Sun Tsu

– Sun Tsu

Strategy Pyramid

Although a book is sequential, your thinking and planning isn’t. This chapter is about the middle area of the pyramid, the tactics, mainly marketing and product or service plans. The previous chapter was about the strategy at the top, and the next chapter is about the bottom on the pyramid, the concrete specifics. Don’t think of these as separate or sequential. Develop them together. They are sequential here because of format and logistics only.

These tactical plans in your lean plan are as simple as possible, ideally just bullet point references. Don’t worry about writing descriptions and explanations, or compiling background information, until you have a real business need to explain them to outsiders. Do worry about thinking all of your marketing and product plans through and planning them well. Even without the big text, you do want to plan and manage your important tactics.

If you’re not absolutely sure about execution, do your best and remember you’re going to review and revise every month from now on.

Marketing Execution

Marketing, in its essence, is getting your customers to know, like, and trust you. To do that, you must understand your customers: know how and where to find them, how to help them find you, and how to present your business to best match your strategy and business offering. You have to make choices for pricing, messaging, distribution channels, social media, sales activities, and so forth. For your lean plan, these are mainly bullet points. They are defining the tactical decisions that you make. In the lean plan they are for internal use only.

I do recommend, however, that every business leader take a fresh look at the market at least once a year. Markets change, new markets develop, and you don’t want to get lost thinking that what was true in the past is still true and will be true in the future.

Product Execution (or service, or both)

These are about the business offering. Product or service tactics are the decisions you make about pricing, packaging, service specifications, new products or services, product launches, sourcing, manufacturing, software development, technology procurement, trade secrets, bundling, and so forth. Your lean plan contains the decisions you make on these items as bullet points. You know your tactics by heart, so you just list them, briefly, in your lean business plan.

Not sure? Do your best. Only you can decide whether you need to do more testing, research, or prototyping, or launch and develop improvements as you go. That’s up to every business owner. There is no certainty ever, so do your best. And remember, you’re going to track results, review your metrics, and revise every month. Nothing is written in stone.

Other Execution

Tactics often include financial tactics, or team building, hiring, recruitment tactics, or logistic tactics related to, say, taking on new office or manufacturing space. I group these in the third part of the pyramid shown in the illustration above.

This chapter also includes:

Strategic Alignment for Effective Strategy

I like the pyramid metaphor. It highlights strategic alignment from strategy at the top to tactics to concrete specific activities. Strategy at the top, tactics in the middle, and concrete specifics as the base. The tactics and specifics are both execution, so there is still the difference between strategy and execution.

Strategic alignment with Strategy pyramid

Strategic alignment is like silk. It’s hard to describe in the abstract, but you know it when you see it. And you know the lack of it when you see that, too.

Strategic Alignment Examples

For example: a local computer systems retailer. The strategy is providing a high level of service to local businesses, offering peace of mind in exchange for prices higher than the box stores, generates strategic alignment by beefing up its service capability with training and additional staff, buying some white vans with messaging about installation and delivery, and dedicating space in the store for a long service counter staffed by technicians in white coats. That same business is out of strategic alignment if it does nothing to improve service, doesn’t deliver or install, and hounds customers who are leaving bills unpaid because their equipment wasn’t installed correctly and isn’t working.

And another example: a restaurant whose strategy is great healthy gourmet meals for special occasions is in alignment when the food, the locale, and the service are excellent; the food sourcing is organic, the cooking is new cuisine, naturally light; and the meals are expensive. A restaurant with that strategy is out of alignment if the food is mediocre, or too heavy on sauces and butter; maybe the service is poor, or annoying. Strategic alignment is lacking if it offers drive-through value meals; or it caters to kids under 10.

Strategic Alignment Optimizes Execution

You see from the examples that alignment is about choosing tactics to execute strategy, and specific milestones (tasks, dates, deadlines, responsibilities, metrics, etc.) to execute those tactics. The strategic has to inform tactics and the specific details, or you are out of alignment.

Business Tactics Checklist

You can use this checklist to set tactics to execute strategy. Tactics are easier to recognize than define. Focus on content, what’s supposed to happen. Think of tactics as absorbing the traditional marketing plan, product plan, and financing plan. Your next step will be to set these tactics into a plan with concrete milestones, performance metrics, lists of assumptions, and so on.

Business Execution Checklist

This business tactics checklist should give you an idea of the tactical decisions you make as you execute strategy. In a lean plan, you still want to cover what you need to plan and run your business, but simply jot it down in an organized way, usually bullet points, so you can refer back to it as you flesh out the details. But you don’t bother with descriptions.

Marketing Tactics Checklist

  • Tactics to locate target market, media that work for target market.
  • Pricing
  • Messaging (tag line, descriptions, etc.)
  • Benefits list
  • Features lists
  • Web presences including web, mobile, social media
  • Content marketing
  • Advertising
  • Packaging
  • Channels of distribution
  • Margins through channels
  • Channel gatekeepers
  • Affiliate marketing
  • Social media, platforms, metrics, paid posts, etc.
  • Events
  • Affiliate marketing
  • PR (media strategies, interviews, blog posts)

Product Tactics Checklist

  • Product descriptions and product lists
  • Technology, patents, trade secrets, protection
  • Price lists, menus, etc.
  • Features and benefits lists
  • Versions, configurations, new versions, new configurations
  • New product (or service)
  • Product (or service) updates
  • Bundling
  • Sources and costs, vendors, suppliers
  • Packaging
  • Liability problems
  • Registration for legal requirements
  • Registration in lists of providers

Other Business Tactics

  • Funding needs, raising investment
  • Use of funds
  • Borrowing, loans, credit lines
  • Management team recruitment, compensation
  • Benefits

Sample Tactics in a Lean Plan

These are sample business plan tactics for the lean business plan of, the social media service whose strategy was a model for the lean plan strategy section. Notice that the tactics are simple, reminders for management, things to track later with specific dates and deadlines and tracking results. This is from the tactics section of the lean plan.

Marketing and Sales Tactics

  • Our location is in the background, the small office location in a residential neighborhood in Eugene, OR. We don’t hide the smallness — we show a picture of it on the contact page — but it stays in the background. We could be anywhere, not just Eugene.
  • The website is critical location for us, as if it were the store for a retailer. It’s our operation center. It takes continual content, SEO, and updates.
  • We use outside experts for SEO and other online marketing. We don’t have time for it.
  • Pricing: Social media service pricing is all over the map. The current $995 target price is low. That prices can gradually increase.
  • We should be using chamber of commerce membership for additional marketing/sales in the local area.
  • Of course we explore email marketing.

Product Tactics

  • Manage pricing of social media services.
  • Introduce online courses as soon as possible, with connection to WaPow, SchoolKeep, and Udemy
  • Complete and market the ebook.
  • Develop social media workshop for small business, to be marketed live.

Financial/Admin Tactics

  • Use occasional founder inputs to maintain cash flow.
  • Invest in SEO, content, additional products, at a few hundred per month.
  • No loans, no investment required beyond occasional founder input.
  • Stick with the current office.

Tactics in a Lean Plan is a Collection of Simple Lists

You see in these sample business plan tactics that listing tactics in a lean business plan is a long way from the “elaborate business plan” for outsiders. Don’t worry about text, editing, and descriptions. Just use bullet points to remind you and your team what the plan is.

Essential Business Plan Numbers and Forecasts

You Can Forecast Sales

You can do your essential business plan numbers yourself. It doesn’t take a CPA or MBA. Just do a simple forecast for your business. It doesn’t take an advanced degree, or an econometric model; it takes common sense and knowing your business. 

I’ve been at the front lines of this, as a well-paid vice president in a high-tech market research firm. Our clients paid us big sums to predict market growth, inflation, and trends. I ran some very sophisticated forecasting projects that ended up proving nothing much beyond the fact that the people working in those markets, doing business there every day, know more than the data manipulations. All data-based forecasting is based on using the past to predict the future.

“It is far better to foresee even without certainty than not to foresee at all.” — Henri Poincare

And in the meantime, hard as may be to forecast sales and expenses, it’s harder still to run a business without forecasting them. You need to break things down into meaningful chunks, make some educated guesses, and then follow up with regular plan vs. actual review and revisions.

This chapter has three parts, all about your essential business plan numbers:

  • Forecast Your Sales: includes cases and examples. The math is simple. But you have to be comfortable with making educated guesses. Examples for email marketing, web marketing, a deli, etc.
  • Budget Your Expenses: you really need to be able to estimate future expenses. It’s part of normal management and business ownership.
  • Plan for cash: Be so careful with this: profits are not cash. You can be profitable without having cash in the bank. Several hidden factors matter.

“Hard as it may be to forecast sales and expenses, it’s harder still to run a business without forecasting them.” — Tim Berry