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Lean Business Planning … Just Do It

Lean Business Planning

This is the website version of my book Lean Business Planning, published in August of 2015 and revised in 2020. Please click here to order on amazon.com. What you have here, on this website, is all you need to just do it. Do your lean business plan now. Read on…

Also, by the way, you can check out these links:  why this site; about the author and why a lean business plan?

  • The lean business plan includes strategy, tactics, review schedule, milestones, assumptions, sales forecast, expense budget, and cash flow management.
  • Lean business planning is a process, not just a single plan. It’s the plan plus the regular review and revisions. It’s never done. Every latest version will need revision with a few weeks.
  • It’s not a formal business plan document. However, when (and if) you need a traditional business plan document, add summaries, descriptions and explanations as needed to fill the specific business need. You might even make them part of your pitch deck or leave them in appendices.

Making it easier and more practical for you

The book (and this site) starts with principles and overview, but maybe you get the idea from the beginning and just want to jump in and do a plan, in which case you can just Click this link to jump to Chapter 4, Set the Strategy, which is the first chapter in a series of chapters taking you through the process of developing the plan. Use the built-in hyperlinks to jump around. Take it in the order you want, not necessarily the order in which it appears.

I’ve also tried to make it easy for you to read the whole book in the order I planned, if you choose. As you finish each section just click the link on the lower right to go to the next section, in order. Notice for example the link in the lower right of this section to the next section, Section 1. As the book continues every page has a link to the next page on the bottom right, and – except for this page, which is the first – a link to the previous page on the lower left.

Links to Next and Previous Pages

About Lean Planning

Lean business planning is faster, easier, better business planning for all business owners who want to run their establishments better. The lean business plan is not a document, and it’s not just for companies who need a formal business plan document. It sets strategy, tactics, and concrete specific milestones, so you can track results and do course corrections. It’s for steering your business, not just for investors and banks, but for better management. Read about that in the fundamental principles section.

How To Do a Lean Plan Step by Step

Find the primary how-to in the second main section, Lean Business Planning Step by Step. That’s where you go if you want to just jump in and do your lean plan. You can see it includes four simple steps, each of which is streamlined for management, not outsiders. These are lists and tables and bullet points, not text. The four steps are: define your strategyset the execution, develop concrete specifics, and finally do the basic numbers.

Keeping it Live

You don’t just do a lean plan, you use lean planning to run your business better. There’s an initial lean business plan to start, then an ongoing process of run-review-revise-repeat.

Additional Information

I set aside much of what you might see in the middle of a normal business plan book. I want to emphasize lean business planning, so I don’t slow it down with additional information on strategy, market analysis, marketing plans, and other subjects that will be of interest to some, but not all. Some of that is in the appendices, which cover planning for Startup Costs,  Sharing Your Plan, and Angel Investment. These are all contained in the book too. Beyond that, this website has additional information not in the book, but here for your convenience, on this website. That includes a lot on strategy, plus market analysis, competitive analysis, marketing plans, product or service plans.

Special for LivePlan Users Only

The book itself and the main content of this site is indeed software neutral; but I do have a LivePlan-only version of the book, and I’ve included some of that LivePlan-specific content on this site as well. I’ve marked those pieces off from the main portions with this graphic: LivePlan Specific Version … which links(except for here) to the generic version of the same topic. And in the main content, where it touches on topics that have a LivePlan-specific version, you’ll see this one: LivePlan Users Click Here … which links (except for here) to the LivePlan-specific version of that topic.

Sample Sales Forecast for a Restaurant in LivePlan

LivePlan Specific VersionMagda is developing a lean plan 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.

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 8-9 a.m. hour. She also estimates some coffees at lunch, based on 3 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:

Estimating monthly sales

Month-by-month estimates for the first year

Month-by-month estimates for the first year

Turning to LivePlan, we input the row definitions, unit sales estimates, average prices, and average direct costs to create the complete sales forecast. The first illustration here shows the input for the row definitions. This is based on Magda’s calculations above, with an additional row added for “other,” which is t-shirts and mugs and such.

LivePlan Deli Sales Rows

And this illustration shows the data input for unit sales of lunches, one of the four rows of sales:

LivePlan Sales Units Deli

Important: these are all just rough numbers, for general calculations. There is nothing exact about these estimates. Don’t be fooled by how exact they appear.

Notice 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. Ideally she’s worked in a restaurant or knows somebody who has, so she has some reasonable information to draw on.

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 sales and direct costs in LivePlan  (with just the leftmost columns showing for visibility’s sake):


Here again you see the idea of educated guessing, estimates, and summary. 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.