How to Create the Right Business Plan for Your Small Business


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levi anderson and pete fry

Levi Anderson and Pete Fry

Levi Anderson and Pete Fry BlogPost 118159605251 How to Create the Right Business Plan for Your Small Business new Levi Anderson and Pete Fry


  • Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. Content does not involve the rendering of personalized investment advice, nor is it intended to supplement professional individualized advice.
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CERTIFIED FINANCIAL PLANNER(TM) professionals like EP Wealth Advisors’ Pete Fry and Levi Anderson do much more than crunch the numbers. They look at a business owners’ life circumstances, ambitions, desired retirement lifestyle, and cherished causes to tie personal goals to business goals. A life well-lived is the ultimate measure of success, after all.

In the following article, they share some of their best general business planning advice.


Go beyond ideas.

Skipping the business plan altogether is a common pitfall. Whether starting out or ramping up: “Failing to plan is planning to fail.” Many small business owners have a good idea they feel very passionate about, but they don’t take enough time to figure out, step-by-step, how that idea will become a viable financial opportunity.

Before heading off to the races, it’s worth asking: How is the idea best executed? Scaled? Resourced? What is the actual need for this product or service, the size of the market?

Making the product or delivering the service is important, but success is also built upon dealing with the competitive climate, marketing, finance, and overcoming the business’s potential weaknesses. Business owners come from different backgrounds, so identifying gaps and figuring out “what they don’t know” will help round out the business with the right types of expertise.

Ideas are a dime a dozen; it’s the hard work that converts them into opportunities.


Take time out of the business to work on the business.

Business success can depend on setting aside sufficient time to plan—and looking through a wider lens. Business owners all too often fail to plan because they're so busy with their heads down, working in the business when they should also be working on the business.

The business plan should include three years of pro-forma financial statements including balance sheet, profit and loss statements and cash flow. Cash flows should be projected monthly, especially if there is any seasonality in the business. Working on the business goes beyond the financial statements – it involves strategic thinking about how to achieve those projections including who and when to hire, how your customers will find you, how to deal with competitors, what new products to research.


Begin with the end in mind.

The exit strategy should be considered at the outset rather than as an afterthought.

For many business owners their business is not only their main source of income during their working years, but also their retirement and their legacy. Thinking about what they want their retirement and legacy to look like can help business owners develop their business in a way that is more connected to these goals.


Separate business and personal accounts.

When managing cash flow, it’s all too easy for personal and business accounts to comingle.

“If you’re paying your mortgage out of the same account that you are paying vendors or buying equipment for your business from, that’s a red flag,” says Levi Anderson.

He sees it happen all the time, but it becomes difficult to track and plan for cash flows and retirement. Worse yet, comingling of accounts might “pierce the veil” of liability protection. Even if the business is structured as an LLC, potential plaintiffs might argue that the finances are comingled and that they can come after a business owner’s personal assets. The same warning applies to the use of personal credit cards for business expenses or vice versa.


Ask cause-and-effect questions.

Cash flow planning can never be 100% accurate, but business owners can draw reasonable conclusions by asking the right questions. For instance,

  • What is causing the customer to buy this product?

  • Are we spending resources on the best methods of generating cashflow?

  • Are we paying our creditors quicker than the people who are paying us?

  • Is the business worthy enough for a line of credit?

  • What quality is our debt?


Establish repeatable processes to deal with the ebbs and flows.

Every business is going to have ebbs and flows, which the cash coffers will need to weather. For startups and established businesses alike, it’s about finding repeatable processes that efficiently and effectively deliver products and services to the customer.


Build the business as light as possible.

There are many possible resources to get a business off the ground—from credit card loans and home equity lines of credit to grants from startup pitch competitions and SBA loans. Startup entrepreneurs should know from the outset if their game plan is to leverage other people’s money.

While many businesses run on borrowed money to some degree, there’s value in running lean, taking out fewer loans, and resisting the urge to dip into personal finances. Working with investors is a possible solution—but one that can involve giving up 100% control.

There are reasons to get others involved in the financial picture. Pete Fry explains, “You might say, ‘I don’t necessarily need the money, but I really want that person involved in my business as some kind of mentor, advisor, vendor, or customer.” It can help to form a trusted group of advisors as a sounding board before making major decisions.


Be aware of key metrics.

When running a business, getting a grip on the , balance sheet, profit and loss, and cash flow statements is essential Business owners should also be cognizant of the non-financial metrics—like the focus of their personal financial plans—and stay on top of the interplay of all the metrics with consistent tracking to ensure their business isn’t failing in the background.

“Non-financial measures often drive the financial side of the business,” Pete Fry explains. “For example, if you’re a consultant, utilization is going to be really important. If you’re in retail, sales per square foot is going to be important. If you’re in manufacturing, inventory may be driving the numbers. It doesn’t matter if your balance sheet shows plenty of assets if you’re building up inventory you’ll have to write off because it’s going stale.”

A CERTIFIED FINANCIAL PLANNER™ professional can help business owners integrate their business life with their personal financial plan, providing valuable insights and taking advantage of tax efficient strategies available to businesses. Every entrepreneur faces unique financial challenges when building their business. A CFP® professional can apply their knowledge to your specific goals, helping you make well-informed decisions that can save you time and money.


Take off the rose-colored glasses when looking at finances.

Business owners tend to be optimists; that’s why they started their businesses and continue to run them. Yet, finances are best considered from a risk-conscious standpoint.

Levi Anderson uses this analogy: “A lot of times a real estate investor will buy a rental house and say, ‘Okay, I’m going to get this loan and it’ll be fine because I’m going to rent it out for X amount of money.’ But what about vacancy? What if a renter destroys the property? What could go wrong? And if these things go wrong, is this business still a good idea?”

Rather than being an “island,” it’s good to crowdsource a few horror stories to get a reality check and consider what the true risks are.


Pay yourself fair market value.

All too often, business owners put 100 hour weeks into their business, which becomes their “baby.” One measure of success for an entrepreneur is the ability to take enough cash out of the business to pay themselves a fair market wage. If a $200,000 a year person can’t afford to pay out a $200,000 salary, the mindset needs to change to “this is a hobby, not a business.”

To figure out how your business plan will play into your personal financial plan and how your personal financial plan might affect your business plan it is a good idea to consult an expert like an EP Wealth CERTIFIED FINANCIAL PLANNER™ professional.

As Levi Anderson explains: “Spending time with your family, going on vacations, experiencing different things in life, scaling back work at a certain point in your life, living a certain lifestyle, benefiting a cause—there’s any number of personal financial goals that are really the ‘why’ behind starting a business.”

Contact EP Wealth for personalized business planning advice.






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