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Editor’s note: Since publication of this update, our Scoreboard feature has undergone a change, and we now call it the Dashboard.  

Recently, Palo Alto Software CEO Sabrina Parsons hosted a webinar for our Bcast members on how to use LivePlan to create a better business plan, pitch your idea to investors, and track your business. As a successful small business owner, Sabrina wanted to show off how LivePlan’s many features can help boost your business.

LivePlan can help you create a better business plan, and then transfer the important parts of that business plan into a short, successful pitch to show to investors. Once your business is up and running, LivePlan’s Dashboard feature helps to track your progress so you can make better business decisions.

Listen to Peter and Jonathan try to create a business plan on the second episode of The Bcast, Bplan’s official podcast:
Click here to subscribe to The Bcast on iTunes »

Starting a business comes down to planning and funding, and LivePlan can help you do both. To find out how, watch the video above, or check out the transcript below.

Read the transcript:

Sabrina Parsons: Hey, everybody. Good morning. I am here to talk about LivePlan and give you some big picture information on business planning, forecasting, how to really kick your business off in the best possible way. Whether you’re a startup or an ongoing business, I think you can get a lot of value out of this presentation.

The format here is going to be switching between some presentation, and getting into LivePlan and showing you LivePlan, because I want to show you the tool and how easy it is, and how it can propel your business. If you’re a startup, it’s going to help you understand how much money you actually need. It’ll give you an idea of the feasibility of your business. You’ll be able to think through your assumptions, what you think you can charge for your product or services, and what you think it’s going to cost, and then you’ll be able to see the bottom line.

Are you going to make money? How long is it going to take to break even? How much startup capital are you going to need.

If you haven’t started your business, you absolutely need to go through a tool like LivePlan, get your business strategy together, and particularly your financials to understand the feasibility of what you’re trying to do.

With that, we’ll get started.

What we want you to learn. The evolution of the business plan, how to build a pitch and a plan, budgeting and forecasting, and then how to use LivePlan, because there’s more to LivePlan than just budgeting and forecasting. There’s a whole management feature, that we call the “Scoreboard,” we’ve got industry benchmarks, we’ve got features that are going to help you implement your plan, because you can schedule milestones and get reminders about getting those done.

I’m definitely going to jump in and show you all of LivePlan, so that you can see what a great and easy tool it is. I want you to understand why you want to take the time and put a business plan together, and then manage to your plan as you run your business.

Somebody’s asking if we’re going to be able to get a copy of the presentation. We can definitely get a PDF version of that in the email follow-up that we send out, but you’ll also get a full copy of the recording, so that’ll be available as well.

Let’s start with the evolution of the business plan. The business plan is about a map to help you understand where you need to go with your business. It is not a 75-page document, that takes months and months to put together. Maybe you have to pay a consultant thousands of dollars. Nobody wants that. That is not the business plan anymore. That is an old-school plan. No one should do that sort of business plan. That is basically maps that are out of date.

You need to think of business planning from a lean perspective, and it’s just enough to get you to the right place. One of the biggest things that I hear from people in terms of why they don’t plan, is they say, “I don’t have time,” and, “It’s not right anyway. I can’t predict the future. Why should I take the time to do this, if it’s not right.” And that’s not really what a business plan is about.

A business plan is about helping you understand where you want to go, and then, when things don’t go as planned, it gives you information that helps you make decisions, which is why businesses grow 30% faster when they actively plan, track against that plan, and adjust for growth. Why wouldn’t you want that statistic? Whether you’re just starting a business, whether you’re thinking about starting your business, or you’re already running a business, give yourself better odds. Give yourself a better chance. Why not increase your chance to grow your business, and grow 30% faster?

If you were going to Vegas and somebody said, “Hey, read this book. I guarantee you, if you read this book, you’re going to increase your odds of winning by 30%,” you read the book! Think about that, and when we step back a little bit, and we think about why a business will grow 30% faster, if they plan and track against that plan…And notice that in this statement here, it says actively plan. This is what I mean about the evolution of the business plan.

It is not about some static, 75-page document. It is an active planning process. It is lean. It is meant to help you make the right decisions, and that is why you are going to grow 30% faster. You are going to be able to understand where you’re coming from, where you want to go, and what is has taken to get there. So when you’re presented with decisions, you have better data and you make better decisions, and you use information to inform you to make those decisions.

Again, evolution of the business plan. What is the modern business plan? Why do I talk about it as being a process, and lean. What I want you guys to all think about is this idea that engaging in active planning is what’s going to make you a better business owner, a better business leader, and more successful. What this is about is building your plan, then actively measuring against your plan, learning from the results, and then rinse and repeat. It is about an ongoing process that’s going to really help you and make your business better.

When you don’t plan, what happens? This is what business owners and startups encounter all the time. They are constantly confused, lost, unclear, perplexed, bewildered, and it’s hard to run a business. There’s a lot of things going on and it makes it difficult to wear all the hats, be that business owner, be in charge of everything, and then try and make all the decisions.

The reality is, if you do a little bit of planning, you won’t be in this state. If you don’t do planning, you’ll constantly feel like this. As the CEO of Palo Alto Software, if we didn’t plan, manage against that plan, and actively understand why we make our numbers, or don’t make our numbers, I don’t know if I would sleep at night. Planning makes me sleep better. It makes me understand and know that I’m doing the best I can.

Rather than wondering, can I make payroll? Wondering, can I make expenses? What is revenue going to look like? The more you plan, the more you understand your business, and the more that you can understand how to push your business in the right direction.

A lot of times, people have this preconceived notion that business planning is only for startups. That if you are getting venture capital money, that if you are an angel investor, you’re going to want a business plan and if you are going to a bank, you might need a business plan, but other than that, I don’t need a plan. That’s really putting yourself at a disadvantage.

Think about big, public companies, and when we hear in the news that Google made the quarter results, or didn’t make them, basically what you’re hearing is did Google make their plan or did Google not make their plan. That’s exactly what you’re getting told. Big, large, public companies plan. They have huge departments. They spend lots of money on it. Lots of resources. That doesn’t mean that you have those resources, but when you don’t plan because, “Oh, I’m not getting an investment,” or, “My banker didn’t ask me for it,” you’re putting yourself at a disadvantage.

Think about this as well, those high tech, high growth companies we all hear about all the time, Uber, and Twitter, and Airbnb, they all plan. They have investors who are saying, what are your numbers? What are they going to be? Are you going to make them? How much are you spending?

You’ve got one startups and high growth companies are planning. Public companies are planning. Any company that is large enough to have a CFO, and an accounting department, and financial analysts, they all plan as well.

At the end of the day, this misconception that a business plan is just for certain types of startups, is putting at a disadvantage all the small business owners out there, because the reality is you’re the only ones not planning. Everybody else is planning, and yet, small business owners, when they start their business, when they run their business, they don’t plan, because they think planning is not for them. It’s a misconception and it puts you at a disadvantage. If you do plan, you are going to reap the benefits.

When you think about a business plan, these are the reasons why business plans work and are effective. I’m going to go through a couple of things here that are really important pieces of the plan, and things that you need to think about. Then, I’m going to jump into LivePlan and show you how LivePlan helps you answer those questions, and gets you on track with your strategy.

The first thing you need to think about in a business plan is, who are you? And I don’t mean you, the business owner. I mean you, the business. What is that personality of your business, because it’s really important and it help keeps you on track, and it helps make sure that your business portrays that personality to your customer. You don’t want to feel Schizophrenic to your customer. You want to present a certain personality.

For example, in the building that Palo Alto Software is in, on the first floor, we have a great coffee shop. It is definitely a hipster coffee shop. It just is. Everything about it screams hipster. Including expensive coffee. It’s delicious. It’s absolutely amazing. It’s addictive coffee, and it is expensive. They sell PBR in cans in the evenings, because it turns into a cocktail lounge, and it’s very kitschy, and they give you your drinks in Mason jars. Everything about the business makes sense and it’s an experience, because the Barn Light downstairs understands who they are. When I go there, I know what I’m getting, and I don’t question it. When you go to Starbucks, you know what you’re getting.

Think about big brands. They know who they are. You need to think about who you are. The other important piece, is you need to understand your competitors, and no matter what you are doing, no matter what kind of new business you have, what idea you have, and what’s going on with your business, you have competitors. Do not be fooled. Do not say you don’t have a competitor. What you’re actually saying is you have no direct competitors. And competitors are actually not a bad thing.

An example I use all the time is Google. When Google came onto the market in ’99, ’00, there was already 15 other search engines. They were not first. Today, they’re like the only search engine, but back when they started, there was plenty of competition, but you know what? It was good for Google. It meant that when they launched, all they had to do was put that search bar in there and we all knew what to do with that. We all knew what to do with that, because we already had learned from Yahoo!, from Excite, from AltaVista. All of those search engines taught us, the consumer, how a search engine works. Google didn’t have to spend time, and energy, and money educating a marketplace. Competitor’s not a bad thing. It’s a good thing, and you can learn a lot from your competitors.

An indirect competitor is somebody that solves the same problem that your solution solves, in a different way. If you don’t have a direct competitor, you definitely have indirect competitors, because if there’s absolutely direct or indirect competitors, I will venture to say that maybe you’re not really solving a problem with your solution. Think about that when you tell yourself there’s no competitors.

When Ford first put out the Model-T Ford and it was the first car out there, it did not have any direct competitors, but it had plenty of indirect competitors. Ford had to convince people to by a car, instead of having horses, instead of having a horse and carriage, or a buggy, instead of walking, instead of taking the train. There were other methods of transportation and Ford had to convince people that it was worth buying a car, instead of everything else. No direct competitors, but plenty of indirect competitors.

The other thing you need to make sure, as you think about your business plan, is that you have a good idea of who your customer is. I put all these faces up here, because you’re not selling to everybody, and especially not in the early days of your company. Even if your company has been around for a while, you should identify two or three personas, who encompass all your customers.

A persona is not a real person. A persona is not someone you know. A persona is an aggregate of all the traits that your customers have, so that it becomes your most common customer. A persona is not your most desired customer. It’s who is actually buying your products, or services, or products and services.

If you’re a startup, you should think about who your persona is, and in a startup, it can be your ideal customer, but think about all the traits. What does the person look like? How much education do they have? How old are they? Are they male? Are they female? What income level are they? As much information as you can get and hone in on, it’s going to help you understand how to reach these customers. The more you know about them, the more you can relate to them as people, the more that you can understand how to make them happy, how to price your products and services, and where to find them, where to market, where to advertise.

At the end of the day, you have to be able to implement, or your plan is worth nothing. The whole point of a plan is that it is a roadmap to success, that it helps you get from point A to point B. Hopefully, in as straight of a line as possible. It’s not going to be a straight line. It’s going to be with some curves and some detours, but if you’ve done your planning, it’ll be less curves and detours.

The other thing that happens when you run a business, and particularly when you’re starting a business, is that you oftentimes feel like you’re walking down a long hallway, and all these doors are opening. And these doors are your friend who’s saying, “Oh, you should offer this.” And your neighbor saying, “Oh, you should carry this product. Oh, you should add this service. Hey, you should open a new location!” You’re walking down the hallway, all these doors are opening, and some of those doors are going to be distractions, and they’re not going to get you where you want to go, and some of those doors are going to be opportunities.

You’re not going to understand that, if you haven’t done your planning. If you do your planning, that intersection between planning and implementation will actually happen and you’ll implement and your business will move forward, and it will grow, and it will be healthy.

At the end of the day, what you want to do, is be able to move from that fishbowl of all the other businesses running around in the rat race, and differentiate yourself, and be that outlier and move to your own fishbowl. That’s what you want to do, and you do that through this planning process. Active planning, and thinking throughout the whole time, how to do it in a time-efficient way.

We’re going to talk a little bit about budgeting and forecasting, and them I’m going to jump right into the product, but I think these big-picture ideas are really important for you to understand and then LivePlan’s going to make more sense to you.

Budgeting and forecasting, it’s not rocket science. It feels like it is. It feels like maybe there’s some magic to it. How in the world are you going to be able to predict the future? But it isn’t. Once you hear a little bit about what I’m going to say, and then you see LivePlan, then you’re going to see.

The first thing is, you have to start at the very top with setting some financial goals. And yes, we all want smart goals, but what I mean by SMART, is this. Specific, measurable, attainable, relevant, and time-bound. Think about that. If a goal is specific, you can implement it. For instance, don’t say the goal is to be the best. The best is not specific.

You want the goal to be more like, I want to make this much money in my business by the end of the year. I want to have enough revenue to hire a manager. I want to have the lowest priced product. I want to have the … As I say these things, you can hear how they’re specific. Lowest priced product in your area, that’s specific. It’s measurable. Is it attainable? You’ve got to figure out if it’s attainable. Is it relevant? If you’re trying to compete on price, and that’s your niche, you are the cheapest option, then it’s relevant. Time-bound. How long is it going to take you to get to that point? Thing big picture, but at the same time, as you think about your goals, make them SMART. Otherwise, you can’t measure to them. You can’t forecast. They don’t do you any good.

The big problem with forecasting is that it is, for most people, this fear of the unknown. I don’t know how to forecast. I don’t understand. I’m a startup. I’ve never sold anything in this business. How am I supposed to understand? How do I know what it’s going to be, if I’ve never done this before. And it will stop people in their tracks. It’ll be very difficult for them, if they’re afraid. I’m going to tell you a little story about Crocs to help you understand that. Then you’re going to think back to the things I’ve already gone through and told you over here, in terms of who you are, your competitors, and that target market, because that’s going to inform how you put your forecast together.

Crocs got to a point where pretty much everybody I knew had Crocs. Kids, adults, grandparents. They became this product that everybody had. If you were to say, who is the target market for Crocs, in America? At a certain point, and I know their popularity has fallen off, but there was a peak point when Crocs, you could say, was targeted at everybody in the United States. If your target market is everybody in the United States, it’s really difficult to forecast. If your market is everybody in the United States, you better have an enormous marketing budget. You better be going after venture capital funding and be getting hundreds of millions of dollars.

Even big, high growth companies, like Uber, and Airbnb, they do not say their audience is everybody in the United States. Uber is looking for a certain type of tech-savvy, business traveler, city dweller, who’s looking to change the way they transport themselves and not use cabs, and not use limo services. There’s a specific target audience that Uber’s going after. They’re not going after everybody. There’s certain people who will never take an Uber, and Uber doesn’t want them.

Going back to the Crocs, when they were first started, they were targeted at nurses. Now some of this has changed, but back in the day, nurses had to wear white shoes. Everybody would always see nurses with their white tennis shoes. White athletic shoes are expensive, and if you’re a nurse, and you work at a hospital, you can imagine lots of different ways where something’s going to happen in that hospital, and your shoes are going to be ruined. You’re in the ER, you’re in surgery, you’re in the ICU. Lots of different things that can happen that are going to make your shoes completely ruined. You’re going to have to throw them away. You’re going to have to get new ones.

Athletic shoes are about a hundred bucks, so nurses have this problem. They had to wear white shoes. White shoes are expensive. They needed comfortable shoes, and they didn’t want to keep having to buy new shoes, if something happened in the ER, for instance.

Crocs came along, they were special rubber material that was anti-germ, they could be made in white, they were very comfortable, and you can put them in the dishwasher and clean them. They solved this problem that nurses had.

But the big picture here from a forecasting perspective, is think about it. Now, instead of trying to figure out how many Crocs am I going to sell if I am selling them to everybody in the entire United States, all I have to think about right now is, how many Crocs am I going to sell to nurses and let’s pick a region of the US. Nurses in the Northeast.

Now, I can start to say, I’m going to start with hospitals, because that’s where nurses are more likely to have blood, or god knows what else spilled on their shoes. Now, I’m going to count the hospitals in the northeast. I’m going to do some research to find out how many nurses in those hospitals, and that gives me a total, addressable market. Then, I’m going to think about how I’m going to reach those nurses.

Hospital supplies stores. How do hospital supplies stores buy? They probably buy from distributors, so I’m going to reach out to the distributors. I’m going to go to hospital supply trade shows. I’m going to advertise in hospital supply trade magazines. All of a sudden, it becomes a lot easier, and let’s pretend that there’s a thousand nurses in the northeast, just to make it easy. Then I could say, in year one, I’m going to get 5% of those 1,000 nurses. Then, in year two, I’m going to get 10%. Now you have a forecast. Now it’s no longer a noun. Now you have numbers that help you understand how to forecast. Now you can say, by year two, I’m going to have 100 nurses wearing my shoes, and it becomes a whole lot easier to forecast, if you can think through the numbers like I just did for Crocs.

The other thing about forecasting is that you’ve got to see the forest through the trees. It applies to budgeting as well. You don’t want to forecast every tiny, little thing, depending on what you’re selling. Crocs, today, have I don’t know how many different lines of Crocs. For a big picture, strategic forecast, you probably want to forecast women’s Crocs, men’s Crocs, children’s Crocs. Boom. That’s it. You don’t want every single style and different shoe. It’s too much. It’s not manageable, then you move beyond this idea of a lean, active planning process, and into one that becomes cumbersome, that you’re not going to keep up with, and it’s not going to inform you in the right way.

Same thing with budgeting. When you start to put your expense budget together, you’ve done your revenue forecast, you’ve thought about your cost of goods, now you’re putting the actual expense part together, you don’t want to account for every single pencil, pen, paper, and paper clip. You want to think about categories that are manageable that inform you in the right way.

If you’re not going to do a lot of marketing or advertising, you might just want to have one line for all promotions. If you have very specific promotions, trade magazines, trade shows, radio, and you really want to understand what’s going on, you might flesh those out and have more categories there. It all depends on what you want to measure and what’s important to you.

It’s also a living process. You might start with a budget that you think is categorized correctly, and as you run your business, you’re going to end up wanting to change those different categories and consolidating or breaking things out. That’s okay. That’s going to happen. That’s par for the course.

The big thing about budgeting is that, at the end of the day, putting your revenue forecast together and putting your expense budget together is about one thing, and that’s about cash. You want to make sure you keep cash in the bank. Yes, it helps you grow your business. It helps make sure you’re profitable. All of those things are important, but if you don’t have cash in the bank, you’re going to go out of business. It’s called going bankrupt. Then it doesn’t matter what you’ve done. You have no more money and you’ve got to shut your doors.

I’m going to give you a statistic that is really a sobering statistic about small businesses that you can [inaudible 00:31:03] that fail or profitable when they failed. What this means, is they went bankrupt. They didn’t have money in the bank. They have profits, but they didn’t have money. I know that that’s a hard concept, but cash does not equal profits. We’re going to go into that and I’m going to show you.

In LivePlan, if you put your whole forecast together correctly, you’re going to have a projected cash balance that will show you cash on hand at the end of each period. In this screenshot, what it’s showing you is this particular business needs to get a loan or it cannot operate. That’s what all those numbers in red are. If you put this all together, then you know how much money you need to get. You can see here that, in this business, you have projected negative cash, and the worst is that it’s in November of -$69,000. When I look at this, this is a business that I say, this business probably wants to get about $80,000 in loans, because you don’t want to be down to $100 in the bank.

This is what LivePlan will help you do. It will help you understand how much money you actually need to get.

At this point, we’re going to jump into LivePlan. I’m going to pause the screen here for a second, while I open up LivePlan for your guys, and please make sure that you ask a lot of questions and let me know what you think about everything, because if you’re asking questions, I can make sure that I am addressing all your questions and helping you.

Some of you that are asking about specific businesses, what I am talking about applies to all businesses. If you want to know how to start a funeral business, these are big picture principles, and these big picture principles that I am giving you, you can apply to the funeral business, to the pizza parlor, to the landscape business. I’m not going to go into specifics of how to start a landscape business, or a funeral business, because that’s going to apply only to you, but everything I’m talking about is going to apply to whatever type of business that you’re starting.

Now we’re in LivePlan and I’m going to give you a quick tour. You can see we’re in the forecast right now. There’s a couple other tabs across the top that I want you to notice.

We’ve got our “Pitch” tab. We’ve got our “Plan” tab. We’ve got our “Forecast” tab, and within the “Forecast” tab, we’ve got our Revenue Forecast. Our Personnel Plan is basically our hiring plan, and it’s where you put the salaries for all the people you plan to hire. The Budget is that expense budget. We’ve got our Cash Flow Assumptions, and I’ll go into them, because I know that sounds difficult, but it’s not. It’s easy to understand.

Once you do your cash flow assumptions, after you’ve done revenue, personnel, budget and you get cash flow assumptions, then you’ll understand how much money you need for your business. And maybe you don’t need any, which is great, but it’s likely that if you’re starting a business, you’re going to need a loan. It’s also likely that if you have an existing business, and you’re growing it, growth usually means capital. It’s hard to grow without some cash. This is going to help you with that.

It’ll make sure that you’re keeping on track, and you’re really able to keep on top of how cash flows in and out of your business, and if you need a loan, you can go to the bank before you go bankrupt, because once your numbers look horrible, nobody’s going to lend you money. If you catch it six, seven, eight months ahead of time, and you can show how your business is growing and you just need that credit line or that loan to support the growth, you’re going to be in really good shape.

We also have industry benchmarks, so you can compare your business, both your forecast as well as your actual results against similar businesses like yours in a similar region in the United States. The “Schedule” tab, which will help keep you on track and make sure you’re implementing your business plan and you can make sure you’re going from point A to point B. Then the “Scoreboard,” which you will use if you’re an existing business, and you will use if you are a startup as soon as you open your doors and you get your loan, you want to start tracking how you spend your money and you want to start tracking the money that comes in.

We’re going to jump into the forecast right now, and I’m going to show you. Right now, we’re looking at Garrett’s Bike Shop. Garrett’s Bike Shop is exactly what you think it is. He is running a bike shop. He is selling bikes, repair services. He’s got a service contract with the University Patrol, he’s in a university town. He sells accessories and parts, and he sells clothing.

What I’m going to show you here is how easy LivePlan is to work with. Everywhere you’re going to get a lot of help, you can see here. We ask you questions, we give you information, we give you a lot of support. When you go to forecast, we’re going to take you through, and again, we’re going to give you a lot of information. We give you different revenue forecasting models. Are you going to forecast by revenue, i.e. I’m going to make $10,000. Or are you going to forecast by units. I’m going to sell 100 bikes. Or do you have a membership or subscription business, where you’re going to forecast by recurring customers that pay you every month? We give you a lot of flexibility here.

Each step of the way, we’re going to again give you information. You’ll be able to put in all of your info, costs, sales tax, it’s all super easy, and before you get overwhelmed, I’m going to go over here to the Help and Resources, and I’m going to show you how we’ve got a great help center, and I’m also going to show you all the free resources that we have that are going to help you.

We have a plan-as-you-go business plan book. That is a step-by-step. We have 500 sample business in our sample plan library. We have planning tutorials done by our founder and business plan expert, Tim Berry, where you can actually have him go in and he will do a video on how to do your sales forecast.

Don’t get overwhelmed. There’s a lot of information, a lot of support and a lot of help here. We’ll go back to our revenue forecast.

You can see you can do a lot of fun things with LivePlan. What you see is what you get. When you see this little icon here, you can move things around and reorder them. The little trashcan deletes things, I’m not going to delete it, and you can add a new revenue stream. All really easy. I am going to delete that one now. You can see when you’re done, you can click, “I’m Done,” and it’ll take you to view your forecast and what it looks like. In this particular scenario, we have set this forecast to forecast for 36 months. Not to complicate anything, but I’m going to give you a quick little view on how you can set that.

You can forecast in three years or five years, and you can forecast in one year monthly, or three years of monthlies. For the purposes of the demo, we did three years of monthly, because it allows me to go into some detail. For your purposes, I would always say, do one year of monthlies. I would err on the side of forecasting for three years. Five years is a long way out. The further out you get, the less you know, and then you’re spending time forecasting really big unknown chunks of time. I would recommend three years, with one year of monthlies. Sometimes, though, someone’s going to tell you they want to see a plan, and they want to see five years. People are particular, and if they’re stuck in their ways, we’ve allowed you to do those options.

We’re going to go back into the ‘Forecast’ tab here, and I’m going to go a little bit more quickly, just because of the interest of time. In the Personnel, you can forecast, like I said, by group of employees or by individuals, and as I mentioned, it’s all super easy and very customizable, and we help you every step. List your current and planned employees, et cetera, et cetera. Then we help you understand your burden rate. What is it between payroll taxes and benefits that you’re going to have to pay for every employee. We really try to hold your hand.

On the budget side, it’s very flexible. You can see there’ll be some categories, like Marketing Promotion, and Insurance, and Rent, and Utilities that are in there. They won’t have any expenses in them, but it’ll be up to you to change them. If you want it to just be advertising, instead of marketing and promotion, is it a percentage of revenue? Is it the same amount every month or year? Varying amounts? It’s all really easy to customize. You can see now it stays, “Advertising.”

Now, we’re going to get into what I think is the fun part, because this is going to teach you how cash and profits are not the same. It’s going to take you through this idea of incoming payments. What percentage of your sales will be on credit? I don’t mean credit card here. I mean, how many of your sales, if you have 100 customers in a month, are all of them going to be invoiced and then you’re going to bill them later, and you’re going to have to wait for their money? Or are they going to pay you with cash or credit card right there and then. How many days is it going to take to collect, on average, your incoming payments, if you are invoicing and billing. We’re going to set that at 45 days.

In outgoing payments, what percentage of your purchases are on credit, i.e. you get billed and you don’t have to pay cash or use your credit card, and how many days will you wait on average before making outgoing payments? Let’s say 30 days.

If you handle inventory, we’ll help you with that. Not everybody does, so you don’t have to. You can say no, or you can say yes, and you can see it doesn’t lose my information.

Once I’ve done my cash flow assumptions, I get to my loans and investments, and I get this great view on my projected cash balance. You can see, in this particular plan, there’s a $75,000 loan. I’m going to edit it and delete it, because if you’re doing this for the first time, that loan won’t be there. When you come to your projected cash balance, basically what this is saying is based on what you plan to do, in terms of revenue and expenses, and how you’re going to sell, invoicing and billing people, inventory, et cetera, this is how much money you’re going to have to have to run your business. You can see that here, and I can take a look and I can go, “Wow, okay. I get negative about $88,000 in June, so I better add a funding source here.” I’m going to say it’s a loan. I’m going to add that loan. Then you can see lots of customizability here. You can have a line of credit, an investment, et cetera.

I’m going to get a $100,000 loan, because I think that’s what I’m going to need, and I think I can get it, I’ve got good credit, so I’m going to get 7% interest over 16 months. And now you can see, I probably needed $110,000. You can see you might need to adjust here and there. I’m going to go back and do that, because in June I only have $11 in the bank, and that’s no good either. I’m going to come back here and I’m going to call that 110.

What this helps you do is get the exact amount of money that you need for your business. There we go. That looks great. And not a penny more. The other thing it’ll do automatically, is it’ll automatically put in your expected payments and it’ll automatically separate principle and interest and all of that in the right ways, so that you’re accounting for them correctly.

Now, you get to your profit and loss statement. This is your projected profit and loss, and you can see your net profit. Let’s go to fiscal year 2016, your net profit is $83,000. Great. Wonderful. And you can go onto your cash flow statement and you can see cash at the end of the period. There’s never any red numbers. There’s never any negative cash at the end of the period, because negative cash at the end of the period means you bounced checks and you went bankrupt, and once you go bankrupt, it’s very hard for anybody to help you. That’s when you start seeing business owners taking out second mortgages, borrow money from their mother, their parents take out second mortgages, and it becomes a financial mess. You don’t want to do that.

With the last 12 minutes here, I’m going to quickly go over the rest of the tabs here, because I want you to see how LivePlan can help you be really strategic.

The “Pitch” page is built so that you can build a pitch. If you’re going to pitch an investor, if you’re going to pitch your rich uncle, if you’re trying to get a partner to join you and you’re trying to pitch them on why this is a great idea, you’re trying to get friends and family loans, this is what you want to do. You can see for Garrett’s Bike Shop, first of all, the pitch is beautiful. It helps almost give you a graphical representation of your business, but the other thing the pitch is is a high-level, 1-page business plan.

For most businesses, this is all you need. A 1-page business plan. You don’t actually have to go in and use the entire plan, and you can see this is a more traditional plan, unless someone has specifically asked you for that whole business plan. If they have, then you can come in here and it’ll go step-by-step, and it’ll give you instructions, and you’ll get the video advice from Tim Berry, which is fantastic. Every step of the way, we’ll give you so much information, and once you edit, you can see instructions, and examples. We give you a ton of information.

I want to reiterate that you only should do a full plan, if someone has asked for it. Otherwise, stick to the pitch. This is going to keep you on track, and it’s going to make sure that you implement strategically, but it’s not going to take you the next three months, and it’s not going to be a 50-page business plan.

Garrett’s Bike Shop has his headline, or value statement. “We offer high quality biking gear for families and regular people, not just gear-heads.” He’s got his problem worth solving and his solution, he has his target market and his competitors, he has the funding that he needs, sales and marketing, the financial projections come from the “Forecast” tab, so if you come in here and you want to edit the revenue forecast in the pitch, it’ll take you to the revenue forecast in LivePlan. It’ll take you exactly where you need to go. It’s got his financial projections. He doesn’t have milestones right now, so he should probably fill these out, and these ones come directly from this “Schedule” tab, so you can add a milestone, but basically they come from the “Schedule” tab right here. You can see, Garrett’s got some late milestones here, but he’s got some great, completed milestones. Then, Garrett can talk about his team, key roles, and partners and resources.

I’m going to show you the pitch builder, because again, it’s really easy. Company name and logo. You can upload your company logo. You have your headline, and again, we give you all the instructions and we hold your hand. One of the things you should note is that in order for this to be a 1-page business plan, we do limit the characters, and we do it on purpose, and I know it can be frustrating if you get in there and it’s hard to limit, but this is part of the process. You’ve got to be succinct. The whole idea with this 1-page business plan strategy is that you can, in five minutes, talk to somebody about what your business is, and if you’re writing three paragraphs, you can’t talk to anybody in five minutes. Don’t be frustrated by the character limitations.

Again, you’ll see problem worth solving. We tell you what you should do, and it goes all the way down and it helps you every step of the way. Once you’re done, you can publish your pitch, so here’s the secret location of your published pitch. The reason is secret is that nobody will be able to get to this pitch, if you don’t give them the URL. It will not be indexed, it will not show up in search engines. Nobody will come across it randomly. The only way that someone’s going to come across this is if you give it to them. At any point, I can stop publishing my pitch, and it won’t show up anymore.

The other thing that you can do here is you can export to PowerPoint. Every part of the pitch will be exported into a PowerPoint template. If you actually have to put a pitch back together, it’s a great starting point. You can see, it’s super fast, it’s downloaded here, I’m going to open it up, and I’m going to show you that it’s built this really nice starting point for your pitch. You might want to expand it. You might want to add some slides, put in some pictures. In the problem worth solving and solution, I think Garrett would do well to put some images in there, but the whole point is that it has everything you need in it and you can customize it. You can really go nuts, or you can use it as is. You can see, it’s nicely formatted there for you.

I do want to show you on the plan side, I showed you the instructions, the examples. I do want to show you that, once again, it is customizable, so you can change things, if you want to. Or if someone says, this is the business plan outline I want you to use, you can change things here and do that. You can add a cover page to your business plan, so your slogan, your tagline, your address, and your confidentiality message.

When you go to print your plan, you can export it as a document, or you can print it to PDF, and if you print it to PDF, we have these great, fun templates that’ll make your plan look beautiful, if that’s what you want, so that you can do your whole business plan and print it and give it to somebody in a PDF or email it to them.

I’m going to reiterate, you only want to do the full plan, if someone’s asking for it. The whole idea is to actively plan, and to engage in a lean-planning process, which is all about making sure that you keep on track. That’s what LivePlan was built to do. That’s why it’s called LivePlan. It’s a living plan. It’s a process that you’re actively participating in.

That’s why I really encourage you to use the pitch and not the full plan, if you don’t have a need for a full plan, because this is easier to come back to and make changes. You can come back to this and say, “You know what? This target market I was totally off. This is not the right target market. I’m not getting hipsters under 40. That’s not my market. Actually, what I’m getting is parents 35 to 55, and that’s actually what I’m getting and there’s actually 6,000 of these guys in my town, and they’re only going to spend $300.” Now I’ve changed my target market, because I’ve been running my business and I’ve realized that the hipsters under 40 aren’t coming, because they don’t want to come somewhere where there’s all these kids buying bikes. The pitch is a lot easier for you to go back strategically and change and adjust and massage as you learn more and more about your business.

I’m going to jump over to the “Benchmarks” tab here, because this is a great place to compare yourself. You can see here that Garrett, the bike shop owner, has chosen sporting goods stores. He didn’t actually chose that. What he did is he typed, “Bike,” into the keyword here, and industries related to bike came up. As he looks at these, he can see, “Oh, sporting goods stores. That’s what I am,” and he can select it.

If you happen to know your NAICS code, great. Put it in there, but most of us don’t know and we don’t know what that is, and it doesn’t matter. Just use the keyword search.

The other thing is that the bike shop can choose what part of the country they’re in, and the bike shop can choose what revenue size. Garrett’s a startup. He chose under $1,000,000, and that’s because Garrett doesn’t want to compare himself to a $100,000,000, multiple bike shops in multiple states-type of business. He wants to compare himself to a business that’s like his.

Then you’ll see that we help you understand how you’re doing. Gross margin, we tell you about the metric, how it’s calculated, what it means, you can see your results, 3-year industry, 10-year, and your forecast, and your results get pulled from your accounting software once you’re ready to connect it and I’ll show you that in just a second here.

We really give you a lot of information. You can see operating margin, net profit martin, average days to get paid. If was Garrett here and I saw that most sporting goods stores have an average of eight or seven days, I would work on getting paid faster. It’s an easy place where I would say, “Wow, I can probably do better here.” It’s a place where you can go to see how you can improve your business.

We briefly looked at the “Schedule” tab already, where you can add milestones. My project. You can give it a due date. I’m going to give it a due date of September 30th. I’m going to say Sabrina is responsible and I can add details as I see fit. Then I can say, “Okay,” and my project is upcoming. We’ve created a pitch and we did a new milestone, so there we go.

The last piece of LivePlan that I’m going to show you in these last two minutes is our “Scoreboard.” This is where you come to manage your business. Once you do your forecast, you get your pitch together, you get that loan that you need and you’re actually running your business, what you do is you connect your LivePlan account to QuickBooks. We connect with QuickBooks Online, QuickBooks the desktop-Windows version, and we also connect with the newer accounting solution, Xero. X-E-R-O. If you’re starting the business, you’re going to need an accounting solution. I suggest you check out QuickBooks. Right now, it’s one of my favorites, but we connect with all of those. We sync, we pull in all your information, and then you can see how you’re doing.

You can come in here and you can see in July versus your forecast. You can also see in July versus your previous year, once you have that information. It helps you understand, when you click in, you can see your actual results versus your forecast, versus your previous period. That would be June. June is your previous period and you can see that right here, actual results, previous period, forecast, and previous year.

This is a great way to make sure that you’re keeping on track and to help you see things when things go wrong. For instance, expenses for Garrett’s Bike Shop aren’t doing so great. He’s up 13% from what he forecasted, 10% from the previous period and 51% from last year. I would be nervous, if I were Garrett, and if you can see in his revenue forecast, he is up 11% from last year, but his expenses are up 13%, so not horrible, but something for Garrett to keep in mind. If you go to the overview here, you can see, we call them and in the industry they’re called KPI’s, key performance indicators. You don’t have to set this up. You don’t have to do anything. You connect your accounting software, and you’re good to go. You don’t have to think about what you’re supposed to measure. We tell you. You can measure revenue and expenses, revenue breakdown, expense breakdown, operating income, operating margin, net profit, and net profit margin, cash on hand very important, net cash flow, that means how much money is coming in and out of the business.

If you look at net cash flow, and let’s look at it for the last quarter, because it gives us a little bit more information, I love how we give you options. You can look at it in lots of different ways. You can see your actual results here are really positive, and especially compared to some of the previous periods and previous year. Big picture, if you get this all going, this is your key to keep your business on track to grow it, and to grow 30% faster, because who doesn’t want to do that?

With that, I want to thank you all very much for joining us, and I will have our team follow-up with you and give you everything you need to follow-up with us. Thank you very much.

AvatarJonathan Michael

Jonathan is the Engagement Marketing Manager for Palo Alto Software, and has spent the last 9 years developing and implementing digital marketing strategies. During that time, he has learned that empathy and authenticity are strengths by which companies can effectively engage with individuals at every point throughout the customer journey.