How to make a business plan

How to write a business plan.

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What every business plan should have and include. Details on how to write a business plan.

In this episode, you are going to learn the next step you should take after you figure out what type of business you want to go into. That step is building a business plan. Then, I’m going to talk about some fashion designers who didn’t have a business plan and took some hard knocks because of it. 


No matter what business you are going into, we can all learn from fashion designers. Their history is rich because they are original creative thinkers who have left their undeniable marks on this world.

Once you know what type of business you want to go into, the next step is to form a business plan. I personally love writing business plans. Some people love to read books, some love to watch movies, I like to write business plans — just for fun. They teach me so much about a business that I’m interested in. For instance, I own a strip mall and thought it would be a perfect place for a beauty salon, so I ran it through a business plan only to find out that most states require special permits and licenses to open a salon. For example, my strip mall was located in Minnesota. Minnesota is a state that requires salon managers to have a managerial license.

You must already be licensed as a beauty professional before even applying for a salon manager license. To get your license, you have to provide proof of 2700 hours of licensed work in the last three years. Now, I did not have that. And with my schedule I wasn’t planning on working as a stylist any time soon. Only after verifying that you meet the experience requirements for a stylist in your state, then you have to pass the managerial examinations. I knew I would never be able to open up a salon without hiring someone who has a managerial license. So that means, I would be at the mercy of the manager. And should she choose to leave, she wouldn’t be that easy to replace. I’d have to shut down the salon until I found someone else with a manager’s license. This is not an ideal situation for a business owner.








You can see, a person can not just open up certain businesses because they want to, they need to know what goes into the business. And that all starts with a business plan.

I once had a girl who brought her whole family with her to view a space I had for rent in my strip mall. It was her dream to open her own beauty salon and we both knew this strip mall was the perfect place for one.  She had saved up thousands of dollars to purchase the equipment necessary to start the business. The first question I asked her was, “Where did you get your training?”  She said she taught herself how to cut hair and has been saving all the money she made cutting hair in her basement to open up her own salon location.

Unfortunately, I had to break the bad news to her that in order to open up a salon she needed a managerial license. You see, she obviously never did a business plan on what it took to run a beauty salon. This was a total red flag for me because I, on the other hand, had completed a business plan on a beauty salon so I knew there was no way I could rent her the space without the proper credentials until she had years of experience and passed the test as a licensed manager.

A business plan is needed for a few reasons:

1– I mentioned that it outlines everything you need to know about the business in question. You’ll know if there are special licenses or permits needed, how much inventory you need and when to replenish it, who your competition will be, who will be running the business, where or what type of location you will need, and your marketing plan. It provides you with everything needed to understand both the internal and external aspects of the type of business you’d like to pursue. 2– The most important point is that it tells you if your business will be profitable. As I’m hoping that is your main motivator for going into business — to make a profit. If after you run a business plan and find out there is no way to make money, why would you continue to pursue going into this type of business? Or perhaps through the business plan you can alter the plan to find a way to make it work and be profitable. 3– Another reason for a business plan is to outline your goals as it will serve as a guide in the process. This way, there will be less surprises. Through a business plan, you can address concerns you may have and figure out which direction you want to go. You don’t necessarily have to follow the business plan exactly into your future, but it will provide you with a roadmap to success and you may find that you need to take a few detours on the way to reach your goal or destination.

Some people refer to business plans as a living plan as it should be constantly monitored, flexible, changed, and redefined to suit your goals as needed.

Here is how business plans can change . . . After I retired I was changing my bed sheets one day and I could not get my sheets to stay on my bed. So I thought, “This is a square piece of fabric, I’m a designer. I should be able to design bed sheets that stay on my bed.” And I did.

My first thought was to make them out of a really great fabric. And any one who knows me, knows that I love fabric. So I started researching fabrics, and I found what we are actually sleeping in is enough to give a person nightmares! I kid you not! You probably do not realize what you are sleeping in. Over 75% of manufacturers put toxins in their bed sheets. That’s right, toxins! And these toxins off gas right into your pores. Then we wonder why allergies, eczema, and asthma rates are all on the rise. We are all sleeping in toxic chemicals and we don’t even realize it. I didn’t even realize it. This woke me up and I started to do a ton of research and now I had a new mission. I had to make bed sheets that didn’t have any toxins in them AND would stay on a bed. Finding the perfect fabric was really hard to do. I decided on cotton, because that’s a natural fiber and I found a small town called Xinjiang, (next to Tibet) that handpicked their cotton.

Let me explain the advantages of hand picking cotton versus machine picked cotton. First, in machine harvesting the cotton picker picks the entire cotton plant at once. The mature cotton boll gets harvested with the immature cotton boll, creating a lot of wasted substandard cotton fibers. When you hand pick cotton, it preserves the cotton in the longest threads possible and avoids contamination. Machine harvesting also stresses and breaks long strands of cotton into shorter frayed strands which requires tying them together which causes pilling. So handpicked cotton is less likely to pill. Machine harvesting also lets oils and greases from machinery soak into the cotton. Have you ever seen a little black line running through your t-shirt? That’s contamination. That’s grease from the machinery. Contamination isn’t possible when you handpick the cotton. There are so many reasons why handpicking cotton is beneficial that I cannot list them all. Machines also pick up garbage that strayed into the cotton field from a nearby road. Who wants garbage inter bed sheets or duvet covers?

When you have extra long fibers, it allows the cotton to breathe so you won’t sweat at night and it allows the sheets and duvet covers to be moisture wicking. What it basically comes down to is extra longer strands produce finer, more luxurious stronger, more durable fabric. To make a long story short, I started to tell my friends about these sheets I had made. And they started asking me, “Can you make me a set?”

One of my friends had cancer and she talked about how much she sweats at night from the chemotherapy, and how these sheets would be great for her. Some of my other friends are going through that time in their life when they get hot flashes. So that was another reason they wanted my sheets. Another friend who travels a lot was talking about how she goes to motel rooms and the sheets come off of her bed and she often finds herself walking up with her face directly on the mattress that thousands of people have slept on.

I’m sure everyone can relate as to when your sheets come off of your bed. It wakes you up at night. Sometimes, it’s like they shrink in the washer when actually they probably don’t. So that was another thing that changed in our business plan, we started to pre-shrink all of our fabric.  Then I gave my sheets extra thick elastic so the sheets would actually grip the bed with the patented straps. This actually guarantees they will stay on your bed.

All of the stories I was hearing made me empathetic towards my friends and their situations. I really didn’t realize that bed sheets could have such a big impact on people’s lives. But think about it, you spend 8 hours a night in your bed sheets, that’s over half your life in bed. So you want to make sure you’re not sleeping with something that is bad for you. Then to top it off another friend told me about her son who is a veteran and has PTSD. He constantly tosses and turns at night and his sheets end up wrapped around him like a taco causing him more anxiety. That was the final straw, I knew I needed to get these bed sheets out there; so other people that suffer from things like this have the opportunity to benefit from these sheets in more ways than one.

I once heard a quote from Robert Badin Powell and he said, “Try to leave this world a little better than you found it. And when your turn comes to die, you can die happy with feeling at any rate, you’ve not wasted your time but you’ve done your best.”  And so I thought, perhaps these sheets would be my contribution to this world. After all, the fabric I was using was already earth and animal-friendly, peta approved, hyper-allergenic, Okeo-tex tested (which means they contain no chemicals that can harm you), AZO-dye free, moisture wicking, they keep you cool when you need it and warm when you don’t… Did I forget anything?  Oh yeah, they are BSCI compliant. BSCI stands for Business Social Compliance Initiative. It was formed to monitor business supply chains to ensure all suppliers are treating their workers ethically and legally. For me, it was all about my morals.

When I was in the prom dress industry, Vera Wang was taken to court over having her dresses made in sweatshops. So I wanted to make sure from that my dress factories didn’t have anything that was immorally improper happening at them. And that was never the case at my company. So if your company does abide by the BSCI standards, this is also something you should put in your business plan. Either in your executive summary or under your operating plans.

So I made a business plan. In the plan I researched who my customer should be but, I really learned a lot more going direct to my customers. For instance, I took my sheets to Macys and they told me that they absolutely love the idea of my sheets staying on the bed, but in order for them to have my bed sheets in their stores, they needed more than just one product. If they were going to take another product line out of their stores, they needed more than just bed sheets to replace it. They did offer to put them on their website but what I really wanted was for them to have my bed sheets in their stores. So that’s when I started to think, “What other products can I make that go with these sheets?”

That’s when I came up with the Zip-Zip-Flip duvet cover to match the sheets. I should mention that because the sheets and the duvet cover were unique, I had them both patented. Retailers love this because they know no one else on the market will have the same thing. First, I just came up with the typical duvet cover, you know the one that has the buttons on the bottom and I hated it. I couldn’t imagine myself demonstrating these as I had to crawl inside the duvet cover to get the duvet inside. My hair would be a mess coming out of the duvet cover.

So I thought, I’m a designer, I can do better than this. So, I designed a really easy to use duvet cover. You simply unzip both sides of the duvet cover. Put in the duvet, attach the four corners of the duvet inside the duvet cover so it stays in place, zip the sides up, then flip over the pocket on the top. I named it Zip-Zip-Flip. It’s so much easier than a normal duvet cover.

Now I had three products: sheets, a duvet cover, a duvet and I thought of one more product, a sleeping beauty mask. And again, having all these unique products, I wondered how I could make the mask unique. It was another New York customer of mine that had suggested having sleeping beauty masks on our line. He warned me all throughout the holiday season they could not keep beauty masks in stock. I knew I had to make this beauty mask different. I found some water gel beads and put them in a plastic form that is the same shape as your eyes. And you insert this plastic form into the same beautiful Oeko-tex tested cotton that was in my sheets. Then you can heat these water beads up in hot water or freeze them to be cool. When you put them over your eyes they help you with a few different things. A few being, they reduce puffy eyes, dark circles, pink eye, relief from hot weather, and are headache reducers, they help you relax, and of course they are blackouts when you are sleeping at night.

Now my business plan had changed from just having one product to having an entire product line. Before I was able to present my entire product line to Macys, Covid happened and my business plan had to change again. I went from having a B2B model to a B2C model. B2B means business-to-business and in my case that was my company being a wholesaler selling to a retailer such as Macy’s. And I was changing to a B2C model. Which means business-to-consumer or business-to-customer. For me that was going direct from me as a wholesaler, bypassing the retailer, and selling direct to the consumer. I was going to sell online.

Changing from a B2B to a B2C changed the entire business plan; all the way from my executive summary, to my marketing plan, to my pricing. My customer no longer needed to make money from the sale because now my product was going direct to the customer.

As you can see, the business plan directed me, but I had to make changes as I went along the way. A business plan isn’t cut in stone, some things just happen along the way. Unexpected things happen such as Covid and how the government changed how the majority of us had to conduct business. You can see the business plan directed me, but I had to make changes to it as I went along. And that is not where it ended. When I started running low on my inventory, a major retailer called to place a wholesale order, and I didn’t have enough inventory to cover the order, so I had to manufacture more.  That’s when I found out my supplier was now lacking resources because their companies were shut down for Covid. In other words, I couldn’t get cotton. Or at least I couldn’t get the type of cotton that made my bed sheets so luxurious.

However, one of the buyers I had presented my sheets to had a plan. And this company was interested in licensing my product. They didn’t have a supply issue because they were a huge company. So again, the business plan changed to accommodate my unforeseen circumstances. If you’d like some of my sheets I am offering my listeners a coupon code while supplies last. Just put in BFT15 into to receive 15% off.

4– Finally if you need capital, banks, investors and financiers will require a business plan. They want to see if it will be profitable for them and how fast you’ll pay back your loan and if they’ll make any interest on your loan. However, having a business plan doesn’t necessarily mean a bank will loan you the money. When I first went into business, I showed my bank my plan and they said it was the best plan they had ever seen. Then they went on to tell me they could not provide me with a term loan because I didn’t have enough collateral. After all, I only had a nine year old car and I was only 24 years old. Since loans are one of the main motivators in writing a business plan and people always have questions about loans. I will dedicate my next podcast to loans and what’s available for you.

Business plans let bankers and financiers know exactly what you/they are getting into. It also shows a financier that you are serious about having a business and not some fly by night person. A well thought out business plan will tell you where you are today and help you plan for where you’ll be tomorrow.

For instance, you wouldn’t just hop on an airplane and go wherever it takes you. Typically, you would pack your bags first according to where you’re going: pack a swimsuit if you’re going to Hawaii or a parka if you’re going to Alaska. Then, you’d buy your plane tickets well in advance, so you can notify your employer or your relatives that you’re taking a vacation. And you’ll bring enough cash to last you until you come back.

A business plan operates the same way. It takes a business from conception to reality, mapping out the way to get there.

5– Another good thing about a business plan is it doesn’t allow for emotions to get in the way. Emotions run high when building a business and they can cloud your train of thought. A lot of people just get it in their mind that they want to live their dream, but they don’t take the time to put a plan in place. A plan will take all the emotion of the business and lay it all out there, showing your strengths and your weaknesses. Showing whether you will succeed or fail. It’s that easy.

Business plans can be any length. They can be short or long. It all depends on what type of business you’re going into. But, they all basically contain some of the same aspects/points. First, you want to form an executive summary. It needs to grab the attention of the reader by providing an overview of what your company is going to be all about, and what type of problems it will solve, who will be involved, and the plan of attack. It’s like the synopsis you would provide a literary agent or publisher of a book.

Next, specify typical company information or a company overview. That means providing what form or tax status your business will be taking, who is going to be running the business and the management team, why they will succeed and what their compensation will be. And what are their roles and duties? Where will the business be located? After listing your company information, the next section should go into detail on the product or service you’ll be offering. You’ll need a merchandise plan that lists your price points and unique selling points or patents you may hold on your products or services. Then, you need to specify who your target market is. This is describing your customers: where they live, what their hobbies are, their ages, their schooling, their income levels, anything you can think of that describes your customer in detail.

A section should be included on your competition. Who else has services or products like yours? Where are they located? What are their annual sales? You’ll need an advertising and marketing plan describing an in depth study on how you will get your product in front of the eyes of your target market.

Also included in your business plan should be an operations plan which describes your polices and procedures, how your orders are processed, and how you handle your inventory control and returns. Everything having to do with the day-to-day operations of your business.

Finally, the last section is a financial forecast. It displays in detail the funds needed, what they will be used for, a balance sheet, a profit loss analysis, business ratios, and details about your expenses and projected income for bankers and financiers. A financial forecast is the most important section of your business plan. If you’re looking for capital do not present a business plan without a financial forecast. I provided you with the basic outline of what a business plan is. If you’d like to see an outline in more detail click below:

Business Plan Template

Business Plan Template 1

Page 1 step-by-step business plan template. Click to enlarge.

Page 2 step-by-step business plan template. Click to enlarge

Remember the outline is not set in stone. You can add more topics to this business plan if needed, such as adding your action plan. Simply list whatever will help you learn everything about the business you’re looking to go into. And once you’ve completed a business plan, before you take it to an investor, I highly suggest to first take it through an online spell check or ask a friend to go over it to double check for mistakes. There are many services or businesses that can do this for you for free. Call Score helps entrepreneurs or small business owners find a business mentor. There are also many universities that offer help. The SBA, (aka the Small Business Development Center) can also help you with your business plan. Keep in mind the entire reason why you’re writing a business plan is to learn more about the business that you’re interested in opening and making sure your concept will work before you take the plunge and spend 1000s of dollars on something that may or may not work.

What fashion designers can teach us about business plans.

Let me tell you a couple stories about fashion designers that had no business plan. You may have heard of fashion designer, Betsey Johnson. Johnson is the fashion designer with the reputation of doing cartwheels down the runway of her fashion shows. She’s known for her over the top embellished designs and she just loves using bold colors such as fuchsias and blacks. Problem is, in 2012, her company filed bankruptcy and Johnson claimed in her biography that she was simply bogged down in five year projections.

Unlike most designers, Betsey Johnson’s stars always seem to line up on the right path. In other words, she just seemed to always be at the right place at the right time. During college she won a contest that was something like a non-paid internship at Mademoiselle magazine. After the internship was over, she was offered a job there.  Because her salary was so low, she needed to make extra money in order to pay her bills. So, she started making a few clothing items to sell to her fellow co-workers at Mademoiselle magazine. Her mentor at Mademoiselle recommended her clothes to a new store featuring up and coming designers. After only one interview, she was hired to design for this store using her own name on the label. It’s pretty rare to have your own name on your label when you’re designing for somebody else. Betsey had no business plan. As a matter of fact, she had no plan at all and she just always seemed to go with the flow. All her dots somehow always connected to the best outcome a designer could possibly ask for. Eventually, she decided to open up her own wholesale business and took on a friend and her father as business partners. In her biography, Betsey Johnson claims her father wanted a traditionally laid out business plan and her response to him was always, “The only plan I have is for all of us not to go broke.” The partners became annoyed by Betsey’s father who was always trying to go the traditional route with a plan, so they asked him to take a silent partner route. He agreed.

Moving forward, still without a plan, they decided to buy their first round of inventory without pre-selling anything. So, they randomly picked a number out of the air as to how much inventory they should order for the first season. They decided they could probably sell at least two stores a state, so they ordered in 100 clothing items per state for the first season. Unfortunately, their sales were miserable. Betsy and her partner basically sold nothing. And now, they had tons of inventory to deal with. So, they started going door-to-door to rid themselves of all this excess seasonal inventory. They were lucky enough to be able to sell a lot of it at a substantial discount. This however, didn’t help their bottom line. But then again, they didn’t have a business plan which had a bottom line. So they were kind of flying by the seat of their pants. Again, Johnson was just simply lucky when it came time to find a way to pay for her inventory.

Betsey just so happened to meet a guy named Gary Wassner . Betsy mentioned to him that she needed financing of $15,000 for purchase orders and that she couldn’t find anybody to give her a loan. So, Wassner had an ‘aha’ moment, and he ended up forming a new company to facilitate financing and credit for designers. Wassner named this factoring firm Hilden and he went on to work with some of the biggest names in fashion. And it all began with this one conversation with Betsey Johnson on the selling floor.

Still unable to get rid of the rest of the inventory that they had purchased, Betsey found herself complaining to a friend. That friend suggested that she should try to open up her own store to sell her own inventory. So, after failing at wholesaling Betsey again, without a business plan, decided to open up a store and sell at retail.

For my own business at DeBora Rachelle, I started with the retail stores and then went into wholesale. It worked to my benefit in a number of different ways. First, I was able to sell directly to my customers, so I knew who my customers were by working with them personally on a daily basis. I learned their likes and their dislikes. When I finally went into wholesaling my DeBora Rachelle line, I knew not only what my target market would buy, but I could also give advice to my wholesale buyers on what they should stock in their inventory based on what my customers were telling me they wanted. My target market (my customers) were actually their target market (customers). Before I took my DeBora Rachelle prom dresses to the wholesale market every year, I had a list of ten of thousands of teenagers in my target market that I would poll asking which dresses would sell that season. This was actually a great marketing gimmick as well as it made my customers excited about the dresses I had coming in. Whenever I polled them, they were always 100% right with their choices about what would sell best.

That’s how I based my inventory selection and how much to buy. I also kept comparing my store sales from one year to the next so I knew exactly how much my stores would sell based on my prior year sales. I broke these numbers down using a 5-4-5 calendar. So, I knew what I would be selling per day per store. A 5-4-5 calendar breaks down the weeks of every year and compares them with the next year. So this basically compares the same week every year. The layout of this type of calendar lines up the holidays and ensures that the same number of Saturdays and Sundays are in each month comparatively. I also used the 80/20 rule, which means pretty much 20% of the dresses will be the ones that sell 80% of the time. That means I ordered a lot more of the top 20% of the hot selling items. Remember, those are the ones my customers told me to buy when I polled them. Therefore, I didn’t order much of the 80% of the dresses that my customers didn’t say they would buy or loved. Without a business plan, Betsey was obviously flying by the seat of her pants and taking great risks. Many of her mistakes may have been prevented, had she first come up with a business plan.

However, as luck would have it, Betsey ran into a journal friend who told her to open up her own store and sell her own merchandise. This friend claimed they had the perfect location. So, with no research on this location, and still without a plan and just winging it, Betsey not only opened up a store in her friend’s suggested location, but she ended up opening up 66 stores, which sold roughly $150 million in annual sales. I find this story amazing. I’m hoping you’re enjoying it as much as I am. It’s almost like eventually, not having a plan has to, at some point, catch up to you right? Well, it did.

In 2007, Betsey and her partner decided it was time to take on a major partner because they needed more capital to grow and they thought a partner would do the trick. Unfortunately, that only made matters worse. And according to Women’s Wear Daily, that was when the shoe designer, Steve Madden, finally stepped in. He took over a roughly $48.8 million loan that Johnson’s firm had accumulated. He also took over the company and the Betsey Johnson Company’s intellectual property. Two years later, Betsey Johnson filed bankruptcy.

Betsey was able to stay on as the creative director until 2020 that’s when Betsey and Steve went head-to-head with their differences. And, according to the New Yorker’s article, in May of 2020, titled How Betsy Johnson Built Her Fashion Empire and Lost her Name. Madden then furlonged Betsey Johnson.

Last I heard Betsey was living in a trailer home in California. In my opinion, a trailer home is not really the glamorous life a fashion designer, let alone a famous fashion designer, should be living, but that’s just my opinion. So, that’s a little bit about how Betsey Johnson’s career ended up without a business plan. What are your thoughts on that? I’d love to hear.

If you go to, you can leave a message for me with any business questions you may have, or tell me your feelings about how this Betsey Johnson thing turned out. I’d love to hear from you.

Now let’s talk a little bit about Tommy Hilfiger. Tommy Hilfiger was another person who also filed bankruptcy after finding out that without a business plan, he was spending money much faster than he was making it.  In Hilfiger’s biography called American Dreamer, Hilfiger stressed his retail number one tip was to advise other designers to work within a budget and to be up-to-date on their sales history. Lucky for Hilfiger, he learned from his prior mistakes. From then on, he only surrounded himself with intelligent people who knew what a business plan was. They knew how to read a bottom line and stick to a budget. Hilfiger also knew how to set goals for the company which would incent employees not only to stay but to be committed to his company. He always gave them equity in the company itself. Oddly, Tommy Hilfiger has never owned 100% of any company. He’s always had others involved with ownership in his company who believed in his dream. In Hilfiger words, “It’s better to own a large piece of an elephant than a small piece of a pea.” I think we can all agree on that.

Had Betsey Johnson and Tommy Hilfiger had a business plan in place from the start, this could have helped them avoid some of these failures. As you can see, business plans help reduce risk. You don’t have to follow your business plan perfectly, but just have one in place, so you can make important decisions about your company based on factual and strategic information. The plan will lead you in the right direction. You can make changes along the way. That doesn’t hurt anything, but at least you have a goal and you know what your business is all about.

I put an outline of a business plan above. That way, you’ll have an outline you can follow when you’re making your own business plan. So, you found your idea from our first podcast, and now you have your business plan from this podcast. You may have figured out already that I’m trying to put the podcasts in order so we’ll help an entrepreneur take an idea from concept to creation all the way up to managing your company and your exit plan. The plan for this podcast is to help entrepreneurs, small business owners, and college students to take the first step and start their own business, whether it’s in fashion or just having their own product or whatever it is. I hope that in some way this podcast has helped you or will help you in the future.

Being in business is fun. There is nothing I’d rather do. The hardest part is just taking a leap and going for it. Because if you don’t, you never know where you would have landed. And if you happen to fall, it’s just part of the learning experience. If you’re worried about the money, consider this, you have to pay for learning experiences. Why not just gamble on you? Believe me, you’re worth the bet. So that’s it for my second podcast. I hope you’ll join me next month. And don’t forget to subscribe above if you’re liking what you hear at And don’t forget to tell others so that they can learn about business from a real entrepreneur who has been there and done that. And if you have any questions don’t forget, you can always leave a message at

I made a quick little quiz at the bottom of this podcast page that you can take just for fun to see if you learned anything. If you collect 130 points from all of the podcasts, I’ll send you a free gift by the end of the year. Just make sure you use the same email address every time so the system will keep track of the points for you. Have fun taking the quiz. Let me know how you do. Thanks for listening and don’t forget to subscribe so you know when the next podcast is coming up.


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