business plan personnel

How Do You Draft the Personnel Section of the Business Plan? The Personnel Section of a Business Plan Explained.

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How to Create an Investor-Ready Personnel Plan and Forecast Employee Costs

Posted march 22, 2021 by noah parsons.

A personnel plan is a critical part of your business plan and financial forecast . In addition to helping you budget for current and future employees, your personnel plan enables you to think through who you should hire and when you should hire them.

If you’re pitching to angel investors or venture capitalists for funding, they will want to see why your team is uniquely suited to grow and scale your business, as well as your hiring plan.

Investors will want to know:

• What positions do you need to fill?
• When you plan on filling them?
• How much it’s going to cost to build the team you need??

What to include in the personnel section of your business plan

For many startups and small businesses, the people who do the work—your team—are both the most costly and most valuable asset. It makes sense that hiring the right person at the right time can have a significant impact on your ability to meet your company’s milestones and goals , not to mention your cash flow .

Thinking strategically about human resources — when to add positions, compensation levels, and whether to hire full-time or on a contract basis are all pieces of a healthy personnel plan.

So, whether you’re seeking investment or not, building a personnel plan and forecast is an essential part of business planning and strategic planning for the long-term viability of your company. Let’s dive right in and look at the five key steps to build an investor-ready personnel plan.

1. Describe your team

In the “team” section of your business plan, you will typically include an overview of the key positions in your company and the background of the people who will be in those critical roles. Usually, you’ll highlight each of the management positions in your company and then speak more generally about other departments and teams.

You don’t need to include full resumes for each team member—a quick summary of why each person is qualified to do the job is enough. Describe each person’s skills and experience and what they will be doing for the company.

Emphasize your team’s strengths. How do they make your team stronger? What specific expertise and experience do they have in your (or a related) industry? Assuming your market research identified a great opportunity, why are you the right team to capitalize on it? 

For potential investors, this section helps qualify why each team member is necessary for the success of the business. It acts as a justification for their salary and equity share if they are part owners of the company.

2. Describe your organizational structure

The organizational structure of your company is frequently represented as an “org chart” that shows who reports to whom and who is responsible for what.

You don’t have to create a visual org chart, though—describing your organization in the text is just fine. Just make sure to show that you have a clear structure for your company.

Is authority adequately distributed among the team? Do you have the resources to get everything done that you need to grow your company?

You’ll also want to mention the various teams your company is going to have in the future. These might include sales, customer service, product development, marketing, manufacturing, and so on.

You don’t need to plan on hiring all of these people right away. Think of this section as an outline of what you plan to do in the future with your company.

3. Explain the gaps

It’s alright to have gaps on your team, especially if you’re a startup. You may not have identified all the “right” team members yet, or you may not have the funds available yet to hire for essential roles . That’s okay.

The key is to know that you do have gaps on your team—this is how you figure out who you need to hire and when you need to hire them. Also, it’s much better to define and identify weaknesses in your team than to pretend that you have all the key roles that you need. In your business plan , explain where your organization is weak and what your plans are to correct the problem as you grow.

It might be tempting to hide your potential weaknesses from investors, but they’ll see through that right away. It’s much better to be open and honest about where you have management gaps and your plans to solve those problems. You want them to know you have identified and made plans to mitigate risks .

You also need to keep in mind that employees might wear a lot of hats in the early days of a company, but that specialization will happen as the company grows.

For example, initially, the CEO might also be the VP of Sales. But, eventually, the VP of Sales role should be filled by a specialist to take on that responsibility. Include these types of changes in your personnel plan to explain to investors that you understand how your company is going to grow and scale.

4. List your advisors, consultants, and board members

For some companies, external advisors, board members , and even consultants can play a crucial role in setting business strategy. These people might even fill key positions temporarily as your company grows. If this is the case, you’ll want to list these people in your business plan. Like your management team, provide a brief background on each principal advisor that explains the value they provide.

If your advisors don’t hold key roles or are not critical to your success, you don’t necessarily have to list them. But, do list anyone that is adding substantial value to the company by providing advice, connections, or operational expertise.

5. Forecast your personnel costs

Most business plans should include a personnel table to forecast the expense of your employees. Here are the expenses you’ll need to be aware of when forecasting.

Direct and indirect labor expenses

You’ll want to include both direct expenses , which usually comprise salaries, as well as indirect expenses which include: 

• Paid time off
• Healthcare and insurance
• Payroll costs

 As well as any other costs you incur for each employee beyond their salary. Here’s an example of what a personnel forecast can look like using LivePlan .

Burden rate and employee-related expenses

There are different names for the indirect expenses of personnel. Still, I like to call it “burden rate” or “employee-related expenses,” which is an expense over and above the direct wages and salaries. These expenses typically include payroll taxes, worker’s compensation insurance, health insurance, and other benefits and taxes.

For business planning purposes, don’t stress about coming up with the exact figure for the burden rate. Instead, estimate it using a percentage of total monthly salaries. Somewhere between 15 percent and 25 percent usually makes sense, but it depends on what kind of benefits you plan on offering.

In your personnel plan, you can list both individual people as well as groups of people. You’ll probably want to list out key people and other highly paid employees, but group together other departments or groups of people. For example, you might list out your management team, but then group together departments like Marketing, Customer Service, and Manufacturing.

Then, add in your personnel burden to cover benefits and insurance. In the example personnel table above, this is called “Employee-Related Expenses.”

You’ll then take the total number of your salaries plus personnel burden and include this in your profit and loss forecast as an expense. Suppose you’re using LivePlan to build your personnel forecast. In that case, this how-to article on entering personnel shows where you’ll see personnel costs appear on your cash flow statement, profit and loss (income statement), and your balance sheet.

Do you need a personnel plan if you have no employees?

If you are a sole proprietor and don’t have employees, you should still include your own salary as part of the business plan. Make sure to include your salary as an expense in your Profit & Loss Statement . Even if you, the business owner, don’t take the salary, so you can keep the cash in your business, you’ll want to record what you should have been paid.

In the case of a sole proprietor, you probably don’t need a full table for the personnel plan, like in the example above. But, when you do start planning to hire a team, you should use the format I’ve described here.

Personnel planning is a valuable part of the business planning process because it forces you to think about what needs to get done in your business and who’s going to do it. Take the time to work through this part of your financial forecast, and you’ll have a much better sense of what it’s going to take to make your business successful.

*Editors Note: This article was initially written in 2019 and updated for 2021.

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How to Write the Management Team Section of a Business Plan + Examples

Written by Dave Lavinsky

Over the last 20+ years, we’ve written business plans for over 4,000 companies and hundreds of thousands of others have used the best business plan template and our other business planning materials.

From this vast experience, we’ve gained valuable insights on how to write a business plan effectively , specifically in the management section.

What is a Management Team Business Plan?

A management team business plan is a section in a comprehensive business plan that introduces and highlights the key members of the company’s management team. This part provides essential details about the individuals responsible for leading and running the business, including their backgrounds, skills, and experience.

It’s crucial for potential investors and stakeholders to evaluate the management team’s competence and qualifications, as a strong team can instill confidence in the company’s ability to succeed.

Why is the Management Team Section of a Business Plan Important?

Your management team plan has 3 goals:

• To prove to you that you have the right team to execute on the opportunity you have defined, and if not, to identify who you must hire to round out your current team
• To convince lenders and investors (e.g., angel investors, venture capitalists) to fund your company (if needed)
• To document how your Board (if applicable) can best help your team succeed

What to Include in Your Management Team Section

There are two key elements to include in your management team business plan as follows:

Management Team Members

For each key member of your team, document their name, title, and background.

Their backgrounds are most important in telling you and investors they are qualified to execute. Describe what positions each member has held in the past and what they accomplished in those positions. For example, if your VP of Sales was formerly the VP of Sales for another company in which they grew sales from zero to $10 million, that would be an important and compelling accomplishment to document.

Importantly, try to relate your team members’ past job experience with what you need them to accomplish at your company. For example, if a former high school principal was on your team, you could state that their vast experience working with both teenagers and their parents will help them succeed in their current position (particularly if the current position required them to work with both customer segments).

This is true for a management team for a small business, a medium-sized or large business.

Management Team Gaps

In this section, detail if your management team currently has any gaps or missing individuals. Not having a complete team at the time you develop your business plan. But, you must show your plan to complete your team.

As such, describe what positions are missing and who will fill the positions. For example, if you know you need to hire a VP of Marketing, state this. Further, state the job description of this person. For example, you might say that this hire will have 10 years of experience managing a marketing team, establishing new accounts, working with social media marketing, have startup experience, etc.

To give you a “checklist” of the employees you might want to include in your Management Team Members and/or Gaps sections, below are the most common management titles at a growing startup (note that many are specific to tech startups):

• Founder, CEO, and/or President
• Chief Operating Officer
• Chief Financial Officer
• VP of Sales
• VP of Marketing
• VP of Web Development and/or Engineering
• UX Designer/Manager
• Product Manager
• Digital Marketing Manager
• Business Development Manager
• Account Management/Customer Service Manager
• Sales Managers/Sales Staff
• Board Members

If you have a Board of Directors or Board of Advisors, you would include the bios of the members of your board in this section.

A Board of Directors is a paid group of individuals who help guide your company. Typically startups do not have such a board until they raise VC funding.

If your company is not at this stage, consider forming a Board of Advisors. Such a board is ideal particularly if your team is missing expertise and/or experience in certain areas. An advisory board includes 2 to 8 individuals who act as mentors to your business. Usually, you meet with them monthly or quarterly and they help answer questions and provide strategic guidance. You typically do not pay advisory board members with cash, but offering them options in your company is a best practice as it allows you to attract better board members and better motivate them.

Management Team Business Plan Example

Below are examples of how to include your management section in your business plan.

Key Team Members

Jim Smith, Founder & CEO

Jim has 15 years of experience in online software development, having co-founded two previous successful online businesses. His first company specialized in developing workflow automation software for government agencies and was sold to a public company in 2003. Jim’s second company developed a mobile app for parents to manage their children’s activities, which was sold to a large public company in 2014. Jim has a B.S. in computer science from MIT and an M.B.A from the University of Chicago

Bill Jones, COO

Bill has 20 years of sales and business development experience from working with several startups that he helped grow into large businesses. He has a B.S. in mechanical engineering from M.I.T., where he also played Division I lacrosse for four years.

We currently have no gaps in our management team, but we plan to expand our team by hiring a Vice President of Marketing to be responsible for all digital marketing efforts.

Vance Williamson, Founder & CEO

Prior to founding GoDoIt, Vance was the CIO of a major corporation with more than 100 retail locations. He oversaw all IT initiatives including software development, sales technology, mobile apps for customers and employees, security systems, customer databases/CRM platforms, etc. He has a  B.S in computer science and an MBA in operations management from UCLA.

We currently have two gaps in our Management Team: 

A VP of Sales with 10 years of experience managing sales teams, overseeing sales processes, working with manufacturers, establishing new accounts, working with digital marketing/advertising agencies to build brand awareness, etc. 

In addition, we need to hire a VP of Marketing with experience creating online marketing campaigns that attract new customers to our site.

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• How to Write an Executive Summary
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• How to Write the Market Analysis Section of a Business Plan
• The Customer Analysis Section of Your Business Plan
• Completing the Competitive Analysis Section of Your Business Plan
• Financial Assumptions and Your Business Plan
• How to Create Financial Projections for Your Business Plan
• Everything You Need to Know about the Business Plan Appendix
• Business Plan Conclusion: Summary & Recap

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How To Write the Management Section of a Business Plan

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Ownership Structure

Internal management team, external management resources, human resources, frequently asked questions (faqs).

When developing a business plan , the 'management section' describes your management team, staff, resources, and how your business ownership is structured. This section should not only describe who's on your management team but how each person's skill set will contribute to your bottom line. In this article, we will detail exactly how to compose and best highlight your management team.

Key Takeaways

• The management section of a business plan helps show how your management team and company are structured.
• The first section shows the ownership structure, which might be a sole proprietorship, partnership, or corporation.
• The internal management section shows the department heads, including sales, marketing, administration, and production.
• The external management resources help back up your internal management and include an advisory board and consultants.
• The human resources section contains staffing requirements—part-time or full-time—skills needed for employees and the costs.

This section outlines the legal structure of your business. It may only be a single sentence if your business is a sole proprietorship. If your business is a partnership or a corporation, it can be longer. You want to be sure you explain who holds what percentage of ownership in the company.

The internal management section should describe the business management categories relevant to your business, identify who will have responsibility for each category, and then include a short profile highlighting each person's skills.

The primary business categories of sales, marketing , administration, and production usually work for many small businesses. If your business has employees, you will also need a human resources section. You may also find that your company needs additional management categories to fit your unique circumstances.

It's not necessary to have a different person in charge of each category; some key management people often fill more than one role. Identify the key managers in your business and explain what functions and experience each team member will serve. You may wish to present this as an organizational chart in your business plan, although the list format is also appropriate.

Along with this section, you should include the complete resumés of each management team member (including your own). Follow this with an explanation of how each member will be compensated and their benefits package, and describe any profit-sharing plans that may apply.

If there are any contracts that relate directly to your management team members, such as work contracts or non-competition agreements, you should include them in an Appendix to your business plan.

While external management resources are often overlooked when writing a business plan , using these resources effectively can make the difference between the success or failure of your managers. Think of these external resources as your internal management team's backup. They give your business credibility and an additional pool of expertise.

Advisory Board

An Advisory Board can increase consumer and investor confidence, attract talented employees by showing a commitment to company growth and bring a diversity of contributions. If you choose to have an Advisory Board , list all the board members in this section, and include a bio and all relevant specializations. If you choose your board members carefully, the group can compensate for the niche forms of expertise that your internal managers lack.

When selecting your board members, look for people who are genuinely interested in seeing your business do well and have the patience and time to provide sound advice.

Recently retired executives or managers, other successful entrepreneurs, and/or vendors would be good choices for an Advisory Board.

Professional Services

Professional Services should also be highlighted in the external management resources section. Describe all the external professional advisors that your business will use, such as accountants, bankers, lawyers, IT consultants, business consultants, and/or business coaches. These professionals provide a web of advice and support outside your internal management team that can be invaluable in making management decisions and your new business a success .

The last point you should address in the management section of your business plan is your human resources needs. The trick to writing about human resources is to be specific. To simply write, "We'll need more people once we get up and running," isn't sufficient. Follow this list:

• Detail how many employees your business will need at each stage and what they will cost.
• Describe exactly how your business's human resources needs can be met. Will it be best to have employees, or should you operate with contract workers or freelancers ? Do you need full-time or part-time staff or a mix of both?
• Outline your staffing requirements, including a description of the specific skills that the people working for you will need to possess.
• Calculate your labor costs. Decide the number of employees you will need and how many customers each employee can serve. For example, if it takes one employee to serve 150 customers, and you forecast 1,500 customers in your first year, your business will need 10 employees.
• Determine how much each employee will receive and total the salary cost for all your employees.
• Add to this the cost of  Workers' Compensation Insurance  (mandatory for most businesses) and the cost of any other employee benefits, such as company-sponsored medical and dental plans.

After you've listed the points above, describe how you will find the staff your business needs and how you will train them. Your description of staff recruitment should explain whether or not sufficient local labor is available and how you will recruit staff.

When you're writing about staff training, you'll want to include as many specifics as possible. What specific training will your staff undergo? What ongoing training opportunities will you provide your employees?

Even if the plan for your business is to start as a sole proprietorship, you should include a section on potential human resources demands as a way to demonstrate that you've thought about the staffing your business may require as it grows.

Business plans are about the future and the hypothetical challenges and successes that await. It's worth visualizing and documenting the details of your business so that the materials and network around your dream can begin to take shape.

What is the management section of a business plan?

The 'management section' describes your management team, staff, resources, and how your business ownership is structured.

What are the 5 sections of a business plan?

A business plan provides a road map showing your company's goals and how you'll achieve them. The five sections of a business plan are as follows:

• The  market analysis  outlines the demand for your product or service.
• The  competitive analysis  section shows your competition's strengths and weaknesses and your strategy for gaining market share.
• The management plan outlines your ownership structure, the management team, and staffing requirements.
• The  operating plan  details your business location and the facilities, equipment, and supplies needed to operate.
• The  financial plan  shows the map to financial success and the sources of funding, such as bank loans or investors.

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How to Create a Personnel Plan for Investors

What is a personnel plan?

A personnel plan is a document that outlines an organization’s staffing needs, goals, and strategies for managing its workforce.

It is a key component of human resource management and provides a roadmap for the recruitment, selection, training, development, retention, and management of employees.

A personnel plan is critical within the business plan you would have created as a start-up or entrepreneur. It will help you in your financial forecasting, anticipating the right times to hire and expand.

What to include in the personnel section of your business plan

The personnel section of a business plan should include information about the management team and staff that will be involved in operating the business. The people who do the work are the most important asset, which of course comes with a cost. Understanding when to hire, when to think about human resources, and when to grow your business at the right time can be enormously important in meeting business objectives, setting yourself up for success with great personal benchmarks.

Building out a personnel plan within your business plan is going to be essential in planning for the long term success of your business. Forecasting this data can be the best way to ensure longevity.

Who is your management team?

This should include a brief introduction to the key members of the management team, including their backgrounds, experience, and relevant skills. It’s important to highlight their qualifications and how they will contribute to the success of the business.

This can be brief and doesn’t require a full resume for each member of the team. A simple explanation detailing qualifications and relevant experience applicable within the company is all that’s required.

What is the organizational structure?

This section should provide an overview of the organizational structure of the company, including who will be in charge of each department or functional area, as well as any outside consultants or advisors who will be involved.

In line with forecasting, you will want to illustrate the future of your company and who will be included. As you develop, you can anticipate your team growing from a just few employees into staff across multiple sectors, such as customer service, marketing, and support.

What are your staffing needs?

Outline the staffing needs of the business, including the number and types of employees needed to run the business successfully. This should also include the qualifications and skills required for each position.

Here you can identify the weaknesses and risks across your team, ensuring that you have a capable understanding of the roles and responsibilities that are important to the business in the future – though they may not be in place right now. Investors are quick to highlight “perfect” personnel plans, so you will want to embrace that you have identified risks in staffing.

As an example, your head of customer support may also be your head of sales, but in time these two roles will need to be separated.

What will recruitment and training look like?

This section should detail how the company plans to recruit and train employees, including any training programs or on-the-job training that will be provided.

What will the compensations and benefits be?

Outline the compensation and benefits packages that will be offered to employees, including salaries, bonuses, health benefits, retirement plans, and any other perks or incentives.

Outline the Human Resources policies

Detail the company’s policies on issues such as employee performance reviews, disciplinary procedures, and termination policies.

Does a business plan need personnel planning if I have no staff?

Even if you don’t have any employees right now, having a personnel plan is beneficial for your business in the long term.

Without a personnel plan, you may find it challenging to scale your business or adapt to changes in your industry or market. For example, if you suddenly need to hire someone to fill a critical role, you may not know where to start or what qualifications you should look for.

Creating a personnel plan can also help you to clarify your business goals and objectives. By determining the roles and responsibilities required to meet those goals, you can better prioritize and focus on the essential tasks that need to be done.

Therefore, even if you don’t have any employees currently, it’s still a good idea to develop a personnel plan to help you prepare for future growth and ensure that you have the right team in place to support your business objectives.

Is there an easy way to forecast a personnel plan?

Personnel planning is a long process as it requires dedicated thought as to what needs to happen in your business and where you want to take it. Typically, this require a lengthy process of spreadsheets and equations to figure out exactly who needs to be working with you, and at what cost.

Business planning software can ensure that this part of your business plan, alongside other key components, is created with ease – simply needing a few data entries to be entered throughout the software.

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The Secrets of a Great Personnel Plan

Investing in human resources (HR) is a key element of healthy personnel planning and strategy. A hallmark of effective leadership is efficient HR which means hiring employees in a cost-effective manner and mostly when needed. Your business plan should always include an informative and up-to-date personnel plan section to provide direction for the company and help entrepreneurs stay focused.

At the heart of every business owner is the desire to excel. The best way to excel is to define your plans and proceed with purpose. Your business plan comprises a business description , a competition analysis, a marketing plan, a personnel section, the HR section and key financial information.

The personnel plan is designed to help company owners put their plans into action. It helps to clarify objectives for the current and forthcoming year. Thus, a good understanding of personnel plan and how to implement it in your business is vital.

What is a personnel plan?

A personnel plan is a vital part of every company plan and financial forecast, which aids future and current budgeting and defines the type of employee to hire and when to hire such employees.

When you are seeking funding, venture capitalists and angel investors will want a breakdown of your team. Who are they? What talents and skills do they bring to the table? What is your hiring plan for the first year, second year, and so on? How will your team drive business growth and success?

All this information will include the positions you will need employees for, the period in which the management intends to fill the plan, and the financial implications of the implementation of the plan. Just as you would assess if your business is financially feasible , you’ll need to apply this same sentiment when hiring employees.

The personnel plan represents a consolidated strategy for hiring the best people for all company positions, while keeping an eye on future expansion.

Michael E. Gerber, the author of The E-Myth Revisited, posited that an effective personnel plan designed as an efficient workplace game will help employers prime employees for organizational goals while creating job satisfaction. This means that an effective hiring process is vital to an efficient process of personnel planning.

The majority of employers find personnel planning difficult especially those whose staff work in shifts. Organizational challenges like these can easily be taken care of with TimeTrack Duty Roster which helps employers create a suitable overview of their workforce and personalize shifts according to any number of criteria, including their location and skills.

Features of the TimeTrack Duty Roster

Key elements of a personnel plan

Each company’s needs may differ, but in general, these are common elements that should form part of every personnel plan.

Job description

• Clearly explained requirements of the various job functions. Use easy-to-understand language and phrases.

Organizational chart and type of hiring

• The chart of the organization should show who works for whom and provide a good overview of the overall management and employee structure of the company.
• The plan should be clear on whether employees are independent contractors or receive salaries. This is essential for labor compliance issues and the workers’ tax.

Remuneration (salary amount and assumptions)

• Details of hourly or yearly payments are defined, including relevant assumptions that comprise estimates of salary increases over time. You also need to account for company benefits, including health insurance. This may be a percentage of salary costs employers pay to staff.

Time of recruitment

• The hiring of employees is often done over time and staggered. Thus, your plan must include details about when an employee will start and the end date for temporary staff.

Incorporate key personnel into the business plan

Employees are the most valuable assets any company can have. This means that hiring the right person should always be a key priority for every company. Your staff will have a significant impact on revenue, customer experience/satisfaction and the success of the company.

Incorporating the personnel section into your business plan is an important part of strategic planning for long-term viability. The information below serves as guide on how to implement a personnel plan in your business.

Team dynamics

This presents an overview of all the key positions in your business and the backgrounds of staff in their critical roles and departments. Add the total number of staff and their experiences. Emphasize the strengths of individuals and how to upskill where necessary. A great team is typically the fulcrum of business success because they have the responsibility of and possess the ability to translate policies into business success.

Organizational structure

The structure of your company is represented in the company’s organizational chart, which shows the hierarchy of duties and management. Is authority finely distributed and are the various company teams properly mentioned? This includes customer service, product development, marketing, manufacturing and sales.

When planning the company’s organizational details, you will need a strategy to manage absences and leave. TimeTrack Leave Management feature helps you to finetune these details so you can easily (and quickly!) oversee employee absences, vacation time and keep track of working hours for compliance management.

TimeTrack Leave Management

Gaps and stumbling blocks

While it may be difficult to identify gaps in your team, chances are that if you look closely, you will observe a section of your company in need of quality talent. You need to figure out how to fill this gap. Don’t hide the weakness of your team from potential investors. Always remember that specialization will evolve as the company grows.

Where advisors, board members and consultants are applicable to your company, list them. Where they will fill key positions as the business grows, you need to list them and provide background on the value they provide.

The fine print

Every personnel plan needs to include a section addressing employment benefits , rights and conditions, especially for managers. Design your company’s management personnel plan and include a table of staff expenses, including both direct and indirect labor expenses, a burden rate and employee-related expenses, while adding payroll tax, workers’ compensation, salaries and health insurance.

Checklist for personnel planning

Personnel improvement

Improving conditions for personnel involve the identification of gaps, developing and implementing action plans  and taking follow-up actions. Managers should develop a performance improvement plan before taking disciplinary action against employees.

Identify skills or performance gaps

A gap analysis is designed to help you identify potential and current issues and is an essential part of the personnel process. Incorporate characteristics of human resource planning into your business planning.

Provide proof of a skills gap or underperformance of the workforce using a consistent format across all employment cadres. Design your format, including employee information and a description of performance discrepancies using expected and actual performance criteria.

Have a face-to-face meeting with your employees to share observed issues or concerns and gain insights into causal factors of underperformance. Use your documentation to share insights on performance challenges. Let the affected employees know they have committed specific policy infractions. Focus only on the outcomes of behaviors to help affected staff understand how their behaviors affect company success.

Develop action plans

Establish specific and measurable improvement goals for your workforce. Avoid generalizations and focus on key goals. Setting bit-sized goals is an effective way of working while monitoring task on time .

Provide detailed resources, including advanced tools that can help employees improve. This also means providing the management with essential tools that will help with the efficient oversight of the workforce.

Create a timeline for achieving performance improvement goals. This will help keep the staff on track towards achieving expectations. Don’t forget to identify metrics for measuring progress. Be specific about what you want employees to achieve and define the intended consequences in the event of failure to complete performance improvement plan. Be specific about actions you will take whether or not targets are met.

Schedule regular appointments to review the performance improvement plan with your employees and implement their feedback.

Incorporating a personnel plan into your business strategy is a key factor for efficient planning. To maximize the opportunity presented by personnel planning, use any of the effective and reliable TimeTrack planning and absence management software tools.

I am a researcher, writer, and self-published author. Over the last 9 years, I have dedicated my time to delivering unique content to startups and non-governmental organizations and have covered several topics, including wellness, technology, and entrepreneurship. I am now passionate about how time efficiency affects productivity, business performance, and profitability.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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How to Create a Personnel Plan for Your Business

This article is an excerpt from the Shortform book guide to "The E-Myth Revisited" by Michael E. Gerber. Shortform has the world's best summaries and analyses of books you should be reading.

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Do you have a personnel plan for your business? Do your employees find satisfaction and success in the work they do for your organization?

In The E-Myth Revisited , Michael E. Gerber explains what an effective personnel plan looks like. He shows how to see your work environment and rules as a game, which helps set people up for success and satisfaction in their work. He also provides tips for an effective hiring process.

Read more to discover what comprises an effective personnel plan.

Designing and Implementing a Personnel Plan

To get things done—and done right consistently—you must create an environment where doing what needs to be done is important and satisfying to the people tasked to do it. Create processes that make habits out of doing what you want done.

Help people understand the purpose of the work you’re asking them to do, and make sure the steps and standards are clear. Review the company’s objectives, standards, strategy, philosophy, and operations manual. Exemplify the behavior you want to see from your employees.

The work environment and rules you create for accomplishing the company’s purpose can be likened to a game in which everyone participates and tests their skills and talents. Communicate your business’s “game” (its purpose and method of achieving it) to each employee when you start your relationship. How you do this is your personnel plan.

Here are some guidelines for establishing and communicating your game (purpose and methods):

• Establish the parameters at the beginning.
• Be willing to play your own game (set an example, for instance, by how you treat customers).
• Create opportunities for people to “win” or succeed and be recognized, although the game is always ongoing.
• Constantly remind people of the game (purpose).
• To keep it interesting, change tactics (methods) occasionally, although your overall strategy must remain the same.
• Make playing the game (achieving your business’s purpose) fun.
• Make it logical. For example, here’s the logic of a hotel’s “game”: In today’s chaotic and busy world, people need a place of order and calm. Our business can fulfill this need by creating a special place, where the physical environment and everything we do contributes to a sense of order.

Your Hiring Process

Your hiring process is a critical piece of your personnel plan and crucial to achieving your purpose. It’s your first opportunity to communicate your purpose to potential employees. 

As an example, consider a hotel owner who follows a carefully designed and scripted process of choosing, hiring, and orienting employees. It includes a presentation in a group meeting to all applicants, followed by an individual meeting to discuss each applicant’s reactions to the ideas presented.

A new employee’s first day of training includes:

• A review of the business owner’s purpose and methods.
• A summary of the system for carrying out the business’s purpose.
• A tour of the facility, accompanied by an explanation of each person’s job.
• A question-and-answer period.
• A presentation of the uniform and operations manual.
• A review of the manual, position contract, and business objectives.
• A discussion of how the business does things (rules of the game).

The centerpiece of your personnel plan is the clear communication— to and by your people—of your way of doing business. This differentiates your business from your competitors’.

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Elizabeth Whitworth

Elizabeth has a lifelong love of books. She devours nonfiction, especially in the areas of history, theology, and philosophy. A switch to audiobooks has kindled her enjoyment of well-narrated fiction, particularly Victorian and early 20th-century works. She appreciates idea-driven books—and a classic murder mystery now and then. Elizabeth has a blog and is writing a book about the beginning and the end of suffering.

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Guide to Developing a Personnel Plan

• May 12, 2023
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Table of Contents

A people plan is an essential component of your business strategy and Financial Planning . In addition to assisting you in budgeting for current and prospective employees, your personnel strategy allows you to consider who to hire and when to hire them.

What is a Personnel Plan?

A Personnel Plan is a document that details an organization’s staffing needs, goals, and workforce management practices. It is an essential component of human resource management and serves as a road map for employee recruitment, selection, training, development, retention, and management.

A Personnel Plan is an essential component of any start-up or entrepreneur’s business plan . It will aid you in your financial predictions, allowing you to anticipate the best periods to hire and expand.

When presenting for funding to angel investors or venture capitalists , they will want to see why your team is uniquely equipped to grow and scale your firm, as well as your hiring strategy.

Investors will be interested in learning:

• What positions do you require?
• When do you intend to fill them?
• How much will it cost to assemble the team you require?

What should you put in your Personnel Plan section?

The people who execute the work—your team—are both the most expensive and most important asset for many startups and small businesses . It stands to reason that hiring the appropriate individual at the right moment can have a big impact on your company’s ability to accomplish milestones and goals, not to mention cash flow.

A healthy Personnel Plan includes strategic thinking about human resources, such as whether to expand roles, and salary levels, and whether to hire full-time or on a contract basis.

So, whether you’re looking for investment or not, developing a people plan and forecast is an important aspect of business planning and strategic planning for your company’s long-term success. Look at the 9 critical phases of developing an investor-ready Personnel Plan .

What is the composition of your management team?

Typically, the “team” portion of your business plan will include an overview of the main jobs in your organization as well as the backgrounds of the people who will fill those critical responsibilities. You will highlight each of your company’s executive positions before speaking more broadly about other departments and teams.

Keep it brief .

You do not need to submit whole resumes for each team member; a brief overview of why each person is qualified for the position is sufficient. Describe each individual’s talents and expertise, as well as what they will do for the company.

Highlight your team’s strengths . How do they bolster your group’s strength? What is their special knowledge and experience in your (or a related) industry? If your market research uncovered a fantastic opportunity, why are you the best team to capitalize on it?

This part helps potential investors understand why each team member is critical to the company’s success. It serves as the rationale for their wage and ownership stake in the company if they are part owners.

How is the organizational structure defined?

Your company’s organizational structure is typically portrayed as an “org chart” that indicates who reports to whom and who is accountable for what.

However, you do not need to construct a graphic org chart; simply defining your organization in the text is sufficient . Simply demonstrate that your organization has a well-defined structure.

Is authority divided fairly among the team members? Do you have the resources to do all of the tasks required to expand your business?

You should also explain the many teams that your organization will have in the future . Sales, customer service, product development, marketing, production, and so on are examples.

You don’t have to hire all of these employees right away. Consider this section to be an outline of what you intend to do with your firm in the future.

Compile a list of your advisors, consultants, and board members

External advisers, board members, and even consultants can play an important role in determining a corporate strategy for some organizations. These individuals may even temporarily fill crucial positions as your company grows. You should include a list of these individuals in your Personnel Plan if this is the case. Give a brief background on each main advisor that outlines the value they give, just like you would for your management team.

You don’t have to include your advisors if they don’t play essential roles or aren’t critical to your achievement. However, i nclude anyone who adds significant value to the organization through advice, contacts, or operational skills.

Explain the gaps

It’s normal for your team to have gaps, especially if you’re a startup . You may not yet have identified all of the “right” team members, or you may not yet have the cash to hire for critical roles. That’s OK.

The trick is to recognize that you do have gaps on your team—this is how you determine who to employ and when to hire them . Furthermore, it is far better to describe and recognize team deficiencies than to pretend that you have all of the critical responsibilities that you require. Explain where your organization is weak and how you intend to address the issue as you develop in your business strategy.

Although it may be tempting to conceal potential weaknesses from investors, they will see right through you. It is far preferable to be open and honest about where you have management gaps and your Personnel Strategy to remedy those gaps. You want them to know you’ve identified and planned for dangers.

You should also bear in mind that your Personnel Plan may wear many hats in the early days of a company, but specialization will occur as the company expands.

For example, the CEO may initially also be the VP of Sales. However, the job of VP of Sales should eventually be filled by a specialist to take on that task. Include modifications like these in your personnel plan to show investors that you understand how your company will expand and scale.

What are your personnel requirements?

Outline the company’s personnel requirements, including the number and types of people required to run the business successfully . The credentials and skills required for each post should also be included.

Here you may identify your team’s shortcomings and vulnerabilities , ensuring that you have a competent grasp of the roles and duties that will be crucial to the business in the future – even if they are not currently in existence. Investors are ready to highlight “perfect” people strategies, so you should embrace the fact that you have recognized staffing hazards.

For example, your head of customer service may also be your head of sales, but these two responsibilities will need to be split in the future.

How will recruitment and training be carried out?

This section should explain how the company intends to recruit and train personnel, including any training programs or on-the-job training.

What are the remuneration and benefits?

Outline the salary and benefits packages that will be provided to employees, including salaries, bonuses, health insurance, retirement plans, and any other perks or incentives.

Describe your Human Resources policies

Explain the company’s policies on topics such as employee performance reviews, disciplinary procedures, and termination procedures.

Estimate your personnel costs

Most Personnel Plans should include a personnel table to anticipate labor costs . Here are some expenses to keep in mind when forecasting.

Labor costs, both direct and indirect

You should include both direct expenses, which are often salary, and indirect expenses, which include:

• Paid vacation
• Insurance and healthcare
• Payroll expenses

As well as any extra fees you incur for each employee in addition to their compensation. Here’s an example of a personnel prediction:

Employee-related expenses and the burden rate

The indirect costs of staff are known by various names . Still, Innovature BPO will refer to it as a “burden rate” or “employee-related expenses”, as it is an expense in addition to direct wages and salary . Payroll taxes, worker’s compensation insurance, health insurance, and other benefits and taxes are common examples of these costs.

Don’t worry about calculating the correct burden rate for company planning objectives. Estimate it instead as a proportion of total monthly compensation. A range of 15% to 25% is normally appropriate, but it depends on the type of benefits you intend to provide.

Individuals and groups of individuals can both be listed in your Personnel Plan . You should certainly mention key people and other highly paid employees but put other departments or groups of people together. For example, you may include your management team but then group departments such as marketing, customer service, and manufacturing together.

Then factor in your employee costs for benefits and insurance. In the example personnel table above, this is referred to as “Employee-Related Expenses.”

The whole quantity of your salary and personnel load will then be included as an item in your profit and loss prediction. Assume you’re using HR management software to create a Personnel Prediction. This software explains where you’ll see personnel costs on your cash flow statement, profit and loss (income statement), and balance sheet.

Is it necessary to Personnel Plan in a company strategy if you have no employees?

Even if you don’t currently have any employees, having a Personnel Plan is useful to your firm in the long run.

You may find it difficult to scale your firm or respond to changes in your sector or market if you do not have a Personnel Plan . For example, if you need to hire someone immediately to fill a key function, you may not know where to begin or what qualifications to search for.

Developing a Personnel Plan can also assist you in clarifying your company’s aims and objectives. You can better prioritize and focus on the critical tasks that must be completed by establishing the roles and responsibilities required to fulfill those goals.

As a result, even if you don’t currently have any employees, it’s a good idea to build a Personnel Plan to help you prepare for future growth and ensure that you have the correct team in place to support your business objectives.

Is there an easy approach to forecasting a Personnel Plan?

Personnel Plan is a time-consuming process that necessitates careful consideration of what needs to happen in your company and where you want it to go. Typically, this necessitates a lengthy process of spreadsheets and mathematics to determine who needs to work with you and at what expense.

A financial modeling tool can ensure that this component of your business strategy, along with other critical components, is easily constructed, requiring only a few data entries to be entered throughout the software. Currently, on the market, there are quite a few tools to support Personnel plans and personnel management . Let’s enjoy!

Personnel Plan is an important aspect of the business planning process because it forces you to consider what needs to be done in your company and who will do it. Take the time to work through this section of your financial plan, and you’ll have a lot better idea of what it will take to make your firm a success.

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Create a Personal Business Plan That You'll Really Use Develop a customized tool that will serve to focus you on your most important objectives. Write it in user-friendly prose so you'll check it weekly.

By Marty Fukuda • Oct 7, 2014

Opinions expressed by Entrepreneur contributors are their own.

Every successful business leader I've encountered is in some way a prolific goal setter. For this reason, the single most important piece of advice I give any aspiring entrepreneur or business professional is to figure out exactly what you want, document it on paper and then attack it every day.

A personal business plan is something that I develop each year to help me put my own advice into action. Creating a plan can clarify your objectives for the coming year but don't just shove it in drawer. It is something that should become weekly, if not daily, reading material.

Related: Why Business Leaders Must Set a Personal Mission

1. Start with a simple brainstorming list.

Break down your role in the company into small parts and be sure it's comprehensive. This could mean taking each department that you oversee or are involved in, and breaking it down into further segments. For instance, for my company's graphic-design department, I would create separate objectives for its leadership development, equipment and software needs, anticipated hiring, the continued education plan and efficiency.

2. Prioritize objectives.

Your brainstorming list probably contains an overwhelming number of potential starting points. The key is narrowing them down into a manageable and realistic number of goals. Since you'll review the finished personal business plan often, don't write a novel.

I made the mistake of developing a massive 100-page personal business plan that I never looked at. The very thought of reviewing it was scary. A user-friendly one- to two-page document will do the trick.

Take your brainstorming list and organize it according to the biggest potential impact. You'll also have some must-dos (if not tackled business will fall apart). Then you'll have some items that aren't necessary or don't require much of your focus and perhaps can be delegated.

My company's CEO, Duane Hixon, does a wonderful job of narrowing down his list into what he refers to as his "rocks." These are the biggest areas of impact, the areas to which a person should offer most of his or her attention. These will make up the heart of the personal business plan.

Related: How to Build a Business Plan For Your Personal Brand

3. Be specific.

Once you've narrowed things down to a handful of rocks, be sure the plan includes specifics that will allow you to measure and track progress. For this year's plan, one of my rocks was maintaining company culture while building the team. Obviously, this is a broad, difficult-to-measure objective. For my plan, I developed a strategy for accomplishing the mission by including more details such as creating a company culture slide show and a plan for both current employees and new hires.

4. Set challenges but be realistic.

A goal that doesn't take much effort to accomplish isn't really a goal. Setting an objective that has a slim chance of realization, however, amounts to little more than a hope and can leave you feeling discouraged. Aim for a perfect balance between the two -- something that stretches you but doesn't break you.

Related: Write a Winning Business Plan With These 8 Key Elements

5. Set deadlines.

The beautiful thing about your personal business plan is that it's yours. You don't have to wait until the start of a new year to create one. While I create a plan annually, that doesn't mean that each objective has a deadline that's one year out. Set a deadline no matter what it is to keep you focused and provide a call to action (as opposed to adopting an open-ended objective).

6. Share the plan.

I recommend that you show your plan to a colleage whom you respect. Ask for feedback. This individual may think of an angle you have not. Equally important, this person will hold you accountable. It's a lot tougher to hit the eject button on a plan after you've shared it with someone you respect. And everyone can use a cheerleader in the workplace from time to time.

I personally love it when an employee shares a plan with me. It shows initiative and forward thinking. There are few things more impressive than when an employee has clear-cut objectives and works hard to meet them.

7. Revisit the plan weekly.

Creating the plan is just the first step. Put the plan in a prominent spot where you're going to remember to review it or place reminders in your calendar.If you've got a great plan, it can and will inspire you every time you see it.

Related: Your Mission Statement May Be Utterly Useless or a Gold Mine

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How to Write a Business Plan, Step by Step

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What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

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How to Forecast Personnel Costs in 3 Steps

Noah Parsons

9 min. read

Updated October 25, 2023

For many businesses, the people you employ are your most valuable—and most expensive—asset. Payroll often makes up a large portion of a business’s expenses, so it’s important to spend some time working on this portion of your forecast.

But, if you’re just starting out or are working on a business plan for a new idea, you probably don’t have anyone on the payroll yet and maybe don’t even know what your staffing plans are. That’s OK and the exact reason why you should work on a personnel forecast. We’ll take you step-by-step through the process so you can figure out what your payroll costs are going to be and how that will impact the bottom line of your business.

• What you need to know to forecast personnel costs

A personnel forecast is all about planning for the people you employ to help run your business. Your goal is to figure out what your monthly payroll will be and how that may change over time.

To create a good personnel forecast, you’ll need to have thought about a few things:

Your team makeup

You’ll need to know your current team, if you’re already up and running, and the positions that you plan on hiring for. It’s helpful to think about the different teams that make up your business and they may grow over time. 

Now, if you don’t have a team yet, think about the key positions and teams you will need to run your business. Will you need marketing, customer service, or service staff? Think about your business, who will help you operate it, and when you’ll likely hire them.

Employee benefits 

For most businesses, the cost of employees is more than just salaries. If you  offer any benefits , you’ll want to know what those are and what the rough costs of those benefits are.

Payroll tax obligations

Payroll taxes vary by location. If you don’t know what your payroll tax obligations are, it’s useful to do a little research or ask an accountant about the typical payroll tax rates and requirements for your region.

Any other required costs

Many cities and states require additional spending for employees, such as funding a workers compensation insurance program. If you have (or are planning on having) employees, it’s important to have a sense of what these additional costs might be for your region.

• How to forecast personnel costs

With the information above in mind, you can begin forecasting employee costs & expenses in just a few simple steps. 

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1. List out key roles and teams

If you have a small team, you can simply list out your employees and their salaries. 

For companies with teams that are made up of people who do a similar job, you should think about creating a forecast for that entire team, instead of listing out each individual employee. For example, if your business has a customer service team, you don’t need to list out every single customer service employee. Instead, just include an entry on your personnel forecast for the “customer service team” and then include the total salaries for that team.

It’s OK for your personnel forecast to have a mix of teams and individuals. For example, you should list out the members of your management team individually, but then you could use teams to forecast payroll for customer service, manufacturing, design, etc. The important thing is that the mix you land on accurately reflects your business and is useful for you to easily track and analyze employee costs over time.

If your personnel forecast covers several years, you’ll want to think about and include future raises and bonuses that may be issued at the appropriate points of your forecast. For example, if an employee is making $50,000 in the first year that they work with you and you plan on giving a 7% raise, then their new salary would be $53,500 the following year.

If you’re a startup or a growing business, you may have plans to hire employees in the future. Be sure to list those future positions and add their salaries in the month or year that you plan on filling those roles. 

2. Define and separate direct, indirect labor, and contract labor 

In a personnel forecast, there are three different types of expenses: direct labor, indirect (or regular) labor, and contract labor. Each type impacts your financial forecast in different ways. So, it’s important that you understand how they function and forecast each type separately.

Direct labor is associated with your sales. It’s labor that is required to produce your product or make your sale. If sales go up, your direct labor costs go up. If sales go down, your direct labor costs go down. Direct labor is most common in manufacturing businesses, but can also be used in consulting and other service-based organizations. Direct labor is part of  your direct costs  and impacts your gross margin in your financial forecast. 

Indirect labor is also called “regular” labor and includes any salaries that your business will pay regardless of what sales your business makes. For example, a business will pay the salaries of its management team, marketing team, and product development team regardless of what is going on in sales. These are salaries that are needed to run the business on a day-to-day basis. For many businesses, all of their salaries are classified as indirect (or “regular) labor. These salaries are regular expenses and will show up on your  profit and loss statement .

Contract labor is used to forecast expenses for people who do contract work for your business and who are not employees. The reason you want to separate out contract labor from direct and indirect labor is that you don’t pay payroll taxes, benefits, or other expenses for contractors. Contractors are often independent businesses of their own and your business is not responsible for paying additional taxes for contract labor. Contract labor is also an expense and will be included in your profit and loss statement.

3. Find your burden rate

In addition to salaries, your personnel plan will include a forecast for other employee expenses such as taxes, benefits, health insurance, worker’s compensation insurance, and more. This section of your personnel plan is often called “other employee expenses”, “employee overhead” or “employee burden”.

You could figure out what the exact costs are for each employee. But, when forecasting, it’s often easier to figure out a percentage of salaries you’ll pay for the typical employee—this is called the “burden rate”.

For example, if an employee’s salary is $50,000 per year, you might pay an additional 15% to cover taxes, insurance, benefits, etc. That 15% is the burden rate. Because taxes and other employee expenses often grow with salaries, it’s useful to use a percentage so that as you forecast salary changes, your employee burden expenses will automatically rise accordingly.

For most businesses, a burden rate of 15% to 25% is considered normal, but it all depends on what kinds of benefits you plan on offering and what your local payroll taxes are. 

• Completing your personnel forecast

To complete your personnel forecast, you’ll add all of your labor costs together (direct, indirect, and contract) to get your total salaries. 

You’ll then calculate your burden using the burden rate that you defined. Multiply your direct and indirect labor costs by your burden rate to figure out what your employee overhead (burden) costs are. Add this number to your total salaries, and you’ll know your total personnel costs.

Your personnel costs will show up in your profit & loss statement and impact your profitability.

• Tips to budget for personnel

Personnel budgeting might seem complicated, but it’s much easier when you just think of it as calculating your payroll. You just need to know who your employees are, what you pay them, and what kinds of benefits you provide. Here are a few other tips to help you with your forecast:

Find the right mix of individuals and groups

In your personnel plan, you can list both individual people as well as groups. You’ll probably want to list out key people and other highly paid employees, but group together other departments or groups of people that do similar jobs and have similar salaries. For example, you might list out your management team, but then group together departments like Marketing, Customer Service, and Manufacturing.

Don’t forget to pay yourself

A key mistake many entrepreneurs make is not paying themselves. In your forecast, don’t forget to include a salary for yourself. You don’t need to actually take the money out of the business in the early days, but it’s important to keep a record of the compensation that you are deferring. 

Forecast for employee gaps

If you are forecasting revenue growth, it’s likely that you’ll need to expand your team at the same time. Don’t forget to forecast for this growth. 

It’s also common in the early days of a business for a few people to do many jobs. You might wear the CEO hat, and be the director of marketing, and also the VP of sales. But, eventually, you’ll grow and you should include plans to hire for these positions in your forecast.

• A part of your larger financial plan

Your personnel forecast feeds into your profit and loss projections and has a direct impact on your profitability. For many businesses, personnel is the largest expense, so it’s important to think through the forecast and make adjustments to the timing of planned hiring based on your revenue projections, profitability, and the cash you have available to meet payroll obligations.

Of course, you’ll also want to think about how your business is organized and what the management structure will look like. You can use tools such as an  organizational chart  to help figure out your personnel plan and then add that to your business plan. You can also use the “team” section of your business plan to discuss key employees that you plan to hire in the future and any gaps that your organization currently has.

Your completed Management and Organizational Structure section of your business plan will include info from your personnel forecast as well as descriptions of your organization. Along with your full forecast, it gives readers a full understanding of where your business is today and how you plan to grow your team in the future.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

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I was put on a performance-improvement plan, so I chose to retire at 58. Sometimes I wish I wasn't a young retiree.

• I was put on a PIP after working at my company for 10 years, so I decided to quit.
• After not being able to find a new job, I retired at 58. It's been a mix of good and bad.
• I sometimes wish I could've kept working, but I am enjoying retirement.

After working for nine years as a communications specialist for a healthcare association, I was put on a performance-improvement plan during my 10th annual job review.

"Has my performance changed so much from my last exemplary review?" I asked, knowing that my previous review had been conducted by a former boss who was no longer at the company.

As a result of the PIP, I was sent to human resources to fill out paperwork outlining how my boss would closely supervise my work. I had three months to improve.

As a 58-year-old, I worried about what this would mean for my career, but it became an opportunity for me to retire early .

I walked away from the job I had held for nearly a decade

I signed all the paperwork with HR and went back to my boss. I wanted to ensure she understood what was happening and get additional guidance on avoiding termination . I started to get nervous.

After an uncomfortable meeting with human resources the following day, I left the company voluntarily. I didn't want to stick around to see how this situation worked out because I already had enough information to know my days there were numbered.

Related stories

Leaving my job with no plan was unsettling. My normal approach would not be so rash; I prefer to have a plan and know my next steps. I was especially worried about my financial situation .

I had several interviews, but I felt forced to retire

Shortly after I left my old job, I worked part-time for a vendor I had previously done business with. I eventually started applying for full-time positions and going to interviews. Many of these interviews went well but somehow never resulted in an offer. I wondered if it was because I was close to retirement age .

I could've continued working for the vendor, but the money was not worth the effort or the long commute. Meanwhile, my personal life was getting complicated. My daughter wanted help planning her upcoming wedding, my mother needed more oversight as she approached 90, and I craved more freedom to travel .

So, I decided to retire — in my 50s.

Being a young retiree has its pros and cons

I'm younger than most retirees by almost a decade — which is a blessing and a curse.

I decided to keep freelance writing . I also started writing a longer project about my father's teenage experiences as a Holocaust survivor, so having more time was welcome. In addition, I began volunteering as a docent at the Newseum, which brought me a lot of satisfaction.

Plus, being young enough to go on some adventurous journeys is a nice perk: I enjoyed going on safari and on bike trips to California's wine country. It was also nice to have extra time to help plan my daughter's and son's weddings and be involved in all the pre-wedding activities. Having time to do what you want is a definite benefit of retiring young.

Sometimes, though, I wish I wasn't.

I can't help but feel I still have a few more years left of full-time work in me, so I sometimes regret retiring so young. I was cut off early from building up Social Security for a few more years, so from a financial perspective, I feel like retiring early has been detrimental.

I'm also worried I will quickly lose my grip on technological advancements. I kept up with those advances through work, but as a retiree, I'm worried I'll fall behind.

Either way, I wonder if my age played a role in all of this

In the end, it all worked out, but I do wonder if my age is what caused all of this.

I won't ever know for sure if I was put on a PIP because of my age, nor will I know if I struggled to find a new job for the same reason. But I now stand by my decision to retire and start a new phase. After all, I was given the opportunity to reinvent myself and try new things.

Retirement is a time of rediscovery and transformation, and exploiting that opportunity is the best way to win the game of life.

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Moscow International Business Center (Moscow City)

• Guide to Russia

What can you do at Moscow City?

• Dine in style: Moscow City is home to 100+ cafes and restaurants, including Europe’s highest restaurant and ice-cream shop
• See Moscow like never before: Ascend to one of Moscow City’s observation decks for an unparalleled panorama of Moscow
• Admire world-class architecture: Each of Moscow City’s skyscrapers has distinctive architecture and design
• Learn something new: Visit the Museum of High-Rise Architecture in Moscow or the Metro Museum

Moscow City is a multifunctional complex in the west of Moscow, which has come to represent the booming business of Russia’s capital. Its skyscrapers enrich Moscow’s skyline, contrasting the medieval cupolas and Stalinist high-rises. Visitors to Moscow City can enjoy entertainment high in the sky, as the complex is home not just to offices, but to restaurants, cinemas, viewing platforms, and museums.

Photo by Alex Zarubi on Unsplash

History of Moscow City

Moscow City was first conceived in 1991 by honoured Soviet architect Boris Tkhor, who proposed to construct a business center in Moscow. It would be complete with gleaming skyscrapers rivalling those of New York and London, to reflect the new life and growing ambitions of post-Soviet Russia.

The chosen site was a stone quarry and disused industrial zone in western Moscow, in between the Third Ring Road and Moskva River. Initially, the territory was divided into 20 sections arranged in a horseshoe shape around a central zone. The skyscrapers would increase in height as they spiralled around the central section, with shorter structures built on the waterfront to give the taller buildings behind a view of the river. 

Architect Gennady Sirota, who contributed to iconic projects such as the Olympic Sports Complex on Prospekt Mira, was selected as the chief architect, and many other world-famous architects were attracted to Moscow to realise their visions in Moscow City.

What can you see and do at Moscow City?

Where Moscow’s cityscape was once dominated by Stalin’s Seven Sisters skyscrapers , this is no more. Moscow City is home to eight of Russia’s ten tallest buildings, six of which exceed 300 metres in height. More buildings are still under construction there today, including the One Tower (which will be Europe’s second-tallest building). Once completed, Moscow City will comprise more than 20 innovative structures.

Each of Moscow City’s skyscrapers was designed by its own architect, lending the cluster of skyscrapers a unique appearance. Aside from being a site of architectural wonder, Moscow City is a place for leisure and entertainment with over 100 cafes and restaurants, exhibition spaces, cinemas, viewing platforms, and more.

Photo by Nikita Karimov on Unsplash

Federation Tower

• East Tower: 374m, 97 floors; West Tower: 243m, 63 floors
• Completed in 2017
• Architects: Sergey Tchoban and Peter Schweger

The East Federation Tower is the tallest building in Moscow, and the second-tallest building in Europe after the Lakhta Centre in St Petersburg. Visitors can enjoy a luxurious meal of seafood, truffles or steak at restaurant ‘Sixty’ on the 62nd floor of the West Tower, or visit Europe’s highest observation deck, ‘Panorama 360’, on the 89th floor of the East Tower.

Did you know? The ice cream and chocolate shop on the 360 observation deck are the highest in the world!

• South Tower: 354m, 85 floors; North Tower: 254m, 49 floors
• Completed in 2015
• Architect: Skidmore, Owings & Merrill LLP

The South OKO Tower is the third-tallest building in Russia and Europe. Here, you can visit ‘Ruski’ to dine on hearty Russian cuisine cooked on a real Russian stove, and have a drink in the ice bar. Alternatively, visit restaurant, nightclub and performance space ‘Birds’; the restaurant is the highest in Europe, situated on the 86th floor roof terrace alongside an observation deck. The OKO Towers are also home to karaoke club ‘City Voice’.

Did you know? Underneath OKO Towers is the largest underground parking in Europe, with 16 levels and 3,400 parking spaces.

Mercury Tower

• 339m tall, 75 floors
• Architects : Mikhail Posokhin, Frank Williams, Gennady Sirota

Another multifunctional skyscraper, which was designed as the first truly ‘green’ building in Moscow. The Mercury Tower has a distinct geometric shape and copper-coloured glazing, and was the tallest building in Europe upon completion. Visit ‘More i myaso’ (Sea and meat) on the first floor of the tower to enjoy European and Mediterranean cuisine whilst surrounded by greenery. On the 2nd and 40th floors a modern art gallery, the ‘ILONA-K artspace’, has just opened.

City of Capitals

• Moscow Tower: 302m, 76 floors; St Petersburg Tower: 257m, 65 floors
• Completed in 2009
• Architect: Bureau NBBJ

The unique geometric design of the City of Capitals towers resembles stacks of rotating blocks, and is rooted in Constructivism of the early Soviet period (many Soviet Constructivist buildings can be found in Moscow). Visitors to the Moscow Tower can enjoy a range of cuisines – traditional Italian dishes on the summer terrace of ‘Tutto Bene’, Panasian cuisine in the tropical luxury of the ‘Bamboo Bar’ on the 1st floor’, and poke or smoothie bowls at ‘Soul in the Bowl’ cafe on the 80th floor.

Tower on the Embankment

• Tower A: 84m; Tower B:127m; Tower C: 268m, 61 floors
• Completed in 2007
• Architects: Vehbi Inan and Olcay Erturk

After completion, the Tower on the Embankment was the tallest building in Europe, and is now the 13th tallest. It houses the headquarters of several large Russian and international  companies, including IBM and KPMG. There are two cafes located on the 1st floor of Tower C – self-service café ‘Obed Bufet’ (Lunch Buffet) and Bakery Chain ‘Khleb Nasushchny’ (Daily Bread).

Evolution Tower

• 255m tall, 54 floors
• Architects: Philip Nikandrov and RMJM Scotland Ltd

Evolution is Moscow City’s most recognisable tower, and the 11th tallest building in Russia. Its façade is a true architectural marvel, comprising continuous strips of curved glazing spiralling high into  the sky. According to the architect, Philip Nikandrov, the spiral shape of the tower honours centuries of architectural design in Russia, from the onion domes of St Basil's Cathedral to Vladimir Shukhov’s Tatlin Tower, a masterpiece of Constructivist design. Outside the Evolution tower is a landscaped terrace and pedestrian zone descending to the Presnenskaya Embankment, which was also designed by Nikandrov.

Did you know? Moscow’s largest wedding palace was supposed to be built on the site of the Evolution tower, though the project was abandoned.

• 239m tall, 60 floors
• Completed in 2011

Imperia’s interesting design has a curved roof and an arched glass façade. Inside the tower are various cafes including ‘City Friends’ for all-day breakfasts and light lunches, ‘Mama in the City’ for simple meals of Russian cuisine, and ‘abc kitchen’ for European and Indian-inspired dishes. Alternatively, visit ‘High Bar’ on the 56th floor for cocktails with a view. In Imperia you’ll also find the Museum of High-Rise Construction in Moscow (suitably located on the 56th floor), and the Camera Immersive Theatre.

Did you know? Inside Vystavochnaya metro station is the Metro Museum , dedicated to the history of the beautiful Moscow Metro!

• 130m tall, 26 floors
• Completed in 2001
• Architect: Boris Tkhor

Tower 2000 was Moscow City’s first tower. It stands on the opposite bank of the Moskva River, and houses a viewing platform from which visitors can admire an unparalleled panorama of Moscow City. The Bagration Bridge reaches across the river from the tower to Moscow City, and underneath are piers from where you can take boat trips.

Photo by Alexander Popov on Unsplash

Afimall is Moscow’s largest entertainment and shopping complex, home to 450 shops, cafes and restaurants, a cinema, and a virtual-reality game park. The shopping centre is located in the central section of Moscow City, and a cinema and concert hall are currently under construction there.

What’s nearby?

Sechenov Botanical Gardens: The botanical gardens of the First Moscow State Medical University was created for students’ training and research in 1946. Today it is open for free visits, and is home to a large arboretum.

Park Krasnaya Presnya: This park belonged to the Studenets estate of the Gagarin princes. It is a monument of 18th and 19th century landscaping, with Dutch ponds, ornate bridges, and tree-lined alleys. There are also sports facilities, sports equipment rental, and cafes.

Photo by Akkit  on Wikipedia

Essential information for visitors

Website: https://www.citymoscow.ru/

Email: [email protected]

Phone: +7 (495) 730-23-33

Nearest metro: Mezhdunarodnaya (closest to the skyscrapers), Delovoy Tsentr (underneath Afimall), Vystavochnaya (closest to Expocentre)

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Majority of US couples do not have an estate plan, study finds

Ameriprise survey finds couples overwhelmingly tend to trust each other, but many have serious details to work out when it comes to retirement.

Diners weigh in on retirement as new study shows what it would take to retire comfortably

FOX Business' Ashley Webster talks to diners at The Villages in Florida about retirement after a Northwestern Mutual survey claims it will take $1.46M to retire comfortably.

American investors in committed relationships overwhelmingly say they trust their partners and share the same retirement goals , but most have not put an estate plan in place, new data suggests.

Ameriprise Financial's "Couples, Money & Retirement" report released Wednesday found 95% of couples agree they are honest and transparent with one another when it comes to their finances, and 91% said they share the same financial values. 

A new survey by Ameriprise found most American investors in committed relationships have some significant details to work out with their partners when it comes to retirement. (Annette Riedl/picture alliance via Getty Images / Getty Images)

But many have not reached a consensus on a number of emotionally-charged decisions about money .

The survey, which polled more than 1,500 American couples with $100,000 or more in investable assets, focused primarily on those between the ages of 45-70 who have retired within the last decade or plan to do so in the next 10 years.

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While it found that 93% of couples share similar goals for retirement and agree on when to retire, 24% of respondents said they have not come to an agreement on how much money they will need to save or how much they should spend on children and grandchildren, both today and as part of their estates. 

Most couples do not have an estate plan in place, according to a new study by Ameriprise. (iStock / iStock)

In fact, more than half (52%) of couples surveyed said they have not yet set up an estate plan.

Marcy Keckler, senior vice president of financial advice strategy at Ameriprise Financial and a certified financial planner, offers the following advice for couples who still need to set up an estate plan:

1. Don't be intimidated by the concept of estate planning

"Estate planning is for everyone, no matter their wealth or complexity of their financial situation ," Keckler told FOX Business. "At some point, all of us will need an estate plan."

She explained that, at its core, estate planning is about making decisions about what you want to happen after you die or in the event you’re incapacitated and can’t make health-related or financial decisions on your own, even temporarily.

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2. Engage professionals

"A qualified financial adviser and estate planning attorney can help you initiate important, yet often emotional conversations and ensure you have decisions documented to cover a variety of potential scenarios that may arise,' Keckler said.

"Guidance from professionals can ensure your wishes for the legacy you want to leave your heirs and other loved ones are carried out."

Financial advisers can provide expert-led guidance for individuals or couples who have complex finances. (iStock / iStock)

Keckler recommends selecting professionals willing to collaborate, noting that one of the biggest mistakes couples can make is creating a will that specifies beneficiaries and then forgetting to update their accounts to actually identify the correct beneficiary. 

She added that financial advisers and attorneys can work together to help ensure you’ve taken all the steps necessary to have your plan executed according to your wishes.

3. Once you complete your estate plan, be proud of yourself

" Estate planning is an important part of protecting your family and financial legacy," Keckler said. "It’s a big accomplishment that should be celebrated once it’s completed."

She recommends ensuring you know where the original documents and any physical or digital copies are, so you can refer to them in the event they become needed. 

"If you have a doctor or hospital of choice, send them a copy, so they can keep it on file," Keckler suggested. "This can save valuable time and stress you or a loved one would otherwise spend trying to find them in an emergency."

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4. Revisit your estate plan at least every five years, and more frequently if a big life event happens

"Estate plans need to be updated as your life evolves to ensure they reflect your wishes," Keckler added. "Moments in life such as the birth of a child or grandchild, major shifts in income, a divorce, acquisition of new property and a child reaching the age of 18 are a few examples of when your estate plan may need to be revisited."

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Drone attacks in Moscow’s glittering business district leave residents on edge

People stroll at embankment of the Moscow River in Moscow, Russia, Tuesday, Aug. 1, 2023, with the “Moscow City” business district in the background. The glittering towers of the Moscow City business district were once symbols of the Russian capital’s economic boom in the early 2000s. Now they are a sign of its vulnerability, following a series of drone attacks that rattled some Muscovites shaken and brought the war in Ukraine home to the seat of Russian power. (AP Photo/Dmitry Serebryakov)

A couple sit in a park in Moscow, Russia, Tuesday, Aug. 1, 2023, with the “Moscow City” business district in the background. The glittering towers of the Moscow City business district were once symbols of the Russian capital’s economic boom in the early 2000s. Now they are a sign of its vulnerability, following a series of drone attacks that rattled some Muscovites shaken and brought the war in Ukraine home to the seat of Russian power. (AP Photo/Dmitry Serebryakov)

Police officers stand near the Red Square in Moscow, Russia, Tuesday, Aug. 1, 2023. The glittering towers of the Moscow City business district were once symbols of the Russian capital’s economic boom in the early 2000s. Now they are a sign of its vulnerability, following a series of drone attacks that rattled some Muscovites shaken and brought the war in Ukraine home to the seat of Russian power. (AP Photo/Dmitry Serebryakov)

People stroll at the Red Square in Moscow, Russia, Tuesday, Aug. 1, 2023. The glittering towers of the Moscow City business district were once symbols of the Russian capital’s economic boom in the early 2000s. Now they are a sign of its vulnerability, following a series of drone attacks that rattled some Muscovites shaken and brought the war in Ukraine home to the seat of Russian power. (AP Photo/Dmitry Serebryakov)

People sit in a cafe in Moscow, Russia, Tuesday, Aug. 1, The glittering towers of the Moscow City business district were once symbols of the Russian capital’s economic boom in the early 2000s. Now they are a sign of its vulnerability, following a series of drone attacks that rattled some Muscovites shaken and brought the war in Ukraine home to the seat of Russian power. 2023. (AP Photo/Dmitry Serebryakov)

A view of the damaged building is seen in the “Moscow City” business district after a reported drone attack in Moscow, Russia, early Tuesday, Aug. 1, 2023. Ukrainian drones again targeted Moscow and its surroundings early Tuesday morning, the Russian military reported. Two of three launched were shot down outside Moscow, while one crashed into a skyscraper in the Moscow City business district, damaging the building’s facade. (AP Photo)

Investigators examine an area next to damaged building in the “Moscow City” business district after a reported drone attack in Moscow, Russia, early Tuesday, Aug. 1, 2023. Ukrainian drones again targeted Moscow and its surroundings early Tuesday morning, the Russian military reported. Two of three launched were shot down outside Moscow, while one crashed into a skyscraper in the Moscow City business district, damaging the building’s facade. (AP Photo)

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The glittering towers of the Moscow City business district dominate the skyline of the Russian capital. The sleek glass-and-steel buildings -- designed to attract investment amid an economic boom in the early 2000s – are a dramatic, modern contrast to the rest of the more than 800-year-old city.

Now they are a sign of its vulnerability, following a series of drone attacks that rattled some Muscovites and brought the war in Ukraine home to the seat of Russian power.

The attacks on Sunday and Tuesday aren’t the first to hit Moscow — a drone even struck the Kremlin harmlessly in May. But these latest blasts, which caused no casualties but blew out part of a section of windows on a high-rise building and sent glass cascading to the streets, seemed particularly unsettling.

“It’s very frightening because you wake up at night hearing explosions,” said a woman who identified herself only as Ulfiya as she walked her dog, adding that she lived in a nearby building. Like other Muscovites interviewed by The Associated Press, she did not identify herself further out of fear of retribution or for her personal safety.

Another resident, who gave her name as Ekaterina, said Tuesday’s blast “sounded like thunder.”

“I think for the first time, I got really scared,” she said. “I don’t understand how people in a war zone can live like this every day and not go mad.”

The Russian Defense Ministry said it shot down two Ukrainian drones outside Moscow and had electronically jammed another, sending it crashing into the IQ-Quarter skyscraper that houses government offices like the Ministry of Economic Development, the Ministry of Digital Development and Communications, and the Ministry of Industry and Trade — the same building that was hit Sunday.

A cordon went up around the building and personnel from the fire department and the Russian Investigative Committee were at the scene. Hours later, residents strolled through the district along the Moscow River or sat on benches in the sunshine. By about 1 p.m. Tuesday, workers were already starting to replace damaged windows.

The business district, a 10-minute subway ride west of the Kremlin, is home to some of Moscow’s flashiest restaurants, offering far-reaching views of the capital and a menu of upscale fare like three types of caviar, shellfish from Russia’s Far East and French cuisine.

But there was no escaping the grim news.

While Russian state television has largely played down the strikes, one channel sandwiched a segment on how Moscow’s air defenses successfully intercepted the drones in between reports highlighting Russian attacks on Ukraine.

Mykhailo Podolyak, an adviser to President Volodymyr Zelenskyy, said in Ukraine that Moscow “is rapidly getting used to a full-fledged war,” without confirming or denying Kyiv’s involvement in the drone attacks that in recent days have struck from the capital to the Crimean Peninsula .

After Sunday’s strike, the Kremlin said security would be ramped up.

Still, the size of the drone that hit the Moscow City district led analysts to question the effectiveness of the capital’s air defenses, suggesting it could have been launched from Ukraine.

“If this is the case, this would be rather embarrassing for Russia’s air defenses. If a drone has been in Russian airspace for hours, air defenses should have picked it up earlier and shot it down earlier,” said Ulrike Franke, an expert in drones and military technology at the European Council on Foreign Relations.

While they haven’t caused much physical damage, bringing the drone campaign to Moscow “blows holes in Russia’s narrative that the war on Ukraine is successful and that it is being prosecuted far away from any consequences for the Russian people themselves,” said Keir Giles, a Russia expert at the Chatham House think tank in London.

“That is something which is going to be harder and harder for Russia’s propaganda machine to explain away,” he said.

A Muscovite who identified himself to the AP only as Eldar summed up the strikes this way: “We attack them, they attack us. And it’s obvious that they will succeed somewhere, and we will succeed somewhere. We should try to strengthen the defense.”

In Odintsovo, where some of the drones were downed about 30 kilometers (18 miles) southwest of the capital, some residents discussed the events on their local Telegram channel.

One woman talked about hearing noises that turned out to be a car or improperly closed trash containers, and seeing what she thought were drones but actually were a flock of birds, a plane and a wind-blown plastic bag.

“How is it possible to live like this?” she asked the group.

“Stop creating panic,” one member admonished her.

“If you hear a noise, be happy because it hasn’t hit you,” added another.

Burrows reported from Tallinn, Estonia.

Follow AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine

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