Today, I interviewed one of the leading business plan experts, Tim Berry. Tim is a blogger for Entrepreneur.com, owner of a business and author of a few books. In the interview below he will talk about his business plan model, how it benefits you and why the typical templated business plans won’t do you justice.
Tim, what’s different between the Plan-As-You-Go business plan and other models?
First, the plan-as-you-go approach focuses on planning as a process rather than a plan, so it emphasizes regular plan review, keeping track of changing assumptions, and planning as steering as management. There is no such thing as a plan-as-you-go plan without a regular review schedule and the assumption that course corrections will be part of the process.
Second, the plan-as-you-go approach emphasizes appropriately sized plans, just big enough to support planning process, but encompassing only those portions of the more formal standard business plan that your company will use and manage. So, for example, while every company stands to benefit from an appropriate planning process to hone strategy and lay out the steps and concrete specifics, many companies are not looking at business plan events and will not therefore need the full richness and formality of the old-fashioned complete business plan.
Third. In plan-as-you-go business planning, the plan is what’s supposed to happen and why, and who’s responsible, and how much it will cost, and how much it will generate; outputs might be the printed formal document, or the elevator speech, or the summary memo, or the pitch presentation, and those are just outputs, not the plan itself. In theory plans could be kept in your head but in practice that’s really hard because our minds play tricks on us, we lose the benefit of plan vs. actual because we don’t accurately record what we thought would happen so we don’t then get the benefit of comparing actual results to planned results.
Fourth. The plan-as-you-go plan separates supporting information from the plan itself. Some planning processes require detailed formal market research, but not all do. You include the research if you need it (like for a business plan event) and/or if you are going to use it.
Fifth. Last not but not least, a plan-as-you-go plan knows that every business plan is wrong, but nonetheless vital to management, because it is through managing the difference between plan and actual that we remain mindful of long-term goals and strategic priorities while we manage the details as well. And it knows that a good business plan is never done.
Most business plans are tossed out and re-written. How do people manage to evolve their plan instead of throw it away?
Every plan should start with a review schedule, meaning the time and date and participants of the plan review meetings, set in advance, so everybody involved makes and keeps the commitment to get together at regular intervals and review the plan including going over important assumptions to identify how and when they’ve changed (and they will change) and how to correct the plan to preserve the long-term directions and goals but manage the short-term steps according to changing assumptions. Changing assumptions are reality.
Part of that is also understanding from the beginning that it’s a process, not a plan. I start with what I call “attitude adjustment” points to help people clean their mind and put the planning into the right context. This is where I get into the basics, like that a plan is modular, you choose what you need, and you get going fast, adding to it as needed.
Why did you choose to make much of your book available on your blog?
I’m very confident that the people who see on the web what it is an what it’s about and like it will want to go ahead and buy the book for themselves. Sure, I’d like to sell to everybody, I like money as much as the next person, but I know that never happens, so I’m happy to sell to people who see what’s there and want more. I want them to be able to see what it is, as much as they want.
A website doesn’t substitute for a book, and vice-versa. Now I’ve got the website enriched with video and audio, so the book owner has a reason to go to the web; and if you’re on the web but don’t own the book, then it’s also a lot easier to read the book as a book than to browse through it (even though it is there complete) on the web. If I like a book, even if it’s available in full on the web, I’m going to pay the cost of a lunch to get the physical book. I like books.
I’ve found through the years that making good content available to people on the web is a matter of mutual benefit, in which everybody wins. I started this in 1995 with bplans.com, which was the first and is still the biggest and best free business plan site on the web (obviously I’m biased, but if you measure by links in, or traffic, that holds up). People who are interested in this content go there and the smart ones figure out pretty quickly that even though all of that is free, the software that supports it has to be pretty good and its about the same thing they’re working on, the business plan. Taking that same idea to the plan-as-you-go business plan approach, the website adds to the book and my target customers are smart enough to see from the site that having the book on their desk as hard copy is worth the $14 or so it costs.
In the forward, Guy Kawasaki admits that he never had a business plan for Truemors. What do you think about that? Would he have been more successful if he did?
I’m pretty sure Guy had a plan-as-you-go plan for Truemors, even if he didn’t know it then and is coy about it now. The plan-as-you-go plan is a combination of heart of the plan, which is strategy; and the flesh and bones, which is a collection of assumptions, review schedule, milestones, and budgets.
Guy’s a natural communicator so he loves to surprise us, and the contrarian way of putting it is much more interesting than if he’d said what I say about it. You can’t have a pitch, an elevator speech, a summary memo, or any of that without having a plan. What Guy didn’t have was the formal old-fashioned complete business plan document. But then that’s me saying it, not him. He got great mileage out of his no business plan theme.
Why is the “plan review schedule” your favorite part of the business plan?
And it really is my favorite, no question; more so every day. It’s so easy to set up a review schedule at the beginning, and that changes the tone of the entire effort to keep it about planning process rather than just the plan. The greatest threat to planning as management is the plan as document, lost in a drawer and forgotten.
The review schedule is the best way to avoid that plan-as-document waste of time. Furthermore, people think differently when they know there’s going to be plan review. Planning process is about accountability and management, which involves review. To me the plan with review schedule is a different item, far more useful, than the plan without.
Can you relate building a business marketing plan to a personal marketing plan? I’ve written about this before, but would like to get your opinion on how people can plan for their careers, using marketing strategies.
The heart of a plan-as-you-go plan is an enmeshed interaction of three factors, identity, target market, and strategic focus, that are inseparable. And these three factors are as relevant for a personal marketing plan as for a business marketing plan. Although they mix together and can’t be pulled apart, identity is who you are and what you’re good at and what you like to do, whether that’s a company as you or a human as you.
Market is what benefits you offer and needs you solve and to whom, plus who isn’t your market, the more narrowly defined the better, and that too is about the same for a person as for a company. Strategic focus is what makes the other three realistic, since you can’t do everything and you can’t please everybody, so you have to focus in on the most important things to make sure they get done. It isn’t really all that theoretical or academic. The most interesting thing to me about strategy is how well it maps to plain common sense.
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Tim Berry is the president and founder of Palo Alto Software, founder of bplans.com, and a co-founder of Borland International. His latest book is called “The Plan-as-You-Go Business Plan.” He also started teaching business at the University of Oregon, once a year, spring quarter. He wrote Hurdle: the Book on Business Planning and other books on planning published by Harcourt Brace, McGraw-Hill, and Dow Jones-Irwin. Tim is the principal author of Business Plan Pro. As a consultant he’s worked with Apple Computer steadily for 14 years of repeat business
