What You Think You Know About Business Planning Can Hurt Your Business
Note: Tim Berry, Founder and Chairman of Palo Alto Software, will be my special guest on Talk Business With Howard radio on Wednesday, March 21st at 11 AM/ET, on Blog Talk Radio. Click here for show details and to listen in! Sure to be an interesting business conversation about one of the essentials to business success – business planning. Thank you, Tim, for writing this blog post on business planning to start the conversation. -Howard-
By Tim Berry
Is this you? When asked if you have a business plan, would you scoff slightly, roll your eyes maybe a bit, and dismiss the idea as something only startups do? Would you say “we’re not a startup.” or maybe, “we’re not seeking investment.” as if this make it obvious that you don’t have a business plan?
If so, you’re not alone. And I say, emphatically in fact, that it’s a shame you’re not using planning, and the planning process, to manage better. The myth of the business plan gets in the way of the benefits of real business planning.
What’s the myth? You already guessed it. They think of a business plan as a document, done once, surmounted like a hurdle, that some businesses need to produce to get a loan or get investment. They say it’s for startups. It’s hard to do. It’s about the text, and the editing, and the formatting. And nobody really uses it. And they think that the rapid pace of change negates the value of planning.
And that myth gets in the way of the real benefits of business planning done right. By which I mean:
- It’s not a document, it’s a plan. The plan lays out what’s going to happen, why, who’s responsible, what dates and deadlines, and how much money comes in, and how much goes out.
- It lives on your computer, not on paper.
- Format doesn’t matter. Keet it in a format that works for you. I liked the software my company publishes, obviously, (look at www.businessplanpro.com or www.liveplan.com) but if you prefer your spreadsheet, word processor, or slide decks, or – better yet – a combination of the above. That works too. Keep it on the network where you can get to it every month.
- It’s a streamlined reminder of major priorities. Use it to keep you and your team mindful of what matters most.
- It gets reviewed and revised every month.
- It helps you manage change by connecting the relationship between tasks and costs and expenses and sales and people and goals.
- It sets objectives that can be measured, and then, for the monthly meetings, metrics are tracked and reviewed.
- Think of it as a way to manage change efficiently. As assumptions change, the results reveal reality, the plan adjusts.
- Think of it as a way to establish accountability. Tasks are assigned with target values, and results are tracked, and results then become management points.
- You don’t have to forecast correctly. We’re human. We don’t guess the future well. Just make sure you base your forecast on trackable assumptions, so you can deconstruct when actual results are different for plan. And they will be.
Myths are fine as stories that stand for something, windows into reality. Myths are bad when they interfere with optimizing your business.
Share your business planning experiences. Have a question for Tim and I about business plans? Post it here.
Tim Berry is the Founder and Chairman of Palo Alto Software; co-founder of Borland International; founder of www.bplans.com; author of books and software; teacher of entrepreneurship, blogger, Stanford MBA and angel investor. His website is www.timberry.com. You can follow Tim on Twitter: @Timberry.
Remember: Tim Berry will be the special guest on Talk Business With Howard this Wednesday, March 21st at 11 AM/ET. Tim and I will be discussing business planning – one of the keys to business success. Tune in and listen live or catch the replay later on the Blog Talk Radio show page, click here.