Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wed. on Twitter from 8-9pm ET. This is excerpted from my recent interview with @TimBerry. Tim Berry is president and founder of Palo Alto Software, founder of bplans.com, and a co-founder of Borland International. He built Palo Alto Software from zero to 40 employees and 70% market share without outside investment. He is a Stanford MBA and has taught business at the University of Oregon. He’s the conceptual author of Business Plan Pro, author of The Plan-As-You-Go Business Plan, Entrepreneur Press. Find Tim on twitter at @TimBerry or at bplans.com
Disclaimer: I was mailed a free copy of Tim Berry’s Plan As You Go Business Plan Book, and I have purchased a copy of the BusinessPlanPro software in the past. I do not interview anyone on #smallbizchat or for this blog, who’s business ideas, advice and products or services I would not support. The focus of #smallbizchat is end small business failure.
Smallbizlady: What is plan-as-you-go business planning?
Tim Berry: Plan as you go is a reflection of changing times, the new world realities of doing business. We need planning more than ever, but it has to be live, flexible, and reviewed regularly.
Smallbizlady: How is it different from any other business plan?
Tim Berry: Ironically, it shouldn’t be; all plans should be done this way. But somewhere along the line people got lost in the plan as document, instead of planning process. Which is a damn shame.
Smallbizlady: How is the “Plan As You Go” method better?
Tim Berry: Because it’s a matter of fundamentals: it assumes change, and that form follows function. Business planning is about the business, not the plan. It’s about steering, and management and it’s about metrics, responsibility, and accountability.
Smallbizlady: What are some common mistakes in business planning?
Tim Berry: By far the most important is thinking that the plan itself matters, instead of keeping it alive and managing your business using it. As if the plan weren’t going to change. Then there’s forgetting cash flow, and staying up in the blue sky instead of getting into specific milestones and metrics.
Smallbizlady: Are business plans obsolete?
Tim Berry: Only if management is obsolete. Planning is part of the management function, like steering the business. The full formal document doesn’t apply as much as people think, but we all need planning more than ever, and the plan is a first step in planning.
Smallbizlady: You say in your book all business plans are wrong, but vital. Aren’t they just wrong?
Tim Berry: No, wrong but vital. Wrong because we’re human and we try to predict the future. But vital because we then track the plan vs. actual results. We need to watch how and in what direction it was off, and following up on course corrections, interdependence, and better management and accountability.
Smallbizlady: If business plan is a lot of trouble, why should a business owner bother to do it?
Tim Berry: Done right it’s a lot less trouble than you think. Make it only as big as you need it to be, just big enough to manage your business. And forget the formalities, the dressing, until you need to present it to a lender. With business planning you get goals, a tracking progress, metrics, accountability, and a management tool.
Smallbizlady: Sometimes smaller startup businesses or home-based businesses don’t think they need a business plan because their not trying to get a loan or funding, what advice can you give?
Tim Berry: All businesses need to optimize their resources, and planning helps. It helps to lay out your goals and the steps to achieve them, to watch the cash flow, isolate the factors, think about focus, and strategy, and to work towards the right long-term directions even as the day-to-day gets in the way.
Smallbizlady: Okay, business plans are a dime a dozen. You can get them free off of the Internet, you can buy a finished plan for $25. Why bother to actually write one?
Tim Berry: Because you’re going to implement, and nobody else. It’s going to be your plan. It’s not a writing exercise, or a document. It’s what you intend to do to run your business. Would you send somebody else to exercise for you or take a trip for you? Ghost writing works for writing, not for planning.
Smallbizlady: What are the most important parts of a business plan. What one thing would you do if you were going to do only that?
Tim Berry: Dates, deadlines, metrics, milestones, and, above all, cash flow. Who’s is responsible for what? How do things work together? And it’s good to write down strategy, particularly what you are not doing. If nothing else, at the very least, manage a sales forecast, and review plan vs. actual sales and expenses. And always cash flow.
Smallbizlady: How long should a business plan be?
Tim Berry: Form follows function. It should be long enough to set down the strategy, main metrics, basic numbers, tasks, dates and deadlines. For the classic business plan, or the ones entered in contests, or submitted to investors or banks, 20 pages is enough, never more than 30. If we insist on measuring in pages.
Smallbizlady: Why Business Plan Pro? How does it help?
Tim Berry: Business Plan Pro is a tool that does the mechanics like keeping the financials mathematically and financially correct, documented and error proofed; and putting things into logical order with the right tables, charts. And outputting to a printer, PDF, secure website, or Word or Excel.
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