Think of your business plan as a matter of blocks, like interrelated pieces. You don’t have to have the whole block structure done before you take any next steps. Start your blocks where you like. Some common blocks are the mantra, the sales forecast, the mission statement , the keys to success, maybe a break-even analysis, or a SWOT, or how about the heart of your plan, as in the whole discussion of who needs your product or service and why and what it is? A sales forecast is a block, and so is an employee or personnel plan, as in laying out month by month how many people will be working in your company, and how much each of them will be paid.

The key here is that you don’t get bogged down on having a finished business plan before you do anything else. You’re planning as you go. You’ve heard the stories of people who spent months developing their plan, but never get started. So instead of that, think of the blocks. Choose where you want to start. Get going.

Start Wherever You Like

The blocks idea also saves you from the tyranny of sequence. You don’t have to start at the beginning and work through to the end. You can jump in and start wherever you want.

• Mission statement, maybe? Define for yourself what your company will do for its customers, for its employees, and for its owners. Mission statements are a bit last century, perhaps doomed forever to Dilbert-related derision, but that’s still where some people start.
• Maybe you’re a numbers person. That’s OK don’t apologize — business planning needs that, too. I was a literature major in college but I still like to start my business planning with a sales forecast. Then I’ll do some conceptual work, then go back to costs and expenses, classic budgeting work, then back to basics.
• Business plans have hearts, like artichokes do. In both, their hearts are their core, the best part. I thought of this analogy when somebody I know and respect suggested that the heart of a business plan is the marketing plan, meaning its identity, positioning, differentiation, the sense of what business you’re in and why people buy from you. That’s a great place to start.
• Some plans start with a product or prototype product. Maybe your first block is a bill of materials for manufacturing the new thing. That’s OK too; that’s a block, you can jump in there.
• There are lots more blocks. The mantra. The vision. A market analysis. A market forecast. Personnel strategy. Financial strategy. Some people like to build an equity plan first, focusing on how many shares exist, how many the founders get, and how many the investors get.

Don’t Worry About Finishing
A good business plan is never done. It’s the launch of a planning process, and you want to understand from the very beginning that if you ever think your plan is done, your business is probably finished. You’ll have to review and revise regularly to keep your business going. Assumptions will change, your forecasts will be wrong, and the art of management will be figuring out when to revise the plan to accommodate changing reality, and when to stick to the parts of the plan that will work if you hold your course. That’s paradox, of course, and that’s why we (owners and managers) do it instead of computers.

You build a good plan like an artichoke, inside out from the heart. That doesn’t mean you necessarily start with the heart and go in rapid succession — I am serious about starting anywhere — but it might. Maybe you did your sales forecast first, but eventually your plan will revolve around its heart.

Of course the heart is not necessarily a written document, not necessarily rehearsed, not necessarily a recorded.

At this point, however, we have to address those of you who have a business plan event that you need to prepare for. You need a full formal complete plan for school, for an investor, for a bank, for a boss, as a consultant, or whatever. Then you might have to do the whole thing at once, and not enjoy the luxury of letting it grow organically. Don’t worry, though: you can still benefit from the idea of the core and the blocks.

The artichoke analogy applies when you build the supporting parts of the plan — or blocks, if you want to call them that — around the heart. For example:

• A really cool way to make sure your planning is useful is to set up the review schedule now, in the beginning. Set up recurring meetings, for example, on the third Thursday of each month. Put these meetings on the calendar. Invite the team members. Surprise people; don’t wait until the plan is done – set up the review schedule first.
• After you’ve figured out your market strategy, target market, focused offering, core competence, and so on, then you need to think through the logical tactics and specific activities to take that idea to market. What is the message? Where do you deliver it, to whom, through what medium? How much will that cost? You can do that with a strategy pyramid, or not; a milestones table is really practical.
• A lot of core benefits of planning link to the milestones table. Metrics, for example, are presumably built into that table. Tracking and accountability also relate to that table, so it’s a pretty important block.
• You really need to take your business strategy and work it into a concrete and specific sales forecast. Hard as forecasting might be, it’s harder to run a business without it. And the sales forecast is when you start tracking. Plan vs. actual numbers will help you adjust your plan, and from that improve your management.
• You need an expense budget. That’s another piece you can track, so you set up your goals and keep an eye on your progress. And while you’re at it, include costs as well as expenses and you’ll have a better hold on your business.

And with that, I want to pause. Take a breath. Notice that at this point you’ve got a strategy and three key metrics to track: milestones, sales, and spending. You’re on your way. Your planning has started. You even have a review schedule.

All of these things are like the leaves of the artichoke. They surround the heart. They aren’t the only things you can do, though; they are just suggestions. Here are some additional suggestions:

• I like the SWOT analysis. It brings the teams together.
• Lots of people like to do the mission statement, or the mantra, or objectives. I like keys to success too.
• You have to be sensitive to your business, and your business’ needs. Maybe distribution channels are important, so you set some milestones. Maybe product design, prototyping, or packaging is important, so you set some milestones.
• The more you have a group involved, the more it helps to create a document on the computer. A set of bullet points, or maybe some prose, gets the ideas down so people can refer back to them.

And now another pause. Let’s reflect on progress and process. A lot of this thinking things through, necessary for good business and good management, ends up in the milestones table.

• Is this plan going to be a document? I hope you see clearly now that it depends on needs. If you’re going to show this document to somebody else, and you expect her to read it, then you might have to start writing things down and organizing things like outlines and structures. The milestones table won’t explain itself.
• And even if it’s just for your team members, although you will spend less time on sweating the output details, you still probably want to record key points into (Business Plan Pro software comes to mind, but it’s not required) so people can refer to them.
• Form follows function. More on that later.

So this might be the evolution of a normal plan, for a normal company, startup or not. You do this plan not because somebody says you have to, but because you want to, because you’re interested in creating a business or growing a business. You care about your business. You think about it a lot. Call it planning.

And then, in some cases, comes the business plan event. Or you’re one of those who started this planning task with the full business plan event starting you in the face. No worry — in that case you add the dressing you need like the supporting information, detailed financial forecast, and descriptions of the management team, and you have the formal plan document.

It’s funny how the words come together. Few people do projections, but lots of people do budgeting. They are not that much different. Lots of people hate to forecast. Lots of people hate budgets.

Even the word “budget” conjures up images of disapproving accountants and denied requests: “It’s not in the budget” is one of the world’s more familiar negatives. No, by any other name, would smell as sour.

But, despite their bad reputation, budgets are always useful tools and are almost essential to the proper running of a business. Budgets are used for planning and for tracking performance against plans. Your plan-as-you-go business plan should always include your spending budget, and that, by the way, when you rename it, is one of your building blocks for your projected income.

Some people think of budgets as normal, not scary. Some people think of forecasts as scary. They are basically the same thing. Take it however it seems easier for you. It shouldn’t be that hard to do.

The best and easiest way to create a useful expense budget is to take last year’s expenses and run them forward.

Start with an empty spreadsheet, the columns set up to show the months you’re running for your plan, presumably 12 months. Then use the row labels on the leftmost column to assign categories. Start with something simple, like rent. Estimate your rent and get it into a standard format. Don’t say you don’t know, or you have no idea. Take it a little bit at a time, and you’ll have something you can work with.

This is a true story, although the names and places have been changed. Everything ended up OK, but there was a lot of unnecessary stress, all of which could have been easily prevented by just a minimum of business planning. This kind of problem happens all the time, and it’s so easily preventable, it’s a shame it happens at all. The lesson: Don’t be a victim of unplanned growth.

The story takes place in a midsize university town on the West Coast, during the mid ’90s, as the Internet boom took off and most everybody in business and education was getting connected. The main players are Leslie and Terry, co-owners of a consulting business offering computer and network services mostly to local businesses.

At the beginning of this story, Leslie and Terry had a small but comfortable office a few blocks off Main Street, near the university, and a comfortable business, averaging about $20,000 in sales per month with a few steady clients and not a lot of seasonal variations in sales. They had one employee who did the bookkeeping and general administration tasks, maintained office hours and made appointments.

Then came the big, wonderful new job–a contract with a large and fast-growing company to install new Internet facilities in offices on its corporate campus, ten miles up the freeway. This was a $200,000 contract that had to be delivered quickly and opened up an important new relationship with a potential business-changing client. There was great celebration. Leslie and Terry and their spouses started with a fancy dinner in the best restaurant in the area.

Both partners readily got going on fulfilling the contract, delivering the network, connecting the systems, making good on their promises. To make sure the new relationship would be a permanent increase in business, they took on five contractor consultants to deal with the needs of installation, training, and the general increase in business demands.

Within two months, it seemed clear to both partners that they’d made the leap. Systems were being installed, clients were happy, and they were on the road to doubling their business volume in a very short period of time. The contractors were doing good work, and four of the five were happy to consider becoming permanent employees. Leslie and Terry decided they could celebrate more, so they both went to the local car dealer and leased new Mercedes sedans.

Then things started going bad. Like a television loosing its connection, things got fuzzy, then blank. Though sales and profits were way up, jobs were done and invoicing was underway, Leslie and Terry had no money. The contractors — good people who Leslie and Terry wanted to keep — needed to be paid, but there was no money. They rushed to their local bank, waving their increased sales and profits, but banks need time. The business suffered the classic problems of unplanned growth. Just as the accounting reports looked brightest, the coffers were empty. People were barely done celebrating, and suddenly they were looking at the disaster of unpaid bills and, much worse, unpaid people.

What happened? Unplanned cash flow problems happened. The new, larger client had a slow process when it came to paying bills, so the jump in sales didn’t mean an immediate jump in cash in the bank. Leslie and Terry were more concerned about delivering good service than delivering necessary paperwork, so their own invoicing process was slow. They were owed about $85,000, but they couldn’t go straight to their new client to get the money — she said she’d already authorized payment and sent them to the company’s finance department for answers. The people in the finance department were slow to respond and not particularly concerned about vendors getting paid quickly; their job was to pay slowly, but not so slowly as to get a bad credit rating.

Leslie and Terry had a bad case of “receivables starvation” — money that was owed to them was already showing in sales and profits, but not in the bank. It would have been predictable, and preventable, with a good plan.

In this case, fortunately, the two partners had enough house equity to get a quick loan and pay their contractors. The business was saved and grew, but not without a great deal of stress and strain, and even second mortgages.

The worst moment is worth remembering: One of the partners’ spouses was particularly eloquent about the irony of taking on a new mortgage while driving that [profanity omitted] Mercedes.

The moral of the story: Always have a good cash flow plan. Never get caught not knowing the impact of a sudden rush of new business. Get to the bank early, as soon as you know about new business, and start processing a credit line on receivables. And never lease a Mercedes until you’re sure you won’t have to take out a new mortgage a few weeks later.

Adapted from Entrepreneur.com column by Tim Berry, January 10, 2007

If you can’t give your elevator speech in 60 seconds, you have a problem. Your strategy isn’t clear enough. It should be a quick description of the business that you could give in the time you share with a stranger in an elevator. The term is becoming popular in the everyday language of the entrepreneur, the venture capitalist, and the teaching of entrepreneurship. There are even elevator speech contests at business schools.

I don’t think its academic, though. I think it’s important. I think it’s a great exercise that everybody in business should be able to do. Let’s get simple, let’s get focused, let’s get powerful. So we’re talking about the heart of the plan strategy. What better way to condense it than in a quick elevator speech. If you can’t do it, worry.

Start with a Story

Start your speech with a person (or business or organization) in a situation. Personalize. Identify clearly. For example:

John Jones doesn’t particularly care about clothes but he knows he has to look good. He sees clients every day in the office, and he lives in a ritzy suburb, where he often sees clients by accident on weekends. But he hates to shop for clothes. (The Trunk Club)

Jane Smith wants to do her own business plan. She knows her business and what she wants to do, but wants help organizing the plan and getting the right pieces together. The plan needs to look professional because she’s promised to show it to her bank as part of the merchant account process. (Business Plan Pro)

Paul and Milena live in a beautiful apartment in Manhattan, with their two kids. Paul has a great job in Soho, Milena works from home, and neither has time for food shopping (Just Fresh).

Acme Consulting has five people managing several shared email addresses: info@acme.com, sales@acme.com, and admin@acme.com. The five of them have trouble not stepping on each other. Sometimes a single email gets answered three or four times, with different answers. Sometimes an email goes unanswered for days, because everybody thinks somebody else answered it. (EmailCenter Pro)

Notice that in each of these examples I could be much more general. The Trunk Club targets mainly men who don’t like to shop but need to dress well and have enough money to pay for a shopping service. Business Plan Pro is for the do-it-yourselfer who wants good business planning software. Email Center Pro is for companies managing shared email addresses like sales@ or info@. But instead of generally describing a market, I’ve made it personal.

Sometimes you can get away with generalizing. “Farmers in the Willamette Valley,” for example, or “parents of gifted children.” It’s an easy way to slide into describing a market. However, I suspect that you’re almost always better off starting with a more readily imaginable single person, and let that person stand for your target market.

Follow With What’s Special About You

In the next part of your elevator speech address “Why you”? Why your business? What’s special about you that makes your offering or solution interesting to the target person or organization you just identified.

This is where you bring in your background, your core competence, your track record, your management team, or whatever. For example:

The Trunk Club invented the best-possible solution to this problem. Founder Joanna Van Vleck first succeeded in sales at Nordstrom’s and then took her personalized shopping-for-others style into a hugely successful first market in Bend, Oregon. Now, having proven the idea on the front lines …

Palo Alto Software has dedicated itself to business planning for more than 20 years. Its founder is one of the best-known experts in the field. Its current management team grew up with business planning, in the trenches. The 8-person development team has more than 50 person years in the same focused area.

Palo Alto Software has been managing this e-mail problem internally for more than ten years now, and has been working with its own in-house solution for nine years. It has a very strong relationship with hundreds of thousands of small but growing businesses.

What we focus on here is core competence and differentiation. And, in the classic elevator speech, you have to say it fast. You make your point quickly and go on.

Make sure your point is the right point: benefits to the target customer. It’s not what’s great about you, but rather, what about you lends credibility to your ability to meet the need and solve the problem.

I included two different paragraphs for the same company on purpose. See how the unique qualifications differ for different contexts. It’s the same company, but in the first example it’s relating its speech to Business Plan Pro, the flagship product. In the second example it’s building up Email Center Pro, the new product. The descriptions have to change for each.

You might also think of this as the classic “What do you bring to the party?” question. It’s not just your brilliance or good looks or great track record, it’s fostering credibility for solving the problem.

Then Explain Your Offering

Now explain what that person you’re selling to gets. You’ve personalized the need or want, identified your unique qualities to solve the problem, and now you have to put the need or want in concrete terms that anybody can see. For example:

For a Trunk Club member, when his wife says it’s time for a new trip or a new activity is coming up, or the mood strikes him, he just grabs the phone and calls his Trunk Club counselor. “I need more casual stuff for the golf course, or cargo pants for hiking, or two more slacks-and-sports-coat combinations.” She knows his size, knows what he likes, what his wife likes, and what he needs. The new clothes come three days later, with a complete money-back guarantee if he or his wife doesn’t like them.

Business Plan Pro lets Jane jump into and out of her business plan at a moment’s notice whenever she wants. She can start with the core strategy and build it in blocks, planning while she goes, refining projections as needed. It’s built around a solid error-checked, financially and mathematically correct financial model, and a generalized set of suggestions for outlines, but is also completely flexible for adding and deleting topics and creating a unique business plan. Each task, whether topic or table, comes with easy-to-understand instructions and useful examples.

Email Center Pro lets a team share an email address like sales@ or info@ efficiently. E-mails can be assigned to team members or not, and answered e-mails are processed and visible, and unanswered e-mails remain at the top until answered. Furthermore, it manages collections of snippets or text templates to build on standard but flexibly customizable answers to frequently asked questions.

In each example here, we can see clearly how this product or service meets the need or solves the problem. Forget features as much as possible, and illustrate benefits. You’ve already described the person with the situation, and built up your ability to solve it, so now it’s just about the solution. Stay focused and concentrated. People will get one or at the most two unique attributes of your business offering. Don’t confuse them with more.

A Note About Context

For the purposes of planning as you go, that’s it, you’ve done your elevator speech. However, since we’re right here together on this page at the end of this discussion, let me suggest what you might do
in a real elevator speech situation: finish strong. The finish depends on who you are, where you are, and what you want. If you’ve personalized in the first part, sold yourself and/or your organization in the second, and established the attractiveness or suitability of the business offering in the third, it’s time to finish strong with a closing.

Your closing depends completely on context. What do you want from the person or people you’re talking to? The classic elevator speech context is a venture competition when looking for investors. But there’s also the true elevator speech for the established company, simply describing your company to somebody who asked, with no real close. Be honest, you’re not always asking for an order, even when you’re just chatting with the person in the next seat on the plane. If you are trying to sell, then do ask for the order. Seriously: “If you give me a card, I’ll send you a copy with an invoice. If you don’t like it, send it back. Here’s my card.”

For the venture competition or investment-variety elevator speech, don’t try to convey too much information. Do establish in general terms where you are or what you want. “We’re looking for seed money of half a million dollars.” Or “We’re now raising round two financing of three million dollars to be used for the mainstream marketing launch.” Or “We’re looking for serious marketing partners able to put money up front in return for privileged first-year pricing.” Or “We’re trying to establish a royalty relationship with an appropriate manufacturer.” And then, ask for a business card, and give one. “If you know anybody who might fit that bill, feel free to recommend us.” Or “Please give me a call.” Don’t offer to send a business plan, and don’t ask a person directly to invest when it’s about investment; reduce the awkwardness by suggesting that your audience might know somebody, not that your audience might invest.

Don’t talk terms in the elevator speech. Just establish what you want or need.

If you’re in a real elevator with a real potential investor, soft pedal: “If you know anybody who might be interested, please pass this along. Or maybe you want a business card and permission to send a follow-up e-mail.”

And if you’re doing an elevator speech in a business venture competition, close with an appropriate call for investment. Venture competitions always hinge on the would-be or hypothetical pitch to the investor, so make it clear. The better ones end up with something like an intriguing reference to seed capital or first-round equity investment. Stay general. Make them want more.

I’ve been writing books for a lot of years, but I’m also blogging and doing podcasts and putting more and more of my daily work on the web. My approach to business planning has changed a lot, and what I expect to do with a book has changed a lot. This book is not what you expect.

A Different Approach to Business Planning

Planning Your Trip

Imagine that you’re going to take the trip of a lifetime. You’ve got the time, you’ve got the money, and you’re finally going to realize that dream trip.

Would you enjoy planning that trip? Don’t you browse the web with relish, looking at hotel reviews, airline guides, destination websites, and whatever else you can find? Don’t you browse the bookstore for guidebooks and maps? Imagine yourself sitting with your travel companion in your living room stashed with books and maps and telephone and computer, planning that trip. It’s a good thought, right?

The heart of your plan is a combination of where you want to go, what you like to do, how, and with whom. The flesh and bones of your plan is a collection of concrete details: dates, flight numbers, hotel reservations, tour plans, and so on.

What would your travel plan look like? Where would you keep it? How would you share it?

You probably wouldn’t write your trip plan out as a formal document with a prescribed outline, table of contents, and appendices. You probably would keep it where you could get to it quickly as needed, whether that would be your phone, your laptop, or a collection of papers in your carry-on bag.

And you probably would work with your plan as you take the trip. For example, as you travel, things happen. Flights get cancelled or delayed. You miss connections. The article in the in-flight magazine recommends a hotel or a restaurant you wouldn’t have thought of otherwise. Hurricanes close airports. Hotels close for remodeling.

What do you do with your trip when things happen, and circumstances change? You change your plan, you revise your schedule, you plan as you go. You sit somewhere with your travel companions, and go back over guidebooks and schedules and possiblities, and revise accordingly. You don’t dump the core heart of your plan, but you might change the flesh and bones details.

You certainly wouldn’t just keep going just because that original plan said so, right? You wouldn’t try to fly into the hurricane or charter a plane to substitute for the one that was cancelled. You wouldn’t sneak into the hotel that was closed for remodeling. You wouldn’t ignore that great tip you got from the in-flight magazine.

When assumptions change, you don’t just run your head into a brick wall, because that’s what your plan said; you change your plan.

That’s where the title of this book comes from: you enjoy the plan as you build it, and you revise and correct and improve the plan as you go. Take some guidebooks and maps and a laptop along, so you can change things later. Listen to people you meet who offer new ideas. Expect to revise your plan as things happen and assumptions change.

Planning is part of the journey. It makes it better.

You might call that plan-as-you-go travel planning.

Planning Your Business

And I’m calling this new kind of business planning plan-as-you-go business planning. This is easier and far more practical than that large old-fashioned business plan you might imagine, and even fear, that you need.

My next chapter shows you how plan-as-you-go planning is different from the old-fashioned Business Plan that nobody uses. For now, here’s a quick summary:

• · It’s comes in integrated related pieces like blocks.
• · You can start anywhere and get going quickly. Jump from place to place.
• · You do only as much as you’re going to use. It’s planning for business’ sake, not for planning’s sake.
• · You can mix and match. Use what fits, ignore what doesn’t.
• · Like an artichoke, its built around a heart. The heart of the plan is a combination of market, identity, and focus.
• · Its flesh and bones are the concrete specifics, like dates, deadlines, milestones, budgets, and forecasts.
• · It’s a plan, not just a document. You don’t have to print it, but you can. You can also leave it on your computer.
• · It’s the source for the printed plan document, or the pitch presentation, or the elevator speech.
• · It leaves tracks so you can follow it back.
• · It assumes rapid change. It’s about managing change well.
• · It’s always there, always changing, always updated and refreshed, always ready to print as needed, but never finished.
• · It doesn’t have to be right to be useful. It helps you track where you were wrong and revise and review and correct. Like steering and walking, planning doesn’t hold the course when it’s better to correct the course.
• · It is concrete and measurable so you can track results and use it.
• · It never, never sits wasted and ignored in a drawer.

A Different Approach to What’s In a Book

Living in the Real World

This is 2008. I’m not pretending this book lives alone. As I write this I’m doing three blogs myself and three others as a guest expert. I’ve only recently stopped running a company that lives and breathes web traffic, download sales, conversion rates, page views, visitors, and Google analytics. I’m working with Microsoft office on four computers and on three different office subsitutes in the web world, where my documents live online and I visit them from whichever computer I’m on.

If you’re near a computer, go to www.timberry.com/thebook/ and you’ll see what that means to you. It’s a new world now, everything changes so quickly. Happily most of what I have to say lasts but there’s also constant updates, new ideas, tools, and of course new stuff on my blogs and associated websites. Join me there. That’s your portal to what else is happening in plan-as-you-go business planning.

I don’t expect this book to sit static on the shelf, I expect you to use it. And I don’t expect it to sit static as it is, I expect to update it constantly on the web, on my blogs, and as it flows through the world into other books, magazines, software, and so on.

The Blogs

From the portal page you’ll find links to other stuff: updates, online tools, templates, the proverbial latest and greatest. And I also hope you’ll check in and look for what’s going on at my regular posting places too:

Planning, Startups, Stories (http://blog.timberry.com), my first blog, sort of a flagship blog. That one gets a lot of my developing work on business planning, plus stories of real companies, including my own, mistakes, occasionally interesting videos, current events, and planning fundamentals.

Up and Running (http://upandrunning.entrepreneur.com), my blog on starting a business, hosted at entrepreneur.com. This one gets examples of actual startups, stories of startups, advice, new ideas, and links to other blogs and outside sources.

I’m also on some other blogs including the Business in General blog, Small Business Trends, and the Huffington Post.

Chapter updates

Please do check in at that portal page because I will be updating some chapters some times. After all, if we’re doing plan-as-you-go planning isn’t it also logical that we do write-as-you-go authorship? Things change, not just in your business, but also in the business of business planning.

Information sources

Links, resources, references that come up in this book can also change; once again, we’re living in the real world here, so we have to deal with change. I’ll keep you updated through the portal pages.

Software, Online Tools, etc.

You don’t need software to do plan-as-you-go business planning. This book is about the planning, how to do it, why, when, and how to work with the ideas, the people, the problems, the information, the decisions, and, of course, also the numbers. It isn’t about any particular software.

Planning doesn’t require any particular software. Plan-as-you-go planning is about results and management, not tools, so you can do it on the back of your hand as far as I’m concerned.

However, just in case you’re already asking yourself as you read this, I am also the principle author of Business Plan Pro, published by Palo Alto Software. I’m not going to talk about that in this book, but I can at least assure you that whatever I’m suggesting you do can be done within that software. And also, look for a coupon, there’s a deal available.

Finally, a related note about tools. I will refer to tools in some places where they are already up and running on the web and available to you at no charge. As with the software, you won’t need them to use this book, but they’ll be available to you; and, unlike the software, those tools are free. You’ll see them when they come along.