Plan as you go

(Note: this is from my business plans coaching column this month at Entrepreneur.com. I’m reposting it here, with permission, for convenience of our BIG blog readers. Tim.)

Plans are wrong, but nonetheless vital. There’s a paradox for you. It’s a simple statement, one that I hope is somewhat surprising coming from a business planning expert; but it’s still very important. And it gets right to the heart of what business planning is all about.

More than ever, those who plan look to projections that often miss the mark. Nobody I know, and in fact nobody I’ve even heard about, accurately predicted the sharp plunge in the economy last fall. So of course those who actually use a business planning process are implementing a lot of course corrections, reviews and revisions.

It’s a great example of how this paradoxical statement — plans are wrong, but nonetheless vital — makes sense. As we look at the year to come, most of us are dialing down our forecasts. Does that mean we wasted our time making them? Not at all. How do we even make sense of where we are if we don’t have a map that shows us how we got there?

If you had a plan earlier this year and results differed greatly from what was expected, I hope you’re taking the time to compare those results, in detail, to the earlier plan. Look for where the differences were greatest. Look for where expenses were tied to sales. Look for the bright spots where sales held up. Look for how the numbers were supposed to come together, and not just how they didn’t.

And if you didn’t have a plan, then think of this as a good time to get a planning process started so you have a better view of your business in the future. Start making simple sales and expense projections. Don’t worry that they’re wrong; just make sure you go back each month and plot where and how and in which direction they were wrong so you can correct them.

You should only be wrong a month at a time, and as you use that plan-vs.-results analysis to look more closely at how things are going, you adjust again and improve results for the next time around. With each month, your grasp on reality gets better.

And then, as things go back up — and they will — you’ll be able to use what you learned to see the signs, anticipate and act accordingly.

This kind of planning process is what’s meant by the phrase, “The plan may be wrong, but planning is essential.” Then there’s another old military saying: “No battle plan ever survived the first encounter with the enemy.” What does happen, though, with battle plans as well as business plans, is you don’t know how to recover or how to adjust the plan if you didn’t have a plan in the first place.

Tim Berry
President and Founder
Palo Alto Software

Tags: business plan, business plan course correction, business plan review, business planning, plan-as-you-go business plan, Tim Berry
Posted on January 9th, 2009 | No Comments »

It is fundamentally important to understand . . .

1. You need customers. The first thing you need to start a business, maybe even the only thing you really need, is customers. It all starts with at least one customer.
2. Who is your target customer. In detail. Not just generalities and demographics, not even just psychographics, but who is this person, what drives her, what does she really want from you, what does she like to read, eat, watch? Where does he live, and with whom? What does he drive?
3. Who isn’t your customer. Sometimes the secret to success is who isn’t your customer.

This week Tim Berry discusses the importance of knowing your customers, and knowing that Not everyone is your customer in an article in our series Back to the Fundamentals.

Tags: "back to fundamentals", customers, who is customer, who is not customer
Posted on December 22nd, 2008 | No Comments »

Ok, so, if I am not referring to a special police unit what is SWOT and how can it help you run your business better? SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Every business should be doing a SWOT assessment every year to make sure that they understand the current market and to focus on the opportunities for the coming year and identify any particular threats which may be on the horizon. Threats and Opportunities are driven by the market and industry your business is in, whereas Strengths and Weaknesses are driven by your particular internal organization.

Recently we had a business owner ask us a question about SWOT:

How would/could I use the SWOT analysis tool to assist in my purchase negotiations. How does knowing your strengths and weaknesses, etc., help?

This is a great question as it sheds light on why all businesses need to know their SWOT and should review it annually. If you are suddenly in a position to sell your business for instance, as in the case above, knowing your SWOT can help you in negotiations in the following ways:

1. You can clearly outline the revenue opportunities for your business, by understanding the Opportunity portion of SWOT. Because the Opportunities are market driven they are simply there for the taking — if the business can recognize them, and put resources in the appropriate place. This is a great selling point for a business because opportunities should exist no matter who owns the business.
2. By understanding the Threats, you can mitigate certain questions/fears that a potential buyer might have. You can address certain threats and clearly lay out a plan to combat them. You come out looking like a smarter business owner, and give the impression that you are running a tight ship - something all potential buyers want to know.
3. By knowing your Strengths, you can emphasize them in your negotiations. Perhaps a strength is your history in the industry or the loyalty of your customers. Maybe a strength is the fact that your product and/or service has been the clear winner in the market. You want to clearly outline your strengths as they should help you get more $$ for your business if are trying to sell it.
4. Your Weaknesses will probably be downplayed during the process of selling your business. But knowing your weaknesses prepares you to address concerns the future buyer may have.

So now you know specifically why SWOT can help you if you are selling you business, but how can it help you run and grow your business? Think about this example:

John is a real estate agent trying to sell a house. In order to price the house, and figure out the right way to market the house, he starts listing the different pros and cons:

1. The house is in a great neighborhood. (Opportunity)
2. The house has no garage. (Weakness)
3. The house has an internal vacuum system. (Strength)
4. The house may be in an area with weak planning restrictions. This means the house across the street could get torn down and an apartment building could be put in its place. (Threat)
5. The house has a brand new kitchen. (Strength)
6. The house has a shady backyard. (Weakness in Oregon, Strength in Arizona)

You can see the mental process that John has gone through in order to market and sell this particular house. This is the same thing you want to do for your business. In order to understand the pros and cons, and position your products and services in the current marketplace you NEED to understand what market conditions you are up against (threats), or make your solution perfect for the customer (opportunities) and what your company brings to the table (strengths) and what your company is not very good at (weaknesses). By identifying your SWOT you can then build a strategy to either take advantage of (strengths and opportunities) or combat (threats and weaknesses). Your SWOT is usually the first step towards creating a strategic plan to market and sell your products and or services. And when business gets a little tougher, maybe due to a bad economy, knowing your SWOT will help you put your energy in the right place, while being aware of which factors may threaten or weaken your business.

Have more questions about SWOT? Read more here.

Sabrina Parsons aka MommyCEO 

Email Center Pro

Tags: backtofundamentals
Posted on October 27th, 2008 | No Comments »

We are having our home’s old bathroom remodeled. We were at the plumbing supply business with our general contractor, looking over and choosing our fixtures and accouterments.

When we got to the toilet paper holder I commented on the infamous, incomprehensible, inability of guys to replace the empty TP core with a new full roll. After all, the spindle is pretty simple. A two-piece nested-sleeve, telescoping cylinder with an internal reciprocating spring. Just like a basic shock absorber on a car or truck or mountain bike!

Now, one of the characteristics of higher cognitive function is the ability to deduce a general principle from a specific instance and then apply that general principle to new situations. Since almost every guy I’ve ever met knows about shock absorbers, I just don’t understand how they seem incapable of applying that understanding to the daily encounter with the mysterious, inscrutable TP holder.

I suggested that we should make this similarity apparent to all men. My contractor threw up his hands in mock horror. “You can’t do that! You’d put the shock absorber industry out of business and we’d all be driving bouncing, banging cars on a real bumpy ride.”

Now, humor aside, I suggest that your business plan is the shock absorber for your business. Build it, develop it, and every single month review your plan to see if what you thought would happen actually occurred. Use your plan to continue your planning as you go along every month, adjusting your business’ goals and outlooks to your real world experience. Use your plan to develop “what-if” scenarios, from newly paved to detours, and that living plan becomes a shock absorber, cushioning your business as it dips into the potholes, encounters the unexpected obstacles, and dodges the roadkill of daily operations.

In today’s economy your business plan must become an integral part of your company’s suspension and running gear. Don’t become one of the wrecks of businesses littering the shoulders of the highway of commerce. Plan now or you’ll be shocked by the bumpy ride.

Tags: , , business plan, business planning, potholes, roadkill, shock absorbers, what-if
Posted on October 7th, 2008 | No Comments »

Roger Parker, Guerrilla Marketing Coach, will be interviewing me on Wednesday, October 8th, between 7:00 PM and 8:00 PM EST. To attend, visit the Guerrilla Marketing Association, or e-mail Roger C. Parker.

Note: there will be an opportunity to ask questions during the call, and you’re invited to submit questions in advance as comments, below, or via e-mail.

Tim Berry
Founder and President
Palo Alto Software

Tags: radio interview, Tim Berry, web interview
Posted on September 30th, 2008 | No Comments »

This takes less than one minute, just a quick summary of why the plan-as-you-go approach to business planning has come up, why it’s needed, etc. And hey, it’s only a minute, literally!

I did this short video for the book add-on site at planasyougo.com first, but it belongs on this blog too. It’s about why we need a new approach to business planning. Just in case you don’t get the video here, click here for the YouTube version.

Thanks,

Tim Berry
President and Founder
Palo Alto Software

Posted on August 18th, 2008 | 1 Comment »

Tom Taulli, author and entrepreneur, wrote a great article about the five key steps when starting a business at the Entrepreneur’s Journal this weekend.

The advice is well worth a read and there’s a bonus as he talks about our own Tim Berry’s new book, The Plan-As-You-Go Business Plan.

Way too many people fail because they don’t recognize that nobody’s really good at everything. They play too close and too tight. Get help.

It’s a short read, but chock full of great information.

This is also a great opportunity to let everyone know that Tim’s book, The Plan-As-You-Go Business Plan is now available at Amazon.com for purchase. Pick yours up today!

‘Chelle Parmele
Social Media Marketing Manager
Palo Alto Software

Tags: business advice, entrepreneurship, Plan as you go
Posted on July 28th, 2008 | No Comments »

This is a flash video, set for 800×600 dimensions, which will require that you install Flash on your system if you don’t already have it.  just click this link … Planning as you go with Business Plan Pro … it should open up a new window with a media player showing, and an obvious arrow to click.

The source file was set up at 800 x 600 resolution, so you might want to resize the window to show the resolution at its best. If the window you use to watch this is too big, then it looks fuzzy.

And here, below, is a flash player version of the same thing (I hope) …

If this doesn’t work for you, it might be a matter of Internet band width or compatibility with flash. I’d like to know, so leave me a comment and I’ll get back to you.

Technorati Tags:
business plan, business plan pro

Posted on July 28th, 2008 | No Comments »