(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 »

Palo Alto Software Ltd is delighted to announce that we will be running a number of business planning workshops in London, U.K., commencing on 27 January 2009. These business planning workshops will be run in conjunction with Company Partners, a Wokingham-England based business matching service, and will be held at the British Library in Central London. These workshops will be the perfect complement to our best selling Business Plan Pro product and will cover everything from pitching your business to understanding key elements of your business plan such as sales forecasting.

There are a small number of early bird tickets still available for this inaugural business planning workshop.

Alan Gleeson
Palo Alto Software U.K.

Tags: business pitch, business plan, business plan training, business plan workshops, elevator pitch, pitch
Posted on January 7th, 2009 | No Comments »

Harumph. Google ads. This is a blog post reviewing Business Plan Pro; a nice review. I appreciate the comments. But, thanks to the magic of Google ads, it’s surrounded by ads for schlocky business plan templates. Dumb ads, making dumb promises.

For example: “download” a winning business plan? That’s nonsense. If it was already written, it’s not going to win anything but your wasted money. Or, worse yet, a business plan costing $18.95 that claims to be “investor/bank ready. Full research. Automated 3-year financials.” Does anybody buy that pitch?

And this stuff is interleaved into an article reviewing serious business planning software. Sigh … brave new world.

Tim Berry
President and Founder
Palo Alto Software

Tags: business plan, business plan software, google ads
Posted on January 7th, 2009 | No Comments »

Business pitches are growing in popularity here in the UK as well as in the US. However, as this article, The Business Pitch by Alan Gleeson illustrates, business pitches are no substitute for the real thing - a thorough business plan!

This short article describes the concept of pitching in detail, and argues why pitches are not substitutes for business plans, before recommending some tips to ensure that your pitch hits all the right spots. Finally for some further information on what an elevator pitch is, visit Tim Berry’s article series on the Elevator Pitch at BPlans.com.

Alan Gleeson

Palo Alto Software UK

Tags: business pitch, business plan, elevator pitch, pitch
Posted on December 10th, 2008 | No Comments »

I’m sure almost everyone is familiar with the story that Thomas Edison discovered 99 ways to NOT make a light bulb. That’s 99 no to reach 1 yes. The point here is that a negative result, proving something didn’t work or was not so, is just as valuable as a positive result. Sadly, scientific research has become so expensive, and so heavily subsidized/sponsored by corporations, that it has become the expected norm that every result must be a commercially marketable yes result.

That “always yes” attitude has come to shade the development and use of business plans as well. It’s gotten to where people think that every business plan has to show exorbitant profits and wild success. And to reach that end, all that they need to do is overestimate the financial tables a bit, or a lot, until the Profit and Loss and Balance Sheet show the desired results. This is a bad and dangerous tack, in my opinion.

For instance, we saw one plan for a tennis club with indoor court rentals. The financial tables looked good until we divided the rate per hour into the sales forecast. Seems those courts were rented continually, 28 hours a day, every day, 365 days a year. Not possible I’m afraid.

Or the mobile auto oil change business in a large mid-western city. Again, closer inspection of the sales forecast showed that the one worker was changing the oil in a car every 45 minutes, with no travel time between jobs, in all weather, every month of the year. Now, I’ve tried to change my oil in Illinois in January, outdoors, lying on my back in the snow and below-freezing temperatures. Let me tell you from experience that 45 minutes is painfully unrealistic.

Final example: there was the apartment rental company with five vice-presidents but no employees in the personnel forecast, and they never showed how or when they paid for the buildings they said they purchased.

These business plans all said YES in the financials — if you didn’t look too closely.

Now, I say that NO is an acceptable result from a business plan. A business plan for a start-up company that shows huge losses, or negative cash flow is an OK result. It tells you that the business as planned will fail. It tells you that some of your basic assumptions are wrong. It tells you that you are missing something immensely important.

And this is better than OK! Rather than starting up with unrealistic expectations and then hitting bottom in an excruciating crash, you can stop right now and reassess, before you make a financial commitment. Don’t ‘embellish’ the financials by boosting the sales forecast. Look at your market, your competition, your expenses, and everything about your plan and be realistic.

Honest reflection may tell you that this isn’t the business to start right now. Or, you might revise the plan and discover if you put some of those vice-presidents out on the production line, it reduces your costs of goods to a point where you really can make a modest profit on steady sales, without hockey-stick growth. After your revisions, you still might not make a profit until year three. But in going through this process, you may become convinced that the business is viable with adequate start-up funding and second-round investment.

NO is an acceptable result for a business plan if the plan exposed the flaws and showed the way to a realistic YES.

Steve Lange
Senior Editor
Palo Alto Software

Tags: backtofundamentals, business plan, business planning, failure, fundamental, Success
Posted on November 20th, 2008 | No Comments »

As part of Global Entrepreneurship Week we are focusing on bringing business planning Back to the Fundamentals. One key issue is the uniqueness of your business planning. There is no other business exactly like yours. (If there is, you’d better reconsider your plans PRONTO!)

Sample business plans are simply examples. They are NOT a one-size-fits-all solution. Sample plans exist to give you ideas and guidance in your thinking and planning for your business.

In a new article planning guru Tim Berry discusses why It has to be YOUR plan for YOUR business.

Tags: , business plan, example business plan, sample business plan
Posted on November 18th, 2008 | No Comments »

A certain je ne sais quoi which makes English such a creative and challenging language is its sponge-like ability to absorb and use words and phrases from other languages as if they’ve always been there.

We regularly use nouns from other languages to improve the image of the same items in our product or services offerings. Pomme de terre frites, (or simply pomme frites) appears on fancy menus instead of French fries. Grande and Vente make our cappuccinos and caffè Americanos taste far better (and cost more) than simple big cups of coffee.

Atelier (a workshop or studio) is a popular addition to the store names of artists, or specialty shops or boutiques (to use one French word to describe another French word wink).

We use abbreviations such as R.S.V.P. instead of spelling out répondez s’il vous plaît, when please respond is just as succinct and stalwart.

When applying for a job we’ll prepare a summary of our accomplishments and call it a résumé, unless it is a job in academia, in which case that summary might be called curriculum vitae.

Our business plan financials are often labeled pro forma (in advance, or as a matter of form).

Your physician’s protégé may give you a pro bono prognosis and prescribe a placebo and wish you prosit. Geshundheit!

Can you tell the difference between ad lib., au-h2o, ca., circ., ebit, e.g., et al., etc., i.e., ibid., lsmft, v., vs., viz, v.s. or v.v.? Can you spell out all these abbreviations?

It is so easy for us to read over, past or through these foreign words that are emigrating into English. Many times we simply make a guess on the meaning, based on the context of the sentence, because we are too busy, or too lazy, to look them up. But then many of us compound the error. We incorporate them into our own writing, still without knowing what we are actually saying.

So, what can you do? Obviously the first thing to do is use your dictionary. There is the old standby, the printed book (our Documentation team has six different editions from different publishers). There are plenty of online dictionaries as well. Google or Yahoo! search and you get a plethora of links. Bookmark your favorites and return to them often.

There are a couple free translators on the Internet as well, such as SDL Free Translation.com and Babel Fish, though they don’t translate Latin.

And, here are two good reference books I’ll recommend to you.

Latin for the Illiterati: Exorcizing the Ghosts of a Dead Language by Jon R Stone. Over 5,000 entries of Latin words and phrases that turn up regularly in modern English.

Oxford Dictionary of Foreign Words and Phrases edited by Jennifer Speake. Covers 8,000 words and phrases from over 40 languages.

Give your writing that certain indefinable quality (je ne sais quoi) of worldliness when you drop in phrases from other languages. No faux pas.

Steve Lange
Senior Editor
Palo Alto Software, Inc.
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Tags: business plan, business writing, english, foreign phrases, foreign words, french, latin
Posted on November 11th, 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 »

One of the most overlooked, forgotten, and intentionally ignored sections in a business plan is the analysis of the competition. Don’t kid yourself. You have competition. Everyone has competition.

It might be direct competition; another business selling the same service or products. Say you sell house paint. There are probably several other paint dealers and home improvement stores in your area selling paint as well.

It might be indirect competition. Using the same example, stores which sell wallpaper, wood paneling or vinyl siding compete against you. Even the house painter/contractor may compete against you by convincing a “do-it-yourself” homeowner to pay for the job on a “time and materials” contract where the painter provides the paint, purchased from his favorite supplier.

Read more about the competiton in Tim Berry’s Hurdle: the Book on Business Planning online: What you Sell and The Business You’re In.

Here at Palo Alto Software, we have read hundreds of business plans over the years. Our Business Plan Pro business-planning software includes over 500 sample plans. Time and again we’ve read a plan where someone thinks they have a unique service or product and proclaims they have no competition. Wrong. So very wrong.

Remember, before anything else, that every potential customer you identify has the option to not spend their money at all. They can choose not to buy from you, choose not to buy from anybody. Or they can spend their money on something entirely different.

Your competition is the savings account, the electric bill, the school tuition, the 401(k), the groceries, the kids’ allowance, next year’s vacation fund, etc.

When you develop your business plan, whether it is a startup plan for the bank or your day-to-day operations roadmap, spend some time thoroughly finding and analyzing your competition. From this you can evaluate what the other businesses are doing right and what they are doing wrong in marketing themselves, how well they are generating potential leads, and then converting those leads into customers.

For a marketing perspective on competition, visit John Jantsch’s Duct Tape Marketing and do a search on competition. Here is one of the many good articles from the list; Analyzing your competition.

Steve Lange
Senior Editor
Palo Alto Software

Tags: business plan, business planning, competition, competitive analysis, competitor
Posted on September 26th, 2008 | No Comments »

One of the great benefits of websites such as Amazon is the ability to read other peoples impartial reviews. Faced with what seems like an every growing array of choice, for an ever growing set of problems, real user reviews can help you reduce the option set so you can buy the best solution for your particular need. However this system is not without it’s problems as Tim Berry has previously pointed out. Competitors can game certain systems (including Amazon) by posting bad reviews behind a cloak of anonymity, and customers can also use them to gain revenge if their demands are not met. Reviews undertaken by established companies tend to be much rarer and are particularly valuable to customers (and producers alike).

As a software producer we are always keen to get independent reviews. We are 100% confident that we have a fantastic product in Business Plan Pro 11.0, but it’s especially pleasing when reviews come out so positively. Business Plan Pro 11.0 has just been reviewed by Company Partners, in the U.K. and has received a ‘highly recommended’ commendation - the first one Company Partners have issued since they first started reviewing business plan products and services.

When these reviews assess competitive and substitute products also, it helps inform entrepreneurs as to which products are clear category leaders. One challenge for software publishers is that prospective buyers are faced with an array of choices and until they consume the product they cannot assess its true value. Consumers are not going to buy all of the options so have to rely on marketing, word of mouth and reviews to help them decide.

We also like reviews as any negative points can help inform new features, or design changes in future editions. Thankfully any negative points we receive regarding Business Plan Pro are usually pretty minor, after all, we are fully committed and focussed on making the business planning process as painless as possible.

The Business Plan Pro 11.o review is available here.

Alan Gleeson

Palo Alto Software

Tags: business plan, business planning, product review
Posted on July 10th, 2008 | No Comments »