True confession: In planning workshops I use this “fact” a lot:
An SBA study in the middle 1990s showed that 43% of the businesses that went under that year were profitable at the time.
It tells a very important story. It speaks truth. But it might not be true. I vaguely remember such a story, but I’ve searched for it, and I still can’t find it. It might also be true, but I’m not sure.
Furthermore, which tells the truth better: the story as I tell it above, with facts (43%), or the real truth, which would be:
I’m pretty sure I saw a study once that showed a surprisingly large number of companies going under even though they were profitable.
So, you tell me, am I lying? Or does 43% instead of some vague number make it more credible.
Back in my consulting days, I learned that when a client asked me the inflation rate in Mexico for two years earlier (which would happen on occasion) I would say “26%” instead of “I forget exactly, but it was fairly high, something in the 25%-20% range.” Was I lying?
Is 26% a good surrogate for “fairly high?”
Is 43% a good surrogate for “a lot?”
I think this is the right way to do it. Do you?
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About the Author: Tim Berry is president and founder of Palo Alto Software, founder of bplans.com, and co-founder of Borland International. He is also the author of books and software on business planning including Business Plan Pro and The Plan-as-You-Go Business Plan; and a Stanford MBA. His main blog is Planning Startups Stories. He’s on twitter as timberry.