The Living, Breathing Business Plan

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Plan As You Go Business PlanningTim Berry, Founder and President of Palo Alto Software, who posts here at Small Business Trends and is someone I’ve come to consider a long-distance friend, coined the term “plan as you go business plan.”

The “plan as you go business plan” emphasizes the importance of the planning process and the development of planning behaviors in your business, rather than creating some humongous written tome. Tim has incorporated his philosophy into a book titled “The Plan as You Go Business Plan” that’s due to be released this summer.

You see, many people approach (or fail to approach at all) a business plan from the belief that it’s a one time creation and that once it’s created, it’s finished and becomes a sort of “bible” for your business. This couldn’t be further from the everyday reality of how we operate our businesses.

I wrote about this topic in my recent column at the OPEN Forum.

Bottom line: planning for your business is crucial. Don’t avoid planning. And whatever you do, do not approach a business plan as a one-time creation. Approach it as a living, breathing, continually growing plan. One that’s worthy of your attention on a regular basis and one that’s flexible and expandable. Creating and approaching your business plan in this manner will keep you focused on the planning — and help you begin developing planning behaviors that become a regular part of your routine to keep your business on track.

Have you worked planning into your business on a ongoing basis? Do you do any business planning?

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Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

15 Reactions
  1. Makes perfect sense, too. The more flexible the plan, the more flexible the business – the better for you. And keeping your business plan “alive” keeps you and your business focused on your goals. Just a bit of tweaking every month or so will keep you right on track. I’m going to have to checkout the book, though, because I’m sure there’s plenty of insight and tips.

  2. I agree. Circumstances change constantly, planning as you go lets you make adjustments as things come up. Being flexible is key to any business owner.

  3. I certainly agree with the premise that business plans should be living, breathing documents and that they don’t need to be “tomes”. I’m not so sure the phrase “plan as you go” gives rise to the appropriate sentiment in an entrepreneur’s mind.

    NEOinc is a collaborative of technology incubators in Northeast Ohio. We work daily with high-growth potential startups and entrepreneurs, helping them accelerate toward commercialization. One of the constant challenges we face is getting them focused on developing a business plan. Given the technology focus most of our entrepreneurs have, they will eventually be looking for several rounds of 6 figure investments. We try to stress upon them that no one is going to give you that kind of money without a complete, realistic business plan.

    The other incentive I personally use often is that the business plan should be your roadmap for building your success. “What are you going to do the day after someone gives you 500K?” is a question I often ask, and hold up the business plan as the answer.

    Once the business plan is done, we also certainly advocate keeping it fresh and updating it as business conditions change.

    Based on your post Anita, I belief Tim would agree with everything I’ve written. I respect Tim Berry and value the wisdom he has shared on this blog. I’m afraid though that people that see the title of this book and don’t read it, will take it as an expert endorsement that it’s okay to create your business plan “as you go”. That may be acceptable for lifestyle entrepreneurs, but it certainly doesn’t work from where I sit.

    It’s probably too late to change the title of the book, and I’m probably picking too fine of a nit here, but entrepreneurs are also looking for shortcuts and excuses to avoid the “boring” aspects of starting a business.

  4. Neal O'Sullivan

    I was very pleased to read the post(s) on maintaining company business plans year round. I have been involved in writing business plans for almost 20 years and here are a few of the lessons I’ve picked up along the way.

    I suggest that an annual plan be fully completed and “in-the-can” on or about Thanksgiving of the previous fiscal year. Doing so will allow five weeks to load the data into your GL. Doing this creates synergy between your EXCEL templates and the automatically generated financial output from packages such as QuickBooks.

    In addition, try and close your monthly books in three days or less (probably 10 hours total). This will give you time to forecast the next months pro forma numbers early in the period and allow you to conduct variance analysis on “Actual” to “Plan” and “Forecast”.

    Lastly, whatever the term; “plan as you go”, or simply “operating plan”, one thing is certain – doing so illustrates opportunities to exploit as well as operation areas that require greater attention and/or perhaps a sharper pencil

  5. Anita,

    we seem to have been on the same wave length today. I actually posted a guest article today by Mike Michalowicz that I thought was very interesting b/c the article is about what he calls the “Three Sheet Strategy”. He pretty much calls business plans useless and outdated (at least that’s what I got from it:)) and recommends the Three Sheet Strategy instead. Although I still believe that a business plan is necessary to some degree, I am not a huge fan of the lengthy expositions that we learn to compose in “BUS 101”. Check out what Mike’s has to say about (click the link to my name to see the article). I think he makes some valid points.

  6. It’s great to hear that Mr. Berry is getting behind this strategy. So often, it seems to me, small businesses are intimidated by the idea of creating some huge, ungainly business plan that’s divorced from their actual operations. As long as a business thinks strategically about their industry, their competition, and their customers – and as long as they keep that research up to date – they won’t be surprised by something unforeseen. And that research really isn’t very difficult – no more than an afternoon or two at a library with a librarian who knows what he/she is doing

  7. I didn’t have a business plan per se, but I did think long and hard about what I was going to leave my job for. And you’re right, it’s constantly evolving and changing!

  8. We have a business plan for our company and I agree it should be a working document. The key reason is like the marketing plan within the business plan it saves you time and money if you have one and keeps you from getting sidetracked.

    Also I believe it works only if you analyze and track your results and progress on a regular basis. This has allowed us to make adjustments during the year and be proactive not reactive when market conditions change, new competitors etc come into play.

  9. Neal O'Sullivan

    Beth you post a very interesting point-of-view. Mike writes a very entertaining article. I am sure that he writes from experience. However, consider that any organization must integrate both short term and long term considerations simultaneously. That means GAAP reporting consistently. The short term stuff – “Daily Metrics” is just a simple “Dashboard” report of the controlling pulse points that drive each individual business. This is pretty straight forward stuff and plows no new ground.

    Quarterly reports, in order to be useful, should be reduced to monthly point-of views.

    Prosperity plan is the only shelf article entitled to collect dust. It is an intermediate life product ( <= 5yrs) and thus serves only as a macro reference guideline.

    However, the business plan being a one year point-of view remains indispensible. The thrust of the post as I read it was to remind small business owners that a business plan is only valuable when it is properly maintained. “Three Sheet” approaches are closer to the role of an FP&A function.

    An important role of business plans vis-à-vis actual vs. forecast is to lay the groundwork for eventual due diligence when the hard working business owner cashes out. Without this data, subjective risk adjusted rates could cost the seller a ton of cash.

    In my humble opinion, a business that views active business planning maintenance and its corollary learning process as “living in a dinosaur age” is akin to building your house on sand.

  10. Anita,

    Thanks for pointing the book out – I’m always a fan of Tim and his great software – I use it to plan for my current businesses (and future businesses).

    Planning is crucial, indeed – Planning minimise the unexpected things that might happening to your business.


  11. Martin Lindeskog

    I will get this book. We have used this approach in our business. It the business “landscape” changes or some new external thing comes to play, then you have to update your business plan accordingly.

  12. Thanks a lot..

  13. Linette Singleton

    Matt has hit the issue right on the head. Writing a business plan should not result in an overwhelming document devoid of a business’ reality. The benefit to writing a business plan is to consider possible opportunities and risks to making your business a success. The exercise can help keep a business owner from being unexpectantly blindsided.

    And to follow-up on Neil’s earlier point, I would like to see the annual end-of-year update to the business plan take place in conversation with one’s accountant as part of year-end tax prep/return planning.

  14. We started with no real business plan but we had a direction and we know where we wanted to end up. The great thing we learnt from this was the best market research you can do is by actually going out to the market and seeing if you can sell your product. After 12-24 months we also had the right pricing model and had been trading for a period of time which others would have been planning.