The comments were revealing — one comment in particular. The commenter responded by describing how early on in his business he was advised to create a business plan for investors, but he didn’t want to spend hours on that exercise, stating: “I couldn’t see 40 hours of writing a business plan on assumption (typical entrepreneurs view) when the whole plan could change in a month and then how do you tell the investors the plan you made the deal on has changed?”
However, he says that later on he came to realize he needed planning of sorts in his business as it grew larger, stating:
“I learned when you get bigger you need some sort of plan for your own execution or else you just can get mixed up, simply. Maybe not a full BP by the book but something. I do have my BP in my head but it should be written down like all told me to do. If I did everything right I would modify my written plan once a month. Once a year is not nearly enough and writing it will bring about new ideas yet.”
This commenter hits on two points that resonate with me:
(1) The process of business planning is crucial, because it causes you to think creatively about your business yet stay on track.
(2) Your plan document needs to be flexible enough to incorporate changes regularly. Don’t think of it as some huge printed document (a Business Plan with a capital “B” and a capital “P”) that sits on the shelf for a year. Rather it should be something that evolves and is modified regularly as your business evolves.
That brought to mind the concept of the “plan as you go business plan” that I’ve been discussing recently with Tim Berry. Tim is the founder and President of Palo Alto Software, the creator of the leading business plan software on the market today.
Tim has coined the term “plan as you go business plan” to emphasize the importance of the planning process rather than a static document. He also uses the term to describe the plan document itself as a living breathing thing that changes as the business changes. Tim explained the plan-as-you-go business plan this way in a recent email to me (bolding added by me for emphasis):
“It’s about using planning to manage your business and control your destiny, whether or not you need the big formal business plan document. Take it in pieces, leave it on a computer, share it as needed, so the planning is about what’s supposed to happen, and who does what, when, and how much money goes in and out. It assumes change, regular plan review, and course corrections as required to deal with changing assumptions.
Your business plan will be wrong, because all business plans are wrong, but it’s still vital because it’s the best way to manage change and keep your long-term direction in mind while managing the short-term as well. And a good business plan is never done, because it has to absorb and manage change.
The plan-as-you-go approach is the best way to get the benefits of planning — focus, prioritizing, mustering resources, setting long-term directions and short term tasks and projections, and of course managing change — without getting bogged down in the big “BUSINESS PLAN” as a document. Not everybody needs the big business plan document, but just about everybody stands to benefit from planning the business. Start anywhere today, and get going with it by tomorrow. Don’t do the whole thing until you have a business reason, but in the meantime start managing change by tracking the difference between what happened and what you thought would happen.”
Tim has recently incorporated these ideas into a book called The Plan as You Go Business Plan, coming out this summer. But interestingly, much of the text of the book is available online at PlanAsYouGo.com. And since the site is set up as a blog, you can even comment on the material and communicate with Tim.
As someone who has written numerous business plans in my career, I’m excited by Tim’s approach to business planning.
Why? It is practical — and achievable.
I know in my current business I can’t set aside a week to work on a business plan — I’m too busy keeping my business growing. If I had to hold off on my planning until I wrote a master business plan, it’d never happen. But spend a few hours here and there on planning and tracking performance and adjusting as circumstances change — yes, I can do that.
As Tim says, focus on the planning — not the plan itself. Instead of getting sidetracked creating some huge document that is outdated almost as soon as it’s done, instead develop planning behaviors that become part of running your business every day, every week, every month. That’s the way it should be.