Category Archives: Plan-as-you-go Planning

Revising the Root Canal Theory of Business Planning

For years I’ve lived with my own “root canal theory of business planning.” Do the Google search for that phrase and you’ll see that my previous writing about this comes up first. Like root canals, business plans were something people dreaded, but needed. Happily, things have changed.

Unlike a root canal, modern-day business planning should not be painful, is not something you do all at once, and ought not to be a cure for anything like a toothache. Instead, it should be fun and interesting, and a regular process. It’s preventative, not curative. I call it plan-as-you-go business planning. The plan stays alive. It’s not painful to do, you like doing it because you’re running your own business and the planning part of it is fascinating. It’s your future, your life, and controlling your destiny.

It’s only now-obsolete myths that liken the business plan to the root canal. They might have been true in the past, but are definitely not true anymore.

root canalI had the worst kind of reminder yesterday: a root canal. This one repaired one done 20 years ago. Root canals have changed. Technology has improved. But they’re still bad.

It was just after having that first root canal that long ago that I developed the root canal theory of business planning. I’d had a horrible toothache back then, a sleepless night, and by the time I got to the dentist chair the next morning I really, really wanted that root canal. I wanted the pain to end.

Back then — late 1980s — I thought about how people only did business plans when they absolutely had to, for investment or business loans; and about how when they did have to, they wanted that business plan fast, and they wanted it badly. But it seemed like nobody who didn’t have the urgent need wanted to do a business plan. Our fulfillment house noted that our business plan software orders had the highest ratio of overnight shipping of all their clients.

Today I believe what I posted on this blog two years ago: If you dread business planning, keep your day job.

(Photo credit: cc license by radiant guy, on Flickr.)

Number One Business Plan Book

I hope you’ll forgive me this post, but it took a long time writing, absorbed most of my Spring, and involved a lot of work by other people with editing, design, and so so forth.

These things go up and down, but I’m proud to share that — at least as I write this — The Plan-As-You-Go Business Plan is the number one ranking for business plan books at

Audio on Business Planning

Last week I was a guest on Barbara Weltman’s Build Your Business radio show on  In the first part Barbara starts out with a review of the present bleak economic picture, then introduces me and business planning. It’s about 12 minutes of interview (the last three minutes are commercials).

Click here for that segment.

The questions, or topics, in this segment include:

  1. Who has to do a plan? It’s about who wants to, what are the benefits, what this does for your business.
  2. What are some common errors?
    1. Not reviewing it regularly. Thinking that it’s a document, that it gets done and then the task is done.
    2. Thinking you don’t have a plan unless you have a full complete plan. Not understanding that it can be just the first part, or the most important part, and it’s useful even if it isn’t the whole thing to show to investors.
  3. Plan as you go planning. What is it, why is it important, and how does it work?
    1. You don’t do the whole thing first, in one fell swoop. You do the parts you’re going to use, and you start using them. 
    2. It doesn’t stop, it doesn’t die, you don’t finish and complete it. I’ts alive, you keep using it.
    3. The plan isn’t a document. It’s on your computer, and it’s in your head.
    4. It recognizes that things are going to change. It’s about managing change, not blindly following a plan as it was written in the past. Keep it alive.

The second part is about seven minutes plus commercials. Click here for that segment. Topics are: 

  1. Sample business plans: how and why to use sample business plans, and when not to use them, and how not to use them. You can’t buy or get a business plan, already written, that works. They are just examples.  (that’s the first four minutes).
  2. Using a professional business writers: do you have the budget? And do you understand that it has to be your plan, not the consultant’s plan? You can work well with a consultant, as long as you understand that.

Zen Habits to Autopilot to Business Planning

Dieting. Regular exercise. Investing. Planning.  All of them so much easier said than done. Easy to know what to do, but hard to do it, because you have to actually do it, repeatedly, not just know what to do. Emphasize, for me please, planning.

What do these things have in common? You guessed it. We know what we should do, but it takes patience, habits, discipline, routines. So we just don’t do it.

While driving over the weekend I heard the podcast of Terry Gross of NPR interviewing Joe Nocera of The New York Times about investment. He said that same thing (I’m paraphrasing):

Good investing takes patience, and waiting, and sticking to things. It’s a lot like dieting. We all know what we’re supposed to do, but we just can’t sustain it over the long term.

And related to this, I just picked up Autopilot Achievement: How to Turn Your Goals Into Habits on Zen Habits. Dealing, essentially, with the same underlying problem. In short:

It’s such a simple concept, yet it’s something we don’t always do. It’s not exceedingly difficult to do, and yet I think it’s something that would make a world of difference in anyone’s life.

Break your goals into habits, and focus on putting those habits into autopilot.

I immediately recognized the problem of planning, which is intended to be a matter of routinely reviewing and managing plans and comparing the plan to actual reality, and course corrections; but too often it just isn’t. If we manage to plan, we forget to work the plan, revise it, review it, keep assumptions where we can see them, and of course change the plan as reality reveals itself.

As I read on, I saw a recipe for working goals into habits that sounds astoundingly close to what I’ve been saying about business planning (that’s planning, of course, not just plan). Here are the details (as direct quote):

It’s a pretty simple process, but let’s go over it step-by-step:

  1. You goal should be written out very clearly. The better you can visualize your goal, the easier this will be.
  2. Think about the steps needed to get to your goal. There may be many.
  3. Can the goal be accomplished with a series (2-4) of daily or weekly actions? For example, to save money, you will need to make a savings deposit every payday, before you pay your bills. Through that regular action, the goal will eventually be accomplished. Figure this out, and that’s your habit or series of habits.
  4. Figure out the amount of the habit will need to be done to get you to your goal by your timeline. By ‘amount’, I mean that you have to figure out quantity times frequency to get your desired result. For example, I can run every single day but not be prepared to run a marathon if I don’t do enough miles or long runs. So if I’m going to run every day, I have to also know how far (and any other things such as different workouts on different days). If I’m going to have a savings deposit every week, I need to know how much is necessary for each deposit in order to reach my goal. Figure out this ‘amount’ for your habit and make a schedule.
  5. Focus on the first habit for at least one month, to the exclusion of all else. Don’t worry about the other two habits (for example) while you’re trying to form the first habit. For more on forming habits, this article is good place to start.
  6. If more than one habit is necessary, start on the second habit after a month or so, then on the third, and so on, focusing on one habit at a time until each is firmly ingrained.
  7. After all the necessary habits are ingrained, your goal is on autopilot. You will still need to focus on them somewhat, but to a lesser extent. If any of the habits gets derailed, you’ll have to focus on that habit again for one month.
  8. After you’re on autopilot, you can focus on a new goal and set of habits.

Does this remind you of good business planning process? I hope so.

An Interesting Drawing; Useful Viewpoint

This image is from Egghead Marketing, in an announcement of a Twitter business plan contest. It’s an interesting summary of a business plan focusing on innovation assessment, written to be read by outsiders; the new world. 

Of course it’s a subset. We’re talking about twitter, as in extreme social media, extreme Web 2.0, extreme new world. No wonder it puts innovation assessment at the center. Also no wonder it emphasizes business model, market research, and management team. Not at all by coincidence, those are the factors that most influence leading-edge investors when looking at leading-edge companies for leading-edge new deals. 

Business model is particularly remarkable. Who needs to talk about business model? Mainly new deal companies that don’t have any obvious way to show investors that they can make money. We didn’t talk about business models at all until companies started getting lots of investment money without having one. 

I said subset. This business plan is a selling document, designed to prove concepts to outsiders. It’s not what every business needs. Form follows function.If you don’t have to prove your market to outsiders, then you might focus more planning attention on what you’re going to do and what’s going to happen and less on proving to outsiders that it’s likely to work. 

One of the fundamentals of my plan-as-you-go business planning approach is that you don’t do the supporting information if you’re not going to use it. Do the market forecast if you have to prove it. If you’re going to just do it anyhow (whatever "it" is), because you’re sure of your business and its market, then get to work. It doesn’t mean you don’t want planning to make it better, but it does mean that your plan isn’t a document, and it’s done for you, not for outsiders. 

Radio Today with Jim Blasingame

Time flies. I was on the Small Business Advocate show again today and Jim said it was the tenth anniversary of my first guest appearance (can you call it appearance when it’s radio?) on his show. I’m always happy to share the microphone with Jim, he’s been doing a good job for a long time. This morning’s talk focused on my new Plan-As-You-Go Business Plan approach.

Elevator Speech Part 1: Personalize

If you can’t say it in 60 seconds, you have a problem. Your strategy isn’t clear enough. Nowadays we call it “the elevator speech,” meaning a quick description of the business that you could do in the time you share with a stranger in an elevator. It’s becoming popular in the everyday language of the entrepreneur, venture capitalist, and the teaching of entrepreneurship.

I don’t think its academic. I think it’s important. I think it’s a great exercise that everybody in business should be able to do. Let’s get simple, let’s get focused, let’s get powerful.

I’ve been writing lately about the heart of the plan, also called the strategy. What better way to condense it than in a quick elevator speech. If you can’t do it, worry.

Start your speech with a person (or business, or organization) in a situation. Personalize. Identify clearly. For example:

John Jones doesn’t particularly care about clothes but he knows he has to look good. He sees clients every day in the office, and he lives in a ritzy suburb, where he often sees clients by accident on weekends. But he hates to shop for clothes (The Trunk Club).

Jane Smith wants to do her own business plan. She knows her business and what she wants to do, but wants help organizing the plan and getting the right pieces together. The plan needs to look professional because she’s promised to show it to her bank as part of the merchant account process (Business Plan Pro).

Paul and Milena live in a beautiful apartment in Manhattan, with their two kids. Paul has a great job in Soho, Milena works from home, and neither has time for food shopping (Just Fresh).

Acme Consulting has five people managing several shared email addresses: [email protected], [email protected], and [email protected]. The five of them have trouble not stepping on each other. Sometimes a single email gets answered three or four times, with different answers. Sometimes an email goes unanswered for days, because everybody thinks somebody else answered it (EmailCenter Pro).

Notice that in each of these examples I could be much more general. The Trunk Club targets mainly men who don’t like to shop but need to dress well, and have enough money to pay for the service. Business Plan Software is for the do-it-yourselfer who wants good business planning. EmailCenter Pro is for companies managing shared email addresses like sales@ or info@. But instead of generally describing a market, I’ve made it personal.

Sometimes you can get away with generalizing. “Farmers in the Willamette Valley,” for example, or “parents of gifted children.” It’s an easy way to slide into describing a market. However, I suspect that you’re almost always better off starting with a more readily imaginable single person, and let that person stand for your target market.

Separate the Plan from its Information Background and Support

I’ve been focusing lately on the difference between your core business plan and the information and analysis and presentation additions that are really dressing, not plan. Too many people assume that a business plan necessarily includes background and supporting information. In fact, the plan itself is your strategy and the concrete steps and specifics you need to run the business. This is one of the core concepts in The Plan-As-You-Go Business Plan book that I’m now writing.

Consider this: every business needs to plan strategy and who does what, when, how much it costs, how much it brings in, and how much money is in the bank. That’s absolutely essential for everybody. That’s also what a plan has to include.

The plan should meet the business needs. Not all businesses need to do research and analysis on markets, the industry, the competition, and related topics as they develop their plan. Those that do know who they are. Also, perhaps more important, those that don’t want or need to do this extensive analysis shouldn’t confuse that with the plan itself.

You might be running or growing or starting your own one-person business. You feel very comfortable about knowing your customers and your market and you’ve got a strategy. Why are you writing all this down, formalizing it, making a big project that you don’t really need?  No good reason. Planning is about the decisions it causes, it’s not about showing off your knowledge.

Example: you’re doing a new coffee roasting business. It’s just you and your spouse, and a close family friend who is also investing. You want to develop your strategy and cash flow projections and who does what, and you want to track progress against goals, so you do need a plan. But it’s not going to be a formal business plan document with a heavy market analysis and competitive analysis. It’s going to stay on your computer. You may or may not do a special research and analysis project for this plan, but either way, you’re comfortable with your sense of the market and the strategy you’re developing.

So if you don’t have to do the formal plan, because you’re not required to by the investor or the bank, then don’t. And when you do want to do the plan, because things are changing (maybe you’re entering a contest, or looking for an investor, or the bank asks for it), then you take the next step of developing the document with all the supporting information.

Some businesses need to explain and present the background information to investors, bankers, directors, members of the management team, or others.  In that case, by all means, put it into your business plan document, and/or your presentation, summary, elevator speech, or whatever. But keep in mind that it’s dressing.

The heart of the plan is its strategy, and no matter which kind of plan output you’re using you still need to understand who you’re selling to, what you’re selling, why they buy, how they know about you, and how you’re different from other offerings. You can write that down, put it in slides, talk it through with others, or keep it in your head, but you really have to understand where and how you fit. It’s a combination of your identity, your market, and your business offering.

The flesh and bones of the plan are its review schedule, metrics, responsibility assignments, dates, deadlines, budgets, and financial forecasts. You need those as much as you need anything. It isn’t necessarily a document, or a presentation, or a speech, or a summary; it’s what you’re doing and what’s supposed to happen.

The output of that might vary. Its actual physical existence might be as simple as thoughts in your head, at the beginning, and — I really hope — quickly becomes a collection of words and pictures and numbers you keep on your computer.

You do what the business needs: no more, no less. 

And you never run a business without a plan, and you never think you have a plan unless you have a plan review schedule of meetings set up and you follow through with it, plus realistic metrics, a cash flow plan, and accountability.

Plan-as-you-go and Venture Contests

Very interesting point from David Miller in Campus Entrepreneurship relating venture contests to my plan-as-you-go business planning:

It also makes one wonder a bit about the value of business plan competitions which demand static plans created for judges rather than a living, evolving tools of entrepreneurship that is the plan as you go business plan?

I think David’s right. The question should be asked. So I think that in venture or business plan contests, as in the real world, every plan ought to include its review schedule with times and dates and participants of future meetings spelled out, along with the sensitive metrics to watch, guidelines for metrics performance, and key assumptions that should be reviewed. OK, in most cases it’s hypothetical, but so what? Even hypothetical can be done right. Every plan should plan on planning process.

I’m biased on this point because although I do want to change the way people think about the plan-as-you-go plan, I also really like venture contests. I’ve been a judge of several (this year I’ll be doing Rice, University of Oregon, University of Texas (Moot Corp), and Notre Dame). I believe most of them, certainly these four included, have a pretty good format for evaluating new ventures. That’s a combination of summaries and business plans and elevator speeches and presentations and on-the-spot questions and answers. 

Also, most judges in these contests give implicit extra credit to the venture that is already started and has a track record. And, even more so, if the founders talk about how their plan has adapted itself to changing conditions and new assumptions.