Category Archives: Growing a Business

Reflections on Family in Business

April 21, 2007Entrepreneurship, Growing a BusinessTim Berry

Does the world disrespect family business? Is there an unpleasant assumption of nepotism?

When I started Palo Alto Software, back in the middle 1980s, it was about me and business planning and a few good clients and a stubborn insistence on eventually selling boxes instead of hours. When it started as Infoplan in 1983 my oldest child was 11 years old.

They didn’t teach family business at Stanford while I was getting my MBA degree. It was all consulting and analysis and high-end buzzwords. But they didn’t teach entrepreneurship either, just a single course in "small business management," taught by Steve Brandt.

So years pass, those children grow up, and I discover family business in the best possible way. I’m proud. They are now educated, successful grownups, with degrees from Notre Dame, Princeton, NYU, Whitman, and one still not finished, a sophomore at Stanford.

Two weeks ago I named my daughter Sabrina Parsons CEO and her husband Noah Parsons COO.

Nepotism? Let’s see … they are both Princeton grads, they built a London company distributing our software as an independent venture, they’ve managed our marketing as share grew from 50 to 70% and sales by 30%. They were employees #1 and #2 at epinions.com, which eventually cashed in for tens of millions. Noah was employee 101 at Yahoo! and Sabrina managed online marketing for Commtouch.

So now I have what seems like an ideal situation and an excellent example of the upside of family business. I can step down from president-CEO and refocus my job as president on writing, teaching, and living business planning content, the parts of the business I’ve always loved. And at the same time I have a strong management team, experienced, dedicated, and completely trusted.

I can’t imagine a better scenario.

Gathering Your Team

April 6, 2006Business Planning, Growing a BusinessTim Berry

Especially when you’re growing an existing business, you want the planning process to pull your team together, develop commitment, and accountability. Managers have to believe in a plan to implement a plan. They also have to believe that results will be tracked, and that managers will be held accountable for disappointing results and will be given credit for positive results. The planning process depends on everybody believing that results will make a difference.

As an owner or operator of an existing business, recognize this team factor as a vital part of your planning process. Work on bringing the team into the planning at several levels. I can recommend some specific steps that will help make this work.

At least once a year go through a strategy review process that begins with a SWOT meeting and SWOT review. SWOT is an excellent framework that everyone understands and is profoundly strategic. Get your key people together and develop bullet points. Keep notes. Keep the discussion open.
Digest the results of the SWOT. Consider the responsibility you have as owner or manager of a business. Strategy is not done by committee or by popular vote. Work on a digestion system that combines ownership responsibility with participation and teamwork. Optimize the SWOT.
Share the digested, optimized SWOT with your team of key managers. Develop the strategy. Keep in mind that strategy is focus, and the principles of long-term consistency, displacement, and priorities.
Give the team time to develop detailed strategy, tactics, and programs. Use can use the strategy pyramid framework, for example. Keep everbody involved focused on strategic priorities and look for concrete, measurable, detailed specifics. Make sure that everything important is measurable, and that the measure is embedded into the plan. If you can’t track it, then you won’t be able to manage it later.
Merge the team’s contributions into a plan. Remember again that strategy isn’t done by committee or popular vote. Somebody has to have the last word, and that somebody ought to be somebody who owns the business.
Schedule regular implementation and plan review meetings — give them dates and importance from the beginning — at the same time that you approve the plan. Make this schedule very specific, real dates and times, so that every manager knows ahead of time. Do something like the third Thursday of every month. Review plan vs. actual results. Talk about why actual results are different from what was planned — and they always will be — and what should be done about it.
Make sure that those review meetings happen. They have to be important. If you’re the owner, operator, or manager, be there. Make sure you attend and manage those meetings. If the review meetings fall apart, so will the plan.

— Tim Berry —

What? Me Plan? But I’m Not a Start-up!

April 6, 2006Business Planning, Growing a BusinessTim Berry

Ask the owner of a small-to-medium company about a business plan. Expect the answer: "Business plan? but I’m not a start-up. Why would I want a business plan?"

They don’t all answer that way, but too many do, and it’s a shame. The business planning process is such a great tool for growing a business, but so many people dismiss it as a one-time plan used only to start a company or raise financing. That myth of the business plan for start-ups only gets in the way far too often. If you own or run a company, you probably want to grow it. And if you want to grow a company, then you want to plan that growth. And the planning is only the beginning; you want to use the full planning process to manage growth.

Think for just a minute about how many different reasons there are for an existing company to plan (and manage) it’s growth. There’s the need first of all to control your company’s destiny, to set long-term vision and objectives and calculate steps to take to achieve vision. Without planning the company is reacting to events, following reality as it emerges. With planning, there’s the chance to pro actively lead the company towards its future.

For an existing company that wants to grow, planning process is essential. Everybody wants to control their own destiny. The planning process is the best way to review and refresh the market and marketing, to prioritize and channel growth into the optimal areas, to allocate resources, to set priorities and manage tasks. Bring a team of managers together and develop strategy that the team can implement. Work on dealing with reality, the possible instead of just the desirable, and make strategic choices. Then follow up with regular plan review that becomes, in the end, management.

This normally starts with a plan. The plan, however, is just the beginning. It takes the full cycle to make a plan into a planning process.

— Tim Berry —

The Fresh Look

April 6, 2006Business Planning, Growing a Business, Planning FundamentalsTim Berry

Back in the 1970s when I was a foreign correspondent living in Mexico City, I dealt frequently with an American diplomat who provided information about Mexico’s increasing oil exports, which were a big story back then. We had lunch about once a month. He became a friend.

Then one day he told me he was being transferred to another post because he had been in Mexico too long. “What? but you’ve only been here for three years,” I said. I was disappointed for two reasons. “You’ve barely learned the good restaurants!” He explained to me that the U.S. foreign service moved people about every three years on purpose. “Otherwise we think we know everything and we stop questioning assumptions,” he said, “that’s dangerous.”

I remember that day still because I’ve seen the same phenomenon so many times in the years since, in business. We — business owners and operators — are so obviously likely to fall into the same trap. Our business landscape is constantly changing, no matter what business we’re in, but we keep forgetting the fresh look. “We tried that and it didn’t work” is a terrible answer to a suggestion when a few years have gone by. What didn’t work in 2000 might be just what your business needs right now. But you think you don’t have to try again what didn’t work five years ago.

This is why I advocate the “fresh look” at the market at least once a year. Existing businesses that want to grow too often skip the part of business planning that requires looking well at your market, why people buy, who competes against you, what else you might do, what your customers think about you. Think of the artist squinting to get a better view of the landscape. Step back from the business and take a new look. Use the standard Know Your Market techniques and content, just applying it to your business, not a new opportunity.

Talking to customers — well, listening to customers, actually — is particularly important. Don’t ever assume you know what your customers think about your company. Things change. If you don’t poll your customers regularly, do it at least once a year as part of the fresh look. As an owner, you should listen to at least a few of your customers at least once a year. It’s a good exercise.

For creativity’s sake, think about revising your market segmentation, creating a new segmentation. If for example you’ve divided by size of business, divide by region or type of business or type of decision process. If you’ve always used demographics, use psychographics.

Remember to stress benefits. Review what benefits your customers receive when they buy with your, and follow those benefits into a new view of your market.

Question all your assumptions. What has always been true may not be true anymore. That’s what I call the fresh look.

The artist takes a fresh look at the scene every time paints it. How many times as this man seen the banks of the Seine? It doesn’t matter, because he takes the fresh look every time. The business needs to take a fresh look at its market and its strategic situation at least once a year.

— Tim Berry —