Tag Archives: Palo Alto Software

Has a Business Plan Saved Your Business life?

Many thanks to Lora Kolodny for this question she asked me in a comment to my post here yesterday:

But I have to ask — any other cases? Has a business plan ever saved your (company’s) life? (cue song: Last Night a DJ Saved My Life)

Yes, many times. With apologies for what might seem like tooting my own horn, it’s a real question, and it deserves a real answer. So these are real saved-by-business-planning experiences I’ve lived through first-hand.

  • During the early stages of Borland International, after sales had taken off but before there was any working capital, good business planning saved founder Philippe Kahn, his main administrative executive Spencer Ozawa, and the whole company, from a disastrously premature adventure into retail distribution. They stayed with direct sales until there was working capital to support sales through distributors to channels. This isn’t my credit, but I was on the board of directors and I saw it close-up. Philippe and Spencer used planning to see the cash flow and working capital implications, and to postpone the sales to distributors. That probably saved the company, which went public in less than four years from its founding.
  • At the end of 1993, with Palo Alto Software, my wife and I faced the disastrous results of getting into mainstream retail channels with a software product that didn’t sell out from the channels to the consumers. The valuable input we got from buyers in the channel was pretty much “your boxes suck.” But we also knew that our customers weren’t happy with business plan template type products (think of them as Word and Excel files, instead of a stand-alone application). So we did invest in expensive professional packaging design, but, much more important, we went back to the drawing board to develop our first stand-alone business plan application. It was tough at the time because we had no capital left and no outside deep pockets. So we — my wife and I — had to go out on a very long and scary limb with three mortgages and $65K credit card debt (at the worst of it) to pay for repackaging, product development, new channel sales reps, and other elements of a serious business plan. We should have called it a recovery plan. And because we had a plan, with milestones, we were able to survive the risk at the darkest times. We had the plan and the specific milestones to give us hope. Happily, it worked. The first Business Plan Pro was a big success. And amazingly, after all that, we’re still married. To each other.
  • By late 2008 and early 2009, as the recession dug deeper into sales, some of us (me included) wanted to lay off some of our people to prepare for financial troubles. Our CEO, Sabrina Parsons, stuck with the plan, and because of that, as things got better again last summer, as we started actually recruiting more people for a growth period. We hadn’t laid off anybody as cost cutting. The plan worked.
  • When sales tripled in 1996, our business plan showed us in advance how the rapid growth in accounts receivable was going to absorb about a million dollars of working capital that we didn’t have. We were able to go to the bank months in advance, with bar charts showing the projected sales and the resulting cash shortage, and arrange a comfortable line of credit before we desperately needed it.
  • In truth, the plan has served us for years to manage the company.  My wife and I started in the middle 1980s with a plan to “sell products, not hours” that took a long time coming to reality in the 1990s. As the company grew in the 1990s, we got to 36 employees and $5 million annual sales without a penny of outside investment; and that took careful business planning to manage the credit lines and working capital without ever spending money we didn’t have. Since we hired our first employees in 1993, through today, we’ve had an annual refresher of the business plan and a monthly plan versus actual review on the third Thursday of every month. Sabrina’s been running the company for three years now, and she does the same thing. And here we are with 45 employees now, multimillion dollar sales, no outside investors, and no debt. That has as much to do with business planning as with anything else. We do practice what we preach.

And again I feel like I should apologize because there’s so much about my company in this; but Lora’s point in the comment yesterday was very important:

People think plans are just for “beauty pageant” purposes, or certain kinds of competitions that are varying in worth. I like that you shared this example of where you were required to pony up a plan in the real world beyond competition and awards shows: “We did that to get the merchant account initially, to set up a commercial line of credit with a bank, and when we were looking at possibly taking on investors.”

So I’ve taken that literally and given these examples because I believe that every company should have not just a business plan, but a planning process that starts with a business plan and continues through the rest of the company’s life, with regular review and constant change. And the examples I know best are ones I lived through.

Confessions of a Hypocritical Business Planner

Irony: I’m a business planner, and I have been for 30 years now; but the biggest decisions of my real life have been remarkably unplanned.

I could rewrite my own history backwards to make it all seem like it had been planned, but it wasn’t. Going from hippy to business planner to entrepreneur, I tripped over the most important right decisions, accidentally. It was a lot like a shiny metal ball bouncing around in a pinball machine, hitting obstacles and changing directions. Sometimes I made the wrong decisions and got the right results. Go figure.


For example, in college I studied what interested me: Literature. I wasn’t making a career choice, I was taking the path of least resistance. It was an easy step from Literature to Journalism, and — after 10 years with UPI and McGraw-Hill and others — from there to the MBA. And in 30-some years of business I keep meeting people whose careers seem to reconfirm the basic wisdom of studying what interests you. These are people who followed that path of interest and found, later, that it led to the right place.

All of which could end up as dangerously bad advice, I suppose: if taking the downhill path leads only downhill. Sometimes you have to buckle down and work; but at least, if you’re doing something that interests you, the work feels better. That was certainly my case.  I got my first job in journalism in Mexico City, by mail plus a plane trip from Oregon, because I was happy to work cheap and they guessed that since my wife is Mexican I probably spoke Spanish (which wasn’t true until a few months later). There was no planning there; it was a job, in 1971, when jobs were scarce (as they are now). It seemed to prove the wisdom of taking that pinball-like  change of direction.

The next time I changed direction it was for the money.  I switched to business writing from regular wire-service news journalism after three years of it because my wife and I had two kids by then and with kids, money became an issue. Before that, neither one of us cared that much. Journalism had enjoyed an aura of save the world for a while, but that gets old. That change doubled my income (from very little to a little bit more). I waded slowly and fearfully into business writing with about as much enthusiasm as an ophidiophobe (fear of snakes) wading into a jungle swamp. At first, it was just a sellout; but then it got interesting. I took business classes at night school. I really wanted to know what was going on underneath the press releases, in the numbers, where the truth hides.

So it took me 10 years to get from undergrad studies to business school, but that wasn’t a bad thing. By the time I got there I was — notice the theme here — once again interested in what I was supposed to be studying. I’d had enough of business journalism to want to actually know what I had been writing about (novel idea) and that made business school fascinating. And my years as journalist helped me get through business school while working full-time in consulting. I could write fast, and that’s a good thing in school.

I made some very bad decisions that created very good outcomes. In some circles, we call that luck. Later I quit a good job to go on my own writing computer books, but with the help of my wife and my favorite former client, that became business plan consulting. And that — again with the help of my wife and some clients — became business plan software. It seemed like a natural progression. Just as it was critical to write for readers in Journalism, it was even more critical to write for users in software. And all of this changing directions meant that it wasn’t until 1994, 20 years after switching to business writing, 11 years after leaving that good job, that Business Plan Pro was first released.

And, while we’re on the general subject of unanalyzed decisions with good outcomes, doing what you want, in 1969 I asked a girl to marry me after knowing her about two weeks. Next January we’ll have a 40th anniversary. (And we both agree we were lucky. Don’t try this at home. Wait longer.) And at every key moment from literature to journalism to business to entrepreneurship, it was always two of us, never just me. When things were really dicey — like when we realized we had three mortgages and $65K credit card debt in developing Palo Alto Software — it was never “you idiot, what have you done,” but rather “we’ll take the risk together, and if we fail, we’ll fail together.” Knowing that you’re not going to lose a marriage over it makes it a lot easier to change directions.

Pinball metaphor notwithstanding.

(Photo credit: GTibbetts/Shutterstock)

The Luckier I Get, the Harder I Work.

The sun was coming out, just peeking through from behind the tall pine trees on the hill above my house, as I drove into the office this morning.  I’d woken up before dawn and gotten back on the computer.

Does my title to this post seem paradoxical? A twist on the old “the harder I work, the luckier I get” saying? Yes, but it’s also true. At least, and Thank God for it, it’s been true for me.

I’ve been sleeping poorly the last few weeks because I have three projects converging. I like all three.  I wake up just before dawn and instead of turning over and going back to sleep, I’m up. Because I’m excited about making progress.

And this is a good thing. Okay: not getting enough sleep isn’t that good; I tend to drag in the afternoons. But being excited about projects, waking up early because the work intrigues me: that’s a good thing.

Which reminds me that a lot of my entrepreneurship has been escaping boredom. We needed the money so I couldn’t not work, but I could determine what work was. The first time I went out on my own I left a good job because it meant supervising other people doing the work I liked to do, instead of just doing the work I like to do. In the maker/manager scale I wanted to be maker, not manager.

I built Palo Alto Software around business planning because I came to love software and business planning. So there it was: creating the company to create the job I wanted.

So the luckier I get, the harder I work. And I love it.

(Photo credit: by Bushman.K via Flickr)

True Story: Building Business, Changing Lives, One at a Time

I hope you heard–you could have read it here— of the Palo Alto Software’s Oregon Small Business Boost, earlier this month, where we gave away thousands of units of business plan software to help the Oregon economy and reduce its unemployment problem.

The effort depended on more than 85 locations of chambers of commerce and small business development centers and related development organizations. They cooperated by giving away the cards that people used for the download.

I posted here about the results as we knew them immediately afterwards.

Yesterday I received this email. I’m reproducing it word for word here:

One late evening after work, a bunch of us were playing an online game, having fun and just relaxing. It was Friday, and we knew we would be playing all night, since the boss sometimes came in and played with us. It was a great opportunity for the developers, customer service reps and technicians to unwind, though we often were hard core gamers and loved playing whenever we could, sometimes during the day at lunch.

As it turns out, we soon discovered a small business that had opened up in Huntsville, Alabama, called Net-Tricity. It was a computer center that had dozens of stations and with all the newest software that we otherwise didn’t have or didn’t want to purchase for all of us to play. So, on many occasions we’d pack up and head over there and commandeer a dozen stations and duke it out online! The business was a hit and the year was 1997, and such stores were far and few between. Often the only venue for gamers was the colleges and universities, till they started restricting who could access, let alone play. Quake was big then and seemed to be on every available system in the area, though many establishments overlooked it, many did not and made it harder and harder to enjoy camaraderie in a LAN environment.

Eventually, the owners of Net-Tricity sold their business and in the subsequent months, the new owners mismanaged and the store closed. A tried and tested success, shut down after only a year in the black and led the way in the south for this business model. It was 1998 and I was determined to reopen that dream and make it mine.

As with life, I had a family to consider, remarried, moved, change career goals, and resumed trucking. Many years went by as I raised my kids, drove a truck across America, and day dreamed about opening my business. Fortunately, I started a side job repairing computers and consulting for friends in 1998. It was called N3tricity, sounding pretty much like the other company, and exclusive to my operation. It didn’t amount to much till later, as fate would have it. In 2004, my family moved to Oregon to be closer to our family roots.

In 2007, frustrated with serving others interests and making little to nothing for it, I went to visit the Eugene Chamber of Commerce. With a half baked idea and a good intention, I soon discovered that without a business plan, it would be hard to convince anyone to help me out. I hung up my dreams again and returned to my job. Determined to make some progress, I kept running into Business Plan Pro advertisements. I couldn’t afford it and settled with something less and waded through the mountain of information. With my laptop, hunched over my meal in a truck stop, I poured over countless articles online about writing a business plan. It was enough to discourage even a hard-core trucker.

In late 2008, I lost my job and faced the reality that I was quickly becoming too old to be a new hire, and the fear that everyone faces when re-entering the job market. My skills were dated and what worked years ago is no where good enough by today’s hiring standards. The recession made it worse, since it was now an employer favored climate, job seekers are not in demand and businesses can be picky. As early as January, I was quickly moving from interview to interview, all of them saying no, or no thank you. I began ramping up N3tricity’s services through craigslist, business cards, word of mouth, and even networking through the Web.

Now, volunteering my time in the community, church, and social groups, I took another look at business planning software, and came across your product. I still couldn’t afford it and knew if I was to move this project forward, now was the time. I began attending life coaching seminars, gained self confidence and reached out to the malls to find out what they thought about my idea. They loved it. I actually sat down and manually wrote my business plan out. It was done in about a week and I was exhausted. Determined to see N3tricity impact the local community during this recession, I visited SCORE, often. I learned about the give away and planned my entire week around insuring I was first in line.

Now, with it up and running, N3tricity business plan has gone through several revisions, using the resources, assets and outlines, I have a nearly complete plan. It has given me the renewed vision and focus to recommit to building this business. In a follow up meeting with SCORE advisors, the plan actually allows me to focus on what’s important, concentrate on weak areas of my vision, and use my time more wisely. Though it doesn’t remove the anxiety a start-up, it has relieved me of many of my obstacles by simply letting me build a bridge, one step at a time.

Today, N3tricity’s team is becoming a reality. The business plan continues to be a center piece for negotiations, that prospective candidates want to read it, look at the numbers and understand where, what, when, why, and who. Last week I secured my operations coordinator, a gentlemen with over 50 years in the entertainment industry, this would not have been possible without having this plan. Yesterday, I spoke someone I want to be on my IT staff, and he also looked at the business plan first. Later that day, I secured my CPA. Again, the business plan was the first thing they looked at.

With the help of the Chamber of Commerce, SCORE and Palo Alto Software, I am well on my way toward meeting with investors in Seattle and delivering a convincing business plan. There isn’t enough I can say to express my deepest thanks and appreciation for this opportunity you’ve provided to so many, including myself. The simple fact is that this tool is an essential component of any businesses ability to succeed. The resources within were immediately recognized, valued and quickly utilized to create momentum, polish the design, and forward my project to print.

I owe a lot my success to Wings Seminars, the process of moving me off the fence and back into my life, taking charge and moving myself towards my goals, through deliberate action and commitment to change. I owe Business Plan Pro, SCORE and Chamber of Commerce a huge round of applause and gratitude for being available, supportive and a constant reminder to me that success is about passion, drive and intention.

Thank you.

Kind Regards,

Richard Beers

So there: trucker, entrepreneur, and a really good writer of emails (that one is not edited at all, that’s the way I received it).

Business Boost: How Did it Go?

Thanks for asking. Our Oregon Small Business Boost day (business plan software free for Oregonians) yesterday went even better than expected. I like this summary from our local newspaper, which tagged it as “frenzy” on its front page this morning.

And you can click here for our summary of it.

We distributed 16,200 cards through 85 locations. By the next morning, we’d had people logging in and registering their new software from more than 170 different cities and towns in Oregon.

When some locations ran out of cards, we got them more units, even though we’d run out of the formal preprinted cards. We made do. As far as we know, no adult Oregonian who went to one of those locations to get Business Plan Pro for free was turned down.

That was hard. One location had 80 people waiting when they opened the doors. Several locations ran out within the first hour or two.

Was it worth it? Well, just for the skeptics, this was not a light version, hoping for an upgrade. It was Business Plan Pro Premier, the more expensive of the two versions we have. And it was not an end-of-market version either; it’s our latest, and just in case anybody notices a later version within the next few months, if that were to happen, it would be upgradable for free.

So was it worth it? I’m big on planning, objectives, and metrics. Here are some values:

  • We won’t know for a while how many people actually used the software to create new businesses or manage existing businesses better. That will be hard to track. We will be asking people for stories.
  • We know for damned sure that we’ve already helped a bunch of people think about their businesses better. And we’re ready to bet that the massive distribution of business plan software is going to end up helping small business, in general, in Oregon. Which means job and economic improvement.
  • Our 85 distribution spots were organizations trying to help business, not commercial businesses: either chambers of commerce, Small Business Development Centers, economic development agencies, town halls, or similar organizations trying to help people do business. None of them had commercial motives. Calling attention to those locations is a good thing. It did our hearts proud to see crowds outside the SBDCs, for example.
  • We met a lot of cool people, doing good work, within those organizations. That makes us very happy.

So we’ll see. It will be fun to watch. If you’re one of those who got a copy yesterday, keep us posted, okay?

10 Lessons Learned in 22 Years of Bootstrapping

(I posted this yesterday on Small Business Trends. I’m reposting here because this is my main blog, and it belongs here too. Tim )

Last week a group of students interviewed me, as part of a class project, looking for secrets and keys to success. They were asking me because after 22 years of bootstrapping, my wife Vange and I own a business that has 45 employees now, multimillion dollar sales, market leadership in its segment, no outside investors, and no debt. And a second generation is running it now.

Frankly, during that interview I felt bad for not having better answers. Like the classic cobbler’s children example, I analyze lots of other businesses, but not so much my own. As I stumbled through my answers, most of what I was saying sounded trite and self serving, like “giving value to customers” and “treating employees fairly,” things that everybody always says.

I wasn’t happy with platitudes and generalizations, so I went home that day and talked to Vange about it. Together, we came up with these 10 lessons.

And it’s important to us that we’re not saying our way is the right way to do anything in business; all businesses are unique, and what we did might not apply to anybody else. But it worked for us.

1. We made lots of mistakes.

Not that we liked it. At one point, about midway through this journey, Vange looked at me and said: “I’m sick of learning by experience. Let’s just do things right.” And we tried, but we still made lots of mistakes. We’d fuss about them, analyze them, label them and categorize them and save them somewhere to be referred to as necessary. You put them away where you can find them in your mind when you need them again.

2. We built it around ourselves.

Our business was and is a reflection of us, what we like to do, what we do well. It didn’t come off of a list of hot businesses.

3. We offered something other people wanted …

… and in many cases needed, even more than wanted. You don’t just follow your passion unless your passion produces something other people will pay for. In our case it was business planning software.

4. We planned.

We kept a business plan alive and at our fingertips, never finishing it, often changing it, never forgetting it.

5. We spent our own money. We never spent money we didn’t have.

We hate debt. We never got into debt on purpose, and we didn’t go looking for other people’s money until we didn’t need it (in 2000 we took in a minority investment from Silicon Valley venture capitalists; we bought them out again in 2002). We never purposely spent money we didn’t have to make money. (And in this one I have to admit: that was the theory, at least, but not always the practice. We did have three mortgages at one point, and $65,000 in credit card debt at another. Do as we say, not as we did.)

6. We used service revenues to invest in products.

In the formative years, we lived on about half of what I collected as fees for business plan consulting, and invested the other half on the product business.

7. We minded cash flow first, before growth.

This was critical, and we always understood it, and we were always on the same page. See lesson number 5, above. We rejected ways we might have spurred growth by spending first to generate sales later.

8. We put growth ahead of profits.

Profitability wasn’t really the goal. We traded profits for growth, investing in product quality and branding and marketing, when possible, although always as long as the cash flow came first.

9. We hired people slowly and carefully.

We did everything ourselves in the beginning, then hired people to take tasks off of our plate. We hired a bookkeeper who gave us back the time we spent bookkeeping. A technical support person gave us back the time we spent on the phone explaining software products to customers. And so on.

10. We did for employees’ families as we did for ourselves.

Family members — not just our own family, but employee family members too — have always been welcome as long as they’re qualified and they do the work. At different times, aside from our own family members, we’ve had two brother-sister combinations, an aunt and her niece, father and daughter, and husband and wife.

And in conclusion…

Bootstrapping is underrated. It took us longer than it might have, but after having reached critical mass, it’s really good to own our own business outright. It might have taken longer, and maybe it was harder — although who knows if we could have done it with investors as partners — but it seems like a good ending.

Family business is underrated. There are some special problems, but there are also special advantages too.

Business Plans and Prizes and Too Many Winners

Most venture contests deal with three elements: the business plan, the pitch presentation, and the question and answer session. Where does the plan itself stand, in the mix? What I’ve gathered from 13 years of judging graduate level business venture contests is the following:

  • The best business plan isn’t always the best venture.
  • The best venture usually has one of the better business plans.
  • The best venture almost never has a bad business plan.
  • There are relatively weak ventures with relatively strong business plans.

I’m in Houston the rest of this week for the Rice University Business Plan Contest. The finals are tomorrow. Winners will be announced tomorrow night. And there, amidst about $800K in cash and in-kind prizes, will be the $2,500 Palo Alto Software outstanding business plan award. With me announcing the winner.

Leading up to that, two days ago, 11 of us met in a Palo Alto Software conference room. It was the culmination of a three-week process that required evaluating the 42 business plans competing today at Rice. The award is for the plan, not the venture. We’ve seen the plans only, not the people, not the presentations, not the questions and answers. We divided them up so that everybody read at least 10 of the plans, most of the people 12, and a couple of people read as many as 16. The participants included me, our CEO, COO, VPs of product development and customer experience, web producer, and marketing managers. To help balance the output, every plan was read by at least four people.

But we had four winners, not just one. There were four plans which were that good.

Rice University and the contest should be very proud of these plans. The teams that submitted them should be very proud of them. After all of the scrutiny, we ended up with four plans that we’d be very proud to award as the best plan.

Several of us had different views on the relative weight of the plan as document vs. the plan as description of the venture. I know that’s a hard concept to swallow, but think of it like this: can a business plan that has every major factor locked down, but has some occasional spelling and grammar problems, be a winner? Is that better than a plan that is beautifully written, easy to read, has great illustrations, looks sensational, but has maybe one hole in the business details?

And how about this one: is a high-risk, high-return plan, taking tens of millions of dollars to yield hundreds of millions 10 years from now, but only if it runs a very narrow gauntlet of challenges, better than a plan that has only medium risk, a product already selling, happy customers, but projects getting to $8 million in five years, with a valuation of $15 million?

Tomorrow I have to announce a single winner, and, happily, we did finally come to a decision on which one to name. But that one is one of four plans that deserved to win.

True Story: Good Idea, but Hard to Explain

Almost 20 Years ago I developed a software product called Forecaster. You start with an empty chart. Then you assign values to vertical and horizontal. Then you draw a line with your mouse, and Forecaster generates the numbers that correspond to the line.

It was built as something you could use in a business plan. Grab the chart as an illustration, put the numbers into your clipboard, and paste them into Excel (or Lotus 1-2-3, because this was 1989).

But: it took three sentences to explain Forecaster.  And that, I’m sure, was the problem.

Forecaster wasn’t successful in the market. It didn’t sell itself. On the contrary, it took me explaining to sell it. We didn’t have a marketing budget; in fact, we back then was just me and my wife, with no outside financing. Not even the reviewers understood what it did.

One comment that came up a lot: "but that’s cheating." As if getting the numbers from the line was morally wrong. You’re supposed to draw the line from the numbers, and vice-versa. Say, what? Why? 

The Moral of the Story

  1. It’s very hard, and expensive, to market something that you can’t explain in a simple sentence. It’s like rowing upstream.
  2. Competition can be good for you. It’s nice to have competition to help you explain what you’re doing.  Jeff Atwood had a good piece on that earlier this week, riffing on the idea of the arch enemy.
  3. With that next great new thing you want to build a business around, test yourself: can you explain it in a sentence? No? That’s a worry.

The Rest of the Story

  • I took it up to a small exhibition of Excel add-ons up in Redmond, WA. Microsoft product managers saw it and liked it. It was built into the next version of Excel. (And, lest you read this as an accusation, there was no violation of copyright, nothing illegal or immoral, they just liked the idea and added it in. It’s called progress.) And, as far as I can tell, nobody got it. Nobody used it. I never saw it commented in a review, or in some expert lesson.
  • Years later, we built Forecaster into Business Plan Pro. It’s still there, still as powerful as ever; and still hard to explain.