The plan-as-you-go business plan is a new approach, a new way of thinking about business planning. It doesn't really change fundamentals, but it does change the focus. It adds some new angles, and it's better for you, and better for your business.
What's the difference? Why do I make the distinction?
Garr Reynolds, in his highly-acclaimed book Presentation Zen, says his approach to presentations "is not a method."
"Method implies a step-by-step systematic process, something very much planned and linear, with a definite proven procedure that you can pick off a shelf and follow A to Z in a logical orderly fashion.
"An approach implies a road, a direction, a frame of mind, perhaps even a philosophy, but not a formula of proven rules to be followed."
I like this distinction. It definitely makes plan-as-you-go planning an approach, and not a method. I've spent a lot of years working on step-by-step methods to do business planning. Some of them work. Sometimes. But the whole idea of step-by-step, attractive as it is, reinforces the myth of the business plan as a document or hurdle.
What's the difference? Why does it matter? It's not that important, but I do want to use the idea of an approach instead of method to emphasize that I don't want this plan-as-you-go concept to become another list of specific steps, or another list of "do it my way" methods. I want this approach, like this book, like your plan, to be yours, not mine. You take what I'm offering here and use what you want from it, in whatever order you want to use it, and make it work for you.
The military relates very well to planning. In business we talk about battle plans, and war plans, as well as business plans. One of the most recommended books for business is Sun Tzu’s The Art of War. I use Eisenhower’s quote “the plan is useless, but planning is essential” frequently in writing, speaking, and teaching about planning. He makes a critical point.
There’s also the famous line: “no battle plan ever survives the first encounter with the enemy,” often attributed to Colin Powell, but also to Field Marshal Helmuth Carl Bernard von Moltke.
You don't have to be an accountant or an MBA to do a business plan, but you will be better off with a basic understanding of some essential financial terms. Otherwise, you're doomed to either having somebody else develop and explain your numbers, or having your numbers be incorrect. This is a good point to note the advantage of teams in business: if you have somebody on your team who knows fundamental financial estimating, then you don't have to do it yourself.
It isn't that hard, and it's worth knowing. If you are going to plan your business, you will want to plan your numbers. So there are some terms to learn. I'm not going to get into formal business or legal definitions, and I will use examples.
- Assets. Cash, accounts receivable, inventory, land, buildings, vehicles, furniture, and other things the company owns are assets. Assets can usually be sold to somebody else. One definition is "anything with monetary value that a business owns."
- Liabilities. Debts, notes payable, accounts payable, amounts of money owed to be paid back.
- Capital (also called equity). Ownership, stock, investment, retained earnings. Actually there's an iron-clad and never-broken rule of accounting: Assets = Liabilities + Capital. That means you can subtract liabilities from assets to calculate capital.
- Sales. Exchanging goods or services for money. Most people understand sales already. Technically, the sale happens when the goods or services are delivered, whether or not there is immediate payment.
- Cost of sales (also called cost of goods sold, direct costs, and unit costs). The raw materials and assembly costs, the cost of finished goods that are then resold, the direct cost of delivering the service. This is what the bookstore paid for the book you buy, it's the gasoline and maintenance costs of a taxi ride, it's the cost of printing and binding and royalties when a publisher sells a book to a store for resale.
- Expenses (usually called operating expenses). Office rent, administrative and marketing and development payroll, telephone bills, Internet access, all those things a business pays for but doesn't resell. Taxes and interest are also expenses.
- Profits (also called Income). Sales minus cost of sales minus expenses.
"This is where so much business communication goes awry. Mission statements, synergies, strategies, visions -- they are often ambiguous to the point of being meaningless. Naturally sticky ideas are full of concrete images ... because our brains are trained to remember concrete data. In proverbs, abstract truths are often encoded in concrete language. "A bird in the hand is worth two in the bush." Speaking concretely is the only way to ensure that our idea will mean the same thing to everyone in our audience."
Adapted from Made to Stick, by Chip and Dan Heath
If you do get into the phase of dressing your plan for others to read, guard against meaningless words and phrases that just get in the way. It might be simple hype, like user-friendly software, or excellent customer service, or best of breed or whatever.
This kind of meaningless language turns up a lot in mission statements. What does "excellent customer service," when it's in a mission statement, tell you? Is there any company you know that aspires to "average customer service," or "mediocre customer service?" Why bother to put these words into your business writing?
So the test is this: would what you're saying in your mission statement, or your mantra, apply as well to any company in the industry? Could anybody tell, just from listening to this mission statement or mantra, which company it is? Can somebody identify you by your words?
If not, then your mission statement is useless. If it would apply as well to any other company, then trash it. Forget it.
The Dilbert mission statement generator on the web is a great example. Click and you get another mushy sounding meaningless mission statement. Don't do that in your plan, or your summary, or your cover letter, or any business writing.
