#TrackThis Episode 6: ROI of Conferences and Trade Shows

Welcome back to #TrackThis! Today, Matt Rissell, CEO of T Sheets Time Tracking, and I sat down to talk about tracking your ROI of attending conferences and trade shows. It's an important question: Is it worth attending these events to get your name out there, or to have your people trained? It's hard to know necessarily, and that's why it's so important to track your ROI. People have so many questions about this topic, and we really tried here to talk through all the pros and cons to think about when you're considering attending these events. Matt is a bit more cynical about these conferences than I am, which is a completely fair view point on these oft-expensive events, but we both agree that if you're going to go, you have to go all-in. These events are typically quite expensive, and it's important to make a big splash if you're going to spend big cash!

The audio of our conversation can be found above, and the transcript of our conversation can be read below:

Matt: Hello and welcome to episode number six of #TrackThis, small business tracking tips from CEOs, specifically, Sabrina Parsons, CEO of Palo Alto Software, and Matt Rissell, CEO of T Sheets. We'll be talking today about tracking the return on investments of attending conferences and trade shows. It's a hot topic—should you or should you not make the investment in trade shows? If you do, how do you actually track your ROI? Up first is Sabrina Parsons.

Sabrina: Thanks, Matt, really excited to do another episode of Track This with Matt and T Sheets. I think this is one of those topics that people have so many questions about. I find anything to do with marketing in general, all of us in the small business world just have a hard time sometimes figuring out should we spend the money, should we not. In the online world, you have so many tools to track your spends, if you're doing pay-per-click marketing, banner advertising. You've just got a lot of different tools that can actually show you how many people clicked, how many people buy, what they purchased, how much money they spend. It's a whole lot easier to prove your return on investment.

When you get to marketing activities like conferences and trade shows, it can be a lot harder to figure out what is actually going to be a good conference to go, how you're going to have a return on your investment, and how do you even make that decision. I love the images here. Any of you who watch the HBO "Silicon Valley" show will recognize this; if you don't watch it, you should definitely check it out. It's a very fun satirical show about startups. This is exactly what these guys face—should they go to conferences, what kind of money should they spend, and what are they going to get out of it.

We all deal with that. If you're the CEO or the president or the owner of a small business, you get bombarded by salespeople trying to sell you all kinds of things, including "come to this trade show, come to this conference." Those of us who go know that conferences and trade shows are expensive. You've got to have materials to present. You have to have things to give away. Your booth has to look well. You have travel there. You have to spend money on a hotel. It's really hard to go to a conference and spend less than thousands of dollars, usually in the $5,000 range. That's probably a cheap conference. How are you going to actually track it?

The first thing is start with SMART goals. Throughout your business, I really recommend you use SMART goals. SMART really stands for specific, measurable, attainable, relevant, and time-bound. If you're going to go to that conference, you might think about putting together a special offer for only conference attendees, that has to be redeemable in a certain time period. Maybe redeem this offer in the next two weeks and then you can actually track and see did the offer get redeemed, how many people redeemed it, what did they purchase, and what is my ultimate return of investment.

Now, you may be going to a conference purely for the branding and for the awareness. If you do that, then you still have to have specific measurable, attainable, relevant, and time-bound goals. Maybe what you want is to get a certain group of thought leaders behind your products. Maybe your goals are "I want 10 quotes from these thought leaders that I can put on my website. If I can go to this conference and get these 10 quotes, all raving about my products or services, then this conference will be worthwhile." Even though these goals aren't sales and revenue, there are still goals that you can set up before you go, and then you can measure against those goals and say, "Did I get that?"

Once you put those quotes up on your website, in your brochures, in your marketing materials, track the difference from before you have those quotes. Are you selling [to] more customers? Is it easier to close deals? Did those quotes help you in the way that you thought? As long as you set things out and put the goals down and track them, you're going to be in good shape.

Matt: [laughs] Well, I don't know what conference you went to Sabrina for $5,000, but sign me up for that one.

Sabrina: [laughs] Well, exactly. I mean, it does [inaudible 04:55], we know. That's like minimum. That's probably a conference down the street.

Matt: Yeah.

Sabrina: Not the one you have to have to fly to.

Matt: Right. If you're going to travel to a conference, I mean, typically the conference just to get a booth is $5,000 to $10,000. That's for the smallest booth you can get. Let alone flying three or four people down with air fare and meals and then your booth is an extra expense. Don't forget, if you want internet, that's another $2,000 at your booth. I mean, it's just a big investment. Typically, I think the average for small businesses is to spend like $25,000 at a conference. Definitely go in with a good idea with exactly what your budget is so you don't get there and run out of money, run out of budget and go, "Oh, geez, I can't maximize this."

One specific, I love what Sabrina said [inaudible 05:44]. I tend to be on the cynical side of conferences. If I can recommend one thing to you is that I would really shy away from just doing the brand exposure conferences. What we do, it's one of my own personal rules, this is like rule number one for Matt Rissell and T Sheets for going to conferences, is that we have a call to action right there. This isn't the conference—I don't go to conferences and just collect business cards. I think that's a waste, no one wants to get those emails afterwards, but what we do every single time is we have a call to action. We try to make it digital, something that they do right there on the spot.

It doesn't have to cost them money, but it's something that they know that they took the effort to engage with your company right there. Your retention rate of that individual, after the conference, is 85 percent higher if they responded themselves versus you doing it for them. So, that would be my one recommendation. And then, if it is digital, back to the return on investment, you can track anything that you've created in revenue, in sales, relationships, that can all go back to that specific conference. That's one way, probably the most significant way that T Sheets tracks our ROI on conferences.

Sabrina: Thanks so much, Matt. I'm just going to jump in here because I think Palo Alto Software has learned a lot from seeing what T Sheets does at conferences. If you're going to go, if you're going to spend the money, and like Matt says, a $5,000 conference is probably a teeny tiny one; most of the time, you're looking at between $10,000 and $20,000 when all is said and done. One of the things T Sheets does that I think is the way everybody should go is they get a theme around which they present their booth, and everything they do is around this theme and that theme goes back to who they are as a brand and fits right in with the audience. It really gives you an impact with the people that you go to.

If you are going to go and you're going to spend money, not only should you do all this tracking, think about fun ways to stand out and drive your brand and your message home with the audience. You're already going to be there, and they don't necessarily have to be expensive things. It's as simple as the T Sheets booth had a superhero theme and all their employees that were at the booth had superhero themed outfits for everyday. It's as simple as that. You can hear the chatter amongst the accountants at the conference we were all at together about the T Sheets booth.

Start with your SMART goals, and then add in a little bit of fun that fits with your brand and gives your message out there to that audience because I think Matt is right, you want to hook people in, but you want them to respond to you. This whole "put your card in a fish bowl and you'll win something" is fine, and it's an okay way to get leads, but at the end of the day, most people putting their cards in there just want the iPad mini that you're giving away. They don't necessarily want your products and services. So, figure out a way to engage them and get them to ask for whatever it is that you're giving out, so that you know that they're engaged.

Matt: That's exactly right. I would just add one thing, is that we are big on giveaways at our booth, but we always take those opportunities and leverage them intimately into creating that desire, that interest in T Sheets or in our company in order to get them to a call to action. So, well said.

Folks, thanks for listening to this episode number six of #TrackThis. Please do us a favor, tweet your business tracking questions and comments to us. We want to respond to them, and we know that tracking things is not always the sexiest, and it's not always the funnest part of your job as an entrepreneur or a business, but it's one of if not the most important to know you're headed the right direction. Again, tweet your business tracking questions and comments to #TrackThis.

Signing off from Sabrina Parsons, CEO of Live Plan, and Matt Rissell of T Sheets, have a great day.

Sabrina: Thanks, Matt. Thanks, everybody.


No, 37Signals, Planning Is NOT What You Think

Rich irony: 37Signals, a great Web app for project management, ought to know better than anybody that real business planning is a process, not a plan. After all, they do the kind of nuts and bolts management that makes that happen. Instead, however, Matt of 37Signals posted the planning fallacy last week:

If you believe 100% in some big upfront advance plan, you're just lying to yourself.

I object. Who ever said planning was "believing 100% in some big upfront plan?" Good business planning is always a process involving metrics, following up, setting steps, reviewing results, and course correction.

He goes on:

But it's not just huge organizations and the government that mess up planning. Everyone does. It's the planning fallacy. We think we can plan, but we can't. Studies show it doesn't matter whether you ask people for their realistic best guess or a hoped-for best case scenario. Either way, they give you the best case scenario.

OK that's a dream, not a plan. Matt seems to confuse the two, but good business planners don't. Any decent business planning process considers the worst case, risks, and contingencies; and then tracks results and follows up to make course corrections.

Which leads to this, another quote:

It's true on a big scale and it's true on a small scale too. We just aren't good at being realistic. We envision everything going exactly as planned. We never factor in unexpected illnesses, hard drive failures, or other Murphy's Law-type stuff.

No, but you do allow extra time for the unexpected, and then you follow up, carefully (maybe even using 37 Signals' software) to check for plan vs. actual results, changes in schedule, new assumptions, and the constant course correction. Murphy was a planner. He understood planning process, plan review, course corrections.

Matt concludes:

That messy planning stage that delays things and prevents you from getting real is, in large part, a waste of time. So skip it. If you really want to know how much time/resources a project will take, start doing it.

Really bad advice there, based on a bad premise. Sure, if you define planning as messy and preventing you from getting real, then it would be a waste of time. But is that planning?

I wonder if Matt takes his own advice. When he travels, does he book flights and hotels? Or does he skip that, and just start walking.

3 Steps to the Startup Sweet Spot

(Note: reposted from Planning Startups Stories)

Every startup has its own natural level of startup costs. It's built into the circumstances, like strategy, location, and resources. Call it the natural startup level; or maybe the sweet spot.

1. The Plan

For example, Mabel's Thai restaurant in San Francisco is going to need about $950,000, while Ralph's new catering business needs only about $50,000. Sweet Spot The level is determined by factors like strategy, scope, founders' objectives, location, and so forth. Let's call it its natural level. That natural startup level is built into the nature of the business, something like DNA.

Startup cost estimates have three parts: a list of expenses, a list of assets needed, and an initial cash number calculated to cover the company through the early months when most startups are still too young to generate sufficient revenue to cover their monthly costs.

It's not just a matter of industry type or best practices; strategy, resources, and location make huge differences. The fact that it's a Vietnamese restaurant or a graphic arts business or a retail shoe store doesn't determine the natural startup level, by itself. A lot depends on where, by whom, with what strategy, and what resources.

While we don't know it for sure ever -- because even after we count the actual costs, we can always second-guess our actual spending -- I do believe we can understand something like natural levels, somehow related to the nature of the specific startup.

Marketing strategy, just as an example, might make a huge difference. The company planning to buy Web traffic will naturally spend much more in its early months than the company planning to depend on viral word of mouth. It's in the plan.

So too with location, product development strategy, management team and compensation, lots of different factors. They're all in the plan. They result in our natural startup level.

2. Funding or Not Funding

There's an obvious relationship between the amount of money needed and whether or not there's funding, and where and how you seek that funding. It's not random, it's related to the plan itself. Here again is the idea of a natural level, of a fit between the nature of the business startup, and its funding strategy.

It seems that you start with your own resources, and if that's enough, you stop there too. You look at what you can borrow. And you deal with realities of friends and family (limited for most people), angel investment (for more money, but also limited by realities of investor needs, payoffs, etc.), and venture capital (available for only a few very high-end plans, with good teams, defensible markets, scalability, etc.).

3. Launch or Revise

Somewhere in this process is a sense of scale and reality. If the natural startup cost is $2 million but you don't have a proven team and a strong plan, then you don't just raise less money, and you don't just make do with less. No -- and this is important -- at that point, you have to revise your plan. You don't just go blindly on spending money (and probably dumping it down the drain) if the money raised, or the money raisable, doesn't match the amount the plan requires.

Revise the plan. Lower your sites. Narrow your market. Slow your projected growth rate.

Bring in a stronger team. New partners? More experienced people? Maybe a different ownership structure will help.

What's really important is you have to jump out of a flawed assumption set and revise the plan. I've seen this too often: you do the plan, set the amounts, fail the funding, and then just keep going, but without the needed funding.

And that's just not likely to work. And, more important, it is likely to cause you to fail, and lose money while you're doing it.

Repetition for emphasis: you revise the plan to give it a different natural need level. You don't just make do with less. You also do less.

True Story: A Challenge

I was the planning consultant to Apple Computer's Latin America group from 1982 until 1991 or 1992, the end of the relationship being a bit hard to define as I was called on steadily more by Apple Japan and less by Apple Latin America.

The challenge came in the spring of 1985. The annual business plan was done every Spring, turned into management in June and then discussed and revised and resubmitted and eventually accepted in July. In April of 1985 I had been the consultant for that process for four years running when Hector Saldana, manager of the group, said:

"Tim, yes I want you to do our annual plan for us again this year. But only on two conditions: first, I want you to stop working for other computer companies. Second, I want you to take up a desk in our office, come every day, and sit here and see us implement the plan."

Happily, he also had some good news related to giving up other competing companies as clients: "And, if you agree to do this, I want to contract you for all of your hours for the next year, and at your regular billing rate."

The condition of giving up competing clients was difficult for a single person business. What if Apple had problems, or changed its policy regarding consultants? What if Hector got promoted or fired? Where would I be then, if I had given up other business relationships.

That's not the real point of the story, although it does relate to planning as you go. That certainly wasn't part of my business plan for my business, but it was a classic example of changed assumptions. We talked about it at home at length, and decided to go ahead with it. However, we also modified the plan we had going related to efforts to generate new leads and new business: we would focus that effort within Apple itself, different groups that didn't talk much to each other, to reduce risk of having two many eggs in the single Apple Latin America basket. The plan was modified for cause, to accommodate changed assumptions.

The problem of implementation, however, forced me to consider the difference between the plan and the results of the plan.

There was some history. The previous year or two had been the time of "desktop publishing" for Apple Computer. Desktop publishing, which we now take for granted, started with the first Macintosh laser printer in 1985. It was a huge advantage for Apple in competition against other personal computer systems.

Our plan for fiscal 1985 had been to emphasize desktop publishing in most of our marketing efforts. And it didn't happen. While we talked about desktop publishing in every meeting, the managers would go back to their desks, take phone calls, put out fires, and forget about it. They didn't intend to, but they'd had so much emphasis on desktop publishing that it seemed boring, old hat. Multimedia was the thing.

So, faced with the implementation challenge, I created what became the strategy pyramid to manage strategic alignment. We ended up with a relatively simple database of business activities. Collaterals (meaning brochures and such), bundle deals (software included with the hardware at special bundled prices),advertising, trade shows, meetings and events, all were tied into a system that identified what strategy point they impacted, and what tactic.

So during that year, as business went on, we were able to view actual activities, spending and effort, divided by priority. We set more budget money for desktop publishing activities than any other. During the review meetings, we compared actual spending and activities (the beginning of what I talk about as metrics)  to planned spending and activities. And over time, with pie charts and bar charts to help, we were able to build strategic alignment. What was done was what the strategy dictated.

The plan-as-you-go implication was that this didn't happen just because it was in the plan. It took management. There was a plan review schedule with the meetings on the calendar way in advance, and for every meeting I was able to produce data on progress towards planned goals. The managers discussed results. Plan vs. actual metrics became important.

When things didn't go according to plan, the meetings would bring that to the surface. Managers would explain how the assumptions turned out wrong, or some unforeseen event -- we had good results as well as bad results -- and we would on occasion revise the plan.

The Art of Execution

I noticed this very plan-as-you-go post by Guy Kawasaki on his blog. What I like about it, particularly, is where Guy says "set goals" and then lists these four desirable qualities of goals:

Measurable. If a goal isn't measurable, its unlikely you'll achieve it. For a startup, quantifiable goals are things like shipping deadlines, downloads, and sales volume. The old line "What gets measured gets done" is true. This also has ramifications for the number of goals, because you can't (and shouldn't) measure everything. Three to five goals measured on a weekly basis are plenty.

Achievable. Take your conservative forecasts for these goals and multiply them by 10 percent; then use that as your goal. For example, if you think you'll easily sell a million units in the first year, set your goal at 100,000 units. There is nothing more demoralizing than setting a conservative goal and falling short; instead take 10 percent of your forecast, make this your goal, and blow it away. You might think that such a practice will lead to underachieving organizations, because they aren't being challenged. Yeah, well, check back with me after you don't sell a million widgets.

Relevant. A good goal is relevant. If you're a software company, it's the number of downloads of your demo version. It's not your ranking in Alexa, so telling the company to focus on getting into the top 50,000 sites in the world in terms of traffic is not nearly as relevant as 10,000 downloads per month.

Rathole resistant. A goal can be measurable, achievable, and relevant and still send you down a rathole. Let's say you've created a content website. Your measurable, achievable, and relevant goal is to sign up 100,000 registered users in the first ninety days. So far, so good. But what if you focus on this body count without regard to the stickiness of the site? So now you've gotten 100,000 people to register, but they visit once and never return. That's a rathole. Ensure that your goal encompasses all the factors that will make your organization viable.

What I like about this, as you might guess, is that it's a very close match to what I'm saying here, in this site, and in the Plan-As You-Go Business Plan book itself. Goals are about business, getting things done, and they do you no good unless you follow up on results and manage accordingly.

Measure Your Business Plan Results

(Note: reposted here with permission from Entrepreneur.com, where it first appeared, as one of my columns in the Business Plan coaching area. Since it's so closely related to the plan-as-you-go approach, I'm reposting it here. Tim.)

Plans are wrong, but nonetheless vital. There's a paradox for you. It's a simple statement, one that I hope is somewhat surprising coming from a business planning expert; but it's still very important. And it gets right to the heart of what business planning is all about.

More than ever, those who plan look to projections that often miss the mark. Nobody I know, and in fact nobody I've even heard about, accurately predicted the sharp plunge in the economy last fall. So of course those who actually use a business planning process are implementing a lot of course corrections, reviews and revisions.

It's a great example of how this paradoxical statement -- plans are wrong, but nonetheless vital -- makes sense. As we look at the year to come, most of us are dialing down our forecasts. Does that mean we wasted our time making them? Not at all. How do we even make sense of where we are if we don't have a map that shows us how we got there?

If you had a plan earlier this year and results differed greatly from what was expected, I hope you're taking the time to compare those results, in detail, to the earlier plan. Look for where the differences were greatest. Look for where expenses were tied to sales. Look for the bright spots where sales held up. Look for how the numbers were supposed to come together, and not just how they didn't.

And if you didn't have a plan, then think of this as a good time to get a planning process started so you have a better view of your business in the future. Start making simple sales and expense projections. Don't worry that they're wrong; just make sure you go back each month and plot where and how and in which direction they were wrong so you can correct them.

You should only be wrong a month at a time, and as you use that plan-vs.-results analysis to look more closely at how things are going, you adjust again and improve results for the next time around. With each month, your grasp on reality gets better.

And then, as things go back up -- and they will -- you'll be able to use what you learned to see the signs, anticipate and act accordingly.

This kind of planning process is what's meant by the phrase, "The plan may be wrong, but planning is essential." Then there's another old military saying: "No battle plan ever survived the first encounter with the enemy." What does happen, though, with battle plans as well as business plans, is you don't know how to recover or how to adjust the plan if you didn't have a plan in the first place.

Number One

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 Amazon.com.

New Attitude Adjustment Video Summary

I've just finished a 12-minute online video (presentation, slides, with me talking) summary of Chapter 2, Attitude Adjustment. Click here for that ... it does require Flash Player and Java on your system, and the window has to be about 860 pixels wide to show the whole thing.

Why This Approach?

[kml_flashembed movie="http://timsstuff.s3.amazonaws.com/Media/whypaygblogsize.swf" height="357" width="475" /]

Installing the Business Plan Pro Add-on

I've finished a nine-minute video showing you how to download and install the free add-on, available on this site, to implement a default plan-as-you-go business plan outline as an add-on to Business Plan Pro.

That video is available on YouTube.

This video shows you how to download the add-on, install it into Business Plan Pro, and then use it to create a plan-as-you-go plan. Then it shows you a bit about how to use that customized outline within the software.

The Secret Sauce

Where's my discussion of the secret sauce? Somebody asked me that a couple days ago, expecting it to be in this book. I was embarrassed. I talk about the secret sauce a lot, in my seminars and in my class, at the office. It's definitively another view of the same reality I'm calling the heart of the plan. So that's one thing to add for the next edition. Differentiate

The secret sauce is the magic, also called (boring) differentiators, and sometimes competitive edge; Guy Kawasaki calls it "underlying magic" and recommends that it be one of the 10 (or so) slides is a pitch presentation. You can google it and see how people are writing about it, using it to define what's new or different about some businesses. (You'll also see some items on McDonalds' secret sauce for the big mac, and some cooking stuff, but you'll see what I mean).

This idea of the secret sauce is a good way to explain how you're different from your competitors. What sets you apart?

Examples? Apple Computer's secret sauce is design, for example. Michelin tires' branding tries (in my opinion) to emulate Volve, the safety angle. My favorite restaurant in Eugene, Poppi's Anatolia, has an extremely spicy version of vindaloo chicken. Whole Foods' secret sauce is its having established the brand for healthy and organic foods. In cars, just look at the mini-cooper or the Honda Element or the Toyota Prius and you see secret sauce immediately.

Take the Brand Genie quiz now!

Plan as you Go and Business Plan Pro

This is a flash video, set for 800x600 dimensions, which will require that you install Flash on your system if you don't already have it. just click this link ... Planning as you go with Business Plan Pro ... it should open up a new window with a media player showing, and an obvious arrow to click.

The source file was set up at 800 x 600 resolution, so you might want to resize the window to show the resolution at its best. If the window you use to watch this is too big, then it looks fuzzy.

And here, below, is a flash player version of the same thing (I hope) ...

If this doesn't work for you, it might be a matter of Internet band width or compatibility with flash. I'd like to know, so leave me a comment and I'll get back to you.

The Book is Out

A tip of the hat to the team at Entrepreneur Press, because the book was barely finished in May and it's already available now -- July 25 as I write this, but it's been a couple of weeks.  You can order it now at amazon.com, it should be on the shelves at Barnes & Noble stores and is available online at the Barnes & Noble website.


The items in the following list are corrections to the printed Plan-As-You-Go Business Plan book. These corrections have been made to the online pages on this site.

  1. We apologize for "about about" on page 13. It wasn't caught in edit. It's okay on this live version.
  2. In the sidebar The Plan is Worth The Decisions It Causes, on page 44 of the book, the last sentence before the math equation should read as it does on this website ("Subtract the hypothetical balance without the information from the balance with the information, and that's the value.")
  3. The Starting Your Balance section, which is included in this site, has been left out of the first edition of the book. It should have been placed at the bottom of Figure 5.3 on page 194, before the section Planning the Cash Flow that now appears in that position.
  4. The order of the cash flow section is correct on this website, but incorrect in the current edition of the book. The Planning Cash Flow section that begins in the book close to the top of page 196 should be followed by the A More Realistic Example section that the current edition has on page 205. That section should be followed by the Breaking Down the Detail Cash Flow section, as it is in this website, which would then be followed (as it is on this website) by Cash Received (page 200), Cash from Receivables (page 196), Additional Cash Received (page 201), and then Estimating Expenditures (starting on page 197), then Additional Expenditures (starting on page 199), then Planning for Inventory (page 203), then, finally Calculating the Cash Balance (on page 208) and then Indirect Cash Flow Method, on page 209. I hope you'll follow along with the website here when in doubt, and accept my apology for the confusion.
  5. Sidebar Fixed And Variable Costs and Burn Rate, on page 207, would have been better in the Basic Business Numbers section around page 150. It is correctly placed on this website.
  6. I have mixed feelings about not including Business Ratios and the Break-even Analysis, which might have been placed at the end of the financial analysis section of Chapter 5, beginning on page 210. They are not in the book, but they are on this website. I left them out because they cause more confusion than they're worth
  7. The introductory Supporting Information section, which should have come after the financial analysis and before the Market Research on the Web section beginning on page 210, was left out.
  8. In Metrics for the Human Factor, on page 111, in paragraph 1, sentence 2, a comma should follow Why. In paragraph 3, sententce 1,  we should be discussing principles, not principals.
  9. In Value-Based Marketing, on page 120, the first sentence in the paragraph following the bullet list should read "Where all of this becomes particularly interesting is when what you do doesn't line up with what you say."
  10. On page 126, You Say Your Plan Every Day, in the final paragraph, the third sentence should read: "If you're normal, you're interested in this..."
  11. On page 128, Basic Business Numbers, paragraph three the first sentence should read: "So in this section what I want is to get you..."
  12. On page 129, Forecasting is More Art Than Science, third paragraph, the first sentence should read ..."It will be..."
  13. Page 130, Sidebar, The Telephone Tree in Reverse. In the 2nd paragraph, Small Business Development Center should be capitalized.
  14. On page 157, Nobody Like Budgets. In the 2nd paragraph, first sentence should read "...budget conjures..."
  15. On page 191, in the bullet point Use of funds, 2nd paragraph, 2nd sentence should read "..you will put..."
  16. Beginning on page 210, the section titled Simple and Practical Market Research should open with these paragraphs and subhead:

    Market research doesn't have to be expensive to be credible. True, there are research companies out there that do custom research for larger companies for thousands of dollars. You can buy expensive research reports for some markets, generally high-growth markets of special interest to companies that can afford to buy expensive research reports. You may have budget for that, but you don't have to spend that much money. Most of the best research is research you do yourself.

    Do Your Homework

    Search for quotes. Magazines, blogs, books, and market research companies publish highlights and snippets with some key numbers from research reports. They really have to, it's part of their normal business. Gartner Group or IDC or NPD Intelect publish market reports that are expensive, but to develop leads they have to give highlights away in press releases. The key here is the search terms you use. Do the Web search first. If you have access to one or more of the powerful literature and published works search engines, like articles.com or accessmylibrary.com, or competitors use them. Check the blogs for updates on this topic; search facilities change often. And don't forget that the key is searching the major search engines, like Google and Yahoo!, directly.


  1. I've posted recently on Planning Demystified about working a plan-as-you-go plan with Business Plan Pro.
  2. I've developed a template (click here to download) you can use to create multiple plan-as-you-go business plans within the latest version of Business Plan Pro. You download that file onto your own computer, the one that has Business Plan Pro installed, and then use the Business Plan Pro help to install and use. There is a video tutorial showing you how to download and install and how to use it, available here on this site and here on youtube as well. And, when in doubt, you can keyword search the Business Plan Pro help for details.
  3. I've developed a starter file (click here to download) you can use as a starting point for the University of Notre Dame 2011 business plan competition along with your licensed copy of Business Plan Pro. Palo Alto Software is donating copies of the software for use for the competition, so of you're part of the Notre Dame event, you should talk to your professor or mentor about getting a copy.  I've posted a video tutorial related to this on YouTube.

My Bloging

I'm using this site as a hub for Plan-as-you-go Business Planning, essentially a live, frequently updated site for resources, (gulp) correcting errors, adding tools, and generally helping you work with the right kind of business planning. Since I already have three blogs going, I'm not going to be doing regular blog posting here, but rather on my other blogs, which are related:

  • Planning, Startups, Stories. My main blog, my first one, which I've been doing the longest. I've got more than 2,000 posts on that one.
  • My blogging collection. I'm using Rebelmouse technology to collect my recent blog posts on my main blog, the main bplans.com blog, entrepreneur.com, SBA.gov, gust.com, and other places.


If your new business is going to distribute products in the U.S. retail market, that means what people call "the channel." Also known as channels of distribution, or retail channels. As in stores. Big stores or little stores. Macy's, Office Depot, Staples, Safeway, whatever. I see too many business plans that underestimate the effort, resources, and problems involved in selling things through channels.

So you know, my experience with channels started in 1993 and has been almost entirely in stores and chains selling packaged computer software. I've talked to a lot of people dealing in other kinds of channels, and it seems to be quite the same. So that's a disclaimer.

  1. Understand tiers. Most of the major retail channels in the U.S. involve two-tiered distribution.
  2. The big retailers, who tend to be chains with hundreds of stores, want to buy from distributors, not from you. No offense intended. It's just that buying from distributors makes their life simple. One bill, one payment, easier administration.
  3. Distributors are tough gatekeepers to get through. They aren't looking for new vendors. New vendors mean more work. And more risk. So they aren't anxious to change the status quo. Of course there are exceptions, but that's the rule.
  4. Retailers are also tough gatekeepers, for the same reason. There too, there are exceptions, but it's hard to be one.
  5. Both tiers are much happier about new products when they come from existing vendors. Those major companies that are already selling into the channel have it easier.
  6. Packaging is really important for everybody in the channel, and more so for new companies. Obviously this is a matter of different products and different industries, but through retail, buyers make choices based on what they see. We vendors would like them to read reviews and make more informed decisions, but most of the time they decide based on what they see.
  7. Channels take a big cut of your money. How much varies by industry, but if you are planning a new business and you don't know, find out. The distributors take a smaller cut but they take forever to pay you. The retailers take a larger cut, and they don't have to pay you, because they bought from the distributors. Both tiers take cuts of the money for co-marketing and things like that. You get a much smaller revenue per unit, and it comes several months after you make the sale.
  8. Most channels will insist on being able to send unsold goods back to you the vendor, and have you purchase them back from them at the same price they paid you, without any allowance for all the co-marketing commissions. This makes financial analysis hard.

One of the things I learned early and hard about channels. They don't care about your problems. If you're hard to deal with, they'll find somebody else to sell into the same segment.

So if you can sell direct, count your blessings. Channels offer volume, and branding, and that's attractive. But direct sales have some very attractive advantages too.

And in the context of developing the formal business plan, for outsiders to read, unless distribution is completely direct and painfully obvious you should include a discussion of distribution in the marketing section of your plan.

Explain how distribution works in your industry. Is this an industry in which retailers are supported by regional distributors, as is the case for computer products, magazines, or auto parts? Does this industry depend on direct sales to large company customers? Do manufacturers generally support their own direct sales forces, or do they work with product representatives?

Then explain how your specific distribution strategy works. There are almost always variations on the industry norm. In many product categories there are several alternatives, and distribution choices are strategic. Encyclopedias and vacuum cleaners were traditionally sold door-to-door but are now also sold in stores and direct from manufacturer to consumer through radio, television, newspaper, and of course Web ads.

Technology can change the patterns of distribution in an industry or product category. The Internet, for example, changed the options for software distribution, books, music, and other products. Look what it's done to video and video rental. Look what cable distribution is doing to video and video rental as well.

This topic may not apply to most service companies, because distribution is normally about physical distribution of specific physical products. If you are a restaurant owner, graphic artist, architect, or some other service that doesn't involve distribution, just leave this topic out of your plan.

For a few services, distribution may still be relevant. A phone service, cable provider, or Internet provider might describe distribution related to physical infrastructure. Some publishers may prefer to treat their business as a service rather than a manufacturing company, and in that case distribution may also be relevant.

A Few Good Books

Two of My Books

  • If you're starting a business or even thinking about starting a business, please look for Start Your Business in Three Weeks, with Sabrina Parsons as co-author. As I'm writing this I'm revising that one, and they're both scheduled to come out at about the same time.
  • Hurdle: The Book on Business Planning
    by Tim Berry
    read more about this book...

    If you want a step-by-step guide to creating the formal business plan, try my Hurdle: the Book on Business Planning. It's posted as its own free website at www.hurdlebook.com, and you can download the ebook-and-printable version as well, at www.bplans.com. Or you can buy it from Palo Alto Software or www.amazon.com

Books in This Book

This book recommends or cites several other books at various places. I do tend to refer to books I like and recommend.

The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything
by Guy Kawasaki
read more about this book...
Guerilla Marketing in 30 Days
(Guerrilla Marketing)

by Levinson, Al Lautenslager
read more about this book...
Duct Tape Marketing: The World's Most Practical Small Business Marketing Guide
by John Jantsch
read more about this book...
Meatball Sundae: Is Your Marketing out of Sync?
by Seth Godin
read more about this book...
All Marketers Are Liars: The Power of Telling Authentic Stories in a Low-Trust World
by Seth Godin
read more about this book...
The One Minute Manager
by Kenneth H. Blanchard, Spencer Johnson
read more about this book...
Rules For Revolutionaries: The Capitalist Manifesto for Creating and Marketing New Products and Services
by Guy Kawasaki, Michele Moreno
read more about this book...
Blink: The Power of Thinking Without Thinking
by Malcolm Gladwell
read more about this book...
Made to Stick: Why Some Ideas Survive and Others Die
by Chip Heath, Dan Heath
read more about this book...
The Three Signs of a Miserable Job: A Fable for Managers (And Their Employees)
by Patrick M. Lencioni
read more about this book...

The Book

The book is now available. You can order it now at amazon.com, it should be on the shelves at Barnes & Noble stores and is available online at the Barnes & Noble website.

About This Site

This site contains the online live part of The Plan-As-You-Go Business Plan, a book, published by Entrepreneur Press. You can order the book online today at Amazon.com, Barnes & Noble, and Borders, as well as other sites. It is available in most bookstores, but please call first.

Hi, I'm Tim Berry, I'm the author. I'm maintaining this site. I want it for several (all related to the book) reasons:

  1. I want to keep the latest edited text here, on the web, where I can keep it up to date. As I say in the book, just like plan-as-you-go planning involves keeping it alive, assuming change, and a lot of review and revise, so does writing about it. Books are still a useful medium, even in this world of web; but better a combination, no? That means ...
          • Updated web links and resources;
          • Occasional (gulp) corrections; and
          • New sections, additions, and changes.
  1. Online videos, and web presentations. Why settle for a book by itself, when together, with something like this site, we can do a lot more? You can tell by looking at the book that it grew out of material that was originally done in live slides. Why not add that here?

Sidebar: If You Dread Planning

This is from my blog Up and Running, on Entrepreneur.com

If You Dread Planning Your Startup, Don’t Start It

Earlier today I had one of those light bulbs go off in my head. I’m referring to those times when you’re reminded of something you already knew, but had forgotten. In my case today it was this: planning your new business, the one you’re thinking of starting, ought to be fun. Planning isn’t about writing some ponderous homework assignment or dull business memo, it’s about that business that you want to create. It should be fascinating to you … what do people want, how are you going to give it to them, how are you different, what do you do better than anybody else …

Honestly, isn’t that related to the dreaming that makes some of us want to build our own businesses? It was for me, every time, including those that made it and those that failed. Dreaming about the next thing I wanted to do was always part of it. Dreaming is related to looking forward, anticipating, and — in this case — business planning.

This came up this morning during my second day of video sessions for SBTV (which no longer exists), which had been filming me on starting and managing a business, and business planning. I was answering a question relating starting a business to getting out of the cubicle when I realized that I was in danger of forgetting that business planning is part of the dreaming and part of the fun.

I think what’s important is that none of us should be intimidated by business planning because of what I’ve called the not so big business plan, or the point I made in this blog last month about starting anywhere you like. The business plan is a way to lay out your thoughts and think it through — it shouldn’t be some dull ponderous task you have to get through.

If thinking through the core elements of your business, or for that matter the details of your business, isn’t interesting, then get a clue. You’re not really looking forward to it. Do you not want to do it?

Remember, you don’t have to do the whole plan all at once. One of the most common and damaging myths about planning is that you are supposed to work only on your business plan until you finish that plan. To the contrary, you should be enjoying thinking about the market, what you do well, how you want to focus, what sales might be, what costs might be, and so forth; and you should be writing some of that down, simple and without a lot of intimidation, just write it down and save it and then do something else. You start your plan wherever you want to, and you start using it the next day, and you don’t worry about exactly when it is formally done, because it never will be. Just get going, but enjoy the thinking and planning while you do.

If you dread the planning of your next vacation, stay home. If you dread the planning of your new startup, don’t start it.

Planning Not Accounting

In the 1994 movie Stargate starring James Spader and Kurt Russell, some fictitious freak of nature had opened up a strange luminous gate between two dimensions. On one side of it was the world as we know it. On the other side, a strange, alien world, like nothing we’d ever seen.

Different Dimensions

Today is another stargate, the place where two dimensions meet. And in this case, it’s not science fiction, it’s as real as business itself. One of these dimensions is accounting. The other is planning. They meet at today.

Basically, it goes like this: Accounting ends today and goes backward into the past. Planning starts today and goes forward into the future.

If that strikes you as theoretical or conceptual, perhaps a bit impractical, think again. This is important. It can save you needless headache and stress. It helps keep you in the right dimension, understanding that the financial projections in your business plan are not meant to be built in excruciating detail.

A Simple Example

Take the balance sheet here, a sample taken from Wikipedia. The so-called balance sheet is a standard financial report, listing the assets and liabilities and capital of a business at the end of some specific day, month, year, or whatever. Assets are good, things you own like cash and land, or money owed to you like accounts receivable. Liabilities are debts, money you owe, which is why you see things that are “payable” – meaning you’re going to have to pay them – as liabilities. Capital is what’s left over. It’s called a balance sheet because it’s magic, the magic of double-entry bookkeeping, the assets are always exactly equal to the liabilities and the capital.


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Is this as accounting report or a projection in a business plan? You can’t tell. It looks exactly the same, either way. However, in truth, they are different dimensions.

Accounting Collects Records of Transactions

Accounting goes backward from today into the past in ever increasing detail

If it’s accounting, then every number shown there is actually a summary report of a database full of transactions. The cash balance is like your checkbook balance, it’s the result of adding up all the deposits and subtracting all the checks. What they call accounts receivable is the sum of all the amounts of money owed by all the different customers, a report of hundreds, maybe thousands of different transactions. You make a sale, leave an invoice, wait to get paid, then finally get paid, record the transaction, debit cash and credit accounts receivable, and so on, through a collection of specific transactions. The $52,000 reported as land value might be what you paid for land, but it might be the resolution of dozens of land transactions, selling some, buying others, and that’s the balance.

Liability balances, like assets, are built from bottom up in accounting by keeping track of all the transactions and summarizing the end result. Notes payable might be dozens of small trade bills sitting on a spike somewhere, or a loan from the bank, in which case it’s related to the starting loan amount less the total of all the principal payments.

I hope you get the idea: accounting is a huge collection of summarized past transactions. Focus on any number in an accounting statement and you should be able to zoom in on more detail, down to each individual transaction.

Planning Makes Reasonable Educated Guesses

Planning goes forward from today into the future in ever increasing summary and aggregation.

Now consider, if you will, that same illustration as part of a business plan, making an estimated guess of what the balance will be two or three years from now. Don’t even try, not for a second, to think that you’re going to estimate cash by estimating the details of thousands of transactions and adding them up. You’re not going to estimate assets by guessing what you’re going to buy, and when (not to mention depreciation, so pretend I didn’t). You’re not going to estimate debts by guessing when you took out each loan, exactly what you purchased, and when. No, that’s impossible, and silly. You’re going to find some way to guess your cash, you assets, your liabilities, based on larger educated guesses tied logically into the major flows, like sales.

We’ll be working together later on how you can make reasonable estimates, but for the sake of illustration, I have some of examples to explain the difference in dimensions:

  • Accounts receivable means money owed to you by customers. You make the sale but you deliver an invoice, and wait to get paid; that’s the way it goes in business-to-business sales. So you need to guess how much money will be sitting there, at important points in the future, waiting to get paid. Every dollar in accounts receivable is a dollar less cash, because it was booked as sales but you don’t have the money. You don’t however, try to guess all the specific sales transactions with all the specific customers and add them all up and figure out where the total will be two or three years from now. Instead, you guess what percent of sales involve invoices and waiting, and then you guess how many days on average you have to wait, and you can do some numbers tricks to make an educated guess.
  • You don’t guess what you’re going to owe by adding up all the imagined bills from some guessed-at future purchases. Instead, you estimate how much you’re paying out in expenses as a matter of percentages of sales and payroll or something, then estimate about a month’s worth of that as payables.

I’m not going to belabor the examples because I think that’s already enough to make the point. You have to make some logical guesses.

Why Does This Matter?

Top Down vs. Bottom Up

Every so often I encounter somebody trying to manage the minute detail of projected interest expense to allow for several different loans with differing rates and terms as part of a business plan. Or there’s somebody trying to guess assets by guessing the detailed purchase dates and values. And then there are people trying to project future accounts receivable by customer, guessing each customer’s future sales and payment patterns.

The problem, of course, is that is really hard to do. You can spend a lifetime calculating details and never get as close as you would with a good estimate.

Compare the levels of certainty: let's say interest is normally a percent or two of total expenses, and expenses are normally something like two-thirds of sales. If your sales estimate for future years is within 5% either way, you're doing way better than most. How wrong can you go with a simple estimated interest rate, and how much does that affect your projections? Aren't we talking about tiny percentages of expense, in a system that has to estimate other elements that have hundreds of times more uncertainty?

Here's an example with numbers: a company plans to sell $1 million and has interest expense of $10,000. The range between plus or minus 5% in sales is $100,000, from $950,000 on the low end to $1,050,000 on the high. So if you miss the projected interest by $2,000? Or maybe $5,000? Your projection depends on estimating sales, cost of sales, all expenses, plus flow of assets and liabilities. There is a lot of uncertainty in this system, necessarily, that's part of the process. Eventually you will manage the uncertainty by tracking your results every month and checking the difference between what you planned and what actually happened,

I suggest we think about this for just a second. Does it make sense that business planning is about projecting the future so exactly that using a simple average estimated interest rate applied to your projected liabilities isn't good enough? Do you really have time to be modeling the detailed impact of multiple hypothetical interest rates on multiple hypothetical loans as part of a projection that depends on an estimated sales forecast?

Planning is for making decisions, setting priorities, and management. Accounting is also for information and management, of course, but there are legal obligations related to taxes. Accounting must necessarily go very deep into detail. Planning requires a balance between detail and concept, because there are times when too much detail is not productive.

Good News: It Makes Things Easier

This is really good news for business planning. What it means is that you don’t have to paint a picture of your financial future by detailing every brick in every building. You can do it with a broad brush. That doesn’t make it less realistic, in fact it will usually make it more realistic, at least that’s what I’ve seen while working with thousands of people on thousands of business plans.

We’re human. We work better at imagining the future in scale than at building it brick by brick in our mind.

Accounting can never be wrong. Business plans are always wrong (not that they aren't useful -- it's like walking or steering, the value is in the correction and the management of where and why they're wrong, but that's a different chapter.)

A Final Word of Warning

The difference between planning and accounting is particularly hard for well-trained accountants to handle. They learned to build reports from the bottom up, from the detail, and it can drive them crazy when you make estimates using percentages and algebra and plain common sense for something they’ve learned to build up from painstaking detail.

More important than driving them crazy, unfortunately, is that sometimes this dimensional discomfort can make the accountants so unhappy that they’ll say your estimates are wrong. In these cases, they are often misunderstanding what it means to be projecting the future in summary instead of counting the detail in the past. Forgive them, they mean well; but don’t let them drive you crazy either. Stick to the planning.