This book, my work, plan-as-you-go planning is about making your business planning a powerful process that helps you determine your business’s future, guide your business to the future you want for it, set strategy, and manage, and implement. Your planning should be a very powerful tool for driving your business. That includes steering. Keeping the long term visible while minding the details in the short term.

The essence of the plan is its heart, its flesh, and its bone. It isn’t necessarily a document, or a presentation, or a speech, or a summary; it’s what you’re doing and what’s supposed to happen. The output of that might vary. Its actual physical existence might be as simple as thoughts in your head, at the beginning, and — I really hope — will quickly become a collection of words and pictures and numbers you keep on your computer.

The Heart of the Plan: The Core Strategy

  1. Who you are. As a company, if you are one, or an individual if you’re just starting a one-person business. It’s your identity. Your DNA. Especially what you do well, differently, better; long-term objectives. Goals. Dreams. What do you like to do. Keep the focus in mind, too; that is, think about who you aren’t, what you don’t do well.
  2. Whom you reach. That’s a customer, a company that buys from you, a client, a beneficiary. Your target market. By the way, it’s hard to pull this apart from how they find you, how they know who you are and what you do.  Keep focus in mind: who is your target, and what’s different about your target that narrows the focus better. Whom don’t you reach on purpose? How is your target different from the rest?
  3. What you do for your target. Fill a need, perform a service, offer a benefit. What business are you in?  Think of focus as well, meaning what you don’t do for your customer.

You can probably see here why I might call these items identity, market, and offering — more standard terms that sound more MBA-like. Also, I might call them the tricameral heart of the plan.

Is this strategy? Maybe, when done well. Strategy is focus. Make that heart of your plan strategic by focusing more narrowly on the most important elements. Narrow your sense of identity to focus on core competencies, what really makes you different. Concentration is power. Narrow your market to a finely cut target segment, the people and companies who really need you and want you — those who really get it. Narrow your offering to set yourself apart, differentiate, position yourself well. It’s what you’re not doing and why not. Focus on your business’s unique keys to success. Resist the temptation to please everybody, do everything, offer it all.

The Flesh and Bones

  1. Assumptions. Always list your assumptions, and keep that list at the front of your plan. Things are always changing. Listing your assumptions helps you remember to review them frequently.
  2. Review schedule. It’s essential. No way around it. Please don’t do a plan without scheduling times to review the plan and share results with participants and make corrections. At Palo Alto Software we did it on the third Thursday of every month, for years. “We” were the people who ran the company, three or four of us in the early years, five or ten later on. Every quarter you should dig into the strategy. And you need to set those schedules for review ahead of time, so everybody knows and can plan accordingly. This is where managers are going to track progress against goals, and share with peers, and coordinate. Review milestones, review results, review changing assumptions.
  3. Metrics. It starts with money. Sales. Costs. Expenses. Taxes, interest, profits. Assets, liabilities, capital. That boils down to money in the bank, cash flow. But be creative, beyond money: think about drivers, nonmonetary metrics, like customers, deliveries, complaints, calls, presentations, trips, meals, people served, client companies, repeat business, whatever. Everybody needs metrics. You want to be able to track progress, remember?
  4. Who does what. Call it management team, management structure, organization — it boils down to who does what. Who’s in charge? Who’s responsible for what metrics?
  5. When? Who does what when. Milestones. Dates and deadlines. Concrete specifics.
  6. How much will that cost? Who does what when; how much will it cost; and how much will it generate? Budgets. Forecasts. Tie down the concrete specifics related to business activities, tasks, managers. Your plan should leave tracks.

The Rest: Dressing it Up

Separate the plan from the dressing. The plan is what, why, how, who, and how much. Dressing is supporting information.

This is important: form follows function. So of course you want a plan, no matter who you are or how big or how new your company is. However, that doesn’t mean that everybody needs to have the full formal business plan with all the supporting information.

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

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

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

You do what the business needs demand —  no more, no less.

Tim BerryTim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Follow him on Twitter @Timberry.