True Story: Lately I’ve been working with very good friends to develop a new startup. It’s not ready-to-go yet and it’s not the subject of this post, so I’ll offer no more detail on that here. But what it’s done for me, and my partners, is remind us of how much we like the basic idea of business planning to help define a new venture.
We live in four different places so we meet a lot by phone and via online meetings, and our business plan drafts have been vital in helping us polish the idea and begin the execution. Concretely, here’s what we’ve gained:
1. The Sales Forecast Defines Our Business Offering
It’s like magic: General discussions become specific when you get to the forecast. Like most startup founder groups, when we meet we talk about everything possible. Then, when we get to the forecast, we have to get specific about dates, units, and prices. It forces us to focus in on realistic plans we can actually execute.
Yes, we’re using LivePlan to do that. (Of course I’m biased since it’s our product at Palo Alto Software, but still, it’s beautifully collaborative and intuitive.) In the illustration here we’re defining our products, which is the first step. Then we set units and prices and project them by month. (And since we’re not ready to go yet, I’ve marked out the actual info here.)
2. The Expense Budget Defines Our Tasks and People
We need to focus practically on what and when we can afford to spend. We need to start paying two or three people and we need to pay contractors for web development, video editing, and other tasks. All of that takes deciding on priorities.
The way we do that, in practical terms, is to look at our expense budget. We develop it together step by step: From the first to the twelfth month, how much do we need to pay out, and to whom? We all have different ideas on this, so when we get together, the actual expense budget—which we can all see and agree on—helpfully steers us back to the plan.
Conclusion: Numbers Define Concepts
Particularly when the startup founders—such as in our case—all have a lot of experience, and love the topic area, and are full of ideas, it’s really hard to make progress moving from brainstorming to execution. My experience with the sales forecast and expense budget reminds me, once again, how much I like planning as a vital part of the process of starting a business.
Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.
