Arment Dietrich

Business Plan Paradox: It’s About the Planning, Not the Plan

By: Arment Dietrich | August 9, 2010 | 
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Guest post by Tim Berry, founder and president of Palo Alto Software, founder of bplans.com, and co-founder of Borland International.

I got an interesting email the other day from Daniel Hindin, community manager here at Spin Sucks, challenging some contradictions he’d found in some of my work. Sometimes I’m listing the reasons you want a business plan, and sometimes I’m saying the plan doesn’t matter by itself nearly as much as it does as part of a planning process.

My first response to that is, with a wide grin: “Yep. Now I want to do that guest post you’re suggesting.” Challenging me like that works. You got my interest.

The second response is to take my hat off to the wonderful magic of paradox. Seriously.

For example, both these statements are true:

  1. Better a mediocre strategy consistently applied over years than a series of brilliant strategies, each contradicting the other, that don’t last.
  2. There is no merit whatsoever to following a plan just because you’re following a plan. That’s no better than running your head into a brick wall, over and over again, just because you once said you would.

See? The one contradicts the other, but they’re both true. That’s paradox. And there is a lot of paradox in business planning.

I do believe in business plans and business planning, but I don’t believe in the big formal business plan document except in very specific and relatively rare circumstances. More about those rare circumstances in a minute.

Instead, after more than 30 years in business planning, I am every day more convinced that what really works in business planning is to work on what I call planning process. That means you start with a plan that is no bigger than what you need to manage and steer your business, and then, as life goes on, you feed and grow and nurture that plan so it reflects the constant change that happens in business.

Planning is about managing change, not avoiding change. What works is to start with a plan and then review and revise it regularly. Look at what really happened, and explore how and why it was different from what you planned (and it will be). Think about what that difference between planned and actual results means for the future. And then revise the plan.

Steering isn’t setting your steering wheel once and holding it still; it’s setting your planned route and direction and then managing a long series of small changes. So is business planning.

And the special circumstances that I mentioned above? Thanks for asking. It’s a damn shame that people who could use planning regularly to run their own business better dismiss it because they have in their mind that unpleasant image of the big formal business plan that is a daunting task.

That’s not for everybody. That’s for a few thousand businesses seeking outside investment. You write the real plan first, then bring the ideas in it to investors in a streamlined (probably PowerPoint and in person) way, and you prepare the big plan so they can see it before they invest.

For the rest of us, it’s a short, simple, management-oriented, regularly reviewed and refreshed business plan. It lives on your computer. You review it every month. And you change it as quickly as your assumptions change. And you do it because it helps you manage and steer your business better.

Tim Berry is founder and president of Palo Alto Software, founder of bplans.com, and co-founder of Borland International. He is a Stanford MBA, author of The Plan-As-You-Go Business Plan and principal author of Business Plan Pro. He blogs at Planning Startups Stories. He is on twitter as @TimBerry.

Trackbacks

  1. […] This post was mentioned on Twitter by KrisSchindler, KBK Marketing. KBK Marketing said: Business Plan Paradox: It's About the Planning, Not the Plan http://ow.ly/2nwmO …Great post from @SpinSucks […]

  2. […] questions, and the associated deep dive they will require, force you to effectively evaluate the strategies you put in place—laying the foundation for any business plan you wish to […]

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