Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

Business Plans are Never Done 3

If your business plan is finished, your business is finished.

I’d like to think that this is obvious, but a lot of people don’t get it. A business plan isn’t supposed to be finished, ever. If it’s useful to your business, then you keep it alive. You review it regularly. You check assumptions and how they’ve changed. You compare plan versus actual results and make course corrections.

It’s supposed to be like the farmer’s axe: the handle’s been replaced 10 times and the blade three times, but it’s still the same axe.

Like that axe changing its parts, expect your business plan to change. Parts of it will be replaced as reality rears up its ugly head and messes with assumptions. But the plan goes on and on.

For example, Palo Alto Software is 22 years old. The business plan has never been finished. We take a fresh look at it once a year, and review plan versus actual results every month. When we discover that assumptions have changed, we review the changes and the impact of the changes, and adjust the plan.

Maybe 10 or 15 times in 22 years, we’ve had to dress up the plan and send it to somebody outside the company. We did that to get the merchant account initially, to set up a commercial line of credit with a bank, and when we were looking at possibly taking on investors. Each time we needed to present a plan, we took the real plan — the live plan — and we reviewed, edited, formatted, and produced a document. And that document, once produced, is no longer the plan. It’s just the dressed-up view of the plan as it existed that particular day.

So the plan lives on. Unfinished. 22 years later.

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  • Lora Kolodny

    People think plans are just for “beauty pageant” purposes, or certain kinds of competitions that are varying in worth. I like that you shared this example of where you were required to pony up a plan in the real world beyond competition and awards shows: “We did that to get the merchant account initially, to set up a commercial line of credit with a bank, and when we were looking at possibly taking on investors.” But have to ask — any other cases? Has a business plan ever saved your (company’s) life? (cue song: Last Night a DJ Saved My Life)

    • http://timberry.com Tim Berry

      Hi Lora, thanks for the comment, including your thoughtful and important question. The answer is yes, a business plan has saved my company’s life over and over again. It’s my blogpost for tomorrow (the following day, March 2, 2010 — Has a Business Plan Saved Your Business Life?), Tim.

  • http://modxcms.com/ Ryan Thrash

    Great article Tim. I’m actually in the middle of a pretty major update to the MODx business plan to reflect what we’ve accomplished and an even tighter focus. Your comments at Rice were tremendously helpful and definitely played a role in the updated version. Thank you!