Planning Startup Stories —

Q&A: Keep Your Business Plan Simple and Short

by Tim Berry on April 1, 2013

I received this question on my ask-me form at timberry.com

I have a question about writing a business plan for my [business]. How do I write a business plan reflecting very little start up costs and a loss so far? I have been putting off writing a business plan, but I feel as if I need to set specific goals in writing to strive for. Most of the business plans seem so complicated for my very small business. Since I am trying to keep my costs very low, I’m wondering if it’s worth paying the monthly fee to create a plan or there another more economical (free) option? Thank you for your time.

My answer:

Questions ask Tim Berry

Thanks, I’m glad you asked. Coincidentally, I just posted Business Plan Yes, But Comprehensive and Detailed, Not So Much earlier this week. But I’m happy to go over this again because it’s so important for real businesses to plan, but the myth of the big formal business plan so often gets in the way. What a shame.

That’s what my last book, The Plan-as-you-go Business Plan, was about:

The plan is for you, to help you manage, to set specific milestones and manage results with plan vs. actual analysis.
It’s a collection of modules. Simple strategy summary, milestones, basic numbers, and so forth. Start anywhere. Get going.
You do only what you need, just before you need it. Only what you’re going to use.
Let it grow organically.
When you have the business plan event, which means you need to show it to somebody outside your business, then you dress it up. Keep it on your computer until you have to print it.

And regarding that monthly fee question, I have two points:

I’m biased. You’re talking about LivePlan, published by Palo Alto Software. I’m the conceptual author. I believe everybody should be using it.
Does “keeping your costs low” mean you want to save $20 a month on a planning tool that makes the planning easier, simpler, and better? How much is your time worth? How many hours do you want to spend to save $20 per month?

(Image: iStockphotos.com)

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How To Consolidate All Your Blog Posts From Different Sites to One Site

by Tim Berry on March 26, 2013

Problem: how do I consolidate my blogging into a single site? I post here on my main blog, but also on Up and Running, smbplans, gust.com, Huffington Post, Entrepreneur.com, SBA.gov, and elsewhere. For a while we had an employee building a database of links.

Tim Berry blog post site

Solution: Take a look at blog.timberry.com. That site consolidates all my posts, pretty much in the order they come. And it happens automatically. I have the RSS feeds programmed into the site so that when a new blog post is published on any of them, it automatically shows up on my consolidated blog site (that’s shown in the illustration below).

That’s done with a new Rebelmouse feature that lets me take my rebelmouse site from www.rebelmouse.com/timsblogging/ and set that to be blog.timberry.com instead. Rebelmouse calls that powered sites, and here is the Mashable post yesterday that describes it. I can also set the page not to display the Rebelmouse-specific branding that I don’t want. For that I pay Rebelmouse $9.95 per month. (And please note the disclosure on my sidebar.)

Although Rebelmouse does a lot of different automatic feeds, like the classic Twitter and Facebook steams, in this case it’s just RSS, as shown below. What I love about this is how my new posts show up automatically. I just do the blogging and the site refreshes itself.

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Business Plan Yes, Comprehensive and Detailed, Not So Much

by Tim Berry on March 25, 2013

Funny how sometimes what sounds like good advice isn’t. I was browsing online when I caught the alleged business plan tip shown here (although I added the red circle over it). It says you should write a “comprehensive, detailed business plan.” And I say probably not; only in special circumstances.

business plan tip, business plan, agile and flexible

Instead, develop a streamlined, flexible, agile, lean, just-big-enough business plan and use it as the start of a forever-after business plan process.

Set a schedule to review it and revise it at least once a month. Understand that it gets obsolete in weeks.

Keep it on your computer where you can refer to it easily and keep it up to date.

Focus on metrics, accountability, priorities, strategy, without a lot of text. For example, don’t ever write text describing your company or management team in a plan that won’t be read by anybody outside your company or your management team. That’s a waste of time.

Of course you should know your business, your team, your strengths and weaknesses, and your market. That’s absolutely essential. But do you take the business time to describe it in comprehensive detail, with edited text, statistics and formal research? No. Not unless you have to communicate it to outsiders. If you’re jumping through hoops for a bank or investors, then maybe there’s an underlying business value to the extra description.

But this kind of hype about big scary masters-thesis-weight business plans does a disservice to all the real business people out there who could use business planning to manage their business better — set priorities, develop accountability, move forward strategically — who unfortunately put off planning because of the mythology of the big formal document that feels as inviting as a high-school term paper.

It’s business: Form follows function. If you don’t know why you need a comprehensive, detailed business plan document then you probably don’t. But don’t let that off-putting tippery keep you from using business planning to manage your business better.

(Note: I posted this on Huffington Post this morning)

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You Aren’t What Others Think You Are … But Your Business Is

by Tim Berry on March 13, 2013

Do you like ironies, paradox, and contradictions? I do. And I like this one a lot. And, better yet, it helps me work through some of the marketing angles for my business.

Flickr cc Dorian Gray soter-was-here

You can’t define yourself by what others think

“To thine own self be true” was Polonius’ last piece of advice to his son in Shakespeare’s Hamlet. Everybody gets this in theory. It’s hard in practice. Defining yourself by what others think is a bad idea. You know why. Everybody knows why. Right?

You aren’t what other people think of you.

But what others think defines your business.

Flickr CC mirror kool_skatkat/3008266499/ Sure, you try to define your business with mantra, mission, your marketing messaging, almost everything you do with your marketing. But what really defines it is what others think. Your marketing goal is to influence what they think. And, beyond marketing, it’s the goal of your business offering, your sense of quality, your pricing, your logo, your website, your signage, everything. With business, however, it’s just the opposite: Your customers, your former customers, your champions and your detractors define your business for the world. You don’t. Understanding this is important to managing your marketing, your brand, your image, and your sales.

Your business is what others think of it.

(images: Soter Was Here! via photopin cc, kool_skatkat via photopin cc)

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To This Day for the Bullied and Beautiful

by Tim Berry on March 11, 2013

Beautiful, haunting, poetic “to this day” for the bullied and beautiful

If you don’t see this here, click this link for the original on YouTube.

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Two Entrepreneurial Relationships: Uncertainty, and Real People

by Tim Berry on March 7, 2013

Hardly surprising that I recommend Befriending Uncertainty on Stephen Lahey’s Small Business Talent podcast, released yesterday: he interviewed me.

There’s a lot about relationships in that interview. Important entrepreneurial relationships:

Your spouse, partner (life partner, not just business partner — and maybe both), and family. I think it’s important to manage your priorities so you can build a business, do that work, and not forget that your people are more important. In my case, my wife gets the credit for that, not me.
The uncertainty thing is very real. Watching people struggle for more analysis and more data and better projections of the future sometimes drives me crazy. So often the fact is: you don’t get to know. You have to guess.

I hate the cliches of small business success: overemphasis on the idea, passion, persistence, instead of giving value and giving people what they want. I like a chance to say something different.

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Some Hard Advice on Working for Sweat Equity

by Tim Berry on March 6, 2013

I just posted Why Sweat Equity Often Stinks on the gust.com blog for startups and angel investors. It’s quite cynical, I’m afraid, but it also reflects what I’ve seen for years.

istockphoto ball and chain

Sweat equity is a dangerous concept. It’s way too easy to misinterpret and misunderstand. And whether it’s intended to be or not, it’s way too often used as a lure to get people to work for less than they are worth.

The good side of sweat equity is what startup founders earn by building their business. You create, work, develop, grow … and your business is worth more than it was. And you own the upside.

The bad side of sweat equity is that it’s so often just thinly-disguised exploitation.

Here’s my advice: if you’re getting paid less than your fair market value in a startup because you’re working for so-called sweat equity, understand that …

unless the equity deal is in writing somewhere,
and defined with real numbers including percent of ownership, shares and total shares outstanding,
and real conditions such as vesting, and work expectations, what happens if you want to sell out and quit, what happens if they want to buy you out, and what about termination …

… then it’s probably not worth as much as you think.

And what makes it worse, quite often, is that the people making the empty promises don’t intend to exploit you. They mean it when they say it, early on. But then the money starts flowing, investors come in, the board changes, and promises can’t be kept. Unforeseen circumstances are very common. So what you get is an apology.

Some more advice: when I say get it in writing, I don’t mean a formal legal contract; at least, not necessarily. I’m a great believer in simple English signed by both parties, laying out what they think they’ve agreed to. Warning: I’m not an attorney. The attorneys are often valuable for pointing out all the issues to consider. But the big contracts usually end up in mediation anyway. Just make sure you have something written to remind everybody of what was promised.

(Image: istockphoto.com)

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Infographic: Degrees and Money

by Tim Berry on March 4, 2013

This Infographic from Mint is hard to read at this size, so you probably want to click on the image to go to the source. On the left you have unemployment broken down according to the degrees held, from PhD at the top to just high school on the bottom. On the right you have average weekly earnings using the same categories. What it shows should have been obvious all along, but still:

More education means, on average, more money and less likelihood of unemployment.

And here’s the data from Mint:

I’m not a fan of directly relating education to earnings. It leads to the ugly logic of not getting education except to earn more money. Still, every so often, we should at least review the fundamentals.

And besides that, I like the way Mint is dealing with data. They aren’t asking people. They are mining financial data in their system.

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Infographic: The Value of Women in Startups

by Tim Berry on March 1, 2013

This interesting infographic called The Value of Women in Startups is from onlinebusinessdegree.com. Lots of interesting information here.

(Via.)

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Quiz: Can a Business Fail While Profitable?

by Tim Berry on February 28, 2013

I’ve posted here before on the problem of survivor bias and how hard it is to identify causes of business failure. Where do you find the people who failed? Do they tell you the truth? Do they even know.

bills confusion istockphoto

In Are These Three Critical Threats Weeks Away From Sinking Your Business? on tweakyourbiz.com, post author Janine Gilmour interviewed 300 people about their business failure. That seems like a good start. A good interview might be able to get into real causes.

The first cause: profits aren’t cash. Janine writes, specifically:

About 60% of the businesses I reviewed were profitable when they failed, but they were upside down in terms of cash flow.

Fascinating: “about 60%” of these failed businesses were profitable when they went under. I’d read “more than 40%” in this context sometime in the 1990s.

Conclusion: watch your cash flow. Those of you with business-to-business sales are particularly vulnerable because businesses normally pay later, not now. Sales in those cases aren’t necessarily money until later, sometimes months later, sometimes never. And those of you who manage products, with inventory, are also particularly vulnerable. You typically spend the money way ahead of making the sale; and sometimes you spend the money without ever making the sale.

Be careful. Profits aren’t cash. And profitable companies fail for lack of cash.

(Image: istockphoto.com)

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