Beth Haselhorst: When you’re ready to start your small business, you need a plan, a business plan. So, what exactly is a business plan and why is it so important? To answer that question for us is the man known as the business plan’s coach, Tim Berry. He’s not only a successful business author but also a founder of Palo Alto Software which produces the nation’s leading business planning software. Tim has given seminars on business planning for entrepreneurs in 15 countries on four continents and he’s here with us today. Welcome to sbtv.com Tim.
Tim Berry: Thank you Beth.
Beth Haselhorst: So, let’s start high level, what is a business plan?
Tim Berry: Yeah, good and thanks for that because I want to say, its not what you think and that’s the most important thing about a business plan. You then—I mean you, I mean you think that a business plan is this long ponderous academic PHD theses document that you have to do because if you don’t do it, all sorts of nice things it will happen to you if you do it don’t happen. That’s not really a business plan. A business plan is what you’re going to do in a business step by step with the assumptions you have now and it’s a starting point for managing that business better. And it might be document because you might have to show it to somebody but it might be just on your computer and share with your other managers.
Beth Haselhorst: Okay, why is that plan so important?
Tim Berry: Because business really is a matter of stirring. That plan is really important because you have to know where you’re trying to go. It sort of like when we coach the kid’s soccer or basketball, we teach them, keep your eyes up, watch where you’re going you know why you’re dribbling. Business planning is about watching where you’re going even while you’re doing the details and you need to be able to go back and forth.
Well, if you don’t have the plan then you can never track where you were going and you lose track of your objectives and you’re answering the next phone call all the time and you’re completely reacting. So, the plan is the way you drive your business forward.
Beth Haselhorst: Okay, and who should have a business plan, every business out there?
Tim Berry: Well, I think the truth is that everybody really does because of this misconception we have the myth of the—some people say they don’t have a plan because they don’t have this heavy document that’s so ponderous but those that don’t have a plan don’t really have the advantage of thinking through how they’re different, who are they selling to, what that market person customer really wants. All of that is why everybody really needs a plan. It’s like, why not have something that helps you do it better.
Beth Haselhorst: That makes sense. Is the business plan for a small business different from other business plans?
Tim Berry: Well, I think what’s important with this is that we need to understand that a business plan should be just what that business needs to manage itself better. So, it isn’t exactly whether it’s large, medium or small, it’s how many people are involved that changes the nature of the plan. If there’s two people and well, let’s look at the extreme. I was a one person business for years before it grew. It’s 40 people now but I used to be able to have business plan in the meetings in the shower because it was just me.
What it needs then isn’t small or large exactly but how many people are involved and how often are you reviewing it and who from the outside needs to read it. Think about this, if I don’t have to show it to a bank or an investor, then I’m going to be polishing lesson doing less tax for example.
Beth Haselhorst: Do you recommend with a one person business still getting that plan down on paper?
Tim Berry: Absolutely and this is where people start to lose that because of this misconception document or whatever. It’s like something that helps me. I know there are people who are so brilliant, they can just do the plan in their head and they’re wonderful with it but for the rest of us, it helps to put things down so we can track later. Even when I was alone running my own business, I had a long term objectives and they would respond and react and get reviewed based on assumptions. You still want to be able to track where you were as you keep your head up and look where you’re going and having the plan is just easier to do it.
Beth Haselhorst: Tim, thanks for joining us today. Be sure to visit www.timberry.com to learn more about Tim’s books, his work and to read his blog. And you can find more segments with Tim Berry in the small business growth series here on sbtv.com where small business is our only business.
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