Planning, Startups, Stories

Radio This Morning

I was on talk radio this morning with Jim Blasingame, about a half an hour, talking about business planning, the new book, starting a business during a recession, and what business to start. Here's the link.

Audio on Business Planning

Last week I was a guest on Barbara Weltman's Build Your Business radio show on wsradio.com.  In the first part Barbara starts out with a review of the present bleak economic picture, then introduces me and business planning. It's about 12 minutes of interview (the last three minutes are commercials).

Click here for that segment.

The questions, or topics, in this segment include:

1. Who has to do a plan? It's about who wants to, what are the benefits, what this does for your business.
2. What are some common errors?
   1. Not reviewing it regularly. Thinking that it's a document, that it gets done and then the task is done.
   2. Thinking you don't have a plan unless you have a full complete plan. Not understanding that it can be just the first part, or the most important part, and it's useful even if it isn't the whole thing to show to investors.
3. Plan as you go planning. What is it, why is it important, and how does it work?
   1. You don't do the whole thing first, in one fell swoop. You do the parts you're going to use, and you start using them. 
   2. It doesn't stop, it doesn't die, you don't finish and complete it. I'ts alive, you keep using it.
   3. The plan isn't a document. It's on your computer, and it's in your head.
   4. It recognizes that things are going to change. It's about managing change, not blindly following a plan as it was written in the past. Keep it alive.

The second part is about seven minutes plus commercials. Click here for that segment. Topics are: 

1. Sample business plans: how and why to use sample business plans, and when not to use them, and how not to use them. You can't buy or get a business plan, already written, that works. They are just examples.  (that's the first four minutes).
2. Using a professional business writers: do you have the budget? And do you understand that it has to be your plan, not the consultant's plan? You can work well with a consultant, as long as you understand that.

Zen and Business Planning

They seem like opposites. Zen's about mindful acceptance of the present moment. Planning is about managing the future. Seems like Zen business planning is oxymoronic. I hope not.

Why do you care? Maybe because real business planning aligns your business with your self and the world around you.  Maybe as a response to business plan bashing, which happens when people  confuse the plan (ugh, big document, hard, formal, not necessary) with planning (focus, prioritizing, envisioning the future, setting directions, dealing with change, managing).

Why do I care? I respect Zen. Maybe it's the coolness factor, as I posted recently, Zen and the Art of Copying. Guy Kawasaki has a good post called the Zen of Business Planning. Maybe it's Gil Fronsdal, and his zencast.org podcasts, to which I listen frequently. 

Maybe it's my new book, The Plan-As-You-Go Business Plan, which deals with (among other things) some Zen-like contradictions and paradox in real business planning. Your business plan is always wrong, but vital. A good business plan is never done. Consistency is critical except when it isn't. Plan for change. Do what you use, do what you need, no more. The plan is what you want to happen, not the document, not the presentation. And so forth. 

So, reflecting on Zen and Business Planning, I suggest four key points:

1. Accept change as constant. The value of the plan isn't mindless implementation in a guessed-at future. The value of the plan is the planning process, the management of change it creates. Planning enhances vision and understanding of past, present, and future.
2. Use planning to remain mindful of which direction you want to move. Towards which horizon. Stay mindful of your own definition of success.
3. Understand how, as you move through business time, where you are is always different from where you thought you'd be. You do that by leaving tracks (the plan) which you can use to trace changed assumptions (plan vs. actual).
4. Correct your course as your assumptions change, remaining mindful of long-term direction and short-term necessity.

Business Plan Bashing

"You don't need a business plan," the self-styled expert says, feeling good when he or she does because it's fun to be contrarian. It's a good story because it's man bites dog instead of dog bites man.  But it's posturing. The business plan that you supposedly need is like a straw man, which the expert puts up just so they can knock it down.

What they mean is that you don't necessarily need a big, pompous, formal business plan document.

It is analogous to their saying that the only way to get regular exercise is to run a full marathon, and then saying, for a lot of good reasons, don't go out tomorrow and run 26 miles.

But business planning isn't just the full-blown marathon equivalent of the formal complete plan. The real practical benefit is setting goals and tracking progress and following up with course corrections and reviews and, hooray, management.

If you're running a business, or starting a business, you owe yourself business planning, which starts with a business plan. You deserve business planning to help you focus, prioritize, manage, and proactively drive your business towards the future in the right direction.

Planning doesn't have to be a big formal plan. Set down your long-term goals and steps along the way, plus some basic numbers, and keep it on a computer where you can review it every so often to track how your assumptions have changed, to review progress and correct your course.

So where does this come from? Do I seem to be shadow boxing? No, I just need to vent every so often. Stupid business plan bashing.

Dealing with Idea Ghost Images

I find this fascinating:

"Yes, I think it's a really good idea, and everybody around here really likes it, but what I'm worried about is that when I talk about it everybody I'm talking to sees what they think I'm saying, what they want to be the idea, rather than the real idea."

I'm not going to cite the author of that quote, because it could embarrass him with the others on his team, but it was in a phone call last week.

It reminded me that what he's talking about is a common phenomenon. Until I find a better description, I'm referring to the misunderstood images of the original idea as Idea Ghost Images, a reference to the shadow images you get on television when you have problems with the antenna. They are a reflection of the original images, but they're off. And the more of them you have, the greater the problem.

Have you seen this happen in your business world? Where there's an idea being discussed but each person imagines something slightly (or maybe more than slightly) different? And sometimes companies will move forward and commit to budgets and tasks and strategy without realizing that each person is agreeing to something different. That can cause a whole lot of problems.

It's closely related to what we  call getting everybody on the same page. Maybe we should call it asynchronous idea management, but that's probably getting too techie with the language.

The solution, I think, is completely obvious. It's part of the normal planning process. Define the idea in a concrete way -- document, email, presentation, something that can be recorded and referred to later -- and manage it through that idea definition.

It's amazing, though, easy solution or not, how far we get sometimes without really dealing with those ghost images.  I think it's a common problem.

Are you Just Putting Out Fires?

Ask a room full of people how many of them use to-do lists regularly. Then ask those who do how many of them actually complete everything on the list. Almost nobody does. So you have to do the right things.

Urgent and important are different concepts. You have to deal with urgent things, but don't let them drown the important things.

I've been outside USA for a couple of weeks now, and even outside Internet range for a bit, so I missed Managing Urgencies from Seth Godin, about planning vs. putting out fires. This is really excellent:

Add up enough urgencies and you don't get a fire, you get a career. A career putting out fires never leads to the goal you had in mind all along.

I guess the trick is to make the long-term items even more urgent than today's emergencies. Break them into steps and give them deadlines. Measure your people on what they did today in support of where you need to be next month.

If you work in an urgent-only culture, the only solution is to make the right things urgent.

The lesson: plan.

An Interesting Drawing; Useful Viewpoint

This image is from Egghead Marketing, in an announcement of a Twitter business plan contest. It's an interesting summary of a business plan focusing on innovation assessment, written to be read by outsiders; the new world. 

Of course it's a subset. We're talking about twitter, as in extreme social media, extreme Web 2.0, extreme new world. No wonder it puts innovation assessment at the center. Also no wonder it emphasizes business model, market research, and management team. Not at all by coincidence, those are the factors that most influence leading-edge investors when looking at leading-edge companies for leading-edge new deals. 

Business model is particularly remarkable. Who needs to talk about business model? Mainly new deal companies that don't have any obvious way to show investors that they can make money. We didn't talk about business models at all until companies started getting lots of investment money without having one. 

I said subset. This business plan is a selling document, designed to prove concepts to outsiders. It's not what every business needs. Form follows function.If you don't have to prove your market to outsiders, then you might focus more planning attention on what you're going to do and what's going to happen and less on proving to outsiders that it's likely to work. 

One of the fundamentals of my plan-as-you-go business planning approach is that you don't do the supporting information if you're not going to use it. Do the market forecast if you have to prove it. If you're going to just do it anyhow (whatever "it" is), because you're sure of your business and its market, then get to work. It doesn't mean you don't want planning to make it better, but it does mean that your plan isn't a document, and it's done for you, not for outsiders. 

True Story: Forecasting a New Market

In 1979 Creative Strategies International, a high-tech market research company, assigned me the job of forecasting the market for automated teller machines in the U.S.

There were a very few of them already in place at the time. Maybe a few hundred.

I got the numbers as best I could. I found out how many banks there were, and how many branches. I got data for growth in banking customers and growth in branches. I got data for employees in banks.

I talked to dozens of experts. Product managers in companies making ATMs, or companies that could possibly be making them. Lots of bankers, lots of consultants to bankers, several journalists involved in bank-specific trade magazines.

Not all of them wanted to talk to me, but an older and more experienced vice president in the same firm (Tom Arnett was his name) had some good advice (and I'm paraphrasing here, it's been 30 years):

They have to be interested in what they do, the market they're in, or they couldn't get up in the morning.

So hook them in fast. Tell them you're forecasting the market for Creative Strategies. Tell them you're thinking the market is going to grow at some percent -- it doesn't matter -- but most experts disagree. Make it clear as quickly as possible that you're going to offer opinions and information as part of the conversation, if they have time to talk to you.

Most of them will. They want to feel like experts. They want to be asked. And they want to know what you're thinking too.

I used Tom's advice a lot, and talked to a few dozen experts.

In the end, though, there was not technical or mathematical way to forecast ATMs. At least I was able to relate the projection to numbers of branches to give me some sense of error check, but it wasn't clear that ATMs would all be in bank branches.

What made the biggest difference to that forecast was the placement of two ATMs at Stanford Shopping Center on the side of the Bank of America branch there. We lived in grad student family housing at the time, and we would ride our bikes over to the shopping center. The ATM was very convenient. It gave me cash fast. It gave me cash after banking hours. I used it a lot.

Most of the bankers told me people would never accept doing business with a machine. They'll never warm up to that.

Happily, I believed what I saw instead of what the bankers told me. I projected a very fast growth rate for ATMs. As the years ticked off, it turned out I was very close. The forecast I made in 1979 gave a relatively accurate view of the future, given how much uncertainty was there in the system.

Take note, however: it was a human educated guess. The math helped me to compare my projection to the numbers of bank branches, but that was just a reality check. I was guessing.

Employee Satisfaction as a Metric

I was with Oregon Small Business Development Center counselors and directors yesterday doing a workshop on "The Plan-As-You-Go Business Plan", talking about metrics, when an interesting question arose.

Joe Austin, an SBDC counselor who (I'm told) has been very successful as an entrepreneur in cable businesses, asked about making employee satisfaction one of the key metrics for a company's business plan. I was taken aback, frankly, because I think of that as a measure of a company's health, something that should always be a major factor, but not, to be honest, something that comes up as a major priority in the heart of a plan.

Still, Joe has a very interesting point. Isn't the general mood of the employees one of, if not the, most important measure of a company's health. I've posted previously on this issue several times, but I was nonetheless taken by surprise with his emphasis.

Later, during a break, I discovered the rest of the story. I'm trying to contact Joe to fill it in even more, but in the meantime, for today's post, what I'm told is that Joe had purchased several companies and made them work very well, after acquiring them. And -- here's where it gets interesting -- his main measure of the value of the company was the employee satisfaction.

This is one of those things that make me say, yes, of course, it should be obvious. But sometimes they take pointing out.

Elevator Speech Part 5: Delivery

In the real world, you know your so-called elevator speech and you use it when appropriate. Every time you do it, you and it get better. I'd recommend taking time out and working on it, but you probably won't; you're too busy. Think about it in the shower. Think about it when you're stuck in traffic, or waiting in line. Rehearse it in your head. 

That said, I'd like to focus in this post on elevator speeches as delivered by MBA students in venture competitions. I've seen a bunch of these, probably more than 100, but who's counting. They're fun to watch, and I'd think fun to compete in. But some students take them as torture.

The last one I watched had 20 competitors and a large clock, about six feet high, ticking off 60 seconds. Each 60 second speech ended with a very loud buzzer. No going overtime with that buzzer there.

Of the 20 competitors, three failed to get all the way through. They choked up, got caught on some phrase, panicked, and crashed. They stepped off the small podium with half the clock's minute, and most of their memorized speech, left.

The moral: please don't memorize your elevator speech. Not ever. It just doesn't work. It's at least 10 and maybe 100 times harder than knowing it thoroughly and rehearsing it well without ever trying to get the exact same words twice. You need to make points, not memorize a speech. Know your points, and their order.

You're supposed to know your business and enjoy a minute to talk about it. Real businesses do.

Interesting moment: after the embarrassing failures in that last contest I watched, the moderator got up and asked if anybody else would like to try. His point was empathy, wow, it's hard to make an elevator speech. But he didn't make his point very well: there wasn't a non-contestant entrepreneur in the room who wouldn't have loved to have 60 seconds at the microphone with that audience. If you don't like to talk about your business, find another business.

But you're in a contest, you know this is coming, so practice. Use your computer and record, over and over, and listen. 

Don't rush.  Believe it or not, 60 seconds is plenty of time to describe that person with a situation, your unique abilities to come to the rescue, what your solution is, and what you want from your listener. Pause in between each of the four main points, breathe, and emphasize. Look at your listener.

You do have to make eye contact, but you don't necessarily smile. Describing somebody with a problem isn't always the right time to smile. If you start with some humor, then smile with that. Sincerity and conviction is a lot more important in an elevator speech than good looks and a smile and a twinkle in the eye. Trust your judgment.

If you dread it, relax, you're young, it's not just you; but take a deep breath, slow down, and enjoy it.