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Interview with Tim Berry: Why Business Plans Should be Lean and Ever-Evolving

While business agility and adaptability are sometimes valued more than traditional business planning these days, don't be fooled. Business planning is just as important but it can also be done much more simply than many existing and aspiring business owners realize. Palo Alto Software founder and "Lean Business Planning" author Tim Berry explains why you need a business plan, what it needs to include, why it doesn't have to take a long time to put together, and how to use it to make your life easier.

Berry explains that it is important to get started on your business plan, and cautions business owners not to try to do the whole plan at once. His strategy for getting started is to create a list and projections to get from general to specific. A business plan should not be some huge document. It should be a lean plan that helps you change to meet your goals and objectives. Finally, Berry states that the business plan is constantly evolving.




Greg Corombos: Hi, I'm Greg Corombos. Our guest this week on Expert Insights is Tim Berry. Mr. Berry is founder and chairman of Palo Alto Software and Bplans. He is also the author of Lean Business Planning: Get What You Want from Your Business. And as you may have guessed from that title, business planning is our topic in this episode. And Tim, thanks so much for being with us.

Tim Berry: Oh, sure. Greg, I'm so happy to be back with you again,

Greg Corombos: It's good to have you with us again. And Tim, I know you've you've written about this a lot, obviously, in your book, but also a number of columns about it. I've heard from other business experts over the years who suggested business plans aren't as important as they used to be because we live in this global economy of instant information. And it's really agility and adaptability that are more important than sticking or even updating a plan on paper. What do you say to them?

Tim Berry: I say that I think it's about agility and being able to move past. It’s one of the prime movers for good, efficient, lean business planning. It's not some huge document that you struggle over for months and then live with for years. It's a lean plan that helps you change. It puts out your goals, your objectives, where you're going to be, what you expect to happen. And it's there available, as things are different because they always are. And having the plan gives you like a dashboard, so you can easily manage quick change. That's the kind of business planning that every business ought to have.

Greg Corombos: So that's a very interesting approach as well because it kind of melds the two. You do advocate having a business plan, but it doesn't need to be exhaustive. It basically is something you should keep pretty simple.

Tim Berry: Yes, a lot of bullet point...will not even a lot...but bullet point lists. And essential numbers, milestones, things that are going to happen, because it's about management. So as business surprises you, and things don't go the way you thought you have, how you thought they were going to go, what's different, and how you're going to react to that at your fingertips. But not a big plan. Bullet point lists for strategy, tactics, milestones, tasks, review schedule, and then your essential numbers like projected sales, spending and cash flow.

Greg Corombos: Well, that's an excellent checklist right there. And I'm sure there's much more on the details in Lean Business Planning, your new book. So if someone is completely clueless, but they want to start a business, and obviously it's a really good idea to have a business plan before you open your business? How do you encourage them to get started?

Tim Berry: The key is to get started. Don't try to do the whole thing all at once. Don't have life stop while you're doing your planning. Get going and start working. For me, I start with a sales forecast, which leads me to, okay, what does it cost me to fulfill these sales? How much will it cost me...the direct cost for the sales, and what do I need for rent or whatever. Other people will start with strategy, what's their key focus. It depends on who you are. The key is to get started, and don't think of it as a document. Think of it as a collection of lists and projections that will help you go from the huge vague uncertainty of “I want to start this business” into the specific “oh, here's this, and here's this other thing”. And you break it down, so you can get a hold of it and actually do it.

Greg Corombos: You say there's a big difference between business plans and business planning, explain the difference

Tim Berry: Business plan implies, here is this thing, this now. Here's a business plan, and you put it in caps. Business planning, to me, implies that it's a regular process. Your plan is, it's like walking. You take a step, you lose balance. With every step that you walk, you lose balance or dribbling or something. Planning is an ongoing process that keeps you moving forward in the right direction, and acknowledges and recognizes that things won’t go exactly according to plan. So you adjust the plan. And you've got that...I use the dashboard metaphor a lot. Because you have knobs to turn as you look at the difference between what you expected and what happened.

Greg Corombos: So it's something that's constantly evolving, it's not something you complete, and then pull out of the drawer when you need to check off your list of things to keep on top of. It's something that as circumstance changes, you're constantly tweaking.

Tim Berry: Yeah. I mean, at least once a month, you look at, here's what we expected. Here's what happened? What do we know from the difference? What conclusions do we make? And how do we adjust? It's really steering a business. Even on a boring straight interstate, from where I live to Portland, Oregon, seems like it's all straight all the way. But you're constantly making course corrections. Well, that's business planning.

Greg Corombos: We're talking with Tim Berry, the book is Lean Business Planning. Tim is also the founder and chairman of Palo Alto Software. And Tim, you've started a number of businesses. And so is that essentially the same format, regardless of the business, because for the most part, the fundamentals will largely look the same? Or if you're starting one type of business, and you move into some other area, it's going to look different?

Tim Berry: The format is a matter of form follows function. For me, I start with a lean plan, that's these bullet point lists, and so on, and numbers, and just keep that for myself to help me figure out what's going next, and what's important, and how much it's gonna cost and how much money I need. And all of that stuff is really...I’m the only user. And as a team begins to develop then, the team is the only user. And opportunistically when you need, for some external reason, to present a formal business plan to, oh,l like the bank, or in some cases, investors, you always have the lean planning that's always up to date, and fresh. And when you need to present the business plan, which you may not ever, but if you do need to do it, then you dress it up. Then those bullet points you massage a little bit, make it look better. Okay, here's my business plan. There's always a lean plan, it's always getting updated. But updating is easy because it's not a big plan. It's only these key essentials. And then when you do need the big plan, if you ever do, you're already two-thirds done.

Greg Corombos: What are the big mistakes? Obviously, you like to keep it lean. So going on and on and stressing out about how to get this exhaustive business plan done would be one way to make your life miserable. But what are other things? Perhaps things that you probably ought to include, but somehow forget?

Tim Berry: The biggest mistake, for sure, is confusing profits with cash flow. People think that, if I'm going to sell it for more than it cost me to build and everything flows, then I'll be fine with cash flow. And frequently, particularly in businesses that are business to business or need to buy inventory and things like that, frequently cash Flow is very different from profits. You have to look at the cash flow.

Another one that comes up way too often is people thinking that they have to have a lower price than the competition in order to make a new business. And in reality, higher prices with more value is more often than not a more reachable accessible strategy, then I'm going to be the low-cost spread.

And of course, Greg, you mentioned that the biggest one is overestimating the size of the job and not doing anything. Because it's, oh, a business plan is too hard, it’s too static. I can't use it. Well, that's the most common mistake. Business plans ought not to be that, and it should be useful. So that's what happens. As you said, that's really the most common one,

Greg Corombos: What do you see most businesses doing on this front? Are most of them adopting the lean business planning approach? Or are some wearing themselves out trying to be too detailed in all these different categories? Or are others just blowing it off and hoping that their instincts pay off for them? What are you seeing most often in the business world right now?

Tim Berry: I think it's really a shame, Greg, how many businesses look at the wrong thing for the business plan and put it off or don't do it. And they don't get the benefit of good planning, because they're confused about what planning is. And they're thinking it's this big formal business plan, which they don't need. So they don't do the lean planning that ought to help them guide the business into the future. That has to be the most common problem.

Greg Corombos: Well, one of the things we love to point out on this program is what is entailed in launching and running a successful small business. And one of the things that can often seem overwhelming is that covering all these bases is going to be something that takes up every waking moment of your life. But I love how on your page, you have the philosophy of lean business planning, startup social media and having a life. So taking an efficient approach to these things in order to a) be successful, but b) being able to enjoy that success and the fruits of it with your family.

Tim Berry: Oh, absolutely. Because remember, and this is important to me. You don't sacrifice your life to make your business better. You do your business to make your life better. So this kind of efficient lean management to optimize results from an effort and so on, this is about everybody winning.

Greg Corombos: We like that. Absolutely. So hopefully, our aspiring and existing business owners get a lot out of this interview. I know they'll get a lot out of your book as well, which is Lean Business Planning: Get What You Want from Your Business. Tim, thanks so much for a lot of good advice today.

Tim Berry: Oh, Greg, thanks for asking. It's always a pleasure.

Greg Corombos: Thank you, sir. Tim Berry is founder and chairman of Palo Alto Software and Bplans and again, the book is Lean Business Planning. I'm Greg Corombos. And for more information on this topic, please call CT at 844-787-7782.

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