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In Business Planning, Form Follows Function

Your plan should be functional and be a tool for managing your business growth.

How long should a business plan be? How many pages? What should it cover? It covers what you need to manage your business better. Form follows function.

Consider the illustration here, which comes from my Plan-As-You-Go Business Plan book. The plan is in the big circle in the middle. The plan is what's supposed to happen, why, who's responsible and what that means for managing resources. It's strategy and what you're going to do to implement that strategy.

The other circles represent optional output formats for that plan. The output might be the formal plan document, the pitch, and so on. Be careful not to confuse the output with the plan.

The document you had copied and coil-bound to present to investors isn't really your business plan. Don't make that mistake. That's just the output of the plan as it existed on that day. It isn't your business plan any more than the picture of your kid is actually your kid. It's a snapshot. It has changed since and should continue to change as your business grows.

You might ask if that means your plan is in your head. The answer is no; you want to keep track of the details and assumptions as they change. The most valuable result of the plan is the management it causes. If you don't have it recorded somewhere on your computer, it's really hard to remember later what your assumptions were, and it is therefore hard to track and manage the changes.

With this form follows function idea, the plan should exist on your computer or in whatever form makes it easiest for you (and other members of your team, if you have a team) to call it up, review it, check actual results, check changed assumptions, and make course corrections.

All of these outputs need to be aligned with each other. The core plan, in the center, is where you keep track of what your latest plans are. Yes, they change, and change fast; but you still keep track of them in one place. And the outputs--whether a document, a presentation or a summary--all have to be aligned.

Some people say you should just do a pitch presentation instead of a plan. But if you think about it, you'll realize that without a plan you really have no good idea of what the core content for the pitch is. What if the person or group you pitch asks you what the projected headcount will be? Or why it isn't more, or less? What if they ask why you requested a certain amount of money instead of more or less? You can't really do the pitch well without the plan to base it on, and with the understanding that the plan will change, and that, when it does, the pitch will have to change with it. That's what alignment really means.

And that's also why you have to expect to throw those outputs away, like used snapshots, as the plan changes. You work on the core, with the understanding that you'll be able to make use of those outputs when they're required, for good business reasons.

The good news here is that for real business planning, when the goal is managing your business as well as you can, you can forget that big formal business plan document. Leave that for when you need it, and keep a shorter, simpler, more powerful version on your computer where you can use it well.

The real plan goes on and on, if you're doing it right. It's a living document that will change regularly. It's the core content of your elevator speech, your pitch presentation, your summary memo, and--by far the most important of the various outputs--your business management.

The author is an Entrepreneur contributor. The opinions expressed are those of the writer.

Tim Berry is the president of Palo Alto Software Inc., based in Eugene, Ore., which produces business planning software. He is also the author of 3 Weeks to Startup and The Plan-As-You-Go Business Plan, published by Entrepreneur Press.
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