The original title of this piece was “Business Plans Are Made, Not Found.” It comes from my childhood memories of the Wheaties ad campaign of the 1950s. The slogan was “Champions Are Made, Not Found.”

The same applies to business plans. You make one, you don’t find one. You develop your own.

This idea comes up a lot these days because — I think– of sample business plans. The spread of sample business plans is a real problem for the greater good of business planning. And unfortunately, I might be part of the problem. Gulp.

I started sample business plans at Palo Alto Software in 1987 with the first Business Plan Toolkit, which included the original versions of Acme Consulting and AMT, the computer reseller, which I had written for clients.

Digression: If you’re curious, Google one or the other and see how widespread it is. By the way, there are a few sites that use one of these examples with permission (the SBA, for example, has permission to use AMT as a sample on its site), but there are a lot of people just copying one and calling it their own. Seems like there are hundreds of them out there. Only a very, very few have permission. Most are pirates. End of digression.

We came up with the idea of including sample plans with the business-planning product to help people understand what a business plan looks like, what it covers, and how it comes together. We included 10 real sample plans in late 1994 when we released Business Plan Pro. People liked the samples, so we included more. We polled the users and came up with 20 real plans from real businesses to include with our second version in February of 1996, and 30 sample plans for the third version, in May of 1998. People really liked sample plans as part of the product.

Then the idea spread. People started buying and selling sample plans. Our life as market leader became very complicated when a competitor bought 100-some sample plans from a book compilation and included them as Adobe PDF files with some business plan software. That company didn’t tell their customers that the plans were just electronic documents, didn’t work with their software, and most didn’t even have financial information, but they did cause a stir in the market. We had to work like mad to get 250 real plans, all of which worked with Business Plan Pro and had financial data, to compete. We sponsored business plan competitions, and paid our customers, looking for real plans.

So the race was on. By this point we had our version 2002 (equivalent to the fifth version) of Business Plan Pro out. People started selling sample plans on the web, most of them poorly-disguised knock-offs of our sample plans exported from Business Plan Pro and massaged slightly. We’ve had several legal battles with people using our work to compete against us. We’re up to 500 sample business plans with Business Plan Pro now, and, frankly, I hate it.

Here’s the problem: when it was two sample plans or even 10 sample plans, people generally understood that they were supposed to give you an idea of what a plan is. Now with hundreds of sample plans available, some people naturally think their own business plan is supposed to be one of those 500.

Frankly, as author and professional business planner, I hate this idea. People are buying and selling finished business plans as if they were term papers (also a bad idea) for college students. That trend is really spreading, and it’s a mistake. Not just wrong because of plagiarism, but wrong because it doesn’t work and clouds business planning.

I get the question all the time: “Do you have a plan for X?”

Which brings me back to the title of this sidebar (which was originally a blog post). I want to tell everybody that finding a business plan you can use is a really, really bad idea. You make a plan; you don’t find one. Obviously, every business is unique. Every business plan is unique. Even if you happened to find a business plan for a business very much like yours, it would never have the same owners, the same management team, the same strategy, and probably not the same market or location either.

Sure, I recognize that a sample plan can help in several ways. You can find out how somebody else defined the units and prices in a business, what her expense projections were and for what categories, and how she described her market.

But I strongly recommend you start at zero, and write your own plan. Refer to samples for some hard points, perhaps, but start with an empty plan. If you’re using Business Plan Pro, the wizard takes you through the process step by step, tells you what you need to include and why, so that you just tell your own story and do your own numbers. If you start with somebody else’s plan it’s going to be very hard to distinguish your own ideas from hers. You’re going to end up with a hodgepodge of rehash.

Recently I had one of those light bulbs go off in my head. I’m referring to those times when you’re reminded of something you already knew, but had forgotten. In my case today it was this: planning your new business, the one you’re thinking of starting, ought to be fun. Planning isn’t about writing some ponderous homework assignment or dull business memo, it’s about that business that you want to create. It should be fascinating to you. What do people want, how are you going to get it to them, how are you different, and what do you do better than anybody else?

Honestly, isn’t that related to the dreaming that makes some of us want to build our own businesses? It was for me, every time, including those ventures I worked on that made it and those that failed. Dreaming about the next thing I wanted to do was always part of it. Dreaming is related to looking forward, anticipating, and (in this case) business planning.

This came up this morning during my second day of video sessions for SBTV, which has been filming me on starting and managing a business and business planning. I was answering Beth Haselhorst’s question relating starting a business to getting out of the cubicle, when I realized that I was in danger of forgetting that business planning is part of the dreaming and part of the fun.

I think what’s important is that none of us should be intimidated by business planning. That’s why were doing the plan-as-you-go plan. The business plan is a way to lay out your thoughts and think them through — it shouldn’t be some dull ponderous task you have to fear or dread or put off.

If thinking through the core elements of your business, or for that matter the details of your business, isn’t interesting, then get a clue. If you’re not really looking forward to it, maybe you don’t want to start that business after all.

If you dread the planning of your next vacation, stay home. If you dread the planning of your new startup, don’t start it.

(originally posted in Up and Running.)

Validating the idea and understanding the business model are pretty important steps that should come before writing a business plan. That’s hardly a novel idea.

Still, novel idea or not, successful entrepreneur Vivek Wadhwa spells out the early stages very well in a BusinessWeek special report published in early 2008, “Before You Write a Business Plan.”

He starts with a short list for validating the idea:

1. 1. Write down your thoughts on the product you want to build and the needs you want to solve. You’ll be detailing your hypotheses.
   2. Validate these hypotheses with as many potential customers as you can. Ask them if they will buy your product or service if you build it. Learn about what features they need and what they will pay for, ask them for more ideas, and be sure that there is a large enough market.
   3. Build a prototype of your product or offer a test run of your service and again ask potential customers what they think about it. You’ll find that customers usually provide much better input when they can actually try out a product.

Then he also suggests a slightly longer list for developing the business model, as the answers to a series of questions:

1. 1. How are you going to find customers or have them find you? Are you going to advertise, cold-call or rely on word of mouth?
   2. How will you differentiate your product or service? There is always competition, so how are you going to set yourself apart?
   3. What can you charge for your product or service that’s profitable for you and provides value to the customer?
   4. How are you going to persuade potential customers to buy from you? Even great products or services don’t sell themselves; you have to develop a process for closing deals (BusinessWeek, 7/12/05).
   5. How will you deliver your products or services to your customers? Are you going to have a direct sales force, sell through distributors or over the Internet? Can you do this cost-effectively?
   6. How are you going to support your customers if your product breaks? Are you going to provide a telephone hotline, on-site support or answer e-mails?
   7. How are you going to ensure customer satisfaction and turn customers into loyal fans? Your success will ultimately depend on how happy your customers are.

These are good lists to go over as you consider your plan.

The fundamental shortcoming of most mission statements is that everyone expects them to be highfalutin and all-encompassing. The result is a long, boring, commonplace, and pointless joke.

In The Mission Statement Book, Jeffrey Abrams provides 301 examples of mission statements that demonstrate that companies are all writing the same mediocre stuff. To wit, this is a partial list of the frequency with which mission statements in Abrams’s sample contained the same words:

Fortune (or Forbes, in my case) favors the bold, so I’ll give you some advice that will make life easy for you: Postpone writing your mission statement. You can come up with it later when you’re successful and have lots of time and money to waste. (If you’re not successful, it won’t matter that you didn’t develop one.)

Make Meaning : The Art of the Start

You fall in love with your plan, and love is blind. You don’t see the fatal flaw.

I know a man who jumped headfirst into a new venture based on building a chain of used CD stores. The punch line? It was 2000. Napster was already there. Do you see the fatal flaw? He didn’t. And this was a man who’d had a string of successes.

Love is blind.

So here’s a trick that might, sometimes, if you’re lucky, help you see the fatal flaw.

1. It takes imagination. So close your eyes, relax your shoulders, take a deep breath and let it out slowly.
2. Jump in your imagination to the future. Go to three years from now.
3. Now pretend that, there in the future, you know that the business you are starting now, your baby, your dream, is over. It failed. I know, that’s hard, but it’s a game; it’s only in your imagination, so make that leap.
4. You’re sitting at a table, maybe in a coffee shop, maybe at lunch, and somebody asks you: “What happened? Why did it fail?”
5. Now, using your imagination, your intelligence and what you know about your business, answer that question. This is fiction now, so you have to tell a story. Make it believable. What happened?

This helps you think about flaws. Was it competition? Did the management lose interest? Was there not enough money? Did some new technology come in?

I don’t know for sure, but I believe that if my friend with the used CD stores had done this exercise, he would have come up with the possibility of a change in the way we deal with music, meaning Napster, downloading, iTunes and so on.

And, for the record, I haven’t done the research, either, but what do you think? Would you like to own a used CD store? What do you think has happened to the sale of used CDs?

(from Up and Running)

In 30 years of working with businesses of all sizes, I’ve come across several of what I would call general principles of strategy. These don’t necessarily apply in the academic world, or for larger corporate enterprises, but they do apply to small and medium businesses everywhere:

• Strategy is Focus. The more priorities in a plan, the less chance of successful implementation.
• Strategy Needs to be Consistently Applied Over a Long Term to Work. Better to have a mediocre long-term strategy consistently applied for years than a series of brilliant but contradictory strategies that never last long enough to matter.
• Strategy Needs to be Tailored. There are no standard strategies. Every company is different. A given strategy must always be tailored for a specific company.
• Strategy Needs to be Realistic. You have to deal with your company as it is at this point in time, understanding what choices you really have, what knobs you can actually turn.
• The Best Strategies are Market Driven. When possible, it’s not “how to sell what we have,” but rather, “how to make what people want or need what we offer.”
• Good Strategies Understand Displacement. Displacement in business refers to the undeniable fact that everything you try to do rules out many other things that you therefore can’t do. You have to choose carefully, because one project displaces many others.

(from Hurdle: the Book on Business Planning)

Nobody talked much about business models until suddenly a lot of businesses, valued for a lot of money, didn’t have them.

For almost any traditional business, the business model is so obvious that you don’t have to talk about it. Stores sell goods. Restaurants sell meals. Hotels sell lodging. Airlines and taxis sell transportation.

Think of the business model as how you make money. How you get money out of your customer’s pocket and into your bank account.

The new businesses, mainly web businesses, need to explain how they make money. Some of the most highly valued businesses in the world — Facebook, for example — don’t have an obvious way to make money.

Some businesses still get away with generating traffic, so-called eyeballs, but not money. The underlying assumption in these cases is that the traffic means a likelihood of being able to generate money somehow, some day.

And if you want to be really trendy, use the phrase “business model” to mean type of business. This can get really interesting. Take a look at Alexander Osterwald’s Business Model Design and Innovation, for example, a blog focusing on new ways to do business. Here’s how he defines the business model:

A business model is a conceptual tool that contains a set of elements and their relationships and allows expressing the business logic of a specific firm. It is a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams.

Along with that he adds nine points:

1. The value proposition of what is offered to the market;
2. The target customer segments addressed by the value proposition;
3. The communication and distribution channels to reach customers and offer the value proposition;
4. The relationships established with customers;
5. The core capabilities needed to make the business model possible;
6. The configuration of activities to implement the business model;
7. The partners and their motivations of coming together to make a business model happen;
8. The revenue streams generated by the business model constituting the revenue model;
9. The cost structure resulting of the business model.

This is perhaps a bit think in language, but still, a nice summary of a business. You could use this as the heart of a plan too, no? His value proposition is our business offering, his target customer segment is obvious; but our strategy adds more attention to your business identity and your narrowed strategic focus. This is descriptive. Regardless, it’s a good list.

I want you to use words and numbers written down somewhere to keep track of your plan, but that doesn’t mean it isn’t there unless you have it written into a text. It is there if you know it and if your team knows it.

Don’t get freaked out by the text, or the writing. It’s just for you, and probably your team members, to keep track. Some of my favorite plans keep the key concepts for their heart of the plan as pictures, illustrations that could be as simple as a single slide.

Sometimes it’s as simple as a mantra. Reftk Mantra. Fine dining in Eugene, OR. Fresh organic Korean food in lower Manhattan. Your weekend cottage in Cape Cod. Healthy fast foods.

You might be writing bullet points. Whether short text or picture or complete written out discussions, you want to keep track of your plan so you can track it and review and revise it and, of course, communicate between different people. But until you need to present it as a document to be read by others, don’t make extra work. Keep it simple.

I do recommend keeping it on a computer, making it accessible to the few key team members who must be able to refer to it, but do only what you need.

Don’t ever get caught worrying about the actual writing. Just type snippets. Steam of consciousness is fine. Pictures or photos or charts are fine.

by Jake Weatherly, Vice President of Customer Experience, Palo Alto Software

Performance Metrics – In the corporate world there is tremendous effort applied by management surrounding metrics, and this philosophy has trickled down to small business rapidly with affordable yet robust systems focused on metrics like CRM, IP phones, web analytics, search engine optimization, help desk ticketing and good old accounting. Why with all of this experience, infrastructure, and applied science is customer service generally terrible?

Key performance indicators in call centers surround call resolution time, call volume, number of open issues, and escalation data. Statistical analysis is done by another group of managers who are tasked with minimizing expenses and maximizing volume.

Even the smallest businesses are moving to outsourced call centers or building in-house teams based on these principals, and suddenly their unique competitive advantages – quality customer relationships, understanding goals and objectives, and domain expertise – are lost to real-time measurements that theoretically translate to higher levels of success. What is missing from these equations? If running successful call centers is such a science, why can’t my small regional credit union implement my change of address after one request?

What are the vital few in customer satisfaction?

It all boils down to the human factor. Empathy, patience, and the true desire to help people are the foundation. Building skills surrounding these key factors to provide excellent service can be accomplished through training, experience and quality infrastructure.

The vital few of customer service are things like repeat business, size of initial purchase compared to subsequent purchases, and feedback feedback feedback!

Believe it or not feedback about how our software would be better if it did X, Y, or Z is a huge indication of customer satisfaction. This means that the customer is really using the program, and they believe in the company behind the software enough to warrant taking time to share details about their experience.

When was the last time you sent the tech support person you spoke with a pizza for lunch? True story – we’ve received pizzas, unannounced visits, and even customers’ plans to publish as thank you.

It does not get more measurable than than a thank you pizza from a customer!

That’s in my vital few – I check on the number thank you pizzas we have received everyday around noon.

By Jake Weatherly, Director of Customer Experience, Palo Alto Software.

(reprinted from Business in General with permission. All rights reserved.)

How Analytics Help Build this Champion

Posted by Tom Davenport on January 31, 2008 8:54 AM

Last spring, on baseball’s Opening Day, I confidently identified the Boston Red Sox on these very pages as the eventual World Series winner—based in part on their analytical prowess. You may recall that I was correct in that prediction. This Sunday, I will go out on a much more solid limb and pick the Patriots to triumph in the Super Bowl. I’m more of a baseball guy than a football nut, but fortunately both of the Boston teams I cheer for are not only winners of late, but also heavy users of analytical approaches to their respective games (the Celtics aren’t doing badly either, but I think Kevin Garnett is more of a factor in their success than any statistician).

Like the Red Sox (or any analytically-oriented sports team, for that matter) the primary analytical application for the Pats is selecting the best players for the lowest price. This is particularly critical in the NFL, with its stringent salary cap. In-depth analytics helped the team select its players and conserve its dough. (Until last year the team had only a middle-ranking payroll in the National Football League, but now Tom Brady is getting expensive!) The team selects players using its own scouting services rather than the NFL-generic one that other teams employ; Brady, for example, was the 199th pick in 2000. They rate potential draft choices on such nontraditional factors as intelligence and willingness to subsume personal ego for the benefit of the team (though I had my doubts about their fidelity to that variable when they signed the famously mercurial Randy Moss before this season).

The Patriots also make extensive use of analytics for on-the-field decisions. They employ statistics, for example, to decide whether to punt or “go for it” on fourth down, whether to try for one point or two after a touchdown, and whether to throw out the yellow flag and challenge a referee’s ruling. Both its coaches and players (particularly quarterback Tom Brady) are renowned for their extensive study of game video and statistics, and head coach Bill Belichick has been known to peruse articles by academic economists on statistical probabilities of football outcomes—over breakfast cereal, the legend goes.

Off the field, the team uses detailed analytics to assess and improve the “total fan experience.” At every home game, for example, twenty to twenty-five people have specific assignments to make quantitative measurements of the stadium food, parking, personnel, bathroom cleanliness, and other factors. The team prides itself not only on scoring the most points ever this season, but also on having the lowest wait time for women’s restrooms in the NFL. External vendors of services are monitored for contract renewal and have incentives to improve their performance. This won’t help them win the Super Bowl, but it helps fill Gillette Stadium every home game.

Belichick deserves a lot of credit for the analytical emphasis (God knows, he can’t get by on charm), but so do the team’s owners. Just as the Red Sox owner John Henry moved the Sox in an analytical direction, Bob and (especially, I’m told) Jonathan Kraft believed that analytics could make a difference in football. Jonathan is a Harvard Business School alumnus and a former management consultant. In addition to Belichick, they hired Scott Pioli, a former Wall Street investment analyst and now the “player personnel” guru.

The only thing the Patriots lack is an analytical secret weapon equivalent to Bill James, the god of baseball statistics who acts as a “senior adviser” to the Sox. I’m not sure there is a Bill James of football. If there is, the Pats need to hire him (or her). Such a move could keep the Patriots dynasty going for many years to come.

(from Harvard Business’ discussionleader.hbsp.com, posted by Tom Davenport on January 31, 2008. URL http://discussionleader.hbsp.com/davenport/2008/01/how_analytics_help_build_this.html)