It’s better planning that’s efficient and practical. It’s not just a plan, it’s a process. Its benefits include managing, optimizing, and steering a business.
The PRRR cycle in lean business planning
It’s not a traditional formal plan document. The lean plan includes strategy, key tactics, milestones, tasks, responsibilities, performance metrics, tracking, and regular review and revision. It’s something that benefits every business.
It’s easy to do because it doesn’t bother with extras. Don’t do the executive summary. For you or you own team, you don’t need it. Don’t describe the market. Don’t describe the team. Just plan it. Know it, yes; but analyze it or prove it, no.
It’s just big enough to run the business. You write a few things down for yourself and your team, then track results, then review and revise. The process is steering your business.
It’s about getting what you want from your business. Forget the big formal business plan document of decades ago. Forget the fact that the plan will be wrong. Keep it simple. Do only what you need. Write it down and keep track of it so you can look back in a few weeks to check what you thought would happen and compare that to what actually happened. Your business plan is wrong, but it’s vital to good business management.
Use the planning process like a GPS for your business — the plan as destination and route, and monthly plan review for constant course corrections.
“Forget the old-fashioned business plan. It’s not just for startups, or investors; it’s to run your business better. Faster, easier, more focused, and quicker to change. Tim Berry’s Lean Business Planning is a methodology, not just a plan. It’s about getting the right things done. A must for every business owner and startup.”
Susan Solovic, THE small business expert, NYT best-selling author
“In order to thrive today your business must be nimble. Throw out traditional business planning and embrace Lean Business Planning and set your business free to dominate.”
– John Jantsch, author of Duct Tape Marketing and The Referral Engine
“If you’re serious about really running a business, you need this book. It’s about getting what you want from your business, getting the right things done, and adjusting quickly to change. Forget the old-fashioned business plan. This is faster, easier, and better. And you’ll be grateful for using this proven system”
– Melinda Emerson “SmallBizLady.” Bestselling author, Become Your Own Boss in 12 Months, 2nd edition
It’s lean, short, just what you need. An easy business plan. It is way easier than a traditional business plan. The core plan is four steps:
Set the strategy. Use lean business planning to bring your identity, market focus, and business offering together, for strategic alignment. This is something every business owner does all the time. Just remind yourself.
Set the tactics. Plan to execute strategy with tactics to match. Think of pricing, channels, messaging, features, benefits, and so forth.
Do the essential numbers. Calculate basic numbers you need to keep the business running. Sales forecasts, costs, spending. The core numbers that keep your doors open. Plan, track, review, and revise.
Set the execution. List concrete specifics you can track. Who does what, when, and what does it cost? How much money does it bring in? Milestones, performance metrics. This is management.
It’s about getting what you want from your business. Forget the big formal business plan document of decades ago. Forget the fact that the plan will be wrong. Keep it simple. Do only what you need. Write it down and keep track of it so you can look back in a few weeks to check what you thought would happen and compare that to what actually happened. Your business plan is wrong, but it’s vital to good business management.
Use the planning process like a GPS for your business — the plan as destination and route, and monthly plan review for constant course corrections.
Optimize your business with metrics, tracking, and accountability
Optimize your business. Keep the long term in mind while dealing with the everyday routine. Stay the course, but also make course corrections. Lean planning offers real benefits to every business, including:
Accountability. The future is now. Virtual world. Performance and productivity by metrics, whether it’s hours, codes, calls, or presentations. Set expectations with specific goals, then track numbers. Management by transparency. The lean planning process keeps the metrics on top.
Managing change. Forget that big daunting document; keep a lean plan to help you track changing assumptions, so you can review and revise regularly.
Strategic alignment. A simple process to keep you focusing on the details without losing track of the horizon. Make sure you have tactics to execute strategy; and specific, concrete milestones, metrics, dates, and deadlines to make the tactics real. Plus what you need to plan the money.
Optimize your business. This is planning for today. Lean. Productive.
It’s about getting what you want from your business. Forget the big formal business plan document of decades ago. Forget the fact that the plan will be wrong. Keep it simple. Do only what you need. Write it down and keep track of it so you can look back in a few weeks to check what you thought would happen and compare that to what actually happened. Your business plan is wrong, but it’s vital to good business management.
Use the planning process like a GPS for your business — the plan as destination and route, and monthly plan review for constant course corrections.
What do you want from your business? Whether it’s growth and profits, getting investors, or just peace of mind and independence, this book will help you get what you want. It will show you how to do it better with focus, priorities, setting expectations and tracking results. I promise.
The lean business plan is a tool to help you get what you want from your business
Don’t sweat the big business plan. Skip the descriptions and explanations. Just to a lean business plan. It will help you get where you are going without bogging you down. It’s a fast, easy, and efficient way to get what you want from your business?
Who doesn’t like planning a vacation? Decide where you’re going, look at the activities, attractions, restaurants, hotels, and the route. When I was a kid, we’d get together before our big backpacking trips and plan routes, food, what to pack. As an adult, I’d join my wife planning our family vacations. Planning is part of the fun.
And planning your own business? That too. Set your strategy, and the tactics to execute it. Figure out pricing, marketing, product. It’s dreaming and telling stories, and then adding what it takes to make them come true. It’s making things happen. It’s going from a vague, daunting, hard-to-manage uncertainty to specific educated guesses, linked together, so you can deal with them. Get things done.
Why lean? Because lean means strong with muscle but no fat. Lean means useful. No frills. You may have heard of the lean startup or lean manufacturing. It’s a set of ideas that started about 70 years ago, revolving around PDCA: plan-do-check-adjust. The idea first came up in relation to the auto manufacturer Toyota, as lean manufacturing. It was also called “the Toyota way.” It was adopted later by a collection of experts and authors, most notably Eric Ries and Steve Blank with their work on The Lean Startup. It’s a process of continuing improvement in steps, or cycles, each one involving plan, action, checking results, and revising the plan to start again.
Just like all these other applications of lean, lean business planning is also a process of taking steps, tracking results, and revising to improve. The lean plan itself is a lot like the minimum viable product in the lean startup. (I called the lean plan the minimum viable business plan in early drafts, but that would be pushing too hard.) It’s much more focused, specific, practical and easier to do than a full formal business plan. The lean business plan is four steps: Set the strategy, then tactics, then milestones, then basic numbers, then track results, review, and revise.
I’ve come up with a slight revision of the classic PDCA cycle. My version, develop for lean business planning, is PRRR, for “plan, run, review, revise.” And I could add another R for repeat (but that would be pushing too hard).
A lean business plan process is not a long boring formal document. It is not the traditional document, daunting to do, required for some business plan event. It’s not a document, it’s the first step in the process. It’s what’s going to happen, when, and who’s responsible. And how much money out, how much in. And how it will be tracked, reviewed, and revised. It’s planning, not just a plan.
“The plan is useless; but planning is essential” — Dwight Eisenhower
You start with a lean business plan, just big enough to steer the business, to meet the need. It’s about results. It’s about managing a business. Accountability. Metrics. Priorities. It starts simply and grows organically. It gets reviewed and revised regularly. The first plan is step one in a planning process that includes the plan-run-review-revise cycle and goes on as long as the business does.
A lean business plan is never done. If the lean plan is finished, the business is finished. — Tim Berry
With lean business planning, the plan is only the latest version. It is constantly being reviewed. Planning process is what matters.
A good business plan has a shelf life of a few weeks.
It’s not a plan; it’s a process
What we call a business plan event occurs when a business needs to present a business plan to outsiders. Seeking investors is a business plan event. So are applying for commercial credit, taking on partners, estate planning, and even divorce settlements. There are dozens of business plan competitions held around the world that offer prizes and awards for business plans. These too are business plan events. If you were one of the students to whom I taught entrepreneurship from the late 1990s to 2009, then your business plan event existed because you couldn’t pass my class without doing a complete business plan.
Form Follows Function
Most formal business plan documents have all of what we’ve already done, plus disclaimers, disclosures, a table of contents, executive summary, descriptions for outsiders of the company, products or services, market analysis, management team, and financial projections including the basic numbers plus projected income (profit/loss), balance sheet (assets, liabilities, capital) and cash flow. Traditionally they are printed and bound documents, but lately I see almost entire plans produced as electronic (PDF) documents. Actual printed pages are rare.
While the plan is still the plan, the business plan event will usually require dressing it up to deal with the special occasion. The formal document is the output of the plan, not the plan itself; it’s required by the special occasion. So too, as needed, the slide presentation for live pitching, the summary memo, and the elevator speech. These never work instead of the plan. They are outputs of the plan.
And of course, the nature of the event — what’s the business need, who is this for, what do they expect — changes the details of dressing the plan.
For example, a business plan for seeking investment from angel investors or venture capital needs to have the standard formal plan contents with emphasis on scalability, growth potential, defensibility, management team, and possible exits.
And the plan supporting a commercial loan application usually needs to include personal financial statements and more detail about assets, collateral, payback potential, and past credit.
Change is Constant
Furthermore, in all cases, recognize that even the formal business plan documents have evolved a lot in the past few years. When I started with business plans in the Silicon Valley in the early 1980s, they were huge. Investors actually pored over plans looking for details. And people thought plans would last for six months to a year.
Nowadays, although it’s still a formal business plan, everybody agrees that business plans should be short and concise. Key information has to be there, but bullet points are encouraged and business tables and charts are vital.
Also, everybody understands that even formal business plans are good only for a few weeks. They can’t get stale.
Lean business planning starts with a lean business plan. The lean plan contains four essentials every business needs, and nothing else. It’s a streamlined core plan for running the business, not a document or detailed plan, full of descriptions, to be presented to investors or lenders. It’s to optimize management. Here’s what the lean business plan includes.
The principles apply to every business plan. Fight the fallacy of the formal plan. Start lean. Make it formal only when needed.
Who you are, what you do, and for whom you do it. Ideally, the smaller your business, the more focused. Maybe you keep it in your head, always — and lots of us do that — but maybe you write it down. Simple bullet points. Just reminders.
Planning outside of strategy is a waste of time.
I like this framework: the problem you solve; your solution; who you are; and the market you try to reach.
But don’t sweat any strategic framework too much. Strategy is focus. It’s as much what you’re not doing, whom you’re not reaching, as what you are doing and whom you reach.
Strategy without tactics is just puffery. Keep your strategy in mind — your focus, what you are and aren’t doing, for whom — as you develop specific action plans filled with tactics that make strategy matter. This is all about execution.
Marketing tactics: Target market, differentiators, positioning, messaging, pricing, channels, online presence, engagement, content, sales structure, and all the old-fashioned marketing mix stuff like advertising, public relations, special promotions, and so forth.
Offering (product or service) tactics: launch dates, feature sets, packaging, product lines and options, apps, menu items, Stock Keeping Units (SKUs), services, website, technology, vendors, delivery options, and so forth.
Financial (and admin and infrastructure) tactics: Funding and financing, hiring and recruiting, training, policy, and so forth.
And don’t think of all this as a document. At least, not yet. Early on, it’s a matter of form following function; you keep it in bullet points, maybe orderly sections, but none of these plans are independent of all the others.
Do think about strategic alignment. What you do with your tactics should flow from your strategy.
And what this means, specifically, is that you think all these factors through, and set down some plans, in writing but not fancy text, just bullets, so you can get back to them at least once a month to see how you’re doing. It might even be a bit like the classic business plan, covering topics like pricing and distribution — except that you do it for yourself. Keep it just big enough to run the business.
3. Forecasts of Sales, Costs, Expenses, and Cash
You can’t optimize management without managing the money. You need to forecast your basic business numbers because without the forecasts, you can’t track results and catch problems or capitalize on pleasant surprises.
Forecast basic numbers
Don’t worry too much about forecasting; just do it. If you can run a business, you can do a basic forecast of sales and costs. It’s not about being accurate; it’s about laying out realistic assumptions. Of course you’ll be wrong, but with good assumptions you can track how you were wrong, in what direction, and make regular corrections.
And you can’t plan a business without considering cash flow. Although for some simple businesses, cash flow is a matter of staying profitable, keeping sales above costs and expenses; for most businesses, it’s much more complicated because you don’t get paid exactly when you make the sale, and you have to buy things ahead of time. Being profitable doesn’t guarantee having money in the bank.
4. Execution: Assumptions, Milestones, Metrics, and Schedule
trackable concrete specifics
Tactics without concrete specifics are just wasted effort. None of what you have in tactics means anything without dates, deadlines, and specific task assignments. Here are the essentials:
Review schedule: This is absolutely essential. This is the real world, in which we’re all very busy. If you don’t schedule your monthly review in advance — and then follow up and do it — it’s not likely to happen. I always did it the third Thursday of the month, and you do it whenever — but make sure that “whenever” is a real date.
List of assumptions: You should always list assumptions because that’s the first thing you look at when it’s time to revise. You set the plan running, then track results, and when results are different from the plan (and they always are), you look at assumptions first to see whether they have changed. If so, then revise the plan. If they haven’t changed, maybe you still revise the plan, but you look first whether you executed correctly.
Milestones: What’s supposed to happen, when, and who is responsible? It’s a simple list to do, but it’s the core of execution. Tailor it to fit your needs, so it’s either reminders for yourself, in its simplest form; or commitments from the team, plus budgets, start dates, end dates. This is for real management accountability. This is so you can track progress and deal with standstills.
Metrics: These are performance metrics, the other side of milestones, also for real management accountability. Of course the most important are sales, costs, and expenses, with the details of who is responsible for which lines or revenue or spending. But most businesses have many other useful performance metrics, like web traffic, conversions, foot traffic, sales per square foot, sales per employee, tweets, followers, minutes per call, presentations, leads, lines of code (ugh), contacts made, likes, retweets. Tailor this for your business.
Run, Review, Revise.
If you’re like me and most businesses, you start with a lean plan and then get going. Track the plan results, do your reviews, and revise often. Your first plan is done. Now execute.
Plan-Run-Review-Revise
You may have heard of the lean startup or lean manufacturing. It’s a set of ideas that started about 70 years ago, revolving around PDCA: plan-do-check-adjust. The idea came up first related to the auto manufacturer Toyota, as lean manufacturing; that goes back 70 years. It was also called “the Toyota way.” It was adopted later by by a collection of experts and authors, most notably Eric Ries and Steve Blank with their work on The Lean Startup. It’s a process of continuing improvement in steps, or cycles, each one involving plan, action, checking results, and revising the plan to start again.
That term “lean,” and the idea of continuous process, applies perfectly to business planning. It’s a shame that so many people think of a business plan as a document, the formal business plan; but good planning is a streamlined simple plan in a process that could be called PDCA, which I prefer to call PRRR: plan-run-review-revise.
Unless you have a business plan event
If you’re a business facing a business plan event, then your lean business plan is still most of what you need. Just add an executive summary and, if needed, market information, pitch deck, and whatever else is required.
This is important: form follows function. So of course you want a plan, no matter who you are or how big or how new your company is. However, that doesn’t mean everybody needs to have the full formal business plan with all the supporting information.
For example, you might be running or growing or starting your own one-person business. You feel very comfortable about knowing your customers and your market, and you have a strategy. Why are you writing all this down, formalizing it, making a big project that you don’t really need? No good reason. Planning is about the decisions it causes, not about showing off your knowledge.
You do what the business needs demand — no more, no less.
