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.
It’s much easier to be friends with your coworkers than to manage them well. Every small-business owner suffers the problem of management and accountability. Good business planning adds accountability via goals, metrics, and tracking.
Lean business planning sets clear expectations and then follows up on results. It compares results with expectations. People on a team are held accountable only if management actually does the work of tracking results and communicating them, after the fact, to those responsible.
What gets measured is what gets done
Metrics are part of the problem. As a rule, we don’t develop the right metrics for people. Metrics aren’t right unless the people responsible understand them and believe in them. Will the measurement scheme show good and bad performances?
Remember, people need metrics. People want metrics. You and your business need metrics. Good business planning adds to accountability.
Then you have to track. That’s where the lean business plan creates a management advantage, because tracking and following up is part of its most important pieces. Set the review schedules in advance, make sure you have the right participants for the review, and then do it.
In good teams, the negative feedback is in the metric. Nobody has to scold or lecture, because the team participated in generating the plan and the team reviews it, and good performances make people proud and happy, and bad performances make people embarrassed. It happens automatically. It’s part of the planning process. Besides, guilt and fear tactics are the worst kind of fake management.
And you must avoid the crystal ball and chain. Sometimes — actually, often — metrics go sour because assumptions have changed. Unforeseen events happen. You manage these times collaboratively, separating the effort from the results. Your team members see that and they believe in the process, and they’ll continue to contribute.
The “business plan event” is any business development that requires you to show a business plan to somebody. The most common business plan events relate to getting investments or business loans. Both of these business events require presenting a business plan to somebody outside your company. A Divorce or death in the family might require a business plan. Or opening a merchant account, bringing in partners, selling the business, and so forth.
Lean business planning is the lean plan you maintain all the time. The formal plan comes on special occasions only.
Investors do Read Business Plans
In investment, don’t get fooled by people who say investors don’t read business plans. I can’t speak for all, but I can speak from my experience in working with venture capital and as an angel investor. Investors will reject some businesses without reading the plan. They can often tell, from the pitch or the summary memo, that they don’t want to go further and won’t even want to see the plan. But — and this is important — every investor I actually know and have worked with (about 60) will either read the plan or have somebody they trust read the plan, and thoroughly, before agreeing to invest. In investment, we call the process of investigating a startup “due diligence.” And it includes poring over a business plan.
Investors do read business plan before they invest. But they often reject a startup from just summaries and pitch, without reading the plan. The plan comes in when they are really interested.
And what happens with banks and commercial loans, in my experience, is that having a business plan doesn’t guarantee you’ll get the loan. But not having one, especially before you know the bank well, can guarantee that you won’t.
Don’t do the Big Plan Until You Hit the Business Plan Event
Don’t do the extra work of the full formal business plan unless you have a business plan event scheduled. Keep your lean plan up to date. When you run into the event, then you go from your lean plan to a formal business plan. The lean plan lives on your computer and isn’t polished or edited for outsiders. The formal plan is tailored for the specific business need.
For example, that formal version of your plan that you send to investors ought to have good descriptions of management backgrounds and exit strategy. And the one you send to the bank has more on the personal assets of the owners, payment history, and ability to cover the interest expense. Don’t confuse these formal versions with your lean plan. Your lean plan stays alive and flexible on your computer and gets reviewed and revised each month. Both the formal versions are outputs from your plan, intended to serve some specific business need.
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.
