Business planning is a favorite subject of mine. In the seven years since founding Net Daemons Associates, I've learned a lot about planning. In the same seven years, I've spanned the scale from way too little planning to way too much of it.
NDA began nearly as an accident. A good idea, the right timing, easy to launch - so who needed a plan? A large-company spinoff, NDA was founded to provide computer-consulting networking services to companies that either didn't have an in-house staff or needed to augment their staff. Because a recession was on and because NDA's former parent was strong, we had a lot of ready-made business. Recessions are great for contractors, and existing contracts from people we knew didn't hurt either.
NDA, in short, was a no-brainer. Our "no-plan plan" was us just trying things out to see how they worked. It was a few years before we determined that, yes, things were working, and it was right before our second managers' meeting that we wrote our first plan. The genesis was an off-site gathering, when our managers said, "You know, it would be so much easier to focus on strategy if we had a plan." It's embarrassing and almost shameful to say this caused lightbulbs to go off, but it did!
Always a First Time
Our first plan was based on a planning software package, full of big sections for which we had no use. But the package gave us a structure and enabled us to organize our thoughts, which is what we really needed. By that time, the laissez-faire landscape of our early days had given way to rapid growth: revenue more than quadrupled, causing us to mutate from a two-person to a 15-person firm - all of whom wanted to know what to expect in the future. For us to tell them, we needed to know what we expected. Hence, a plan.
Over time, putting together and then revising the plan, first by our management and then by our employees, became an annual ritual. After the reviews, we made changes, and the result was our strategic plan for the year ahead. Based on that strategic plan, we could create a budget, an operations plan, department plans, and spending plans. Since everyone knew about the plan and had a say in it, it was easy to get support for management's objectives.
Each quarter, we managers give financial reports to the company, detailing our progress to date. Not only is this process useful, but it helps to keep the entire company focused and provides pieces for everyone to address.
Before having any plan at all, we didn't know if we were performing under, at, or above an expected level. With a plan, we know where we stand and where we need to be more or less focused. Without a measuring stick, it's hard to measure.
Not Too Hot, Not Too Cold
For entrepreneurs who don't have a plan, it's OK! But don't just wash your hands of it. In the early days, when NDA had a "no-plan plan," that might have been too little. Now that we have many plans, perhaps that is too much: we need to make sure that planning doesn't overtake performance.
In other words, entrepreneurs need a just-right plan, one that's not too hot, not too cold. That means if you aren't sure of your goal, particularly at the beginning, it's OK not to have a road map. I think you can do a lot with a company prior to working from a formal plan - but there isn't any guarantee that you couldn't have done more by starting with one.
A lot of planning comes down to how you think, a personal preference for order and its priority in your mind and in your life. While a plan can make order from chaos, it can also restrict it. And in the Lawton view of the world,you need some level of chaos to recognize opportunity.
Having Your Plan and Your Chaos Too
Against the backdrop of an entrepreneur's need for both chaos and a stick against which to measure it, I have some firm thoughts about business planning.
- Timing Is Critical
There's a right time and a wrong time for planning. Overplanning up front can sometimes put the focus on the wrong area at the expense of the right area. Some companies can get by without ever having a plan, and that's fine. On the other hand, if you feel that a lot is out of control and you don't know whether you are doing well or not, it's time for a plan.
- Trust Your Gut
Consider your comfort level. If a plan would help you sleep better at night and stop eating Tums like they were M&Ms, you probably need a plan.
- It's Never Too Late
If you think you're late in the game, think instead about all the data from which you can now draw. Never look at the process as "too little, too late." Look at it as a way to uncover untapped opportunities.
- Personalize Your Plan
One entrepreneur's plan is another's disaster. Our software package notwithstanding, there isn't any real formula. At NDA, we're partial to logic and readability; our plan is open, clear, concise, witty, and easy to take in. Use the format that works for you. If it doesn't look like your CEO friend's plan, don't worry. It's your tool, for use in your company.
- The Audience Matters
At this point, alarms should be going off. While your inside plan can be anything you want it to be - on purple paper with pink polka dots - a plan meant for outsiders needs to adhere to the expectations of the external audience. In particular, if your plan is for fund-raising, spend some time with venture capitalists, angels, and bankers to understand what they look for. Listen carefully: what they're telling you is truly what they want to see. With investors, show your creativity through knowledge and skillful presentation.
- Spread the Wealth
Share your plan with as many entrepreneurs as you feel comfortable with. Help them with their plans, and have them help you with yours. Some of the best ideas come from others in unexpected ways. Our advisory board was helpful in getting our plan into a workable form. One member in particular hammered me every five minutes with the question, "What is your goal?" NDA is an amalgam of great ideas borrowed from others. I firmly believe that no one person knows all there is to know about anything.
I learned somewhere that you need to have data before you can draw conclusions. And then, another time, I learned that there are no problems or solutions, only challenges and opportunities. Planning embraces both of these adages.
Embrace the challenge of planning to take advantage of the many opportunities that are just outside your door.
Jennifer Lawton is senior vice president of consulting and technology at Interliant Inc., an Internet hosting company formerly called Sage Networks Inc. She also serves as vice president of strategic relations on the board of the Young Entrepreneurs Organization. Previously, Lawton was CEO of Net Daemons Associates Inc., a computer-networking and consulting firm that she cofounded in 1991.
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