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Plan? What Plan?

If you had eyes like Paul Newman's, you wouldn't need a business plan, either.
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"'If we ever have a plan, we're screwed' -- Paul Newman to himself at the Stork Club urinal, 1983" (From a sign at the corporate headquarters of Newman's Own Inc., Westport, Conn.)

Many hot companies never had a formal business plan. They started with in idea that just took off. The list includes Banana Republic, San Francisco; David's Cookies, New York; Lands' End, Dodgeville, Wis.; and Cuisinarts, Greenwich, Conn. One of the most devoutly antiplan companies around is Newman's Own, founded by actor Paul Newman, the company's president, and author A. E. Hotchner, the vice-president and treasurer, who watches the company's operations from day to day.

The company, which makes spaghetti sauce, salad dressing, and popcorn, didn't have a plan when it was founded in 1982; it doesn't have a formal plan now, despite the fact that 1985 sales were $24 million, up from $15 million the year before. The founders share an almost philosophical aversion to planning, says Hotchner, who has written biographies of Doris Day, Sophia Loren, and Ernest Hemingway.

"That's really the nature of the lives that we have always led," he says. "There's been no plan -- I don't know what the next book will be. When you begin to work out things with a slide rule, you take the fun of discovery out of it. You just fly by the seat of your pants and hope you don't crash."

Newman and Hotchner started the company with Newman's salad dressing. They planned on giving the dressing to friends, maybe selling it to area stores. "It was going to be sort of a lark. It just took off," says Hotchner. A marketing expert warned them they'd have to spend about $200,000 to test and introduce their products, and that they'd better be prepared to lose a million dollars in their first year. They went ahead anyway, with only $40,000 of their own money. Newman's name, and his face on the packaging, didn't exactly hurt their chances. But, as Hotchner points out, "That'll get you one bottle sold." The product, he contends, is what brings customers back for the second bottle.

The founders, however, have a more casual outlook than most entrepreneurs can afford. "We don't care whether the market growth is 25% or 12%, as long as we stay on the black side of the ledger," says Hotchner. The company's next product will be an old-fashioned lemonade. But what does Newman's Own expect to introduce after that? "Nothing, nothing -- that would be a plan," Hotchner says. "We have no idea what we're going to do next, or whether we'll ever have another product."

Last updated: Feb 1, 1987




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