Last week we had Tim Berry, founder and CBO of Palo Alto Software on CredibilityLIVE, talking about what it takes to develop a successful business plan. Karen E. Klein hosted the interview with Tim, who drew from his own experiences as a CEO and entrepreneur to explain what is important in developing and holding to a successful business plan.
If you missed the event, we’ve posted the full video below, as well as some highlights of the fantastic information that Tim offered up.
Karen: How do you leverage social media? How much time do you spend on it? What is the business value?
Tim: “The key for me, that I think people forget is blogging and social media take time and effort. It’s not free, it’s something you don’t pay for. But you just don’t do it. If you’re not dedicated to it, it’s not going to happen.” Tim points out that blogging and social media are not beneficial to the company if they are only used for six weeks. He also believes a new business landscape has become prominent, where the fundamentals of marketing are still present but the keys to success are not buying attention but by having interesting content for your customers. Tim then cited John Jantsch of (Duct Tape Marketing), who wrote that the core principles of marketing are, “getting people to know, like, and trust you.” Tim said that this is especially true today because you can do it yourself (which makes it more believable) through social media. Good content can generate awareness and interest by being authentic and writing what people want to read.
Karen: What other lessons have you learned about being online?
Tim: The new analytics available are a great help to anyone in online marketing as they can show page views, clicks, conversion rates and other such things. In social media it can be hard not to be distracted by these analytics about pure numbers such as retweets, followers, subscribers, etc… Tim feels those statistics in social media can distract from instead of looking at the actual benefit for the business. To reap these benefits you need to identify the objective of using social media and then create a plan based around those objectives. To help with this you want to find metrics that relate to the true objectives so you can follow them, review them, and put them in your business plan. Tim clarifies by saying you should come back to those objectives and metrics every month to review and revise them. By following those steps you can keep the business in social media.
Karen: What are your thoughts on starting a business in a recession?
Tim: “You have to get really big before macro economics affects your business.” Tim looks back to the core of business as still being important no matter the economy. This core is that you have something that other people want to buy. You should start by thinking, “I have something that other people will pay me to do,” and this has nothing to do with the economy at large. If you understand what your customers want and why they would pay you for it, you should not wait for macro economic indicators to start your business but instead when you feel comfortable. By breaking everything down through a business plan you can understand how starting a business is based more in micro economics.
Karen: From EarthBookKeeper on Twitter: What are the indicators that a failing business should call it quits?
Tim: He is worried about the myth in entrepreneurship that passion, persistence, and perseverance, that the key to success is never giving up will endure. Tim feels it is more important for entrepreneurs to have a product or service that others want to buy. You should know when to give up, that is, before you lose lifelong relationships, before you lose your family, and before you lose your house. By knowing how to judge the indicators of your business, you will know when is the best time to get out. When investors look at funding a business, failure can oftentimes be a plus. “You learn from failure…successes are often the result of having had failures.”
Karen: Please disabuse us of the notion that business plans are not essential anymore.
Tim: We need to understand what a business plan is. You should keep the plan on your computer, not in your head because it can affect how you lead your company. The plan is what is going to happen, why (strategy), who is affected by it, specific responsibilities, dates, deadlines, and review schedules for the plan, as well as a list of assumptions so you know when to change. It is easier to do then people think. “A business plan is about filling the business need and for most companies the business need is managing better.” Business plans are important as a reference point for evolving your business and are important to investors looking to fund your business.
Karen: How does an entrepreneur know when to follow the plan and when to deviate?
Tim: This is part of the reason that Tim loves business planning and it is a true paradox. “Better a mediocre strategy consistently applied over several years than a series of brilliant strategies that come out of every six months and contradict each other. That implies sticking with the plan. However I’ve also written that you should not stick to a plan just because it’s the plan. It comes down to the human factor and judgement.” It comes down to the assumptions from the plan. If the plan has changed the assumptions will have to be changed and if the assumptions have been changed, the plan will have to be adjusted.
Karen: As an investor do you prefer a stronger idea with a weaker team? Or a weaker idea with a stronger team?
Tim: “Ideas are a dime a dozen. An idea without a team is useless.” The execution behind the idea is vital to success. Tim is also quick to note how teams can evolve based on success and experience.
Tim took control of the interview and gave an answer for a question that had not been asked.
Tim: “The absolute essentials for a business plan that everyone should have.”
- Start with the review schedule. When you’re going to meet to discuss plan v. actual.
- List your assumptions. You will need that for every review meeting.
- Specific tasks, dates, deadlines, milestones, responsibilities. Don’t finish with strategy. Set up the metrics so you can track what is working and not working.
- Do your basic numbers. It may be educated guessing but it is still good to go through.
- Bring in assets and liabilities so you can set up your cash flow.
Here’s a picture of Tim Berry signing our Failure Wall that Dun & Bradstreet Credibility Corp. CEO Jeff Stibel mentioned in his piece for the Harvard Business Review. Tim wrote, “”If you can’t deal with making mistakes, keep your day job.”
That about wraps up the highlights for CredibilityLIVE with Tim Berry. This is a pretty good taste of the business advice Tim gave out during the event but we definitely recommend you check out the whole video. We’ve got big things planned for CredibilityLIVE, so stay tuned for the speakers we have coming up!