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									Teaching with Business Plan Pro                            September 2005




                                  Teaching with BPW




            Presentation given originally by Tim Berry at ASBDC
            annual convention in Baltimore, September, 2005.

         • We are at booth 113 in Baltimore
         • This presentation is downloadable at :
             www.timberry.com/asbdc.htm
         • Notes pages are important
         • Email me at:
               tberry@paloalto.com
         • Business plan website: bplans.com
         • Software website: paloalto.com
         • Check with us at the event. It’s booth 113.




                                                                  Page 1
Teaching with Business Plan Pro                                               September 2005




                   Introductions
                     Participants
                     Tim Berry
                     Business Plan Pro




         • Tim Berry bio:
               •   President, Palo Alto Software
               •   Principle author, Business Plan Pro
               •   Former VP, Creative Strategies International
               •   Co-founder, Borland International
               •   Planning consultant to Apple Computer, 82-94
               •   Stanford MBA (’81)
               •   Mexico City ’71-79
               •   Published books include
                     •   Hurdle: the book on Business Planning
                     •   CPA’s Guide to Developing Effective Business Plans
                     •   On Target: the Book on Marketing Plans
               •   www.timberry.com




                                                                                     Page 2
Teaching with Business Plan Pro                                     September 2005




                   Introductions
                    Business Plan Pro




         • For more information on Business Plan Pro:
         • http://www.paloalto.com
         • Academic pricing is available for SBDCs
         • Palo Alto Software is donating 1,000 copies for use by
           SBDCs and counselors in SBDCs.
         • For more information on donations, academic pricing, SBDC
           programs, please email Jacqueline Mansfield at
           jacqueline@paloalto.com




                                                                           Page 3
Teaching with Business Plan Pro                        September 2005




                                        Fundamentals




         • Plans, Fish, and Teaching
         • Simplify
               •   People fear plans
               •   Demystify
               •   Take it in steps
               •   Break it into tasks
               •   Preach “you can do this”
               •   Tailor the outline
               •   Appropriate sizing
               •   Sample plans as examples
         • Make it Concrete and Specific
         • It’s a Process, Not a Plan




                                                              Page 4
Teaching with Business Plan Pro                                                  September 2005




                   Plans, Fish, and Teaching




         The proverb:
               “Give a person a fish and you’ve fed them once. Teach them to fish
                  and you’ve fed them for a lifetime.”


         The business planning version:
               •   It’s about ownership and empowerment. The proper strategy for
                   teaching business planning is to make sure you teach, not do.
               •   Never let it be the teacher’s plan, or the consultant’s plan. It’s
                   the entrepreneur’s plan. They own it.




                                                                                        Page 5
Teaching with Business Plan Pro                                               September 2005




                   Simplify
                    People fear plans
                    Demystify
                    Take it in steps
                    Break it into tasks
                    Preach “you can do this”
                    Tailor the outline
                    Appropriate sizing
                    Sample plans as
                    examples




         From the Cat in the Hat, by Dr. Seuss:
               “This mess is so big And so deep and so tall, we can not pick it up
                  There is no way at all.”
         • People fear plans
         • Demystify
         • Take it in steps
         • Break it into tasks
         • Preach “you can do this”
         • Tailor the outline
         • Appropriate sizing
         • Sample plans as examples




                                                                                     Page 6
Teaching with Business Plan Pro                                                 September 2005




                   Make it Concrete and Specific




         It’s human nature. Plans are worthless without
         implementation. What makes implementation likely?
               •   Measurable objectives
               •   Specific start dates
               •   Specific end dates
               •   Specific responsibilities
               •   Specific spending budgets
               •   Specific business activities, with specific people responsible for
                   carrying them out, and for results.




                                                                                        Page 7
Teaching with Business Plan Pro                                           September 2005




                   It’s a Process, Not a Plan




         • A real business plan is never done.
         • Business plans aren’t ever “right.” They are a process.
               •   Like a map for a journey, routes can change
               •   Assumptions are always changing. Reality intervenes
               •   Use the plan as a marker. Compare where you are to where you
                   intended to be.
         • Important requirements
               •   Regular review
               •   Course corrections
               •   Plan vs. actual analysis




                                                                                  Page 8
Teaching with Business Plan Pro                     September 2005




                                    Start Slow




         • Fundamental: Break it into Tasks
               •   Reduce the fear factor
               •   Give quick, early successes
         • Start Slow. Roll downhill. Downstream.




                                                           Page 9
Teaching with Business Plan Pro                                                   September 2005




                   Set the Planning Scene with Vision




         • You are selling the idea of planning.
         • Ask your people to start by thinking
               •   What do they want their business to look like in 3 years?
               •   What are the steps to get there?
               •   What’s most important?
               •   What does/will the market/customers want?
         • Start with the ultimate goal:
               •   Planning is to determine your business future
               •   Proactively direct your future, not reactively discover your
                   future
               •   Planning sets directions, priorities, long-term goals
         • This avoids the “plan as removing a barrier” mentality.
               •   The plan is much more than just getting through a business plan
                   event
               •   It’s the process, not just the plan. It makes your business
                   better. It’s a management tool.




                                                                                        Page 10
Teaching with Business Plan Pro                     September 2005




                   Break it Into Steps




         • Fundamental: Break it into Tasks
               •   Reduce the fear factor
               •   Give quick, early successes
         • Start Slow. Roll downhill. Downstream.
         • What’s the Destination
         • SWOT
         • Concept kick-start
               •   Why? What’s the problem?
         • What’s the market?
         • Break-even analysis
         • Business basics
               •   Gross Margin, profitability
               •   Competition




                                                          Page 11
Teaching with Business Plan Pro                                      September 2005




                   Break it Into Steps




         • The EasyPlan Wizard is designed to break the entire plan
           development project into a few dozen specific component
           tasks.
         • Click the “Wizard Tasks” tool in the toolbar to make sure
           your navigation is showing the task-by-task wizard.
         • Then follow the tasks, using the “next task” button, from
           start to finish in the plan.
         • Every task has task-specific instructions and examples.
         • This is all about breaking the project down into its steps.




                                                                           Page 12
Teaching with Business Plan Pro                                     September 2005




                   Defeat Writer’s Block
                    Easy to jump from topic
                    to topic
                    Easy to write draft not
                    final
                    Think of it like notes in a
                    loose-leaf binder
                    Finish and edit later




         • Business Plan Pro naturally reduces the writer’s block
           problem with its flexible navigation
         • One of the main causes of writer’s block is trying to make
           things perfect the first time through. There is no need for
           that.
         • Another great writer’s block remedy is jumping from one
           topic to another, or from topic to table and back. Business
           Plan Pro makes that easy.
         • The sample plans and examples built into instructions
           reduce writer’s block. Get a draft to start with, and then edit
           it.




                                                                             Page 13
Teaching with Business Plan Pro                                    September 2005




                   Get Started with Topics




         • It’s easy to get going with some topics that lend themselves
           to concept-kick-start thinking:
               •   Keys to success
               •   Mission
               •   Market needs
               •   Competitive edge
         • The underlying teaching point here is that the business plan
           project breaks down into specific topics, each of which is an
           understandable task.
         • This is empowering the entrepreneur: “You can do it”
           theme.
         • These topics tend to generate fundamental consideration of
           the plan.




                                                                           Page 14
Teaching with Business Plan Pro                                      September 2005




                   Free the Outline




         • This emphasizes the you-can-do it theme. It’s empowering.
         • User/student understands that the outline is not a
           disciplinarian teacher demanding work, but a guide and a
           helper, suggesting, not demanding.
         • User research supports the importance of teaching the
           flexibility of the outline. People respect the default outline
           too much. They think they have to fill in everything. They
           don’t feel empowered to modify.




                                                                            Page 15
Teaching with Business Plan Pro                                    September 2005




                   Free the Outline




         • This emphasizes the you-can-do it theme and empowering
           the user.
         • Move from the standard task view to the outline view by
           clicking the “Plan Outline” tool on the toolbar.
         • Select any outline topic with the mouse, then right-click the
           mouse for the context-specific menu.
         • Demonstrate how you can insert a new topic, remove a
           topic, promote or demote a topic.




                                                                           Page 16
Teaching with Business Plan Pro                                       September 2005




                   Don’t Sweat the Text Format




         • More reinforcement of the you-can-do it theme and
           empowering the user.
         • People get fixated in the formatting, as if it made a
           difference.
         • Business plans aren’t really exercises in page layout or
           business documents. It’s about the content.
         • Business Plan Pro has built-in formatting that will take care
           of this for your students/clients, as long as they’re
           reasonable.
         • Details on next slide.




                                                                            Page 17
Teaching with Business Plan Pro                                                 September 2005




                   Don’t Sweat the Text Format




         • The first view shows the text formatting toolbar, with icons
           for various layouts.
         • Notice you can manage fonts, font sizes, bullet lists,
           numbered lists. You can even import graphics.
               •   Tip: graphics should be sized for proper printing before
                   importing. Business Plan Pro won’t resize them.
               •   Tip: lots of different formats and heavy use of bold and italic
                   make a plan look cluttered and “junky.”
               •   Tip: Business Plan Pro will automatically create a reasonably
                   good-looking format, with body text indented and headers to
                   the left.
         • There is a good Help topic on formatting text.
         • In general, the text formatting fixation seems to interfere
           with the project.




                                                                                      Page 18
Teaching with Business Plan Pro                                    September 2005




                   SWOT for Ongoing Teams




         • The SWOT analysis is a great ice-breaker for groups and
           ongoing companies.
         • The latest version of Business Plan Pro adds SWOT to the
           standard outline, as an option in the setup menu
         • SWOT stands for Strengths, Weaknesses, Opportunities, and
           Threats.
         • Strengths and weaknesses are internal. Opportunities and
           threats are external
         • A discussion generates bullet points, participation, and buy-
           in.




                                                                           Page 19
Teaching with Business Plan Pro                                        September 2005




                                  Teach the Tables Easy




         • Introducing the next section
         • The projections can be the most difficult part of a plan,
           particularly for people who think “experts” have some
           magic formulas
         • People who do have expertise know that these are
           estimates
         • First we’ll talk about the general strategy of breaking it
           down.
         • Then we’ll look at some general ways to handle it
         • Then we’ll look specifically at a sequence of tables and how
           to show examples and handle them.




                                                                             Page 20
Teaching with Business Plan Pro                                     September 2005




                   Ease into the Financials




         • Business Plan Pro can help your students/clients break
           through the problem of fear of financials
         • Financials are broken into separate tables, but linked up so
           that changes in one affect all others.
         • Mathematics and finance are correct. Projections are as
           good as the underlying assumptions.
         • Your students/clients don’t have to be experts, they just
           have to made reasonable estimates.
         • Teaching involves giving people confidence to estimate.
         • Following slides contain a recommended sequence.
               •   Break-even
               •   Starting costs (Past Performance for Ongoing)
               •   Sales forecast
               •   Personnel plan
               •   Profit or loss




                                                                          Page 21
Teaching with Business Plan Pro                                     September 2005




                   Helpful Tips on Financials
                     Help everywhere
                     Planning ≠ Accounting
                     You can estimate
                     Expect plans to change




         • Business Plan Pro can help your students/clients break
           through the problem of fear of financials
         • Financials are broken into separate tables, but linked up so
           that changes in one affect all others.
         • Mathematics and finance are correct. Projections are as
           good as the underlying assumptions.
         • Your students/clients don’t have to be experts, they just
           have to made reasonable estimates.
         • Teaching involves giving people confidence to estimate.
         • Following slides contain a recommended sequence.
               •   Break-even
               •   Starting costs (Past Performance for Ongoing)
               •   Sales forecast
               •   Personnel plan
               •   Profit or loss




                                                                          Page 22
Teaching with Business Plan Pro                                       September 2005




                   Steps, Tasks, Instructions, Help




         • This is about empowering your student/client to find help
           within the software.
         • The table wizard helps with data entry. It isn’t necessary –
           you can turn it off if it gets in the way – but it helps when
           people are unsure of themselves getting through tables.
         • Every table has row-by-row help for every row in the table
         • The online help facility is extensive … 597 pages if you
           download and print it out.
         • It includes a lot of help on the financial principles, financial
           model, tables, etc.




                                                                              Page 23
Teaching with Business Plan Pro                                 September 2005




                   It’s Planning, not Accounting




            •   Accounting: today backwards into the past
            •   Objective is reporting to IRS, SEC, etc.
            •   Details are essential
                   •   Depreciation in detail
                   •   Assets in detail
                   •   Loan payments and interest
                   •   Graduated tax rates
            •   Reporting responsibility for infinite details
            •   Planning: today forwards into the future
            •   Objective is decision making
            •   Powerful simplifying assumptions:
                   •   Depreciation
                   •   Assets
                   •   Taxes
                   •   Loans and interest
            •   Where is the uncertainty:
                   •   Sales forecast vs.
                   •   Detailed depreciation
                   •   Detailed taxes




                                                                      Page 24
Teaching with Business Plan Pro                                 September 2005




                   Encourage Educated Guessing




            •   Accounting: today backwards into the past
            •   Objective is reporting to IRS, SEC, etc.
            •   Details are essential
                   •   Depreciation in detail
                   •   Assets in detail
                   •   Loan payments and interest
                   •   Graduated tax rates
            •   Reporting responsibility for infinite details
            •   Planning: today forwards into the future
            •   Objective is decision making
            •   Powerful simplifying assumptions:
                   •   Depreciation
                   •   Assets
                   •   Taxes
                   •   Loans and interest
            •   Where is the uncertainty:
                   •   Sales forecast vs.
                   •   Detailed depreciation
                   •   Detailed taxes




                                                                      Page 25
Teaching with Business Plan Pro                            September 2005




                   Plans Change
                     A good business plan is never done
                     Reality comes quickly
                        Expect changes
                        Review it often
                        Use it or lose it
                     The benefit of the plan is planning
                        Business tracking
                        Following up




         • A good business plan is never done
         • Reality comes quickly
               •   Expect changes
               •   Review it often
               •   Use it or lose it
         • The benefit of the plan is planning
               •   Business tracking
               •   Following up




                                                                 Page 26
Teaching with Business Plan Pro                                                September 2005




                   Breakeven Made Simple




         1. Start a plan with BPW. Use the wizard to do the setup. Set the starting
            dates. Set whether you want to forecast sales by units or just dollars.
         2. Go to the Sales Forecast table. You can use the plan wizard, outline
            view, or views menu to get there.
         3. Pick a month about midway through the year, a month that would
            seem to be an average run-rate month.
         4. Do the sales forecast, with sales and cost of sales, for at least that one
            supposedly typical month.
         5. Go to the Personnel plan and fill in at least that one supposedly typical
            month of payroll.
         6. Go to the Profit and Loss and fill in estimated running expenses (rent,
            utilities, marketing, etc.) for that same one month. Find the total
            operating expenses number for that month, and copy it.
         7. Go to the break-even table. Paste the single month total operating
            expenses into the “estimated monthly fixed cost” cell
         8. You have a break-even analysis done. Discuss it. Make sure your
            students understand it.




                                                                                         Page 27
Teaching with Business Plan Pro                                      September 2005




                   Starting Costs




         1. Demystify starting costs
         2. Start with expenses. Explain them. Estimate them. It’s a
            simple list
         3. The wizard can help with this
         4. Sample plans can help with this
         5. Go on to start-up assets. Explain how furniture, signage,
            vehicles, etc., may be required.
         6. Finish with starting cash. This is an estimate at first, then
            becomes a better estimate later after filling in sales,
            personnel, profit and loss, and cash flow.
         7. Important: show how start-up funding relates to starting
            costs. Make sure your students/clients understand the way
            the “Additional funds required” cell in start-up funding
            makes your cash balances balance.




                                                                            Page 28
Teaching with Business Plan Pro                                      September 2005




                   Sales Forecast




         • The most frightening part of the sales forecast is the “I’m
           not qualified” problem. Emphasize for students/clients how
           this is educated guessing. It’s the future. Nobody knows.
           And it’s going to change anyhow.
         • Explain the steps: start with units, go to prices, then costs.
           Break it down to make it easier.
         • Explain how to look at past sales where you have data.
         • Explain how to find some logic in your business: sales per
           square foot, sales per table, sales per day, something that
           can help.
         • The view here might look complicated. Better in practice to
           break it into units, then prices, then costs.




                                                                            Page 29
Teaching with Business Plan Pro                                               September 2005




                   Personnel Plan




         • The personnel plan is easy to understand
         • It’s educated guessing
         • It is a simple list
         • Special note:
               •   Business Plan Pro has a number of options on structure of this
                   table.
               •   It can divide by categories, calculate according to headcount by
                   department, etc.
               •   However, to get people started we usually show the simple and
                   most understandable option.




                                                                                      Page 30
Teaching with Business Plan Pro                                      September 2005




                   Profit & Loss




            • After sales forecast and personnel are done, the profit
              and loss follows
            • Sales, cost of sales, and personnel come in from the
              previous tables
            • Black is protected because it comes from somewhere
              else or is a formula
            • Green is for data entry
            • Your student/client fills in the operating expenses,
              and has a P&L done.




                                                                           Page 31
Teaching with Business Plan Pro                                    September 2005




                                  Teach Cash Flow




         • This next section focuses on teaching cash flow, the most
           critical – and least intuitive – part of the business plan.
         • We’ll look at some tips and techniques for showing people
           how to anticipate cash flow
         • That starts with showing them how it’s important
         • From there you show how the three critical factors affect it.




                                                                           Page 32
Teaching with Business Plan Pro                                     September 2005




                   Do the Numbers

                     Sales
                      Sales                    Cash
                                               Cash
                    Forecast
                    Forecast



                        Profit or
                        Profit or
                          Loss                      Balance
                                                    Balance
                           Loss
                                                     Sheet
                                                     Sheet


                               Personnel
                               Personnel               Past
                                                     Start-up
                                                     Start-up
                                                        Past
                                 Plan
                                  Plan                 Costs
                                                      Results
                                                       Costs
                                                      Results




         • Critical:
               •   Profits are not cash
               •   This matters because it can hurt so badly
         • Examples
               •   I learned the hard way with channels
         • You don’t need to do it – but know it!


         • For more information:
         • http://www.timberry.com/fm/
         • That is a detailed explanation of the financial model.




                                                                          Page 33
Teaching with Business Plan Pro                                    September 2005




                   Background on the Financial Model




                      http://www.timberry.com/fm/


         • This information is for your background, not for your
           students and clients.
         • Detailed background on the financial model is available on
           the web
         • The site is:
         • http://www.timberry.com/fm/




                                                                         Page 34
Teaching with Business Plan Pro                                   September 2005




                  Simplifying Financial Terms


                             Assets               Sales



                           Expenses             Liabilities



                             COGS                Capital




         • This is introductory material.
         • We are going to look at each of these general categories in
           context.




                                                                         Page 35
Teaching with Business Plan Pro                                               September 2005




                   Profit & Loss Also Called Income

                             Sales

                              Costs of
                               Sales

                             Expenses



                           Profit




         • This is the most familiar accounting statement
         • Used for many financial reports, stock market reporting, etc.
         • Sales less costs of sales is gross margin
         • Gross margin less operating expenses is earnings before
           interest and taxes (EBIT)
         • Timing is critical.
               •   The costs of sales are supposed to be reflecting the items sold
                   that same time period.
               •   Expenses are supposed to be expenses incurred that same time
                   period
               •   Whether they were paid or not doesn’t affect the statements




                                                                                     Page 36
Teaching with Business Plan Pro                                     September 2005




                  Balance

                                                  Assets


                                                   Liabilities


                                                  Capital


                           Profit




         • The balance sheet shows assets, liability, and capital
         • Assets must always equal liabilities + capital
         • The Income statement is separate. It generates profits,
           which affect balance as capital




                                                                          Page 37
Teaching with Business Plan Pro                                       September 2005




                  The Cash Flow


                     Sales                              Assets
                                    Received

                    Costs of           Spent          Liabilities
                     Sales

                                    Cash
                   Expenses                            Capital




         • The cash flow is different from either Income or Balance
         • Money received less money spent
         • This is a fact of life in business. We can’t change it. We just
           deal with it.




                                                                             Page 38
Teaching with Business Plan Pro                                                 September 2005




                   Sales are not necessarily money received


                      Sales                                    Assets?
                                        Received?

                    Costs of                Spent             Liabilities
                     Sales

                                         Cash
                    Expenses                                    Capital




         • Simple but very important point:
               •   Sales are booked on delivery, but not necessarily paid on
                   delivery
               •   This pulls cash out of synch with the profits
               •   The solution isn’t to get it back in synch. The solution is to know
                   how this works, and plan on it.




                                                                                         Page 39
Teaching with Business Plan Pro                                                 September 2005




                   Costs are not Necessarily Money Spent


                      Sales                                    Assets?
                                         Received

                    Costs of               Spent?             Liabilities?
                     Sales

                                         Cash
                    Expenses                                    Capital




         • Simple but very important point:
               •   Costs of goods sold might not be flowing out during the same
                   month of the sale
               •   They may be inventory that was purchased long ago
               •   They might also be inventory purchased previously, for which
                   money is still owed.
               •   This pulls cash out of synch with the profits
               •   The solution isn’t to get it back in synch. The solution is to know
                   how this works, and plan on it.




                                                                                         Page 40
Teaching with Business Plan Pro                                           September 2005




                   Expenses are not Necessarily Money Spent


                      Sales                                 Assets
                                      Received?

                    Costs of             Spent?           Liabilities?
                     Sales

                                       Cash
                    Expenses                                Capital




         • Simple but very important point, part 2:
               •   Expenses are not necessarily money spent already. They might
                   be in accounts payable, or somewhere else.




                                                                                  Page 41
Teaching with Business Plan Pro                                                  September 2005




                   Profits ≠ Cash




         1. Cash≠Profits needs to be demonstrated
         2. Open the Metolius sample plan. Check the Cash Flow.
         3. Check wizard for Plan Setup, the table settings wizard.
            Discover that it has all sales in cash. That doesn’t seem
            right.
         4. Use the table settings to set it for 75% sales on credit, 60
            day collection period. Watch the cash flow change.
         5. Make the point: nothing else has changed, still profitable,
            but now out of money.
         6. Discuss the alternative solutions:
               •   It’s still a good business, just needs more working capital
               •   Go to start-up, adjust starting cash upwards
               •   OR go to cash flow, borrow money in July. Check the balance
                   sheet to see that receivables provide assets to support
                   borrowing to support cash flow.




                                                                                       Page 42
Teaching with Business Plan Pro                                       September 2005




                   Demonstrate Cash Flow




         • Make sure your students/clients have seen the table
           settings, receivables details table, payment details table,
           inventory details table, and how to adjust each.
         • Use simple assumptions to show the cash change with each
           of these key assumptions.
         • Demonstrate Help on cash flow
         • This is vital, probably the best lesson you can teach an
           entrepreneur.




                                                                            Page 43
Teaching with Business Plan Pro                           September 2005



                        Q & A, Discussions, and thanks.




                                  End of Presentation




         Presentation given originally by Tim Berry at ASBDC
           annual convention in Baltimore, September, 2005.

         • We are at booth 113 in Baltimore
         • This presentation is downloadable at :
             www.timberry.com/asbdc.htm
         • Notes pages are important
         • Email me at:
               tberry@paloalto.com
         • Business plan website: bplans.com
         • Software website: paloalto.com
         • Check with us at the event. It’s booth 113.




                                                                Page 44

								
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