Category: 5. Eighties

1983: First Day of a New Business

(This is reposted here from my blog at timberry.bplans.com)

This is a true story. I think it’s worth telling because it’s one real example, one that I lived through, of how plans change and you have to adapt. And it’s also an example of how random businesses are, and how many different ways people get started on their own path.

I’m a business planner by profession, and I find it humorous how differently my own steps in my own business went from what I had planned.

It was a hot day in August of 1983. I sat typing in to a home-built business computer that was bigger than a dorm-room refrigerator, writing a book on spreadsheets, using mostly Wordstar and SuperCalc. I was in my home office at the corner of Mariposa and Miramonte in Palo Alto, CA. My third daughter and fourth child, Cristin, 18 months old, shared the office with me, playing on the floor with a used keyboard. I needed to finish the book to collect the second half of the advance, which was part of my plan.

The plan, however, was not going to work. What I had planned was to make a sufficient living writing computer books. Stuart Brandt had collected a $100,000 advance (or so it was reported) for the Good Earth Catalog. It seemed like publishers were looking for computer books and I was  a computer lover, former journalist, and MBA, well positioned to write them.

I didn’t know then that my plan wasn’t going to work.  The book was on schedule and I had contracts for two others.

I had left Creative Strategies International, a high-tech market research and strategy-consulting firm, two months earlier. When I left I was vice president of the software group, which had the company’s highest margin and highest gross sales, so I was well positioned. But, I had decided that what I wanted to do was the work, not the supervision of other people doing the work. I liked writing and analysis, and I liked market forecasting and market research. What I didn’t like was checking on other people and managing them.  I needed to make money to support my family of six; we had no savings, and debts left over from business school, so it was foolish to give up a good job, but I actually thought, foolishly, that I could make as much, or more, money writing computer books.

The phone rang. It was Hector Saldana, who managed Apple Computer’s Latin America group. I had done several market research jobs for Hector while at Creative Strategies. I had a good background for market research in Latin America, having lived for several years in Mexico City and having experience in consulting and market research, and a good set of degrees.

“Tim, I need you to go to Venezuela for me as soon as possible. I need a market study of Venezuela quickly,” Hector said.

“Hector,” I answered, stupidly, “I’m not with Creative Strategies anymore. I’m on my own now, writing computer books.”

“I know,” Hector answered, “They told me that when I called them. What do I care about that? Why would I want to pay them for your work instead of you? Now seriously, how soon can you get down there? I can pay you well.”

I was on a plane three days later, and three weeks later I delivered a Venezuelan market study along with an invoice for more than the combined advances of three computer books. My career as a business planning consultant had begun.

I went on to 12 years of consulting with Apple Computer. I was never an employee, but I worked for Apple Latin America, Apple Pacific, and Apple Japan regularly until 1994. That phone call changed my book writing into a filler and my consulting into a career. It wasn’t my plan; but that’s the way it happened.

I did eventually finish the books I had contracted, but my focus had changed. I admit that thinking I could actually survive economically and support a family only by writing computer books was really dumb, but at least I had the good sense to jump tracks when the opportunity arose.

1981: My Worst Business Plan Engagement

It’s not for nothing that I always say a business plan has to be your plan and nobody else’s. It can’t be your consultant’s plan. You must know it backwards and forwards and inside out, or it won’t work.

I learned this the hard way, sitting in venture capital offices at 300 Sand Hill Drive, the business plan consultant on the tail end of the new venture team. I had done the plan, built the financial model, written the text, shepherded the document through the painful coil binding and the whole thing, but I wasn’t part of the team. I didn’t want to be. I was still at grad school, getting my MBA, and my part of this venture was writing the plan, period. I needed the money to pay tuition.

In meeting after meeting, at key moments, the VCs would ask critical questions and all heads turned to me. I would answer.  I knew the plan, backwards, forwards, and inside out; but I was the only one who did. It was my plan. 

It was a good founders team. It included three Silicon Valley veterans, a marketing guy, a technical guy, and a deal maker guy.  They had about 40 years of computer company experience between them. They had a good idea and, much more important, a market window, differentiation, and experience to make it happen.

The three of them never really got into the plan. It was a hurdle they paid me to jump for them. Every meeting generated new changes, so I would go back to the basement computer at the business school, and re-run the financial model. The team of three didn’t include a financial person to learn and manage the model, so it was always me, tweaking. Which meant I was the only one who knew the plan. I’d re-run my financial model, edit the text, and publish a new version of the plan. They read paragraphs here and there, glanced at the numbers, but they stayed with the strategy, and left the details to me.

Details that, in fact, they didn’t read. They trusted my faithful recording of their ideas, and my financial modeling. They assumed, I guessed at the time, that these were functions that could always be delegated to somebody with special skills, while they generated high-level strategy.

They did not get financed. I was disappointed. When you develop the plan and revise it dozens of times and support it and defend it through the long series of meetings with supposedly interested investors, you want it to take flight.

And time after time, when questions came, I was the only one with answers. It was my plan, not their plan.

All these years later, memory of that disappointment is still fresh. I did learn my lesson, though, and I changed my strategy as a business plan consultant. From then on I made sure that any plan I worked on belonged — and I’m talking about intellectual ownership here, conceptual ownership — to the real plan owners, not the consultant.

If you have the luxury of a budget to pay an outside expert, consultant, or business plan writer, then maybe you should use them. This might be a good use of division of labor, and perhaps you can lever off somebody else’s experience and expertise. However, that will not work for you unless you always remember that it has to be your plan, not the consultant’s plan. Know everything in it, backwards and forwards, and inside out.

(Reposted from timberry.bplans.com.)

1988-89 Macworld & The Fishbowl Story

The first time I took our company to exhibit in a trade show we brought along a big plastic fish bowl with a sign that said: “Free Drawing! Drop your business card in the bowl for a free copy of Business Plan Pro®.”

Three days later we had four fishbowls full of business cards. Business cards, business cards, and not a lead among them. Fortunately we typed in only a few hundred names and sampled the marketing results before we spent the resources to input thousands. The list was useless. None of the people sampled wanted our product.

The following year we took the same product to the same trade show and the same fish bowl too. That second year, however, we put a sign by the bowl that said: “For more information about Business Plan Pro, drop your business card here.”

After that trade show we ended up with a few hundred good leads. We input the data and followed up and made some sales.

I’ve used this story often in teaching and seminars and managing my own company because to me it illustrates the importance of target marketing and focus. In this example, quality of leads is much more important than quantity. Thousands of bad leads are worth nothing, while a few hundred good leads have real value.

This is about selling business plan software. Not everybody wants business planning, and those who don’t aren’t good prospects. It’s hard, or expensive, or both to sift through a lot of leads to find those who have real interest.

A few years later the fishbowl story helped our marketing team recognize that we didn’t want mysterious banner ads or free prize offers that generated lots of clicks and few prospects. We wanted to attract the few interested people, not huge numbers of people who couldn’t care less.

What distinguishes the good leads from the bad leads is their interest. People walking the aisles at a trade show drop their business cards in any fish bowl offering something free, whether they are interested or not in what that exhibitor is selling. We didn’t want a lot of cards. We wanted cards from people interested in our specific product, business planning software, and not cards from anybody (via lucica at dress head).  The marketing follow-up was expensive , whether it was inputting data from business cards or mailing information, and the marketing yield was good with well-targeted prospects and bad with generalized prospects.

Some businesses depend more on targeting than others. Think about that for your business. Do you sell to everybody? Or do you sell to a specialized group? What kind of fishbowl do you want?

For the record, since I like the idea of true stories, this actually happened in 1988 and 1989 at the MacWorld expos in San Francisco, and the product was Business Plan Toolkit®, ancestor of Business Plan Pro®.

Reprinted from timberry.bplans.com A Fish Bowl, a Free Prize, a Lesson.