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Neat article from Entrepreneur.com:

The Plan-as-You-Go Business Plan
This year, consider a new approach that could change how you plan--and manage--your business.
By Tim Berry | December 31, 2007

The Plan-as-You-Go Business Plan
This year, consider a new approach that could change how you plan--and manage--your business.

As we roll into 2008, I believe it's time to adapt a new kind of business planning that I want to call plan-as-you-go business planning. The idea is to integrate the concept of the business plan with the flexibility and power today's business tools offer. At the same time, you'll focus on management, tracking and accountability and concern yourself more with function than with form.

What's Different

Here's how the PAYG plan differs from the standard business plan:

It's a process, not just a plan. Every PAYG plan has a review schedule built in from the beginning. It sets the dates and participants for future review meetings, taking 60 to 90 minutes once a month and 2 to 3 hours once per quarter. PAYG planning is about process, including the regular review and management of the plan.

Form follows function. The PAYG plan isn't necessarily the same kind of formal business plan document you did in business school or have read about. It doesn't necessarily follow a recipe. Every PAYG plan is unique. It might generate a formal document at some point, but until you need the formal plan document to show somebody, it lives on your computer. You pull from the plan to make a pitch presentation, elevator speech, summary memo or detailed business plan document as required for business purposes.

It assumes and manages change. The PAYG plan is about navigation, not just a static map. It assumes that assumptions will change. That's why it includes a built-in review schedule. Assumptions must always be visible, on top, where they can be reviewed. Unlike the misunderstood formal business plan, the PAYG plan is a way to keep your long-term goals in sight while also managing the short-term surprises.

You might read this list and say "But those things are true for any good planning; your concept isn't so new and different." And I'd say "That's right, you're getting it." What's most important about PAYG planning is that people in the real world, startups and growing companies alike can actually use it. It gets people out of the silly talk about how a business plan isn't useful because they misunderstand how a business plan is supposed to be used.

The Essentials

Start with the review schedule. If you don't have a plan review schedule, you don't have PAYG planning. Set the dates from the very beginning. As you develop the plan, keep the people involved aware of when and how you're going to track.

Develop useful metrics. PAYG planning is about actually managing, not just planning. The main metrics involve money--the most important being cash flow--but look for metrics that involve the team, such as calls, presentations, visitors, inquiries, average time of calls and downloads. Ideally, everybody on the team deserves metrics.

Identify the assumptions. Effective PAYG planning keeps the assumptions on top, where you can revisit them with every review meeting. We assume things change and that the planning is about navigation, not just a static map. This is how you keep your plan alive and active.

Every plan has a heart and flesh and bones. The heart is strategy, market need, differentiation and focus. This is as true with PAYG planning as with traditional planning. The flesh and bones are just as important; in PAYG planning they're the metrics, milestones, tasks, dates, deadlines, responsibility assignments and, most important, cash flow planning.
Important Principles of PAYG Planning

Start anywhere. Get going. The plan is a matter of interlocking blocks, so some people start with a numbers task, like a sales forecast, and others start conceptually with a vision, a strategy or focus. Just get started. Don't wait until your plan is finished to get going. Start today and start using it tomorrow.

All business plans are wrong--but still vital. You're predicting the future, which means you'll be wrong. But you set down tracks so you can follow up and revise without losing sight of the long-term goals and directions.
Good business plans are never done. My company's business plan started in the late 1980s and it's still a work in progress. If your plan is finished, your company is finished. Instead, you revise as needed. The core of the plan is the collection of heart and flesh and bones; it's content, thinking and specifics. From that you spin out a document or presentation or elevator speech when needed.

Form follows function. Do only as much as you need to run your company, to manage and to build strategy. If you don't need to create a formal plan, don't; keep it on your computer.

Keep it alive and spin the output as needed. Don't ever let your plan become static. Keep it active and alive, not forgotten in a drawer.

Planning is worth the implementation it causes. You measure a plan by results. It's as good as the decisions it guides.

For more information on this method of planning, look for my book The Plan-as-you-go Business Plan due out later this year from Entrepreneur Press.

Tim Berry is the "Business Plans" coach at Entrepreneur.com and is president of Palo Alto Software Inc., which produces the industry's leading business planning software, Business Plan Pro, as well as other popular planning applications for businesses.

[akula]

Tim should have moved his software to a web based platform at least a few years ago. Now there's better stuff like Web Based Business Plan Software - PlanHQ
This PAYG thing is pretty impractical in a desktop environment

[opportunitize]

i think the whole concept of this "plan after you begin" is not that intelligent. Right, I believe that you are supposed to plan so that you know what you are going to do. I dont think it would make sense to find out what you are going to do after you have done it. Does not make any sense atall.

[Gaulkin]

Every business plan will change over time in your venture so in a sense all business plans are "plan as you go".

[opportunitize]

no, your wrong Gauker. my business plan didnt change. so, no, not "every business plan" will change over time.

[mbolton2181]

Every business plan will change over time.

How else can a business grow and adapt to our ever-changing society?
It's ignorant to think otherwise. Businesses which fail to adapt to changing world conditions will fall behind and eventually fail to those businesses which embrace the change in our society. Look at Blockbluster, they failed to change and embrace technology and NetFlix popped up and demolished them.

I agree with Jmenq. A favorite website of mine, StevePavlina.com, often says to "ready, fire, aim" as opposed to "ready, aim, fire". This is because it is easy to get so caught up in the theoretical planning and strategy of any plan (business or not). His advice is to take action immediately with your initial plans and then change them as you go.

Once you have "fired" you have a model, with this you can easily judge as to what changes you need to make to hit the target on the next shot. This is why aim is after fire. Either way, it's unlikely you are going to "hit the nail on the head" on your very first attempt, but it's much easier to base your strategy and theory on an initial "fire", initial action, then to base to spend ample time aiming before you ever have a model to look at and judge your initial success and what changes can be made.

Hope I explained that right.

[tazman9r]

In the Army I learned that no plan, no matter how well conceived or executed, survives the first bullet. A plan is a good start point, but if one fails to adapt to change, they will have a really tough time finding success. I like the concept of PAYG, but I would rename it to "Make the plan, Research the known quantities. Then Execute, Evaluate, Adjust, Repeat". That may be a bit long winded, but its the most specific way I know how to say it without losing some part of the concept.

By the way, I think a lot if intelligence is lost in trying to boil everything down to a "Headline". Sure, short (and witty) phrases may be best remembered, but a fully understood concept goes way farther toward a solid education. Just my two cents on a relatively unrelated topic.

[Gaulkin]

Originally Posted by opportunitize

no, your wrong Gauker. my business plan didnt change. so, no, not "every business plan" will change over time.

Its Gaulkin, and your business plan hasn't changed yet because you havent accomplish anything.

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Originally Posted by opportunitize

no, your wrong Gauker. my business plan didnt change. so, no, not "every business plan" will change over time.

You are correct that "not every business plan will change over time." Obviously yours hasn't. But should it maybe?

Are you regularly reviewing your business plan? Are you updating your financial forecasts based on new data? If not, why not? Are you assessing the strengths and weaknesses of your business? Is there NOTHING that you would change about your business in ANY area?

[s304]

my business plan has changed and for the better

[Theros]

Since I have the most experience with web companies, I think a lot of them subscribe to this method...maybe not the bigger sites out there, but a lot of smaller blogs (like those get rich ones ), and smaller only web based sites (like the one I'm trying to do) really revolve around fluid, dynamic business models. That's not to say I don't set goals, and all that stuff...but I highly expect them to move and shift quite frequently just because I'm a student and I often can't find enough time to even get to my own projects.