Monday, August 6, 2007

10Q Interview with Palo Alto Software Founder and President, Tim Berry

For all of us in the "Entrepreneur Community" that have had to write a business plan and use a software program to have it all make sense; we probably owe a little something to Tim Berry.

Tim Berry is an author, speaker, entrepreneur, and expert in business planning. He has a Stanford MBA degree, is author of several books, and president and founder of Palo Alto Software, creators of Business Plan Pro. He is also the founder of, the world's most viewed and referenced business-planning site.

For years Tim has been giving entrepreneurs and small business leaders tips, stories and, how Tim modestly puts it, "sometimes advice". He writes regular columns for and AllBusiness and is always delivering new content at

Recently, Tim shared with me how he started, some tips, stories and...a little advice.

1. AZSB: Tim, can you please take us through how and why you started Palo Alto?

TB: I started Palo Alto Software because I believed in business plan software and nobody was doing it right. I had been consulting in business planning for years and I developed templates because I wanted my clients to understand that the plan has to be their plan, the owner’s and implementer’s plan, not the consultant’s plan. I wanted empowered clients who used me as extra knowledge and experience, but understood that they had to implement the plan. After I’d been using my templates with clients for years, several clients suggested that they should be productized, and I liked the idea.

2. AZSB: Who uses Palo Alto’s products? Start-ups, corp. business units, Marketing etc?

TB: Business Plan Pro is a tool to help people handle the mechanics of developing a business plan: it helps people starting a business or running and growing a business, plus teachers and students, consultants and their clients, and people who are merely thinking about starting a business. It is used by some middle managers to develop group plans, product plans, expansion plans, and ad-hoc plans addressing special issues in the business.

Marketing Plan Pro is a tool to help people develop marketing plans. It is used mainly by owners and operators who want to focus in on marketing strategy and implementation, and by middle managers in larger businesses.

Of course you can’t do a business plan without a marketing plan, and Business Plan Pro includes a lot of material related to the core marketing strategy and implementation, which leads me to the key differentiator between the two: Marketing Plan Pro doesn’t do the whole financials of the business, doesn’t worry about assets or liabilities or cash flow, but just the sales and marketing. Business Plan Pro does the whole business. Both products include marketing strategy and sales and marketing expenses, but Marketing Plan Pro goes into more detail.

3. AZSB: I purchased Business Plan Premier Pro online. What does the rest of your business model look like? Do you sell direct or through channels?

TB: As you indicate, our most important channel is the web. We sell a great deal over the web. We were early on the web, we’ve done a great job there, we give a lot of valuable information for free at, and we sell and support at And I write my views on

We also sell a lot through retail, especially mainstream office and electronics stores. We sell approximately two out of every three units of business plan software sold through the US retail market, meaning major stores including Best Buy, Staples, Office Depot, Office Max, CompUSA, Fry’s and others. We’ve been in retail a long time. We respect the retail business very much. It’s important for branding.
We also sell direct to some specialized users. McDonalds, for example, purchased 600 copies. We’ve had programs for dealers of Intel, Progress Software, Autodesk, some others.

4. AZSB: How is Palo Alto different from other business planning software/service providers?

TB: We are the only software company I know of focused entirely on software tools for business planning. We don’t write business plans for people any more, we don’t consult, we are dedicated to making tools that facilitate the process of planning to make it easier but without taking away the value or the insight you gain from developing your own plan. . We do the mechanics. We help our users manage outlines, texts, tables, charts, formatting the page, doing the table of contents, doing the detailed appendices in the back, even managing simple tools for plan vs. actual analysis, export to PowerPoint or PDF or Word or other formats.

Our competitors in retail are software publishers. They package and distribute software. Their business planning software is not their main business. Different competitors have copied our earlier software versions, and one made a copy of our packaging that was so close that our sales reps called to complain about us supposedly bringing out a new version without telling them.

The vendors we compete against on the web are hard to describe because there is such a broad range, from pure unmitigated junk like selling sample plans – which is intellectually dishonest at best – to some serious competition.

Yes, I get angry at the business of selling sample plans. We started it in a way, because our customers clamored for sample plans to be included with the Business Plan Pro software product, which now includes 500 of them. However, we never intended for them to be anything but examples, idea generators, and now the Internet is full of people selling sample plans as if there were some value – there isn’t – in a sample business plan. As if you could buy a plan instead of making one. To make it worse, a lot of them are selling the same sample plans we include with Business Plan Pro, for free. It’s bad for the world to pass around the idea that a bought plan is useful. Every plan is unique, and has to be. Even if you’re in the same business as the sample plan you use, you have a different market, different management team, different strategy, different resources … it’s dumb to think you can just buy a finished business plan.

Regarding consultants and business plan writers, some are very good and very professional. We don’t compete with them at all, in fact we work cooperatively with several of the better business plan consulting businesses, and with hundreds of consultants. We recommend consultants and we never take any commission or payback of any kind. Business Plan Pro is a great addition to a consulting engagement, because it empowers the client to understand the plan and tweak it on their own, focusing the consulting on know-how and experience, not just writing and doing the numbers. A lot of smart consultants use it automatically, because the cost is nothing compared to the cost of a reasonably good consultant, so everybody wins. The part of the market that makes me nervous are the business plan writers who pretend they can produce something useful for a few hundred dollars, because business plans don’t get stamped out like cookies. It takes thought. And the person with the knowledge and experience to be useful as a business plan consultant has a market value of several hundred dollars per hour.

5. AZSB: From the start in 1983 as a “consulting and market research firm” what other directions have you taken Palo Alto and what are your plans for the future?

TB: I’m proud to say I executed my own plan consistently over a long period. The idea beginning in 1986 was to create a product that could offer people my knowledge and experience inside a software product, without cynically trivializing the thinking and insight that goes into planning. That took a long time to do. I developed templates in 1987 and sold them as “Business Plan Toolkit” until finally, as computing offered more power and more capability to software developers, we developed Business Plan Pro as a standalone Windows product in 1994. That also marked the important step of professional programmers who took what I had done originally in spreadsheet macros and turned that and a lot more additional features into a complete application. From then on, we no longer depended on Excel or Lotus 1-2-3, and as an author I had the luxury of an environment in which I could control the interface, and build instructions and examples into it.

Marketing Plan Pro was developed first as a custom product for Hewlett-Packard, but, thank goodness, the contract allowed us to offer it to the rest of the world too.
We’ve also learned a lot of things that didn’t work, and we’ve learned not to publish anything less than excellent products. Through the years we’ve developed and dropped Business Budgeting Toolkit, Sales and Market Forecasting Toolkit, Financial Forecasting Toolkit, Cash Plan Pro, DecisionMaker, Incorporation Toolkit, Cash Compass, and others.

Where are we going in the future? It’s exciting times for Palo Alto Software right now. Last Spring I stepped aside and named Sabrina Parsons, 33, Princeton grad, with a great track record in Internet marketing, entrepreneurship, and running the marketing of our company, as CEO. She named Noah Parsons COO and Cale Bruckner VP Product Development. We now have a great team of young committed managers who, although they are all in their early to mid thirties, have years of experience with business planning. They are complemented by some gray haired heads too. We’re sticking to our mantra, helping people to succeed in business, but looking to do more and better in the future.

6. AZSB: Do you have a business “philosophy”?

TB: Yes. It’s about value. I wouldn’t be able to work as hard as I have if I didn’t believe that we are giving real value to our customers. People who have the good sense to spend $100 with us are much better off for it. When I walk out of the office at the end of the day, I know that what I’ve been doing is good for people, I’ve helped them. I’ve empowered them to see their business better.

That philosophy has worked very well in building a company. I believe that things don’t work well when people don’t believe that what they’re working on is a good thing. Our people feel good about what we do, and that makes people happier, and the company healthier.

Regarding business planning, it’s about the process, not the plan itself. The business plan is worth the implementation it causes. The plan saved in a drawer is useless. What I strive for is the live plan, the plan that becomes a management tool, and that happens when the plan is tracked and reviewed and revised as assumptions change.

7. AZSB: Palo Alto is a recognized leader in Business Planning Software; what are some of the challenges you face in order to stay in front of the pack and continue success?

TB: We’re on our 11th version now. We’ve always believed that the right way to run a software company is to constantly make it better. Our software development team is full time and year-round. We have lots of challenges. It’s frustrating that people are trafficking in sample plans, contributing to the dangerous myth that you can find or buy a business plan for your business instead of developing one. And for a long time we’ve had to navigate through the paradoxical waters of people wanting a business plan to be easy while we want it also to help you run your business and give you valuable information. We could make it really easy if we didn’t believe it is there to help you conceive, start, run, and grow a business.

8. AZSB: If you were to change an event in your business since launching, what would it be?

TB: Wow, it’s been so many years, and we’ve been operating in the real world, which means we deal with uncertainty and we make mistakes. At one point we had $65K in credit card debt and three mortgages, and that was hard.

I’ve made a lot of mistakes. Once I decided people could see through the difference between $99.95 and $100 in a direct mail campaign, so I changed the price to $100, and response plummeted. Once I went into retail with dull brown dignified packaging, which didn’t sell at all.. And once when our sales took off I ignored my own teaching on cash flow, and ran out of working capital. I’ve learned a lot of things the hard way. I write about my mistakes on my blog. You can find that as a category.

9. AZSB: What advice can you offer our readers about starting a small business?

Offer value. Give your customers something of value, and give them more value than what you charge them. That’s the best strategy ever. Respect your customers and their intelligence.

1. Stay focused. Strategy is focus. Set your identity based on what you’re really good at and how you’re different from anybody else, and make that the key to your marketing. Tell people how you’re different and why that’s better for them. And make it the truth when you say it.

2. Understand planning is vital. Your plan will be wrong but you’ll track how and why and where and how much, and that will lead to management. You steer by correcting, but you can’t correct if you don’t plan.

3. Always watch the cash flow. Cash flow is not intuitive. We think in terms of profit and loss but profit is an accounting concept, and doesn’t always mean cash. This is especially important when you sell to business customers, because business customers don’t pay on time. Also when you’re dealing with products, because you have to buy things before you sell them.

10. AZSB: How would you like the public to view Palo Alto Software?

TB: We are dedicated to helping people succeed in business. We are focused on planning – not just the plan, but the whole planning process – and on entrepreneurs, small business, and middle managers. We believe in what we’re doing.

AZSB: Thanks for your time, Tim.

TB: My pleasure, Dave.

To learn more from other leaders of entrepreneurship and small business, check out the Interview Section of AZ Small Business.


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