4
Planning versus practice
WORKING WITH DISCIPLINE

We are practitioners of social enterprise. We chose to write a book focused on the practice of social enterprise because it is in the trenches of doing that we spend most of our time and learn the most about what really makes our enterprises tick. Not surprisingly, it’s where most of the colleagues featured in this book live and breathe too. But none of us would be very good practitioners if we didn’t have a healthy understanding and respect for planning.

Two seemingly contradictory quotes frame the inherent tension you will face between planning and practice. From time management guru Alan Lakein: “Failing to plan is planning to fail.”¹ And from Napoleon: “No plan of battle ever survives first contact with the enemy.”²

We believe these two views can peacefully coexist and form the basis for a healthy, sane enterprise.

■ UNLOCKING THE THIRD PARADOX
Plan well. Adjust better.

Whether you prefer to call them strategic plans or business plans, you need to have good plans, for many different reasons:

• A good planning process will identify your weaknesses and strengths, your opportunities and threats.
• In order to plan effectively, you will be forced to articulate the why and how of your business model. If it doesn’t hold water, this will show.
• Your plans will be the basic communication documents for your engagements with banks, investors, and grantors. They will state what you will do with their money and how they will receive their return on investment.
• Your plans will guide your management team and your staff to a common understanding of what they will do together.
• Your plans will create the context for all sorts of other plans, such as your sales and marketing strategy, your staffing model, pricing, or any number of other subplans.
• Your plans will give you a means of checking your progress and staying focused on the prize: your mission and goals.
• Perhaps even more important than the plans themselves, the process of planning creates a forum for communication, discussion, and dialogue—at least among your internal team and potentially among other stakeholders if you choose to include them.
• And most important of all, creating and communicating and making promises about your plans will keep you, the leader, in check. And believe us, you must be kept in check!

Planning Well

No matter your approach to planning, business-plan writing is a specialized skill. Having the skills to operate a business does not necessarily qualify you to write a business plan. As the leader, your most important role is to articulate the vision, whether that’s drawn from a process you engage in with your team or board or merely from your inspiration. However you 55arrive at your vision, it must be well-articulated and omnipresent in your plans.

The inherent form and structure of business plans requires those who prepare them to have complementary understandings of numbers and words. Your numbers will provide input for the critical financial analysis that is at the heart of calculating the success of your business. Your words will articulate to all stakeholders your story and vision, such that investors will provide you the capital to start and sustain your business, employees will know the direction of your business, and you will have the confidence to execute a well-laid-out plan.

So be realistic about your skills. If necessary, seek out someone to prepare your business plan or consider using Business Plan Pro: Social Enterprise Edition, an outstanding software platform offered by the Social Enterprise Alliance.

No matter how you get it done, make sure your plan covers the key points your stakeholders want, need, and deserve to know. As a guideline, we offer the following table of contents from the 2008 Greyston Bakery Business Plan. Walls used this plan to articulate expansion plans to his board and other current stakeholders, including staff and lenders, and as his main marketing tool to secure a non-asset-based investment.

Sample Table of Contents for Social Enterprise Business Plan

1. Executive Summary
2. Background
3. Products
4. Operations
5. Market
6. Strategy
7. Management
8. Financial Information
9. Summary

If you think this looks a lot like a business plan for any enterprise, you’re right. What makes a social enterprise plan unique is not its structure or key points but that it is written from the perspective of an organization seeking to succeed both at commerce and the common good. Here’s a bit more on each element of your plan.

Executive Summary

Summarize the business plan in the executive summary. This may be the only section some people read, so you have to capture their attention with a brief statement about the direction and goals of your business, how you intend to reach these goals, why you think you will be successful, and what resources you need. Write this section last. You cannot address these issues until after you complete the full planning process.

Background

Put your business into perspective. Tell the history of your organization. What is the general condition of your business and how did it get there? Speak to the financial condition to some extent, but do not get number-happy in this section. People will look for complete financial information in the financial section.

Products or Services

Describe the products or services you are selling. Distinguish be tween current products and services and future ones.

Operations

Describe how you intend to deliver the services or produce the products. If you offer a service, describe the service delivery model, including who will deliver the service. If you offer a product, describe the origin of the product. If you are a manufacturer, 57describe the manufacturing process. If you are going to purchase a finished product, describe the supply chain. Whether via a manufacturing or distributing business, describe how you intend to deliver your product to the market. Highlight any aspect of your product or service that gives you a competitive advantage. You will make reference to this again in the strategy section.

Market

The market section is big because the market is a big issue. You will need to establish two points: that people want what you have to offer and that they are willing and able to pay you what you need to be paid for it. When people complete their reading of this section, you will want them to feel confident that such a market exists.

Describe the marketplace, including opportunities and threats in the market. Who is interested in buying the product or service? Who else is selling this product or service? What is the size of the market?

Do not kid yourself into believing you do not have a competitor. That’s easy to do when you have a great product and a strong mission. Walls could think his Do-Goodie (Greyston’s superpremium brownie) is so good, no other brownie is a competitor. He’d be wrong. Of course, he says smugly, no brownie is as delicious as his. But he doesn’t compete just with other brownies. He competes with all baked desserts. In fact, he competes with other desserts as well. As for brownies, he makes four flavors. What about the baker who makes more flavors? A customer might prefer more variety or a different texture or a lower price point or fewer calories or more. Get the picture?

Strategy

What is your competitive advantage? Prospective customers have a choice of providers. Why will they come to you? How 58will you let them know you exist? What is your marketing message? What is your value proposition? Why will people buy from you, and how will you articulate that? Describe your sales process. Who will be selling, and to whom will they sell? Are you using advertising and promotions? Will you have a marketing partner? Are you hiring a public relations firm to get out your message? Will you have an Internet strategy? If so, what is it?

Management

The old adage is that investors fund people, not plans. Who are the people who will execute your plan? If some key positions are open, don’t be bashful in describing them. Just tell how you will fill the gaps. It is better to have an open named position than an unarticulated gap that is discovered later. You, your team, your stakeholders, and any potential investor must gain the confidence that comes from transparency.

Financial Information

Lay out your business’s financial history (if it is not a start-up) and future. Both start-ups and expansions need to provide projected financial statements, including five years of profit and loss statements, current and projected balance sheets, and five years of cash flows. In addition to the annual statements, you should provide the next twelve months’ profit and loss and cash flow.

If you are seeking an investment, you need to state what is formally referred to as sources and uses, defining the type of capital you seek (equity or debt, amount, and type of each) and the activities or purchases you will conduct with the money.

Summary

Provide a brief closing statement. Many business plans skip this section because the executive summary is actually the summary. 59The difference between these sections is that the executive summary should be a mini–business plan, whereas the summary should be a concluding statement.

Adjusting Better

It’s important to have good plans. It’s equally important to not get too hung up on them. If you are going to start, grow, and scale a social enterprise capable of changing the world, you must be nimble, quick, and fast on your feet. This means you’ve got to be ready, willing, and able to stay ahead or move away from your best-laid plans, lest they weigh you down.

Rebuild Resources’ founder developed one of the first and best models for an employment-based social enterprise designed to put some fellow alcoholics to work. But it wasn’t until sometime after the plan was laid out that he actually came across the opportunity for the founding enterprise, a forklift parts and re -hab business. Thus was the business born and the enterprise christened as Rebuild Resources (for rebuilding forklifts and rebuilding lives).

A similar turn of events led to the creation of Greyston Bakery as we know it today. Early in its existence, the Bakery was mainly in the business of making pastries on a small scale to produce income for the Zen monastery that operated it. Bernie Glassman, the monastery’s founder, happened to go on a social walk with a new acquaintance, Ben Cohen (of Ben & Jerry’s fame), during a group meeting of what eventually became Social Venture Network. By the time the walk was over, the two of them had hatched the idea of having the Bakery make the brownies for Ben & Jerry’s. The rest, as they say, is history. Today, Greyston bakes all of the brownies for inclusion in Ben & Jerry’s products, including Chocolate Fudge Brownie ice cream.

Apparently, Bernie and Ben were listening to neither Alan Lakein nor Napoleon but to John Lennon, who said, “Life is just what happens to you while you’re busy making other plans.”³ What happens while you’re busy planning the life of your social enterprise is this:

• Your people come or go and develop or don’t—so your capacity and expertise changes.
• New competition emerges out of the blue or old competition folds—so your landscape changes.
• Old technology becomes obsolete or new technology disrupts—so you find yourself on the leading or fading edge.
• Funders are their fickle selves—so your access to capital shrinks or expands.
• Economies boom or recede—so the psychology of customers and vendors fluctuates.
• Commodity markets sway—so raw material prices go up or down.
• Success begets success and failure, failure—so your own performance yesterday and today affects what opportunities are available to you tomorrow.

Some may argue that you can create contingency plans to mitigate the effects of “life.” We think that’s an arrogant argument and an unrealistic one. Your enterprise will be better served by taking a “practitioner’s approach to planning.”

■ PRACTITIONER’S TIP
Have a big vision and small plans; coordinate; inform;
learn; depart, don’t drift; and roll.

Have a Big Vision and Small Plans

When you’re learning to drive, you go through that rough over-steering stage where you can’t seem to drive straight because you are looking only a few feet ahead of the hood of the car. When the driving instructor finally tells you to look way down the road at the horizon, everything becomes smooth.

So it is with your planning. Spend your time and energy on examining, articulating, and refining the overall vision for your enterprise and reducing it to something toward which everyone can drive. For example, Rebuild’s vision for the world is “that every re-entering drug addict or alcoholic becomes sober, self-sufficient and of service.” KaBOOM!’s is “a great place to play within walking distance of every child in America.” Benetech’s is “ensuring that technology fully serves humanity.”

Once you create visions of these magnitudes, your plans be -come less constrictive because the brilliance, creativity, and commitment of the whole organization is unleashed to head toward the horizon rather than constantly adjusting toward the plans.

Coordinate

A social enterprise has a lot of interrelated moving parts and, hopefully, a lot of empowered people. Empowered people take actions that affect, for better or for worse, what other empowered people are up to. For example, if your marketing whiz delivers more leads than your sales whiz can keep up with, or if together they deliver more orders than you have plant capacity to produce, you’ve got a problem—a good problem but still a problem.

If you think of a plan as a vehicle for creating an understanding of the series of interrelationships between empowered 62people, it will become a powerful tool for containing and focusing their collective energy.

Inform

Throughout this book we talk about the need for good, real-time information, be that your financial dashboard, your mission metrics, or your pulse on the marketplace. If you use your plan as a tool for determining what key information you need to be tracking, you will be creating a tool that can help the organization get better every single day of its life.

Learn

The smarter you get, the better your plans and your departures from them will be. Invest in institutional and industry knowledge. Go to trade shows, read industry publications, join boards, participate in blogs and Listserv groups. You must become an expert in the actual business you are in. In fact, given the choice between learning more about social enterprise and learning more about your industry, choose the latter. (After finishing this book, of course.)

Depart, Don’t Drift

You will start moving away from the plan before the ink is dry. “Drifting” and “departing” are not the same. “Drifting” means doing something different than you had planned, but because not everyone knows you are doing so and those who do know don’t know why, soon no one knows anything. “Departing” means making a conscious decision that the plan, as crafted, no longer fits the reality of your situation and executing an alternative. Implicit in this distinction is understanding the context of vision, coordination, and information (three of the previous points) in which that departure took place, so that the decision to depart can be properly communicated to all of the other moving parts.

Roll

If a plan doesn’t live and breathe, it quickly dies. This means that it must be constantly reinvented rather than rebuilt from scratch every year or three years. When Rebuild began using the Internet as a key marketing piece, the old, simple model of developing an annual marketing plan just couldn’t keep up with what was really happening out there. The planning model needed to be more dynamic, so Rebuild recently began experimenting with a rolling marketing plan model.

Lynch’s marketing whiz kid came up with a different way of planning that assigns strategies and tactics to four ever-changing “buckets.” He has a bunch of “foundational strategies” that look at improving the sales and marketing infrastructure. He has a set of bread-and-butter “developing strategies,” the drivers that are proven to create business but need to be constantly expanded and refined. A group of “pilot strategies” contains ideas he’s trying out to see if they can become drivers. And finally, the “idea bank” is a planning device, which provides a place where any idea can go to hang out until Rebuild can find the bandwidth to give it a try.

Rebuild does not yet have empirical data to show how this model will work. What is certain, though, is that the old model didn’t keep up with the movement of the market. And this one does. And that is a key component of all plans!

■ PRACTITIONER’S TIP
Do the next right thing.

Your life as a practitioner is largely spent making decisions in the here and now. Given perfect data, a crystal ball, and unlimited time to ponder, you could perhaps make perfect decisions—assuming, of course, that the questions hadn’t 64changed by the time you made them. So get real. Your goal is simply to do the best thing you can do, right now, and then do it again and again. Having a plan that examines your market, your skills and resources, and how these can work together gives you the opportunity to do just that and do it more often. Do it consistently and unwaveringly, and you’ll survive long enough to get lucky.