Teaching with Business Plan Pro business planning-software? Kristen Langham asked me about it last week, via email, while I was off to Houston for the Rice University 2008 Business Plan Competition (more about that on my blog).
For 11 years now, I've been using Business Plan Pro as part of my undergrad class in starting a business. I teach the class every Spring quarter, at the University of Oregon. Here's some of the things I've learned:
- I've created downloadable Adobe Acrobat (PDF) files describing each of the assignments I give and made them available for download at my class website at www.ba410.com.
- I assume, and I hope, that you'll find them easy enough to read, understand, and use. I ask my students to create explanations of the problem and solution, a market analysis, sales forecast, expense budget (which includes personnel plan), startup costs, and an executive summary. The instructions sheets are all included in the downloadable assignments.
- In one of my more popular classes, I challenge the class to do the numbers of a business plan in a single class. Then we do it together, with Business Plan Pro projected. We agree on a hypothetical business (usually a book store or coffee house) and create, within a single hour, a sales forecast, cost of sales, personnel, expenses, startup costs, and cash flow and balance sheet. I do that by not paying too much attention to fine tuning the numbers, just getting some quick estimates. We see together how the numbers interact. Here's how that goes in more detail:
- I use the Forecaster function to set a one-row sales forecast, and then set a percentage value down below, also in the sales forecast table, for cost of sales.
- I then jump to income statement and set some expenses, typically rent, utilities, and something big for marketing.
- Then I go to the Personnel Plan table and set up salaries, quickly, for a few people. I am summarizing, so quite often I'll just use a single row to represent salaries.
- I'll go to the Startup Costs table and estimate some startup expenses and startup assets. I try to make the number significant, because I'll use it to make a point about cash flow.
- I pop briefly back to the Sales Forecast and Profit and Loss to show progress, then go over to cash flow. I use the Cash Flow table first. If I've done my numbers right, it will show that this hypothetical company makes a profit but lacks working capital.
- Then we talk about startup financing, and cash flow, and how much working capital is required. We make some assumptions and fill in the startup funding table.
- Then I show them that Cash Flow is better now, with the chart.
- Finally, we look at the Balance Sheet, and then the ratios, which are both completed automatically at that point.
- I use a template that I created with Business Plan Pro for a simple 10-point business plan, focusing on the slides I like my students to use when they finish the class with a presentation. You can click this link to download and save the .zip file that contains the template. The template's named "Startup Plan Template.pdtx" and it works with Business Plan Pro version 11. Use the Business Plan Pro help to install it as a template, using the template manager. There are also downloadable instructions included with the first assignment.
- My favorite business plan to use as an example is the sample plan for Metolius Graphics, because it contains a serious flaw. It's a graphic design company selling to businesses, whose plan setup didn't include sales on credit, and therefore doesn't have accounts receivable. I use it to show them why they shouldn't trust sample plans, and how a company can be profitable but run out of cash. The most visual part of that demo is to go back to plan setup, change the setting to say "yes" to the sales on credit question in the setup. This of course fouls up the cash flow, which is the whole point of the exercise.
- I do use the projector every other class or so to go over the numbers routines, like the sales forecast, and later on the cash flow, because it's so much better to show my students how these things work. Demystifying is really ideal.
- I warm them ahead of time that computer problems and software problems aren't reasons for not turning in assignments. I tell them not to wait until the last minute to print, and to back up their work often, and to keep copies on a portable USB/thumb drive it they have to. I'm not sure they follow my advice, but it makes it harder for them to excuse themselves from assignments for that kind of a problem, since I've already warned them against it.
All of this is on my mind today because Kristen asked me last week, and today I have my second class in the 19-class schedule for this Spring Quarter. This is now the 11th year in a row I've taught this class. It's the only class I teach, but it's still hard, takes a lot of time, and is thoroughly enjoyable. I wouldn't miss it.
-- Tim Berry
Palo Alto Software