Sabrina Parsons is on a flying visit to London, fitting in our interview among a host of other meetings and events before flying back to the US. But the Palo Alto chief executive - now based near the company's headquarters in Eugene, Oregon - is clearly glad to be back in the city where she and her husband Noah honed their entrepreneurial skills just over a decade ago.

Back then, the plan was to set themselves up as consultants, drawing on their experience of working in entrepreneurial dotcom enterprises in the late 1990s in the US; Parsons having worked for a start-up software business and Noah at Yahoo!, before both helped to set up the consumer review site Epinions. But they soon realised the appetite in the UK at that time for new business ventures, and the potential to extend the reach of Palo Alto - then run by its founder and Parsons's father Tim Berry - into the UK.

"He'd always wanted to get Business Plan Pro, which was the flagship product, into the UK, so we did a deal where we would distribute the software," she recalls. "That's how Palo Alto UK Ltd came into being, although my husband and I founded it and we didn't get any money from Palo Alto US. We took the risk and did it on our own."

The duo established a transactional website and a distribution centre based in Ireland, and began selling the software to entrepreneurs looking to develop their own business plans. Back then, buying software meant taking delivery of a CD, and the software was soon selling in PC World stores all over the UK.

"Business planning was something that was very engrained in the UK culture and entrepreneurship but there weren't any products over here," recalls Parsons. "We realised it was a great way to keep involved in start-ups while starting our own business and taking advantage of a market opportunity. But it also ended up being a really great way for my husband and I to explore working with my Dad, being 6,000 miles away and with a time difference."

By the end of 2002, things were changing on both sides of the Atlantic. Her father confided that he was looking to take on senior recruits to help with business development and online marketing. "He said if we were ever thinking of coming back to the US and working with him then that was the time," says Parsons. "If he hired others then there wouldn't be that opportunity, and there may not be in the future.

"At the time Silicon Valley had gone through the dotcom bubble bursting and we had a lot of friends who had just been laid off. It seemed like the perfect opportunity for us and we did want to come back to the US. We loved being in London but we were starting to think about having kids that were a long way from family. So we took the opportunity." At this point the US firm bought out the UK company - with Parsons and her husband taking a 20% stake in the US firm - and the duo continued to run this from the US, assisted by a network of partners in the UK.

Alongside this, Parsons concentrated on building up the online marketing around the Business Plan Pro product, while her husband focused more on the product itself and the website. In time, though, their entrepreneurial instinct once again came to the fore. "Towards the end of 2006 my husband and I spoke to my father and said we'd done this for three years and we wanted to do something else," says Parsons. "We'd always done start-ups and been entrepreneurial, pretty much from college, and we were chomping at the bit, but we wanted to give him plenty of notice."

Initially she recalls her father being surprised, but the three agreed to put a timeframe in place for an exit and review this regularly. Ultimately, however, it put in place a series of events which would eventually see them take over the US business, and pave the way for her father to scale back his role. "In April 2007 he called me into his office and asked what we would do if we did take over," says Parsons. "Of course we had thought about that, so I said we'd do this and this, and he said he was going to announce me as chief executive tomorrow and make Noah chief operating officer."

Coping with recession

Although no one knew it at the time, it was, of course, far from the best moment to take on responsibility for running a business, coming just as the global economy started to falter. "We took about a year to make sure the company was solid and then we started laying out plans in April or May of 2008 to move more towards online products, and then the recession happened," she recalls. "It just stopped everything, all over the world. It was very difficult, our sales went down and we really had to rethink how we were going to do things."

It also prompted a difference of opinion between Parsons and her husband on the one hand and her parents on the other. "They had gone through the dotcom bubble bursting in 2001 and had had to lay people off and it had been a very traumatic experience for them," she says. "When the recession happened in October of 2008 they basically said: "Where is your list? Who are you going to lay off?""

The new management team, though, had other ideas, and set out renegotiating several supplier contracts and reducing unnecessary expenses. "We managed to cut $17,000 a month in expenses and got more services because of the recession, because they didn't want us to leave as customers," explains Parsons. "It gave us the breathing room we needed to not fire any employees. We basically did a deal with my parents which said as long as we hit our numbers we wouldn't lay anyone off.

"It also set up a really great operating agreement between my husband and I and my Dad, and from then we agreed that we would be cash flow positive and profitable and that we would keep six or seven months of operational money in the bank untouched," she adds. "As long as we did that they would totally let us be, and we could do what we wanted."

As well as putting the business on a more stable footing, Parsons also credits the downturn with the development of its new product, LivePlan, which provides small firms with the ability to analyse company performance using historic data and that from forecasts and actual results. "We had all this planning expertise from Business Plan Pro but my husband and I also had all this management expertise from running our own business, and an understanding that through setting goals through budgets and forecasts and seeing what actually happens you can get a lot of information," she explains.

"So rather than just looking at what happened in the past, you're looking at it in the context of what did we want to do, what did we actually do and what did we do the same month or quarter last year. It helps to really understand those numbers and make decisions. You move away from gut-feel decisions and can start to make decisions based on data."

The other notable shift was the move towards selling software as a service; something the business picked up again once the worst of the recession was over. "By late 2009 we saw the market start to move again and we started hiring developers for the new product. It's a financial product so it requires a lot of spreadsheet interaction, which is not an easy thing to do online so we had to explore different development languages to see what was going to work. That took place through the summer of 2010 and we started to build it in the autumn and launched it in April 2011."

It was also something of a risk, she concedes, particularly moving from charging customers a one-off fee to a monthly subscription model. "It's a scary proposition because you don't know how long people are going to stay, and whether more or fewer people are going to buy it," she adds. "We did a lot of testing and a slow rollout to understand all of our metrics. Now it's hosted in the cloud on Amazon Web Services, as an online subscription product. That really is the future for all software companies; anyone who hasn't made that transition is in trouble."

Family and flexibility           

Over time, her father has taken much more of a backseat in the business, moving from president to chairman of the board and now no longer even has an office in the company's headquarters, leaving Parsons and her husband to run operations. There is, fortunately, a clear natural division of responsibilities between the two, with Parsons more focused on the people side and marketing, and her spouse on the internal operations and infrastructure development.

"We have a very clear separation in terms of our talents and what we want to do, and you have to have that," says Parsons. "If you're very similar in your skills sets and what you want to do, you're going to step on each other's toes." The two stagger their working arrangements to accommodate the needs of their three children too; Parsons will start early and finish around 4:30pm, while her husband takes the children to school and finishes later in the day. But both of them start work again once the children are in bed, once the after-school clubs and homework have been completed.

"It makes it a very full day but it allows us to be home with the kids in the evenings," she says. "But sometimes we have to tell each other at 9:30pm "I can't talk about it any more", and we have to allow each other to do that. But it also allows us to do a lot of things as a family that we wouldn't be able to do if we worked for other people. We have a ski cabin about two and a half hours away in the mountains and from December to March every Friday we pack up the kids about six o'clock and we have our end-of-week debrief meeting in the car as we drive over the mountains."

Flexibility in the workplace and the difficulties women in particular have in picking up their careers after having children is an issue Parsons feels particularly passionate about. "It wasn't until I became a working mother that I really started to look at the barriers that women have to deal with, realising the choices that you have to make and this idea of work/life balance," she says.

She believes there needs to be a culture change in business, where organisations are open to children coming into the office after school or when they are feeling under the weather or unable to attend school after illness. "Pretty much around the world it's seen as unprofessional and I don't understand why it has to be like that," she says. All of her children came into the office every day when they were babies, and this is something that is open to all Palo Alto employees. "We have five or six single dads who have told us that we have helped them from a custody point of view, and their ex-wives now depend on them more than they ever did," she says.

As well as pushing for better opportunities for women and working mothers, Parsons is actively involved in other initiatives. The business supports a number of charities or non-for-profit bodies with free software donations, while Parsons herself serves on a number of local boards including the Chamber of Commerce and a government-funded accelerator programme designed to support economic development in Oregon.

"I'm also on the school district budget committee, which is a volunteer position although you do have to get elected by the school board," she adds. "From there I just get involved in all kinds of things; the city of Eugene is trying to pass paid sick leave for all employees. Europe has been a lot better about supporting maternity leave, paternity leave and paid sick leave and the US is really shamefully behind. I'm advocating it in our local community and also nationally through blogging and writing about helping working families. It's really important to me as a working parent to use my position to educate people as to how things can be, and that it affects the bottom line in a really positive way."

Dangerous liaisons

She also has a few words of advice for people considering starting their own business. "The first mistake people make is with the legal contracts," she suggests. "That means really getting the details of who owns what, what happens when you disagree and what happens if one person wants out or if one person isn't really working out any more. When you're starting a business everything is happy and the world is your oyster but at some point you'll have disagreements and if you don't have legal agreements which spell out exactly what happens it can tear a business apart."

Cash flow is another danger many entrepreneurs fail to spot, particularly if they are - in theory - making money. "Many small businesses don't understand the difference between profit and cash," she explains. "The UK has the same statistics as the US; around 50% of the businesses that fail are profitable, but they have no cash." Cash flow forecasting and budgeting is essential, she says, but consideration should also be given to whether firms have the cash resources to take on a large order.

Parsons attributes much of her own success to her upbringing, split between California and her mother's home country of Mexico, where she would return each summer. "I went to an all-girls private school, and I think that's part of why I'm a CEO and what I'm doing today," she says. "It was a very tough academic programme and there were no boys, so I never experienced what a lot of girls experience when they're 15, 16 or 17, where they get shy they don't want to do science or to raise their hands in class. That carried on into college. I was never afraid to speak up. It definitely gave me an independent streak."

As for the future, Parsons is torn between continuing to grow the business organically as the economy improves - headcount has increased from 27 to 55 since she became CEO - and moving on to a new entrepreneurial venture. "The business has grown organically and we've been able to fund that growth ourselves," she says. "You don't really want to take money if you don't need it because that means giving up equity. But it could be something that we do. There is part of me that would love to really grow the business in a big way in the next three to five years and then have some sort of an exit, because it would be a final exit for my Dad, and we could then start something else that is truly ours and maybe involve our kids."

More immediately, however, she's still looking to finesse the LivePlan product, hoping to offer tangible evidence of how it can help small firms grow and prosper. "In the next two to three years I'd like to be able to say, definitively, statistically, that if you use our product you will be more successful," she says. "You will grow faster, you will have more cash in the bank and your chances of surviving will increase. That's the goal that I put in front of myself and in front of my employees."