If you’re running any kind of business, chances are that you’ve made a business plan at some point – it might have been to apply for funding, to impress your accountants, or just to convince yourself that starting the business was the right thing to do.
But what have you done to track performance against that plan or review the relevance of the plan over time?
If you’re not measuring your performance, you’re also not evolving your plan. And the best kind of business plan is one that changes and evolves along with your business.
A plan that evolves over time
A good business plan doesn’t sit still. This isn’t a static, immovable blueprint that’s etched in stone. In fact, flexibility and evolution need to be built into it from the start.
Your business plan is an ever-changing document that needs ongoing iterations to your forecasts to adjust for the rapidly changing business environment. Material costs may soar, payroll spending may increase, the economy may dip or there may be unexpected changes to taxation or your legal requirements.
All of these variables need to be worked into your business plan, so you’re aware, ready and able to deal with change when (and if) if arrives.
In fact, we recommend reviewing your forecasts on a monthly basis and maintaining a 12-month rolling forecast at all times.
Tracking your performance against the plan
Making a plan is great – it gives you direction, it helps you pin down your objectives and (importantly) it forces you to look at the future direction of the business.
But to truly hold yourself accountable to a plan, you’ll need to track your actual performance against that plan. That’s where you see what’s working and where you need to adjust either what you are doing (actual performance) or the plan itself (because it’s no longer realistic).
Think of your business plan as making a journey using an old-fashioned map (no sat navs are available for this particular analogy):
- You have to know where you are now (your current home base)
- You need to know where you want to be (your end goal).
- You have to choose a route and decide how quickly, and how directly, you want to get to your end destination.
- BUT (and it’s a big but) this route can change at any point.
- If something blocks your route, or traffic is slowing you down, you need to be able to review, re-assess and re-plan your route.
And this is why regular reviews and updated forecasts are such a crucial part of your business planning.
If you have a sudden, unexpected cash-flow problem, this cash shortfall has to be factored into your monthly and annual forecasting.
- What impact will this cash-flow issue have?
- What goals are most likely to be affected?
- Which tactical objectives can be put on hold to lower spending?
- Where can efficiencies be made to make up the shortfall?
In short, how can you get back on track with an updated, amended and inherently stronger business plan?
Talk to us about your forecasting
The secret to great business planning is experience.
Knowing the theory is great, but you can’t beat some hands-on knowledge of the ups and downs of running a small business – and we have that experience in spades here at My Accountancy Place.
We’ve worked with all kinds of small business, and we know that creating a solid plan, putting the right metrics and targets in place and revisiting your forecasting is the best way to create a business plan with real flex built into it.
We’ll sit down with you to build a live forecast. And we’ll update it monthly and track the metrics against your actual performance to help you deliver the agility you need.
Call or email us at the office to book a planning meeting and see how a flexible, evolving plan can help you meet your business goals for 2016.
