Business Planning

There is an old adage in business that to fail to plan is to plan to fail.

Every well-managed business has a business plan that is continuously reviewed, with performance being monitored against target and targets being reviewed in the light of ongoing economic circumstances.

So, what happens to those businesses that do not have a business plan? Actually we do not believe there is a single business in the United Kingdom that does not have some form of business plan. However, all too often the plan is contained in one man’s head and is too short term.

As an absolute minimum a business should have a financial performance forecast going forward six months. Many businesses work to a one year plan and some even longer, particularly if a long term strategy is being embarked upon.

The forecast should be based upon realistic assumptions of achievable sales and anticipated expenditure and include profit and loss as well as cashflow forecasts. Often, simply by carrying out this process it is possible to identify a fundamental flaw in a business strategy. For example the exercise may demonstrate that anticipated sales cannot possibly be achieved without further recruitment, or that there is a developing funding gap. Such factors are more easily dealt with once they have been anticipated, rather than suddenly finding out there is a problem some three months or more, later.

Once the forecast is prepared, many people in business put it in a drawer and forget about it until it is time to draw up the next period’s forecast. This is almost, but not quite as bad as having no plan in the first place. Once you have a plan, actual performance should be monitored against it. Inevitably there will be variances between the plan and what actually happens. It is however important to know the reasons for these variances, particularly where performance falls short of expectations. Such an occurrence could be an indication of a terminal trend developing.

We have considerable expertise in developing business plans, interpreting the reasons for variances in performance and devising strategies to overcome underpeformance.