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So you embark on business planning to help you run your business better. You have understood that what matters is not the plan document, but rather the planning – effective planning, simplified, streamlined, often reviewed and revised, which results in better management. How are you doing that? How do you work smoothly between plans and actions, plans and results? Here are my favorite tips.
— Reduce the document. Focus on dates, deadlines, key performance measures, responsibilities, people and tasks. Always include and update forecasted sales, costs, expenses and cash flow. Make it as specific and concrete as possible.
— Focus on the process. Be sure to schedule regular review meetings.
— Focus on people. Make good use of these performance measures, dates, deadlines and responsibilities. Make planning a way to help everyone on your team contribute, engage, and succeed. Use metrics to make team and individual performance transparent.
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— Focus on objective and measurable results. Be collaborative. Agree on performance goals and how to measure them. Make them numerical, objective, so you can track the results and the results will stand on their own.
— For financial projections, focus on budget versus actual. Take all the steps you need to take to ensure that you get a good overview of budget vs. actual and plan vs. actual at least once a month for sales, costs, expenses and cash flow .
I have nothing to say about business plan software in this context. I am totally biased. Read my bio and you’ll see that I started a successful business plan software company that my family still runs.
As for accounting tools, I’ve worked with Quickbooks, Freshbooks, Netsuite, and several others, and none of them are particularly good at budgeting and planning compared to the real thing. I still use them of course, but I take extra steps to make sure I get the views I want. The steps depend on the software tool.
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The key to making this effective is to summarize. Don’t drive yourself crazy trying to automatically plan versus actual on every item in every budget and forecast if you don’t have tools that make it easy for you. Instead, focus on getting a regular high-level view. For example, automate the monthly vs. actual plan for total sales and total costs, if that makes it easier, rather than for each line of sales. Then look in detail during the review. The same goes for total expenses and cash balance. Summarize and aggregate for easy automation.
— Make tracking tasks, projects, and milestones easy and transparent. Use a tool that makes lists and checkmarks of tasks and assignments easily visible to everyone who needs to see them. I know there are several competing web applications in this general area, and I’ve personally worked with Basecamp and Teamworkpm.net. I mention them not because they are necessarily the best or better than the others, but because I have used them both. I like them both too. I recently switched to Teamworkpm.net from Basecamp because the former allows recurring tasks and handles dependencies better.
Whether you use one of these or a competitor, or your own system, make sure it’s easy to use and easy to share. To-do, project, and action lists need to work well and be easy for everyone, otherwise they don’t work. I pay monthly fees for the web apps I use, and it’s worth it.
And I also recommend that you think about the level of detail. Tasks and metrics that are shared by a team need to be just granular enough, just at the top level, so they can optimize management. Having too many items on a list makes it useless.
Some detail-oriented personalities want lists that make a simple project as complex as designing an airplane wing. (You know who you are and who they are.) Don’t smother it. Just ask them to share only the high-level tip of their iceberg, not the whole thing.
Creating a business plan only works if you settle into the process for the long haul. You have to develop the discipline to choose tools and stick to them, choose metrics and follow them, and make it feel like exercise and fitness. It only works with consistency, not when you’re trying to do it all at once every few months.
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