So you’re getting started with business planning to help run your business better. You’ve understood that what matters is not the plan document, but rather the planning -- effective, lean, streamlined planning, reviewed and revised often, that results in better management. How do you do that? How do you work smoothly between plans and actions, plans and results? Here are my favorite tips.
-- De-emphasize the document. Focus on dates, deadlines, key performance measurements, responsibilities, people, and tasks. Include and always update projected sales, costs, expenses, and cash flow. Make it as specific and concrete as possible.
-- Emphasize the process. Make sure you schedule regular review meetings.
-- Emphasize the people. Use those performance measurements and dates and deadlines and responsibilities well. Make the planning a way to help everybody on your team contribute, commit and come through. Use measurements to make team and individual performance transparent.
-- Emphasize objective 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 for themselves.
-- For financial projections, focus on budget versus actual. Take whatever steps you have to take to insure that you get a good look at budget versus actual and plan versus 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’m totally biased. Read my bio and you’ll see I started a successful business-plan software company that my family is still running.
As far as accounting tools go, I’ve worked with Quickbooks, Freshbooks, Netsuite and several others, and none of them is particularly strong on budgeting and plan versus actual. 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.
The key to making this effective is summarizing. Don’t drive yourself crazy trying to automatically do plan versus actual on every item in every budget and forecast if you don’t have tools that make it easy. Instead, focus on getting a regular top-level view. For example, automate the monthly plan versus actual for total sales and total costs, if that makes things easier, rather than for every line of sales. Then look in detail during the review. The same goes for total expenses, and cash balance. Summarize and aggregate to make automating easier.
-- Make tracking tasks, projects and milestones easy and transparent. Use a tool that makes lists and checking off tasks and assignments easily visible to everybody who needs to see them. I know there are multiple competing web apps in this general area, and I’ve worked personally with Basecamp and Teamworkpm.net. I mention these not because they’re necessarily the best or better than others, but because I’ve used them both. I like them both, too. I switched recently 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. Task, project and action lists need to work well and be easy for all, or they don’t work. I pay monthly fees for the web apps I use, and it’s well worth it.
And I also recommend you think about level of detail. Tasks and measurements that are shared by a team need to be just detailed enough, just 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 look as complex as designing an airplane wing. (You know who you are and who they are.) Don’t stifle that. Just have them share only the high-level top of their iceberg, not the whole thing.
Creating a business plan doesn’t work unless you settle into the process for the long term. You need to develop the discipline to choose tools and stick to them, choose metrics and track them, and make it like exercise and fitness. It works with consistency only, not when you try to do it all at once every few months.
Related: The Top 10 Business Plan Mistakes