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5 Tips on Planning Amid Rapid Change As the pace of business shifts quickens, forecasting can become even more vital.

By Tim Berry

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Change in the business world is happening quicker than ever before. Does that mean business owners should stop planning? I say uncertainty increases the value of planning.

Consider this true story: During the chaotic fall of everything, from August to October of the Great Recession, sales at my company plummeted. Suddenly sales were 30 percent below the same month of the previous year, horribly below the planned level.

Related: Write a Winning Business Plan With These 8 Key Elements

So did the fact that the business plan was way off during the crisis make the preparation useless or wasted? Absolutely not. Having a plan gave managers the equivalent of a dashboard to work with as my company navigated sudden change. The plan linked sales to expenses. The plan-vs.-actual data analysis was an incredibly valuable tool as managers decided which expenses to cut and why.

I admit I urged company CEO Sabrina Parsons to cut the head count. But she insisted that by working with the plan we could cut expenses without laying off anyone. She ended up being right. And it was the business plan that gave her a view of our predicament that made this management decision possible.

My favorite quote on this type of situation is from military strategist and former President Dwight Eisenhower. He said, "The plan is useless. But planning is essential."

In thinking about this, I've prepared the following five tips to explain the role of planning in times of uncertainty.

1. Start with the assumptions.

In developing a business plan, keep uncertainty and rapid change in mind. Break things down into underlying assumptions that can be checked later.

So, for example, create a sales forecast that maps sales into units, price per unit and other useful categories, such as channels, product lines, websites or territories --whatever is appropriate for the business.

Make a spending forecast that divides expenses into obvious categories and when possible component units, such as cost per person, trip or department. Make the milestones to be reached as specific as possible with dates and performance measures, tasks and responsibilities.

2. Schedule regular reviews from the get-go.

Don't finish a plan without setting up a review schedule and designating people charged with those duties on specific dates. For example, establish a monthly review on the third Thursday of every month and follow up with a short useful meeting for the key people in charge. Be sure they mark it on their calendars and attend.

The review should include at least two main parts. First, look for changed assumptions. When assumptions change, the plan should change. Second, look for new information derived from the execution of the plan. Compare the plan to the actual results and explore the differences.

Often new information will be discovered -- I like to call that learning -- not previously in hand. Plans should be adjusted for learning.

Related: How Do I Build a Business Plan? (Infographic)

3. Bring attitudes up-to-date.

Is adhering to a plan a good thing? Not necessarily. Stick to a plan only if its underlying assumptions are still valid and the execution requires more time. Review the plan often. Sometimes a certain strategy will take more time and consistent execution. Sometimes a pivot will be required.

Address the general misunderstanding about planning in a time of change. Don't let team members complain that setting assumptions in advance is useless because they change. Show them how having a plan makes it easier to manage change.

Reward people for catching changed assumptions early enough so managers can alter the plan in response. Emphasize that planning together is collaboration, not competition.

4. Avoid the "crystal ball and chain" problem.

People in organizations fear that planning will be a process of extracting commitments and collecting "gotchas" if goals aren't met. I call that the "crystal ball and chain" phenomenon. People fear that laying out planned activities and performance metrics months in advance will generate data that will make them look bad later on.

Fight that problem in several ways. Be clear that the goal is collaboration and the plan will be reviewed and revised regularly. Encourage team members to lay out specifics in the plan and bring up these details for review and revision in advance, as conditions change, rather than waiting. Congratulate those who uncover that assumptions must be revised and who suggest plan changes early.

5. Keep the plan lean.

Don't create an elaborate business plan full of descriptions and extra data until it's needed for a specific business reason like providing it to partners, investors, bankers, vendors or allies. Until then, craft and use a lean plan with no extra information for outsiders, just the specifics that staffers use for its execution.

A lean business plan doesn't require an elaborate executive summary or lots of text describing the company, product, market and team. It's for internal use only. Keep it simple. Confine it to lists and tables covering what's supposed to happen, with no extra detail to explain why.

Related: 4 Things Entrepreneurs Should Think About That May Not Be in the Business Plan

Tim Berry

Entrepreneur, Business Planner and Angel Investor

Tim Berry is the chairman of Eugene, Ore.-Palo Alto Software, which produces business-planning software. He founded Bplans.com and wrote The Plan-As-You-Go Business Plan, published by Entrepreneur Press. Berry is also a co-founder of HavePresence.com, a leader in a local angel-investment group and a judge of international business-plan competitions.

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