So, you’ve taken the time and energy to write a business plan, and there it sits on the shelf collecting dust. Writing the business plan is not enough- using it is what’s important. I often compare a business plan to a map. You wouldn’t want to go walking off into the Alaskan bush without one, but it does you no good if it just sits in your pack and you don’t use it. The same thing goes for your business plan.
A key to using the business plan properly is to schedule how often you compare your actual numbers to the plan itself. This will vary depending upon what stage you are in with your business. For example, a new start-up might want to review their numbers every month, while a long-standing business might do so quarterly. Nonetheless, both companies will want to use their plan to gauge where they are at and why.
Understanding the why is important. It doesn’t do much good just to look at the numbers and say, “golly, we’re down 20% from where we should be.” A business owner or manager needs to dig deeper to gain understanding. Maybe a major deposit hasn’t been received yet for a resort buyout next summer which would bring the cash flow right back up to where it should be. Gaining an intimate understanding of the numbers of your business is crucial to long-term success.
At the end of the fiscal year, it is also very important to sit down with your business plan and your actual numbers and adjust the future expectations accordingly. If you realize that your labor costs are going to be 30% higher than what you had originally put into your plan, then change the predictions for the next couple of years and make sure you err on the side of too high.
All in all, what’s really important is to remember that your business plan is not a static entity. It is a constantly evolving document that needs to continually be reviewed and adjusted in order for it to be accurate and to provide you with any form of benefit.