Business Planning: An Exercise In Revisions

Tim Berry
Image by Cale Bruckner via Flickr

Here we are, caught in a recession, so what can we do about it?  The first thing we should all do is sharpen our past business planning and take into account the facts on the ground.  A “plan” exists in a vacuum until that little hatchling bursts out of its shell and steps into the barnyard which is miles and miles of vast, uncharted territory with many, sometimes scary, things happening at once, all of which have an impact on you in one way or another. We all have to remember that a business plan is never done, it’s always a work in progress and revisions are never needed more than in tough times.

Here’s what Tim Berry has to say in 7 Business Planning Fundamentals | Small Business Trends.

” Specifically, what do we as business owners, managers, and entrepreneurs, do about it? I see this question and good and bad answers everywhere, so for this post I’ll stick to my expertise, which is business planning.

Let’s review how we go back to the fundamentals of business planning. What exactly are the fundamentals?

  1. It’s the planning, not just the plan. That’s critical and we all see it now as sudden unexpected changes — the black swan — blow our plans up. No worry, business plans are always wrong, so it’s always been the planning process that makes them worthwhile. Planning means plan and review, revise, and correct, and review and revise and correct again. Watch how the assumptions change. This is absolutely fundamental to planning.
  2. Shorten the cycle. You’re using planning to steer your business now, and the road is curvy and bumpy and unpredictable, so you pay closer attention and concentrate more carefully. Review your numbers frequently. Watch for changes, surprises, and the unexpected. It’s about early warnings. Watch the short-term closely. Use your planning as an early warning system.
  3. Sharpen the focus. Narrow it down. Make sure you’re close to your best customers. Sharpen the marketing message, and review where it’s going and how. Avoid wasted resources.
  4. Watch the cash flow. As the kids would say, “no duh.” But even if it’s obvious, I can’t leave it out of the fundamentals. Please remember that profits aren’t cash, and watch for changes in the cash cycle, like your business customers waiting longer to pay their bills. A business-to-business company needs extra financing worth a month of sales for every 30 days longer that customers hold off their payments.
  5. Watch the metrics. Remember, you’re looking for early warning systems. Obviously sales, costs, and expenses are metrics, but measure wherever you can, and watch for changes. Phone calls in and out? Time per call? Presentations? Inquiries? Metrics work for early warning.
  6. Your business plan is always wrong, but vital. See point number 1.
  7. Your business plan is never done. See point number 1.

My conclusion? Now, as 13 months ago. This is from that economic dark clouds post (sorry to quote myself, but hey, at least I’m consistent), but I think it holds up now more than ever. Stick to fundamentals, and get back to work:

Thoughtful economic analysis is readily available, fascinating, and scary. I don’t know about you, but for me some measure of future fear is a good thing. As president of a small company, being fearful is part of my job. Then I finish my coffee, go to my email, and get back to work.”

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Tim Berry is president and founder of Palo Alto Software, founder of bplans.com, and co-founder of Borland International. He is also the author of books and software on business planning including Business Plan Pro and The Plan-as-You-Go Business Plan; and a Stanford MBA. His blog hub is at timberry.com.
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