Now, your business plan is ready, you have selected your KPI (key performance indicators) and you are ready to perform to your business plan. You should not put your plan aside but you should evaluate your progress on a regular on a regular basis, at least for each board meeting. There will for sure be lessons to be learned for the next time you have to write a business plan.
If you needed to draw up a business plan for a specific purpose – probably to obtain internal or external backing – the
chances are that you will need to do so again one day. That may be in a couple of years’ time, if things go either badly, and there’s a need for restructuring, or extremely well, and you need further growth capital. Or perhaps you will be looking to expand through acquisition or alliance. Or it may be in 5, possibly 10 years’ time that you need to dust off your business plan and write another.Whichever, you may well have to do this exercise again. So it would be good to find out what you did right and what went wrong this time.
The way to do that is through a structured evaluation process. This is best done after at least three years but can be done sooner if a new business plan is needed within that period.
The evaluation should be carried out by someone independent of the initial business planning exercise. No vested interests should be at stake. It should focus on examining the outturn against the KPIs forecast in the plan.
The important points in the evaluation process are as follows:
■ KPIs – you might choose to compare the actual costs of rental of premises compared with the forecast, but you won’t compare the costs of paper clips. Select here only those parameters that have a significant bearing on the outcome of your financial forecasts.
■ Reasons – if things turned out significantly different, why? Was this the result of external forces, or were they in areas within your control?
■ Lessons – next time round, what should you do differently in the planning process? How can your forecast be made more accurate? What extra research or analysis would be beneficial?
The main point of the exercise is, of course, the final column. What lessons can be learned for next time?
Monitoring your business plan can be regarded as an option. Evaluation should not be. It is not a time-consuming process. It can be carried out in just a few days. And the lessons may be illuminating and extremely useful for the next time you’re asked by the boss to prepare a business plan – by the end of the week!