This article was first published in the Sanlam Business Tips for Business Owners newsletter of December 2015, an excellent resource for entrepreneurs distributed free by a wonderful company. Entrepreneurs would do well to subscribe to this newsletter.
Comparing actual performance against planned results pays dividends
At year end many companies take stock of all inventory items. Taking stock of how your company performed against your plan is even more important. Pull out the business plan you completed earlier and make a comparison between what was planned and what actually happened. Of course if you never did a business plan cannot do this, and you should take note of Dave Ramsay’s wise words “A goal without a plan is just a dream”. Stop dreaming, plan and implement
The easiest way to do this is to develop a spreadsheet or table with the targets from the plan listed. Be as comprehensive as you can be. Obvious items are sales, profitability and cash flow forecasts, customer and staff retention, staff and management development, customer service levels, planned marketing campaigns, planned product development / improvement and competition monitoring and reaction. If those were not in your plan take this as a good reminder about what should be included when you do your plan for the following year. Now you should enter the actual results and show variances.
When you compare actuals to plan be brutally honest. If your plan had a non measureable goal like “give great customer service” assess honestly how well or badly you did, ask a few customers, and not only the friendly ones. Define what ‘great service’ meant to you at that time and then measure against that definition. In future rather include measurable goals in your plan. Examples are: Less than 2% returns from customers, fewer than 4 customer complaints per month.
Once you have the variances you should examine each one, and it is not a bad idea to involve appropriate staff while doing this. You need to ask questions like:
If you can measure it you can manage it. Take control of your business outcomes by planning well and assessing frankly, then see your business improve.
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