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How to Analyse Your Business Plan After 1 Year

June 12, 2012 | Comments: 0 | Views: 195

3 Steps to analyse your old business plan

Make sure that you have blocked out a day or two to analyse your business plan effectively as this will not be a quick review. The quality of your analysis is highly related to the time and effort spent on it.

Firstly, leave your plan where it is and collect data

Take the time now to print out or gather all the monthly performance reports you have been completing over the last year. You will need this data to compare and review what you stated in your old business plan.

Collect the following documents;

  • Monthly profit/loss and balance statements
  • Sales reports detailing; how many sales, average sale price per sale, product sale mix, and customer lifetime value
  • Advertising campaigns expenses and results. The number of leads, enquiries, quotes, converts, and advocates from each advertising method is required here
  • Customer service complaints, employee feedback, and any non-conformance reports from legislation breaches
  • Employee management data that includes turnover rates, time of vacancies, employee recruitment and training costs.

If possible source the latest industry benchmarks for comparison analysis. Benchmarks are established from analysing a suitable range of similar business so you are able to analyse your performance against theirs.

Secondly, read through your plan with a Red Pen

Go through your old plan and cross out any areas of information that was mistaken or no longer relevant to your business. Ensure you have a notebook next to you. Large sections of the plan may have been filler and now you are able to refine your plan with the added focus of 12 months actual performance.

Each time you read about an objective or measure that you detailed in your plan, write in down in a column of the notebook. Title this column as Planned. Leave room for an adjoining column titled Actual, and a column for variance from planned percentage.

What you are looking for are statements of;

  • Projected sales targets
  • Monthly sales revenues
  • Market share claims
  • Operating expenses
  • Advertising budget estimates

After reading the plan you go back to your notebook and now enter in the Actual results from your monthly/annual performance data you have collected.

Most businesses aim to have a variance of less than 5% either way from an objective. Calculate the percentage variation of each obective and for any variances more than 10% make notes of why you think the variation occurred.

Most common reasons for variances are;

  1. Failure to accurately estimate the planned objective with any degree of informed accuracy. In other words, a number or measure was plucked out of the air. Commonly seen in rounded or simple numbers like $10,000 or 5 sales a day for example.
  2. Changes in the planned processes due to change in the available budget once started. Few business plans have detailed contingency plans to adapt the plan when sales drop or legislation changes.
  3. Overestimation of ability to achieve the objective based on a lack of true awareness of the industry trends or customer behaviour regarding your products/services.

Lastly, analyse all variances and establish new objectives

Reviewing all the objectives in your notebook, investigate the reasons behind all variances over 10% and research for solutions to prevent it from happening to your next years business plan.

Use your actual figures from the last year and write your new business plan based on this data as your foundation. It is important to include stretch objectives to help grow your business but keep in mind that most industries have an average growth range and it is wise to plan your objectives using these tested benchmarks.

Obtain your industry benchmarks from the last year and now compare them to your actuals and the new business plan. If you figures are within the industry range that is a good start.

However, if your projected objectives are outside these ranges you need to question the information you based your ability to meet your objectives on. People can do better than industry benchmarks, but make sure you have a real chance and its not just a wishful illusion.

Information supplied by Paul Baker

Over twenty years of business development & change management strategies successfully used in National organisations across Australia. The focus is on continuous improvement of business systems to stimulate growth through our principles of Initiate, Inspire, Innovate.

Customer-centric focus using our extensive experience in consumer behaviour and business process operations to find ways to help business owners manage their organisations.

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Source: EzineArticles
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