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BUSINESS PLAN – HOW TO MEASURE RESULTS?

Business plan is live matter. They is not to stay in the drawer and to take dust on it. They is not unchangeable. You must to remember that business world is world that is change continually and because of that your plan must to be changed for time to time. Entrepreneurs are people that is always full with business ideas. The ideas is something that push every business forward. You as an entrepreneur maybe don’t have that ideas in time when you prepared your business plan and you know that that ideas will increase your business success. Because of that you must to obtain that business ideas into your business plan.

There is not existing business plan that is 100% accurate because it is based on historical data, analysis and forecasts about future. Errors will be something ordinarily and that is reasonable. But, errors that come from not measuring the implementation of your business plan is not reasonable and may to provide catastrophic effects for your business. Because of that you must to compare planned and real numbers, you must to find the differences and causes of that differences. This will be implemented in the next planning cycles. In this way you will provide not only improvement of the planning process, but improvement in whole business processes.

Comparing elements

What is that elements, that must to be compared with the reality in business plans? Here I will obtain some basic points of comparing on which you must to play attention:

  • Objectives. Every business plan start with business objectives. You must to ask and give answers to several questions. Am I accomplished business objects that I set for the previous year? Will your current work will accomplish that objects? This is important because if your objectives is not accomplished you must to change something in your current work.
  • Products/services. Do you have introduced new products or services that you don’t put in your business plan? What is comparing results of your products or services with that of your competitors? Do you have plans to introduce new products or services that you don’t have notes in the business plan? The products or services is most important element of your business plan and you must constantly to follow them.
  • Market. Do real market movements is the same with predicted market movements in your plan?  On the market circumstances will be relied most of you business decisions. You must to follow your market if you want to stay, because if you don’t follow your market change the market will reject you.
  • Industry. Is there crucial changes in the your industry that was not predicted in your business plan? Every industry have particular characteristics. For example, IT industry have characteristic of quickly and big changes. If you want to stay in trend you must to follow changes in your industry.
  • Marketing strategy. Is there some change in your marketing strategy that is not obtained in your plan? How is setup your prices, promotions and distributions? All of this elements are categories that are changeable. This elements have influence on your selling, current processes and management. Because of that you must to include this changes in your plan.
  • Selling. Do your selling is same as you predicted in your business plan. On the current selling will depend your profitability, cash flow, type of marketing activities, employment… This is important elements and your business rely on it.
  • Marketing plan. Do you have some changes in your marketing plan? If you have update it into business plan.
  • Structure. Do your organizational structure is the same as you note in the plan. Is management team is the same? What’s going with employment plans?
  • Profit/Loose. Is your profit/loose statement according planned?
  • Cash flow. Is your cash flow as planned?
  • SWOT. Is your strengths, weakness, opportunities and threats the same as you note in your plan? Is there change in their influence on your business?

The process of measurement

This is the basic elements that you must to:

  • Control
  • Compare
  • Find causes for the differences
  • Solve all problems through eliminating negative differences.

In the following picture is flowchart for the activities you must to accomplish for results measurement and comparing with planned.

MeasurementBP