Business Plan: Align goals and effectively manage business with clarity

The business plan has more potential than just enabling a start-up idea to be thought through in detail. It can also be used to calculate in advance for new projects which opportunities and risks a company can expect and whether sufficient resources are available to achieve the set goals. A business plan is advantageous for all projects that go beyond the daily routine, such as a product launch, the establishment of a new sales channel or an expansion and other changes in the structures of a company. As a guideline for controlling, it effectively supports corporate management. Even more: a carefully prepared business plan is the basis and best preparation for goal-oriented controlling.

Business plan immediately reveals bottlenecks at every level

Since companies collect figures on sales, earnings, costs and order situation, market status and the necessary investments for the business plan, they have a framework that they can then also use in controlling to ensure that the company's goals are achieved. In general, it is advisable to work with scenarios in the context of any planning. If entrepreneurs have different options for action up their sleeve, they can react effectively to various developments and are also prepared for unpleasant situations. Another positive side effect of working with scenarios: If the focus shifts away from achieving fixed targets, individual departments are encouraged to work more agilely on the company's goals.

Through forward-looking planning, bottlenecks at all levels - personnel, financial or other resources such as time - can be identified at an early stage and the management can initiate appropriate measures quickly and effectively. A business plan with correspondingly sustainable financial planning ensures conceptual clarity and enables a valid assessment of the further development of a company.

Respond to changes in real time

The business plan can do much more than just convince financing partners: Clean planning and the controlling that builds on it strengthen managers in actively managing the development of their company in a permanent and targeted manner by reacting to changing market situations in real time. It also provides an effective tool for identifying means of increasing value creation and profitability. Also, because planning provides a clear picture of a company's current and future liquidity situation, an accurate approach ensures success and economic efficiency.

Nevertheless, many companies still fail to take advantage of the positive effect of the business plan after the start-up phase: But even then, as a management and controlling instrument, it makes management aware of inconsistencies in strategic planning and deviations from targeted goals, which is important for monitoring success. Therefore, regardless of their size, companies are well advised to work permanently on their business plan and to adapt it to the current situation. As a result, the effectiveness of each planned measure can be optimized with this procedure.

Look in all directions

By relating the key figures obtained in this way to one another, and by observing and interpreting their development as well as the general trends in controlling, managers and controllers are always clear as to whether the company is still on track for success and can react immediately to possible areas of tension. In recent years, it has become increasingly important in controlling not only to look backwards, but to add a current view (forecasting) and thus to increasingly include future developments and react in an agile manner. Recent developments in the pandemic have impressively demonstrated how elementarily important it is to adapt plans in the shortest possible time in order to ensure a rapid response capability. In order to be prepared for all eventualities, companies are well advised to support thinking, planning and working in scenarios by means of software that makes it possible to map or calculate several future possibilities.

Influence impact force in a targeted manner

In order to assess the company's ability to act, it has proven useful to compare the actual and target status at regular intervals. A target/actual comparison and precise variance analyses create security at various levels. By comparing the target figures set in the plan with the actual results achieved, companies are on the safe side, have a consistent view of the effectiveness of their company and can influence it if necessary. By taking stock of the situation, managers are able to recognize exactly how goals and measures need to be adjusted. In the event of deviations, they can then intervene in good time before any possible negative consequences occur.

Counteract errors in good time

Management benefits from the ability to plan future developments, can validly assess the effects of external factors and internal measures in advance, and always has a clear picture of the company's profitability. Not only does a business plan provide certainty in advance about the feasibility of the respective goals and strategies, but the key figures on sales or profitability, for example, also enable companies to better assess their options. And this is permanent: Even after a company has set out on its journey, the assumptions from the plan serve as an instrument for fine-tuning. The knowledge contained in the business plan about the respective target group and developments in the specific market segment has strong potential to make it easier to interpret the results from the analysis of the key figures correctly.

Conclusion: Plan success with business plan too

With careful planning, which begins with the business plan at the time of founding and is constantly updated during business operations, entrepreneurs lay a foundation for long-term successful business. The key figures that are collected and calculated for the business plan - at the beginning of the business activity or for new projects - also support targeted controlling. In order to collect, evaluate and provide the really relevant information, every company is generally well advised to use a modern planning and strategy tool, so that optimal controlling is guaranteed at all times.

Author:
Bernd S. Kirschner is Managing Director of Denzhorn Geschäftsführungs-Systeme GmbH in Ulm (Germany). www.denzhorn.de