The most important single component of any real business plan – lean plan, traditional plan, or any kind of plan – is a review schedule. This sets the plan into the context of management. It makes it clear to everybody involved (even if that’s just you) that the plan is going to be reviewed and revised regularly. All the people charged with executing a business plan have to know when the plan will be reviewed, and by whom. This helps to make it clear that the plan will be a live management tool, not something to be put away on a shelf and forgotten.
For example, in Palo Alto Software, we established the third Thursday of every month as the “plan review meeting” day. In the old days, we brought in lunch and took over the conference room. It wasn’t a big deal. We were done in 90 minutes. But we scheduled all the meetings as part of the next year’s plan, and key team members knew they should attend, and wanted to be there. Absences happened, but only when they were unavoidable.
If your planning process includes specific responsibilities assigned, managers committed, budgets, dates, and measurability, then the review meetings become easier to manage and attend. The agenda of each meeting should be predetermined by the milestones coming due soon, and milestones recently due. Managers review and discuss plan vs. actual results, explaining and analyzing the differences.
Even if it’s just you in your business, you should still do a monthly review. We all benefit from the discipline of a scheduled time to take a step back from the day to day, review progress, analyze results, and make changes. That’s called management.
Identifying assumptions is extremely important for getting real business benefits from your business planning. Planning is about managing change, and in today’s world, change happens very fast. Assumptions solve the dilemma about managing consistency over time, without banging your head against a brick wall.
Assumptions might be different for each company. There is no set list. What’s best is to think about those assumptions as you build your twin action plans.
If you can, highlight product-related and marketing-related assumptions. Keep them in separate groups or separate lists.
The key here is to be able to identify and distinguish, later (during your regular reviews and revisions, in Section 3), between changed assumptions and the difference between planned and actual performance. You don’t truly build accountability into a planning process until you have a good list of assumptions that might change.
Some of these assumptions go into a table, with numbers, if you want. For example, you might have a table with interest rates if you’re paying off debt, or tax rates, and so on.
Many assumptions deserve special attention. Maybe in bullet points. Maybe in slides. Maybe just a simple list. Keep them on top of your mind, where they’ll come up quickly at review meetings.
Maybe you’re assuming starting dates of one project or another, and these affect other projects. Contingencies pile up. Maybe you’re assuming product release, or seeking a liquor license, or finding a location, or winning the dealership, or choosing a partner, or finding the missing link on the team.
Maybe you’re assuming some technology coming on line at a certain time. You’re probably assuming some factors in your sales forecast, or your expense budget; if they change, note it, and deal with them as changed assumptions. You may be assuming something about competition. How long do you have before the competition does something unexpected? Do you have that on your assumptions list?
The illustration below shows the simple assumptions in the bicycle shop sample business plan.
There’s no real plan without milestones. Milestones are what you use to manage responsibilities, track results, and review and revise. And without tracking and review, there is no management, and no accountability.
Milestones in a Lean Business Plan
Milestones for business planning
Just as you need tactics to execute strategy, so too you need milestones to execute tactics. Normally you’ll look for a close match between tactics and milestones.
Take your milestones list and categorize what’s supposed to happen, and when, for ongoing tactics related to products, services, marketing, administration, and finance. They include launch dates, review dates, prototype availabilities, advertising, social media, website development, programs to generate leads and traffic. The milestones set the plan tactics into practical, concrete terms, with real budgets, deadlines, and management responsibilities. They are the building blocks of strategy and tactics. And they are essential to your ongoing plan-vs.-actual management and analysis, which is what turns your planning into management.
Give each milestone at least the following:
Start and end dates
Expected performance metric
Relationship with specific tactics and strategy points
You might also have additional information for main milestones. Then make sure all your people know that you will be following the plan, tracking the milestones, and analyzing the plan-vs.-actual results. If you don’t follow up, your plan will not be implemented.
You develop your milestones by thinking through strategy, tactics and actions for business offering and marketing. So you can naturally divide them into the same categories as your tactics: marketing and sales, product, and other (where “other” might be, as with tactics, financing activities like raising investment or contracting commercial credit). Or the milestones might be related to legal issues, or managing a team, or logistics like moving or opening a new location.
Sample Lean Business Plan Milestones
The illustration here shows the milestones from the bicycle shop lean business plan:
Lean business planning sets clear expectations and then follows up on results. It compares results with expectations. People on a team are held accountable only if management actually does the work of tracking results and communicating them, after the fact, to those responsible.
“Metrics” is my favorite word for performance measurements that you track as part of your regular planning process. They are numbers people can see and compare. Make them explicit as part of your lean plan. Show them to the management team as part of the planning and then show the results again and again during your monthly review meeting. Management often boils down to setting clear expectations and then following up on results. Those expectations are the metrics.
metrics for business planning
The most obvious metrics are in the financial reports: sales, cost of sales, expenses, and so on. Most people in business understand how assigning specific responsibility for those financial numbers, and managing those numbers closely, builds accountability in a business. Those are classic performance metrics.
However, with good lean planning, you can look for metrics throughout the business, aside from what shows up in the financial reports. For example, marketing is traditionally accountable for levels of expenses in the financials, but also generates metrics on websites, social media, emails, conversions, visits, leads, seminars, advertisements, media placements, and so on. Sales is traditionally responsible for the sales reports in the financials, but there are also calls, visits, presentations, proposals, store traffic, price promotions, and so on. Customer service has calls, problems resolved, and other measures. Finance and accounting have metrics including collection days, payment days, and inventory turnover. Business is full of numbers to manage and track performance. When metrics are built into a plan, and shared with the management team, they generate more accountability and more management.
The illustration below shows simple performance metrics for a bicycle store sample lean plan:
Developing the metrics required to bring your people into the planning process is very important. Involve the team in deciding what metrics to use. The people in charge often fail to realize how well the players on the team know their specific functions, and how they should be measured.
Of course the starting expectation numbers alone aren’t enough. For real accountability, management revisits those numbers regularly, to track progress and make people accountable for results. This is a critical part of planning as steering the business and planning as management.