Category Archives: Monthly Review

Business Plan Monthly Review Session

Plan vs actual lines

Scheduling the monthly review was the first of the execution specifics of your plan. I suggested a set schedule such as the third Thursday of every month, so you can set the meeting into your calendar ahead of time. Make sure you get that meeting onto the schedules of every person on the team who should attend. Make sure it’s a relatively short but also extremely useful meeting.

“It is a bad plan that admits of no modification.” – Publilius Syrus

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Expect resistance when you introduce good planning process into an existing organization. I have several decades of first-hand experience with this. It takes leadership. Some people mistrust planning process because they fear you will use accountability – tracking performance metrics and results – against them. Others mistrust it because of the myth that having a plan means you have to follow it, no matter what.

Take the business plan monthly review session schedule very seriously. You’re the leader. You set priorities. Make this important. Use the review schedule to set meetings months in advance, so team members can plan around it and be present. And make sure you’re present too. If you don’t show up, or if you allow others to miss it, then it’s not that important.

The need for leadership is especially important in the beginning. After you have years of history with monthly review sessions, then maybe you can miss an occasional session and trust your team to do it well. But the early meetings are essential.

Standard Monthly Review Agenda

Review sessions become second nature in time, but as you start with your planning process, the more detail in the agenda, the better. Here are some things to include.

Review Assumptions

Start every business plan monthly review session with your list of assumptions. That’s why you list them in the plan. Assumptions change often. You don’t build a plan on a set of assumptions and then forget about them, because they are probably changing. So once a month you review assumptions.

Assumptions lead to a key decision. You always deal with the question of when to revise the plan and when to stick to it. If assumptions have changed, then the plan should change. If not, then you look further. Maybe you need to stay the course and maybe not.

Review Milestones

You can set some of the main agenda points of the review sessions in advance. Your plan includes milestones, that is, dates and deadlines. Use them to set review session agendas. For example, if your plan includes a milestone for product launch in September, then even in January (several months ahead), you can add that item to the August, September, and October review sessions. In August you check the last details, in September you go over the launch as it’s happening, and in October you review the results and execution.

Review Performance Against Planned Metrics

Reap the benefits of good planning and accountability. Use the review session to share performance metrics, track results, and identify problems, opportunities, and threats. Let there be some peer pressure as key managers share their results.

The most obvious and standard review is the plan vs. actual analysis of financial results. In accounting and finance, the difference between the plan and actual results is called variance, and the exploring it is called variance analysis. This is a very important monthly process. Look at key financial metrics including sales, sales by product or line, direct costs, expenses, profits, balance sheet including assets and liabilities, and of course the cash balance and cash flow.

Remember that performance metrics, accountability, and peer pressure require leadership. You want this to be about good decisions, productivity, and collaboration, not threats or fear. Make sure your managers feel safe bringing up expectations and revising metrics. Encourage them to evaluate metrics often and to bring up problems with metrics ahead of time, not after the fact.

Good planning encourages collaboration. Managers should know that it’s better to bring problems up ahead of time than hide them until after the fact. If the various factors that influence total sales show problems over the summer, you want to know about it, and deal with it promptly. You don’t want to wait until results are bad in October, and then react in November. Instead, in good planning process, managers bring up problems before they happen. Problems are discussed, solutions put in place where possible, and expectations revised. You want to know ahead of time if sales are going to slip, so you can adjust expenses accordingly.

That happens in an atmosphere of collaboration, not criticism. That collaboration should extend to other metrics, beyond just the financials. For example, suppose a plan includes leads generated through an online webinar program. It’s set to generate 500 new leads in October.

However, the marketing team learns in July that some unforeseen development – not something the team could control – will really hurt the attendance of the October webinar, and decrease the expected leads. With good planning process, the problem comes up in the July or August plan review session. The team adjusts both performance metrics and related marketing activities ahead of time. What you don’t want, of course, is the problem being hidden or avoided with no actions taken, and then performance metrics are disappointing for October.

Leadership sets the tone. Problems are supposed to come up. Good management wants to get bad news fast. And collaboration is the rule.

Gathering the Team

Make sure your review sessions include the right people.

Even if it’s just you, a one-person company, you should still do your monthly review sessions. Plan ahead and take the time to actually step away from the daily routine and review your plan, assumptions, and results. And revise your plan as needed.

In a business, the business plan monthly review session should include everybody in the company who has responsibility for executing the plan. Use your judgment. In a startup with just a few people, review sessions might include the whole team. By the time you have 20 people, review sessions probably include five or six. Being at the review session should be both an obligation and a privilege. Don’t include so many people that your meeting is unmanageable. Match your organization structure and your culture.

Plan vs. Actual Analysis

This chapter continues in the next section, about plan vs. actual analysis.

Business Plan vs. Actual Means Management

plan vs actual is not just numbers

Look at a simple example of how business plan vs. actual analysis works. Where do these numbers come from, and what do they mean? And, further on, how do you use them to manage better?

Here’s some simple vocabulary: In accounting and financial analysis, the difference between plan and actual is called variance. It’s a good word to know. Furthermore, you can have positive (good) or negative (bad) variance.

Positive Variance:

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  • It comes out as a positive number.
  • If you sell more than planned, that’s good. If profits are higher than planned, that’s good too. So for sales and profits, variance is actual results less planned results (subtract plan from actual).
  • For costs and expenses, spending less than planned is good, so positive variance means the actual amount is less than the planned amount. To calculate, subtract actual costs (or expenses) from planned costs.

Negative Variance:

  • The opposite. When sales or profits are less than planned, that’s bad. You calculate variance on sales and profits by subtracting plan from actual.
  • When costs or expenses are more than planned, that’s also bad. Once again, you subtract actual results from the planned results.

Sales Variance Example

I’d like to show you this with a simple example. Let’s start with a beginning sales plan, then look at variance, and explore what it means. In the illustration here you see sales, actual, and variance for bicycle unit sales for the month of March. You can see in this illustration that the plan was for 36, actual sales were 31, so the variance was -5. The plan for April was 40 units, actual sales were 42, so that’s a positive variance of 2.

Sales Variance Analysis


Regarding units, in March the store sold five fewer bicycles than planned; and in April, it sold two more than planned. That’s a negative variance for March and positive for April. But wait – there’s more.


I use prices in this example to point out that plan vs. actual analysis offers a lot of good information. Look at the prices of bicycles for March, April, and May. You can see there was a price promotion going on in April, right? The price of bicycles went down. It was supposed to be $500 on average, but it ended up as $79 less than that. And the increased units over plan were not enough to compensate for the lower average price per unit. The value of April sales of bicycles ended up $2,318 less than planned. The store’s total sales for the month suffered, and ended up $3,633 less than planned.


This simple example shows why regular review and managing business plan vs. actual results is steering the company, and management. The variance analysis in this case leads to insight about price promotions. It might generate discussions about what went wrong. It might change some future decisions about price promotions. And of course it needs to generate some spending adjustments to compensate for the less-than-expected sales. The team has to work together, not looking to assign blame, but rather to gain insight and to adjust the business.

Expense Variance Example

The next illustration shows the expense variance for the same period, for the same bicycle store:

Expense Plan vs. Actual

In this case, you can see that the actual marketing expenses were $326 less than planned, which is a positive variance, because an expense less than planned is a positive variance by definition. But is this good?

Analyzing the Marketing Expense Case

Here again, I want to show you the management implications of plan vs. actual. With the sales plan vs. actual we saw a sales promotion based on price. Apparently it failed, because the price attracted too few buyers to compensate the store for the discount.

But was the price the problem, or did somebody fail to execute on marketing? Is spending less than planned, during a promotion, a good thing? The prices came down but maybe the marketing department failed to tell people about it. Where is the management problem? What needs to be corrected? These are examples of good questions coming from plan vs. actual analysis.

Furthermore, let’s revisit the results with a look at what happened in May. In that month, the marketing expense was higher than planned, by $326. That’s a negative variance, an expense higher than planned. But another thing that happened in May – you can see it in the sales variance – was a price boost back to above plan, and sales revenue well above plan. So maybe that negative variance was actually good marketing, well executed.

So if you and I are running the bicycle store, we need more information. We need to look at results and talk about them with the team, to take advantage of what’s working, and correct what isn’t. And the variance analysis – plan vs. actual – provides the clues. Then it requires management to follow up and take action.

The Management in Business Plan Vs. Actual

What’s important is not the accounting, the calculations, but rather the resulting management. Garrett, the bike storeowner, watches the variance every month. He looks for indications of problems, or unexpected positives, so he can react. In this picture, the variance is negligible. The forecast was remarkably close to actual results. Still, Garrett should investigate why he’s selling fewer accessories and parts than planned, and whether the up and down of repair and service is worth reviewing. The point is the management. Lean business planning is about the management, not the hard numbers. What should be done, given the variance, to make the company better?