Chapter 8: Monthly Review Session

LivePlan Specific Version“It is a bad plan that admits of no modification.”

– Publilius Syrus

Scheduling the monthly review was the first of the concrete 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.

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.

They Call it Variance Analysis

First, though, 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:

  • 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.

The Liveplan Scoreboard gives you visual variance analysis when you connect to your accounting. That means you can see plan vs. actual results in the charts in the Scoreboard. For example, here’s plan vs. actual for sales:

LivePlan Sales Variance

This is where the management begins. These are not just numbers. These are performance indicators. The bike storeowner and the team get together and review the changes. They go beyond the numbers, into the causes of the changes, looking for identifying management items that should be changed.

In the data shown here, for example, sales of and accessories and parts are way up from the previous year. Does this tip management off to marketing activities that worked? To a change in competition, or market conditions? And sales of clothing are up month-to-month and year-to-year, but down compared to the forecast. Was this just an error in the forecast? Was there a promotion in play with this?

Please don’t settle for narrowing the plan vs. actual analysis to focus only on the accounting data that LivePlan shows you in the Scorecard. Make sure you check the other performance metrics as suggested in the next chapter. The lean planning principle of accountability suggests that the planning process includes suggested metrics for as many factors in the business as possible. And for each of them, the plan review process is the right format for identifying good and bad performance and dealing with that in management.

For example, consider practical milestone items like social media updates or website conversions. Plan vs. actual is a natural lead-in to managing people based on numbers. It doesn’t happen automatically. It takes management attention to track those numbers like LivePlan tracks the accounting.

For example, assume the conversion rate is up. That’s kudos for the web team, but is it the result of their improving the landing pages, or simply a lowered price? And if leads from trade shows are down, is that a problem with the person managing trade shows, or the free gift offered, or maybe that an important trade show was cancelled.

Review and Revise

What’s important is not the accounting, the calculations, but rather the management that results. 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, with this example, 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?

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 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.

Take the review session schedule very seriously. You’re the leader. You set priorities. You give it importance. You can 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.

Use the LivePlan Scoreboard

I hope you’ll forgive me, as author, to add a personal note at this point, a reflection on the LivePlan Scoreboard and where it came from. I’ve been writing about the benefits of plan vs. actual analysis for 20 years. I built the plan vs. actual analysis into Business Plan Pro, my first Windows application for business planning, originally released in 1995. But until LivePlan, doing the plan vs. actual analysis to make planning process real was always a matter of data input. Now, with LivePlan, finally, I can recommend and use an application that connects to the accounting and does automatic plan vs. actual analysis.

If that seems like me selling – because I own the company that publishes LivePlan – I apologize. If it helps at all, this note is not in the generic version of this book, only in this LivePlan-specific version. It’s a huge relief for me to be able to recommend software that does this automatically; it’s a real leap forward for lean planning and business planning.

LivePlan isn’t magic. It works with several specific accounting packages. Happily, one of them is QuickBooks, which is used by way more small businesses than any other. And there are other packages as well. The team is working to broaden the possibilities, so I won’t list them here.

Connecting isn’t automatic because accounting isn’t standardized. Each company has its own unique chart of accounts. So it takes a session to go through the chart of accounts and reconcile what the accounting has with what the business plan has. In practical use, that’s often a matter of telling LivePlan how to summarize items that are kept separate and in more detail in the accounting. For example, the real-life bicycle store has multiple lines of new bicycles, but in the LivePlan connection, the storeowner sets it to sum all bicycle sales into a single line.

For example, the line chart in the illustration here below connects the planning with the accounting and shows several important lines to look at: Sales by month compared to the plan and to actual results of the previous year. LivePlan does this automatically – once the accounting is connected – without any data entry or massaging.


LivePlan includes dozens of possible views, business charts and diagrams, to show sales, sales breakdown, direct costs, expenses, profits, gross margin, cash flow, and key cash factors, among other items, all with just click and choose.

In this next illustration, LivePlan breaks down the sales into the different lines of sales, comparing each to the forecast and actual results and previous year’s results:

LivePlan Scoreboard Sales Breakdown

This following illustration looks specifically at the performance compared to the plan and to past results in the critical function of getting paid. Average collection days is shown over time. You can image how valuable this view is when it’s time for the monthly review session.

LivePlan Scoreboard Days to Get Paid

And finally, one last example, this is the LivePlan overview, showing the revenue and expenses for a given month compared to the forecast for that month. This is the last I’ll show here, but there are many other views possible. I hope you can see how all of them can lead to effective plan review and revision.


Standard Review Meeting 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 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.

Stick to the plan or change it?

As you work with your lean planning, when you get to reviewing and revising, these questions will come up:

Do I stick to the plan, or change it? If I change it, then is my plan vs. actual valid? Doesn’t it take consistent execution to make strategy work?

These are valid questions. And there are no easy answers. You won’t find some set of best practices to make this easy for you. You’ll end up deciding on a case-by-case basis.

The Arguments for Staying the Course

In one of my earlier books on business planning, I wrote this about consistency and planning:

It’s better to have a mediocre strategy consistently applied over three or more years than a series of brilliant strategies, each applied for six months or so.

This is frustrating, because people get bored with consistency, and almost always the people running a strategy are bored with it long before the market understands it.

Consider this true story. I was consulting with Apple Computer during the 1980s when the Macintosh platform became the foundation for what we now call “desktop publishing.” We take it for granted today, but back in 1985 when the first laser printers came out, it was like magic. Suddenly a single person in a home office could produce documents that looked professional.

What I saw in Apple at that time was smart young managers getting bored with desktop publishing long before the market even understood what it was. They started looking at multimedia instead. They were attracted to new technologies and innovation. As a result, they lost the concentration on desktop publishing, and lost a lot of market potential as Windows vendors moved in with competitive products.

That argues for staying the course. Strategy takes time.

The Arguments for Revising the Plan

On the other hand, there is no virtue in sticking to the plan for its own stake. Nobody wants the futility of trying to implement a flawed plan.

You’ve probably dealt with the problem of people doing something “because that’s the plan” when in fact it just isn’t working. I certainly have. That kind of thinking has something to do with why some Web companies survived the first dotcom boom and others didn’t. It also explains why some business experts question the value of the business plan. That’s sloppy thinking, in my opinion: confusing the value of the planning with the mistake of implementing a plan without change or review, just because it’s the plan.

How to Decide: Stay the Course or Revise the Plan

This consistency vs. revision dilemma is one of the best and most obvious reasons for having people — owners and managers — run the business planning, rather than algorithms or artificial intelligence. It takes people to deal with this critical judgment.

One good way to deal with it is by focusing on the assumptions. Identify the key assumptions and whether or not they’ve changed. When assumptions have changed there is no virtue whatsoever in sticking to the plan you built on top of them. Use your common sense. Were you wrong about the whole thing, or just about timing? Has something else happened, like market problems or disruptive technology, or competition, to change your basic assumptions?

Do not revise your plan glibly. Remember that some of the best strategies take longer to implement. Remember also that you’re living with it every day; it is naturally going to seem old to you, and boring, long before the target audience gets it.

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