Managing a Business - The Finance Perspective

Part 4  —- Monitoring the Plan

You have now set out your stall.  All the ground work is completed, cashflows, forecasts generated and the finance is in place. The business plan is now in action. Here the input from the Finance Director becomes crucial. Their job is to assist the Owner/manager achieve the targets and provide them with current and appropriate analysis.

There are several steps involved in this exercise.

1. Identify the appropriate KPi’s
This is the starting point and needs to be addressed with a completely open approach.

The actual KPi’s will depend upon the individual businesses circumstances and this is where a complete understanding of the business and the growth plan is critical.

It is very easy to simply roll out the standard ones and a Google search will throw up the usual contenders and also a multitude of others. This is a good springboard and serves as a useful reminder that one size does not fit all. 

2. Identify the appropriate timescales
Once again the individual business circumstances will be the deciding factor. During the pandemic (for one of the companies I was MD of) I organised a daily report that fed into a weekly decision on the staffing requirements.  A quick daily catch up was held with the department manager. The actual decision was both straightforward and  perfectly clear from the daily reports. Because the manager had input, they therefore implemented the decision in a positive way to their staff and understood the reasoning behind it.

A report that is used to either correct  a shortfall or enhance an over achievement against a target is needed more frequently than monthly. My preference is for either weekly or fortnightly. This allows for the monthly review to be more strategic instead of being reactionary and in turn increases the chances of achieving the targets required.

3. Updating the Forecasts
It is now important to update the P and L and cashflow forecasts on a regular basis and again the frequency will be dictated by the individual business circumstances. As a rule of thumb a monthly update should be sufficient. 

The forecasts should show the variance from the original and all variances need to be scheduled out and the underlying cause identified. This should be presented along with current and up to date management accounts to the owner/manager. 

4. Presentation
As stated in the earlier articles, the report NEEDS to be neutral. It should identify every deviation (both positive and negative) from the original forecasts and the actions taken at the weekly review.

There should be a brief explanation of the cause, its expected impact and the actions taken to mitigate or enhance, as appropriate. 

The owner/manager can see these trends and the weekly actions taken to correct (or enhance) them and therefore allows them to make informed decisions at a strategic level.  

The meeting needs to be diarised. It is very easy for every participant to find reasons to be unavailable on any given day. By diarising it and enforcing attendance the meeting becomes part of the routine and ensures all participants have time to prepare.

It also serves to keep the team focussed on the plan and helps avoid falling into the “Business As Usual” mindset.

For a free initial discussion on the above article and to find out more , please contact me on [email protected] or call me on +44 7 306 162 553.