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Leadership
Systems Consulting believes that business planning
is a fundamental component of the foundation of success. The plan consists in simple terms, of a forecast, budget, development
of measurement tools, gap analysis, and adjustment strategies.
Forecast:
It is wise to have a solid ability
to forecast the quantity of goods and services that your company is likely to sell during a given fiscal period. Built upon
history, knowledge of the business in which your company engages, knowledge of the economic factors that impact your company
and your customers, your staff skill level, knowledge of your company’s products and services and knowledge of your
competition. All are required to build a “real” forecast
Top to bottom (management’s idea) forecasting
is as important as bottom to top (the field’s idea) forecasting. When intelligently created and critically compared
these two forecasts will most likely shed a great deal of reality on what is often thought of as “crystal ball gazing”.
Budget:
The application of an accurate forecast to a detailed pro-forma profit and loss grid will generate
a clear picture of the financial requirements for realizing the forecast. As important the pro-forma profit and loss grid
will help to establish reasonable budget guidelines for the variable expenses that are so often considered unpredictable and
uncontrollable in business.
Measurement Tools:
In order to properly manage the budget throughout the fiscal
period it is most necessary to regularly measure results against forecast sales and profits in addition to measuring costs
against the pro-forma profit and loss grid.
Gap Analysis:
In a perfect world, overlap rather than gap will
be the case. In those other than perfect circumstances it is important to critically and accurately determine that there is
a gap, where the gap resides and the root cause of the gap. Determining the right questions to ask in the hard situations
and then getting those questions answered accurately completes a successful gap analysis.
Adjustment Strategies:
When the gap is real and the reason for the gap is learned it is most important to make the adjustments necessary to close
the gap. Of course determining which portion of the gap is satisfied from the cost side of the equation and which portion
of the gap is filled from the revenue side of the equation, without “pretending”, is the key to a successful adjustment
strategy.
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