Updated: May 21, 2020
There is a couple of old adages, "Failing to Plan is Planning to Fail" and "What gets measured gets Done"
Failing to Plan is Planning to Fail: -
When was the last time you looked at your business plan? Often or not, every business has to write a business plan if they are seeking funding from either a lender or other institution. Its is a fundamental requirement that gives the other party an idea about what your business is about, mission, vision, product, customer etc.
They can be quite hard to write and hours are spend on these important documents and once submitted the plan goes on the shelf in your Copy or in the drawer or perhaps in the business plan folder on your computer.
How often have you looked at it since? Revised it, changed it, ammended a few bits here and there?
Now for the second adage, "What gets measured gets done"!
Unless you know where you started from how far have you come? Are you on the right road still? Are you making rapid progress or slow progess? Are sales good or bad?
Benchmarking is fundamental to this process and your Business Plan, when it was written set out from the start of this period for the business, what your expectations for the business were, where you thought it would be at this date, or that year.
Measures or Key Performance Indicators (KPI's) are prescribed methods with which the business will measure daily, weekly, monthly and annual performance. When these are in place it is quite easy how you are doing. How are you measuring your success? Cash in the bank, Sales Receipts, Gut Feel, How busy you are or how the sales team are bringing in new customers, Sales versus budget and or Sales versus last year.
I was listening to a coach telling a story about a 3rd generation business they where working with, (as coaches, we are bound by confidentiality, so i have no idea who's business) and the boss called her to come and see him urgently. Quote "Cash was running out and the sales teams needed to be working harder in the field". He needed to talk through some ideas he had. Often clients just need a sounding board, nothing more!
To get to the point, this business owner measured success on Cash in the bank. When lots of Cash the business was doing great, when low, poorly. When they worked through benchmarking and measuring, the business owner realised that he likely as not could have retired 15 years earlier. Due the the waste and duplication, wrong tasks being done by the wrong teams the business was so inefficient that it drained cash, but as they had an on trend product, sales grew which masked the drain. It was only when the trend started to tail off, that the problems really started to show.
The moral of the story use your Business Plan as a living working document to ensure you are benchmarking and measuring to it