You either know in very specific terms how well you are executing your 2006 plan…or you don’t!

If you do know, you are probably using a combination of standard best practices…with reasonable success. In the areas you are doing well, you congratulate yourself and your team. Where the plan or execution is weak, you make early course corrections. If you have to ponder, guess or speculate on how well your plan is being executed, hopefully these tips will be helpful.

What Works!

What Doesn’t Work!

Plans! Clear, concise, written plans! If it’s important enough to invest in a manager or a team…they must have written plans. Budgets! Quantify Revenues & Expenses Every profit center and cost center must have a budget. Key underlying operating assumptions must be clearly spelled out. Financial Statements! Timely & Accurate Your financial statements keep the official score! Every number has a story! Insist on accurate statements not later than the 7th work day of the month. Keep an eye on the balance sheet…it’s a burial ground! Monthly Business Reviews! This is the forum where you really learn what happened in the last month! Walk through the financials, review mission critical plans, resolve key issues & discuss emerging opportunities. Forecasting! Minimizes Surprises Create a simple forecasting tool by making a copy of your budget spreadsheets. Update them monthly for actual results. Then fine-tune remaining months budget to create a forecast. It’s simple and highly effective at minimizing future surprises.

Business Plans written to obtain funding are almost useless for running your company. Remember these are PR documents. Be suspicious of excessive verbiage! Insist on concise, understandable plans! Budgets created without written plans have little value. Every project or initiative has an impact on revenues, expenses or the balance sheet. Use product, project & dept. plans to help guide development of budgets. Financial Statements produced by most General Ledger systems provide little management information and are only readable by CPAs and financial nerds. Create a template that makes sense to you and your team w/ references to Budget and Last Year. Include key performance indicators & ratios. Monthly Business Reviews that are used for status updates are a waste of time and talent. Use this meeting to assess YTD results, progress, opportunities…and resolve issues. Have an agenda, stick to it. Have team members provide status updates at least 48 hours in advance. Insist they read and understand each other’s reports before attending the monthly business review. Forecasting every number, every month wastes time and potentially communicates a false sense of precision. Focus on the critical numbers that drive your business. It is shocking the number of CEO’s that do not have a forecasting process that gives them visibility on their cash or credit line balance 3 – 4 months into the future.