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Implement Your Plan. Keep it Alive. Plan vs. Actual: Part 1

by Tim Berry

Managing With Your Business Plan

As you review implementation results with the people responsible, you will often find the need to set new goals and make course corrections. Keep track of the original plan and manage changes carefully. Although changes should be made only with good reason, don’t be afraid to update your plan and keep it alive. We recommend using Business Plan Pro for your financials so you can easily make changes

The starting sales plan
The example begins in this first illustration with the sales forecast imported from a finished business plan, developed in Business Plan Pro.

Illustration 1: Beginning sales plan

Actual results for sales
In the next illustration, you see the actual results for the same company for the first three months of the plan, at the end of March, showing actual sales numbers.

Illustration 2: Actual sales results


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Plan vs. Actual sales
The third illustration below shows you the plan vs. actual results (or variance) for this hypothetical company. The variance setting automatically shows plan vs. actual results for the different tables in the menu.

Illustration 3: Sales variance

As you look at the variance for the sales forecast for the first three months, you should see several important trends:

  1. Unit sales of systems are disappointing, well below expectations.
  2. The average revenue for systems sales is also disappointing.
  3. Unit sales for service are disappointing, but dollar sales are way up.
  4. Sales are well above expectations for software and training.

Adjusting the sales plan
One of the main advantages of creating a plan on a computer is how easily you can change it. Month by month, as you record your actual results, you can make changes to your plan in the future months of the actual tables, preserve the plan tables, and be able to see the plan vs. actual variance.

In this example, if the company knows by March that sales will be different than planned in April, they should estimate the revised forecast, as a correction to future results. When the actual results are available, they can then replace the revised plan numbers with actual results. The actual results area can then become a plan area for course corrections.

Compare the difference in the February and March columns in Illustration 1: Beginning Sales Plan (the original plan) above, and Illustration 4: Adjusted Sales Plan in Actual Table, (the actual results area).

Illustration 4: Adjusted sales plan in actual table

Illustration 4 shows how this company makes its course corrections with revisions in the April and May columns of the Sales Forecast Actual table, even before they happen, to reflect the changes shown in the January-March period. Since the company knew systems sales would be down, they planned on it and made a revised forecast in the actuals area. The same revision affects projected profits, balance sheet, and–most important–cash.

Continue reading about Growing your Businesses and Plan vs. Actual in Part 2 of this series.

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