In today's breakneck fast-paced business world, the only answer to outdated business planning is BPM or Business Plan Monitoring. BPM is primarily set-up for internal use. This process begins with identifying the performance metrics for the business. Performance metrics are key ratios and numbers vital to the company's success.
Depending on the business, metrics can be many items such as inventory turns, sales conversion or product defects. By regularly monitoring the performance metrics, the business owners can identify negative or positive anomalies, correct problems, capitalize on opportunities and keep the business plan current.
To illustrate this process at work, let us look at the sales conversion metric. The business plan called for a 10% close rate on all qualified leads generated by the company. This assumption was the basis of the revenue targets in the financials section of the plan. After 3 months of operation, the company is only at a 7% close rate. This will impact the financial forecasts for the year. The business owners seeing this trend can go back to their market and sales strategy to see what is going wrong. Maybe changes need to take place in the product features or a competitor may have responded by signing customers up to a long term contract. This simple metric has alerted management to current changes in the market and will allow them to make some plan revisions to make the year-end forecast.
Overall, a well written and researched business plan will not only prepare your company for today's conditions but tomorrow's unforeseen events. All business plans should have a contingency section to accommodate for the future. BPM process allows a plan to become a "biological" business plan. This is a plan that will not just sit on the shelf for 12 months but will always updated when new market conditions or strategic changes take place. At the very least the update should occur monthly. So to keep your plan current use the Business Plan Monitoring System.
