A good business plan is never done – it’s a living document, a work in progress. It needs to be reviewed regularly, measured and recalibrated.

Measurement is very important because, put simply, what gets measured gets done. Therefore the metrics you apply must measure the things that lead to sustained organisational success and achievement of your vision, not just short term financial performance or other easily measured dimensions.

How is measurement best done?

Your measurements should be able to be quantified in terms of quantity, quality, time, or cost.

There are five essential key success measures which you should undertake to provide you with valuable information:
 
  1. Financial viability: For example, profitability is important to your organisation’s survival and growth. However, relying solely on budgets and sales forecasts can typically result in your organisation being driven by its financial departments. If you do this you will be missing the important “people” outcomes that are essential to produce long term success receive short shrift.
  2. Customer satisfaction: For example, performance rated on customer satisfaction surveys is important because obviously without happy customers your organisation will fail.
  3. Employee satisfaction: For example, performance gauged via employee satisfaction surveys is important because over the long term it’s impossible to have happy customers if you have an unhappy employees.
  4. Contribution to society: For example, the number of trees saved by implementing paperless processes is one way to measure your contribution. These contributions can also relate to ethics, safety, and social responsibility. These are important because you need more than a simple profit motive to attract and retain the best talent and to sustain itself over time.
  5. Key operational results: For example, for a hotel it would be the percentage of hotel rooms occupied. If you consider one to three operational indicators that represent the leverage points in your organisation, they can be a valuable addition to your metrics.

How do you arrive at your key success measures?

  • Examine your mission, vision, and core values to determine what outcomes your organisation believes are important—then make these items your key success measures. At a minimum, include the essential key success measures above
  • Limit your key success measures to 10 or less so they are focused and not overwhelming in detail.
  • Set an ultimate goal at the end of your strategic planning horizon, usually 3-5 years, and then create intermediate objectives for the intervening years


How is reviewing and recalibrating best done?

Review and recalibrate as and when it’s needed. Senior management should keep a judgemental eye on your business plan at all times because unplanned internal and external issues can have dramatic effects on long-term outcomes and require changes in strategies and goals.

Blindly following a long-term plan that isn’t working will seriously affect your company’s viability. Subjective judgement is critical in reviewing your business plan. Look for strategies or initiatives that will fail because the real world has proven wrong the assumptions on which your strategy is based. This kind of subjective judgment is what makes business reviewing and calibrating is critical.

Remember, plans are about the future, and few people get the future right very often, so be astute and keep a watchful eye on the plan as reality moves forward. Review and recalibrate it whenever it’s needed.

12 reasons to review and refresh your plan

  • A new financial period is about to begin.
  • You need financing.
  • There has been significant market change.
  • New or stronger competitors are looking to your customers for their growth.
  • Your business develops a new product, technology, service or skill.
  • You have had a major change in management.
  • You have entered into a new business partnership.
  • Your company has crossed a significant threshold.
  • Your target customer changes.
  • Your old plan doesn’t seem to reflect reality anymore.
  • You expand into new markets.
  • You change suppliers or technologies.

Undertake a monthly update

Accounting and financial analysis is normally undertaken monthly.  Implement a monthly review of the difference between planned results and actual results for your sales, profits, balance and cash.

For each of the standard pro-forma projections, maintain a table with the plan, another with actual results, and a third with the difference between plan and actual, which is called variance.

Don’t forget to review the activities, deadlines and planned results that don't fall into the financials. A good plan is full of milestones, assumptions and tasks, all of which should be measurable.

Undertake an annual update

Update your plan thoroughly at least once a year. Look at the existing plan with fresh eyes. Review your value proposition. What are your customers buying? What problems do you solve? What other solutions can they choose? Can you come up with a new market segmentation? 

Consider new products, services, channels, buyers, and regions. Look at the larger potential market for the problems that need solutions. Look at contiguous businesses. Finally, look at changing trends and technologies.