How to create realistic plans

A question we hear quite often is: “Which steps should I follow to make sure that my plans are as realistic and as useful as possible?” Here are our thoughts on it.

Take your time for planning

If you invest a little time in drawing up a realistic budget, it helps you to set priorities in day-to-day operations in line with your own targets, and it makes the subsequent controlling easier.

Use last year’s figures – but only for orientation

Look at and analyse your previous year’s figures – this can give you a good indication of the likely sales and costs. In this context people often speak of a base plan, in other words the baseline plan. That should then be the starting point for the priorities in the current financial year. On this basis, take into account your sales plans, which costs you are planning in addition to last year and which investments you would like to make.

Create realistic plans

Make sure that your plan contains enough information to easily monitor the most important drivers of your business, such as revenue, costs and working capital. Follow the 80 / 20 rule. If you do not spend so much time on smaller budget items, you can give more thought to the sales campaign and its impact on the figures.

Always keep dependencies in mind as well. If you want to generate more revenue, this usually also leads to higher costs, such as buying more materials, purchasing external services and hiring more staff.

Involve the right people

Planning should always be a team effort too. Plans developed together are more likely to be achieved and automatically lead to a higher level of commitment. The team understands your priorities and you gain an insight into the thinking of your employees.

Use a tool for support

You should use a software tool for developing the plan and, subsequently, for controlling. The accounting system is often used for this. However, this has the disadvantage that it usually maps the entire complexity of the accounting. COMMITLY makes it easy for you to create plans, to discard them, to lock them and to continuously monitor how well the plan is being met.

Credits: Photo by Samuel Zeller on Unsplash