The 2013 planning process – business and personal

Since the last post I wrote on some of the tools I was using to plan the year, I had a few requests for some more details. Especially when it came to business planning and how I do things, so I thought I would write a blog about it.

My history of planning is one of ying and yang. I like to plan and have done since I was about 18, and I manage my finances pretty carefully both business wise and personally, but as the numbers have grown, I have developed a knack of making excel add up wrong and getting lost in the detail!

So here is what I do.

Personal budget.

I’m sorry if you are a client or a member of my team and don’t find this particularly pleasing to read, but here goes. I do my personal cash flow first because I run my business for among other and equal things, to earn a living. Therefore if I am going to work all year ‘balls out,’ which I do, I need to make sure the pay back is in line with my effort. I also like to make sure my spending is in line with my payback.

I downloaded my last 3 months of personal bank statements and checked for consistent bills, and got an average of monthly spending on non-bills (food, eating out etc), and entered them in excel. So I ended up with a list of overheads and entertainment with associated costs for the year, month by month.

I then added to that my savings goals, estimated holiday costs, the costs of keeping healthy (gym, supplements, personal trainer) etc.

This then gave me a magic number, and the beauty of Excel is that I had created a model which I could tweak. After some minor changes, I had my magic number.

I will update by personal budget as the year progresses.

Business budget

This is where it starts to get complicated. Yes, I know how much I need to earn, but there are a lot more variables. My non exec director was invaluable in this process!

(so you understand, my business is digital marketing and essentially we are a contract based business. We needed to make some distinctions about our revenue lines as well)

We started by working out how much revenue would roll over from last year – contracted income. We then worked out who we thought would renew – renewal income. We then looked at our pipeline, and then finally made some assumptions about how much new new business we could generate. (we classify new new as business from people we don’t know yet or have not entered a sales conversation with) This again gave us a great Excel model to start playing with. Our tweaks were done according to marketing events during the year, seasonality and events of the past four years.

After creating what was essentially our sales plan, I built our standard budget, containing expenses and our new sales plan numbers. I tweaked the numbers to include increases in staffing costs in proportion to increase in income etc., and entered my magic number. So now I have a picture of what the year will look like financially, including lots of assumptions and sense checking. Each month we reforecast against our budget to see where we are going v. the route we have set. We track and graph performance against initial budget, reforecasts, year in total and previous year.

Finally, after chatting with a friend who spent a fortune on lean manufacturing training, we pinched one of his templates and created a one page business plan, which is similar to a balanced score card.

This is basically stripping the year’s strategy back down to 4 main objectives, with 4 strategies per objective and a control point for each strategy so you know if you are hitting it. This goes into a lovely excel spread sheet and each strategy and control point is tracked each month as either red, amber or yellow. In a single view we know how the business is performing.

Below is a rough example of what this looks like.

To give you an idea of our main objectives this year, they are simple. To put our clients at the centre of everything we do, develop our world class team, build world class systems, processes and reporting and to grow our sales.

Hope you find this helpful!

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