Practical Company Planning – Discipline #1 for Managing Your Company Finances 

Company Planning

Company Planning, like many fundamental business strategies, often gets a bad rap. Why? Because it is often done poorly, with even worse follow-through. This article focuses on a Practical Company Planning strategy you can easily implement.

If you find it hard to gain financial stability in your business, you’re not alone.  One common reason for such difficulties is that you often initiate random business strategies that, while they may be valid, do not come in a logical order. It helps to receive information in sequential order, where the most important obligation or necessity should be implemented first, then the next, and so on. This allows you to develop a methodology that can provide optimised financial management and control, rather than trying to keep balance over a scattered array of income and expenses that do not relate to one another.

In this series of blogs, we provide the five required disciplines all companies need to maintain in order to run effectively. Each week, we will delve into one of these strategies, though all five will remain visible in each article; this will allow you to keep an eye on the macro strategy while we further explore each of them in subsequent articles.

The good news is that, in order to effectively manage a company’s finances, there are only five core disciplines. When these are effectively implemented, they support the overall company needs as well as highlighting problem areas until the issues are resolved.  

The five disciplines are:

  • #1 The Discipline of Practical Company Planning
  • #2  The Discipline of Using a Business Accountability Chart
  • #3  The Discipline of Effective Management Meetings
  • #4  The Discipline of Monitoring a Simple Company Scorecard
  • #5  The Discipline of Better Financial Control

We are going to focus on the first – The Discipline of Practical Company Planning – in this article, developing the remaining four in the coming weeks.

What Is Involved in a Practical Company Planning Process? 

Most companies do not have a practical and actionable finance plan. If one exists, it is often not reviewed frequently nor is it shared regularly with those it applies to. Financial Planning is not just a formality for big, successful businesses; it has been repeatedly proven to be a critical discipline for success for small-to-medium businesses (SMBs). As is often the case, when people endure a series of bad experiences related to a topic like Financial Planning, they tend to discard the strategy rather than placing blame on the actual problem. In this case, the problem is the quality of financial control and its place within the Company Planning strategy – not the strategy itself.

The following are the typical attributes that need to be included in an effective company planning process, and they need to be implemented in the following order:

Step #1 – Ensuring alignment between key stakeholders (owners/directors/managers)

The first step in your company’s financial planning is to ensure that the owners and top managers are all on the same page. Often, there are verbal understandings’ between owners, directors, and managers that, in actuality, are not clear – especially as time goes by. In our financial management process, we often discover issues between stakeholders in the form of unclear understandings of your financial commitments, flexibility and liquidity. A key part of effective financial company planning is to ensure the people at the top remain fully aligned on how the company needs to manage its finances and the actions required to make that happen, before looking to guide the rest of the organisation.

Step #2 – Clarity on company liquidity, its short- and long-term balance and a clear plan of action  

By attaining clarity of the company’s short- and long-term financial fluctuations and how money is both made and – most importantly – spent over an extended period, the organisation is better equipped to rally its employees and customers around the plan. There needs to be a clear vision for how the company’s long-term finances relate to it’s quarterly, or even weekly, operation. With this Company Planning in place, the team can see the company’s vision, direction and capabilities, and that what they do today will have a direct impact on the company’s position in five or 10 years.

Step #3 – Circulate the simple strategic plan with others consistently

Beyond documenting a thoughtful and straightforward one- or two-page financial plan, your strategic plan for how to manage finances needs to be continuously reiterated and used consistently as a reference when making decisions on the company’s ongoing status.  

Although we often help companies develop this concise company financial planning document, we always need to push for the plan’s continued circulation and reinforcement throughout the company. This process of sharing and referencing the company plan nearly always requires coaching and accountability. It is said that someone needs to hear a statement seven times before the idea sinks in; this is definitely the case for employees understanding their company’s financial direction.

Implementing the 3-Step Company Planning Process

There is a reason we refer to these activities as ‘Disciplines‘: they require ongoing effort and monitoring. When left un-managed, things unravel quickly, but when teams begin to become clear on where their company is going and why, great amounts of progress and momentum can be expected.  

How is your company’s financial planning considered a discipline? An early issue is often having a clear process to follow to obtain the necessary attributes of an initial plan. We find that leaders and their management teams benefit greatly from some outside facilitation on these concepts and desired outcomes. Filling out a questionnaire on a company’s income, expenditure and variables rarely results in something inspiring and meaningful. Often, a third-party facilitator (i.e: an experienced financial coach) can elicit the desired metrics from team members who know your business’s financial requirements, capabilities and sustainability.

In reviewing this strategy and process for managing your finances, if you feel your company is in good shape, I want to be the first to compliment you on your efforts. Getting this right isn’t that easy or commonly achieved. If you feel your company needs some more discipline in the area of clear and practical financial planning, simply contact us here; we can figure out a plan that works for you.

Next week, we will dig into the second key discipline: Effective Meeting Management. This covers why and how it is critical to get your meetings right. Enjoy the process!