Business Planning & Strategy

'Plans are worthless, planning is vital' – we all have said, 'well that forecast is now out of date, everything has changed'; it may well be already out of date, but the process of producing the plan – examining every aspect of the businesses future strategy and structure, its cost base, margins, sales levels, pricing policy, its sources of funding, ability to service its debts etc is extremely valuable. If the business planning model that is produced as part of the process is scenario based, then it can be adjusted to assess the most likely outcomes and used on an ongoing basis as circumstances change. 3r will help you through this process.

During the last 20 years I have built and presented a large number of business plans using both some proprietary forecasting tools and of course Microsoft Excel.

The last fully integrated Excel model produced was presented to various funders, banks and investors as well as the management, was for a substantial hotel, residential and commercial mixed use development in the South West, on behalf of the site owners and developers. The model was also reviewed by a number of national/international hotel chains that were considering an investment, and was very well received.

Whilst at a national food retailer with 58 outlets, I produced the integrated Excel model based on which an MBO for £42M was funded.

In the last 6 months I have started to use Sage Forecasting for 5 or 6 models that I've built for e.g. an on-line retailer, a waste recycler to include venture capital investment, grants, leases etc and a substantial capital build project, and a nursing home business with 15 homes. I found that Sage Forecasting strikes a good balance between the flexibility to produce a model that is meaningful and relevant to management, and the rigour of the treatment of funding streams, capital costs, banking facilities, working capital, etc in the system, so that P&L, Balance Sheet and Cashflow are completely integrated and validated. When using Sage Forecasting detailed revenue, capital, staffing etc models were produced in Excel and dynamically linked them to Sage Forecasting to allow that ultimate level of flexibility, and the ability to scenario plan.

The key thing in the process is to have a very clear idea of what the key drivers of the model should be and what the stakeholders expect to see as a result. In most models I have built the key drivers are completely variable so that e.g. margins, volumes, numbers of rooms, price charged per widget etc can be scenario planned to explore break even points, investment returns and risk. Ideally the models should be useable but adaptable so that they can continue to be used in the business as for instance the basis for a 12 month rolling forecast, incorporating actual data as it becomes available.