Whether you are about to dive into your new financial year or are half way through it, it’s likely that you created a financial plan to aim at. But the achievement of financial plans has nothing to do with the financial numbers. It’s all about the policies that you have agreed to execute and of course the corollary of those policies produces a set of financial profit and loss accounts, cash flows and balance sheets.
Plans don’t fail because the budgeted cost of marketing was too high.
Plans don’t fail because the budgeted sales figure was too high.
Plans don’t fail because the Capex budget was underestimated.
No these are reasons given by people who’ve lived too long in the world of numbers, not operational policies.
Plans fail because: the policy on trade shows was flawed, the product launch had operational holes all over it, the acquisition strategy had no integration policies built in, the competitive strategy seriously underestimated the changes in the landscape, the roll out tactics to create a new Services Division were over simplistic and over ambitious, the sales commission policy was disconnected to the desired behavior.
Successful short term and long term success requires relevant policies to be hammered out in the context of your people, your markets and your objectives. If done well, then the numbers that reflect these thoughts will appear in a powerful financial plan and subsequent believable financial forecasts.
Without insightful and practical policies you’ll only ever understand what financial variances have occurred relative to plan. You’ll never understand why they occurred.
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