When planning goes wrong: high on activity, low on content < Blog Emark

It goes without saying that planning was a big part of my professional life during my time as a CFO. Initially it was 5 times a year – one budget in Q4 and a forecast each quarter. However, over time it grew to 13 times a year – one budget in Q3 and monthly rolling forecasts. So in the end, we had exactly 13 chances to do a proper critical evaluation of where the business was going, identify and highlight key trends that could make the difference between success and failure of the business over time.

Did we always manage to do that? No, of course not. Especially when things were done manually in Excel, a lot of budgeting/forecasting was done based on past experience and feelings. Those are important but, believe me, also sometimes went terribly wrong! There was that time that the one margin element that we didn’t monitor separately decreased and we didn’t notice the impact on the revenues for way too long…

Did we get better over time? The answer to that one is a resounding YES. How? By simplifying and shortening the process so that we could focus more on the message that the numbers were giving us and less on collecting the numbers themselves. This also gave us a very important second-level control of what our past experiences and feelings told us. Revenues decreasing for reasons we didn’t expect? Automatization gave us the time to find out how and why and take action to change the trend MUCH earlier than before.


Beware of the traps…

By focusing on collecting the numbers themselves I mean falling into some of the traditional traps of a sub-optimal planning process:

  • Time-consuming process steps: the creation of new excel templates each time, putting base structures and figures into those templates, sending them out to be filled, getting them back and manually copying them into other excel templates…
  • Getting lost in “are you sure that this is the last version?” and “does this include that last update that came in an email last week?”
  • Manually re-calculating the key KPIs each time

The list could go on and on. In short, taking so much time getting the figures together that there wasn’t any time left to do a critical analysis of them.


Tips how to improve your planning process

In order to avoid these traps the key is to automate the planning process as much as possible and as a result, reduce the amount of time spent preparing templates and collecting data. For example, use the same tool that you use for your regular managerial reporting. Make sure that tool has change tracking, the option to accept/reject budgets, and the possibility to comment figures directly in the tool. Get the business to put data directly into that tool, ideally compared to top-down expectations that have already been pre-filled.

Ask the right questions

This, in turn, will make it possible to spend the time set aside for planning asking the questions that really matter, like:

  • What actions can we take to support the business to be able to meet the top-down expectations? Relatedly, is our business creative and proactive enough to think of new ways of growing?
  • The numbers show that the trend going forward is going in the wrong direction. Why did that happen and what are we going to do about it?

That’s where planning adds value for a company. When the process is set up in a way that it is LOW on activity but HIGH on content.



FREE LIVE webinar: How to escape the “excel” hell when creating plans, budgets and forecasts. A webinar not to be missed by any executive, planner or analyst who create or overlook the creation of plans. More info and registrations: emarkanalytics.com/sk/webinar-planning

Check out also my other blogs.

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