Page 159 - Finance for Non-Financial Managers

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Finance for Non-Financial Managers
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People who regularly plan in their personal lives sometimes
resist planning when their company announces the annual
budget or the quarterly business plan review. And yet they are
serving the same purpose, to reach desired goals. The compa-
ny version is different, of course. For one thing, it’s usually
more formal and more detailed, for several reasons, all related
to execution of the plan:
• Execution will require the coordinated efforts of many
people.
• Execution will consume substantial, expensive resources.
• The plan will cover multiple, often interlocking and related
goals and tasks.
For very much the same reasons, it should be a written
plan. Putting a plan in writing enables us to gain several impor-
tant benefits for our planning efforts:
Clarity. It becomes much clearer what must be done and what
are the steps to get there. We’re less likely to forget something
or to have to hastily redirect our efforts to include a missing
task, if we’ve written them down ahead of time. When we carry
plans in our heads, funny things sometimes happen. We can
change the plan in mid-thought, in case it looks more difficult to
reach than we originally thought, and no one will know. We can
rationalize with ourselves that 75% is as good as 100%, and no
one will hold us accountable for our questionable adjustment of
the metric. When it’s written, it’s crystal clear what the goal
was—75% or 100% or whatever—because it’s there, on the
page in black and white.

Roadmap. If you can remember the last time you tried to find a
new street address without a map, you may recall making a few
wrong turns, stopping to ask directions, retracing your steps,
and generally proceeding more slowly because you weren’t sure
where you were going. A plan tells you which turns to take and
which ones to avoid, and you know ahead of time because
you’ve thought the route through before the journey began.