This section details how you will measure success of the business during the planning period.
Many first timers do not include this section in their business plan format as they do not understand how critical it can be.
The bottom line is that this section is where you work out how you will know that you have achieved your goals and objectives.
If you leave it out, you risk being in the situation where you think you are doing all the right things and you should be meeting your objectives, but you really can't tell if you are.
And let's face it, the first year or so in business you are going to be so busy just keeping your head above water, you are unlikely to revisit this part of your plan and without identifying your key milestones and a few KPIs (key performance indicators), you may find yourself flying blind.
You should already have developed and documented the core objectives for your business in an earlier section of your plan, so you know what they are.
Ideally you should have goals related to:
- Customer service
- Maintaining positive relationships with employee
- Establishing or promoting the Core Values of the business
- Any Ambitions for Growth that you have for the business
In this section you will provide details about how you will know how you are performing, in the form of a key performance indicator for each goal and the milestones that indicate positive progress towards achieving those goals.
How to Develop a Key Performance Indicator and Milestones for Each of Your Major Objectives
Basically The first step(s) are to list all of your objectives broken down to the major tasks that are necessary to achieve them. Then you assign responsibility for each task to someone (if you are a small business owner working alone - that would be you!) and decide when you expect the task to be completed. Those anticipated completion dates become your milestones.
Adding a key performance indicator or measure will enable you to evaluate the degree of success or failure of your planned actions. A key performance indicator is a measure of something that indicates to you whether or not the desired outcome has been obtained.
For example, if one of your goals is to become profitable in your first year of operation, your measure is likely to be the desired profit ratio in your financial plan compared to your actual results. Another indicator might be a rating of customer satisfaction, or return rate for faulty goods.
Just bear in mind that whatever you measure will drive activity within your business and not always in the ways you intended.
Don't Just Leave Your Completed Plan on a Shelf!
Your business plan should be a living document.
By this I mean that you refer to it often to check that the objectives, strategies and action plans included in your business plan have been implemented correctly and that you are achieving the desired results. If not, you need to revisit your objectives and fix anything that is 'broken'. What ever you do, do not wait to review your progress against your goals and objectives until the end of the period covered by your plan, as it will be too late to take any corrective action at that point and you will have to start all over again with your next plan!
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