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What are you basing your planning on?

What are you basing your planning on?

by mike tombs
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One of the difficult things about being a parent is the constant changing. Sometimes it seems as though no sooner have you got yourself sorted, than your child changes. So, the tricks that worked last year no longer seem to work, and the activities that were perfect and enjoyable 6 months ago are suddenly no longer relevant. Planning ahead includes factoring in how your child may change in the intervening period of time. You can’t work out how to entertain a 6-year-old through the holidays based on what you did with a 4-year-old; it simply won’t work.

Businesses are similar to children in some ways. We work hard to improve them, we watch them take their first steps with delight, and then expect more and more from them. So, basing our plans on what we did with our business two years ago, will give us the same issue as basing our plans with our children on their younger selves. In order to plan successfully we need to understand what is happening now and make an informed assessment of what will happen in the future.

If you base your business planning on your end of year reports from your accountant, that information could be around 18 months out of date. Those figures may not be remotely relevant to what is currently happening in your business. If you use a management accountant, you will be able to see what is happening how in your business. This means that when you plan forwards, the data that you are working from is timely and more relevant. It is possible to then project forwards to see what may happen in the coming year. If you are using 18-month-old data and then trying to project forwards another year; that is time span of up to 2 and half years. A lot can happen in two and half years.

At TLA Business Services we believe that in order to make your business successful you need to understand what is happening in it now, not what did happen a year ago. Decisions need to be based on the latest figures. After all you wouldn’t take your 6-year-old child to an activity designed for a 4-year-old, so why would you plan for your business based on old figures? If you want to work with management accountants who will support you to grow your business, why not arrange a meeting? Call us now on 01905 21411

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