Sadly, it’s so simple that it should be obvious: Make sure the way you organize the rows of sales, costs, and expenses in your financial projections match the way your accounting tracks them.
So if your accounting divides sales into widgets, gadgets, and dealios, don’t project your sales as direct, channels, and distributors. And if your accounting divides marketing expenses into personnel, advertising, and PR, don’t project marketing expenses in your business plan as print, online, and social media. And in the picture here, a simple plan vs. actual review for a café, if the accounting divides sales into meals, drinks, and other, then the business plan should divide sales into meals, drinks, and other.
Get your last Income Statement (also called Profit & Loss) and keep it in view while you develop your future projections.
- If you don’t have more than 20 or so each rows of sales, costs, and expenses, then make the rows in the projected statement match the rows in the accounting.
- If your accounting summarizes categories for you – most systems do – consider using the summary categories in your business plan. Accounting needs detail, while planning needs summary.
If your categories in the projections don’t match the accounting output, you’re not going to be able to track plan vs. actual well. It will take retyping and recalculating. And you’ll lose the most valuable business benefit of business planning: management, steering your company.