Evaluate the Data Included in Your Business Plan
During the planning process, evaluate your data to make sure it’s complete, accurate, reliable, and timely (CART). Actually, you should apply the concept of CART to all business segments; whether you’re developing a business plan, analyzing periodic operating results, or evaluating an employee benefit plan.
Business owners and managers must have complete, accurate, reliable, and timely information to make savvy business decisions. Whether the information and data is coming from internal or external sources, from the marketing or manufacturing departments, the basis of the budget is having access to complete, accurate, reliable, and timely information.
Complete: Financial statements include a balance sheet, income statement, and a statement of cash flows. All three are needed in order to understand the entire financial picture of a company. If a projection model is incorporating an expansion of a company’s manufacturing facility in a new state (to keep up with rising demand), all information related to the new facility needs to be accumulated to prepare the budget.
This info includes the cost of the land and facility, utility costs in the area, potential environmental issues, whether a trained workforce is available, and so on. Overkill isn’t the objective; having access to all “material” information and data is.
Accurate: Incorporating accurate data is absolutely essential for preparing the business plan. Every business plan needs to state the price your company charges for the goods or services it sells, how much employees are paid, what the monthly office rent is, what evolving patterns exist in sales channels, and every other relevant detail. Accumulating accurate information, whether from internal sources or external third parties, represents a critical and ongoing management endeavor.
Reliable: The concepts of reliability and accuracy are closely linked, but they differ as well. A piece of information may be accurate without being reliable. For example, you may conduct some research and find that the average wage for a paralegal in San Diego, California, is $24 per hour.
This data sounds accurate, but if the business model you’re developing requires paralegals with special training who demand $37 per hour, the information isn’t reliable.
Timely: Finally, the information and data must be accumulated in a timely fashion. Data provided six months after it was needed doesn’t do management much good. Companies live and die by having access to real-time information on which to make business decisions and change course (and forecasts) if needed.
An old phrase that’s often quoted, “Don’t put the cart before the horse,” means you shouldn’t buy a cart before you have a horse to pull it; in other words, you should do things in the proper order. However, the CART principle is a case in which the “cart” always needs to come first.
You must put the CART information and data before the horse (the business plan). If you attempt to offer a business plan that hasn’t been created through CART data, the end result will be nothing short of disastrous.