Effective Business Planning

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Welcome to the 'best of' articles written for Adviser-Hub by Brett Davidson, chief executive of FP Advance. The articles include hugely valuable information and ideas that you can take and put into action back in your own business.

Effective Business Plan

If you were setting off on a holiday you would not dream of leaving without first having completed some sort of planning to identify your final destination, the route you will take to get there, the preferred transportation method – taking account of speed, cost and comfort trade-offs – and any potential roadblocks you might encounter that could prevent you achieving your goal.

Your business should go through a similar process to improve the quality of the journey and of the final outcome. Put simply, a business plan is a formal statement of a set of business goals, the reasons why they are believed attainable and the plan for reaching those goals.

Idea 4 in our Top Five Global Best Practice Ideas is to have an effective business planning process – with emphasis on the word ‘effective’. That is for a reason – in my experience, many firms do have a business plan but it is 50 pages long, gets written once every year and then gathers dust on the shelf until they go through the process again next year. This does not really work.

At FP Advance we use and recommend a process called the one-page business plan. I got this idea from a good friend of mine Nick Hermann, who developed the concept using the ideas from the balanced scorecard approach by Kaplan and Norton, with which some people may be familiar. But before we get into the ‘how to’, have a look at these two pieces of data from the FP Advance Business Fitness Report.

* 28% of firms say they have a strategic business plan – that is, a plan looking forward for three years or more – while 60% say they have one of these but it is “in their head” or partially documented.

* 40% of firms say they have an operational plan – that is, a plan of action for the next 12 months mapped out quarter by quarter - while 46% say they have one of these but it is “in their head” or partially documented.

Now consider the profit data below:


Key value driver

Percentage of practices

Profit per principal

3-5 year strategic plan
Fully documented



12-month operational plan
Fully documented



Effective planning
(Written strategic & operational plan, reviewed regularly, with monthly progress to plan meetings) 



It is clear that having written plans, be they strategic and/or operational, makes a difference in business performance. But the real giant strides come when the business is managed to the business plan on a monthly basis. Top firms know this and set up monthly board meetings that focus on ‘progress to plan’.

By checking in monthly, not only does it provide a roadmap for going forward, but a rear-view mirror into which you can look to identify the path that got you to where you are. Businesses operating with no plan do not have this ability to look back and analyse what worked and what did not so no learning can occur.


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