5 planned profit and loss following the sales example

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Unformatted text preview: don’t be afraid to update your plan and keep it alive. We recommend using a computer for your financials so you can easily make changes, as described below. Prescription for Live Planning One of the main advantages of creating a plan on a computer is how easily you can change it. Month by month, as you record your actual results, you can make changes to your plan in the future months of the actual tables, preserve the plan tables, and be able to see the plan vs. actual variance. 1. After your plan starts, type actual results into the sales forecast, balance sheet, profit and loss, and cash plan. Watch what the plan vs. actual worksheets tell you. 2. Note when actual results indicate you need to make changes. 3. Stay in the Actual mode and make adjustments to future months of your Actual cash plan. After all, it is already more accurate than the original plan because it has actual results for the months already completed. 4. As each month closes, type actual results over your revised plan numbers into the Actual area, then repeat steps 2 and 3, above. A Case Example of Plan vs. Actual The illustrations on the following pages show an example of a planned sales forecast, the actual results achieved, and variance analysis of the difference between plan and actual. CHAPTER 20: PLANNING FOR IMPLEMENTATION The Starting Sales Plan The example begins with the sales forecast portion of a finished business plan. 20.3 Actual Results for Sales Here we see the actual results for the same company for the first three months of the plan. BEGINNING SALES PLAN To set the scene, this illustration shows the sales forecast as the business plan is finished. ACTUAL SALES RESULTS The numbers at the end of March show actual sales numbers plus adjustments and course corrections. Plan vs. Actual Sales (Variance) The illustration below shows the plan vs. actual results (or variance) for our hypothetical company. SALES VARIANCE In the sales variance, numbers in parentheses are negative, mean...
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