Forgive us our moment of schadenfreude here, but we love us a little irony: National Bank, the biggest lender in Greece, said that it’s scrapping its three-year business plan because it’s no longer relevant. According to Reuters:
“Due to the adverse global financial conditions and the continuing instability prevailing in the markets…the assumptions on which its 2007-2009, three-year business plan was prepared have changed and are no longer relevant,” the lender said in a bourse filing.
In a strange twist, it seems that the banks- the very institutions that require three years worth of financials in every business plan—are the ones proving a point they’ve yet to concede: when it comes to a business’ financials, no one knows what’s going to happen in three years let alone, three months. It sounds simple and clear enough, but try telling that to a banker. The respone you’ll likely get is rote: “You need three years worth of financials to be considered for a loan…’
Unsatisfying? Yes. Frustrating? Absolutely. Still, National Bank’s debacle does illustrate an imporant point: bankers know just as well as you do that figures three years out aren’t likely to be terribly accurate. And here comes the takehome lesson for those of you working on a business plan. Rather than wasting your time toiling over what may happen three (or even two years) down the road, focus instead on the first six months of your financials, and ensure that those are as accurate as possible. The truth is that no bank expects you to have accurately predicated your business’ financials in three years when, with their teams of financial modelers and economic forecasters, even they can’t get it right.