Before a plan, calculate where the company is heading if nobody does anything
23 September 2026, 08:06
The Ministry has granted another twelve months of Cassa Integrazione Straordinaria (Italy's extraordinary short-time working scheme) to the workers of Sgl, a supplier in the Melfi industrial area. The regional secretaries of the Uilm Basilicata and Fismic Confsal unions, who announced the news, commented: “This extension is not a chance result, but the fruit of a responsible model of industrial relations”, and added the hope that “these further 12 months will not represent merely a prolongation of the social safety nets”.
That hope contains the question that matters to anyone running a business, and it does not concern only areas of complex industrial crisis. Twelve months is an amount of time. To know whether it is a lot or a little, you need to know where the company is heading while that time passes.
The line you draw by assuming nobody decides anything
In the method used to build a business plan, the first number is not the target: it is the five-year inertial projection.
You take the figures of the last closed financial years. You project them five years ahead, assuming that nobody does anything different from what they are already doing: same prices, same product mix, same customers, same cost structure, the same current trends carrying on uncorrected.
It is not the pessimistic scenario. Nor is it a forecast. It is the answer to a single question: if the company keeps behaving as it has behaved so far, where will it be in five years?
In the companies I work with, this line is almost never there, and the plan starts straight from the first year of recovery. The result is that every proposed action looks like an improvement, because it is compared with last year instead of with the trajectory.
An example, with the figures stated as assumptions
Take a cable harness manufacturer with €9 million of turnover and an EBITDA of 12%, that is €1,080,000 a year. Cost of sales accounts for 63% of revenue; the rest is structural costs, €2,250,000 that are there every year, whatever happens.
Inertial assumption: revenue falls by 5% a year, because the main customer is scaling back its programmes and nobody opens up new markets; the structure stays as it is, because nobody touches it.
By the fifth year EBITDA has fallen from €1,080,000 to €327,000 a year, that is from 12 points of revenue to less than 5. And the sum doesn't end there: depreciation is €315,000 a year, so operating profit is down to €12,000. Before even paying the interest on the debt.
The point is not the 5% fall, which is modest and which nobody notices from one year to the next. The point is that the structure does not move accordingly, and five years of standing still turn a company that holds up into one that cannot withstand a single setback.
That line is the yardstick for measuring decisions
Once the inertial projection has been drawn, the second layer is added: an analysis of the sector and the forces at work in it, a reading of internal strengths and weaknesses, and an economic assessment — not descriptive, economic — of every opportunity and every risk identified. This produces a second line, the adjusted projection.
The distance between the two lines is the value of the actions being decided. Not the turnover one hopes for, not the margin one would like: the difference between two scenarios built with the same method.
From there on, the plan becomes measurable. The challenges turn into objectives with a deadline, the five-year plan turns into the budget for the year and then into the rolling forecast that shows, month by month, whether the gap between the two lines is really opening up.
The consequence that can be checked
If the reasoning holds, one thing ought to be observable. In companies that have the inertial projection in hand, requests for time — a payment extension, a safety net, a moratorium on loan instalments — come with a date and a number attached: how much time is needed, and what must have happened by the end of that time.
Where there is no projection, time is simply asked for, and when it runs out it is asked for again. Anyone with the line in front of them knows that the twelve months are not a pause: they are the window within which the slope has to change.
Written by Dr Flavio Marzani, founder of www.fmstudioconsulenza.it
This article was prompted by a news item published in ANSA.