“If you fail to plan, you plan to fail” is a stalwart adage.
“Numbers are the language of business” is another favorite.
In 2020, there have been extreme winners and extreme losers.
Some people have gained time that used to be spent commuting; others are struggling because they lost their jobs.
Grocers and online sales are way up, while hospitality, travel and restaurants have seen their revenues decline and profits disappear.
There looks to be a vaccine soon, but when will we reach herd immunity? Even then, people will be slow to return to travel by air and to attend large gatherings like concerts, sporting events and festivals.
So how does a business team reconcile these discrepancies and plan for 2021?
A rigorous budgeting process includes: prior year’s performance, unbiased evaluation of trends, use of outside data, and creative brainstorming by an experienced team. Let’s look at each of these individually.
Prior year’s performance: what’s happened in the past 3 – 5 years has typically been a strong indication of the future. However, 2020 was off the rails for most businesses starting in early March. Either you saw a spike, or sales dropped precipitously. Even if you saw a spike, were you able to keep up with demand or did you short ship some of your deliverables because of supply-side issues? Have you resolved those shortages? Are you bringing more capacity online in the near future? Do you need to ensure that additional capacity is used? If sales dropped, did you furlough or fire personnel? Will you have enough bench strength to build back what’s been lost?
Unbiased evaluation of trends: we tend to see what we want to see in trends. For example, while there is phenomenal growth in plant-based foods, they still only represent a small portion of the overall American diet. Rather than introducing new vegan foods, perhaps your products complement a plant-based diet?
Use outsourced data to supplement your hunches about trends. Be sure to continue to play to your strengths rather than go off on tangents. However, experiment with new positioning to test new markets. Remember that these efforts need to be supported with promotions and marketing. You can’t just wish them to happen. Budget for them and evaluate your return on investment monthly to ensure the best outcome.
Creative brainstorming by an experienced team: nothing replaces critical thinking by a team who are open and receptive to hearing each other and finding consensus. Each discipline brings different perspectives: sales, marketing, production, finance, and admin managers should be encouraged to make contributions and to understand each other’s concerns. This is probably the hardest step and is best facilitated by a skilled outsider who can manage the meeting dynamics and ensure a safe place for all voices to be thoroughly heard.
Once the process is complete, write your plan. If done as outlined, all stakeholders should be on board and eager to bring home the results.
Deb Mazzaferro, Deb@CoachMaz.com 727.258.8015