It’s a challenging time to run a business. Even as companies cope with the lingering impact of the pandemic, they’re also dealing with new concerns of inflation, recession, softening demand, and higher cost of capital. With supply chain bottlenecks making it hard for businesses to access necessary goods and services, many companies are looking for a way to get back on track this year. The answer? Better business planning.
While it’s natural to experience some uncertainty about what’s to come, this shouldn’t hinder business leaders from making sound business decisions and executing on strategies. Instead, companies should look to increase data access so they can make more informed decisions in the coming months. Ultimately, recessions end, supply chains stabilize, and cost of capital is eventually absorbed. The businesses that thrive are ones that know how to navigate a downturn without losing sight of the big picture. Keep reading to discover the best practices for better business planning during times of economic upheaval along with tips on how to prepare for a return to normalcy.
1. Revisit Your Budget…More Frequently
When was the last time you revised your budget up or down? If you want to put your company in the best financial position ahead of a possible recession, it’s wise to get a strong handle on your expense, revenue and profit drivers. Examine loose spending and operating expenses and look to shift money away from untested projects and initiatives in favor of those that are known to drive the highest top or bottom line impacts.
When cutting operating expenses, it’s important to use care. After all, the last thing you want to do is reduce the quality level of a given product or service at a time when customers are already suffering. The goal is to find ways to reduce costs without impacting revenue and customer experiences. For example, you might be able to negotiate better contracts, supplier discounts, or add software and automation to your workflows to help your people become more efficient.
2. Analyze Costs and Profits…Every Month As Part of Your Business Planning Process
Speaking of suppliers, rising costs are common in times of economic upheaval. Moreover, companies may find themselves dealing with supply chain bottlenecks that harm their bottom line. Recognizing that a downturn can happen faster than expected, savvy business owners strive to create realistic projections based on multiple scenarios models. Rather than just modeling the best and worst-case scenarios, aim to build additional models so you can evaluate tolerances on various cost and profit drivers. By creating action plans now as part of your business planning process, you minimize errors while ensuring there’s plenty of time to communicate and get everyone on the same page.
3. Talk to Your Team…Transparency is Key
Whether you own your business or head up a finance department, you probably know that your employees are the most important aspect of your business. So, it’s only logical to put your team first when it comes to navigating a recession. To start, organizations should take time to communicate and educate employees about economic cycles and help them understand the situation outside your business providing them a broader context.
Additionally, an informed team can ensure your business has the best chance of success. Because they’re the ones in the trenches, your employees have the knowledge and experience to help your business respond creatively to changing circumstances. You may also want to consider cross-training staff or expanding their current skill sets through training programs or college courses. That way, everyone is in the best possible position for what’s to come.
4. Take Care of Your Customers…And Listen
No company can be successful without loyal customers that love your products, services, and people. As the world faces a potential recession, it’s important to do whatever it takes to draw new customers to your business while keeping the current ones coming back for more. Start by collecting customer data now, assessing your products’ strengths as well as their weaknesses. Additionally, you should look for ways in which you can differentiate yourself from the competition before the downturn occurs.
Why Businesses Need a Plan in Place
Just as stress impacts our bodies for the worse, it can have a profoundly negative effect on the mind, hindering our ability to make financial decisions. If you wait until the recession is upon you to start planning, you may well end up taking steps that damage your business over the long term. Instead, savvy organizations create a recession plan that they can call upon in times of turmoil.
It’s no secret that data is everything. Fortunately, a sophisticated business budgeting software can go a long way toward improving your corporate planning during economic downturns and times of prosperity alike. Enjoy accurate forecasting, superior reporting, improved performance and more with Centage’s financial planning and analysis solutions. Combining modern technological advancements with the convenience of cloud computing, Planning Maestro can be easily optimized for scale, automation, integration, and performance. Contact us today and discover the benefits of better business planning.
Centage Corporation’s Planning Maestro is a cloud planning & analytics platform that delivers year-round financial intelligence. With Planning Maestro, Centage offers the sophisticated features needed by small and mid-market organizations to integrate budgeting, forecasting, and deep data analysis within one easy-to-use, scalable SaaS solution. For more information on how to modernize your office of finance with intelligent planning, view our product demonstration video, or call 800-366-5111.
