Those charged with creating viable budgets are used to accuracy, consistency, and fairly predictable planning cycles — not the uncertainty their organizations are living with today. Although the primary focus for most companies is to determine how they will survive the worst of the crisis, there is also an opportunity to initiate discussions about how the overall planning process needs to change going forward.
Identify the latest trends and key drivers of your business. Compare the inputs that had the most operational impact before the crisis with the key drivers of the business since the crisis began. What has changed? What specific risks have emerged? How likely are these drivers to be affected by uncertainties in the market?
Revise your initiatives. Understand your position in the marketplace. Decide if you need to shift resources away from products that have seen a large drop in sales and toward those that are holding steady. You may need to invest in advanced technology to help you reach your customer base.
Consider implementing monthly forecasting. Given changing market conditions, identifying core drivers and metrics monthly may prove to be a more valuable exercise than executing a detailed long-term plan. It can result in a budget planning process that is more robust, flexible, and shock-resistant.
Adopt digitization. Many companies may adopt a hybrid approach as they jump start their workforces. As hiring picks up, we will also see a gradual return to a competitive job market. Companies should be allocating funds to beef up their hiring efforts and upskill current talent to meet the demand that is sure to come.
Particularly during an unsettled fiscal cycle, astute budget planning is critical. It can serve to mitigate uncertainty, provide a more effective financial plan for 2021, and enhance processes for developing a more dynamic organization that’s able to respond to the new World of Work.