The seismic effects of the pandemic, inflation and the talk of a recession has meant sweeping and enduring changes for businesses. Previous strategic plans and roadmaps are being ripped up and reworked. As you look ahead to the last six months of 2022 and beyond, here are 5 key areas to focus on.
Your chances of making whatever you want your business to achieve are significantly increased if you take the time to create a solid plan. Here are some things to think about when planning for rest of 2022 and beyond.
- Decide what not to do – ask yourself what was not working and ensure those bad habits do not reappear.
- Create a plan – What does success look like? Is it business growth, is it a sale? What is your strategy to thrive? What three things do you want to do differently to increase your chances of success?
- Tools, advice and processes – What do you need to achieve your plan? What or who is integral to support your success? Do you have the team internally or do you need external support?
- Get your team on board – Let each team member know how they can contribute to success and communicate effectively. Set clear individual goals aligned with your core purpose and strategic objectives.
- Plan for yourself. While planning for the business, make sure these plans support the goals for you and your loved ones. What do you want from the business over the next 3-5 years?
- It’s a good idea to simultaneously create a personal financial plan and ensure you have the proper protection in place for you, any other integral people to your business, and your loved ones.
- Define your purpose, this will demonstrate to employees and customers what you and they stand for and why. Your purpose can then set the context for your strategy, and you can define what winning means in service of your overall purpose.
Future working practices
The most significant change caused over the last couple of years is in the way we work and the way we hire. The rapid and enforced switch to remote working was embraced and proved effective in many cases. However, as some offices have to re-opened, now is the time to rethink the way we work now and into the future.
- Rethink your office. Some of the UK’s biggest employers have adopted hybrid working. What does your team want? Could you survey your team to see what’s important to them?
- Make your office work for you. If you’re going hybrid, can you look at flexible working options for your business and reduce costs?
- Hire talent from further afield. Hybrid working means you can cast your net a lot wider for talent. Who have you missed out on previously that could work for you now?
- Can you reduce your footprint by outsourcing back office support services rather than haven them onsite.
- On average, digital transformation has accelerated seven years of progress in a matter of months. Every business needs to embrace digitalisation in some way. Have you analysed your digital systems? Is your remote or hybrid working infrastructure robust and secure? Have you moved part of your services or products online? Is your current technology up to scratch? Do your various systems talk to each other in an efficient and productive way?
- It’s important we communicate regularly internally. When it comes to team communication, what habits do you want to build on going forward? Do you need systems and technology in place to support this? How can you foster team communication in the way you now work?
Whether it is a sale or building a sustainable business profitability will be key to drive the valuation or increase the amount that you can take out of the business. Focusing on driving profitability is a key area.
- Create a forecast. Produce a forecast for the next six months as an absolute minimum. Ideally for the next 3 years that supports your strategic plan. This will include how much money would you like to make and what you need to do to achieve this.
- Get detailed. Set targets and measure progress so you can work out where you’re winning and losing. Can you measure profitability by client, product/service, department, and even by team members? What additional analysis could you do to help you work out where you’re making money and where you’re not?
- Calculate your billing capacity. If you’re a service business calculating your billing capacity will help you work out what profit you’re capable of as a business. Once you’ve calculated this figure, look at your revenue for the past six months and see how you measure up. Get curious about why the gap exists – where is the profit disappearing in your business?
- Plug the leaks. Much of that lost profit will likely be due to inefficiencies in your business – what are three leaks you can plug to increase the profit you make? Try working on one each month.
- Share. Share your forecast and plans with the people who can affect the results and encourage them to seek out ways of doing things more efficiently. Setting up weekly meetings focusing on profitability is an excellent way of doing this – put attention and energy into this and see what a difference it makes.
- Target your most profitable clients. Identify the top characteristics of your most profitable clients and make sure that ALL your marketing is targeting them – what do you need to change?
- Look at your pricing. The price you charge for your products or service will have a significant impact on the profit you make. In the last couple of years, you may have decided not to increase your prices – now may be a good opportunity to rethink how you price.
It’s more important than ever to get to grips with the key numbers in your business. Here’s some of the key information you should have at your fingertips.
- Produce a visual dashboard for your business. Take the three to five key metrics that tell you whether you’re on track. Ensure there’s a balance of leading and lagging indicators on there and update them at least monthly. Review them regularly to ensure you remain on track and can take swift action if you’re not.
- Calculate your break-even point. It’s a good number to know. But make sure you set targets well above this. Plan to make a profit but know where the break-even line is if things don’t go to plan.
- Increase transparency with your team. Share the key numbers with your team and help them understand how they can impact them.
You can be the most profitable business in the world but if you do not have the cash to pay the bills you will not be in business for very long. Managing cash was vital during the pandemic and must continue to be one of the main areas of focus for you moving forward.
- Set budgets for all areas of your business
- Review your payment terms. Look at reducing your payment terms. If you’re dealing with bigger corporate clients, this can be a lot harder. For large orders or projects, look at structuring payments, so you get paid throughout the project or order rather than waiting until you’ve finished it. This will really help with your cash flow.
- Cut the costs you don’t need. What did you stop spending money on during the changes of the last couple of years? Don’t start paying for things you’ve survived more than a year without.
- Look at new suppliers to reduce your direct costs, perhaps sourcing closer to home may actually work out better with lower transport costs
- Go through every line of overhead and see what can be improved, outsourced or made to run more efficiently