Original content provided by BDO UK.
As we mark the beginning of a new year, with new challenges and hurdles to cross. A sturdy business plan would help your business to pass the challenges with flying colors by prioritizing your key strengths. However, the 10 tips, combined with the seven areas of the BDO Business Lens, form something of a manifesto advocating for the creation of agile strategies that offer businesses a viable path into a future where growth remains not just possible but likely.
We at BDO have developed a Business Lens, to focus on 7 key areas of your business that would help you benchmark against your competitors and help your business to stand out from the others.
Along with the business lens, BDO’s Rethink model has observed four significant changes in the way businesses are going to be shaped for the future. The way of ‘how we do business’ has been affected by socio demographics, sustainability and resource resilience, technological transformation and shifting global economics.
A well-planned strategy that is flexible and agile to address new challenges could help you manifest a sound business plan and we at BDO could help you shape the future of your business by combining our Business Lens and Rethink model.
How can you prepare for uncertain times?
If we think of a business as a ship out at sea, heading for a destination and needing to ride any storms, then it is important to consider both the internal design of the ship and the impact of the external factors buffeting the ship.
Regarding the design, BDO has developed its Business Lens to look across seven areas of a business and compare to good practice:
People – Protecting, retaining and motivating a workforce
Processes – Reframing operations, transactions and interactions
Purpose – Finding the 'why' that will keep your business resilient
Profit – Reconsidering a financial strategy
Performance – Adjusting activity-related initiatives to meet goals
Productivity – Ensuring effective operations to stay resilient
Place – Rethinking the importance of location
By completing the Business Lens, business leaders can gain a solid understanding of how they benchmark against competitors, identifying common challenges and sector specific traits.
A balanced approach to growth, spanning these seven areas, can help to both build resilience and increase the effectiveness of the entire business.
Once you have explored all the internal considerations to be factored into your business plan, a thorough assessment of current external trends, threats and opportunities is vital.
BDO’s Rethink model has identified four key long-term megatrends which are shaping how we do business. These include changing socio-demographics, sustainability and resource resilience, technological transformation and shifting global economics.
Megatrends help us to understand additional challenges that businesses face in the immediacy, such as rising inflation, a shortage of skills, and disruption to vital supply chains. They can also help in building a long-term business strategy, forcing businesses to rethink what it is they do, identify new opportunities and opportunities from emerging customer needs or new markets.
10 practical tips for how to plan for uncertain times
We at BDO have listed down 10 practical tips to keep in mind for tackling uncertainty and to help you focus on what matters. Our recommendations follow insights gathered from 160 businesses through BDO’s Business Lens, which covers seven key areas that businesses should consider when planning – people, processes, purpose, profit, performance, productivity and place. Across each of these seven areas, we asked businesses to score their compliance with 1 (strongly disagree) to 5 (strongly agree).
It is remarkable how many business plans focus on a single set of outcomes, rather than weighing up alternative strategies and options. Many struggle to objectively look at external signals and data, which may suggest alternative plans are more suitable long-term. Positive confirmation bias means we can all often hold onto old strategies and products too long and miss new opportunities as they occur.
Despite most businesses claiming to have a focus on customer needs, the average Business Lens score for carefully managing key customers was only 3.2 out of 5. The impact of the last few years has meant that many organisations have become inward looking and with many needing to revisit their operating model in the months ahead, it is more vital than ever that you stay abreast of their activity and maintain effective channels of communication. Failure to keep close could lead to businesses being displaced from supply chains, but in-depth understanding of needs could create significant opportunity.
Despite many businesses feeling proud of their ability to survive over the last few years, it is worrying that most businesses still report poor disaster recovery plans. An average score of only 2.3 out of 5 for this area suggests that most businesses are relying on intuition to survive the many challenges lying ahead. One reason for this could be that the scale of uncertainty makes it hard to plan for a multitude of scenarios, and so a solution could be to set up a non-decision making “think tank” or “advisory board”, which is designed to think around possible events and provide insight to the board.
With a score of only 2.6 out of 5, most businesses admitted to resuming pre-pandemic activities, in addition to resuming the changes brought in since. This creates a significant drain on productivity and leads to an inefficient allocation of resources and excess cost base. Objectively reviewing all business activities and ensuring they remain effective and relevant could help reduce the break-even point and boost profitability. One effective way of doing this is to rebuild business forecasts from scratch and assess whether each cost is necessary and adding value.
Surprisingly, our Business Lens shows an average score of 3.0 out of 5 in relation to the effective tracking of business performance against meaningful targets. For most, key performance indicators (KPIs) remain focused on traditional measures rather than using additional data sources available to give advanced warning around issues and trends. Effectively planned data strategies can provide insights to support fast decision making and allow leaders to adapt quickly whilst building business resilience. Simple investment into better use of management reporting systems can help improve tracking of business segments, customers, and suppliers.
The rise of purpose-led cultures is gaining increased market traction, higher innovation, lower staff attrition and improved resilience. However, with an average grading of only 3.0 out of 5 when it comes to clarity of purpose and strategy, most businesses are missing out on these benefits. At a time when attraction and retention of staff is one of the biggest business challenges, this could be an easy step to differentiating in a crowded marketplace.
News headlines suggest we’re back in our offices. But are we? Data suggests the contrary, with footfall in cities showing a decline and many business leaders reporting challenges with workforce engagement and productivity. Double thinking has also led to people wanting to choose when and where they work, but then expressing frustration when other colleagues are not in when they are. It is not a simple conundrum, and mandating office time could trigger worsened staff attrition. With a average scoring of only 2.6 out of 5 for the effectiveness of physical and digital infrastructure, this remains a challenge which businesses have to resolve if they wish to compete for and retain top talent.
Shortage of talent is being reported by most businesses, and this can quite easily lead to lack of resilience. The lowest average score in this area of 2.4 out of 5 relates to a lack of contingency planning for the departure of key staff, with many teams excessively relying on one key person to deliver activities. It is important to invest in skills within your team, so that future talent can come through and support activities.
The business landscape is making it harder and harder for firms to survive, which means it has never been so important to know exactly what you do best. Cautious spending habits among potential customers will mean that only the brands who communicate effectively and differentiate themselves from the market will make an impact. Naturally, uncertainty also leads to competitors changing what they do, which could mean a chance in market focus or the displacement others in the supply chain. Our external research and benchmarking tools at BDO help to give a different perspective on what is happening in key markets.
The expertise you bring into your business is a long-term investment, strengthening your ability to ride out any storms that might lie ahead and helping you to prepare for better times. There is no shortage of financial guidance available to businesses in all sectors and securing a trusted partner at this stage can make all the difference in the year ahead, helping you to think differently about risks and challenges, and opening your eyes to opportunities. For example, could you take advantage of financial outsourcing?
BDO can guide your business through all these considerations and ensure your business plan is balanced, comprehensive and agile.
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