Is your business operating against a business plan that was constructed in the previous year. If you can answer yes, give this blog a quick read!
In the current business environment (post-COVID with remote and hybrid workforces), shifts in your markets, competitive landscape, and customer needs occur overnight. There is a marketing or business plan that will remain relevant for any extended period (extended period of time measured in months).
There is a middle ground that you can employ to ensure that you are pushing your business forward in a way that balances deterministic decisions against real changes in your operating environment. And now is the time to do it.
Every business is different, but most need to review their plans every six months.
The 5 Key Areas to assess mid-year include:
- Forecasted vs. Actual vs. Planned financial results
- Current Sales Pipeline
- Competitive landscape shift(s)
- Marketing spend allocations and ROI
- Staffing impact
1. Forecasted vs. Actual vs. Planned Financial Results
Mid-way through the year is a great time to revisit the validity of your annual financial plan. If you have been tracking actual versus plan results, and seeing what appear to be permanent changes in your plan assumptions, now is the time to reconsider your current financial forecast relative to your financial plan and change your financial targets and measurements.
The key issue to consider – are your targets still relevant, given changes in your market(s), shifts in your revenue mix, and the like?
2. Current Sales Pipeline
An important input when deciding whether to officially adjust the forecast for your current year is embedded in your sales funnel.
Is your funnel coverage (amount in your funnel versus your revenue forecast) sufficient to hit your revenue number? If not, perhaps you should officially reduce your revenue target for the current year. Conversely, if you can reliably see your way to exceeding your plan based on the sales plan, you can set a more aggressive revenue target with high confidence.
If you have more than one product in your sales pipeline, does the mix of those products true up to your original plan assumption about product mix? If higher-margin products are more prevalent in the funnel than you expected, you will be positioned to generate higher profitability than in your original plan, and vice versa and your forecast should reflect this shift in the product mix.
3. Competitive Landscape Shift(s)
Your competitive landscape can change in six months, and it is important to revisit that potentiality when reviewing your financial forecast. Has a new competitor emerged since you constructed the plan for your current year? Has a known competitor changed their direction, or are they performing better (or worse) than you anticipated? Has your value proposition been impacted by changes in your competitive landscape?
4. Marketing Spend & Allocations
The outcome of a mid-year review will certainly impact your marketing expenditures. Your marketing mix must reflect your revenue targets to increase the probability of achieving your financial goals. Don’t be too quick to cut your marketing budget over the next six months. Whenever a downturn hits a business, becoming cautious with marketing allocations is often a natural behavior. Consistent marketing will help keep current customers, increase your voice, and manage your message. Reduce your marketing total spend if necessary, but don’t cut it completely or too deep; competitors will creep in.
5. Staffing Impact
And lastly, once you’ve formulated your mid-year forecast, assessing your team concerning the goals you establish for your business is critical. This can be a gut-wrenching analysis, but every plan requires an optimally populated team to execute the plan.
In conclusion, the mid-point of an operating year is always a busy time.
Regardless, take the time to thoroughly review where you’ve been and integrate what you’ve learned into the path forward. You’ll be glad you did – no one likes a surprise regarding business results.