End-of-year reviews: Pass me my crystal ballby
Kevin Phillips, CEO at forecasting firm IDU, takes a look at how to prepare your business for the year ahead in uncertain times.
End-of-year reviews used to make sense. They are a bit of a chore, but ultimately useful, and, if things have gone well during the year, can be very encouraging. They’re a great way to take stock, see where your organisation has under- or overspent, as well as consider your wins (hopefully many) and losses (hopefully few and attached to valuable lessons). And finally, an end-of-year review forms a useful template for plotting your way forward into the next year.
Not any more unfortunately.
The year that was 2017 gave us just a taste of the seismic shifts that are coming our way. And has taught us that the fundamental assumptions we used to be able to take for granted can vanish overnight.
For instance, Brexit. What is that deal going to look like, and how is it going to play out for our businesses? And will Trump provoke a thermonuclear war with North Korea? The very fact that the man is president of the US is enough to tell us to expect the unthinkable. For me, closer to home, we saw the swift and peaceful end to Robert Mugabe’s 37-year rule of Zimbabwe arrive almost out of the blue. One week he was in power, the next week, he wasn’t. But is this really a fundamental change or just a change of face, and what is the impact going to be on business if any? And South Africa is poised to find out what happens when Jacob Zuma’s leadership comes to an end during the current succession planning in the run up to the 2019 elections.
Even without politics, the world we live in is an interesting place. Technological changes, which have been slow, tectonic plate shifts for the last few decades, have suddenly sped up. How soon will it be before we are working alongside robots? And, in a way we already are, thanks to software automation bots. And blockchain and cryptocurrencies have gained hold on people’s imagination and wallets faster than many could have expected — a major supermarket in South Africa trialled bitcoin payments this year. These are just some of the changes coming our way.
So what to do? Abandon the end-of-year review and wing it? Absolutely not. But realise while you will still need to plan, using the best information available to you at the time, you will also need to bake extreme flexibility into your outlook. Hold the course, but also be prepared to shift, dramatically, if needed. If you don’t, you could find yourself being a Kodak in a world of digital cameras.
Things to do:
- Still do a budget review and forecast, obviously. You need to continue to function in the world, motivate staff, negotiate bank financing and so on.
- Stay flexible. Prepare for the fundamentals to change at a moment’s notice. Nothing is cast in concrete. Do your best with what you have at the time, and keep a beady eye on what is happening in the world, and especially with your customers.
- Do factor in the cost of doing nothing projects. These are the maintenance, upgrade and incremental innovation projects that don’t deliver an immediate ROI, but are essential for saving you money and ensuring your survival in the longer term. A cloud computing migration strategy is one example.
- Do consult with the coal face of your organisation. While you are being overwhelmed by macro-level issues, they hold the key to essential information on the ground. What marketing activities are most effective with their customers? What are competitors doing in their specific market? Looping in the coal face also ensures a more accurate budget, with ownership by the non-financial managers who actually spend the money.
Things not to do:
- Don’t panic!
- Don’t not plan!
- But don’t think you can plan for every possible variable — both known and unknown. It’s impossible. Embrace the fact that major change is the new normal.
Good luck! Flexibility is the watchword going forward, and the key to unlocking the opportunities that will undoubtably still exist in our new normal.
You might also be interested in
Kevin is the founder and CEO of idu Software. He has degrees in Commerce and Accounting, and started idu with partners James Smith and Wayne Claassen in 1998. Kevin is fast becoming a thought leader in his field, and makes regular comment in the media about current affairs affecting business, as well as accounting, finance, budgeting and...