In our economic climate, there are no shortcuts or “set-it-and-forget-it” approaches to business. Our world is constantly evolving and at the end of each year, organizations take time to prepare for and anticipate the needs and changes that the next year will bring. “Business as usual” is not a recipe for success; financial success requires continuous evaluation of all the levers that impact financial performance.
A collaborative strategy will guide the assessment of all the levers of financial impact across the organization: sales, materials, overhead, production, marketing, etc. As part 1 in a 3-part series on planning for 2016, I would like to share what I believe are the best approaches to financial planning for a new year.
Refer to Your Scorecard
The first step in the review process should be to analyze the results measured in your operational scorecards. These scorecards should provide a line of sight into operational strengths and weaknesses, highlighting which key functions require a deep dive. Determine if your organization is operating to the desired-state and if not, what is inhibiting those performance targets from being met? For those non-performing functions, go beyond BAU planning. Invest the time to figure out the cause of the gaps – technology, resources, complex work processes – and that should lead you to your primary focus for 2016.
Listen to Your Customers
As my colleagues expressed in their previous blog, companies should be leveraging the available data on cross-channel customer service usage and determine areas in which the customer experience can be made more seamless and efficient. Customer experience has a direct correlation with prhttps://www.northridgegroup.com/contact-us/ofitability and the best way to determine if your business has breakages or issues is to listen to the people who do business with your company.
Determine the Cost Drivers by Core Processes
Using a Cost Transformation approach, organizations examine cost drivers, associated volumes and unit costs. To determine the cost drivers, ask such questions as what does it cost to acquire a new customer; what does it cost to bill a customer; what does it cost to provide customer service on each channel?
Examine Use of Technology
There are so many ways that technology can impact performance that it’s essential to research and assess the options for each department. Companies are offering robust self-service options to meet the demand of their increasingly digital consumers. The implementation of new technologies can affect internal work processes, productivity and overall customer experience, which translates into increased profitability.
Create an Impact Roadmap
As your organization makes decisions to purchase new technology or simplify work processes will take time to make an impact in the organization. Depending on the complexity and the number of employees affected, it can take time to implement, train and fully utilize new technology or procedures. Therefore, the financial impact may not be felt for months or over a year, so it is important to prioritize the most critical changes and create a timeframe for judging the success of various implementations.
Financial planning requires a mutual understanding of the future goals for an organization. Consistent communication and alignment will achieve a common perspective on the strengths to capitalize on and the weaknesses to overcome in order to succeed in the marketplace. To learn more about Business Transformation and how it can enhance your business, contact us.