The benefits of flexible planning
Flexible business plans help organisations adapt quickly to change, build up resilience and create a competitive edge
Change is a common occurrence these days and UK businesses are spinning multiple plates to try and adapt. Inflation is rising to 10% or more, Brexit issues, supply chain problems, a world shortage of computer chips, the rising cost of utilities and there is always the threat from a possible, new COVID variant.
Static plans will quickly become become unreliable if, as recent experience with the impact of COVID has proved, significant changes in the background economy occur. So what should we consider to help mitigate potential future problems?
Follow the leaders
If you ask any successful business leader, they would likely say that the ability to adapt to the changing business scenarios is an essential part of running and growing a successful business.
Without the ability to change lanes quickly or a business where there is no margin or provision for slight tweaks is a risky gamble in the modern-day business environment.
It therefore makes good sense for your business to be flexible enough to avoid minor setbacks and keep on going strong.
Flexing your budgets
Without a doubt, preparing a business plan shortly before the beginning of a new trading year makes lots of sense. But as the factors or assumptions that underpin the plan are seen to be changing, then it makes sense to flex your budget to take these changes into account.
The primary advantage of this approach is to see how the impact of inflation, supply chain issues and other factors affect profitability cash flow and solvency for the reminder of the period under review.
What is a flexible budget?
A flexible budget is a type of budgeting that adjusts to a company’s activity or profit margins. This type of budget also accounts for variable costs, continuously changes according to changes in costs or revenue. This approach means that businesses can anticipate any potential increases or decreases in monetary needs.
A static budget does not change from the figures established when the business creates the budget.
Make quicker decisions
Your flexible business budget will enable you to make decisions based on your best estimation of the road ahead.
Resist the temptation to make do and to assume that your rising costs and inflation damaged sales can be somehow, magically overcome.
Whilst it may not be possible to discover what you need to do by uncovering your business crystal-ball, by spending time each month to reflect on the major changes affecting your business and following through these changes to your business plans, will inevitably place you on solid ground and best prepared for challenges ahead.
Benefits of Flexible Planning
- Gain a competitive edge – Everyone is fighting harder for business and gaining a leading edge on your competition and stay ahead of the pack.
- Increase your operational efficiency – Being less rigid in your planning allows you to incorporate change and innovate more quickly.
- Mitigate risk – Nurturing diversity allows for efficiency in dealing with uncertainties. You will be more successful in bouncing back from challenges than others with rigid business plans.
- More growth opportunities – Flexible businesses welcome innovations which helps meet the change in this fast paced economy.
How we can help
We are business growth specialists and can help you create realistic flexible businesses plans, help you create and flex your annual budgets, produce reports that compare these budgets to actual results and help you decide on the most effective changes to minimise any downside effects on your profits, cash flow and solvency.
Get in touch for a free no-obligation discussion.